International Monetary Fund is an instrument and a product of development in the world. Just after the Second World War, leading politicians and administrators felt there was the need for the organization of a body that would see to the organization of the International monetary system on an agreed basis. Different people including a world’s great and very influential economists at that time, John Maynard Keynes, made proposals, the proposals were debated at Bretton Wood in July 1944 in the United States of America and an agreement was reached. The IMF was formally established on the 27th December 1945.
Objectives of International Monetary Fund (IMF):
- Promoting exchange rate stability of member countries
- Eliminating restrictions on the use of foreign exchange
- Promoting cooperation in monetary matters among the member countries
- Providing short term credit to member countries who are suffering from balance of payments deficit or problems
- Devising a mechanism that will simplify the payments for goods and services traded among nations.
How the International Monetary Fund (IMF) works
All member countries are expected to contribute their own quota. The contribution of each member country represents its rights for voting and borrowing. When any member country borrows, the repayment is expected to be made in gold or convertible currencies. The IMF works in conjunction with Central Banks of the member countries and the decisions in the organization are taken by the Board of governors and directors which constitute the decision making body.
The IMF and the West African Countries
The IMF has been of great relevance to the West African countries just as it has been to other less developed countries. It provides credit to the West African countries in time of balance of payment problems. In other words, the IMF helps in providing loans to countries that are not able to earn enough foreign exchange that will pay for their imports.
However, some analysts have criticized the purported relevance of IMF, saying the industrialized countries control a very large proportion of the voting and quota. They also say that the IMF unduly imposes hard conditions when giving credit to any country especially the less developed ones such as the West African countries that approach the organization for help. Through such hard conditions, it is maintained that the West African countries that approach it for help. Through such hard conditions, it is maintained that the IMF exercises the power to influence the internal economic policies of client countries in difficulty.