Objective & Function of International Monetary Fund (IMF)


This article focuses on the Objective and Function of International Monetary Fund. You can also learn here the full form of IMF, History of IMF, and international monetary fund definition. Here, I will also share the information about the purpose of IMF, objectives of the international monetary fund and the international monetary fund functions. Let’s read the full article to get more information.

International Monetary Fund (IMF)

IMF full form: 

International Monetary Fund – IMF

International Monetary Fund history: IMF

Let’s know about the history of IMF:

The International Monetary Fund is an international organization that works to track the global economic status of its member countries. It provides economic and technical support to its member countries. This organization helps in stabilizing the international exchange rates and facilitating development.

The International Monetary Fund is an international monetary organization. According to the decision of the Bretton Woods Conference, it was founded on December 27, 1945, in Washington. But it actually started work on March 1, 1947.

Let’s see some important information about IMF:

Established: 27 December 1945

IMF Headquarter: Washington, D.C., U.S.

Managing Director: Click here  (1st MD of IMF: Camille Gutt, from Belgium,  from May 6, 1946, to May 5, 1951)

 Membership: 189 countries (as on today)

IMF 189th memberNauru Joins the IMF as 189th Member on April 12, 2016.

Official Websitehttp://www.imf.org

Here, you have got information about the history of IMF. Now, I will explain about International Monetary Fund definition

What is IMF? : International Monetary Fund definition

The International Monetary Fund (IMF)  was set up to stabilize the exchange rate in international trade. It helps member countries improve their balance of payments (BOP) through adequate liquidity in the international market, promotes an increase in global monetary cooperation. IMF is one of the Britton Woods Twins who came into existence in 1945. It is administered by 189 countries and these countries are also accountable for its functions.

International monetary fund members: IMF members

Membership: 189 countries

There are 189 countries which have the membership of international monetary fund (IMF).

April 12, 2016: Nauru Joins the IMF as 189th Member

International monetary fund purpose: IMF 

Let’s know about the IMF purpose

According to the terms of an agreement of the International Monetary Fund, its main objectives are as follows:

  1. Promoting international monetary cooperation.
  2. Facilitating the expansion and balanced growth of international trade and as a result of the economic objectives of the economic policy to contribute for the growth of all members and the high levels of real income and the development of productive resources of the members.
  3. To promote exchange severity to maintain systemic exchange arrangements in the members and to avoid competitive exchange rate depreciation.
  4. Establish a multimodal system of payment in relation to the current transaction of members and to help eliminate foreign exchange restrictions which hinder the growth of the business.
  5. To provide the members with the resources under proper protection and to give them the opportunity to do so that they can cure the balance of their payments without resorting to measures destroying national or international prosperity

Role & Functions of the International Monetary Fund: IMF

Here, you can find the explanation of about role of IMF and function of IMF.


Through this system, the IMF reviews the policies, economic and financial development of member countries to maintain stability in the international monetary system. The IMF advises its 189 member countries about promoting economic stability, reducing sensitivity to the financial and financial crisis, and encouraging policies that elevate the standard of living. It provides a regular assessment of global possibilities in its World Economic Outlook.

Special Drawing Rights – SDR

This facility was started in 1969 to improve the status of international liquidity in the world. The IMF issues international reserve asset. This is known as Special Drawing Rights (SDR, also known as Paper Gold), and it supplements the official stores of member countries. The total allocation for the IMF is about 204 billion SDRs (the US $ 286 billion). IMF members can voluntarily exchange SDRs for currency among themselves. The value of the SDR is fixed by 5 currencies i-e the US dollar, the euro, the pound sterling, and the Japanese yen and China’s Yuan. International Monetary Fund

Financial Assistance:

It balances the payments problems to its members: Funds to correct national authorization design adjustment programs in close cooperation with IMF supported by IMF financing, Continuing conditional financial support on effective implementation of these programs

Technical Support:

Provides technical support and training to member countries to help the member countries in enhancing their capability in implementing design and effective policies. Tax policy and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative framework and technical support including statistics are given in many areas.

The Precautionary and Liquidity Line (PLL):

PLL provides funds to meet the actual or potential balance of payments to countries with good policies and its intent is to help in the form of insurance and to overcome the crisis. International Monetary Fund

The Trade Integration Mechanism

This mechanism provides the IMF with its facility to provide loans to developing countries which are facing the problem of counterbalance due to multilateral trade and liberalization, because of such multilateral trade liberalization. They lose preferential reach and their earnings from exports decrease or because of their reduced agricultural subsidies.

Lending to low-income countries

Under the new Poverty Reduction and Growth Trust (poverty eradication and development trust-PRGT), three types of loans have been made as part of the following comprehensive reforms: Extended credit facility, Extensive credit facility, Quick credit facility, and standby credit facility. These are below:

  1. Debt relief: In addition to concessional loans, some countries with low incomes are eligible for a loan under the following two main initiatives.
  2. The Heavily Indebted Poor Countries: It started in 1996 and was expanded in 1999, under this initiative credit is provided in debt consolidated with the approach of restoring credit stability. International Monetary Fund
  3. The Multilateral Debt Relief Initiative: Under this, IMF, the International Development Association of World Bank (IDA) and the African Development Fund (AFDF) forgive the entire debt given to some countries to help move forward in achieving Millennium Development Goals.

Difference between IMF (International Monetary Fund) and world bank:

The basis for Difference IMF World Bank
Meaning International Monetary Fund, It is an international organization that maintains the global monetary system. A global organization established to fund and advises the developing countries, the World Bank has to develop them economically.
Aim Economic Stability Economic Growth
Structure of Organization A single organization with four credit lines. There are two major institutions –  IBRD and IDA.
Objective To deal with all issues related to the financial sector and macroeconomics. To reduce poverty and promote the long-term development of the economy.


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