International Monetary Fund

The International Monetary Fund (IMF) [1] was set up by the Bretton Woods Conference in 1944, mainly to provide loans to member governments in support of policies to deal with balance of payments problems. Its present functions also include monitoring international financial developments and advising member governments about their economic problems. It is financed by a contribution from each member state that depends upon the size of its economy (the contributions levied in 2007 totalled over $300 billion).

An IMF loan is usually provided under an "arrangement" which stipulates the specific policies and measures that a country has agreed to implement to resolve its balance of payments problem. The economic program underlying an arrangement is formulated by the country in consultation with representatives of the IMF and is presented to the Fund’s governing body as a “letter of intent”.