- International Monetary Fund
- Published Date:
- September 2009
The International Monetary Fund
The IMF is the world’s central organization for international monetary cooperation. With 186 member countries (as of June 2009), it is an organization in which almost all of the countries in the world work together to promote the common good. The IMF’s primary purpose is to safeguard the stability of the international monetary system–the system of exchange rates and international payments that enables countries (and their citizens) to buy goods and services from one another. This is essential for achieving sustainable economic growth and raising living standards.
All of the IMF’s member countries are represented on its Executive Board, which discusses the national, regional, and global consequences of each member’s economic policies. This Annual Report covers the activities of the Executive Board and Fund management and staff during the financial year May 1,2008, through April 30, 2009.
The main activities of the IMF include
providing advice to members on adopting policies that can help them prevent or resolve a financial crisis, achieve macroeconomic stability, accelerate economic growth, and alleviate poverty;
making financing temporarily available to member countries to help them address balance of payments problems–that is, when they find themselves short of foreign exchange because their payments to other countries exceed their foreign exchange earnings; and
offering technical assistance and training to countries at their request, to help them build the expertise and institutions they need to implement sound economic policies.
The IMF is headquartered in Washington, D.C., and, reflecting its global reach and close ties with its members, also has offices around the world.
Additional information on the IMF and its member countries can be found on the Fund’s website, www.imf.org.
Ancillary materials for the Annual Report–Web Boxes, Web Tables, Appendixes (including the IMF’s financial statements for the financial year ended April 30, 2009), and other pertinent documents—can be accessed via the Annual Report web page at www.imf.org/external/pubs/ft/ar/2009/eng. Print copies of the financial statements are available from IMF Publication Services, 700 19th Street, N.W., Washington, DC 20431. A CD–ROM version of the Annual Report, including the ancillary materials posted on the web page, is also available from IMF Publication Services.
The IMF’s financial year is May 1 through April 30.
The unit of account of the IMF is the SDR; conversions of IMF financial data to U.S. dollars are approximate and provided for convenience. On April 30, 2009, the SDR/U.S. dollar exchange rate was US$1 = SDR 0.667632, and the U.S. dollar/SDR exchange rate was SDR 1 = US$1.49783. The year-earlier rates (April 30, 2008) were US$1 = SDR 0.615847 and SDR 1 = US$1.62378. References to dollar amounts are in U.S. dollars.
“Billion” means a thousand million; “trillion” means a thousand billion; minor discrepancies between constituent figures and totals are due to rounding.
As used in this Annual Report, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.
Message from the Managing Director and Chair of the Executive Board
Dominique Strauss-Kahn, IMF Managing Director and Chair of the Executive Board.
The Annual Report of the IMF’s Executive Board to the Fund’s Board of Governors is an essential instrument in the IMF’s accountability. The Executive Board is responsible for conducting the Fund’s business and consists of 24 Executive Directors appointed by the IMF’s 186 member countries, while the Board of Governors, on which every member country is represented by a senior official, is the highest authority governing the IMF. The publication of the Annual Report represents the accountability of the Executive Board to the Fund’s Board of Governors.
The world is dealing with the worst economic slowdown since the Great Depression. A crisis that originated in a segment of the U.S. housing market has spread rapidly across the whole world, engulfing advanced economies, emerging markets, and low-income countries alike.
As countries have grappled with the policy response, the IMF has been at the forefront of the debate. We supported a full deployment of the monetary arsenal as the first line of defense. We also called, as early as January 2008, for a global fiscal stimulus. We did this because our forecasts suggested an exceptionally large and long-lasting decline in private demand, one that could not be cushioned by monetary policy alone. We recommended a stimulus equivalent to 2 percent of GDP, and countries have largely delivered. At the same time, we called for the cleansing of banks’ balance sheets of toxic or impaired assets. Our vast experience with financial crises indicated that, unless this was accomplished, the financial system would stay locked down, and efforts to boost demand would prove fruitless.
This crisis also showed that the global economy needs an effective firefighter that can be rapidly deployed, and the IMF has been active on this front. The institution helped a wide array of countries meet their financing needs and so mitigate the economic and social costs of the crisis. The IMFC supported a tripling of the IMF’s lending capacity to an unprecedented US$750 billion and-in addition-a doubling of its capacity for concessional lending to low-income countries. In response, the IMF has adapted to circumstances, emphasizing flexibility and crisis prevention. Aside from a commitment to more up-front financing in general, we have specifically introduced a new Flexible Credit Line, providing large-scale up-front financing with no policy conditions to countries with a sustained track record of very strong policies. We are also committed to more streamlined and focused conditionality and the protection of social safety nets. We have a special duty to our low-income members, and we are in the process of modifying our concessional lending facilities to make them more flexible and effective.
Aside from our lending activities, the G-20 leaders have indicated their support to the IMF in providing candid, evenhanded, and independent surveillance. As the crisis broke, we were ahead of the curve with our policy advice and with our forecasts for the global economy. We have been beefing up our early warning exercise, looking especially at systemic risks, macrofinancial linkages, and spillovers across countries, and we are also working on promoting greater transparency in our operations.
I would like to take note of the unparalleled commitment to multilateralism on display during this crisis. There have been few instances in recent history in which we have witnessed this degree of economic policy cooperation. We saw coordination in the monetary arena, with the fiscal stimulus, and we are now seeing signs of a more common approach to the cleansing of bank balance sheets. The IMF itself has proven an essential vehicle of multilateralism, in its surveillance and lending roles. And the world economy is benefiting—systemic risks have faded, and we are forecasting a recovery in the first half of 2010. The challenge is to sustain this degree of cooperation, even when the crisis has passed.
Of course, the effectiveness of the IMF depends on its legitimacy among its global membership. As the dynamic emerging markets assume a greater role on the world stage, this must be reflected in IMF decision making. It is therefore appropriate that the IMFC recommended that we speed up quota and voice reform, to give more weight to emerging and low-income countries.
Looking ahead, the challenges are daunting. The global financial crisis is not yet over, but countries are already preparing exit strategies from the unprecedented policy interventions put in place to fight the crisis. The IMF is assisting its members by providing key analytical work as input into these exit strategies. There are many unanswered questions, from the global growth engine and the future of global imbalances to the shape of the international financial system. As always, we stand ready to help our global membership grapple with these all-important issues.
Letter of Transmittal to the Board of Governors
July 31, 2009
Dear Mr. Chairman:
I have the honor to present to the Board of Governors the Annual Report of the Executive Board for the financial year ended April 30, 2009, in accordance with Article XII, Section 7(a) of the Articles of Agreement of the International Monetary Fund and Section 10 of the IMF’s By-Laws. In accordance with Section 20 of the By-Laws, the administrative and capital budgets of the IMF approved by the Executive Board for the financial year ending April 30, 2010, are presented in Chapter 5. The audited financial statements for the year ended April 30, 2009, of the General Department, the SDR Department, and the accounts administered by the IMF, together with reports of the external audit firm thereon, are presented in Appendix VI, which appears on the CD-ROM version of the Report, as well as at www.imf.org/external/pubs/ft/ar/2009/eng/index.htm. The external audit and financial reporting processes were overseen by the External Audit Committee, comprising Mr. Steve Anderson (Chair), Mr. Thomas O’Neill, and Mr. Ulrich Graf, as required under Section 20(c) of the Fund’s By-Laws.
Managing Director and Chair of the Executive Board