The Impact of IMF on The Romanian Economy

1. The IMF at a Glance - What is the International Monetary Fund?

The International Monetary Fund—also known as the “IMF” or the “Fund”—was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, U.S. in July 1944. The 45 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s.

The International Monetary Fund was created to help promote the health of the world economy through international monetary cooperation. Headquartered in Washington DC, it is governed by and accountable to the governments of the 185 countries that make up its global membership.

1.1. Fast Facts on the IMF

• Current membership: 185 countries

• Staff: approximately 2,490 from 143 countries

• Total Quotas: $352 billion (as of 5/31/08)

• Loans outstanding (as of 5/31/08): $19.4 billion to 65 countries, of which $6.4 billion to 57 countries on concessional terms

• Field delivery of technical assistance: 186.2 person years during FY2008

• Surveillance consultations concluded: 123 countries during FY2008, of which 115 voluntarily published information on their consultation.

Article I of the Articles of Agreement sets out the IMF's main responsibilities:

• Promoting international monetary cooperation;

• Facilitating the expansion and balanced growth of international trade;

• Promoting exchange stability;

• Assisting in the establishment of a multilateral system of payments; and

• Making its resources available (with adequate safeguards) to members experiencing balance of payments difficulties.

1.2. IMF activities

The IMF is generally, responsible for:

- promoting the stability of the international monetary and financial system

The monetary and financial system is the system of international payments and exchange rates among national currencies that enable trade and financial transactions to take place between countries.

The Fund's job is to:

- promote economic stability,

- help prevent crisis,

- help resolve crisis situations when they do occur, thereby promote growth and alleviate poverty.

It’s three main activities — surveillance, technical assistance, and lending — are intended to meet these goals.

2. Lending by the IMF

A country in severe financial trouble, unable to pay its international bills, poses potential problems for the international financial system, which the IMF was created to protect.

Any member country, whether rich, middle-income, or poor, can turn to the IMF for financing if it has a balance of payments need—that is, if it cannot find sufficient financing on affordable terms in the capital markets to make its international payments and maintain a safe level of reserves.

IMF loans are meant to help member countries tackle balance of payments problems, stabilize their economies, and restore sustainable economic growth. The IMF is not a development bank and, unlike the World Bank and other development agencies, it does not finance projects.