I

Overview of the IMF as a Financial Institution

Role and Purposes of the IMF

The International Monetary Fund is a cooperative international monetary

organization whose members currently include 183 countries of the world. It
was established together with the World Bank in 1945 as part of the Bretton
Woods conference convened in the aftermath of World War II.
The responsibilities of the IMF derive from the basic purposes for which
the institution was established, as set out in Article I of the IMF Articles of
Agreement—the charter that governs all policies and activities of the IMF:
• To promote international cooperation through a permanent institution
which provides the machinery for consultation and collaboration on
international monetary problems.
• To facilitate the expansion and balanced growth of international trade,
and to contribute thereby to the promotion and maintenance of high
levels of employment and real income and to the development of the
productive resources of all members as primary objectives of economic
policy.
• To promote exchange stability, to maintain orderly exchange arrange-
ments among members, and to avoid competitive exchange depreciation.
• To assist in the establishment of a multilateral system of payments in
respect of current transactions between members and in the elimination
of foreign exchange restrictions which hamper the growth of world trade.
• To give confidence to members by making the general resources of the
Fund temporarily available to them under adequate safeguards, thus
providing them with opportunity to correct maladjustments in their bal-
ance of payments without resorting to measures destructive of national
or international prosperity.
• In accordance with the above, to shorten the duration and lessen the
degree of disequilibrium in the international balances of payments of
members.

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

The IMF is best known as a financial institution that provides resources to

member countries experiencing temporary balance of payments problems
on the condition that the borrower undertake economic adjustment policies
to address these difficulties. In recent years, IMF lending increased dramati-
cally as the institution played a central role in resolving a series of economic
and financial crises in emerging market countries in Asia, Latin America,
and Europe. The IMF is also actively engaged in promoting economic
growth and poverty reduction in its poorer members by providing financing
on concessional terms in support of efforts to stabilize economies, imple-
ment structural reforms, and achieve sustainable external debt positions.
Often missing from the public perception of the IMF, however, is the
broader context in which this financing takes place.
The IMF is unique among intergovernmental organizations in its combi-
nation of regulatory, consultative, and financial functions, which derive from
the purposes for which the institution was established.1 Supporting the
IMF’s legal mandate are a variety of voluntary service and informational
functions that facilitate the implementation of its official tasks:
• Regulatory functions of the IMF include formal jurisdiction over mea-
sures that have the effect of restricting payments and transfers for cur-
rent international transactions. Member countries are required to
provide the IMF with such information and statistical data as it deems
necessary for its activities, including the minimum necessary for the
effective discharge of its duties, as outlined in the Articles of Agree-
ment (Article VIII).
• Consultative functions stem primarily from the IMF’s responsibility for
overseeing the international monetary system and exercising firm sur-
veillance over the policies of its members, a task entrusted to the IMF
following the collapse of the Bretton Woods fixed exchange rate system
in the early 1970s.2 These activities include regular monitoring and peer
review by other members of economic and financial developments and
policies in each of its members under Article IV of the Articles of
Agreement, ongoing reviews of world economic and financial market

1See Manuel Guitián,

The Unique Nature of the Responsibilities of the International Mon-
etary Fund, IMF Pamphlet Series No. 46 (Washington: International Monetary Fund, 1992).
2See the discussion in Chapter III for an explanation of how the fixed exchange rate sys-

tem worked.

