The IMF and World Bank were both established at the Bretton Woods Conference in 1944 to help stabilize the international monetary system and facilitate postwar reconstruction. The IMF focuses on macroeconomic stability and short-term lending to address balance of payments issues. The World Bank provides long-term loans for development projects and aims to reduce poverty through financing infrastructure, health, education and private sector development. While both institutions work to promote global economic growth, the IMF oversees currency exchange rates and monetary policy while the World Bank focuses on long-term financing of economic and social development programs.

1. International Monetary Fund
VS
The World Bank

2. IMF
• The International Monetary Fund (IMF) is
an organization of 188 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.

3. Purposes of the IMF and The
World Bank
• The International Monetary Fund (IMF)
maintains international monetary cooperation
among its members
• The World Bank aids in the development and
reconstruction of it members

4. IMF Briefing
– Exchange rate stability, balance of payments
disequilibrium, and growth of international
trade
– Currently 182 member countries
– By sharing economic policies the system of
buying and selling currencies would be stable

5. World Bank Briefing
Made up of 5 different organizations
– International Bank for Reconstruction and
Development (IBRD)
– International Development Association (IDA)
– International Finance Corporation (IFC)
– Multilateral Investment Guarantee Agency
(MIGA)
– International Center for the Settlement of
Investment Disputes (ICSID)

6. History behind the IMF and
World Bank
• After the Great Depression in the 1930s there was
a need for an organization to create a system for
exchange rate stability
– Uncertainty of the value of paper money (no longer
used the gold standard)
– Countries began cheating other countries in trade
• Countries’ economies affected by WWII
– need for reconstruction in well-developed nations
– need for development in the lesser developed nations

7. Bretton Woods Conference
• 1940s proposals for monetary system by Harry
Dexter White (U.S.) and John Keynes (UK)
– establish the value of each currency
– eliminate restrictions and certain practices on trade
– assistance for post-war reconstruction
• Bretton Woods Conference, New Hampshire, July
1944 with delegates of 44 nations
– final negotiations of the IMF and the World Bank took
place

8. Purposes of the IMF
Articles of Agreement of the IMF
i) promote international monetary cooperation
ii) expansion and balanced growth of
international trade
iii) promote exchange rate stability

9. iv) help establish multilateral system of
payments and eliminate foreign exchange
restrictions
v) make resources of the Fund available to
members
vi) Shorten the duration and lessen the degree
of disequilibrium in international balances
of payments

10. Operations and Responsibilities
of IMF
• Surveillance – Monitoring economic and
financial developments and extending
policy advice to member countries.
• Lending – Providing financial resources
under specified conditions to countries in
need.
• Technical Assistance – Help on designing
and improving the quality and effectiveness
of domestic policy-making.

11. Analysis on the Usefulness of the IMF
IMF Facilities – Concessional Facilities
Low-income countries may borrow through these facilities aimed at poverty
reduction and growth.
•Extended Credit Facility (ECF)-medium-term support to LICs with
protracted balance of payments problems.
•zero interest rate, with a grace period of 5½ years, and a final maturity
of 10 years.
•Standby Credit Facility (SCF)- short-term balance of payments needs.
•zero interest rate, with a grace period of 4 years, and a final maturity of
8 years.
•Rapid Credit Facility (RCF)- urgent balance of payments need.
•with limited conditionality
•zero interest rate, has a grace period of 5½ years, and a final maturity of
10 years.

12. Analysis on the Usefulness of the IMF
IMF Facilities – Non-concessional Facilities
All non-concessional facilities are subject to the IMF’s market-related interest
rate, known as the “rate of charge”
Middle –income countries
•Stand-By Arrangements (SBA)- short-term balance of payments problems.
•disbursements are made conditional on achieving these targets to correct
balance of payments problems (‘conditionality’).
•length is typically 12–24 months, and repayment is 3¼-5 years
•flexibility to either draw on the credit line at the time it is approved or
treat it as precautionary.

13. Analysis on the Usefulness of the IMF
IMF Facilities – Non-concessional Facilities
•Flexible Credit Line (FCL)- for countries with very strong
fundamentals, policies, and track records of policy implementation
•precautionary basis
•no preset cap on access
•disbursements are not conditioned
•length - one or two year
•Precautionary Credit Line (PCL)- is for countries with sound
fundamentals and policies
•may be no actual balance of payments need should at the time
•do not require the same large-scale policy adjustments normally
associated with traditional SBAs.

