Leadership of the IMF and World Bank has been guided by a historical 'gentleman's agreement' between Europe and the United States. What does this agreement entail? And how could it be reformed?
The IMF and World Bank continue to be amongst the most relevant and significant powerful norm-setters, convenors, knowledge-holders and influencers of the international development and financial landscape. This Inside the Institutions sets-out some of the most common criticisms of the World Bank and IMF under three broad lenses: democratic governance, human rights and the environment.
The Bretton Woods Institutions are the World Bank, and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944. Their aims were to help rebuild the shattered postwar economy and to promote international economic cooperation.
This Inside the Institutions looks at the funds available to the IMF and the World Bank, including the origins of IBRD and IFC resources and an overview of the most recent changes in the IMF and IDA’s funding streams and mechanisms.
The IMF was conceived primarily as a supervisory institution to promote international monetary cooperation and facilitate the growth of international trade. This is to be achieved through maintaining monetary exchange stability and assisting member countries who are experiencing balance of payments problems.
The World Bank mainly lends to governments, although certain Bank facilities can also provide direct support to private businesses and to non-profit organisations. Middle-income countries and poorer countries termed as "creditworthy" borrow from the IBRD, while the poorest countries borrow from the IDA. Loans granted by IDA are interest-free but borrowers are required to pay a fee of less than one percent of the loan to cover administrative costs.
The IMF provides various types of loans to member governments. Concessional loans are granted to low-income countries at a concessional interest rate through the Poverty Reduction and Growth Facility (PRGF) while non-concessional loans are provided with a market-based interest rate through five mechanisms: the Stand-By Arrangements (SBA); Extended Fund Facility (EFF); Supplemental Reserve Facility (SRF); Contingent Credit Lines (CCL); and the Compensatory Financing Facility (CCF).
The World Bank Group is made up of five institutions, four of which were created after 1944, all sharing a similar mandate of reducing poverty and facilitating economic growth in developing countries. The original institution is the International Bank for Reconstruction and Development (IBRD), often simply known as the World Bank. Other institutions have been added: the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for the Settlement of Investment Disputes (ICSID).