How Does a Country Become Part of the International Monetary Fund?

The International Monetary Fund was established in July 1946 with 46 members. Its goal was to stabilize international exchange rates as well as help reconstruct the world's international payment system. The member countries contribute to a pool of funds that can be borrowed temporarily by countries with payment imbalances.

Since then, the organization's members have more than quadrupled to 185 countries (with Montenegro being the most recent member to join, in January 2007). The IMF has steadily gained influence as its member list increases.

But how does a country go about joining the International Monetary Fund, and why would it want to?

Any country may apply to be a member of the IMF. An application is first considered by the IMF's Executive Board, which sends a report to the Board of Governors of the IMF with its recommendations.

This "Membership Resolution" will include recommendations for the country's IMF quota (which determines the cost of its subscription, its voting weight, its ability to borrow from the IMF, and its Special Drawing Rights). The Board of Governors will decide whether to adopt the Membership Resolution.

If the Board of Governors approves the resolution, the country will have to take measures under its own law that would let it become a member of the IMF, fulfill its duties, and abide by the regulations.

Countries may also withdraw by similar means, although this rarely occurs.

The United States is the only country with veto power.

The benefit that would occur to countries that join is access to financial assistance from the IMF pool in the case of serious financial or economic difficulties. States that have balance of payment problems can also request loans to bridge the gap between state income and operational costs.

In order to receive funds, these countries often have to agree to launch certain reforms (often called the "Washington Consensus," a list of reforms including fiscal policy discipline, tax reform, privatization of state enterprises, trade liberalization, deregulation, and legal security for property rights).

Critics of the IMF have long said the institution supports military dictators friendly to United States and European business interests. IMF supporters say that economic stability is necessary for democracy, but critics point to instances where democratized countries fell to dictatorships after receiving funds from the IMF.

The IMF remains controlled by the Western Powers, although this is another convention that is being questioned. The current managing director of the IMF is Dominique Strauss-Kahn of France.

Reference: International Monetary Fund Web site