Imf

Activities of IMF & World Bank

1.0

Introduction

1.1 About IMF The IMF is an international organization of 185 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment.

Since the IMF was established its purposes have remained unchanged but its operations—which involve surveillance, financial assistance, and technical assistance—have developed to meet the changing needs of its member countries in an evolving world economy.

1945

200

1955

150

1965

100

1975 1985

50

1995

0

2005 Growth in IMF Membership, 1945 - 2005

1.2 International Monetary Fund The International Monetary Fund (IMF) is an international organization that oversees the global financial system by observing exchange rates and balance of payments, as well as offering financial and technical assistance. Its headquarters are located in Washington, D.C., USA.

Graph: The IMF Considers as Advanced (Blue Color) 2.0 History The International Monetary Fund was conceived in July 1944, when the representatives of 45 governments met in the town of Bretton Woods, New Hampshire, United States of America, and agreed on a framework for international economic cooperation. The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1944.

2.1 Today From the end of World War II until the late-1970s, the capitalist world experienced unprecedented growth in real incomes. (Since then, the integration of China and Eastern and Central Europe into the capitalist system has added substantially to the growth of the system.) Within the capitalist system, the benefits of growth have not flowed equally to all (either within or among nations) but overall there has been an increase in prosperity that

contrasts starkly with the conditions within capitalist countries during the interwar period. The lack of a recurring global depression is probably due to improvements in the conduct of international economic policies that have encouraged the growth of international trade and helped smooth the economic cycle of boom and bust.

In the decades since World War II, apart from rising prosperity, the world economy and monetary system have undergone other major changes that have increased the importance and relevance of the purposes served by the IMF, but that has also required the IMF to adapt and reform. Rapid advances in technology and communications have contributed to the increasing international integration of markets and to closer linkages among national economies. As a result, financial crises, when they erupt, now tend to spread more rapidly among countries.

The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries and more recently the collapse of the Soviet bloc. The expansion of the IMF’s membership, together with the changes in the world economy, has required the IMF to adapt in a variety of ways to continue serving its purposes effectively.

During April 2007 Ecuador announced its intention to withdraw from the IMF, followed by Venezuela which made this step public on April 30, 2007. As of October 2007, Ecuador continued its membership status. On October 24, 2007 Venezuela announced its withdrawal decision was on hold.

Graph: IMF Data Mapper 3.0 Purposes The purposes of the International Monetary Fund are: • To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems?

• To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.

• To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.

• To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade?

• To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.

• In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.

The Fund shall be guided in all its policies and decisions by the purposes set forth in this Article.

3.1 What the IMF Does The work of the IMF is of three main types. Surveillance involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention. The IMF also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems; loans to low-income countries are also aimed especially at poverty reduction. Third, the IMF provides countries with technical assistance and training in its areas of expertise. Supporting all three of these activities is IMF work in economic research and statistics.

In recent years, as part of its efforts to strengthen the international financial system, and to enhance its effectiveness at preventing and resolving crises, the IMF has applied both its surveillance and technical assistance work to the development of standards and codes of good practice in its areas of responsibility, and to the strengthening of financial sectors.

The IMF also plays an important role in the fight against money-laundering and terrorism.

3.2 Organization and purpose The International Monetary Fund (IMF) was conceived in 1944, with a goal to stabilize exchange rates and supervise the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances.

(Condon, 2007) The IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty".

With the exception of North Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN member states participate directly in the IMF. Some

are represented by other member states on a 24-member Executive Board but all member countries are members of the IMF's Board of Governors.

3.3 Data Dissemination Systems In 1995, the International Monetary Fund (IMF) began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS).

The IMF executive board approved the SDDS and GDDS in 1996 and 1997 respectively and subsequent amendments were published in a revised “Guide to the General Data Dissemination System�. The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals and Poverty Reduction Strategic Papers.

The IMF established a system and standard to guide members in the dissemination to the public of their economic and financial data. Currently there are two such systems: General Data Dissemination System (GDDS) and its superset Special Data Dissemination System (SDDS), for those member countries having or seeking access to international capital markets.

The primary objective of the GDDS is to encourage IMF member countries to build a framework to improve data quality and increase statistical capacity building. This will involve the preparation of metadata describing current statistical collection practices and setting improvement plans. Upon building a framework, a country can evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility of financial and economic data.

Some countries initially used the GDDS, but lately upgraded to SDDS.

