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imf Friday, 2 October, 1998, 11:39 GMT 12:39 UK
What is the IMF?
The Bretton Woods conference
The IMF emerged from the Bretton Woods conference in 1944
The International Monetary Fund was born as a result of the financial turmoil of the 1930s and the Second World War.

It was established at a conference of world leaders at Bretton Woods in New Hampshire in the USA in 1944.

The aim was to create an institution that would help rebuild - along with the World Bank - the world economy.

Michael Camdessus
IMF Chief Michael Camdessus
The IMF is neither a world central bank nor a development bank.

It acts as a monitor of the world's currencies by helping to maintain an orderly system of payments between all countries.

It is also a kind of international credit union.

It lends money to members who face severe balance of payment problems.

But the IMF - which has 182 members - only doles out the money for a short amount of time and it attaches tough conditions to the loan.

These are meant to help a crisis-hit country's economy to get back on course but has sometimes led to severe recession in places like Indonesia where millions are facing dire food shortages.

In Russia there has also been criticism about the way IMF cash has been used to little effect and with few controls.

There is no doubt the financial crises in South East Asia and Russia have severely tested the IMF's ability to act as the world's economic firefighter.

Loans totalling tens of billions of dollars have drained it of funds.

The IMF headquarters in Washington
The IMF headquarters in Washington
In the US Congress $18bn dollars in extra funding has been held up by critics who denounce the "secrecy" of the IMF and say its rescue packages reward imprudent lenders.

The IMF has also been attacked for not trying to avert the Asian crisis earlier and for not doing enough to stop the contagion spreading.

IMF Managing Director Michael Camdessus has admitted that the speed with which economic troubles in one country can infect markets half-a-world away has surprised him.

He said: "The nature of the virus was so strong and so quick in so many places. We did not see ... how the crisis in Russia could prompt the lack of confidence in Latin America two weeks later."

But he has also defended the IMF's actions: "Without it the past year would have been much worse - with greater devaluations, more defaults and greater trade dislocations."

See also:

14 Sep 98 | The Economy
14 Jul 98 | The Economy
30 Sep 98 | The Economy
14 Jul 98 | The Economy
30 Sep 98 | The Economy
17 Jul 98 | The Economy
01 Oct 98 | The Economy
01 Oct 98 | The Economy
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