The World Trade Organization (WTO) classifies countries as developed or developing based on members' self-selection. Around two-thirds of WTO's 164 members are developing countries. India is categorized as a lower-middle income country while China is upper-middle income. Developing countries receive special treatment including longer timelines to implement agreements and non-reciprocity in trade concessions. The WTO Agreement on Agriculture classifies subsidies into Green Box, Blue Box and Amber Box with different limits on trade-distorting domestic support. Developing countries have raised concerns over the percentage limits and classification of certain subsidies.

1. Criteria IMF World Bank
Establishment Bretton Woods Conference (UN Monetary and Financial
Conference)
Bretton Woods Conference(UN Monetary and Financial Conference)
Year 1944 1944
Mandate (a) Lend Loans to the countries facing global crisis
(b) Global Surveillance
(c) Technical assistance to the Government
Promote Growth and Development.
Criteria for
becoming member
Agree to the IMF Articles of the Agreement Agree to the World Bank Articles of the Agreement
Must be member of IMF to become member of World Bank Group.
Decision Making Board of Governors comprising of all member countries.
It consists of one governor and one alternate governor for
each member country. The governor is usually the minister
of finance or the governor of the central bank.
Board of Governors comprising of all member countries. It consists of
one governor and one alternate governor for each member country.
The governor is usually the minister of finance or the governor of the
central bank.
Chairperson As per convention, IMF is always headed by a European As per convention, IMF is always headed by US Citizen
Lending Does not lend for specific projects.
Lend Conditional loans to countries to tide over BoP Crisis.
Conditional loans- Reduce Fiscal Deficit, CAD, Structural
Reforms etc.
Can lend to specific projects.
Usually, unconditional loans for the purpose of growth and
development.
Source of Funding Members’ contribution through Quota Raise money through Bonds in International Market.
Share capital by Member countries.
Headquarters Washington DC Washington DC
Member countries 190 189
Reports World Economic Outlook, Global Financial Stability Report,
Fiscal Monitor Report
Human Capital Index (HCI); World Development Report; Global
Economic Prospects; Logistics Performance Index; Women, Business

2. Board of Governors
• Representatives of 190 Member countries
• Represented by Finance Minister
• Meet once in a year and take broad policy
decisions
Executive Board
• Consists of 24 Members elected by Board of
Governors
• Looks after day-to-day functioning of the IMF
IMFC
• Consists of 24 members appointed by
Board of Governors
• Meets twice a year and advises the Board
of Governors
Managing Director
• Appointed by the Executive Board for a period of 5
years
Structure of IMF

3. Quota and SDR in IMF

4. IMF
QUOTA
• Contribution of the
member Countries
• Depends upon Size
of GDP, Forex
Reserves, Openness
Determines
• Voting Rights
• Access to Loans
• Allocation of SDRs
IMF Quota
• Quota review is undertaken every 5 years.
• Changes in Quota approved by 85% of the votes.
• Top 10 Countries in terms of Quota and Voting Rights: USA,
Japan, China, Germany, France, UK, Italy, India, Russia and
Brazil.
• India’s Quota (2.75%) and Voting Rights (2.63%).
Challenges in Quota review:
USA enjoys more than 15% voting rights and hence exercises
virtual veto.
Lend to
Countries facing
BoP Crisis

5. About Special Drawing Rights (SDRs)
What is SDR?
• International Reserve Asset created by IMF to supplement the member countries’ official reserves.
• SDRs become part of Forex Reserves
How are SDRs allocated? • Allocated to the member countries in proportion to IMF Quotas
Value of SDR
• The value of the SDR is based on a basket of five currencies—the U.S. dollar, the Euro, the
Chinese Renminbi, the Japanese Yen, and the British Pound Sterling.
• The value of SDR is set daily by the IMF on the basis of exchange rates between the currencies
included in SDR. The value of SDR is denominated in terms of dollars.
Criteria for inclusion of
currency in SDR Basket
Export Criterion: Member of IMF and one of the Top 5 world exporters.
Freely usable: Currency has to be widely used to make payments for international transactions
Uses of SDRs
• SDRs can be held as part of Forex Reserves
• SDRs can be exchanged into other freely usable currencies among themselves. (This signifies
that SDR is neither claim nor currency of IMF. Rather, it is potential claim on freely usable
currencies of IMF members)
• IMF members can also use SDRs in their transactions with IMF such as repayment of loans,
payment of interest, payment for increasing their IMF quota and so on.
• Members can sell a part or all their SDR allocations.

7. Practice MCQ
The Special Drawing Rights (SDRs) issued by the IMF can be used for
which among the following?
1. Held as part of Member country's forex reserves
2. Member Countries can sell a part or all their SDR allocations.
3. SDRs can be exchanged into other freely usable currencies.
4. SDRs can be used for the Increasing the IMF Quota.
Select the correct answer using the code given below:
(a) 1 only
(b) 1 and 3 only
(c ) 1, 2 and 3 only
(d) 1, 2, 3 and 4
Practice MCQ
With respect to IMF’s Quota, consider the following statements:
1. An individual member country’s quota broadly reflects its
relative position in the world economy.
2. Quotas are expressed and denominated in terms of dollars.
3. Quota determine the SDR allocations of the IMF.
Which among the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3 only
Practice MCQ
With respect to Currencies included in the IMF's Special Drawing
Rights (SDRs), consider the following statements:
1. Presently, there is no well defined criteria for inclusion of a
currency in SDR basket.
2. All the currencies included in the SDR basket are assigned equal
weightage.
3. The SDR currency basket is reviewed every five years by the
Executive Board of the IMF.
Which among the statements given above is/are correct?
(a) 1 and 2 only (b) 3 only
(c) 2 and 3 only (d) 1, 2 and 3 only