Some entities that are not themselves IMF members also contribute statistical data to the systems: Palestinian Authority – GDDS Hong Kong – SDDS European Union institutions: The European Central Bank for the Eurozone – SDDS Eurostat for the whole EU – SDDS, thus providing data from. Cyprus (not using any DDSystem on its own) and

Malta (using only GDDS on its own).

Examples of press coverage of the discussions regarding changes to the voting formula to increase equity.

3.4 IMF Members' Quotas and Voting Power, and IMF Board of Governors Table showing the top 21 member countries in terms of voting power: IMF

Quota:

Quota:

Member

Millions

Percent

Country

of SDRs

age of

3236.4

Total 1.49

Wayne Swan

4605.2

2.12

Australia Belgium Brazil

Canada China France Germany

3036.1

6369.2 8090.1 10738.5 13008.2

Governor

Alternate

Votes:

Votes:

Governor

Numb Percenta er

ge of

Ken Henry

32614

Total 1.47

Guy Quaden

Jean-Pierre

46302

2.09

Guido

Arnoldi Henrique

30611

1.38

Mantega

de Campos

Jim Flaherty

Meirelles David A.

63942

2.89

3.72

ZHOU

Dodge HU Xiaolian

81151

3.66

4.94

Xiaochuan Christine

Christian

10763

4.86

5.99

Lagarde Axel A.

Noyer Peer

5 13033

5.88

1.4

2.93

India

Italy

Japan Korea Mexico Netherlan

4158.2

7055.5

13312.8 2927.3 3152.8 5162.4

2 41832

1.89

70805

3.2

Toshihiko

13337

6.02

Okyu Kwon

Fukui Seong Tae

8 29523

1.33

1.45

Agustín

Lee Guillermo

31778

1.43

2.38

Carstens A.H.E.M.

Ortiz L.B.J. van

51874

2.34

Wellink

Geest

Aleksei

Sergey

59704

2.7

Kudrin

Ignatiev

Ibrahim A. Al-

Hamad Al-

70105

3.17

Assaf

Sayari

Pedro Solbes

Miguel

30739

1.39

24205

1.09

Hans-Rudolf 34835

1.57

1.91

3.25

6.13 1.35

ds Russian

5945.4

2.74

Federatio

Weber P.

Steinbrück Yaga V.

Chidambara

Reddy

m Tommaso

Mario

Padoa-

Draghi

Schioppa Koji Omi

n Saudi

6985.5

3.21

Arabia Spain

Sweden

3048.9

1.4

Fernández 2395.5

1.1

Stefan Ingves

3458.5

1.59

Jean-Pierre

Switzerlan

Ordóñez Per Jansson

Roth

Merz

Alistair

Mervyn

10763

Darling

King

5

Henry

Ben

37174

Paulson

Bernanke

3

d United

10738.5

4.94

Kingdom United States

37149.3

17.09

4.86 16.79

Venezuela

2659.1

60081.4

1.22

29.14

Remainin

Gast贸n Parra

Rodrigo

Luzardo

Cabeza

Respective

Morales Respective

26841

1.21

63706

28.78

7

g 165 countries 3.5 Assistance and reforms The primary mission of the IMF is to provide financial assistance to countries that experience serious financial and economic difficulties using funds deposited with the IMF from the institution's 185 member countries. Member states with balance of payments problems, which often arise from these difficulties, may request loans to help fill gaps between what countries earn and/or are able to borrow from other official lenders and what countries must spend to operate, including covering the cost of importing basic goods and services. In return, countries are usually required to launch certain reforms, which have often been dubbed the "Washington Consensus". These reforms are generally required because countries with fixed exchange rate policies can engage in fiscal, monetary, and political practices which may lead to the crisis itself. For example, nations with severe budget deficits, rampant inflation, strict price controls, or significantly over-valued or under-valued currencies run the risk of facing balance of payment crises. Thus, the structural adjustment programs are at least ostensibly intended to ensure that the IMF is actually helping to prevent financial crises rather than merely funding financial recklessness.

However, this approach is not without its critics, as described below. Many supporters of the IMF contend that some criticisms are the result of the fact that many people are not familiar with the operations and objectives of the IMF, and blame a lack of transparency within the IMF for this, as well as the dense nature of international finance in general. Suggestions for improving these understandings have included greater community outreach efforts,

tighter accounting standards, possible regulatory oversight, and changes in the organizational structure of the IMF to include fewer economists, whom many fear are attempting to use developing countries as nothing more than lab rats.

