International Monetary Fund

and World Bank

• The International Monetary Fund and the World
Bank were both created at an international
conference convened in Bretton Woods, New
Hampshire, United States in July 1944.
• The objectives of the world bank and IMF are
contemporary
• Both the institutions aim at increasing the level of
national income and standard of living of the
member nations
• Both of these institutions serve as lending houses
the IMF for short term and the IBRD for long
term capital
• Both aim at promoting the balanced growth of
international trade
• The International Monetary Fund was created in July
1944, originally with 45 members, with a goal to
stabilize exchange rates and assist 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.
• Original members: All those countries whose
representatives took part in BRETTONWOODS
CONFERENCE and who agreed to be the members of
the fund prior to 31st December 1945
• Ordinary members: All those who became members
subsequently
 Objectives of IMF
• International monetary co operation
• To facilitate expansion and balanced growth of
international trade
• To promote exchange stability
• Generating higher employment and income
• Abolition of exchange restriction
• AID to members during emergency
 Functions of IMF
• Determining rate of exchange by every country
• Fund lending
• Credit tranches
• A central Bank’s bank
• Training and technical assistance
• Consultancy role
 Achievements of IMF
• International monetary co operation
• Exchange stability
• Checking competitive depreciation
• Increased assistance
• Increase in capital resources
• Expansion of trade
 WORLD BANK
• The World Bank is an international financial institution that
provides loans to developing countries for capital programs.

• The World Bank's official goal is the reduction of poverty.

• The World Bank is a lending institution that funds essential

infrastructural requirement, globally.

• The World Bank differs from the World Bank Group, in that
the World Bank comprises only two institutions: the
International Bank for Reconstruction and Development
(IBRD) and the International Development Association (IDA)
• H.Q. : WASHINGTON D.C.
• ESTD. : 1945
 Organisation
• Board of governors: The board is the supreme
governing authority. Every members country
appoints one governor for a period of five years
• Board meet once in year
• Executive directors: For all technical purposes the
board delegates its power to the executive
directors in the day to day administration
• Presidents: The executives directors elect a
president who become their Ex-Officio chairman.
He is the chief of operating staff of the bank.
• The World Bank Group has set two goals for the
world to achieve by 2030:
• End extreme poverty by decreasing the
percentage of people living on less than $1.90 a
day to no more than 3%
• Promote shared prosperity by fostering the
income growth of the bottom 40% for every
country
 Capital Resources:

• The World Bank, like any other corporation, has

an authorised capital of $ 21 billion divided into
210,000 shares, each having a par value $ 1,
00,000. Initially, however, its authorised capital
was $ 10 billion. Of the present authorised
capital, $ 20.48 billion are subscribed by the issue
of 204,848 shares.
 Lending operation of the banks
• Loans are granted to member countries only after the
Bank is fully satisfied about the economic position of the
borrowing country as well as the soundness of the
specified projects for which assistance is sought.
• In granting loans, the Bank is prepared to take reasonable
risks but insists that funds obtained from it should be used
for purposes which are constructive and practical.
• The Bank has powers of supervision and control to ensure
that funds are used for the purposes for which the loan is
granted.
• Normally, the Bank makes medium or long-term loans,
the term being related to the estimated useful life of the
equipment or plant being financed.
• The Bank makes or facilitates loans in any one or
more out of its own following ways
(a) By making or participating in direct loans out of its
own funds; or
(b) Out of the funds raised in the market of a member,
or otherwise borrowed by the Bank; or
(c) By guaranteeing, in whole or in part, loans made by
private investors through the investment channels.
• Technical and Advisory Assistance:
• In addition to providing financial assistance to
member countries, the Bank has been providing
them suitable technical assistance to assess their
total economic resources and to set up priorities to
be followed in their development programmes.
 Criticism:
1. High rate of interest: It is alleged that the Bank
charges a very high rate of interest on loans.
2. Orthodox standards :The Bank’s insistence, prior
to the actual grant of loan, on the country having
the capacity to transfer or repay, is open to
criticism. The Bank should not apply orthodox
standards to judge the transfer capacity of any
borrowing country.
3. Not enough financial help: The financial help
given by the Bank does not amount to more than
a drop in the big ocean of financial requirement
so essential for various development projects.
United Nations
• The United Nations is an international organization
founded in 1945.
• It is currently made up of 193 Member States.
• The mission and work of the United Nations are
guided by the purposes and principles contained in
its founding Charter.
• Due to the powers vested in its Charter and its
unique international character, the United Nations
can take action on the issues confronting humanity
such as peace and security, climate change,
sustainable development, human rights,
disarmament, terrorism, humanitarian and health
emergencies, gender equality, governance, food
production, and more.
• The UN also provides a forum for its members to
express their views in the General Assembly, the
Security Council, the Economic and Social Council,
and other bodies and committees.
• The UN's Chief Administrative Officer is
the Secretary-General.
• Headquarters : New York City, with further main
offices at Geneva, Nairobi, and Vienna
 Stated Objectives
• Peacekeeping and security
• Social and economic development
• Human rights and humanitarian assistance
• International Law
 Organs of the UN
• One major problem of the League of Nations was
the lack of division of responsibility, no way to
coordinate military or economic actions between
countries
• UN was created with 5 major ‘organs’ to avoid
these issues
• The Security Council
• The General Assembly
• The Secretariat
• The Economic and Social Council
• The International Court of Justice
 General Assembly
Function: to oversee the budget of the United
Nations,
1. appoint the non-permanent members to the
Security Council
2. receive reports from other parts of the United
Nations
3. make recommendations in the form of General
Assembly Resolutions
Composition: Made up of every country in the
United Nation
Head: President of the United Nations General
Assembly
 Security Council
• Function: Responsible for maintaining
international peace and security
• Composition: 5 permanent (US, Britain, France,
Russia, China) 10 non-permanent
• Head: Rotates between members
• Makes binding decisions about international
disputes Recommend mediations, send
peacekeeping missions, impose economic
sanctions and arms embargos
 The Economic and Social Council
• Function: It is responsible for coordinating the
economic, social and related work of 14 UN
specialized agencies, their functional
commissions and five regional commissions
• Established: 1945
• it holds a four-week session each year in July
• Also works with non-governmental bodies,
making it a key connection between the UN and
civil society
 The Secretariat
• Function: It provides studies, information, and facilities
needed by United Nations bodies for their meetings.
• It also carries out tasks as directed by the UN Security
Council, the UN General Assembly, the UN Economic
and Social Council, and other U.N. bodies
• The United Nations Secretariat is headed by the
Secretary-General, assisted by a staff of international
civil servants worldwide.
• Each UN member country is enjoined to respect the
international character of the Secretariat and not seek
to influence its staff.
UNESCO
 The Organization
• UNESCO is responsible for coordinating international
cooperation in education, science, culture and
communication.
• Director General : Irina Bokova
• It strengthens the ties between nations and societies, and
mobilizes the wider public so that each child and citizen
• has access to quality education; a basic human right and
an indispensable prerequisite for sustainable development;
• may grow and live in a cultural environment rich in diversity
and dialogue, where heritage serves as a bridge between
generations and peoples;
• can fully benefit from scientific advances;
• and can enjoy full freedom of expression; the basis of
democracy, development and human dignity.
 Governing Bodies
• The General Conference consists of the
representatives of UNESCO's Member States.
• It meets every two years, and is attended by
Member States and Associate Members,
together with observers for non-Member States,
intergovernmental organizations and non-
governmental organizations (NGOs)
• The General Conference determines the policies
and the main lines of work of the Organization.
• It also elects the Members of the Executive
Board and appoints, every four years, the
Director-General
 The Executive Board
• The Executive Board ensures the overall
management of UNESCO. It prepares the work of
the General Conference and sees that its
decisions are properly carried out.
• Every two years the General Conference assigns
specific tasks to the Board.
• The Executive Board’s fifty-eight members are
elected by the General Conference.
• The Executive Board meets twice a year.
UNCTAD
• UNCTAD is a permanent intergovernmental body
established by the United Nations General
Assembly in 1964.
• Our headquarters are located in Geneva,
Switzerland, and we have offices in New York
and Addis Ababa.
• UNCTAD is part of the UN Secretariat. We report
to the UN General Assembly and the Economic
and Social Council but have our own
membership, leadership, and budget. We are
also part of the United Nations Development
Group.
• UNCTAD, which is governed by its 194
member States, is the United Nations body
responsible for dealing with development
issues, particularly international trade – the
main driver of development.
• Thus UNCTAD organization acts like a bridge
between the developing and developed
countries to increase their economy of the
country .
 FUNCTIONS
• To promote international trade with a view to
accelerating economic development.
• To formulate principles and policies on
international trade and related problems of
economic development.
• To negotiate multinational trade agreements.
• To make proposals for putting its principles
and polices into effect.
 The major activities of UNCTAD

