IMF, The World Bank and Asian Development Bank

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[<–2/”>a >su_heading]World Bank[/su_heading]

The International Bank for Reconstruction and Development (IBRD), commonly referred to as the World Bank, is an international financial institution whose purposes include assisting the development of its member nation’s territories, promoting and supplementing private foreign Investment and promoting long-range balance Growth in international trade.

The World Bank was established in December 1945 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. It opened for business in June 1946 and helped in the reconstruction of nations devastated by World War II. Since 1960s the World Bank has shifted its focus from the advanced industrialized nations to developing third-world countries.

Organization and Structure:

The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the Loan Committee and the president and other staff members. All the powers of the bank are vested in the Board of Governors which is the supreme policy making body of the bank.

Capital Resources of World Bank:

The initial authorized capital of the World Bank was $ 10,000 million, which was divided in 1 lakh Shares of $ 1 lakh each. The authorized capital of the Bank has been increased from time to time with the approval of member countries.Member countries repay the share amount to the World Bank in the following ways:

  1. 2% of allotted share are repaid in gold, US dollar or Special Drawing Rights (SDR).
  2. Every member country is free to repay 18% of its capital share in its own currency.
  3. The remaining 80% share deposited by the member country only on demand by the World Bank.

Objectives:

The following objectives are assigned by the World Bank:

 

  1. To provide long-run capital to member countries for economic reconstruction and development.

 

  1. To induce long-run capital investment for assuring Balance of Payments (BoP) equilibrium and balanced development of international trade.

 

  1. To provide guarantee for loans granted to small and large units and other projects of member countries.

 

  1. To ensure the implementation of development projects so as to bring about a smooth transference from a war-time to peace economy.

 

  1. To promote capital investment in member countries by the following ways;

 

(a) To provide guarantee on private loans or capital investment.

 

(b) If private capital is not available even after providing guarantee, then IBRD provides loans for productive activities on considerate conditions.

 

Functions:

 

World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to 20 years duration.

 

The main functions can be explained with the help of the following points:

 

  1. World Bank provides various technical Services to the member countries. For this purpose, the Bank has established “The Economic Development Institute” and a Staff College in Washington.

 

  1. Bank can grant loans to a member country up to 20% of its share in the paid-up capital.

 

  1. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.

 

  1. Generally, Bank grants loans for a particular project duly submitted to the Bank by the member country.

 

  1. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.

 

  1. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors have to seek prior permission from those counties where this amount will be collected.

[su_heading]International Monetary Fund(IMF)[/su_heading]

The major roles of the International Monetary Fund are as follows:

  1. To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
  2. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of EMPLOYMENT and real income and to the development of the productive resources of all members as primary objectives of economic policy.
  3. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
  4. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of Foreign Exchange restrictions which hamper the growth of world trade.
  5. To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
  6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.“Articles of Agreement: ARTICLE I—Purposes,” International Monetary Fund

[su_heading]World Trade Organization(WTO)[/su_heading]

The important Objectives of WTO are:

1. To improve the standard of living of people in the member countries.

2. To ensure full employment and broad increase in effective demand.

3. To enlarge production and trade of goods.

4. To increase the trade of services.

5. To ensure optimum utilization of world resources.

6. To protect the Environment.

7. To accept the Concept of Sustainable Development.

Functions:

The main functions of WTO are discussed below:

1. To implement rules and provisions related to Trade Policy review mechanism.

2. To provide a platform to member countries to decide future strategies related to trade and tariff.

3. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade.

4. To administer the rules and processes related to dispute settlement.

5. To ensure the optimum use of world resources.

6. To assist international organizations such as, IMF and IBRD for establishing coherence in Universal Economic Policy determination.

Asian Development Bank

The Asian Development Bank was conceived in the early 1960s as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world.

A resolution passed at the first Ministerial Conference on Asian Economic Cooperation held by the United Nations Economic Commission for Asia and the Far East in 1963 set that vision on the way to becoming reality.

The Philippines capital of Manila was chosen to host the new institution, which opened on 19 December 1966, with 31 members that came together to serve a predominantly agricultural region. Takeshi Watanabe was ADB’s first President.