Some fear, however, that some of these reforms to the IMF itself introduce political considerations rather than economic considerations, many of which may have resulted in the financial crises in the first place. According to Ulrich Beck, the International Monetary Fund is an international risk community combating the threat of a global financial crisis.

3.6 IMF/World Bank support of Military Dictatorships The role of the Bretton Woods institutions has been controversial to some since the late Cold War period. Critics claim that IMF policy makers deliberately supported military dictatorships friendly to American and European corporations. Critics also claim that the IMF is generally apathetic or hostile to their views of democracy, human rights, and labor rights. The controversy has helped spark the anti-globalization movement. Others claim the IMF has little power to democratize sovereign states, although that is not its stated objective, which is to advise and promote financial stability. Arguments in favor of the IMF say that economic stability is a precursor to democracy; however critics highlight various examples in which IMF loans to countries that had democratized fell.

Countries that are members of the IMF/World Bank whilst under a Military dictatorship (support from various sources in $ Billion): Country

Dictator

indebted to

In power

In power

debts at start of

Debts at end

Country

Dictator

Dictator

from

to

Dictatorship

of Dictatorship

Debts in

debts

generated

(1)

(2)

1996

generated $

debt % of

IMF/World Bank Argenti

Military

1976

1983

9.3

48.9

93.8

billion 39.6

total debt 42.00%

Bolivia

dictatorship Military

1962

1980

0

2.7

5.2

2.7

52.00%

Brazil

dictatorship Military

1964

1984

5.1

105.1

179

100

56.00%

Chile

dictatorship Augusto

1974

1989

5.2

18

27.4

12.8

47.00%

Pinochet Military

1979

1994

0.9

2.2

2.2

1.3

59.00%

na

El Salvador

dictatorship

Ethiopia

Mengistu

1977

1991

0.5

4.2

10

3.7

37.00%

Mariam Jean-Claude

1971

1986

0

0.7

0.9

0.7

78.00%

Duvalier Suharto

1967

1998

3

129

129

126

98.00%

Moi

1979

2002

2.7

6.9

6.9

4.2

61.00%

Doe Banda

1979 1964

1990 1994

0.6 0.1

1.9 2

2.1 2.3

1.3 1.9

62.00% 83.00%

Buhari/Abac

1984

1998

17.8

31.4

31.4

13.6

43.00%

Pakista

ha Zia-ul Haq

1977

1998

7.6

17

Pakista

Military

1990

present

20.6

29.9

29.9

18.7

63.00%

Haile

Haiti Indones ia Kenya Liberia Malawi Nigeria

n dictatorship

n Paragua

Stroessner

1954

1989

0.1

2.4

2.1

2.3

96.00%

Philippi

Marcos

1965

1986

1.5

28.3

41.2

26.8

65.00%

Somalia

Siad Barre

1969

1991

0

2.4

2.6

2.4

92.00%

South

Apartheid

18.7

23.6

18.7

79.00%

y nes

Africa Sudan

1992

Nimeiry/al-

1969

Present

0.3

17

17

16.7

98.00%

Syria

Mahdi Assad

1970

Present

0.2

21.4

21.4

21.2

99.00%

Thailan

Military

1950

1983

0

13.9

90.8

13.9

15.00%

1965

1997

0.3

12.8

12.8

12.5

98.00%

dictatorship

d Zaire/

Mobutu

Congo

Notes: Debt at takeover by dictatorship; earliest data published by the World Bank is for 1970. Debt at end of dictatorship (or 1996, most recent date for World Bank data). Pakistan had two periods of military dictatorship.

4.0 Criticism Two criticisms from economists have been that financial aid is always bound to so-called "Conditionalities", including Structural Adjustment Programs.

Conditionalities, which are the economic performance targets established as a precondition for IMF loans, it is claimed, retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programs lead to an increase in poverty in recipient countries.

Typically the IMF and its supporters advocate a Keynesian approach. As such, adherents of supply-side economics generally find themselves in open

disagreement with the IMF. The IMF frequently advocates currency devaluation, criticized by proponents of supply-side economics as inflationary.

Secondly they link higher taxes under "austerity programmes" with economic contraction.

Currency devaluation is recommended by the IMF to the governments of poor nations with struggling economies. Supply-side economists claim these Keynesian IMF policies are destructive to economic prosperity.