• It include research and support negotiations

for commodity agreements, technical
elaboration of new trade activities designed to
assist developing countries in the areas of
trade and capital.
• UNCTAD’S action program and priorities have
been laid down in the various recommendations
adopted by the first conference in 1964.
• Every country has the sovereign right freely to
dispose of its natural resources
• Economic relations between countries
• There shall be no discrimination on the basis of
difference in socio-economic systems.
 Role of UNCTADof UNCTAD
• Despite the debates and disagreements
(UNCTAD) played a key roll
• The generalized system of preferences (GSP)
• A maritime shipping code
• Special international programs to help least
developed countries and International aid
targets.
• During the break down of Bretton wood system,
oil price shocks, inflation and accumulation of
debt by developing countries
• (UNICTAD) became a central forum for debates
between the north and south.
 Bretton woods conference
• The Bretton Woods Conference, formally known as
the United Nations Monetary and Financial
Conference, was the gathering of 730 delegates from
all 44 Allied nations at the Mount Washington Hotel,
situated in Bretton Woods, New Hampshire, United
States, to regulate the international monetary and
financial order after the conclusion of World War II.
• The conference was held from July 1–22, 1944.
Agreements were signed that, after legislative
ratification by member governments, established
the International Bank for Reconstruction and
Development (IBRD) and the International Monetary
Fund (IMF).
 The agreements

• The Bretton Woods Conference had three main

results: (1) Articles of Agreement to create the
IMF, whose purpose was to promote stability of
exchange rates and financial flows. (2) Articles of
Agreement to create the IBRD, whose purpose
was to speed reconstruction after the Second
World War and to foster economic development,
especially through lending to build infrastructure.
(3) Other recommendations for international
economic cooperation. The Final Act of the
conference incorporated these agreements and
recommendations.
• Within the Final Act, the most important part in the
eyes of the conference participants and for the later
operation of the world economy was the IMF
agreement. Its major features were:
• An adjustably pegged foreign exchange market rate
system: Exchange rates were pegged to gold.
Governments were only supposed to alter exchange
rates to correct a "fundamental disequilibrium."
• Member countries pledged to make their
currencies convertible for trade-related and other
current account transactions.
• There were, however, transitional provisions that
allowed for indefinite delay in accepting that
obligation, and the IMF agreement explicitly
allowed member countries to regulate capital
flows.
• The goal of widespread current account
convertibility did not become operative until
December 1958, when the currencies of the
IMF's Western European members and their
colonies became convertible.
• As it was possible that exchange rates thus
established might not be favourable to a
country's balance of payments position,
governments had the power to revise them by up
to 10% from the initially agreed level ("par
value") without objection by the IMF.
• The IMF could concur in or object to changes
beyond that level. The IMF could not force a
member to undo a change, but could deny the
member access to the resources of the IMF.
• All member countries were required to
subscribe to the IMF's capital. Membership in
the IBRD was conditioned on being a member
of the IMF. Voting in both institutions was
apportioned according to formulas giving
greater weight to countries contributing more
capital ("quotas").
• The seminal idea behind the Bretton Woods Conference
was the notion of open markets. In his closing remarks at
the conference, its president, U.S. Treasury Secretary Henry
Morgenthau, stated that the establishment of the IMF and
the IBRD marked the end of economic nationalism. This
meant countries would maintain their national interest, but
trade blocs and economic spheres of influence would no
longer be their means.
• The second idea behind the Bretton Woods Conference
was joint management of the Western political-economic
order, meaning that the foremost industrial democratic
nations must lower barriers to trade and the movement of
capital, in addition to their responsibility to govern the
system.
 Failed proposals

• The Bretton Woods Conference recommended

that participating governments reach
agreement to reduce obstacles to
international trade
• The recommendation was later embodied in
the proposed International Trade
Organization (ITO) to establish rules and
regulations for international trade. The ITO
would have complemented the IMF and IBRD.
• The ITO charter was agreed on at the U.N. Conference
on Trade and Employment (held in Havana, Cuba, in
March 1948), but the charter was not ratified by
the U.S. Senate. As a result, the ITO never came into
existence. The less ambitious General Agreement on
Tariffs and Trade (GATT) was adopted in its place.
However, in 1995, the Uruguay Round of GATT
negotiations established the World Trade
Organization (WTO) as the replacement body for GATT.
The GATT principles and agreements were adopted by
the WTO, which was charged with administering and
extending them.