2
 I Overview

developments, and semiannual consideration of the world economic

outlook (Article IV).
• Financial functions of the IMF are the subject of this pamphlet. They
range from the provision of temporary balance of payments financing
and administration of the SDR system to the extension of longer-term
concessional lending and debt relief to the poorest members (Articles V
and VI).
• Service and supplementary informational functions are voluntary, in
contrast to the obligatory nature of members’ participation in the
above three areas of the IMF operations. These supportive functions
include a wide-ranging program of technical assistance and encompass
an array of statistical and nonstatistical activities, most notably the col-
lection and dissemination of economic and financial data on its member
countries, reporting on its country and global surveillance assessments,
and disseminating its policy and research findings. In many cases, the
IMF is the chief source of reliable, up-to-date economic information on
individual countries. Increasingly, the institution is also called on by its
members to develop and monitor adherence to standards and best
practices in several areas, including timely country economic and finan-
cial statistics, monetary and fiscal transparency, the assessment of finan-
cial sector soundness, and the promotion of good governance.
The IMF is therefore concerned not only with the problems of individual
countries but also with the working of the international monetary system as
a whole. Its activities are aimed at promoting policies and strategies through
which its members can work together to ensure a stable world financial sys-
tem and sustainable economic growth. The IMF provides a forum for inter-
national monetary cooperation, and thus for an orderly evolution of the
system, and it subjects a wide area of international monetary affairs to the
covenants of law, moral suasion, and understandings. The IMF must also
stand ready to deal with crisis situations, not only those affecting individual
members but also those representing threats to the international monetary
system.
All operations of the IMF are conducted under a decision-making struc-
ture that has evolved over the years (Box I.1). The governance structure
attempts to strike a balance between universal representation and the oper-
ational necessities of managing an effective financial institution. While every
member country is represented separately on the Board of Governors, most

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

BOX I.1. DECISION-MAKING STRUCTURE OF THE IMF

The IMF has a Board of Governors, an Executive Board, a Managing Direc-

tor, and a staff of nearly 3,000 that roughly reflects the diversity of its member-
ship. The Board of Governors is the highest policymaking body of the IMF; it
consists of one Governor and one Alternate appointed by each member. The
Board of Governors, whose members are usually ministers of finance, heads of
central banks, or officials of comparable rank, normally meets once a year.
An International Monetary and Financial Committee (IMFC), currently
composed of 24 IMF Governors, ministers, or others of comparable rank
(reflecting the composition of the Executive Board and representing all IMF
members), usually meets twice a year. This committee advises and reports to
the Board of Governors on the management and functioning of the interna-
tional monetary system, proposals by the Executive Board to amend the Arti-
cles of Agreement, and any sudden disturbances that might threaten the system.
A committee with a similar composition, the Development Committee, main-
tains an overview of the development process and reports to the Board of Gov-
ernors of the World Bank and the IMF and makes suggestions on all aspects of
the broad question of the transfer of resources to developing countries.
The IMF Executive Board is responsible for conducting the business of the
IMF and exercises the powers delegated to it by the Board of Governors. It
functions in continuous session at IMF headquarters and currently consists of
24 Executive Directors, with the Managing Director (or one of the three Dep-
uty Managing Directors acting for the Managing Director) as the Chairman.
The Managing Director is selected by the Executive Board and is the chief of
the operating staff of the IMF. The three Deputy Managing Directors are
appointed by the Managing Director with the approval of the Executive Board.
The number of votes that a member can cast is related to the size of its quota
at the IMF. The five members with the largest quotas each appoint their Execu-
tive Directors, as can the two members with the largest creditor positions in the
IMF over the two years preceding an election if these members are not part of
the group of the five largest members. The remaining Directors are elected
from among the other member countries that may form themselves into groups
or constituencies. A number of important decisions specified in the Articles of
Agreement require either 70 percent or 85 percent of the total voting power;
other decisions are made by a majority of the votes cast.

members form combined constituencies on the much smaller Executive

Board that conducts the day-to-day business of the IMF. While voting power
is based on the size of capital subscriptions, giving the greatest voice to the
institution’s largest contributors, smaller members are protected with a fixed

4
 I Overview

number of basic votes. Moreover, the Executive Board takes most decisions
based on consensus, without a formal vote.
This pamphlet aims to explain the IMF’s financial organization and opera-
tions—that is, how the IMF works as a financial institution, focusing on its
financial structure as of the spring of 2001, but including enough background
information to make that structure understandable.

Evolution of the IMF’s Financial Structure

The single most important feature of the financial structure of the IMF is
that it is continuously developing. This is necessary for the IMF to meet the
needs of an ever-changing global economic and financial system.
The IMF has introduced and refined a variety of lending facilities and pol-
icy changes over the years to address changing conditions in the global econ-
omy or the specific circumstances of members.3 It discontinued or modified
such adaptations when the need for them was reduced or eliminated.
• During 1945–60, the IMF facilitated the move to convertibility among
countries for current payments and the removal of restrictions on trade
and payments that had been put in place before and during the war.
This was also a period of relatively low financing by the IMF, as the
Marshall Plan of the United States largely assumed that role.
• During 1961–70, to meet the pressures on the Bretton Woods fixed
exchange rate system, the IMF developed a new supplementary reserve
asset (the special drawing right, or SDR) and a standing borrowing
arrangement with the largest creditor members to supplement its
resources during times of systemic crisis.
• During 1971–80, the two world oil crises led to an expansion of IMF
financing and the development of new lending facilities funded from
borrowed resources. The decade also marked the IMF’s expansion into
concessional lending to its poorest members.

