1 Known formally as the Joint Ministerial Committee of the Boards of Governors of the World Bank and the IMF on the Transfer of Real Resources to Developing Countries.
2 Attached to the Office of the Managing Director.
Economists and the IMF use a specialized language. Here’s a quick reference to some of the terms used in this publication and the page on which you will find them.
Concessional: A loan is concessional if its terms (defined by the interest on the loan and its maturity) are more favorable to the borrower than the terms of loans provided commercially. The IMF lends to low-income countries at a subsidized interest rate of ½ of 1 percent a year, with 5-10 year repayment periods (see page 22).
Conditionality: The policy conditions that countries have to meet in most cases when borrowing money from the IMF (see page 23).
Contagion: Refers to the spread of a financial crisis from one country to another—a bit like a contagious disease spreads among individuals (see page 16).
Facilities: Types of IMF loan available to members (see pages 24-25).
Governance: Encompasses all aspects of the way a country or institution is run, including its regulatory framework and its accountability (see page 18).
IMF surveillance: Literally, oversight: under its Articles of Agreement, the IMF is responsible for overseeing the international monetary system and for exercising firm surveillance over the exchange rate policies of members. Surveillance is one of the core activities of the IMF—tracking economic developments, both globally and in individual countries and letting policymakers know if things are going off course or if policies need to be corrected (see page 14).
Macroeconomics: Macro comes from the Greek word meaning large. Thus, macroeconomics is concerned with the functioning of an economy as a whole and with such variables as total wealth, money, income, unemployment, inflation, and exchange rates (the value of currencies vis-à-vis other currencies). In contrast, microeconomics is concerned with the behavior of individual economic units, such as households and firms and the determination of relative prices (see page 14).
Sustainability: The IMF promotes policies that are designed to lead to sustainable growth—that is, lasting growth that is not interrupted by, for example, “booms and busts.” A country’s debt is sustainable if it can be serviced and repaid without jeopardizing the health of the economy (see page 18).
Transparency: Refers to how open an institution is with the public. The more transparent an institution, the more it keeps the public informed about its activities and methods of operation (see page 18).
For further information, the IMF has a glossary of financial terms on its website, www.imf.org.
Cover shows Brazilian futures market traders in São Paulo. Financial globalization is one of 10 events that have shaped the IMF (see Page 5).