(1) What is World Bank?

Ans: The World Bank Group (WBG) was established in 1944 to rebuild post-World
War

II

Europe

under

Development (IBRD).

the International

Today,

the World

Bank

for

Bank functions

Reconstruction
as

an

and

international

organization that fights poverty by offering developmental assistance to middleincome and low-income countries. By giving loans and offering advice and training in
both the private and public sectors, the World Bank aims to eliminate poverty by
helping people help themselves. Under the World Bank Group, there are
complimentary institutions that aid in its goals to provide assistance.
The World Bank's official goal is the reduction of poverty. However, according to its
Articles of Agreement, all its decisions must be guided by a commitment to the
promotion of foreign investment and international trade and to the facilitation
of Capital investment.
The World Bank is different from the World Bank Group, an extended family of five
international organizations:
1. The International Bank for Reconstruction and Development
The International Bank for Reconstruction and Development (IBRD) lends to
governments of middle-income and creditworthy low-income countries.
2. The International Development Association
The International Development Association (IDA) provides interest-free loans called
credits and grants to governments of the poorest countries.
Together, IBRD and IDA make up the World Bank.
3. The International Finance Corporation
The International Finance Corporation (IFC) is the largest global development
institution focused exclusively on the private sector. We help developing countries
achieve sustainable growth by financing investment, mobilizing capital in
international financial markets, and providing advisory services to businesses and
governments.
4. The Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to
promote foreign direct investment into developing countries to support economic
growth, reduce poverty, and improve peoples lives. MIGA fulfils this mandate by
offering political risk insurance (guarantees) to investors and lenders.

5. The International Centre for Settlement of Investment Disputes

The International Centre for Settlement of Investment Disputes (ICSID) provides
international facilities for conciliation and arbitration of investment disputes.
Criteria of the World Bank

Various developments have brought the Millennium Development Goals targets for
2015 within reach in some cases. For the goals to be realized, six criteria must be met:
stronger and more inclusive growth in Africa and fragile states, more effort in health
and education, integration of the development and environment agendas, more as well
as better aid, movement on trade negotiations, and stronger and more focused support
from multilateral institutions like the World Bank.
Eradicate Extreme Poverty and Hunger: From 1990 through 2004, the proportion
of people living in extreme poverty fell from almost a third to less than a fifth.
Although results vary widely within regions and countries, the trend indicates that the
world as a whole can meet the goal of halving the percentage of people living in
poverty. Africa's poverty, however, is expected to rise, and most of the 36 countries
where 90% of the world's undernourished children live are in Africa. Less than a
quarter of countries are on track for achieving the goal of halving under-nutrition.
Achieve Universal Primary Education: The percentage of children in school in
developing countries increased from 80% in 1991 to 88% in 2005. Still, about
72 million children of primary school age, 57% of them girls, were not being educated
as of 2005.
Promote Gender Equality: The tide is turning slowly for women in the labor market,
yet far more women than men- worldwide more than 60% are contributing but
unpaid family workers. The World Bank Group Gender Action Plan was created to
advance women's economic empowerment and promote shared growth.
Reduce Child Mortality: There is some improvement in survival rates globally;
accelerated improvements are needed most urgently in South Asia and Sub-Saharan
Africa. An estimated 10 million-plus child under five died in 2005; most of their
deaths were from preventable causes.
Improve Maternal Health: Almost the entire half million women who die during
pregnancy or childbirth every year live in Sub-Saharan Africa and Asia. There are

numerous causes of maternal death that require a variety of health care interventions
to be made widely accessible.
Ensure Environmental Sustainability: Deforestation remains a critical problem,
particularly in regions of biological diversity, which continues to decline. Greenhouse
gas emissions are increasing faster than energy technology advancement.
Develop a Global Partnership for Development: Donor countries have renewed
their commitment. Donors have to fulfill their pledges to match the current rate of
core program development. Emphasis is being placed on the Bank Group's
collaboration with multilateral and local partners to quicken progress toward the
MDGs' realization.
The following objectives are assigned by the World Bank:
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
(2) What is the 'International Monetary Fund - IMF'?
Ans: The International Monetary Fund (IMF) is an international organization created
for the purpose of standardizing global financial relations and exchange rates. The
IMF generally monitors the global economy, and its core goal is to economically
strengthen its member countries.
Specifically, the IMF was created with the intention of:
1. Promoting global monetary and exchange stability.
2. Facilitating the expansion and balanced growth of international trade.
3. Assisting in the establishment of a multilateral system of payments for current
transactions.

How a Country Can Join the IMF

Countries must apply to be a part of the IMF, although any country can apply. Over
time, the stipulations of being a member have changed, with membership
requirements being more relaxed when the Fund was in its early stages. Countries are
required to make membership payments, or quotas, which are assigned to individual
countries based on their economic size and stipulate how much they contribute. These
quotas are larger for more powerful economies, and they form a pool from which
countries in need can take loans. Member countries are also required to adhere to the
Code of Conduct, and stricter regulations may be imposed on those countries who
apply in hopes of financial aid.
Members not only have access to the broad range of services provided by the IMF, but
also to the economic records of other member countries
Objectives of IMF
1. To promote international monetary cooperation through a permanent institution this
provides the machinery for consolation and collaboration on international monetary
problems
2. 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 objective of economic policy.
3. To promote exchange stability, to maintain orderly exchange arrangements among
members, and to avoid competitive exchange depreciation.
4. 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.
5. To give confidence to members by making the general resources of the Fund
temporarily available to them under adequate safeguards, thus providing them with
the opportunity to correct maladjustments in their balance of payments, without resorting to measures destructive of national or international prosperity.
6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members.