3The provision of financial assistance by the IMF is not technically or legally “lending”

as such. Rather, financial assistance is provided via an exchange of monetary assets, similar
to a swap. Nevertheless, the purchase and repurchase of currencies from the IMF, with
interest charged on outstanding purchases, is functionally equivalent to a loan and its sub-
sequent repayment, as explained in Chapter II (see Box II.1). Accordingly, for ease of ref-
erence, the terms “lending,” “loans,” and “borrowing” are used in this pamphlet to refer to
the provision of financial resources by the IMF to its members.

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

• During 1981–90, the developing country debt crisis triggered a further

sharp increase in IMF financing, with higher levels of assistance to indi-
vidual countries, again financed in part by borrowed resources.
• During 1991–2000, the IMF established a temporary lending facility to
facilitate the integration of the formerly centrally planned economies
into the world market system. The globalization of financial markets
also required adaptation of the financing facilities designed for an ear-
lier era when current account imbalances predominated to a world in
which large and sudden shifts in international capital flows resulted in
payments imbalances originating in the capital account.
Following a major review of its lending policies and facilities in 2000, the
IMF introduced a number of important changes to encourage early adoption
of sound economic policies as a means of preventing crises and to reduce
excessively long or large-scale use of its resources. Looking ahead, the chal-
lenge is to design and implement tools to assist members in the early detec-
tion of financial crises.
Most of the developments described above were accommodated through
policy changes in the IMF’s regular lending operations, within the original
financial structure that was created at the Bretton Woods conference. This
structure reflected the IMF’s basic purpose of financing short-term pay-
ments imbalances between member countries under the fixed exchange rate
system created after World War II. Since capital markets were not inte-
grated at that time, these payments imbalances arose from trade and other
current transactions among countries. The financial mechanism designed to
fulfill this purpose is in the General Department of IMF, specifically the
General Resources Account, or GRA.
The financing mechanism of the GRA continues to function much as it
was originally designed. But the number of members that provide resources
for the IMF’s financial operations has expanded from early reliance on the
United States and the major European countries to an ever wider array of
members whose balance of payments positions became strong enough to
support IMF lending. In mid-2001, there were 38 countries financing IMF
assistance through the GRA. As the group of IMF creditor countries contin-
ued to widen, the countries borrowing from the IMF also shifted from
largely the industrial countries in the IMF’s first 25 years to the developing
and emerging market countries in the last 25 years.

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 I Overview

Although most developments in the world economic system could be

accommodated through changes in the IMF’s lending policies implemented
through the GRA, two major transformations resulted in lasting changes in
the financial structure of the IMF:
• First, the creation of special drawing rights (SDRs) in 1969 and estab-
lishment in the IMF of a separate SDR Department to conduct all
operations in SDRs. The Bretton Woods fixed exchange rate system
came under pressure during the 1960s because it contained no mecha-
nism for regulating reserve growth to finance the expansion of world
trade and financial development. Gold production was an inadequate
and unreliable source of reserve supply and the continuing growth in
U.S. dollar reserves required a persistent deficit in the U.S. balance of
payments, which itself posed a threat to the value of the U.S. dollar. The
solution to the reserve problem lay in creating an international reserve
asset to supplement dollars and gold in official reserve holdings. The
creation of the SDR was intended to make the regulation of interna-
tional liquidity, for the first time, subject to international consultation
and decision. Only a few years after the creation of the SDR, however,
the Bretton Woods system collapsed and the major currencies shifted
to a floating exchange rate regime. This, along with the growth in inter-
national capital markets and the expanded capacity of creditworthy
governments to borrow, lessened the need for SDRs.
• Second, the involvement of the IMF in providing financial assistance on
concessional terms to the IMF’s poorest members beginning in the
late 1970s.4 This fundamental shift recognized that the IMF’s poorest
members required different terms of financing and had different policy
requirements than did the rest of the membership in adjusting to exter-
nal imbalances. Since the IMF’s legal structure does not permit lending
on concessional terms, the concessional operations are conducted
under administered accounts, with the IMF acting in the capacity of
Trustee of the resources. During 1976–86, concessional lending was
financed by selling a portion of the IMF’s gold holdings. The level of
lending was initially relatively low, with few policy conditions attached

4Concessional terms are those that are below the IMF’s marginal cost of funds, which, as

explained later, is linked to short-term interest rates prevailing in the world’s four largest
money markets.

