Philip Brear

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IMF and the World Bank

• Presented By
• Philip Brear
• Financial Services
• Programme

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The IMF
The International Monetary Fund
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What is the IMF ?
A Global Institution

• The only international agency involved in active
  dialogue with virtually every country on economic
  policies .
• The IMF is the principal forum for discussing
  national economic policies in a global context

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What is the IMF ?
A Global Institution

• By working to strengthen the international
  financial system and to accelerate progress
  toward reducing poverty, as well as promoting
  sound economic policies among all its member
  countries, the IMF is helping to make
  globalization work for the benefit of all.

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What is the IMF ?

• The IMF is a specialized agency of the United
  Nations system set up by treaty in 1945 to help
  the world economy.
• It is the central institution of the
  international monetary system, which enables
  business to take place between countries
• It aims to prevent crises in the system by
  encouraging countries to adopt sound economic
  policies
• Most importantly it is a fund available for
  members needing temporary LOANS.
• H.Q. is located in Washington, D.C.

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The origins of the IMF

• In 1944 representatives of 45 governments agreed
  on a framework for economic cooperation designed
  to avoid a repetition of the disastrous economic
  policies that contributed to the Great Depression
  of the 1930s
• During the 1930s economic activity in the major
  industrial countries weakened and countries
  attempted to defend their economies by more
  restrictions on imports
• this worsened the downward spiral in world trade,
  output and employment.
• Some countries stopped their citizens' freedom to
  buy goods abroad
• some devalued their currencies and some
  introduced complicated restrictions on their
  citizens' freedom to hold foreign exchange.
• world trade declined sharply, as did employment
  and living standards in many countries.

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Articles of Agreement
The IMF came into existence in December 1945,
when the first 29 countries signed its Articles
of Agreement
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Articles of Agreement
The IMF is now governed by its membership of 184
countries.
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The IMF

• The statutory purposes of the IMF today are the
  same as when they were formulated in 1944.

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IMFs purposes include

• promoting the balanced expansion of world trade,
• the stability of exchange rates,
• the avoidance of competitive currency
  devaluations,
• the orderly correction of a country's balance of
  payments problems

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To serve these purposes the IMF

• monitors economic and financial developments in
  member countries and at the global level
• gives policy advice to its members
• lends to member countries with financial problems
• provides member countries with technical
  assistance and training

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Recent Examples

• IMF giving policy advice to a member
• In 2000, the IMF urged the Japanese government to
  stimulate growth by keeping interest rates low,
  encouraging restructuring, deregulation and
  competition

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Recent Examples

• IMF giving loans to members
• During the 199798 Asian financial crisis, IMF
  acted swiftly to help Korea
• It pledged 21 billion to assist Korea reform its
  economy, restructure its financial and corporate
  sectors, and recover from recession.
• Within four years, Korea had recovered
  sufficiently to repay the loans.
• In October 2000, the IMF approved an additional
  52 million loan for Kenya to help it cope with
  the effects of a severe drought, as part of a
  three-year 193 million loan under the IMF's
  Poverty Reduction and Growth Facility, a
  concessional lending program for low-income
  countries.

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Recent Examples

• Technical assistance training
• Following the collapse of the Soviet Union, the
  IMF stepped in to help the Baltic states, Russia,
  and other former Soviet countries set up treasury
  systems for their central banks as part of the
  transition to market-based economic systems.

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Where does IMF money come from ?
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Which members borrow ?
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Types of Loans
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IMF Technical Assistance
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The World Bank
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World Bank Mission Statement
To fight poverty with passion and professionalism
for lasting results. To help people help
themselves and their environment by providing
resources, sharing knowledge, building capacity,
and forging partnerships in the public and
private sectors. To be an excellent institution
able to attract, excite, and nurture diverse and
committed staff with exceptional skills who know
how to listen and learn.
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World Bank Principles and Values
Our Principles Client centered, working in
partnership, accountable for quality results,
dedicated to financial integrity and
cost-effectiveness, inspired and innovative. Our
Values Personal honesty, integrity, commitment
working together in teams with openness and
trust empowering others and respecting
differences encouraging risk-taking and
responsibility enjoying our work and our
families.
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Quote from the President
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What is the World Bank ?
The World Bank Group is one of the world's
largest sources of development assistance. In
2002, the institution provided US19.5 billion in
loans to its client countries. It works in more
than 100 developing economies with the primary
focus of helping the poorest people and the
poorest countries.
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World Bank Group
Founded in 1944, the World Bank Group is one of
the world's largest sources of development
assistance. The Bank, which provided US19.5
billion in loans to its client countries in
fiscal year 2002, is now working in more than 100
developing economies, bringing a mix of finance
and ideas to improve living standards and
eliminate the worst forms of poverty. For each
of its clients, the Bank works with government
agencies, nongovernmental organizations, and the
private sector to formulate assistance strategies
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Who owns the World Bank ?
The World Bank is owned by more than 184 member
countries. Member countries are shareholders who
carry ultimate decision-making power in the World
Bank.
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World Bank Emphasis

