The structure of the Fund: The functions and interrelationships of various Fund organs are discussed in the light of changes made under the Second Amendment of the Articles of Agreement
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The organization of the Fund is complex and subtle. It was the subject of much debate in the original negotiation of the Articles, and aspects of it have been re-examined on a number of occasions during the life of the Fund. The Committee of Twenty made certain recommendations that have been followed by the Board of Governors, and important changes have been made by the Second Amendment of the Fund’s Articles of Agreement. This article discusses how the various elements of the Fund are combined and how they function at the present time.


The organization of the Fund is complex and subtle. It was the subject of much debate in the original negotiation of the Articles, and aspects of it have been re-examined on a number of occasions during the life of the Fund. The Committee of Twenty made certain recommendations that have been followed by the Board of Governors, and important changes have been made by the Second Amendment of the Fund’s Articles of Agreement. This article discusses how the various elements of the Fund are combined and how they function at the present time.

Joseph Gold

The Second Amendment of the Articles of Agreement has made important changes in the organization of the Fund. The Amendment is the latest chapter in a history of debates on the ideal structure for the organization that began before the Bretton Woods Conference and have been resumed from time to time since then. The pressures responsible for continuing interest in the subject have been developments in the activities of the Fund and the great growth in its membership.

One outstanding problem has been the creation of two kinds of organs and the apportionment of powers between them. One kind of organ must deal primarily with the economic and financial problems that are the essential concern of the Fund as an economic and financial organization. The other kind of organ is intended to deal in addition with issues that are recognized at the outset as “political” because of their character or that become “political” because an impasse is reached in settling issues that are not thought to be innately of that character. The distinction between the two categories of issues, however, does not mean that compromises are confined to the “political” category.

The Articles now provide that the structure of the Fund shall consist of a Board of Governors, an Executive Board, a Managing Director, and a staff, as well as a Council, if it is called into being by a decision of the Board of Governors taken with an 85 per cent majority of the total voting power of the member states of the Fund. The Board of Governors and the Executive Board have appointed ad hoc and standing committees. The Interim Committee is a committee appointed by the Board of Governors. It will be discussed later in this article.

The Board of Governors and the Executive Board are organs of the Fund in the sense that they exercise powers and by doing so take decisions of the Fund that bind members and the Fund. The Council would be another organ if it were in existence. Committees are bodies that make recommendations and give advice but do not exercise powers and take decisions of the Fund. The one apparent exception is the so-called Committee on Interpretation of the Board of Governors for which the Articles provide. It can decide appeals from decisions of the Executive Board on questions of interpretation of the Articles. A decision of the Committee becomes a decision of the Board of Governors unless the latter decides, by an 85 per cent majority of the total voting power, to override the Committee’s decision. In the structure of the Fund, the Committee is unique not only because it takes decisions but also because it takes them without reference to weighted voting power. The Committee has not been appointed, but its absence has caused no inconvenience because there has been no occasion for it to consider any problem of interpretation.

Subject to the anomaly of the Committee on Interpretation, voting occurs only in organs. Notwithstanding its name, however, the Committee could be considered an organ of limited authority, whereupon the anomaly would disappear. Other committees reach their conclusions by the informal engineering of consent, and if they cannot reach a concord, they report all strains in their discord. The decisions of the two Boards (and of the Council) are taken, in principle, by reference to the weighted voting power of members of the Fund. The words “in principle” are appropriate because the normal practice of the Fund is to take decisions by means of the sense of the meeting without voting whenever possible. On a few occasions, this practice has not been observed, usually because an actor in the debate feels a sudden urge for drama, but these occasions rarely involve issues of high policy. Normally, weighted voting power is a deterrent to voting because the exercise of it may seem coercive to the minority.

Each member has 250 votes, because of the classical theory of the equality of states, plus one vote for each SDR 100,000 of quota, because of the financial and economic character of the Fund. The subscriptions of members to the Fund’s general resources are equal to their quotas. Each Governor or appointed Executive Director casts the number of votes allotted to the member that appointed him, and each elected Executive Director casts the number of votes allotted to the members whose votes counted toward his election. A majority of the votes cast is the basic majority for the adoption of decisions, but a special majority of the total voting power is necessary for many decisions. The Second Amendment has reduced the number of special majorities, but has increased substantially the categories of decision for which special majorities are required. One reason for this proliferation is the number of enabling powers in the Second Amendment. Another reason is the diffusion of financial and economic strength in the world and the solidarity of some groups of members. These developments have been responsible for insistence on the necessity for broad support for certain decisions, or, to put it less elliptically, for insistence on a power to veto proposals to adopt these decisions.