That said, the IMF sometimes advocates "austerity programmes," increasing taxes even when the economy is weak, in order to generate government revenue and balance budget deficits, which is the opposite of Keynesian policy.

These policies were criticised by Joseph E. Stiglitz, former chief economist and Senior Vice President at the World Bank, in his book Globalization and Its Discontents. He argued that by converting to a more Monetarist approach, the fund no longer had a valid purpose, as it was designed to provide funds for countries to carry out Keynesian reflations.

Complaints are also directed toward International Monetary Fund gold reserve being undervalued. At its inception in 1945, the IMF pegged gold at US$35 per Troy ounce of gold. In 1973 the Nixon administration lifted the fixed asset value of gold in favor of a world market price. Hence the fixed exchange rates of currencies tied to gold were switched to a floating rate, also based on market price and exchange. This largely came about because Petrodollars outside the United States were more than could be backed by the gold at Fort Knox under the fixed exchange rate system. The fixed rate system only served to limit the amount of assistance the organization could use to help debtridden countries. Current IMF rules prohibit members from linking their currencies to gold.

Argentina, which had been considered by the IMF to be a model country in its compliance to policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis in 2001 , which some believe to have been caused by IMF-induced budget restrictions— which undercut the government's ability to sustain national infrastructure even in crucial areas such as health,

education, and security— and privatization of strategically vital national resources. Others attribute the crisis to Argentina's maldesigned fiscal federalism, which caused sub national spending to increase rapidly. The crisis added to widespread hatred of this institution in Argentina and other South American countries, with many blaming the IMF for the region's economic problems. The current— as of early 2006— trend towards moderate left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures has been ascribed to this crisis.

Another example of where IMF Structural Adjustment Programmes aggravated the problem was in Kenya. Before the IMF got involved in the country, the Kenyan central bank oversaw all currency movements in and out of the country. The IMF mandated that the Kenyan central bank had to allow easier currency movement. However, the adjustment resulted in very little foreign investment, but allowed Kamlesh Manusuklal Damji Pattni, with the help of corrupt government officials, to siphon off billions of Kenyan shillings in what came to be known as the Goldenberg scandal, leaving the country worse off than it was before the IMF reforms were implemented.

Overall the IMF success record is perceived as limited. While it was created to help stabilize the global economy, since 1980 critics claim over 100 countries (or reputedly most of the Fund's membership) have experienced a banking collapse that they claim have reduced GDP by four percent or more, far more than at any time in Post-Depression history. The considerable delay in the IMF's response to any crisis, and the fact that it tends to only respond to them or even create them rather than prevent them, has led many economists to argue for reform. In 2006, an IMF reform agenda called the Medium Term Strategy was widely endorsed by the institution's member countries. The agenda includes changes in IMF governance to enhance the role of developing countries in the institution's decision-making process and steps to deepen the effectiveness of its core mandate, which is known as economic surveillance or helping member countries adopt macroeconomic policies that will sustain

global growth and reduce poverty. On June 15, 2007, the Executive Board of the IMF adopted the 2007 Decision on Bilateral Surveillance, a landmark measure that replaced a 30-year-old decision of the Fund's member countries on how the IMF should analyze economic outcomes at the country level.

Whatever the feelings people in the Western world have for the IMF, research by the Pew Research Center shows that more than 60 percent of Asians and 70 percent of Africans feel that the IMF and the World Bank have a positive effect on their country. This may largely be due to the fact that the media and textbooks in developing countries' schools describe the IMF as having a positive role in their countries, despite claims that there has been an increase in poverty, increase in the debt-burden, and a reduction of economic growth that IMF opponents argue its policies have resulted in. In 2005, the IMF was the first multilateral financial institution to implement a sweeping debt-relief program for the world's poorest countries known as the Multilateral Debt Relief Initiative. By year-end 2006, 23 countries mostly in sub-Saharan Africa and Central America had received total relief of debts owed the IMF. The documentary Life and Debt deals with the IMF's policies' influence on Jamaica and its economy from a critical point of view. In 1978, one year after Jamaica first entered a borrowing relationship with the IMF, the Jamaican dollar was still worth more on the open exchange than the US dollar; by 1995, when Jamaica terminated that relationship, the Jamaican dollar had eroded to less than 2 cents US. Such observations lead to skepticism that IMF involvement is necessarily helpful to a third world economy.

