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During our recent interview, we spoke to Pauline Muscat, Manager, International Financial Institutions Office during which she explained in detail the role of the International Monetary Fund.

What is the International Monetary Fund?

The International Monetary Fund (IMF) is an international organisation which seeks to ensure the stability of the international monetary system (see footnote) through: monitoring of the world economy and the economies of individual members; providing financial assistance to countries experiencing difficulties; advising members as necessary.

Who can join?

As of July 2020, the IMF consists of 189 members. Any country can join provided it meets certain obligations. On the one hand, a prospective member is required to regularly share domestic economic information with the Fund. Another important obligation is that the country must contribute a one-time financial commitment or quota to the Fund, the amount depending on how rich the country is. This contribution can be reviewed from time to time.

How is the IMF financed?

The total of members’ quotas provide the Fund with a common pool of financial resources which can be accessed by its members in case of need. A country that is no longer in a position to pay for its imports of goods and services, or to service its foreign debt can seek financial help from the IMF. When granting this assistance, the IMF will work with the country to ensure that the money is spent responsibly. This will safeguard both the IMF and the borrower by ensuring that the loan is repaid and that the borrower’s financial problems are resolved.

What was the IMF’s response to the COVID-19 crisis?

The IMF responded with unprecedented speed to the pandemic. First and foremost, the Fund increased its financial assistance to help its members combat the crisis and protect the lives and livelihoods of citizens, particularly the most vulnerable. On an ongoing basis, the Fund tracks the economic responses of countries to limit the human and economic effects of the COVID-19 crisis. Where necessary, it imparts its advice to the authorities.

What is Malta’s relationship in the IMF?

Malta has been a member of the IMF since 31 July 1968 and over the years has established a strong relationship with the institution. Our country has always been a strong supporter of IMF initiatives – particularly those that aim to provide assistance to poor countries. The Minister for Finance represents Malta in the Fund with the Governor of the Central Bank of Malta as substitute in his absence. The Minister and a representative from the Bank participate on a regular basis in international meetings organised by the IMF.

How does Malta benefit from IMF membership?

As with other member countries, Malta can request financial assistance from the IMF if it ever requires – which Malta has so far not needed to do. Our country benefits from bilateral meetings with IMF staff who visit Malta on a regular basis as part of its Fund’s monitoring function and always welcomes any Fund advice that is forthcoming. During their visits, IMF staff hold discussions on our economy with the Maltese authorities and with other stakeholders.

What is the role of the Bank’s International Relations Office vis-à-vis the IMF?

The IMF is an extremely dynamic institution, continually adapting to incessant global developments particularly in times of a crisis as is the current pandemic. It is essential for our office to keep track of any new developments and of IMF responses in this respect, particularly should these have potential implications for Malta. The relevant authorities are kept updated and, whenever requested, draft recommendations are presented by our office to the Ministry for Finance subject to the approval of the Bank’s Governors. The International Relations Office also undertakes the necessary preparations for the regular bi-annual international meetings organised by the IMF which are usually attended by the Minister for Finance and a Bank representative (Governor/Deputy Governor).