INTERNATIONAL SUBMITTED BY-

GAYATRI PANJWANI

ECONOMIC INSTITUTIONS BBA III

28
INTERNATIONAL MONETARY
FUND(IMF)
The International Monetary Fund (IMF) is an international organization
headquartered in Washington, D.C., consisting of 189 countries working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce
poverty around the world while periodically depending on the World Bank (for its
resources).
Through the fund and other activities such as the gathering of statistics and analysis,
surveillance of its members' economies, and the demand for particular policies, the
IMF works to improve the economies of its member countries
HISTORY
The IMF was originally laid out as a part of the Bretton Woods system exchange
agreement in 1944. During the Great Depression, countries sharply raised barriers to
trade in an attempt to improve their failing economies. This led to the devaluation of
national currencies and a decline in world trade.
This breakdown in international monetary co-operation created a need for oversight.
The representatives of 45 governments met at the Bretton Woods Conference in the
Mount Washington Hotel in Bretton Woods, New Hampshire, in the United States, to
discuss a framework for postwar international economic co-operation and how to
rebuild Europe.
FUNCTIONS
1. Exchange Stability:
The first important function of IMF is to maintain exchange stability and thereby to
discourage any fluctuations in the rate of exchange. The Found ensures such stability
by making necessary arrangements like—enforcing declaration of par value of
currency of all members in terms of gold or US dollar, enforcing devaluation criteria,
up to 10 per cent or more by more information or by taking permission from IMF
respectively, forbidding members to go in for multiple exchange rates and also to
buy or sell gold at prices other than declared par value.
FUNCTIONS
2. Eliminating BOP Disequilibrium:
The Fund is helping the member countries in eliminating or minimizing the short-
period equilibrium of balance of payments either by selling or lending foreign
currencies to the members. The Fund also helps its members towards removing the
long period disequilibrium in their balance of payments. In case of fundamental
changes in the economies of its members, the Fund can advise its members to change
the par values of its currencies.
FUNCTIONS
3. Determination of Par Value:
IMF enforces the system of determination of par values of the currencies of the members
countries. As per the Original Articles of Agreement of the IMF every member country
must declare the par value of its currency in terms of gold or US dollars. Under the revised
Articles, the members are given autonomy to float or change exchange rates as per
demand supply conditions in the exchange market and also at par with internal price
levels.

IMF is exercising surveillance to ensure proper working and balance in the international
monetary system, i.e., by avoiding manipulation in the exchange rates and by adopting
intervention policy to counter short-term movements in the exchange value of the
currency.
FUNCTIONS
4. Stabilize Economies:
The IMF has an important function to advise the member countries on various
economic and monetary matters and thereby to help stabilize their economies.
5. Credit Facilities:
IMF is maintaining various borrowing and credit facilities so as to help the member
countries in correcting disequilibrium in their balance of payments. These credit
facilities include-basic credit facility, extended fund facility for a period of 3 years,
compensatory financing facility, lociffer stock facility for helping the primary
producing countries, supplementary financing facility, special oil facility, trust fund,
structural adjustment facility etc. The Fund also charges interest from the borrowing
countries on their credit.
FUNCTIONS
6. Maintaining Balance Between Demand and Supply of Currencies:
IMF is also entrusted with important function to maintain balance between demand and supply
of various currencies. Accordingly the fund can declare a currency as scarce currency which is
in great demand and can increase its supply by borrowing it from the country concerned or by
purchasing the same currency in exchange of gold.

7. Maintenance of Liquidity:
To maintain liquidity of its resources is another important function of IMF. Accordingly, there
is provision for the member countries to borrow from IMF by surrendering their own
currencies in exchange. Again for according accumulation of less demand currencies with the
Fund, the borrowing countries are directed to repurchase their own currencies by repaying its
loans in convertible currencies.
FUNCTIONS
8. Technical Assistance:
The IMF is also performing an useful function to provide technical assistance to the member
countries. Such technical assistance in given in two ways, i.e., firstly by granting the members
countries the services of its specialists and experts and secondly by sending the outside experts.

Moreover the Fund has also set up two specialized new departments:

