The International Monetary Fund (IMF) was established at a United Nations Monetary and Financial Conference, also known as Bretton Woods Conference, on 22 July 1944 as an organ under the UN System. The IMF headquarters is located in Washington D.C., U.S.A.
Under its Articles of Agreement (http://www.imf.org/external/pubs/ft/aa/index.htm), the IMF is responsible for 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 providing resources available to members experiencing balance of payments difficulties.
2. Main Functions
The IMF employs three main functions – surveillance, financial assistance, and technical assistance – to promote the stability of the international monetary and financial system.
Surveillance : The IMF closely monitors each member country's economic and financial developments and holds a policy dialogue with a member country on a regular basis (also known as Article IV Consultation), usually once each year, to assess its economic conditions with a view to providing policy recommendations. The IMF also reviews global and regional developments and outlook based on information from individual consultations. The IMF publishes such assessment on the multilateral surveillance through the World Economic Outlook and the Global Financial Stability Report on a semi-annual basis.
Financial Assistance : The IMF lends to its member countries facing balance of payments problems in order to facilitate the adjustment process and restore member countries' economic growth and stability through various loan instruments or "facilities". An IMF loan is usually provided under an "arrangement," requiring a borrowing country to undertake the specific policies and measures to resolve its balance of payments problem as specified in a "Letter of Intent." Most IMF loans are primarily financed by its member countries through payments of quotas. Thus, the IMF's lending capacity is mainly determined by the total amount of quotas. Nevertheless, if necessary, the IMF may borrow from a number of its financially strongest member countries through the New Arrangements to Borrow (NAB) or the General Arrangements to Borrow (GAB) (http://www.imf.org/external/np/exr/facts/gabnab.htm) to supplement the resources from its quotas.
Technical Assistance : The IMF provides technical assistance to help member countries strengthen their capacity to design and implement effective policies in four areas, namely, 1) monetary and financial policies, 2) fiscal policy and management, 3) statistics and
4) economic and financial legislation. In addition to technical assistance, the IMF also offers training courses and seminars to member countries at the IMF Institute in Washington D.C., and other regional training institutes (Austria, Brazil, China, India, Singapore, Tunisia and United Arab Emirates).
3. Organizational Structure
The Board of Governors, comprising one governor from each member country(http://www.imf.org/external/np/sec/memdir/members.htm), is the highest decision-making body of the IMF. The Board of Governors usually meets once each year at the IMF/World Bank Annual Meetings. The International Monetary and Financial Committee (IMFC), consisting of 24 members, which reflects the composition of the IMF's Executive Board, acts as the advisor to the Board of Governors. It meets twice each year to review issues relating to the Board of Governors' functions in supervising the management of the international monetary and financial system as well as make recommendations to the Board of Governors. The day-to-day work of the IMF, as guided by the IMFC, is carried out by the Executive Board (http://www.imf.org/external/np/sec/memdir/eds.htm) and IMF staff. The Managing Director is Chairman of the Executive Board and Head of IMF staff.
Membership : IMF's members have grown from 29 at its inception in 1945 to 185 at present. The latest member country is Montenegro who joined the IMF in January 2007. Countries must first join the United Nations to be eligible for IMF membership.
Quotas : Upon joining the IMF, each member country is assigned an initial quota comparable to its relative economic size to the global economy and those of existing member countries (http://www.imf.org/external/np/sec/memdir/members.htm). Quotas are denominated in Special Drawing Rights (SDRs) 1/ General quota reviews are conducted at regular intervals – usually every five years, allowing the IMF to assess the adequacy of quotas in terms of members' needs for liquidity and its ability to finance those needs.
A member's quota determines its voting power and access to IMF financing. The quota largely determines a member's voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota. In general, a member can borrow up to 100 percent of its quota annually and 300 percent cumulatively.
4. Relationship with Thailand
Thailand joined the IMF on 3 May 1949 as its 44th member. The Bank of Thailand (BOT) represents Thailand in the IMF under the Act Authorizing Operations Relating to the International Monetary Fund and the International Bank for Reconstruction and Development B.E. 2494 (1951). In this regard, the governor and a deputy governor of the BOT serve as governor and alternate governor of Thailand in the IMF respectively. Thailand's quota is 1,081.90 million SDR, equivalent to 0.5% of total quotas, corresponding to 11,069 votes (http://www.imf.org/external/np/sec/memdir/members.htm).
As part of an obligation under Article IV of the Articles of Agreement, Thailand is subject to an annual economic review by the IMF – a "consultation" between the IMF staff and authorities. In addition, Thailand has accepted obligations under Article VIII of the Articles of Agreement (http://www.imf.org/external/pubs/ft/aa/aa08.htm) since 4 May 1990, to impose on restrictions on payments and transfers of current account transactions. Most recently, Thailand participated in the joint IMF/World Bank Financial Sector Assessment Program 2/ (FSAP) in 2007.
Thailand has borrowed from the IMF under the Stand-by Arrangement 3/ (SBA) five times in total of 4,431 million SDR: 45.25 million SDR in July 1978; 814.5 million SDR (only 345 million SDR drawn) in June 1981; 271.5 million SDR in November 1982; 400 million SDR (260 million SDR drawn) in June 1985; and 2,900 million SDR (only 2,500 million SDR drawn) in August 1997. Thailand has no financial obligation to the IMF as Thailand completed repayment of the last Stand-By Arrangement in July 2003, two years ahead of schedule. Currently, Thailand participates as a potential lender to the Fund under the New Arrangements to Borrow (NAB), in an amount not exceeding 340 million SDR.
Further information on the relationship between Thailand and the IMF can be found at http://www.imf.org/external/country/THA/index.htm. In addition, latest information on the BOT's activities in the IMF can be found in BOT's Annual Economic Report
1/ The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries with a view to supporting the expansion of world trade and financial development. The SDR also serves as the unit of account of the IMF. Its value is based on a basket of 4 major currencies, i.e., US dollar, euro, pound sterling, and Japanese yen.
2/ The Financial Sector Assessment Program (FSAP), a joint effort by the IMF and World
Bank aims to promote the soundness of financial systems in member countries. Work under the program seeks to identify the strengths and vulnerabilities of a country's financial system, and to help prioritize policy reforms.
3/ The SBA is designed to help countries address short-term balance of paymentsproblems. Stand-by is the most commonly used facility. The length of a SBA is typically 12-24 months, and repayment is normally expected within 2¼-4 years. Surcharges apply to high access levels.