After world war – II IMF & World Bank was created to cope with the restoration of economy of countries suffered from war. IMF role is to monitor and has a supervisory role to play and create greater co-operation among member countries. There are five important international institutions World Bank, IBRD, IDA, IFC and MIGA. Brief functions of these institutions shall follow
World Bank :
Of all international financial institutions World Bank formerly known as the international Bank for Reconstruction and Development (IBRD). World Bank has two associates which are International Development Association (IDA) and International Finance Corporation (IFC). The details of the objectives member countries has been illustrated vide Exhibit – 7.
Sources of Money for World Bank:
By tapping money from world’s capital markets and in case of IDA, through contribution form weather member governments. IBRD which covers about 75% of lending raises its fund from in financial markets. IBRD sells AAR rate bonds. Charges interest at cost of borrowing. Repayments are 15 to 20 years spread.
There is 3 to 5 years of gestation period. On the similar pattern IDA helps to promote growth and reduce poverty but it is interest free loan. The overage is about 25% of total credits. Only residual 1% fee to cover administrative cost is charged. Repayment period is 35 to 40 years with 10 years start up period. About 40 countries contribute to IDA’s funding.
World Bank’s Constitutions:
There are 180 country members. It has Board of Governors (member of each country) and Washington based Board of Directors. Member countries are shareholders who have deciding power. Governors meet once in a year & frame policy of funding, admission of country members, distribution of income etc.
International Monetary Fund (Imf)
Came into existence on December 27, 1945 current membership is 182 countries. Total quota is about US $ 300 billion (1999). Staff structure – 2700 from 110 countries. The accounting unit is Special Drawing Right SDR which is about 1:1.37 to US $.
IMF - Lends money to its members having trouble for meeting financial obligation to other members. IMF has no effective authority over economic policy of its members. The IMF’s role & authority are limited to, requiring the members to disclose information on its monetary and fiscal policies. Headquarter Washington DC. Role differences of IMF & World Bank has been exhibited vide Exhibit No. – 2.
- Supervision of the international Monetary System
- Financial Support to member countries
- Providing technical assistance in selected area.
- Running educational Institution in Washington and offering training courses abroad
- Publications containing valuable information.
Bank (ADB) was created in 1966 with 31 member countries to promote social & economic progress of Asian and the pacific region. Special attention is given to smaller & undeveloped countries. Headquarter at Manila. Present membership 57. The major functions of Bank are extending loan, provide technical assistance and facilitating public & private capital for developmental purposes. For coordination Bank has resident missions at Bangladesh, India, Cambodia, Indonesia, Nepal, Pakistan, Sri Lanka, Vietnam, Kazakhstan & Uzbekistan. Agriculture, Energy, Transport, Tech assistance and capital are major area of assistance.