The

World Bank is an international financial institution that provides financial and technical assistance to developing countries for development programs (e.g. bridges, roads, schools, etc.) with the stated goal of reducing poverty.

 Provide

assistance to developing and transition countries Promote the economic development of the world's poorer countries Finance the poorest developing countries whose per capita GNP is less than $865 a year special financial assistance through the International Development Association (IDA)

Build capacity Infrastructure creation Development of Financial Systems Combating corruption Research, Consultancy and Training

 Build
Build

Capacity

capacity is a conceptual approach to development that focuses on understanding the obstacles that inhibit people, governments, international organizations and nongovernmental organizations from realizing their developmental goals while enhancing the abilities that will allow them to achieve measurable and sustainable results.

Infrastructure
The

creation

World Bank will increase infrastructure investments to $45 billion over the next three years to provide the foundation for rapid recovery from the global economic crisis. ( WB SITE NEWS) Investments in infrastructure can provide the platform for job creation, sustainable economic growth and overcoming poverty

 Financial

System The financial system is the system that allows the transfer of money between savers (and investors) and borrowers. A financial system can operate on a global, regional or firm specific level

Investment loans: Support of economic and social development projects

Development policy loans: Quick disbursing finance to support countries

Focus on three priority areas: Safety net programs Global recession and the food Fuel and financial crises
For this: $8.3 billion to mitigate the crisis impact in poor countries, over and above previous commitments to the institution

An organization of 188 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

Before buy or sell anything there is a basic problem i.e. Buyers have to be able to change their money from their country's currency to the seller's national currency. This is called "foreign exchange. This is the "exchange rate." Without a reliable supply of foreign exchange and relatively stable exchange rates, world trade would drop drastically. The IMF was founded over 50 years ago to allow currency to be exchanged freely and easily between member countries. They ensure that members always have enough foreign.

SURVEILLANCE ( Like a Doctor ):- Help in providing policy advise to low income countries by:i.

Establishing Economic Frameworks that

support sustained growth and poverty reduction.

ii.

Identify and manage sources of macroeconomic risk and vulnerabilities.

iii.

Strengthen institutions and policies that

underline sound macroeconomic management.

Progress report is annually published in Global Monitoring Report by IMF and World Bank.

Technical Assistance (like a teacher) :-

Strengthening human skills and institutional

capacity of countries

Helps members in strengthening their policy formulation and implementation, and the legal, institutional, and market frameworks within which they operate. It also constitutes an important complement to IMF surveillance and lending operations in member countries.

Financial Assistance (like a banker) :-

Lending to countries to support reforms

Improving financial sector surveillance. Development of standards and codes of good practice.

Enhancement of transparency in the IMF and its

member countries.

Involvement of the private sector in crisis resolution

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IMF introduced the Extended Fund Facility to help countries address balance of payment difficulties related partly to structural problems that may take longer to correct than macroeconomic imbalance Under its Poverty Reduction and Growth Facility, the IMF provides concessional loans loans with an annual interest rate of 0.5 percent and a maturity of 10 years - to its poorest member countries. The IMF provides Emergency Assistance to countries coping with balance of payments problems caused by natural disasters or military conflicts. The Trade Integration Mechanism allows the IMF to provide loans under one of its facilities to a developing country whose balance of payments suffers.

Many observers thought the collapse of the Bretton Woods system in 1973 would diminish the role of the IMF within the international monetary system
However, the activities of the IMF have expanded due to the periodic financial crises since 1973 IMF deals with three challenges currency crises banking crises foreign debt crises

CURRENCY CRISIS
Speculative attack on a currencys exchange rate value results in:

a sharp depreciation in the value of the currency forcing authorities/central bank to defend its currency and the prevailing exchange rate by:

expending international currency reserves sharply increasing interest rates

BANKING CRISIS
The loss of confidence in the banking system that leads to a run on banks, as individuals and companies withdraw their deposits

FOREIGN DEBT CRISIS

Country cannot service its foreign debt obligations, whether private-sector or government debt

Usually the result of macroeconomic causes:

high relative price inflation

a widening current account deficit

excessive expansion of domestic borrowing asset price inflation

Thank you