It deals Balance of Payments - IMF,IBRD and WTO

1. • International Trade: Meaning - Differences between Balance of Trade and
Balance of Payments – Causes for Disequilibrium, I.M.F, I.B.R.D and WTO –
Objectives and Functions.

2. 1.The balance of payments is a systematic record of economic
transactions of the residents of a country with rest of the world during
a given period of time.
2. Balance of Payments is a systematic record of a country’s external
transactions during a given period of time.
Meaning of Balance of Payments

3. Balance of Trade
Meaning of Balance of Trade:
• Balance of trade refers to the difference between the monetary value of exports
and imports in an economy a given period of time (only visible goods).
Types of Balance of Trade (BOT)
• Favorable BOT: E > M
• Unfavorable BOT: M>E
• Equal BOT: E = M

4. Difference Between BOT and BOP
BOT BOP
It records visible items only Its include both visible and invisible items
It does not records transaction of capital it records transaction of capital nature
It records only merchandise transaction
It records the transaction of both goods and
service
It is part of current account of BOPs
Its includes balance of trade, balance of service
and capital transaction
It is a partial study of the balance of
payments
It is a complete picture of the country’s
international relations
It is not true indicator of economic
relation
It is true indicator of economy performance of an
economy

5. 1. Trade Cycles
2. Population Growth
3. Demonstration Effect
4. Huge External Borrowing
5. Political instability
6. Inflation
7. Changing Export Demand
8. Natural Factors
Causes of Disequilibrium in the Balance of Payments

9. International Monetary Fund
Abbreviation :IMF
Formation :27 December 1945; 75 years
ago
Type :International financial
institution
Headquarters :Washington., D.C. U.S.
Region :Worldwide
Membership :190 countries
Official language :English
Managing Director :Kristalina Georgieva
Chief Economist :Gita Gopinath
Main organ :Board of Governors
Parent organization :United Nations
Staff :2,400

10. Objectives of IMF

To promote international monetary cooperation among the member nations.
 To facilitate faster and balanced growth of international trade.
 To ensure exchange rate stability by curbing competitive exchange
depreciations.
 To eliminate or reduce exchange controls imposed by member nations.
 To establish multilateral trade and payment system in respect of current
transactions instead of bilateral trade agreements.
 To promote the flow of capital from developed to developing nations.
 To solve the problem of international liquidity.

11. Functions Of IMF
Bringing stability in exchange rate
Correcting BOP Disequilibrium
Determining par values
Balancing demand and supply of currencies
Reducing trade restrictions
Providing credit facilities

12. International Bank For Reconstruction And
Development (IBRD) or World Bank
Motto :Working for a World Free of Poverty
Formation :July 1944; 77 years ago
Type :Monetary International Financial Organization
Legal status :Treaty
Headquarters :1818 H Street NW, Washington, D.C., U.S.
Membership :189 countries (IBRD)
:173 countries (IDA)
Key people :David Malpass(President)
:Anshula Kant(MD and Chief Financial Officer)
: Carmen Reinhar (Chief Economist)
Parent organization : World Bank Group

13. Objectives World Bank
• 1. To help member countries for economic reconstruction and development.
• 2. To stimulate long-run capital investment for restoring Balance of Payments
(BoP) equilibrium and thereby ensure balanced development of international
trade among the member nations.
• 3. To provide guarantees for loans meant for infrastructural and industrial
projects of member nations.
• 4. To help war ravaged economies transform into peace economies.
• 5. To supplement foreign private investment by direct loans out of its own funds
for productive purposes.

14. Functions World Bank
Investment for productive purposes
Balanced growth of international trade
Provision of loans and guarantees
Promotion of foreign private investment
Technical services

15. World Trade Organization
Formation 1 January 1995; 26 years ago
Type International trade organization
Purpose Reduction of tariffs and other barriers to trade
Headquarters Centre William Rappard, Geneva, Switzerland
Coordinates 46°13′27″N 06°08′58″ECoordinates: 46°13′27″N 0
6°08′58″E
Region served Worldwide
Membership 164 member states
[1]
Official languages English, French, Spanish
[2]
Director-General Vacant
[3]
Budget 197.2 million Swiss francs (approx. 209 million
US$) in 2018.
[4]

16. Objectives of WTO
 To ensure reduction of tariff and other barriers.
 To eliminate discrimination in trade.
 To facilitate higher standard of living.
 To facilitate optimal use of world’s resources.
To enable the LDCs to secure fair share in the growth of international trade.
 To ensure linkages between trade policies, environmental policies and sustainable
development.

17. Functions of WTO
• 1. It provides the form for negotiations among members concerning their
multilateral trade relations
• 2. It facilitates the implementation, administration, and operation of the
objectives of the multilateral trade agreements
• 3. It administers the “trade review mechanism”
• 4. It administers the rules and procedures governing the settlement disputes.
• 5. It is a watchdog of international trade.it examines the trade regimes of
individual members
• 6. It trade disputes that cannot be solved through bilateral talks are forwarded to
the WTO dispute settlement “Court”
• 7. It is also consult with international organisation like IMF and World Bank for
taking decision on world trade.

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