World bank

he World Bank is a United Nations international financial institution that provides loans
to developing countries for capital programs. The World Bank is a component of the World
Bank Group, and a member of the United Nations Development Group.
The World Bank's official goal is the reduction of poverty. According to its Articles of
Agreement, all its decisions must be guided by a commitment to the promotion of foreign
investment and international tradeand to the facilitation of capital investment

Function and Objectives:

The following objectives are assigned by the World Bank:

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

development.

To induce long-run capital investment for assuring Balance of Payments (BoP)

equilibrium and balanced development of international trade.

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

To ensure the implementation of development projects so as to bring about a smooth

transference from a war-time to peace economy.

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

1. To provide guarantee on private loans or capital investment.
2. If private capital is not available even after providing guarantee, then
IBRD provides loans for productive activities on considerate conditions.

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

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.

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

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

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

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

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.

IMF
The International Monetary Fund (IMF) is an international organization that was initiated in
1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries.
The IMF's stated goal was to assist in the reconstruction of the world's international payment
system postWorld War II
The IMF is a self-described "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.

Functions and objectives

To promote international monetary cooperation through a permanent institution which

provides the machinery for consultation and collaboration on international monetary
problems.

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.

To promote exchange stability, to maintain orderly exchange arrangements among

members, and to avoid competitive exchange depreciation.

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.

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.

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 IPurposes, International Monetary Fund, accessed May 23, 2011,

Differences and similarities B/W W.B and IMF

During the 1930s, the Great Depression resulted in failing economies. The fall of the gold
standard led countries to raise trade barriers, devalue their currencies to compete against one
another for export markets and curtail usage of foreign exchange by their citizens. All these
factors led to declining world trade, high unemployment, and plummeting living standards in
many countries. In 1944, the Bretton Woods Agreement established a new international
monetary system. The creation of the International Monetary Fund (IMF) and the World Bank
were two of its most enduring legacies.
The World Bank and the IMF, often called the Bretton Woods Institutions, are twin
intergovernmental pillars supporting the structure of the worlds economic and financial order.
Both have taken on expanding roles, and there have been renewed calls for additional expansion
of their responsibilities, particularly in the continuing absence of a single global monetary

agreement. The two institutions may seem to have confusing or overlapping functions. However,
while some similarities exist (see the following figure), they are two distinct organizations with
different roles.

Similarities

Owned and directed by the government of member nations

Almost every country is the member both institution

Both concern themselves with economic issues

Both focus on broadening and strengthening the economies of their member nations

Hold joint annual meeting

Headquarter in Washington DC

Share joint task forces, sessions and research efforts

Differences
Oversees the international monetary system

Seeks to promote the economic development

of the world's poorer countries

Promotes exchange stability and orderly

exchange relations among its member countries

Assists developing countries through longterm financing of development projects and

programs

Assists all members - both industrial and

developing countries - that find themselves in
temporary balance of payments difficulties by
providing short- to medium-term credits

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)

Supplements the currency reserves of its

members through the allocation of SDRs (special Encourages private enterprises in developing
drawing rights); to date SDR 21.4bn has been
countries through its affiliate, the
issued to member countries in proportion to their International Finance Corporation (IFC)
quotas
Draws its financial resources principally from

Acquires most of its financial resources by

the quota subscriptions of its member countries

borrowing on the international bond market

Has at its disposal fully paid-in quotas now

totaling SDR 145bn (135bn)

Has an authorized capital of $184bn, of

which members pay in about 10pc

Has a staff of 2,300 drawn from 182 member

countries

Has a staff of 7,000 drawn from 180

member countries