Imf and world bank

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Imf and world bank

  1. 1. CHITKARA BUSINESS SCHOOL SUBMITTED BY: APOORVA SAINI ASHIMA GARG DIVYA MALIK MANIRAT KAUR UNDER THE GUIDANCE OF: DR. RENUKA SHARMA WORLD BANK
  2. 2. Bretton Woods Conference <ul><li>1940s proposals for monetary system by Harry Dexter White (U.S.) and John Keynes (UK) </li></ul><ul><ul><li>establish the value of each currency </li></ul></ul><ul><ul><li>eliminate restrictions and certain practices on trade </li></ul></ul><ul><ul><li>assistance for post-war reconstruction </li></ul></ul><ul><li>Bretton Woods Conference, New Hampshire, July 1944 with delegates of 44 nations </li></ul><ul><ul><li>final negotiations of the IMF and the World Bank took place </li></ul></ul>
  3. 3. Membership <ul><li>All those countries who took part in Bretten Woods conference & is the member of IMF. </li></ul><ul><li>If secure 2/3 rd votes of the existing members of the banks. </li></ul>
  4. 4. Where the WORLD BANK gets its money from? <ul><li>Through the sale of its bonds in international capital markets </li></ul><ul><li>Members’ subscriptions to its capital stock </li></ul><ul><ul><li>only 10% of the subscriptions is used by the Bank </li></ul></ul><ul><li>“ Callable Capital” </li></ul><ul><ul><li>portion of the subscriptions that the Bank borrows </li></ul></ul><ul><ul><li>the Bank charges a rate of interest rate on its loans to pay this back </li></ul></ul>
  5. 5. Objectives of World bank <ul><li>Reconstruction & development </li></ul><ul><li>Encouragement to capital investment </li></ul><ul><li>Encouragement to international trade </li></ul><ul><li>Establishment of peace time economy </li></ul><ul><li>Environment protection </li></ul><ul><li>Infrastructure development </li></ul><ul><li>Loan for meeting deficit in balance of payment </li></ul>
  6. 6. Functions of world bank <ul><li>Advances loans- direct loans, guarantee loans & joint loans. </li></ul><ul><li>Provides technical assistance . </li></ul><ul><li>Imparts training. </li></ul><ul><li>Coordinated development assistance. </li></ul><ul><li>Agriculture & rural development. </li></ul>
  7. 7. Functions contd… <ul><li>Settlement of international disputes. </li></ul><ul><li>Provides financial assistance to world welfare institutions like UNICEF, UNESCO, WHO, ILO,FAO etc. </li></ul><ul><li>Conducts economic research. </li></ul><ul><li>Establishing subsidiary institutions-IDA,IFC,MIGA. </li></ul>
  8. 8. Successes of world bank <ul><li>Increase in capital </li></ul><ul><li>Due attention to developed & under developed countries. </li></ul><ul><li>Loans for the productive purposes. </li></ul><ul><li>Third window scheme. </li></ul>
  9. 9. Successes contd… <ul><li>Fight against poverty. </li></ul><ul><li>Agriculture & rural development. </li></ul><ul><li>Training </li></ul><ul><li>Research </li></ul><ul><li>Establishment of subsidiary institutions </li></ul>
  10. 10. India & world bank <ul><li>Executive director </li></ul><ul><li>Loans </li></ul><ul><li>Aid India club </li></ul><ul><li>Mediation in indo-pak river water dispute. </li></ul><ul><li>Facilities for general loans. </li></ul><ul><li>Special help to poor states. </li></ul><ul><li>Advantages from membership of associates institutes. </li></ul><ul><li>Population control assistance </li></ul><ul><li>Help to non-govt organizations </li></ul><ul><li>Human development projects. </li></ul>
  11. 11. Membership of International Monetary Fund(IMF) <ul><li>Founded on 27 th dec 1945. </li></ul><ul><li>Headquarters – Washington DC,USA </li></ul><ul><li>Original members-prior to 31 st dec 1945 </li></ul><ul><li>Ordinary members-subsequent </li></ul>
  12. 12. Organization <ul><li>Board of Governors </li></ul><ul><ul><li>Each member country appoints one Governor and and Alternate Governor </li></ul></ul><ul><li>Executive Board </li></ul><ul><ul><li>24 Executive Directors which are representatives for the members </li></ul></ul><ul><li>Managing Director </li></ul><ul><ul><li>the chairman of the Executive Board </li></ul></ul>
  13. 13. <ul><li>Governors spend most of their time dealing with their own countries </li></ul><ul><ul><li>report their countries’ plans to their representatives </li></ul></ul><ul><ul><li>only meet with entire IMF board once a year </li></ul></ul><ul><li>Executive Board oversees the economic policies of the members </li></ul><ul><ul><li>holds meetings three times a week </li></ul></ul><ul><li>Managing Director heads the the IMF staff of about 2,600 people </li></ul><ul><ul><li>traditionally held by a European </li></ul></ul>