8. Prelims 2022
‘’Rapid Financing Instrument’’ and ‘’Rapid Credit Facility’’
are related to the provisions of lending by which one of
the following?
a) Asian Development Bank
b) International Monetary Fund
c) United Nations Environment Programme Finance
Initiative
d) World Bank
Practice MCQ
Consider the following statements related to Poverty
Reduction and Growth Trust (PRGT):
1. It is a financial assistance program of the IMF for the
poor countries.
2. Under this mechanism, poor countries currently get
loans at zero interest rates.
Which among the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

10. Board of Governors
• Representatives of 189 Member countries
• Represented by Finance Minister
• Meet once in a year and take broad policy
decisions
Executive Directors
• Consists of 25 Directors
• Five largest shareholders appoint an executive
director, while other member countries are
represented by elected executive directors.
Delegates the
functions
World Bank President
• Selected by the Board of Directors for a period of 5
years
STRUCTURE OF WORLD BANK

11. World Bank Group
International
Development
Association
• Loans to the world’s poorest countries at concessional terms (zero or very low interest rates) and
maturity periods of around 30 to 35 years.
International Bank for
Reconstruction and
Development (IBRD)
• Loans to Middle-income and credit worthy poor countries.
• Note: IBRD + IDAà World Bank. All 5 Institutions togetherà World Bank Group.
• Countries must first join the IMF to be eligible to join World Bank Group.
• Membership in the IDA, IFC and MIGA are conditional on membership in IBRD.
International Finance
Corporation
• Loans to the Private sector in developing countries.
Multilateral Investment
and Guarantee Agency
(MIGA)
• Encourages Investment in the developing countries by giving Insurance against Political risk.
International Centre for
Settlement of
Investment Disputes
(ICSID)
• Handle Disputes related to International Investment
• Note: India is not a member of ICSID.

12. Prelims Pointers on WTO
Establishment of WTO
• Bretton Woods Conference proposed ITO ( Opposed).
• Multilateral Agreement – GATT (1947) to promote free and fair International Trade
• 8th Rounds of Negotiations: Uruguay Round (1986-95) à Dunkel Draftà Establishment of WTO
through Marrakesh Treaty.
Structure of WTO
• Ministerial Conference: Highest DM body; Meets every 2 years; Member country represented by
Minister of Commerce and Industry; Functions on principle of “One Member, One Vote”
• Trade Policy Review Body
• Dispute Settlement Body
Founding Principles of
WTO
• Most Favoured Nation (MFN) Clause: Trade concession offered by a member country automatically
gets extended to other member countries.
• National Treatment
Trade Barriers
• Tariff Barriers: Imposition of different taxes which impede free trade.
• Non-Tariff Barriers: Import licensing; Delays in Customs clearances; Quota, Higher subsidies;
Technical Barriers; Sanitary and Phytosanitary measures etc.
Types of WTO
Agreements
• Multilateral Agreements: GATT, GATS, TRIPS, AoA, TRIMS, Agreement on SCM, Agreement on TBT etc.
• Plurilateral Agreements: ITA; Govt. Procurement; Trade in Civil Aircraft; Bovine Meat and Dairy
related Agreements (Terminated in 1997)
Important Reports • World Trade Report; Goods Trade Barometer ( Earlier known as World Trade Outlook Indicator)

13. WTO Definition of Developing country
World Bank Categorization
WTO Classification of Countries: There are no WTO definitions of “developed” and “developing” countries. Members announce
for themselves whether they are “developed” or “developing” countries. However, it can be challenges by other members.
About two thirds of the WTO’s around 164 members are developing countries
Note:
1.With a per-capita Income of $1928, India is categorised as Lower-middle income country.
2.With a per-capita income of $10435, China is categorised as Upper-middle income country.

14. WTO Definition of Developing country
Benefits for the Developing countries in WTO
“Special and differential treatment”.
• Extra time for developing countries to fulfil their commitments in many of the WTO agreements.
• Non-Reciprocity: Under concept of Non-Reciprocity, when developed countries grant trade concessions to developing countries,
they should not expect the developing countries to make matching offers in return.
• Provisions designed to increase developing countries’ trading opportunities through greater market access
• Legal assistance: The WTO Secretariat has special legal advisers for assisting developing countries in any WTO dispute and for
giving them legal counsel.

15. WTO Agreement on Agriculture
Domestic Support
Green Box
Blue Box
Amber Box
Development Box
Market Access
Tariffication-
Convert Non-Tariff
barriers into Tariff
Barriers
Reduction in
Tariffs
Export Subsidies
Reduction in
Export Subsidies
Prohibition on
new Export
Subsidies
Special and Differential Treatment

16. Green Box ( No Limit)
R&D
Irrigation
Income Support to Farmers (Non-
Product Specific)
Blue Box ( No Limit)
Production Limiting Subsidies
Given only by few countries
Development Box: Special and
Differential provision
Investment subsidies
Input Subsidies to poor farmers
Subsidies to encourage diversification
from illicit narcotic crops
Amber Box ( Trade Distorting Subsidies)
Fertilisers, Water, MSP, Electricity, Seeds
etc.
Developing countries: 10% of the domestic
agricultural value production in 1986-88.
Developed countries: 5% of the domestic
agricultural value production in 1986-88
Domestic
Support

17. Percentage Limit on
Subsidies Deceptive
Limit on Subsidies does not
factor Inflation
Direct Income Support ( Part
of Green Box Subsidies)
misused by developed
Economies
Procurement of
Commodities for Food
Security should not be
included in the Amber Box
Concerns
raised by India