During the 1960s, ADB focused much of its assistance on food production and rural development.ADB is composed of 67 members, 48 of which are from the Asia and Pacific region.ADB assists its members, and partners, by providing loans, technical assistance, grants, and Equity investments to promote social and economic development,

The International Monetary Fund (IMF) is an international financial institution that was founded in 1944 to promote international monetary cooperation, exchange stability, and orderly exchange arrangements. It also provides loans to countries experiencing balance of payments difficulties. The IMF’s Articles of Agreement, which are the organization’s constitution, were signed by 44 countries at the Bretton Woods Conference. The IMF’s headquarters are located in Washington, D.C.

The IMF’s Board of Governors is the organization’s highest decision-making body. It is made up of one governor from each member country. The Board of Governors meets once a year, and its decisions are made by a majority vote. The Board of Governors delegates most of its powers to the Executive Board, which is made up of 24 Executive Directors. The Executive Directors are elected by the member countries, and they represent the interests of their respective countries. The Managing Director is the IMF’s chief executive officer. He or she is appointed by the Executive Board and serves a five-year term.

The IMF’s main functions are to promote international monetary cooperation, exchange stability, and orderly exchange arrangements. It also provides loans to countries experiencing balance of payments difficulties. The IMF’s lending is designed to help countries overcome short-term financial problems and to promote economic growth. The IMF also provides technical assistance to member countries on a wide range of economic issues.

The World Bank is an international financial institution that provides loans to developing countries for capital programs. It is a vital source of financial and technical assistance to developing countries around the world. The World Bank Group comprises two development institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD provides loans to middle-income and creditworthy low-income countries, while IDA provides grants and low- or no-interest loans to the poorest countries.

The World Bank was founded in 1944 at the Bretton Woods Conference. The original purpose of the World Bank was to help finance the reconstruction of Europe after World War II. However, the World Bank’s mission has since expanded to include the fight against POVERTY and the promotion of sustainable development.

The World Bank Group is headquartered in Washington, D.C. It has 189 member countries. The World Bank Group is governed by the Board of Governors, which is made up of one governor from each member country. The Board of Governors meets once a year. The World Bank Group is managed by the Board of Executive Directors, which is made up of 25 Executive Directors. The Executive Directors are elected by the member countries, and they represent the interests of their respective countries. The President of the World Bank is the chief executive officer of the World Bank Group. He or she is appointed by the Board of Executive Directors and serves a five-year term.

The World Bank Group provides a wide range of financial and technical assistance to developing countries. The World Bank Group’s lending is designed to help countries achieve their development goals. The World Bank Group also provides technical assistance to developing countries on a wide range of economic and social issues.

The Asian Development Bank (ADB) is a multilateral development bank that promotes economic growth and development in Asia and the Pacific. ADB was founded in 1966 and is headquartered in Manila, Philippines. ADB’s membership comprises 68 members, including 48 from the Asia-Pacific region.

ADB’s mission is to help its developing member countries reduce poverty and improve their Quality Of Life. ADB does this by providing loans, grants, and technical assistance to its members. ADB also works to promote Good Governance, regional cooperation, and knowledge sharing.

ADB’s lending portfolio is focused on Infrastructure-2/”>INFRASTRUCTURE, energy, agriculture, and social development. ADB also provides grants to support its members’ efforts to achieve the Millennium Development Goals. ADB’s technical assistance program supports its members’ efforts to develop policies, institutions, and capacity.

ADB is committed to Transparency and Accountability. ADB publishes an annual report, which provides information on its activities and performance. ADB also publishes a range of other reports, including sector studies, policy papers, and economic analyses.

ADB is a valuable partner for its developing member countries. ADB’s loans, grants, and technical assistance help to promote economic growth and development in Asia and the Pacific.

Here are some frequently asked questions and short answers about international financial institutions:

  1. What is an international financial institution?
    An international financial institution (IFI) is a financial institution that provides loans to countries or other borrowers. IFIs are typically funded by governments and multilateral organizations, and they use their funds to promote economic development and stability.