5.0 The World Bank 5.1 About us The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the common sense. We are made up of two unique development institutions owned by 185 member

countries—the

International

Bank

for

Reconstruction

Development (IBRD) and the International Development Association (IDA).

and

Each institution plays a different but supportive role in our mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together we provide low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications and many other purposes.

World Bank (the Bank), is an internationally supported bank that provides loans to developing countries for development programs with the stated goal of reducing poverty. The World Bank differs from the World Bank Group in that the former comprises only the International Bank for Reconstruction and Development and the International Development Association, while the latter incorporates these entities in addition to three others.

The World Bank was formally established on December 27, 1945, following the ratification of the Bretton Woods agreement. The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later, the Bank issued its first loan: $250 million to France for post-war reconstruction, the main focus of the Bank's work in the early post-World War II years. Over time, the "development" side of the Bank's work has assumed a larger share of its lending, although it is still involved in post-conflict reconstruction, together with reconstruction after natural disasters,

response

to

humanitarian

emergencies

and

post-conflict

rehabilitation needs affecting developing and transition economies.

6.0 World Bank activities The World Bank is one of the two Bretton Woods Institutions which were created in 1944 to rebuild a war-torn Europe after World War II. Later, largely due to the contributions of the Marshall Plan, the World Bank was forced to find a new area in which to focus its efforts. Subsequently, it began attempting to rebuild the infrastructure of Europe's former colonies. Since then it has made a variety of changes regarding its focus and goals. From 1968-1981 it

focused largely on poverty alleviation. From the '80s and into the 1990s its main focus was both debt management and structural adjustment. Today the focus is on the achievement of the Millennium Development Goals (MDGs), goals calling for the elimination of poverty and the implementation of sustainable development. Of the two constituent parts of the Bank, the IBRD lends primarily to "middle-income countries" at interest rates which reflect a small mark-up over its own (AAA-rated) borrowings from capital markets; while the IDA provides low or no interest loans and grants to low income countries with little or no access to international credit markets. The IBRD is a market based non-profit organization, using its high credit rating to make up for the relatively low interest rate on its loans, while the IDA is funded primarily by periodic "replenishments" (grants) voted to the institution by its more affluent member countries.

Graph: Rank of World Bank The Bank’s mission is to aid developing countries and their inhabitants achieve development and the reduction of poverty, including achievement of the MDGs, by helping countries develop an environment for investment, jobs and sustainable growth, thus promoting economical growth and through investment in and empowerment of the poor to enable them to participate in development. The World Bank sees the five key factors necessary for economic growth and the creation of a business environment as: Capacity Building– Strengthening governments and educating government officials

Infrastructure creation– implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts.

Development of Financial Systems – the establishment of strong systems capable of supporting endeavors from micro credit to the financing of larger corporate ventures Combating corruption – Support for countries' efforts at eradicating corruption Research, Consultancy and Training - the World Bank provides platform for research on development issues, consultancy and conduct training programs (web based, on line, video/tale conferencing and class room based) open for those who are interested from academia, students, government and nongovernmental organization (NGO) officers etc.

The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-rated bonds in the world’s financial markets. The IBRD’s income is generated from its lending activities, with its borrowings leveraging its own paid-in capital, plus the investment of its "float". The IDA obtains the majority of its funds from forty donor countries who replenish the bank’s funds every three years, and from loan repayments, which then become available for relending.

The Bank offers two basic types of loans: investment loans and development policy loans. The former are made for the support of economic and social development projects, whereas the latter provide quick disbursing finance to support countries’ policy and institutional reforms. While the IBRD provides loans with a relatively low interest rate, the IDA’s "credits" are interest free.

The project proposals of borrowers are evaluated for their economical, financial, social and environmental aspects prior to their approval.

The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. IDA grants are predominantly used for:

• Debt burden relief in the most indebted and poverty struck countries • Amelioration of sanitation and water supply •

Support of vaccination and immunization programs for the reduction of communicable diseases such as malaria

•

Combating the HIV/AIDS pandemic

•

Support civil society organizations

• Creating initiatives for the reduction of greenhouse gases The Bank not only provides financial support to its member states, but also analytical and advisory services to facilitate the implementation of the lasting economic and social improvements that are needed in many under-developed countries, as well as educating members with the knowledge necessary to resolve their development problems while promoting economic growth.

