International

Organizations

IMF
Established on Dec 27, 1945 with 29
member countries
IMF membership is prerequisite for
membership of WB
Current membership no. 187

Objectives
Promote international monetary cooperation
Facilitate expansion and balanced growth of
international trade
Promote exchange rate stability and
maintain orderly exchange arrangements
among members
Make available to members the general
resources on a temporary basis to enable
them to correct BOP problems

Organization
Board of Governors- highest decision
making body (member countrys finance
minister of finance of Central Bank
Governor- meet once a year)
Executive Board- 24 directors responsible
for conducting the business of IMF
Managing Director- responsible for
conducting ordinary business 5 year
term
Staff of International civil servantsadvisory board 24 IMF governors- meets
twice a year

Resources
1.

Subscription by members- Quota expressed in

Special Drawing Rights (SDRs). Quotas determine
the voting power of members, a members quota
reflects its economic size. Board of governors
decides on the proportion to be paid in SDRs or in
the members currency. Generally, 25 % of
members quota is in SDRs or currencies of other
members that are selected by the IMF; it pays the
remainder in its own currency. As quota is based on
economic size, the developed countries account for
substantially larger share of total voting rights.

2. Borrowings: IMF is authorized under its

articles of agreement to supplement its
resources by borrowing (From official
entities & private sources)
Two sources of supplementary finance are
General Arrangements to Borrow (GAB), and
New Arrangements to borrow (NAB)
GAB- IMF borrows specific amounts of
currencies from 11 industrial countries or
their central banks at market-related
interest rates.
NAB- augment funds that are available
under GAB

Financing Facilities and

Policies

The maximum amount of financing a

member can obtain from the IMF is based
on its Quota. Under regular IMF facilities, a
member can gradually borrow up to 300 %
of its quota.
Two of the IMFs facilities- the SRF and CCLdo not specify a limit, however, the
Executive Board has indicated that CCL
access is expected to be in the range of 300
% to 500% of Quota.

Regular Lending Facilities: For drawings

upto 25% of a members quota( first credit
tranche)the members must demonstrate
that they are making responsible efforts to
overcome their BoP difficulties. Drawings
above 25 % of Quota (upper credit tranche)
are made in installments as the borrower
meets certain established performance
targets
a)stand-by-arrangements- to resolve BoP
problems of a largely cyclical nature
b) Extended Fund Facility- to correct BoP
problems that stem largely from structural
problems and take longer period to correct.
1.

2. Special Lending Facilities:

a)Supplemented Reserve Facility (SRF)- is
intended to help member countries that are
experiencing exceptional BoP problems which
are created by a large, short term financing
need, which results from a sudden and
disruptive loss of market confidence.
b) Contingent Credit Lines (CCL)- intended to
be preventive measure, solely for members
that are concerned about their potential
vulnerability
c)Compensatory Financing Facility (CFF)- to
members that are experiencing a temporary
shortfall in export earnings

3. Concessional Lending facility:

Poverty Reduction and Growth facility (PRGF)are expected to be based on a strategy that
is designed by the borrowing country to
reduce poverty
4. Other Policies:
Emergency Assistance (Natural Disaster)
Emergency Financing mechanism (EFM)

World Bank
The

World Bank is an international financial institution

that provides loans to developing countries for capital
programmes. The World Bank's official goal is the
reduction of poverty. By law, all of its decisions must be
guided by a commitment to promote foreign investment,
international trade and facilitate capital investment.

The

World Bank differs from the World Bank Group, in that

the World Bank comprises only two institutions: the
International Bank for Reconstruction and Development
(IBRD) and the International Development Association
(IDA), whereas the latter incorporates these two in
addition to three more:[4] International Finance Corporation
(IFC), Multilateral Investment Guarantee Agency (MIGA),
and International Centre for Settlement of Investment
Disputes (ICSID).

Organization
All powers of the bank are vested in Board
of Governors.
The Board of Governors consists of
Governors for each member country. All
power of the bank are vested in the Board
of Governors. There are 21 executive
directors

Objectives
1.

2.

3.

4.

To assist reconstruction and development of

territories of the members by facilitating the
investment of capital for productive purposes
To restore the economies of member countries
destroyed and destructed by war
To encourage development of productive
facilities and resources in the less-developed
countries
To encourage an international investment of
the productive resources of the members,
thereby assisting in raising the productivity,
the standard of living and the conditions of
labour in the territories.