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

to the loans. Beginning in 1987, the volume of concessional finance

expanded sharply, subject to higher levels of conditionality, with financ-
ing provided through borrowed resources, grants for subsidized interest
rates and debt relief, and repayments of past concessional loans.

Current Financial Structure and

Lending Mechanisms of the IMF

The IMF provides financing to its members through three channels, all of
which have the common purpose of transferring reserve currencies to mem-
ber countries. In both its regular and concessional lending operations,
financing is provided primarily under “arrangements” with the IMF, which
are similar to lines of credit. For the large majority of IMF lending, use of
these lines of credit is conditional upon the achievement of economic stabili-
zation and structural reform objectives agreed between the borrowing mem-
ber and the IMF. The IMF can also create international reserve assets by
allocating SDRs to members, which can be used to obtain foreign exchange
from other members. Use of SDRs is unconditional, although a market-
based interest rate is charged.
The basic financial structure of the IMF is summarized in Box I.2, which
includes references to the relevant chapters of this pamphlet where each of
the three financing channels is discussed in detail, and a final chapter that
describes the safeguards for IMF resources. The pamphlet is organized on
both an institutional and a chronological basis. Summary descriptions of
Chapters II–V follow.

Regular Lending Operations (Chapter II)

Unlike other international financial institutions (such as the World Bank
or the regional development banks), the IMF is, in effect, a repository for its
members’ currencies and a portion of their foreign exchange reserves. The
IMF uses this pool of currencies and reserve assets to extend credits to mem-
ber countries when they face economic difficulties as reflected in their exter-
nal balance of payments.
The IMF’s regular lending is financed from the fully paid-in capital sub-
scribed by member countries. It is conducted through the GRA of the Gen-
eral Department, which holds the capital subscribed by members. A
country’s capital subscription is equal to its IMF quota. Upon joining, each

8
 I Overview

B OX I.2. F INANCIAL STRUCTURE OF THE IMF 1

General Department
(Chapter II)

General Resources Special Disbursement Investment

Account (GRA) Account (SDA) Account 2

SDR Department
(Chapter III)

SDR holdings SDR allocations

Administered Accounts
(Chapter IV)

PRGF PRGF-HIPC Other Administered

(Chapter IV) (Chapter IV) Accounts (Appendix III)

PRGF Administered PRGF-HIPC

Trust Accounts Trust

Loan Reserve Subsidy PRGF-HIPC PRGF HIPC

Account Account Account sub- sub- sub-
account account account

1Chapter V covers “Safeguards for IMF Assets.”

2Account inactive.

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

country is assigned a quota that is broadly based on its relative position in

the world economy and represents its maximum financial commitment to
the IMF.5 The member country provides a portion of its quota subscription
in the form of reserve assets (foreign currencies acceptable to the IMF or
SDRs) and the remainder in its own currency. This “reserve position” is
made instantly available to a member if the member has a balance of pay-
ments need. For its lending the IMF utilizes the reserve assets it already
holds and calls on countries that are considered financially strong to
exchange the IMF’s holdings of their currency for reserve assets that are
then made available to borrowing countries.
The bulk of IMF lending is provided under short-term “Stand-
By”Arrangements that address balance of payments difficulties of a tempo-
rary or cyclical nature. This financing can be supplemented with additional
short-term resources to assist members experiencing a sudden and disrup-
tive loss of capital market access. The IMF also lends under medium-term
Extended Arrangements that focus on external payments difficulties arising
from longer-term structural problems. All credit outstanding incurs interest
at the IMF’s basic rate of charge, which is based on market interest rates,
and can be subject to surcharges depending on the type and duration of the
loan and the amount of IMF credit outstanding.
IMF lending is normally conditional on a country adopting and implement-
ing a program of economic reforms affecting major macroeconomic variables
such as the exchange rate, money and credit, and the fiscal deficit. Moreover,
the financing provided by the IMF is temporary, to be repaid when macro-
economic imbalances have been rectified, and economic performance has
improved, so that it may be available for others to use subsequently, thus
evoking the analogy of the IMF as an “international credit union.”6
The IMF’s quota-based funds can be supplemented by borrowing under
two standing borrowing arrangements, the New Arrangements to Borrow
(NAB) and the General Arrangements to Borrow (GAB). If necessary, the
IMF can also undertake further borrowing from official sources or private
markets to supplement available resources, but to date it has never bor-
rowed from private sources.

