International Monetary Fund and World Bank Roles

International Monetary Fund (IMF)

Original Aims and Purpose

The original aims of the IMF are to:

• Promote international monetary cooperation.
• Facilitate the expansion of balanced international trade.
• Promote exchange stability.
• Establish a multilateral system of payments.
• Make resources available (with adequate safeguards) to members experiencing balance of payments difficulties.

"The IMF’s primary purpose is to ensure the stability of the international monetary system – the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other."

Key Activities and Functions

The IMF’s key function is to provide temporary financial assistance to members in balance of payments difficulties. The IMF supports its membership by providing:

• Surveillance of financial and monetary conditions in its member countries and in the world economy.
• Financial assistance to help countries overcome major balance of payments problems.
• Technical assistance and advisory services to member countries.

The World Bank

History and Mission

The World Bank was established in 1944. It started out as the IBRD, an agency to foster reconstruction in war-torn Europe and, afterwards, development in the rest of the world. It is the world’s largest source of development assistance and it has 188 member countries. As with the IMF, the World Bank requires members to whom it lends to undertake specific reforms within their economy. Its mission is to "End extreme poverty within a generation and boost shared prosperity."

World Bank Institutions

• The International Bank for Reconstruction and Development (IBRD): It was the original World Bank institution and it was designed to finance development projects and give access to financial markets to those countries that couldn’t. It also offered policy advice and technical assistance, especially focusing on middle-income countries.
• The International Development Association (IDA): It gives interest-free loans and grants to the poorest countries.
• The International Finance Corporation (IFC): It offers finance and advice to the private sector.
• The Multilateral Investment Guarantee Agency (MIGA): Formed by private investors, it provides political risk insurance guarantees.
• The International Centre for Settlement of Investment Disputes (ICSID): It provides facilities for arbitration of investment disputes between governments and private investors.