The International Monetary Fund and World Bank

Origin of IMF and World Bank

The agreement reached at Bretton Woods established two multinational institutions

The International Monetory Fund (IMF) and The World Bank

IMF - Overview
The IMF Works to foster global growth and economic stability It has 188 member countries. Its members are represented through a quota system broadly based on their relative size in the global economy.

Purpose of IMF According to the Articles of Agreement

To promote International monetary cooperation and exchange rate stability. Facilitates the balanced growth of International trade Provides resources to help members in balance of payments difficulties Assist with poverty reduction

How IMF do it?

Through its economic surveillance, it keeps track of the economic health of its member countries, alerting of them to risks on horizon and providing policy advice. Lends to member countries with balance of payments problems Provides technical assistance and training to help member countries improve economic management.

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

New Arrangements to Borrow (NAB)

which is designed as a backstop to the Funds

quota-based financing mechanism, and which is only to be used when supplementary resources to quota resources are required

Special Drawing Right (SDRs)

SDR is an international reserve asset, created by the IMF in 1969 Purpose was to solve the problem of international liquidity. Its value is based on a basket of four key international currencies Euro, Japanese Yen, Pound Sterling and US dollar. Referred to as paper gold and has no physical form The exchange rate is USD $1 = 0.647238 SDR

Organization

Board of Governors Highest governing authority in IMF

Each member country appoints one Governor

and an Alternate Governor The Board decides on major policy issues.

Executive Board
Consists of 24 Executive Directors with

Managing Director as its Chairman. Usually meets 3 times a week at its HQ in Washington DC.

The Development Committee

A joint committee of the Board of governors of

the IMF and the World Bank.

International Monetary and Financial Committee

Committee of Governors that deals with the

issues relating to the IMF.

Historically the IMF's Managing Director has been European and the president of the World Bank has been from the United States. The Current MD of IMF is Christine Lagarde from France. The Current President of World Bank is Jim Yong Kim, a Korean-American.

World Bank Group Briefing

International Bank for Reconstruction and Development: to reduce poverty International Development Association: zero-interest loans to poorest countries

International Finance Corporation: promotes private sector development

Multilateral Investment Guarantee Agency: promotes FDI International Center for the Settlement of Investment Disputes: arbitrates between governments and investors

International Bank for Reconstruction and Development

Established in 1944 at the Bretton Woods Conference

To finance the reconstruction of European

nations devastated WWII Lends to governments of middle-income and creditworthy low-income countries with the aim to reduce poverty

World Banks central institution

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

International Development Association

Established in 1960
assist the poorest developing countries

Lends to countries with annual per capita income which does not exceed USD $1175. 172 member countries and 81 borrowing countries, nearly half of them which are in Africa

International Finance Corporation

Become operational in 1956 to reduce poverty and improve people's lives in an environmentally and socially responsible manner (184 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

Multilateral Investment Guarantee Agency

Established in 1988 Helps developing countries attract foreign investment

provides investment marketing services and

legal advisory services to its members

Focuses on members countries of IDA and countries affected by Armed conflict. Has 179 members

International Center for the Settlement of Investment Disputes

Established in 1966 as a multilateral specialized dispute resolution institution to encourage international flow of investment and mitigate non-commercial risks. Provides facilities for the reconciliation of disputes between governments and foreign investors 140 members

Thank You