(a) Central Banking Services Department and

(b) Fiscal Affairs Department for sending specialists to member countries so as to manage its central
banks and also on fiscal management.
FUNCTIONS
9. Reducing Tariffs:
The Fund also aims at reducing tariffs and other restrictions imposed on international
trade by the member countries so as to cease restrictions of remittance of funds or to
avoid discriminating practices.
10. General Watch:
The IMF is also keeping a general watch on the monetary and fiscal policies
followed by the member countries to ensure no flouting of the provisions of the
charter.
WORLD BANK
The World Bank is an international financial institution that provides loans and
grants to the governments of poorer countries for the purpose of pursuing capital
projects.[5] It comprises two institutions: the International Bank for Reconstruction
and Development (IBRD), and the International Development Association (IDA).
The World Bank is a component of the World Bank Group.
The World Bank was established in December 1945 at the United Nations Monetary
and Financial Conference in Bretton Woods, New Hampshire. It opened for business
in June 1946 and helped in the reconstruction of nations devastated by World War II.
Since 1960s the World Bank has shifted its focus from the advanced industrialized
nations to developing third-world countries.
ORGANISATION AND
STRUCTURE
The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory
Committee, the Loan Committee and the president and other staff members. All the powers of the bank are vested in the
Board of Governors which is the supreme policy making body of the bank.
The board consists of one Governor and one Alternative Governor appointed for five years by each member country. Each
Governor has the voting power which is related to the financial contribution of the Government which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders,
namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15 members are elected by the
remaining countries.
Each Executive Director holds voting power in proportion to the shares held by his Government. The board of Executive
Directors meets regularly once a month to carry on the routine working of the bank.
The president of the bank is pointed by the Board of Executive Directors. He is the Chief Executive of the Bank and he is
responsible for the conduct of the day-to-day business of the bank. The Advisory committees appointed by the Board of
Directors.
It consists of 7 members who are expects in different branches of banking. There is also another body known as the Loan
Committee. This committee is consulted by the bank before any loan is extended to a member country.
CAPITAL RESOURCES OF
WORLD BANK
The initial authorized capital of the World Bank was $ 10,000 million, which was divided in 1 lakh shares of $ 1 lakh each.
The authorized capital of the Bank has been increased from time to time with the approval of member countries.

On June 30, 1996, the authorized capital of the Bank was $ 188 billion out of which $ 180.6 billion (96% of total authorized
capital) was issued to member countries in the form of shares.

Member countries repay the share amount to the World Bank in the following ways:

1. 2% of allotted share are repaid in gold, US dollar or Special Drawing Rights (SDR).

2. Every member country is free to repay 18% of its capital share in its own currency.

3. The remaining 80% share deposited by the member country only on demand by the World Bank.
 OBJECTIVES
1. To provide long-run capital to member countries for economic reconstruction and development.
2. To induce long-run capital investment for assuring Balance of Payments (BoP) equilibrium and
balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other projects of member
countries.
4. To ensure the implementation of development projects so as to bring about a smooth
transference from a war-time to peace economy.
5. To promote capital investment in member countries by the following ways;
(a) To provide guarantee on private loans or capital investment.
(b) If private capital is not available even after providing guarantee, then IBRD provides loans for
productive activities on considerate conditions.
FUNCTIONS
World Bank is playing main role of providing loans for development works to member
countries, especially to underdeveloped countries. The World Bank provides long-term
loans for various development projects of 5 to 20 years duration.
The main functions can be explained with the help of the following points:
1. World Bank provides various technical services to the member countries. For this
purpose, the Bank has established “The Economic Development Institute” and a Staff
College in Washington.
2. Bank can grant loans to a member country up to 20% of its share in the paid-up
capital.
3. The quantities of loans, interest rate and terms and conditions are determined by the
Bank itself.
FUNCTIONS
4. Generally, Bank grants loans for a particular project duly submitted to the Bank by
the member country.

5. The debtor nation has to repay either in reserve currencies or in the currency in
which the loan was sanctioned.

6. Bank also provides loan to private investors belonging to member countries on its
own guarantee, but for this loan private investors have to seek prior permission from
those counties where this amount will be collected.
WORLD TRADE
ORGANISATION (WTO)
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade
between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading
nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as
possible.

FACT FILE
Location: Geneva, Switzerland
Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 164 members representing 98 per cent of world trade
Budget: 197 million Swiss francs for 2019
Secretariat staff: 625
Head: Roberto Azevêdo (Director-General)
FUNCTIONS
Trade negotiations
The WTO agreements cover goods, services and intellectual property. They spell out
the principles of liberalization, and the permitted exceptions. They include individual
countries’ commitments to lower customs tariffs and other trade barriers, and to open
and keep open services markets. They set procedures for settling disputes. These
agreements are not static; they are renegotiated from time to time and new
agreements can be added to the package. Many are now being negotiated under the
Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in
November 2001.
FUNCTIONS
Implementation and monitoring
WTO agreements require governments to make their trade policies transparent by
notifying the WTO about laws in force and measures adopted. Various WTO
councils and committees seek to ensure that these requirements are being followed
and that WTO agreements are being properly implemented. All WTO members must
undergo periodic scrutiny of their trade policies and practices, each review
containing reports by the country concerned and the WTO Secretariat.
FUNCTIONS
Dispute settlement
The WTO’s procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore for ensuring that trade
flows smoothly. Countries bring disputes to the WTO if they think their rights under
the agreements are being infringed. Judgements by specially appointed independent
experts are based on interpretations of the agreements and individual countries’
commitments.
FUNCTIONS
Building trade capacity
WTO agreements contain special provision for developing countries, including
longer time periods to implement agreements and commitments, measures to
increase their trading opportunities, and support to help them build their trade
capacity, to handle disputes and to implement technical standards. The WTO
organizes hundreds of technical cooperation missions to developing countries
annually. It also holds numerous courses each year in Geneva for government
officials. Aid for Trade aims to help developing countries develop the skills and
infrastructure needed to expand their trade.
FUNCTIONS
Outreach
The WTO maintains regular dialogue with non-governmental organizations,
parliamentarians, other international organizations, the media and the general public
on various aspects of the WTO and the ongoing Doha negotiations, with the aim of
enhancing cooperation and increasing awareness of WTO activities.