The fiftieth anniversary of the IMF in 1994 has been the occasion for a number of conferences and related studies that have considered how the institution may evolve in the future. Moreover, change's to the international economic environment related to enhanced financial market integration and vastly expanded capital flows have prompted calls from many quarters for a systematic reassessment of the financing role of the IMF. The desirability of such a study has been heightened by recent events, including most notably the European exchange rate crises of 1992-3 and the Mexican economic and financial crisis of 1994-5.

This pamphlet focuses on one aspect of this overall reassessment: the rationale for IMF financial support and the relationship between this support and the surveillance carried out by the IMF in seeking to correct maladjustments of member countries' balance of payments.

The pamphlet is based on a paper prepared by the authors as part of the response to the Interim Committee's request for a review by the Executive Board of the role of the IMF. The authors would like to thank Peter Clark, Donald Mathieson, and Steven Symansky of the Research Department for discussion and comments; colleagues in other departments also provided valuable comments on earlier drafts. Claire Adams provided statistical and computational assistance, and Rosalind Oliver typed numerous drafts as well as the final revison of the pamphlet. The pamphlet was edited by Thomas Walter of the External Relations Department.