5Quotas also determine a country’s voting power in the IMF, generally provide the basis

for access to IMF financing, and determine shares in SDR allocations.

6Repayment schedules vary according to the specific lending program or “facility,”

which is designed to address the particular type of balance of payments problems facing
the country.

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 I Overview

SDR Mechanism (Chapter III)

The SDR is a reserve asset created by the IMF and allocated to participat-
ing members in proportion to their IMF quotas to meet a long-term global
need to supplement existing reserve assets. A member may use SDRs to
obtain foreign exchange reserves from other members and to make interna-
tional payments, including to the IMF. The SDR is not a currency, nor is it a
liability of the IMF, rather it is primarily a potential claim on freely usable
currencies. Freely usable currencies, as determined by the IMF, are the
U.S. dollar, euro, Japanese yen, and pound sterling. Members are allocated
SDRs unconditionally and may use them to obtain freely usable currencies
in order to meet a balance of payments financing need without undertaking
economic policy measures or repayment obligations. A member that makes
net use of its allocated SDRs pays the SDR interest rate on the amount
used, while a member that acquires SDRs in excess of its allocation receives
the SDR interest rate on its excess holdings. Thus far, the IMF has allocated
a total of SDR 21.4 billion, most recently in 1981.
A special, one-time equity allocation of SDRs that would double the
amount of SDRs outstanding is now pending final approval by the member-
ship. The purpose of this allocation is to address a perceived inequity that
more than one-fifth of IMF members have never received an SDR alloca-
tion because they joined after the last allocation. Provisions have been made
for future new members to receive equal treatment.
The SDR serves as the unit of account for the IMF and the SDR interest
rate provides the basis for calculating the interest charges on regular IMF
financing and the interest rate paid to members that are creditors to the IMF.
• The value of the SDR is based on a basket of currencies, comprising the
U.S. dollar, euro, Japanese yen, and pound sterling, and is determined
daily based on exchange rates quoted on the major international cur-
rency markets.
• The SDR interest rate is determined weekly based on the same cur-
rency amounts as in the SDR valuation basket, prevailing exchange
rates, and representative interest rates on short-term financial instru-
ments in the markets of the currencies included in the valuation basket.
All SDR transactions are conducted through the SDR Department of the
IMF. The SDR is solely an official asset. SDRs are held largely by member
countries with the balance held in the IMF’s GRA and by official entities
prescribed by the IMF to hold SDRs. Neither prescribed holders nor the

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

IMF receive SDR allocations but can acquire and use SDRs in transactions
with IMF members and with other prescribed holders under the same terms
and conditions as IMF members.

Concessional Financing (Chapter IV)

