What is IMF?

A form of debt restructuring rather than outright forgiveness should enable Greece to handle its "unviable" debt burden, the International Monetary Fund (IMF) Managing Director Christine Lagarde was quoted as telling a Swiss newspaper.

The International Monetary Fund is an organisation of 188 countries and its work of the IMF is of three main types. Surveillance involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention.

It also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems; loans to low-income countries are also aimed especially at poverty reduction.

Additionally, it provides countries with technical assistance and training in its areas of expertise. Supporting all three of these activities is its work in economic research and statistics. And, the Fund plays an important role in the fight against money-laundering and terrorism.

Formed in 1944 at the Bretton Woods Conference, it came into formal existence in 1945 with 29 member countries with the goal of reconstructing the international payment system. Countries contribute funds to a pool through a quota system from which countries with payment imbalances can borrow.

IMF conditionality is a set of policies or conditions that the IMF requires in exchange for financial resources. The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform. If the conditions are not met, the funds are withheld.

Conditionality is perhaps the most controversial aspect of IMF policies. It is alleged that The IMF – along with the WTO and the World Bank – has put the global economy on a path of greater inequality and environmental destruction.