ECONOMIC DEVELOPMENT

ON

OLIVEROS FINANCIAL DEVELOPMENT PAYAR

AND
INFLATION
NOVENO. PINOTE

グ ル ー プ 8 グ ル ー プ 8

PP
BSA 2 1
M

What is microfinance, and what are its

01 potential and limitations for reducing

poverty and spurring grassroots
development?

F
Microfinance .

is a banking service provided to unemployed or low-income

individuals or groups who otherwise would have no other access
to financial services.
Microfinance allows people to take on reasonable small business
loans safely, and in a manner that is consistent with ethical
lending practices.
Micro finance Services offered by microfinance
institutions:

Institutions • Micro-loans
• Micro-savings
• Micro-insurance product

Benefits of microfinance:
The World Bank estimates that
more than 500 million people
have benefited from microfinance
related operations.
 Loan Amount Effective Interest Rate

Microfinance NGOs 5,000 to 300,000 60% to 90% p.a.

Cooperatives 5,000 to 300,000 60% to 90% p.a.

Cooperatives 300,000 to 5,000,000 9% -36% p.a.

Rural Banks 5,000 to 300,000 60% - 90% p.a.

Rural Banks 300,000 to 5,000,000 9% -36% p.a.

Credit Card Companies 5,000 to 5,000,000 60% - 90% p.a.

Commercial Banks >1,000,000 9% -18% p.a.

F

What is the role of financial and fiscal

02 policy in promoting development?

P
F
Promoting
Development
Roles of Fiscal Policy
• To mobilize resources
• To accelerate the rate of growth
• To encourage socially optimal investment
• To provide more employment opportunities
• Promoting of Economic Stability
Roles of Financial System
• Growth of Capital Markets
• Foreign Exchange Markets
• Government Securities
• Infrastructure and Growth
• Employment Growth
F
F

What is the impact of foreign economic

03 aid from rich countries ? Should

developing countries continue to seek
such aid? Why or why not?

A
F

Foreign Aid
What is Foreign Aid?
Foreign aid consists of financial flows, technical assistance, and commodities
given by the residents of one country to the residents of another country for
development purposes, either as grants, or as subsidized loans.

Foreign aid typically falls into one of the these categories: humanitarian and
disaster relief, economic aid, and military support.

A
 Aid, Growth and Development .
Most foreign aid is designed to meet one or more of
the four broad economic and development objectives.

1. To stimulate economic growth

2. To promote other development objectives
3. To support subsistence consumption of food and other
commodities
4. To help stabilize an economy after economic shocks
 FOREIGN AID
AND GROWTH,
1998̶̵̶2008
GNI, gross national income; ODA,
official development assistance
Source: World Bank, “World Development
Indicators,” http://databank.worldbank.org
I
M
F

What has been the impact of International

Monetary Fund “stabilization programs” and

04 World Bank “structural adjustment” lending on

the balance of payments and growth prospects of
heavily indebted less developed countries?
I
M International Monetary Fund
F

ABOUT The IMF

The International Monetary Fund (IMF) is an
international organization that aims to accomplish a
number of different goals. These include reducing
global poverty, encouraging international trade, and
promoting financial stability and economic growth.

The International Monetary Fund's primary job is

to promote stability in the global monetary
system.
 FUNCTIONS OF THE IMF

The IMF oversees the international monetary system and

monitors the financial and economic policies of its members. It
keeps track of economic developments on a national, regional,
01
and global basis, consulting regularly with member countries
and providing them with macroeconomic and financial policy
Surveillance
advice.

The IMF lends money to nurture the economies of

member countries with balance of payments
problems instead of lending to fund individual
02
projects.
Lending
To assist mainly low- and middle-income countries in effectively
managing their economies, the IMF provides practical guidance and
training on how to upgrade institutions, and design appropriate
03
macroeconomic, financial, and structural policies. Technical
Assistance
INTERNATIONAL MONETARY FUND
WB

The World Bank

The World Bank Group is one of the world’s
largest sources of funding and knowledge for
developing countries. A unique global
partnership: five institutions working for
sustainable solutions that reduce poverty and
build shared prosperity in developing
countries..

WB
A structural change .
A set of economic reforms that a country must adhere
to in order to secure a loan from the World Bank.

The purpose is to adjust the country's economic structure, improve

international competitiveness, and restore its balance of payments.

These policies were typically centered around increased privatization,

liberalizing trade and foreign investment, and balancing government
deficit.
Various Structural
Adjustment Policies:
Privatization
Call for the sell off of government-owned enterprises to private owners, often foreign investors

Cuts in government spending

Reductions in government spending

Imposition of user fees

Charges for the use of government-provided services
Various Structural
Adjustment Policies:
Promotion of exports
Under structural adjustment programs, countries undertake a variety of measures to promote exports.

Higher interest rates

When interest rates are high, bank loans cost more. People and businesses borrow less and save
more. Demand falls and companies sell less.

Trade Liberalization
Removal or reduction of restrictions or barriers on the free exchange of goods between nations.
 ECONOMIC DEVELOPMENT
ON

OLIVEROS FINANCIAL DEVELOPMENT PAYAR

AND
INFLATION
NOVENO. PINOTE

グ ル ー プ 8 グ ル ー プ 8

PP
BSA 2 1