  2. What are the different types of international financial institutions?
    There are many different types of international financial institutions, but some of the most well-known include the International Monetary Fund (IMF), the World Bank, and the Asian Development Bank. These institutions provide loans to countries for a variety of purposes, such as economic development, poverty reduction, and disaster relief.

  3. What are the benefits of international financial institutions?
    IFIs can provide a number of benefits to countries, including:

  4. Increased access to capital: IFIs can provide loans to countries that may not be able to obtain financing from Commercial Banks. This can help countries to finance important development projects.

  5. Technical assistance: IFIs can provide technical assistance to countries on a variety of issues, such as economic planning, financial management, and public sector reform. This can help countries to improve their economic performance.

  6. Policy dialogue: IFIs can engage in policy dialogue with countries to help them to develop and implement Sound economic policies. This can help countries to achieve their economic goals.

  7. What are the criticisms of international financial institutions?
    IFIs have been criticized for a number of reasons, including:

  8. They are often seen as being too powerful and unaccountable.

  9. They have been accused of imposing harsh economic conditions on countries in exchange for loans.

  10. They have been accused of failing to adequately address the needs of the poor.

  11. What is the future of international financial institutions?
    The future of IFIs is uncertain. Some people believe that they will continue to play an important role in the global economy, while others believe that they will become less relevant as countries become more developed.

Question 1

Which of the following is not a multilateral development bank?

(A) The World Bank
(B) The Asian Development Bank
(C) The International Monetary Fund
(D) The European Bank for Reconstruction and Development

Answer
(C) The International Monetary Fund is a specialized agency of the United Nations that was established to promote international monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It is not a multilateral development bank.

Question 2

Which of the following is the largest multilateral development bank?

(A) The World Bank
(B) The Asian Development Bank
(C) The European Bank for Reconstruction and Development
(D) The Inter-American Development Bank

Answer
(A) The World Bank is the largest multilateral development bank, with a total lending portfolio of over $1.8 trillion. It is a vital source of financial and technical assistance to developing countries around the world.

Question 3

The World Bank Group is composed of five institutions:

(A) The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
(B) The International Monetary Fund (IMF), the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank.
(C) The United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF), the United Nations Population Fund (UNFPA), the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), and the United Nations High Commissioner for Refugees (UNHCR).
(D) The World Health Organization (WHO), the Food and Agriculture Organization (FAO), the United Nations Educational, Scientific and Cultural Organization (UNESCO), the United Nations Industrial Development Organization (UNIDO), and the International Labour Organization (ILO).

Answer
(A) The World Bank Group is composed of five institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).

Question 4

The World Bank’s mission is to:

(A) fight poverty and improve living standards for people in the developing world.
(B) promote sustainable economic growth and development.
(C) reduce poverty and inequality.
(D) all of the above.

Answer
(D) The World Bank’s mission is to fight poverty and improve living standards for people in the developing world. It does this by providing financial and technical assistance to developing countries, as well as by promoting sustainable economic growth and development.

Question 5

The World Bank’s lending portfolio is composed of:

(A) loans to governments of developing countries.
(B) loans to private sector companies in developing countries.
(C) guarantees for private sector investment in developing countries.
(D) all of the above.

Answer
(D) The World Bank’s lending portfolio is composed of loans to governments of developing countries, loans to private sector companies in developing countries, and guarantees for private sector investment in developing countries.

Question 6

The World Bank’s IDA is a concessional lending window that provides loans to the poorest countries in the world. IDA loans are:

(A) interest-free.
(B) have a very low interest rate.
(C) have a long repayment period.
(D) all of the above.

Answer
(D) IDA loans are interest-free, have a very low interest rate, and have a long repayment period. This makes them affordable for the poorest countries in the world.

Question 7

The World Bank’s IFC is a private sector development institution that provides financial and technical assistance to private sector companies in developing countries. The IFC’s investments are:

(A) equity investments.
(B) debt investments.
(C) guarantees.
(D) all of the above.

Answer
(D) The IFC’s investments are equity investments, debt investments, and guarantees. This allows the IFC to support a wide range of private sector activities in developing countries.

Question 8

The World Bank’s MIGA is a political risk insurance agency that provides guarantees to private sector investors in developing countries. MIGA’s guarantees protect investors against:

(A) expropriation.