Graph: World Bank Building at Washington 6.1 Leadership The President of the Bank, currently Robert Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. The Executive Directors make up the Board of Directors, usually meeting twice a week to oversee activities such as the approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financing decisions. The Vice Presidents of the Bank are its principal managers, in charge of regions, sectors, networks and functions. There are 24 Vice-Presidents, 3 Senior Vice Presidents and 2 Executive Vice Presidents.

6.2 Areas of operation 4The World Bank is active in the following areasAgriculture and Rural Development

Law and Justice

Conflict and Development

Macroeconomic and Economic

Development Operations and

Growth

Activities

Mining

Economic Policy

Poverty Reduction

Education

Poverty

Energy

Private Sector

Environment

Public Sector Governance

Financial Sector

Rural Development

Gender

Social Development

Governance

Social Protection

Health, Nutrition and Population

Trade

Industry

Transport

Information and Communication

Urban Development

Technologies

Water Resources

Information, Computing and

Water Supply and Sanitation

Telecommunications International Economics and Trade Labor and Social Protections 6.3 Comprehensive development framework According to the World Bank, in virtually all successful assistance projects the country itself was the driving factor. The Bank therefore strives to help governments lead and implement their own development strategies and thus take a stronger hand in their own future development. The strategy was initiated by the former president of the bank, James Wolfensohn. Since 1999, it has followed a set of philosophies known as the Comprehensive Development Framework . These philosophies state that:

Development strategies should be comprehensive and shaped by a long-term vision Development goals and strategies should be “owned” by the country, based on local stakeholder participation in shaping them Countries receiving assistance should lead the management and coordination of aid programs through stakeholder partnerships Development performance should be evaluated through measurable results on the ground in order to adjust the strategy to outcomes and a changing world.

6.4 Poverty reduction strategies For the poorest developing countries in the world the Bank’s assistance plans are based on Poverty Reduction Strategies; by combining a cross-section of local groups with an extensive analysis of the country’s financial and economical situation the World Bank develops a strategy pertaining uniquely to the country in question. The government then identifies the country’s priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts correspondingly.

The Bank supports certain kinds of poor people's organisations such as the Self-Employed Women's Union and Shack/Slum Dwellers International.

Forty-five countries pledged US$25.1 billion in "aid for the world's poorest countries", said that goes to the World Bank International Development Association (I.D.A.) which distributes the gifts to eighty poorer countries. While wealthier nations sometimes fund their own aid projects, including those for diseases recently, and although I.D.A. is the recipient of criticism, Robert B. Zoellick, the president of the World Bank, said when the gifts were announced on December 15, 2007, that I.D.A. money "is the core funding that the poorest developing countries rely on".

7.0 Training wings 7.1 World Bank Institute The World Bank Institute (WBI) creates learning opportunities for countries, World Bank staff and clients, and people committed to poverty reduction and

sustainable development. WBI's work program includes training, policy consultations, and the creation and support of knowledge networks related to international economic and social development.

7.2 Global Development Learning Network The Global Development Learning Network (GDLN) is a partnership of over 120 learning centers (GDLN Affiliates) in nearly 80 countries around the world.

GDLN Affiliates collaborate in holding events that connect people across countries and regions for learning and dialogue on development issues.

Offering a combination of distance learning tools such as interactive videoconferencing and the internet, and expert facilitation and learning techniques, GDLN Affiliates enable individuals, teams, and organizations working in development around the world to communicate, share knowledge, and learn from each others’ experiences in a timely and cost-effective manner.

GDLN clients are typically NGOs, government, private sector and development agencies who find that they work better together on subregional, regional or global development issues and challenges using the facilities and tools offered

by GDLN Affiliates. Clients also benefit from the ability of Affiliates to help them choose and apply these tools effectively, and to tap development practitioners and experts worldwide.

GDLN Affiliates facilitate around 1000 videoconference-based activities a year on behalf of their clients, reaching some 90,000 people worldwide. Most of these activities bring together participants in two or more countries over a series of session. A majority of GDLN activities are organized by small government agencies and NGOs. 7.3 Country assistance strategies As a guideline to the World Bank's operations in any particular country, a Country Assistance Strategy is produced, in cooperation with the local government and any interested stakeholders and may rely on analytical work performed by the Bank or other parties. In the case of low income countries,

the Country Assistance Strategy is derived from the country’s Poverty Reduction.

Graph: Recent Income of World Bank 8.0 Criticism Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support US business interests, and argue that the bank has actually increased poverty and been detrimental to the environment, public health, and cultural diversity. Some critics also claim that the World Bank has consistently pushed a "neo-liberal" agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. A number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual output functions to blame the poor for their condition.