Board of Governors

The Board of Governors, the topmost tier in the structure of the Fund, is composed of one Governor and one Alternate appointed by each member, who serve until such time as the member makes a new appointment. Normally, a member appoints as its Governor its minister of finance or the governor of its central bank, but a member has full freedom in making an appointment.

A few powers, most of which can involve obvious political considerations, such as relative voting power, can be exercised only by the Board of Governors. All other powers not conferred directly by the Articles on the Executive Board or the Managing Director are vested in the Board of Governors, which may delegate some or all of them to the Executive Board. A delegated power can be withdrawn, but the Board of Governors cannot withdraw powers conferred directly by the Articles on the Executive Board or the Managing Director.

The Board of Governors has met annually, but the Second Amendment no longer requires annual meetings. Special meetings can be convened, but never have been. The Board of Governors can take decisions without meeting, and frequently does. An annual meeting is an occasion on which a few decisions are taken, but on which the more important activity is the statement by Governors of their views on the policies of the Fund and on the direction it should take. The Interim Committee, in which many of the same views are presented, has not diminished this activity, probably because publicity is given to speeches delivered in the Board of Governors but not in the Interim Committee.

Executive Board

The Executive Board consists basically of five Executive Directors appointed by the five members having the largest quotas, 15 Executive Directors elected at intervals of two years by the rest of the membership according to constituencies that they form as the result of negotiation, and the Managing Director as Chairman. Geography is an influence in the formation of constituencies, but not the only one. Some constituencies consist of both developing and developed members, or members using the Fund’s resources as well as those providing the resources in use. This catholicity probably increases the excitements of the office of an Executive Director, but undoubtedly increases the problem of deciding which way to throw his weight, unless he concludes that the variety of opinions in his constituency enlarges his freedom of action.

An elected Executive Director, as noted already, casts the number of votes that counted toward his election. In order to strike a balance between the desirability of a rough equality in the voting power of elected Executive Directors and reasonable freedom for members to form constituencies, the minimum number of votes that a candidate must receive and the maximum that he may retain are established for each election.

The number of elected Executive Directors can be increased or decreased at each election. If the five members with the largest quotas do not include the two members that have contributed to the Fund the largest absolute amounts of resources in outstanding use by other members during the two years preceding an election, these members also may appoint Executive Directors. At the moment, Saudi Arabia has appointed a sixth Executive Director. The original purpose of the provision for additional appointed Executive Directors was to ensure that, if substantial outstanding use was being made of the resources contributed by only some of the five members with the largest quotas, their Executive Directors would not be isolated in a company consisting largely of the Executive Directors of members making use of the resources. The provision recognized that the number of Executive Directors on each side of an issue can have an effect whatever their voting strength may be.

Unlike the five members with the largest quotas, a member able to appoint an additional Executive Director is not required to exercise this right, and instead may enter the election. If a member does exercise its right, it may agree with individual members of its former constituency that the Executive Director it appoints shall cast the number of votes allotted to them. The purpose of this provision is to permit a constituency to go on cohering, wholly or partially, if that is the wish of members of the constituency or of some of them.

If one or two additional Executive Directors are appointed, the 15 elected Executive Directors are automatically reduced to 14 or 13 unless a decision is taken to prevent this reduction because of the hardship that it would create. The legal provisions are obviously designed to give effect to a policy of maintaining a compact Executive Board that can act collegially and therefore promptly, but other considerations can affect the number of seats on the Board.

The status of an Executive Director is a subtle one. He is in some ways an official of the Fund, but in the discharge of his functions he does not owe his duty to the Fund. At the same time he is not the representative of the members of his constituency, because he has no mandate, by virtue of his position, to bind them by his actions. His freedom to take his own position on all issues is illustrated by the provision that enables a member that has not. appointed an Executive Director to send a representative to a meeting of the Executive Board when it is considering a request by the member or a matter that particularly affects it. Another illustration of the character of his position is that although he casts the number of votes allotted to members of his constituency, he can cast them only as a unit.

An Executive Director is a channel of communication between the Fund and the members of his constituency, but whether and how he obtains guidance or instructions from them on the activities of the Fund is left entirely to him and them. It would be simplistic in these days to rely on some decisions of January 1948 for the generalization they suggest that the Managing Director proposes while the Executive Board disposes and then calls on him to account for the execution of its dispositions. A complex system of communication among Executive Directors, Managing Director, and staff is a feature of daily life.

The Executive Board is in continuous session and is responsible for conducting the business of the Fund. The Board meets as often as is required to conduct business, and ordinarily it meets several times a week. It is through the Executive Directors that members are involved in all the affairs of the Fund, so that in a practical sense members constitute the organization and control it even though legally it has an international personality distinct from them. The Executive Board is more than the executive organ of the Fund. Through the persons who compose it, members are in permanent consultation among themselves and with the Managing Director and staff.