(3) Describe the Trading Co-operation of Bangladesh?

Ans: Trading Corporation of Bangladesh (TCB) an autonomous state trading
organisation under the Ministry of Commerce. After liberation in December 1971,
Bangladesh inherited a devastated economy, a disrupted system of communication,
and damaged ports. This necessitated urgent import of essential consumer goods and
industrial raw materials. In this background, TCB was created in 1972 by the
Presidential Order No 68. To start with, it took over all the assets, liabilities and
manpower of then of the Trading Corporation of Pakistan. TCB's main functions are:
to import commodities according to the requirements of the government; to distribute
the imported commodities at fair prices to keep the market stable; to create overseas
markets for traditional and non-traditional products of Bangladesh and export those
products; to keep a watch on the supply and price situation of the essential goods; and
to engage in trading and related activities as directed by the government.
TCB is run by a board composed of the chairman (the chief executive) and three
directors. In 1996, the government approved for it a new structure with manpower of
714 as against the earlier manpower of 1,336. It has four departments: administration,
finance, trading and sale/distribution, movement of goods and clearing/forwarding
and storage. TCB secretary heads the administration while the directors head the other
departments. TCB head office is located at Tejgaon in Dhaka.
Since its inception TCB has been playing an important role in rehabilitation and
development of the country's economy, industry and commerce. In 1972-73, it
imported 63 commodities including cement, milk food, textiles, yarn, sugar,
corrugated iron sheets, vehicles, pig iron, oil seeds, medicines, coconut oil, tyres,
tubes and bicycles.
At times of crisis in imports, TCB often acted as the savoir. In emergencies it imports
onion, lentils, salt, dry chillies, dates, ginger and medicines.
In addition to importing TCB also doing export trading. Since 1972 to 30 June 1998,
TCB exported different commodities and earned foreign exchange about Tk 153.09
million. TCB exports jute, jute goods, molasses, tea, hides and skins, leather goods,
readymade garments, urea, frozen fish, handicraft and fine rice. It initiated export of
Bangladeshi readymade garments in 1975-76. In due course it became a major foreign
exchange earner for the country. It participated in many international export fairs and
exhibitions and earned prizes and awards.

(4) What is APTA (Asia pacific trade agreement)? Elaborate it.

Ans: The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok
Agreement, was signed in 1975 as an initiative of ESCAP. Being the oldest
preferential trade agreement among developing countries in Asia-Pacific, APTA aims
to promote economic development through the adoption of mutually beneficial trade
liberalization measures that will contribute to intra-regional trade expansion and
provides for economic integration through coverage of merchandise goods, services,
investment and trade facilitation.
Open to all developing member countries, APTA is a truly region-wide trade
agreement spanning East and South Asia, with potential to expand to other subregions, including Central Asia and the Pacific. APTA is the first plurilateral
agreement among the developing countries in the region to adopt common operational
procedures for certification and verification of the origin of goods and it has the
longest effective implementation period amongst the trade agreements in the entire
Asia-Pacific. Notably, APTA is the only operational trade agreement linking China
and India, two of the fastest growing markets in the world, and other major markets
such as the Republic of Korea.

Asia Pacific Trade Agreement

(5) What is Foreign Exchange Market?

Ans: A foreign exchange transaction is an agreement between a buyer and a seller that
a given amount of one currency is to be delivered at a specified rate for some other
currency.
The foreign exchange market works through financial institutions, and it operates on
several levels. Behind the scenes banks turn to a smaller number of financial firms
known as dealers, who are actively involved in large quantities of foreign exchange
trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is
sometimes called the inter bank market, although a few insurance companies and
other kinds of financial firms are involved. Trades between foreign exchange dealers
can be very large, involving hundreds of millions of dollars. Because of the
sovereignty issue when involving two currencies, forex has little (if any) supervisory
entity regulating its actions.
The foreign exchange market provides the physical and institutional structure through
which the money of one country is exchanged for that of another country, the rate of
exchange between currencies is determined, and foreign exchange transactions are
physically completed.
Functions of the Foreign Exchange Market
The foreign exchange market is the mechanism, by which a person of firm transfers
purchasing power form one country to another, obtains or provides credit for
international trade transactions, and minimizes exposure to foreign exchange risk.
1. Transfer of Purchasing Power: Transfer of purchasing power is necessary
because international transactions normally involve parties in countries with different
national currencies. Each party usually wants to deal in its own currency, but the
transaction can be invoiced in only one currency.
2. Provision of Credit: Because the movement of goods between countries takes
time, inventory in transit must be financed.
3. Minimizing Foreign Exchange Risk: The foreign exchange market provides
"hedging" facilities for transferring foreign exchange risk to someone else.
The foreign exchange market consists of two tiers: the inter bank or wholesale market,
and the client or retail market. Participants include banks and non bank foreign
exchange dealers, individuals and firms conducting commercial and investment
transactions, speculators and arbitragers, central banks and treasuries, and foreign
exchange brokers.