14. Analysis on the Usefulness of the IMF
IMF Facilities – Non-concessional Facilities
•Extended Fund Facility (EFF)- This facility was established in 1974 to help
countries address longer-term balance of payments problems
•requiring fundamental economic reforms.
•usually 3 years, and payment is due within 4½–10 years

15. Where the IMF gets its money
• Most comes from the quota subscriptions
– the money each member contributes when
joining the IMF
• General Arrangements to Borrow (1962)
– line of credit set up with several governments
and banks throughout the world

16. Special Drawing Right (SDRs)
• SDR is an invented currency
– its value is based on the worth of the world’s
five major currencies
US Dollar, French Franc, Pound Sterling,
Japanese Yen
• Countries add SDRs to their holdings of
foreign currencies
– keep available for need of payments that must
be made in foreign exchange

17. Power among the members
• Size of the quotas determine voting power
• IMF decides on the quota for each member
– richer countries have larger quota
• US having largest economy provides 18%
of the total quota (about $35 billion)
– US has largest voting power

18. A bit more on quotas
• Quotas are reviewed every 5 years by the
IMF
• Quotas also determine how much each
member can borrow from the IMF when in
need of aid

19. How much money a member can
borrow from the IMF
• 25% of the country’s quota may be used
• If this is not sufficient, then members can borrow
up to 3 times the amount of its quota
– present plans for reform to Executive Directors
• If these plans are sufficient for the Executive
Directors, the IMF grants the member a loan
PRESIDENT
Jim Yong Kim
President, World Bank Group
On July 1, 2012, Jim Yong Kim became the 12th president of the World Bank Group.

20. PRESIDENT : Jim Yong Kim
President, World Bank Group
• On July 1, 2012, Jim Yong Kim became the
12th president of the World Bank Group.

21. MISSION
OF WORLD BANK
• Our work is challenging, but our mission is
simple:
• Help reduce poverty.

22. World Bank
Made up of 5 different organizations
– International Bank for Reconstruction and
Development (IBRD)
– International Development Association (IDA)
– International Finance Corporation (IFC)
– Multilateral Investment Guarantee Agency
(MIGA)
– International Center for the Settlement of
Investment Disputes (ICSID)

23. Collectively, the World Bank
Group is:
• The world’s largest funder of education
• The world’s largest external funder of the fight against
HIV/AIDS
• A leader in the fight against corruption worldwide
• A strong supporter of debt relief
• The largest international financier of biodiversity projects
• The largest international financier of water supply and
sanitation projects

24. International Bank for
Reconstruction and Development
• Founded in 1944 at the Bretton Woods
Conference
– to finance the reconstruction of countries affected
by WWII
– help with development of impoverished nations
• World Bank’s central institution
• 181 member countries

25. IBRD continued
• Lends to countries with relatively high per
capita incomes
• Money is used for:
– development projects (i.e. highways, schools)
– programs to help governments change the way
they manage their economies
• Provides technical assistance in projects

26. International Development
Association
• Established in 1960
– assist the poorest developing countries
• lends to countries with annual per capita
incomes of about $800 or less
– It’s loans are knows as “credits”
• 161 members

27. International Finance Corporation
• Established in 1956 to reduce poverty and
improve people's lives in an environmentally and
socially responsible manner (174 members)
• finances private sector investments, mobilizes
capital in international financial markets, and
provides technical assistance and advice to
governments and businesses
• provides both loan and equity finance for business
ventures in developing countries

28. Multilateral Investment Guarantee
Agency
• Established in 1988
• helps developing countries attract foreign
investment
– provides investment marketing services and legal
advisory services to its members
• 152 members

29. International Center for the
Settlement of Investment Disputes
• Established in 1966 to promote increased flow of
international investment
• Provides facilities for the reconciliation of
disputes between governments and foreign
investors
• 131 members

30. Where the IBRD gets its money
• through the sale of its bonds in international
capital markets
• Members’ subscriptions to its capital stock
– only 10% of the subscriptions is used by the Bank
• “Callable Capital”
– portion of the subscriptions that the Bank borrows
– the Bank charges a rate of interest rate on its loans
to pay this back

31. Where the IDA gets its money
• Mostly from governments’ voluntary
contributions
• Replenishments
– additional contributions which are needed every
few years

32. Differences between the IBRD and
the IDA
• IBRD charges an interest rate on loans
– loans must be repaid within 15-20 years with a 5
year grace period
• IDA does not charge an interest rate, only a
0.75% service charge
– repayment period is 30-45 years with a 10 grace
period

33. The International Monetary Fund and the World
Bank at a Glance
International Monetary
Fund
• oversees the international
monetary system
• promotes exchange stability
and orderly exchange
relations among its member
countries
• assists all members--both
industrial and developing
countries--that find
themselves in temporary
balance of payments
difficulties by providing
World Bank
• seeks to promote the economic
development of the world's
poorer countries
• assists developing countries
through long-term financing of
development projects and
programs
• provides to the poorest
developing countries whose per
capita GNP is less than $865 a
year special financial assistance
through the International
Development Association (IDA)

34. International Monetary
Fund
• supplements the currency
reserves of its members through
the allocation of SDRs (special
drawing rights); to date SDR
21.4 billion has been issued to
member countries in proportion
to their quotas
• draws its financial resources
principally from the quota
subscriptions of its member
countries
• has at its disposal fully paid-in
quotas now totaling SDR 145
billion (about $215 billion)
• has a staff of 2,300 drawn from
182 member countries
World Bank
• encourages private
enterprises in developing
countries through its
affiliate, the International
Finance Corporation (IFC)
• acquires most of its
financial resources by
borrowing on the
international bond market
• has an authorized capital of
$184 billion, of which
members pay in about 10
percent
• has a staff of 7,000 drawn
from 180 member countries