The Executive Board exercises the powers that are conferred directly on it by the Articles and the powers delegated to it by the Board of Governors. The maximum delegation has been made. The powers exercised by the Executive Board relate to all activities of the Fund, including its regulatory, supervisory, and financial activities. The breadth of these powers, the links with members, and continuous session give the Executive Board the central role in the Fund. Continuous session, however, prevents an Executive Director from performing official functions requiring continuous service in his own country. This is one reason why there has always been some support for the establishment of an organ or body composed of persons with national responsibilities.

Managing Director and staff

The Executive Board selects the Managing Director, who, in addition to acting as Chairman of the Executive Board, conducts the ordinary business of the Fund under the direction of the Executive Board. He is also the chief of the staff, and, subject to the general control of the Executive Board, is responsible for the organization, appointment, and dismissal of the staff.

The Managing Director and staff, in the discharge of their functions, owe their duty entirely to the Fund. Each member must respect the international character of this duty. Members must refrain from attempts to influence any person on the staff in the performance of official duties, but the Managing Director is not insulated from such influence because it is an aspect of his role to receive and to evaluate the proposals of members that are transmitted to him directly or through Governors or Executive Directors. His function, both as Managing Director and as Chairman of the Executive Board, in achieving a consensus on proposals submitted to the organs of the Fund, notwithstanding the diversity of voting power and interest among members, gives him a unique position in the structure of the Fund.


The idea of the Council has a genealogy that stretches back to the plans from which the Fund emerged. There has been repeated support for an organ of a political character. The word “political” in this context has several meanings. One meaning of a political organ is that it is composed of persons in political life in their own countries. It has been argued that such an organ would be able to exercise firmer authority, or would respond more understandingly to problems because often they are not solely economic or financial, or would be able to conduct negotiations among members more effectively. Whatever the argument that has been made for a political organ, the purpose has been to strengthen the Fund.

In the earliest discussions of the structure of the Fund, the United Kingdom advocated an Executive Board composed of persons with official responsibilities in their own countries and therefore not in continuous session at the headquarters of the Fund. The preference of the United States for an Executive Board in continuous session prevailed. One of the compromises, however, was easy access to the Board of Governors on appeal from decisions of the Executive Board, which, it was expected or hoped, would concentrate on the technical aspects of the financial and economic work of the Fund and would forbear from political considerations. The Board of Governors, it was thought, might provide the necessary corrective by viewing decisions through political pince-nez. The original Articles provided for the convocation of a special meeting of the Board of Governors at the request of no more than five members or by members having one fourth of the total voting power. Even under the Second Amendment, the number of members that can require a special meeting has been increased, but they are as few as 15. At the beginning of 1979, membership in the Fund had grown to 138 countries.

The Committee of Twenty agreed that a political organ should be created. On that occasion the proposal was advanced by the United States, in the hope that a more muscular political entity would press members to follow more symmetrical adjustment policies. The Council would be established with a place in the structure of the Fund between the Board of Governors and the Executive Board.

Executive Directors and voting power

(As on 1 May 1979)

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The other Department of the Fund is the Special Drawing Rights Department, in which members have the same votes and almost the same percentage of the total. Kuwait is the only member that does not participate in the Special Drawina Riahts Department.

Votinagpower varies on certain matters pertaining to the General Department according to use of the Fund’s general resource in that Department

Percentages of total votes of members in the General Department (424,612). The sum of the individual percentages may differ from the percentages of the totals because of rounding.

Figures in parentheses are the total votes allotted to the member count.

This total does not include the votes of China, Egypt, Democratic Kampuchea, and South Africa, which did not participate in the 1978 Regular Election of Executive Directors, and of Cape Verde, Djibouti, and Dominica, which became members after that election. The combined votes of those members total 14,097—3.32 per cent of those in the General Department and 3 34 per cent of those in the Special Drawing Rights Department, respectively.

At one time it seemed that the Council would come into existence as soon as the Second Amendment became effective, but the Council has not been summoned forth, mainly because of the opposition of some members and the neutrality of others. The reasons are complex, and include an instinctive suspicion that “political” may mean “unprincipled,” and a preference for the Executive Board as the organ that should conduct the business of the Fund with unimpaired authority. The substantive powers of the Council would be delegated to it by the Board of Governors in accordance with the terms of reference of the Council, which are to supervise the management and adaptation of the international monetary system, including the operation of the adjustment process and developments in global liquidity, and to review, as part of the Council’s concern with liquidity, the transfer of real resources to developing members. The unavoidable effect of a delegation of powers to the Council would be to reduce the delegation to the Executive Board, or to result in concurrent powers of the Council and the Executive Board, with decisions of the Council negating inconsistent decisions of the Executive Board.

