The need for economic recoveries of countries devastated by mass destruction during the World War-II compelled the establishment of an international monetary and financial institution. Therefore, the United States of America invited 44 countries of the world to the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, on July 1, 1944.

This conference decided upon the Articles of Agreement of the Fund which was signed by 27 Governments on December 27, 1 945 and the Fund started its operations from May 1946. The purposes of the IMF, as defined in the Articles of Agreement, are as under:
(i) To promote international monetary cooperation and expansion of international trade.
(ii) To promote exchange stability and maintain orderly exchange arrangements and avoid exchange depreciations.
(iii) To assist in establishment of a multilateral system of payments in respect of current transactions between members, and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
(iv) To give confidence to members by making general resources of the fund temporarily available to them under adequate safeguards, thus providing them with the opportunity to correct maladjustments in their balance of payments without resorting to measures destructive for national or international prosperity.
In order to carry out these purposes the IMF sells foreign exchange to its members so that they can meet the difficulties in the balance of payment. it advises the governments on financial problems and recommends anti-inflationary measures in respect of investments and bank credits, and government spending and taxation The Fund’s financial assistance takes the form of a foreign exchange transaction, and each member of the Fund is assigned a quota which approximately determines its voting power and the amount that it may draw in foreign exchange from the Fund.

Each member undertakes to establish and maintain an agreed par-value for its currency, and to consult the Fund on any change of it—as much as 10 per cent in the initial parity. Further, the subscription of each member is equal to its quota, and is payable partly in SDRs and partly in member’s own currency. Originally, the SDR was equal to one US dollar but since 1974 the value has been changed and now the valuation is linked with a basket of some 05 currencies, being those of members contributing significantly in the world export trade.
Administration of the Fund:

The Fund is administered by a Board of Governors consisting of one Governor and one Alternate Governor appointed by each member-country. These nominees are generally the Ministers of Finance or the Governors of the Central Banks of their respective countries. The Board meets annually either in Washington or in a leading city of some other member-country.
The Board of Governors has delegated the powers of the operation of the Fund to the Executive Board comprising of 24 Executive Directors, 5of whom arc appointed by the members having the largest quotas, and tile other 19 are elected by tile Governors of the remaining members these Executive Directors elect a Managing Director who is an ex-officio Chairman of the Executive Board and is the Chief of the operating staff of the Fund.

The Board usually meets several times each week and carries out the work largely on the recommendations of the Fund management and staff.

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