The IMF lends to poor countries at an interest rate of ½ of 1 percent and
over a longer repayment period than nonconcessional IMF lending while
these countries restructure their economies to promote growth and reduce
poverty. The IMF also provides assistance on a grant (no-cost) basis to
heavily indebted poor countries to help them achieve sustainable external
debt positions. These activities are undertaken separately from the IMF’s
regular lending operations, with resources provided voluntarily by members
independently of their IMF capital subscriptions, and in part from the IMF’s
own resources. The IMF’s concessional assistance is extended through the
Poverty Reduction and Growth Facility (PRGF) Trust and in the context of
the Heavily Indebted Poor Country (HIPC) Initiative through the PRGF-
HIPC Trust, both of which the IMF operates as Trustee.
The financing for the IMF’s concessional lending and debt relief is mobi-
lized through a cooperative effort currently involving 94 countries. The prin-
cipal for PRGF loans has in most cases been provided through bilateral
lenders at market-based interest rates. This loan principal is passed through
to PRGF-eligible borrowers on concessional terms. The financing needed to
make up the difference between the concessional interest rate paid by
PRGF borrowers and the market-based rate received by PRGF lenders is
provided through bilateral contributions and by the IMF from its own
resources. The debt relief provided under the HIPC Initiative is also
financed from contributions from IMF members and the institution itself.
The framework for the PRGF envisages commitments under the current
PRGF Trust through late 2001 or early 2002, to be followed by a four-year
interim PRGF with a commitment capacity of about SDR 1 billion a year.
The continuation of concessional lending for the period after 2005 will be
financed through resources accumulating in the PRGF Reserve Account
from repayment of earlier concessional loans and the investment return on
these funds. Since the resources in the Reserve Account belong to the IMF,
there would be no need for further bilateral loan resources or subsidy contri-
butions. The self-sustained PRGF will have the resources to lend in perpetu-
ity, thus making concessional lending a permanent feature of the IMF’s
financial structure.

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 I Overview

Until needed, PRGF and HIPC resources are invested and the investment
income is used to help meet the financial requirements of the PRGF and
HIPC initiatives. In March 2000, the IMF put in place a new investment
strategy for the resources supporting these initiatives with the objective of
supplementing returns over time while maintaining prudent limits on risk.

Safeguards for IMF Resources (Chapter V)

The Articles of Agreement require the IMF to adopt policies that will
establish adequate safeguards for the temporary use of the organization’s
resources. These safeguards can be divided into those aimed at protecting
currently available or outstanding credit and those focused on limiting the
duration of, and clearing, overdue obligations.
Safeguards to protect committed and outstanding credit include:
• Limits on access to appropriate amounts of financing, with incentives to
contain excessively long and heavy use;
• Conditionality and program design;
• Safeguards assessments of central banks;
• Post-program monitoring;
• Measures to deal with misreporting; and
• Voluntary services and supplementary information provided by the
IMF, including technical assistance; the transparency initiative, com-
prising the establishment and monitoring of codes and standards,
including statistical standards and codes for monetary and fiscal trans-
parency and the assessment of financial sector soundness; and the
improved governance initiative.
Given the monetary character of the IMF and the need for its resources to
revolve, members with financial obligations to the institution must repay
them as they fall due so that these resources can be made available to other
members. Since the early 1980s, the overdue obligations that have emerged
have been a matter of concern because they weaken the IMF’s liquidity
position and impose a cost on other members.
Safeguards put in place to deal with overdue obligations to the IMF
include the following two broad areas:
• Policies to assist members in clearing arrears to the IMF, including:
—the cooperative strategy, consisting of three components: prevention
of arrears, collaboration in clearing arrears, and remedial measures,

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

which are intended to have a deterrent effect, for countries that do not
cooperate actively; and
—the rights approach, which allows a member in arrears to accumulate
“rights” to future disbursements from the IMF.
• Measures to protect the IMF’s financial position.

Financial Reporting and Audit Requirements

The IMF’s By-Laws mandate that its accounts and statements provide a
“true and fair view” of its financial position. The IMF prepares its financial
statements in accordance with International Accounting Standards (IAS)
but is not bound by specific legal provisions or accounting pronouncements
in effect in individual member countries. The IMF is required to publish an
Annual Report containing audited statements of its accounts and to issue
summary statements of its holdings of SDRs, gold, and members’ currencies
at intervals of three months or less. As part of its financial reporting, the
IMF makes extensive information on financial and other activities available
to the public on its website (http://www.imf.org) in order to provide a timely
and comprehensive view of the IMF’s financial position. The IMF’s financial
year covers the period from May 1 through April 30.
The IMF’s finances are analogous to those of other financial institutions,
and comparison between the IMF and such institutions has been made eas-
ier by recent changes in the presentation of the IMF’s financial statements.
A typical financial institution holds liquid assets and loan claims and securi-
ties among its assets, financed by its deposit (monetary) liabilities and capi-
tal resources. Similarly, in the GRA the IMF holds assets (currencies, SDRs,
and gold) and credit outstanding to its members, and issues monetary liabili-
ties (referred to as reserve tranche positions), while its capital includes mem-
bers’ quota subscriptions. Similar practices are followed in the financial
statements of the SDR Department and of the PRGF and PRGF-HIPC
Trusts in order to make their financial operations transparent.
The audit procedures in place call for an external audit of the IMF’s
accounts and activities. The external audit of the financial statements of the
IMF’s General Department, SDR Department, Administered Accounts,
and Staff Retirement Plans is conducted annually by an external audit firm
selected by the Executive Board. The external audit is conducted in accor-
dance with International Standards on Auditing (ISA) under the general
oversight of an External Audit Committee (EAC). The EAC consists of