  14. 14. Power among the members <ul><li>Size of the quotas determine voting power </li></ul><ul><li>IMF decides on the quota for each member </li></ul><ul><ul><li>richer countries have larger quota </li></ul></ul><ul><li>US having largest economy provides 18% of the total quota (about $35 billion) </li></ul><ul><ul><li>US has largest voting power (18% or 26,5000) </li></ul></ul>
  15. 15. Objectives of IMF <ul><li>To promote international monetary cooperation. </li></ul><ul><li>To establish a system of multilateral payments. </li></ul><ul><li>To maintain stability in the rate of exchange. </li></ul><ul><li>To abolish exchange restrictions. </li></ul>
  16. 16. Objectives contd… <ul><li>To provide aid to members during emergency. </li></ul><ul><li>To reduce disequilibrium in BOP. </li></ul><ul><li>To help in profitable investment of capital. </li></ul><ul><li>To promote balanced economic development </li></ul>
  17. 17. SPECIAL DRAWING RIGHTS(SDRs) <ul><li>Created by IMF & started in 1969. </li></ul><ul><li>Also known as Paper Gold. </li></ul><ul><li>Defined in terms of basket of five currencies- US$, British pound, French Franc, Germans Deutsche Mark & Japanese Yen. </li></ul><ul><li>Member countries are allotted quotas of SDRs. </li></ul>
  18. 18. Benefits of SDRs <ul><li>Dependence of gold for making international payments has reduced. </li></ul><ul><li>International liquidity has increased. </li></ul><ul><li>Benefits the member countries having unfavorable BOP. </li></ul><ul><li>Unlike gold, sdr’s are costless to produce as it is paper currency. </li></ul><ul><li>Payment through SDR is easier and more flexible. </li></ul>
  19. 19. Functions of IMF <ul><li>Lending for meeting temporary unfavorable BOP. </li></ul><ul><li>Purchase and sale of foreign currency. </li></ul><ul><li>Bank of central banks. </li></ul><ul><li>Imparts training </li></ul><ul><li>Technical assistance </li></ul>
  20. 20. Functions contd… <ul><li>Facilities during emergency. </li></ul><ul><li>Poverty reduction </li></ul><ul><li>Determines the exchange rates. </li></ul><ul><li>Special lending facilities like CCFF,BSFF,SAF,EASF. </li></ul>
  21. 21. Advantages for India <ul><li>Facility of foreign exchange. </li></ul><ul><li>Freedom from British pound Sterling. </li></ul><ul><li>Membership of the World Bank. </li></ul><ul><li>Importance of India in international sector. </li></ul><ul><li>Economic consultation. </li></ul>
  22. 22. Advantages Contd… <ul><li>Help during emergency. </li></ul><ul><li>Financial help for five year plans. </li></ul><ul><li>Profit from the sale of gold. </li></ul><ul><li>Help in foreign exchange crisis. </li></ul><ul><li>India-IMF institutes </li></ul>
  23. 23. DIFFERENCES <ul><li>International Monetary Fund </li></ul><ul><li>Oversees the monetary system of the world. </li></ul><ul><li>Promotes exchange relations and stability among its member countries. </li></ul><ul><li>Adds to the currency reserves of its member countries through allocation of special drawing rights (SDRs). </li></ul><ul><li>World Bank </li></ul><ul><li>Promotes economic development in underdeveloped countries. </li></ul><ul><li>Helps underdeveloped countries by providing long-term financing for development projects. </li></ul><ul><li>Encourages private enterprises in developing countries through International Finance Corporation (IFC), which is a sub-part of the IMF. </li></ul>
  24. 24. DIFFERENCES CONTD… <ul><li>International Monetary Fund </li></ul><ul><li>Assists all its member countries that are in temporary balance of payments difficulties by providing them short- to medium-term credits </li></ul><ul><li>Financial resources come from the fixed quota subscriptions of its member countries. </li></ul><ul><li>Has about fully paid-in quotas totaling $215 billion. </li></ul><ul><li>Has a total staff of 2,300 from 185 countries. </li></ul><ul><li>World Bank </li></ul><ul><li>Provides special finances to poor countries that have a per capita Gross National Product (GNP) less than $865 a year. </li></ul><ul><li>Financial resources are acquired by borrowing on the international bond market. </li></ul><ul><li>Has authorized capital of $184 billion, of which members pay in 10 percent. </li></ul><ul><li>Has a staff of 7,000 from 185 countries. </li></ul>
  25. 25. <ul><li>THANK YOU…..  </li></ul>

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