Financing Policies
1.
2.

Structure Adjustment Lending (SAL)

Special Action Programme (SAP)

WBs Assistance to India

India is one of the founder member of WB
and was one of the largest beneficiaries of
WBs Assistance, until China became a
member of WB in 1980s
Now there are number of beneficiaries than
India.
Although WBs assistance in absolute term
is very large but the per capita assistance
has been low

Criticism of World Bank and IMF

approaches adopted by the World Bank and
the IMF in formulating their policies, and the
way they are governed.
The World Bank and the IMF often attach
loan conditionalities based on what is
termed the Washington Consensus,
focusing on liberalizationof trade,
investment and the financial sector,
deregulation and privatization of
nationalized industries.

Many infrastructure projects financed by the

World Bank Group have social and environmental
implications for the populations in the affected
areas and criticism has centred on the ethical
issues of funding such projects. For example,
World Bank-funded construction of hydroelectric
dams in various countries has resulted in the
displacement of indigenous peoples of the area.
There are also criticisms against the World Bank
and IMF governance structures which are
dominated by industrialized countries. Decisions
are made and policies implemented by leading
industrialized countriesthe G7because they
represent the largest donors without much
consultation with poor and developing countries.

International Development
Association (IDA)

The International Development Association

(IDA), is the part of the World Bank that helps the
worlds poorest countries. It complements the
World Bank's other lending arm the
International Bank for Reconstruction and
Development (IBRD) which serves middleincome countries with capital investment and
advisory services.
IDA was created on September 24, 1960 and is
responsible for providing long-term, interest-free
loans to the world's 80 poorest countries, 39 of
which are in Africa.

Loans

IDA loans address primary education, basic

health services, clean water supply and
sanitation, environmental safeguards,
business-climate improvements,
infrastructure and institutional reforms.
These projects are intended to pave the way
toward economic growth, job creation,
higher incomes and better living conditions.

Mission Statement
The International Development Association (IDA) is the part of the World
Bank that helps the worlds poorest countries reduce poverty by
providing no- interest loans and grants for programs aimed at boosting
economic growth and improving living conditions. IDA funds help these
countries deal with the complex challenges they face in striving to meet
the Millennium Development Goals. They must, for example, respond to
the competitive pressures as well as the opportunities of globalization;
arrest the spread of HIV/AIDS; and prevent conflict or deal with its
aftermath.
IDAs long-term (streched over 35 to 40 years), no-interest loans pay for
programs that build the policies, institutions, infrastructure and human
capital needed for equitable and environmentally sustainable
development. IDAs goal is to reduce inequalities both across and within
countries by allowing more people to participate in the mainstream
economy, reducing poverty and promoting more equal access to the
opportunities created by economic growth.IDA also provides grants to
countries at risk of debt distress.

Asian Development Bank

(ADB)
The Asian Development Bank (ADB) is a
regional development bank established on
22 August 1966 to facilitate economic
development of countries in Asia.
From 31 members at its establishment, ADB
now has 67 members - of which 48 are from
within Asia and the Pacific and 19 outside

Organization
The highest policy-making body of the bank is the
Board of Governors composed of one representative
from each member state. The Board of Governors, in
turn, elect among themselves the 12 members of the
Board of Directors and their deputy. Eight of the 12
members come from regional (Asia-Pacific) members
while the others come from non-regional members.
The Board of Governors also elect the bank's President
who is the chairperson of the Board of Directors and
manages ADB. The president has a term of office
lasting five years, and may be reelected. Traditionally,
and because Japan is one of the largest shareholders
of the bank, the President has always been Japanese.
The current President is Haruhiko Kuroda.

Lending

The ADB offers "hard" loans from ordinary

capital resources (OCR) on commercial
terms, and the Asian Development Fund
(ADF) affiliated with the ADB extends "soft"
loans from special fund resources with
concessional conditions.

IMF vs. WORLD BANK

World Bank provides long-term loans for promoting balanced economic

development, while IMF provides short-term loans to member countries
for eliminating BOP disequilibrium.

Both these institutions are complementary to each other. Few

economists have even suggested that the two organizations should be
merged.

IMF and World bank collaborate regularly and are involved in several
joint initiatives.

The IMF and the World Bank introduced the concept of Aid for Trade
for the least developed countries