• The World Bank emphasises the need for
• Investing in People
• Focusing on social development
• Strengthening the ability of governments to
  deliver quality services
• Protecting the environment
• Supporting and encouraging private business
  development
• Promoting reforms to create a stable economy

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World Bank Group

• The World Bank Group consists of FIVE closely
  associated institutions, all owned by member
  countries.
• Each institution plays a distinct role in the
  mission to fight poverty and improve living
  standards for people in the developing world.
• The term World Bank Group encompasses all FIVE
• The term WORLD BANK refers specifically to TWO
  of the five IBRD and IDA

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World Bank

• IBRD is The International Bank for
  Reconstruction and Development
• Established in 1945 and has 184 members
• IDA is The International Development
  Association
• Established in 1960 and has 162 members

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International Development Association
Contributions to IDA enable the World Bank to
provide 7 billion per year in interest-free
credits to the worlds 78 poorest countries, home
to 2.4 billion people. This support is vital
because these countries have little or no
capacity to borrow on market terms. In most of
these countries incomes average under just 500 a
year per person, and many people survive on much
less
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World Bank Money
Nearly 40 countries contribute to IDA's funding,
which is replenished every three years. Donor
nations include not only industrial member
countries such as France, Germany, Japan, the
United Kingdom, and the United States, but also
developing countries such as Argentina, Botswana,
Brazil, Hungary, Korea, the Russian Federation,
and Turkey, some of which were once IDA borrowers
themselves.
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Where does the money go ?

World Bank (IBRD/IDA) Lending in 2002 IBRD and
IDA lending increased to 19.5 billion. This
reflected the highest-ever lending levels by IDA,
which reached 8.1 billion for 133 new
operations. IDA's strong lending program was
driven by record lending to Africa and South
Asia, which together accounted for 6.4 billion.
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IDA Lending by Region 2002
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IBRD Lending by Region 2002
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United Nations Millennium DeclarationSeptember
2000

• We will spare no effort to free our fellow men,
  women and children from the abject and
  dehumanizing conditions of extreme poverty, to
  which more than a billion of them are currently
  subjected

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Millennium Development Goals

• Eradicate extreme poverty and hunger
• Achieve universal primary education
• Promote Gender Equality and empower women
• Reduce child mortality
• Improve maternal health
• Combat HIV, AIDS, malaria and other diseases
• Ensure environmental sustainability
• Develop a global partnership for development

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Goal 1 Eradicate Extreme Poverty
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Goal 1 Eradicate Extreme Poverty
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Goal 1 Eradicate Extreme Poverty
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Goal 1 Eradicate Extreme Poverty
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Goal 1 Eradicate Hunger
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Goal 1 Eradicate Hunger
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Goal 4 Reduce Child Mortality
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Causes of Child Mortality
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Goal 6 Combat HIV and Malaria
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Goal 6 Combat HIV and Malaria
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Goal 6 Combat HIV and Malaria
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Goal 6 Combat HIV and Malaria
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Goal 6 Combat HIV and Malaria
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Goal 7 Environmental Sustainability
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World Bank Annual Meetings
Each autumn, the Boards of Governors of the World
Bank Group and the IMF hold their Annual Meetings
to discuss a range of issues related to poverty
reduction, international economic development
and finance. The Annual Meetings provide a forum
for international cooperation and enable the Bank
and Fund to better serve their member countries
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DUBAI 2003