World Bank and International Monetary Fund and their Characteristics

1. World Bank & IMF
By
Gaurav Jain
gauravpaatni1995@gmail.com

2. What is World Bank
•The World Bank was created at the end of world war II as a result
of many European and Asian needing financing to fund
reconstruction efforts.
•The bank is successful in providing financing for these devastated
(destroyed) countries.

3. World Bank
Motto - Working for a World Free of Poverty
 Formation - July 1945; 72 years ago
 Type -Monetary International Financial Organization
Legal status -Treaty
Headquarters -Washington, D.C., U.S.
Membership -189 countries (IBRD) Bolivia left 173 countries (IDA)
 Key people -Jim Yong Kim, president
Parent organization -World Bank Group

4. World Bank Group
World Bank is Different From World Bank of Group, an extended
family of five international organizations.
 International Bank for Reconstruction and Development (IBRD)
 International Development Association (IDA)
International Finance Corporation (IFC)
 Multilateral Investment Guarantee Agency (MIGA)
International Centre for Settlement of Investment Disputes
(ICSID)

5. World Bank’s Objectives
1. To provide long-run capital to member countries for economic
reconstruction and development.
2. To induce long-run capital investment for assuring Balance of
Payments (BoP) equilibrium and balanced development of
international trade.
3. To provide guarantee for loans granted to small and large units
and other projects of member countries.
4. To ensure the implementation of development projects so as to
bring about a smooth transference from a war-time to peace
economy.
5. To promote capital investment in member countries by the
following ways;

6. World Bank’s Functions
1. World Bank provides various technical services to the member countries. For
this purpose, the Bank has established “The Economic Development Institute”
and a Staff College in Washington.
2. Bank can grant loans to a member country up to 20% of its share in the paid-
up capital.
3. The quantities of loans, interest rate and terms and conditions are
determined by the Bank itself.
4. Generally, Bank grants loans for a particular project duly submitted to the
Bank by the member country.
5. The debtor nation has to repay either in reserve currencies or in the currency
in which the loan was sanctioned.
6. Bank also provides loan to private investors belonging to member countries
on its own guarantee, but for this loan private investors have to seek prior
permission from those counties where this amount will be collected.

7. World Bank’s Top Borrowers
Mexico
Brazil
Turkey
Pakistan
China
India
Argentina

8. World Bank’s Top Contributors
USA (16.39%)
Japan (7.87%)
Germany(4.49%)
U.K. (4.30%)
France (4.30%)

9. International Monetory Fund
Abbreviation – IMF
 Formation -27 December 1945 (72 years ago)
 Type -International financial institution
Purpose -Promote international monetary co-operation, facilitate
international trade, foster sustainable economic growth, make resources
available to members experiencing balance of payments difficulties
Headquarters -Washington, D.C., United States
Worldwide Membership-189 countries Official
Managing Director-Christine Lagarde
Parent organization-United Nations

10. What IMF Does
The International Monetary Fund (IMF) is an international organization
headquartered in Washington, D.C., of "189 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."Formed in 1945 at the Bretton Woods Conference
primarily by the ideas of Harry Dexter White and John Maynard Keynes, it came
into formal existence in 1945 with 29 member countries and the goal of
reconstructing the international payment system. It now plays a central role in
the management of balance of payments difficulties and international financial
crises. Countries contribute funds to a pool through a quota system from which
countries experiencing balance of payments problems can borrow money. As of
2016, the fund had SDR 477 billion (about $668 billion)

11. Objectives of IMF
 The elimination or reduction of existing exchange controls,
 The establishment and maintenance of currency convertibility
with stable exchange rates, and
 The widest extension of multi-lateral trade and payments.

12. Functions of IMF
 It functions as a short-term credit institution.
 It provides machinery for the orderly adjustments of exchange rates.
It is a reservoir of the currencies of all the member countries from which a
borrower nation can borrow the currency of other nations.
It is a sort of lending institution in foreign exchange. However, it grants loans
for financing current transactions only and not capital transactions.
It also provides machinery for altering sometimes the par value of the
currency of a member country. In this way, it tries to provide for an orderly
adjustment of exchange rates, which will improve the long-term balance of
payments position of member countries.
It also provides machinery for international consultations.

13. Difference between IMF and World Bank