International Monetary Fund, IMF
The IMF is an important forum for the Riksbank’s international cooperation. The IMF promotes international monetary cooperation and macroeconomic and financial stability. Its purpose is to promote economic growth and better standards of living in the world, and to contribute to a balanced increase in world trade.
The IMF has three main tasks:
- surveillance of member countries’ economies,
- lending for balance of payments support, and
- technical assistance.
The main focus of the work is on the surveillance of the member countries’ economic policies. On the basis of this surveillance, the IMF issues policy advice and recommendations regarding economic policy and financial reforms with the aim of preventing crises. When crises nevertheless occur, the IMF’s role is to provide advice on how the economy can be improved, and to provide conditional financial assistance to temporarily cover the balance of payments needs and thereby make it easier for the countries affected to stabilise their economies. The aim is to create the conditions for sustainable and stable economic growth. Countries that conduct an essentially sound economic policy can also be assured they will receive loans if they suffer balance of payments problems due to external events. The IMF primarily funds its lending using capital that the member countries provide in relation to the size of their economies, and this capital also forms the basis for the countries’ voting power in the IMF’s decision-making bodies. The IMF’s technical assistance primarily aims to support the build-up of institutions, laws and regulations for the financial sector in low and lower-middle income countries.
Once a year, the IMF also sends a delegation to Sweden to assess the Swedish economy and the policy conducted. This is referred to as an Article 4 Consultation and it usually concludes with the IMF delegation presenting a statement on the Swedish economy. The report that is subsequently drawn up on the basis of this assessment is then discussed by the IMF’s Executive Board. Most of the member countries have also allowed the IMF to assess their financial sectors in Financial Sector Assessment Programs (FSAPs).
Board of Governors
The IMF’s highest decision-making body is the Board of Governors, on which each member country has a representative, usually the country’s central bank governor or finance minister. The IMF Governor for Sweden is the Governor of the Riksbank. The Board of Governors has delegated the right to make decisions on almost all issues to the Executive Board.
The member countries of the IMF are represented by a total of 24 members on the Executive Board, who meet several times a week. Most of the member countries are grouped into constituencies that share a joint representative on the Executive Board. The United States, Japan, Germany, the United Kingdom, France, Russia, China and Saudi Arabia have their own representatives by virtue of their voting power. Sweden, which controls 0.93 per cent of the votes in the IMF, is part of the Nordic-Baltic constituency, which covers eight countries and has 3.2 per cent of the total votes.
The International Monetary and Financial Committee (IMFC)
The IMFC is an advisory committee to the Board of Governors and also provides policy guidance to the IMF’s Executive Board. The IMFC does not make any formal decisions. The Committee includes finance ministers or central bank governors from the larger countries and from the countries representing the various constituencies. In addition, a number of international institutions participate as observers in the IMFC’s meetings. The IMFC meets twice a year, in the spring and in connection with the IMF’s Annual Meeting in the autumn, and issues communiqués presenting the conclusions from the respective meetings. These communiqués provide strategic guidance and are therefore very important to the work of the IMF ahead of the next meeting.
Coordination in the Nordic countries, Baltic countries and EU
As far as Sweden is concerned, the forms of cooperation within the IMF mean that, in purely practical terms, much of the IMF work is done within the framework of the Nordic-Baltic constituency. The constituency is the forum in which joint standpoints on important policy issues to be considered by the Executive Board are drawn up on an ongoing basis. The Nordic-Baltic Monetary and Financial Committee (NBMFC) is the constituency’s highest policy-making body. It is made up of deputy central bank governors and state secretaries in the ministries of finance of the Nordic and Baltic countries. These representatives meet twice a year to discuss current IMF issues. A representative is elected to chair the NBMFC and the IMFC in accordance with a set rotation within the constituency. The Riksbank is the Swedish contact authority for the IMF and the other countries in the constituency. The Riksbank’s IMF work also includes coordinating Swedish positions with the Ministry of Finance. Other authorities, such as the Swedish National Debt Office and Finansinspektionen, are involved as and when necessary.
On the more important IMF issues, there is also informal coordination of the EU countries’ positions within the framework of the Economic and Financial Committee (EFC), and its sub-committee for IMF issues (SCIMF), and also within the European System of Central Banks (ESCB) with its international committee (IRC).