Origin and evolution of the role of the International Monetary Fund
The International Monetary Fund (IMF), headquartered in Washington, D.C., was established in 1945 following the agreements reached at the Bretton Woods Conference of 1944, attended by the Allied powers in the Second World War. The aim was to prevent the recurrence of severe economic crises such as the Great Depression of the 1930s.
The IMF currently has 191 member countries. Italy has been a member since 27 March 1947.
Statutory purposes of the IMF:
- to promote international monetary cooperation.
- to facilitate the expansion of international trade.
- to promote stability and orderly exchange arrangements and to avoid competitive devaluations.
- to instill confidence in member states by making the Fund’s resources temporarily available to them, under adequate safeguards, to address balance of payments difficulties.
- in connection with the above purposes, to shorten the duration and lessen the degree of disequilibrium in the balance of payments of member states.
With the outbreak of the debt crisis in the early 1980s, the IMF effectively became the institution responsible for managing financial shocks at the global level through assistance programs that prioritized policies of trade and financial liberalization, privatization, and market deregulation.
Organization
The International Monetary Fund is a universal organization composed of 191 member states. The Board of Governors is the Fund’s highest decision-making body and consists of one Governor (generally the Minister of Finance) and one Alternate Governor appointed by each member country. The Board of Governors may delegate its powers to the Executive Board, apart from certain reserved powers. It normally meets once a year at the Annual Meetings. For Italy, the Minister of Economy and Finance participate as Governor, and the Governor of the Bank of Italy serves as Alternate Governor. The Bank of Italy and the Ministry of Economy and Finance also contribute to determining the positions of the Italian Executive Director on the Fund’s Executive Board.
The International Monetary and Financial Committee (IMFC) is the advisory body that defines the IMF’s strategic direction. It is composed of the twenty-four-member countries represented on the Executive Board, generally by their Ministers of Finance.
The Executive Board is the Fund’s executive body, responsible for the administration of the institution, and is composed of 25 Executive Directors. The Board operates in continuous session, oversees day-to-day operations, and decides on the disbursement of funds. It is supported by the IMF staff and is headed by the Managing Director, who is elected for a five-year term (renewable).
Since 1 October 2019 and re-elected for a second five-year term starting on 1 October 2024, the Managing Director of the IMF is Kristalina Georgieva (born in Sofia on 13 August 1953), a Bulgarian economist and politician. She served as Chief Executive Officer of the World Bank Group from 2 January 2017 to 30 September 2019, and as Acting President of the World Bank Group from 1 February 2019 to 4 April 2019. During the Barroso Commission, she was European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response from 2010 to 2014; from 1 November 2014 to 31 December 2016, she served as Vice-President of the European Commission and European Commissioner for Budget and Human Resources in the Juncker Commission.
In 2001, the Independent Evaluation Office was established as a permanent structure within the IMF, independent of management and staff, with oversight and evaluation tasks.
Voting system and Special Drawing Rights
Although different majorities are required depending on the issues under evaluation, the Executive Board rarely resorts to formal voting and generally reaches decisions by consensus. Voting power within the Board is proportional to the number of quotas subscribed by each country, which are calculated based on specific indices reflecting several economic factors, including GDP, current account transactions, and official reserves.
IMF quotas (normally subject to review every five years) are expressed in Special Drawing Rights (SDRs), the IMF’s unit of account, which is based on a weighted basket of five currencies: US dollar, euro, yen, British pound and Chinese yuan.
The IMF regularly conducts general quota reviews. The 15th Review, concluded in 2020, resulted in no increase in quotas, while the 16th Review — completed in December 2023 —approved a 50 per cent increase, bringing total quotas to SDR 715.7 billion (approximately USD 320 billion).
Italy’s quota amounts to SDR 15.07 billion, equal to 3.16 per cent of the total, which confers 152,159 votes, corresponding to 3.02 per cent of total voting power.
