What are the Functions of IMF?



IMF performs the following functions.

(i) Providing short terms credit to member countries for meeting temporary difficulties due to adverse balance of payments.

(ii) Reconciling conflicting claims of member countries.

(iii) Providing a reservoir of currencies of member-countries and enabling members to bor­row on another's currency.

(iv) Promoting orderly adjustment of exchange rates.

(v) Advising member countries on economic, monetary and technical matters.


IMF is a pool of central bank reserves and national currencies that are available to member countries under specified conditions.

The capital of the IMF consists of the aggregate of the quotas allotted to the member countries member can pay its quota in its national currency.

The IMF utilizes its gold holdings to acquire dollars and other currencies for its opera­tions.


The IMF has shown great interest in the economic development of under development countries. It has made a steady progress towards the establishment of a multilateral system of payment in respect of current transactions.

It has simplified the multiple exchange system. The IMF has promoted exchange rate stability and expansion of world trade.

It has provided an excellent forum for the discussion and solution of economic, fiscal and financial problems having an international impact.

The IMF has granted undue credit to some countries. Its insistence on devaluation in some cases proved ill advised. It has followed a week policy in the fixation of exchange rate.

It has been charged as being partial to developed countries and not helping adequately the under developed countries.

Asian Development Bank (ADB)

The ADB was established by Asian countries to foster the economic growth and coopera­tion in the region of Asia and the Far East, including the South Pacific. Asia has about 30 per cent of world population.

But the pace of development is slow and inadequate to support the popula­tion.

There was need for institution to mobilise additional resources and to attract investment from outside the region. ADB was set up to meet this need. It started functioning on December 19, 1996.


The objectives of the ADB are as under:

(i) To promote economic cooperation and growth in Asia and the Far East.

(ii) To encourage member countries to work both collectively and individually.

(iii) To promote economic growth of member countries by reducing poverty.

(iv) To provide technical assistance in the planning and execution of projects of member countries.

(v) To support human development activities such as education, health, nutrition, popula­tion planning, etc.

(vi) To provide support for policy reforms in order to create more opportunities for the poor.