IMF and World Bank

Introduction

The International Monetary Fund and the World Bank were both created at an international conference convened in Bretton Woods, New Hampshire, United States in July 1944. They share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, with the IMF focusing on macroeconomic issues and the World Bank concentrating on long-term economic development and poverty reduction.

IMF�s mandate

The IMF promotes international monetary cooperation and provides policy advice and technical assistance to help countries build and maintain strong economies. The Fund also makes loans and helps countries design policy programes to solve balance of payments problems when sufficient financing on affordable terms cannot be obtained to meet net international payments. IMF loans are short and medium term and funded mainly by the pool of quota contributions that its members provide. IMF staff are primarily economists with wide experience in macroeconomic and financial policies.

World Bank�s mandate

The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform particular sectors or implement specific projects�for example, building schools and health centers, providing water and electricity, fighting disease, and protecting the environment. World Bank assistance is generally long term and is funded both by member country contributions and through bond issuance. World Bank staff are often specialists in particular issues, sectors, or techniques.

The IMF and World Bank collaborate regularly and at many levels to assist member countries and work together on several initiatives. During the Annual Meetings of the Boards of Governors of the IMF and the World Bank, Governors consult and present their countries� views on current issues in international economics and finance. The Managing Director of the IMF and the President of the World Bank meet regularly to consult on major issues. The staff of the IMF and the Bank collaborate closely on country assistance and policy issues that are relevant for both institutions. The IMF and World Bank also work together to reduce the external debt burdens of the most heavily indebted poor countries under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). In 1999, the IMF and the World Bank initiated the Poverty Reduction Strategy Paper (PRSP) approach�a country-led plan for linking national policies, donor support, and the development outcomes needed to reduce poverty in low-income countries. Since 2004, the Fund and Bank have worked together on the Global Monitoring Report (GMR), which assesses progress needed to achieve the UN Millennium Development Goals (MDGs). The IMF and World Bank also work together to make financial sectors in member countries resilient and well regulated.

India and the IMF

  • India joined the IMF on December 27, 1945, as one of the IMF�s original members.
  • India�s Governor at present: P. Chidambaram;
  • Alternate Governor: Duvuri Subbarao
  • India�s quota: 5281.5 Million SDRs (2.44% of total)
  • India�s voting power: 58,952 (2.34% of total)
  • India accepted the obligations of Article VIII of the IMF Articles of Agreement on current account convertibility on August 20, 1994.
  • India subscribes to the IMF�s Special Data Standard.

Financial Assistance

While India has not been a frequent user of IMF resources, IMF credit has been instrumental in helping India respond to emerging balance of payments problems on two occasions. In 1981-82, India borrowed SDR 3.9 billion under an Extended Fund Facility, the largest arrangement in IMF history at the time. In 1991-93, India borrowed a total of SDR 2.2 billion under two stand by arrangements, and in 1991 it borrowed SDR 1.4 billion under the Compensatory Financing Facility.

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work in more than a 100 developing countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC�s vision is that people should have the opportunity to escape poverty and improve their lives. IFC helps developing countries achieve sustainable growth by financing investment, mobilising capital in international financial markets, and providing advisory services to businesses and governments.

Purpose of IFC is to create opportunity for people to escape poverty and improve their lives by:

  • Mobilising other sources of finance for private enterprise development;
  • Promoting open and competitive markets in developing countries;
  • Supporting companies and other private sector partners where there is a gap;
  • Helping generate productive jobs and deliver essential services to the poor and the vulnerable.

To achieve these purposes, IFC officers development-impact solutions through m-level interventions (direct investments, advisory services, and the IFC Asset Management Company); by promoting global collective action; by strengthening governance and standard-setting; and through business-enabling-environment work.

Written by princy

No comments yet.

Leave a Reply