1. The International Monetary Fund
and the World Bank
presented by
Vimarsh Padha ,Abhishek and Tahir Fazal
Shri Mata Vaishno Devi University kakryal,Katra
J&K
Instructor: Dr. Ashutosh Vashishtha
NOV.26 , 2014
“an organizational perspective”
2. Bretton Woods
• In response to post-war reconstruction and to
discuss the future of international economic
cooperation
• In July of 1944, representatives from 44
countries met at Bretton Woods, New
Hampshire.
• Creation of two institutions,
1.International Monetary Fund (IMF)
2.International Bank for Reconstruction and Development;
a.k.a. the “World Bank.”
3. The IMF Organizational Background
History
• IMF was founded by John Maynard
Keynes and 44 charter nations
during the United Nations Monetary
and Financial Conference in July
1944 as the Bretton Woods
Institution.
• Headquartered: Bretton Woods,
New Hampshire
• Recognized in December 27, 1947
as the International Monetary Fund
with 29 of the 44 members
remaining.
March 31,2014
• Headquartered: Washington,
DC
• Member nations: 188
• Employees: 2,830
• Funds Available: $209.5 billion
• Loans Outstanding: $16.1 billion
• 64 Countries owe the IMF (total)
• 56 Countries are low-income
owed $6.5 billion
• 8 Countries (are not low-
income) owed $9.6 billion
4. Purpose of the IMF
IMF Agenda
• Facilitate global monetary
exchange
• Promote exchange stability
• Organize exchange
arrangements
• Foster economic growth
• Enhance higher employment
• Provide temporary financial
assistance
• Provide training & advice for
balance of payment issues
3 Primary Tasks of IMF
• Surveillance
• Monitoring financial &
economic activities to
develop policies, strategies
& recommendations for
proactive crisis prevention.
• Lending
• Funding for short-term, low-
interest loans for
macroeconomic issues
related to political &
economic stability.
• Technical Assistance
• Training & consultation for
loan applications, policy
reforms and the
interpretation of data.
5. Facilities
Facilities are loan programs set-up by the IMF to address specific needs of member
nations. It should also be noted that IMF funding is disbursed in phases so that
adjustments may be made to mitigate risk.
Facility Purpose Type Duration Repay Surcharge
Stand By Arrangements
(Most lucrative loan.)
BoP Short-term 1 – 2 yrs 2 - 4 yrs Avg 4%
Extended Fund Facility
(Recommended Reforms)
BoP Long-Term 3 yrs 5 – 7 yrs
Supplemental Reserve Facility
(Developing Nations)
Economic
Recovery
( masssive
capital
outflows)
Short-term
Large-scale
financing
1 yr 1 – 1.5 yrs Avg 4%
Compensatory Financing Facility
(Global Commodity Price Issues)
Drop in
Export
Earnings(lik
-e during
disasters)
Short-term 1 – 2 yrs 2 - 4 yrs
Emergency Assistance Loans
(Disasters & Post-War)
(Subsidies may be available)
Disaster
Recovery
Long-term
(Base Rate)
3 - 5 yrs
6. SDRs
• The IMF issues an international reserve asset known as
Special Drawing Rights.
• Can supplement the official reserves of member countries.
• Total allocations amount to about SDR 204billion (some
$309billion). IMF members can voluntarily exchange SDRs for
currencies among themselves.
8. Funding Process Overview
1. Member nation identifies a need from surveillance
& evaluation data.
2. Implementation of policy changes and
recommendations for compliance.
3. File Letter of Intent (doc. outlining agreement
between two or more parties before agreement is
finalised).
4. Monitor the use of phased funding and economic
conditions, watching expenditures, growth and
lowering of BoP.
5. Evaluation of previous disbursements, economic
trends, growth and impact to correct problem.
6. Reassess and resolve unforeseen results due to
policy changes, economic conditions and external
factors.
9. The Future of the IMF
• Surveillance has been broadened to include capital markets
and investments.
• Transparency Standards & Codes have been enhanced in
banking supervision, accounting and many aspects of the
global financial infrastructure to thwart terrorist activities through
money laundering and illicit use of the international financial
system.
• Member nations will face challenges in trying to adhere to
policies and apply and ratify them in their own countries.
• Membership will expand with nations rising in status and
assuming more financial responsibility.
12. MEMBERSHIP
Generally every member country of the IMF automatically becomes the member of
World Bank. Similarly, any country quitting IMF is automatically expelled from the World
Bank’s membership.
But, under a certain provision a country leaving the membership of IMF can continue its
membership with World Bank if 75% members of the Bank give their vote in its favour.
Any member country can quit the Bank simply by written notice to the Bank, but such
country has to repay the granted loans on terms and conditions decided at the time of
sanctioning the loan.
Any country working against the guidelines of Bank can be debarred from membership
by the Board of Governors.
World Bank has two types of members: Founder members and General members.
World Bank has 30 founder members. India is also one of the founding members.
At present total membership is 188
13. VOTING RIGHT
Voting right of members is determined on the basis of
their share in the total capital of the Bank.
Each member has 250 votes plus one additional vote for
each 1,00,000 shares of the capital stock held.
14. NEED OF WORLD BANK
BUILD
CAPACITY
CREATE
INFRA
STRUCTURE
DEVELOP
FINANCIAL
SYSTEM
COMBAT
CORRUPTION
15. 5 PRIORITIES OF WORLD BANK
• World bank provides the largest external funds for education.
• It is a big support in reducing poverty.
• It provides fund for biodiversity projects.
• it helps to bring clean water, electricity, and transport to poor
people.
• It helps in controlling emerging conflicts.
16. OPERATIONS
• Fund generation
• Grants
• Analytic & Advisory Services
• Capacity building
• Granting reconstruction & development loans
• Providing loans to governments & private concerns
• Promoting foreign investment
• Providing technical, economic and monetary advice
• Encouraging industrial development
17. AREA OF OPERATION
• Agriculture and Rural Development
• Economic policy
• Education
• Energy
• Environment
• Financial sector
• Health, nutrition and population industry
• Information, computing and telecommunication
• Law and justice
• Private sector
• Social protection
• Trade
• Water resources
• Water supply and sanitation
18. SUPPORT TO INDIA
• India is home to over one-quarter of the world’s poor,
and the World Bank Group is focused on sharing best
practices as well as financing for development as a part
of its mission to help reduce global poverty.
19. Difference Between IMF & World Bank
• The 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 short- to medium-term credits
• 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 188 member countries
20. Cont.….
• 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)
• 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 188 member countries
