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

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.

IMF Members Voting Power

Size of the quotas determine voting power US has 17.69% of Quota; 16.75% of total votes Japan has 6.56% of Quota; 6.23% of votes China has 4% of Quota; 3.65% of votes India has 2.44% of Quota; 2.34% of votes

 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.

Christine Lagarde Current MD of IMF

Jim Yong Kim Current President of World Bank

World Bank Group Briefing

Made up of 5 different organizations International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Center for the Settlement of Investment Disputes (ICSID)

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 noncommercial risks. Provides facilities for the reconciliation of disputes between governments and foreign investors 140 members

Thank You