It has also been suggested that the World Bank is an instrument for the promotion of US and 'Western' interests in certain regions of the world, Seven South American nations have established the Bank of the South in order to minimize US influence in the region. Criticisms of the structure of the World Bank refer to the fact that the President of the Bank is always an American, nominated by the President of the United States (though subject to the approval of the other member countries). There have been accusations that

the decision-making structure is undemocratic, as the US effectively has a veto on some constitutional decisions with just over 16% of the shares in the bank; moreover, decisions can only be passed with votes from countries whose shares total more than 85% of the bank's shares. A further criticism concerns internal governance and the manner in which the World Bank is alleged to lack transparency to external publics.

8.1 Members Main article: List of World Bank members The International Bank for Reconstruction and Development (IBRD) has 185 member countries, while the International Development Association (IDA) has 166 members. Each member state of IBRD should be also a member of the International Monetary Fund (IMF) and only members of IBRD are allowed to join other institutions within the Bank (such as IDA).

Graph: World Bank based on Washington 9.0 Recommendation Still IMF and world bank are doing many of activities all over the world but in every work have some limitation similarly they have some limitation that is why many of people think they should do some more work. These works can be the IMF to revalidate the primary purpose of surveillance by clarifying the expected roles of both the institution and its members. It also recommends specific steps to improve the management of IMF exchange rate work.

Recommendations include undertaking a full Executive Board review of exchange rate policy—the first since 1999; developing greater guidance for staff, given the lack of professional consensus on appropriate exchange rate regimes and levels; requiring staff to document the reasons for their advice to countries; ensuring the effectiveness of dialogue with country authorities; prioritizing exchange rate policy issues and initiatives across the organization; addressing data provision problems; seeking agreement on new procedures to respect members' concerns about the confidentiality of discussions; and giving strategic focus to opportunities for multilateral concerted action.

The IMF Executive Board has this year agreed to an overhaul of the institutional mandate for international surveillance. The report points out; however, that there are problems identified that must be addressed regardless of changes made to the Surveillance Decision. The key to solving them lies in ensuring the trust of member countries and their willingness to cooperate within the legal framework, and this will take time and effort.

On the other hand World Bank should do some activities for third world country. It established in order to do many of positive work but due to some unavoidable circumstances it was not possible to finish all of work. One of the most important intentions was to remove poverty but still it is going on in the world. So they should reactive about this matter and should be care full to make a pre plan that how they will do work.

Some Specific Recommendation for World Bank 1. Ensure that the focus of the Bank’s transport operations goes beyond intercity highways and gives more attention to issues of growing urgency, including air pollution, traffic congestion, safety, affordability, and trade. This could entail a trade-off between a portion of the traditional highway business and newer, more complex challenges 2. Prepare a Bank Group transport strategy with a six fold emphasis: • Paying greater attention to air and water pollution and realizing environmental gains

• Achieving greater synergies across relevant sectors— building on the merging of the Bank’s environmentally and Socially Sustainable Development and Infrastructure Networks • Enhancing knowledge sharing and analytical and advisory services and their contribution to country strategies • Continuing to support private sector participation through close coordination among the Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) • Increasing attention to governance and corruption issues • Redeploying staff and budget resources accordingly.

3. Build up the sector’s monitoring and evaluation Efforts and align them with the new strategy, including through: • The development over the next year of relevant intermediate indicators applicable to the broad range of projects • The launch of an enhanced program of rigorous impact evaluations for selected programs • A comprehensive self-evaluation of the experience with Sector wide Approaches (SWAps) within three years • An independent overview of the Sub-Saharan Africa Transport Policy (SSATP) program within two years.

• Management agrees and will plan accordingly in coordination with SSATP donors and partners.

10. Conclusion Overall we see the activities of World Bank and IMF are effective but in some cases they got out from their specific intentions and influence by external power. If they don’t influenced by others then it might be achieved their

ultimate goal which should be much better than now. And other things that given their mutual objectives and their individual resource constraints, there are clear benefits from improving the existing coordination and cooperation in the financial sector work of the Bank and the Fund.

11.0 References Book:  International Business Charles W. L. Hill Internet:  www.worldbank.com  www.imf.org  www.en.wikipedia.org/wiki/International_Monetary_Fund.com  www.en.wikipedia.org/wiki/world_bank.com