International Monetary Fund
Published Date:
March 2000
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Balance of payments

The relationship between the amount of money a nation spends abroad and the income it receives from other nations. This includes not only a nation’s balance of trade, but also debts, investments, and other movements of capital between nations.

Bilateral assistance

Assistance in the form of loans, grants, food, equipment, and technical expertise that one nation provides directly to another.


A decrease in the value of a nation’s currency in relation to other currencies. If a country decides to devalue its currency by 50 percent, for example, its products will cost half as much in other countries, but its people will have to pay twice as much for products from abroad. Theoretically, then, devaluation should increase a country’s exports and reduce its imports.

Enhanced Structural Adjustment Facility (ESAF)

A type of long-term IMF loan that has a very low interest rate (0.5 percent per year). An ESAF is designed to help developing countries that are undertaking economic reforms to strengthen their balance of payments and improve their prospects for growth. ESAF was replaced in late 1999 by a new, enhanced program called the Poverty Reduction and Growth Facility.

Exchange rate

The proportional relationship between one national currency and another national currency when they are traded. If a nation is able to exchange its currency for foreign currency at the official exchange rate without many restrictions, its currency is judged to be convertible. The IMF favors currency convertibility as it facilitates international trade and thereby growth and higher living standards.

Good governance

Government and corporate policies that reflect fairness, openness, and impartiality. The IMF promotes all aspects of good governance, including ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption.

Gross domestic product (GDP)

The total value of products and services produced by a country (net of inputs). It is the most important measure of a country’s overall economic activity.

Market forces

A market forms for the purpose of buying and selling a product, service, or financial asset, the price of which is determined by market forces, that is, the underlying influences affecting its supply and demand.

Multilateral assistance

Assistance in the form of loans, grants, food, equipment, and technical expertise provided to developing countries by such international organizations as the Food and Agriculture Organization, the International Labor Organization, the IMF, the United Nations Development Programme, and the World Bank.


Turning over publicly owned enterprises to private ownership.

Structural adjustment

A framework for economic reform that includes liberal trade and investment policies, open systems of pricing and exchange, agricultural policies that promote competition, reformed tax systems, and greater reliance on market forces.

Trade liberalization

An easing of restrictions on international trade, including the reduction or elimination of quotas, tariffs, and excessive licensing practices.


Openness, honesty, and accountability in public and private transactions.

Wage and price controls

Limits placed on wages and salaries and on the amounts that can be paid for certain goods and services. Limiting wages can reduce government spending, and limiting prices can increase demand but also can weaken incentives to produce goods.

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