At least one former advocate of the Council continues to support it. Mr. Paul Volcker has reiterated a plea for it in his Fred Hirsch Memorial Lecture of November 9, 1978:

I have long felt that if that work [management of the international monetary system] was to proceed with full effectiveness, the effort of the international bureaucracy—however able, and it is very able—needs to be reinforced by more active regular participation by politically responsible officials of member governments. That is, of course, the rationale of the Council authorized by the new articles. To a degree, the function has been performed on an interim basis by the…[Interim Committee]. But it would seem to me useful, more than symbolically, for that body to assume now full legitimacy by transforming itself formally into the Council, and renewing the sense of commitment to develop its surveillance function.

The Council would consist of a Councillor appointed by each constituency that appoints or elects an Executive Director. The model of the Executive Board has proved to be the only acceptable one whenever a new organ or body within the structure of the Fund has been contemplated for a purpose connected with the international monetary system as a whole. The composition of the Executive Board is considered “representative” because it is settled by treaty and has been found workable. The Committee of Twenty and the Interim Committee were precedents based on this model when the provisions dealing with the Council were drafted.

The resolutions of the Board of Governors establishing the two Committees have been precedents for other aspects of the Council. For example, a Councillor must be a Governor of the Fund, Minister, or a person of comparable rank. For each constituency, there may be a substantial number of Associates. An argument for the Council has been that it would be slimmer than the Board of Governors and therefore capable of more vigorous action. Members have been tenacious in demanding Associates, however, even though their attendance produces an assembly closer to a parliament than a steering group. Members have been anxious to have their officials present in order to influence opinion when momentous decisions are taken, although only Councillors will be able to vote. A formal justification for so many Associates is that a Councillor, unlike an Executive Director, need not cast as a unit the number of votes allotted to all members in his constituency. The case for “split” voting was that the Council, as a political organ, would be closer in spirit to the Board of Governors than to the Executive Board.

“whenever a new organ or body within… the Fund has been contemplated” the Executive Board has been accepted as the best model because it “is considered ‘representative’” of the full membership and “because it is settled by treaty and has been found workable. “

Interim Committee

The Interim Committee on the International Monetary System was established by a resolution of the Board of Governors adopted on October 2, 1974. It is an “interim” body because it was intended to function after the liquidation of the Committee of Twenty and before the Council comes into being. Much that has been said about the Council applies to the Interim Committee as well, because, as noted already, various aspects of the provisions relating to the Council are derived from the resolutions of the Board of Governors. Among these aspects are the terms of reference, composition of the Committee, and the qualifications for membership of it.

The Committee, like the Council, is intended to strengthen the Fund by providing it with an entity that can legitimately take political considerations into account in its activities. This function is within the province of the Board of Governors also, but its membership is as large as the membership of the Fund. To convene it is a complicated undertaking. Moreover, the size of the Board of Governors encourages formal addresses instead of debate. Even though a meeting of the Interim Committee is not a cozy gathering, unless the Committee meets in restricted session, it is much smaller than a meeting of the Board of Governors, at least when the hall is full. Furthermore, in order to promote efficient proceedings, the resolution provides that participation in the discussion of each item on the agenda shall be limited to one person from each constituency.

The existence of the Interim Committee and the possible existence of the Council help to explain why the Articles no longer require an annual meeting of the Board of Governors. The greater ease in convening the Committee has made it possible for the Committee to meet more than once a year. So far, however, there has been no move to abandon the tradition of an annual meeting of the Board of Governors.

Related reading list

  • Armand Van Dormael, Bretton Woods: Birth of a Monetary System (New York, 1978).

  • Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972).

  • Joseph Gold, Voting Majorities in the Fund: Effects of Second Amendment of the Articles, IMF Pamphlet Series, No. 20 (Washington, 1977).

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  • Joseph Gold, “‘Political’ Bodies in the Fund,” in legal and Institutional Aspects of the International Monetary System: Selected Essays (Washington, 1979), Chap. 6.

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  • International Monetary Fund, Proposed Second Amendment to the Articles of Agreement: A Report by the Executive Directors to the Board of Governors, (Washington, 1976), Part II, Chap. M. N. O. P., and Annex.

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  • J. Keith Horsefield, The International Monetary Fund, 1945–1965: Twenty Years of International Monetary Cooperation (Washington, 1969), Vol. I.

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Finance & Development, June 1979
Author: International Monetary Fund. External Relations Dept.