Updated January 13, 2021
The International Monetary Fund
Overview
which has access to most IMF analysis of global
The International Monetary Fund (IMF, the Fund), which
economic risks.
was founded in 1945, is an international organization that
 Loans. The IMF makes loans to countries experiencing
works to ensure the stability of the international monetary
balance-of-payments difficulties, which generally means
system. The United States is a founding member of the IMF
they are facing problems paying for necessary imports
and the largest financial contributor. This In Focus provides
or servicing their debt payments. The temporary
an overview of the IMF and its operations.
financial assistance enables countries to stabilize their
The IMF: Key Facts and Figures
economies while implementing economic reforms. The
IMF disburses its loans in phases (“tranches”) after
Membership: 190 Countries.
verifying that specified economic conditions and
Headquarters: Washington, DC.
reforms have been met (“conditionality”).
Executive Board: 24 Directors; the United States, China,
 Capacity Development. The IMF provides technical
Japan, Germany, France, and the United Kingdom each have their
assistance and training to help member countries
own representatives; others are formed into constituencies.
strengthen their capacity to design and implement
Total Resources: $661 bil ion in quota; $693 bil ion of
effective policies. The IMF provides technical assistance
additional pledged or committed resources.
in monetary and financial policies; fiscal policy and
U.S. Financial Commitment: about $115 bil ion to IMF quota
management; statistical data complication; and
and $39 bil ion to supplemental funds.
economic and financial legislation.
Largest Borrowers: Argentina, Ukraine, Greece, and Egypt.
Organization and Structure
The IMF’s governing document, the Articles of Agreement,
The IMF has reinvented itself several times since its
provides for a three-tiered governance structure with a
creation. From 1946 to 1971, during the so-called Bretton
board of governors, an executive board, and a managing
Woods era, the IMF oversaw a system of fixed exchange
director. The board of governors is the highest
rates pegged to the U.S. dollar, which was itself convertible
policymaking authority of the IMF. All member countries
into gold. When non-U.S. currencies suffered payments
are represented on the board of governors, usually at the
imbalances arising from their normal trading and financial
finance minister or central bank governor level. Day-to-day
relationships, the IMF provided short-term financing to
authority over operational policy, lending, and other matters
cover temporary hard currency shortfalls.
is vested in the board of executive directors, a 24-member
body that meets three or more times a week to oversee and
After the collapse of the Bretton Woods system of fixed
supervise the activities of the IMF.
exchange rates in 1971, IMF members enacted a
As the largest shareholder, the United States has its own
comprehensive reform of the organization and its
operations in 1975. The IMF transformed itself from being
seat on the executive board. The executive board or board
an organization focused exclusively on issues of foreign
of governors of the IMF can approve loans, policy
decisions, and many other matters by a simple majority
exchange convertibility and stability to one having a
broader mandate: lending for a range of financial crises,
vote; however, a supermajority vote is required to approve
including debt, currency, and banking crises, and engaging
major IMF decisions. The supermajority may require a 70%
or 85% vote, depending on the issue. At 16.52% of total
on a wide range of issues including capital flows, financial
regulation, and surveillance of the global economy.
voting power, the United States has unique veto power over
major policy decisions.
Key Functions
The primary source of IMF lending resources is the
Since the 1970s, the IMF’s mandate of promoting
financial contributions or quota subscriptions of its member
international monetary stability has translated into three
nations. A country’s proportion of quota, or quota share,
main functions:
broadly reflects its weight in the global economy; larger
economies have larger quotas. A member’s quota also
 Surveillance. The IMF regularly monitors the economic impacts the country’s voting power at the IMF. Countries
and financial policies of its member countries. Through
with larger quotas, and thus larger financial commitments
surveillance at the global level and in individual
to the institution, have a greater say in how the IMF is run.
countries, the IMF highlights possible risks to domestic
The United States contributes $117 billion to the IMF quota
and external stability and advises on needed policy
(17.46%). In addition, the United States has contributed $44
adjustments. The implementation of IMF
billion to funds at the IMF that supplement quota resources.
recommendations is enforced through pressure exercised
by other IMF members and the global financial sector,
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The International Monetary Fund
Issues for Congress
is uncertain. The NAB was renewed in November 2016 for
IMF’s Response to the COVID-19 Pandemic
a five-year period. U.S. contributions to the NAB were set
to sunset in 2021 but authorization to maintain U.S.
COVID-19 has spread to virtually all countries around the
participation was included in the Coronavirus Aid, Relief,
world and combatting the pandemic has required shutting
and Economic Security Act (CARES Act, P.L. 116-136).
down large portions of the economy. The pandemic has