The surveillance activity
The IMF’s surveillance activity is carried out both with respect to individual countries (bilateral surveillance) and at the global and regional levels (multilateral surveillance), identifying potential sources of domestic and international vulnerability and proposing the necessary policy adjustments.
Financial assistance
The Fund provides financial assistance to member countries facing temporary balance of payments difficulties through arrangements agreed with the authorities, aimed at defining the economic policy measures and reforms needed to overcome the crisis. Over the years, the Fund has developed a wide range of financing instruments to address the diverse needs of its member countries.
The IMF also plays an active role in major multilateral initiatives aimed at facilitating debt restructuring for developing countries, such as the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), which provide grant resources for debt cancellation. Following the suspension of external debt service under the Debt Service Suspension Initiative (DSSI), launched to address liquidity problems during the COVID-19 pandemic, the IMF — together with the World Bank — has supported the G20 initiative on the Common Framework for Debt Treatments beyond the DSSI, promoted by the Saudi presidency in 2020.
In the context of the general allocation of Special Drawing Rights in August 2021, Italy committed to channel 20 per cent of its SDR allocation—equivalent to approximately USD 4 billion—to the most vulnerable economies. Of this amount, around USD 1.4 billion was allocated to the Poverty Reduction and Growth Trust (PRGT), which provides concessional financing to the poorest countries. In addition, grant resources were provided up to a total of EUR 101 million, equivalent to EUR 83 million in Special Drawing Rights, in five equal annual instalments for each year from 2022 to 2026. These commitments were approved by Parliament through the 2022 Budget Law. The remaining SDR 1.9 billion (approximately USD 2.6 billion) was contributed to the new Resilience and Sustainability Trust (RST), established by the IMF at the end of April 2022, which is intended for a broad group of countries including low-income countries, vulnerable middle-income countries, and small states—over 140 countries in total. In addition, a further loan of SDR 31.5 million was provided from the State budget. These commitments were approved by Parliament through the 2023 Budget Law.
The objective of the Trust is to provide long-term financing aimed at reducing long-term risks to balance stability of payments, with a primary focus on risks related to climate change, as well as on the prevention of and preparedness for future pandemic crises.
Technical assistance and capacity development
The IMF provides technical assistance and training to member countries in several thematic areas, including fiscal, monetary, statistical, and legal matters. The largest share of IMF resources devoted to technical assistance is directed towards strengthening member countries’ capacity to design and implement more effective economic policies and to develop sound economic and financial institutions (capacity building).
Italian staff at the International Monetary Fund
The IMF employs approximately 3,900 staff members from 150 countries.
At the end of 2023, Italian nationals employed at the IMF numbered 138 (46 women and 92 men), out of a total of 3,912 IMF employees, corresponding to 3.5 per cent of the total.
Italy is traditionally represented on the Executive Board by its own Executive Director, who is nominated by the Minister of Economy and Finance and elected by the Governors (Ministers of Finance or Central Bank Governors) of the group of countries forming Italy’s constituency, which for several years has included Albania, Greece, Italy, Malta, Portugal, and San Marino. Starting from November 2024, Italy’s Executive Director (ED) is Dr Riccardo Ercoli. The Italian Office also includes an Alternate Executive Director (traditionally of Greek nationality), two Senior Advisors (of Italian nationality, one appointed by the Ministry of Economy and Finance and the other by the Bank of Italy), four Advisors (three of Italian nationality—two from the Ministry and one from the Bank—and one of Portuguese nationality), and two Administrative Assistants (currently one of Italian nationality and one of Peruvian nationality, normally drawn from the IMF staff).
The Italian Executive Director represents Italy and its constituency in all multilateral and bilateral relations within the IMF, enjoys a degree of decision-making autonomy, and defines Italy’s position on major policy issues by consulting and informing, as appropriate, the Minister and the Director General of the Treasury and, more frequently, the Head of the Directorate for International Financial Relations.