14
 I Overview

three persons, each representing a different member country, who are

selected by the Executive Board for an initial term of three years (EAC
members may be reappointed for an additional three-year period). The
Executive Board approves the terms of reference of the EAC, but the EAC
may recommend changes to the terms of reference for the approval of the
Executive Board. At least one person on the EAC must be selected from
one of the six largest quota holders of the IMF. The nominees must possess
the qualifications required to carry out the oversight of the IMF’s annual
audit and the nominees are therefore typically experienced independent
auditors or auditors in public service. The EAC elects one of its members as
chairman, determines its own procedures, and is otherwise independent of
the management of the IMF in overseeing the annual audit. The audit com-
mittee is responsible for transmitting the audit reports issued by the external
audit firm to the Board of Governors through the IMF’s Managing Director
and the Executive Board. The chairman of the EAC is also required to brief
the Executive Board on the work of the EAC at the conclusion of the annual
audit.

Sources of Information on IMF Finances

IMF’s Website
Comprehensive and timely data on IMF finances are available on the IMF
website. Through a specially designed portal entitled “IMF Finances” (see
http://www.imf.org/external/fin.htm) (Box I.3), which is prominently refer-
enced on the homepage of the IMF website (http://www.imf.org), anyone
with access to the Internet can obtain current and historical data on all
aspects of IMF lending and borrowing operations. Financial data are
updated on a daily, weekly, monthly, or quarterly basis, as appropriate. In
addition, the “IMF Finances” portal provides a gateway to a wealth of gen-
eral information on the financial structure, terms, and operations of the insti-
tution, including this pamphlet. The financial data are presented in aggregate
form for the institution as a whole, and in country-specific form for each
member of the IMF on:
• exchange rates (twice daily)
• IMF interest rates (weekly)
• financial activities and status of lending arrangements (weekly)
• financial resources and liquidity (monthly)

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

BOX I.3. IMF FINANCES WEBSITE

(HTTP://WWW.IMF.ORG/EXTERNAL/FIN.HTM)

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 I Overview

• financial statements (monthly)

• financing of IMF transactions (quarterly)
• financial position of members in the IMF (monthly)
• disbursements and repayments (monthly)
• projected obligations to the IMF (monthly)
• IMF credit outstanding (monthly)
• lending arrangements (monthly)
• SDR allocations and holdings (monthly)
• arrears to the IMF (monthly)

Contacts in the Treasurer’s Department

Questions concerning any aspect of the financial structure and operations
of the IMF may be directed to the Treasurer’s Department staff directly
involved in this work by sending an e-mail inquiry to [email protected].
In the Treasurer’s Department of the IMF, financial policy and operational
work is organized in units along functional lines. Inquiries may be directed
to the Treasurer of the IMF or to the appropriate Division Chief at the
address below:
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431
United States

Chief, Accounts and Financial Reports Division

• Financial statements and related reports
• Policies to safeguard the IMF’s financial position
• Accounting treatment of financial transactions

Chief, Financial Planning and Operations Division

• Planning and execution of financial transactions
• Calculation of SDR value and SDR interest rate

Chief, General Resources and SDR Policy Division

• Terms and general conditions of IMF lending
• Financial resources and liquidity
• Determination of quotas
• Functioning of the SDR system

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FINANCIAL ORGANIZATION AND OPERATIONS OF THE IMF

Chief, PRGF and HIPC Financing Division

• Financing for Poverty Reduction and Growth Facility
• Participation in the Heavily Indebted Poor Countries Initiative
• Arrears to the IMF
• Investment of resources for concessional assistance

Chief, Safeguards Assessment Unit

• Safeguards assessments of central banks of borrowing members

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