roiled stock markets, created mass unemployment, resulted
The IMF reviews quotas every five years. The most recent
in shortages of food and medical supplies, and threatened
review took place in February 2020. At the time, IMF
the solvency of businesses and governments around the
members decided not to seek an increase in IMF quotas but
world. In April 2020, the International Monetary Fund
moved forward the time-table for the next review to
(IMF) cautioned that COVID-19 will likely be the worst
December 15, 2023.
recession since the Great Depression, and far worse than the
recession following the global financial crisis of 2008-2009.
IMF Lending
Over 100 countries have sought financial support from the
The most controversial of the IMF’s activities is its lending
Fund.
program, and its role in financial crises. In the past decade,
the IMF made several large loans to European countries. In
The IMF has several emergency financing mechanism
the years immediately following the 2008-2009 global
options for deploying resources in response to the COVID-
financial crisis, the IMF lent to many Central and Eastern
19 pandemic. The Fund has temporarily doubled access to
European countries. More recently, the IMF has lent to
its emergency facilities—the Rapid Credit Facility (RCF)
Western European countries, including Greece and
and Rapid Financing Instrument (RFI). These facilities
Portugal. Europe’s borrowing from the IMF has declined in
allow the Fund to provide emergency assistance without the
recent years, yet continues to make up a large share of
need to have a full-fledged program in place, which is a
outstanding IMF loans.
time-consuming process.
In addition to representing a majority of the IMF’s
The IMF has also extended debt service relief to 29 of its
outstanding loans, the IMF made exceptionally large loans
poorest and most vulnerable member countries on their IMF
to some European countries. According to IMF rules, the
obligations, covering these countries’ eligible debt falling
amount a country is able to borrow from the IMF is related
due to the IMF for the period between April 2020 and April
to the country's quota. In most instances, countries may
2021, through its Catastrophe Containment and Relief Trust
borrow several multiples of their quota. The current limit is
(CCRT). The IMF is seeking to increase their debt relief
145% in a 12-month period and 435% over the lifetime of a
resources by $1.4 billion to provide additional debt service
program. The conditionality and performance standards
relief. The IMF is also looking to triple the size of its
attached to a loan become more rigorous and demanding as
Poverty Reduction and Growth Trust Fund (PRGT) to $17
its size (relative to the borrower's quota) increases.
billion. The Fund currently has $11.7 billion in
commitments from Japan, France, the UK, Canada, and
While provisions for exceptional access have existed since
Australia.
the early 1980s, the relative amount of lending skyrocketed
with the recent European programs. In an effort to address
Lastly, the IMF Executive Board approved in April 2020
this issue, Congress insisted on restrictions on exceptional
the creation of a new Short-term Liquidity Line (SLL). This
access when it approved the quota and governance reforms.
SLL is a revolving and renewable backstop to support a
Legislation introduced but not passed in the 115th Congress,
country’s liquidity buffers and is available for members
The IMF Reform and Integrity Act (H.R. 1573), would
with certain favored policies in need of short-term and
have further limited the U.S. ability to vote for large IMF
moderate financial support. To date, no countries have
programs, especially where the Fund is cofinancing with
borrowed from the SLL.
larger creditors.
Size of the IMF
Moral Hazard
IMF members agreed in December 2010 to a wide-ranging
Some Members of Congress, among other observers, have
set of reforms that also doubled the IMF’s quota (meaning
also considered concerns that IMF lending may generate
its member contributions). In addition to increasing the size
moral hazard. Some have argued that crisis countries may
of IMF resources available to fight financial crises, the
more be willing to engage in risky financial behavior since
reforms also increased the financial contributions (and
they can anticipate financial assistance from the IMF if they
voting power) of emerging economies relative to advanced
run into economic trouble. Other analysts argue that while
economies. China, for example, increased its quota share at
the IMF may generate moral hazard, international financial
the IMF by 2.4%. Congress passed legislation authorizing
markets are inherently unstable. A variety of factors in a
U.S. participation in the reform package in December 2015
particular crisis, such as coordination problems between
(P.L. 114-113) and the reform package took effect in
creditors and the country in crisis, can spark a financial
January 2016.
crisis that can quickly spread to neighboring countries or
beyond, they say, and the IMF is needed to respond to
In addition to its quota resources, the IMF can draw on an
crises.
additional $692 billion, comprised of bilateral borrowing
arrangements and two supplemental funds, the New
Martin A. Weiss, Specialist in International Trade and
Arrangements to Borrow and the General Arrangements to
Finance
Borrow. The future availability of these supplemental funds
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The International Monetary Fund

IF10676


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https://crsreports.congress.gov | IF10676 · VERSION 8 · UPDATED

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