WORLD BANK AND IMF History International Monetary Fund - 45 government representatives attended in the Mount Washington Hotel (in Bretton Woods, New Hampshire) - they agreed on a framework for international economic cooperation - formally organized on December 27, 1945 Functions of IMF Three main types: - surveillance - monitoring economic and financial developments and provision of policy advise - lending to countries with balance of payments and difficulties to provide temporary financing - provides technical assistance and training in its areas of expertise The International Monetary Fund and the World Bank at a Glance World Bank International Monetary Fund seeks to promote the oversees the international monetary economic development of system the world's poorer countries promotes exchange stability and assists developing countries orderly exchange relations among its through long-term financing member countries of development projects and assists all members--both industrial programs and developing countries--that find themselves in temporary balance of provides to the poorest payments difficulties by providing developing countries whose short- to medium-term credits per capita GNP is less than supplements the currency reserves of $865 a year special financial its members through the allocation of assistance through the SDRs (special drawing rights); to date International Development SDR 21.4 billion has been issued to Association (IDA) member countries in proportion to their quotas The International Monetary Fund and the World Bank at a Glance encourages private enterprises draws its financial resources in developing countries principally from the quota through its affiliate, the subscriptions of its member International Finance countries Corporation (IFC) has at its disposal fully paid-in acquires most of its financial quotas now totaling SDR 145 resources by borrowing on the billion (about $215 billion) international bond market has a staff of 2,300 drawn from has an authorized capital of 182 member countries $184 billion, of which members pay in about 10 percent has a staff of 7,000 drawn from 180 member countries World Bank - provides technical assistance and funding for projects and policies that will realize the countries' economic potential - during the first 20 years of World Bank, two-thirds of the assistance went to electric power and transportation - the bank gives attention to projects that can benefit the poorest people in developing countries - it helps the poor to be more productive and gain access to the basic necessities - with transportation projects, more attention is given to farm- to-market roads - it also provides power and lighting for the smaller villages and farms World Bank - the bank provides both financial and technical assistance - it serves as an executing agency for technical assistance, financed by United Nations Development Program in agriculture and rural development, energy, and economic planning - in response to the economic climate of its member countries, it now emphasizes technical assistance for institutional development and macroeconomic policy formulation - each project it supports is designed in close collaboration with other multilateral assistance organizations World Bank - in making loans, the bank does not compete with other sources - it only assists projects if capital can;t be provided by other sources on reasonable terms - the bank strengthens economies of borrowing nations so they can graduate from reliance and meet their financial needs, on terms they can directly afford from conventional sources of capital - the bank carefully studies the economy of the borrowing country and its needs - these analyses help in formulating an appropriate long-term development assistance strategy for the economy - of the 34 ver poor countries that borrowed money from IDA have made enough progress (no longer borowing), leaving the money for others' needs - Japan used to borrow from IBRD, now IBRD borrows from Japan IMF Operations The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The International Monetary Fund (IMF) is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalising economic policies on other countries as a condition for loans, restructuring or aid.It also offers loans with varying levels of concessionality, mainly to poorer countries. Its headquarters are in Washington, D.C., United States. The IMF's relatively high influence in world affairs and development has drawn heavy criticism from some sources. World Bank is an international financial institution that provides leveraged loans to developing countries for capital programs. The Bank came into formal existence on December 27, 1945 following international ratification of the Bretton Woods agreement. Members of World Bank Group: 1. International Bank for Reconstruction and Development 2. International Development Association 3. International Finance System 4. Multi-Lateral Investment Guarantee Agency 5. International Center for Settlement of Investment Disputes International Bank for Reconstruction and Development (IBRD) - To finance the reconstruction of nations devastated by World War II International Development Association (IDA) - To helps the world’s poorest countries. Key factors of World Bank for Economic Development. 1. Build Capacity 2. Infrastructure creation 3. Development of financial system 4. Combating Corruption 5. Research, Consultancy and Training Voting Power Recently, the World bank revised the voting power to increase the voice of developing countries. The countries with most voting power are now the: United States – 15.85% Japan – 6.48% China – 4.42% Germany – 4.00% United Kingdom – 3.75% France - 3.75% OTHERS – 61.75% Although both institution are based in Washington D.C, the World Bank is by custom, headed by an American, while International Monetary Fund is led by a European.