The IMF and World Bank were formed in 1944 at Bretton Woods to stabilize currencies and finance post-WWII reconstruction. They are dominated by wealthy Western countries, with the US having the largest voting share. The IMF lends money to countries in debt on conditions set by wealthy members, which can have harsh social impacts. The World Bank also finances development but was criticized for projects damaging to environments and debt levels. Both reflect the interests of powerful nations and have been used to counter communism and enforce economic policies benefiting Western donors.

1. The IMF and World
Bank

2. The IMF

3. How does this make you feel?

4. History
• Formed in 1944 at Bretton Woods, USA to
stabilise currencies after WWII.
• 44 Govt’s joined at first nearly all these
were wealthy countries
• Money was loaned out to help countries in
debt. Thus stabilising their currencies and
economies
• It was an attempt to prevent poverty and
communism.

5. Today
• Has 185 members
• Each member does not have parity as
voting rights depend on money invested.
• Headquarters in Washington D.C
• Worlds top 21 economies have 70% of
votes.

6. SO?
• USA has nearly 17% - due to size of
economy
• EU has 25.7%
• Western developed countries have 54.5%
• NIC’s – Brazil, Russia, India, China (BRIC)
have only 9.7%
• The IMF therefore reflects the interests of
America and Europe
• It has lent money not just to stabilise
countries but to counter the growth of
communism.

7. • It has imposed conditions on the borrowing of money
decided by the wealthiest members
• The IMF main role now is still to stabilise countries faced
with debt, impacts however can be harsh.
E.g.
Right wing UK and US govt’s forced developing Countries to
cut spending on health and education in return for re-
financing their debts.

8. Question
In pairs discuss whether the IMF is the best way of
helping poverty, if not what could be better.
Write down your ideas.

9. The World Bank And The IMF

10. THE WORLD BANK

11. History
• Also formed at Bretton Woods, USA in 1944
• Was to be the bank to finance development
• First loan was to France for post war
reconstruction
• Also focuses on natural disasters and
humanitarian emergencies.

12. • By 1950’s it began financing ex-colonies
• Reputation was damaged in the 1970’s and 80’s for
financing developments that were environmentally
damaging or beyond the ability of developing countries
to repay
• By 1990’s it focus had shifted to just debt.
• It’s goals have gone on to achieving the Millennium
Development Goals:

13. • However it’s structure is similar to the IMF in that the
wealthiest countries have the majority voting rights (USA
16%)

14. IGOs
• Often give some powers to EU and USA
• Make things that are in their best interest
• Often operate some form of veto policy
• Tend to group vote
• They therefore can block policy meaning
it’s very hard to ‘go it alone’
• Mainly used now for NATO peacekeeping
• G7 led focus on debt and poverty
• EU forcing through carbon emissions.

15. SAPS – 5 steps to freedom
Five Steps What WB/ IMF believe
will happen
What can actually
happen
1. Reduce tariffs and
protection for domestic
industry
2. Remove or decrease
financial regulations
3. Remove or reduce state
control of industries and
remove any price controls
4. Cut social spending to
reduce debt
5. Increase interests rates
to reduce inflation

17. Example Question
• Evaluate the need for superpowers to play
a key role in trade and international
decision-making to maintain their status.
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