Similarities between IMF and World Bank
The primary difference between the International Monetary Fund, or IMF, and the World Bank lies in their respective purposes and functions.
The IMF exists primarily to stabilize exchange rates, while the World Banku2019s goal is to reduce poverty.
Both organizations were established as part of the Bretton Woods Agreement in 1945.
nThe International Monetary Fund promotes monetary cooperation internationally and offers advice and assistance to facilitate building and maintaining a countryu2019s economy.
The IMF also provides loans and helps countries develop policy programs that solve balance of payment problems if a country cannot obtain financing sufficient to meet its international obligations.
The loans offered by the IMF, however, are loaded with conditions.
Often, a loan provided by the IMF as a form of rescue for countries in serious debt ultimately only stabilizes international trade and eventually results in the country repaying the loan at rather hefty interest rates.
For this reason, the IMF has many critics worldwide.
nThe World Banks purpose is to aid long-term economic development and reduce poverty in developing countries.
It accomplishes this by making technical and financial support available to countries.
The bank initially focused on rebuilding infrastructure in Western Europe following World War II, and then turned its operational focus to developing countries.
World Bank support helps countries reform inefficient economic sectors and implement specific projects, such as building health centers and schools or making clean water and electricity more widely available.
World Bank assistance is typically long term, funded by countries that are members of the bank through the issuing of bonds.
The World Bank also has a pool of about $200 billion with which to offer aid to less-developed countries.
The banku2019s loans, however, are not used as a type of bailout, as in IMF style, but as a fund for projects that help develop an underdeveloped or emerging market nation and make it more productive economically.
World Bank and IMF
World Bank is about growth.
IMF is about stability.
World Bank is for development projects in the developing world.
IMF is about balancing the international financial system in both rich and poor countries [Greece is a recent recipient].
,World Bank is your gym trainer - provides you stuff to grow strong.
IMF is your doctor in emergency ward.
They will try to bring you back to life & provide you advice on not eating that fatty food again.
World Bank brings no stigma.
IMF aid sometimes brings a stigma because it indicates that you have a disease that needs to be cured.
,Both the organizations are for governments to borrow.
You go to the World Bank when you want to build a dam or power plant or a road.
You go to the IMF when you are so fucked up that your currency is dropping like crazy.
IMF comes and usually fixes stuff along with providing a mouthful of advice.
,World Bank is a bank.
Meaning it borrows money from investors around the world and then lends to the poor governments that are building projects that help them out of poverty.
You can see some of their projects in India, for instance: All ProjectsIMF is a fund.
Meaning it has a pool of money given to it by 182 member countries in the past and just lends out of that fund.
It doesnt usually borrow new money.
See where IMF lends: IMF Lending at a GlanceIMF is comprised of four key credit lines:n,FCL (Flexible Credit Line): This is usually given to countries well before they get into a problem.
They are the ones with better policies.
,PLL (Precautionary Lending): This is for countries that are beginning to get weak.
n,SBA (Stand By Arrangement): This is for countries that are quite weak, but can be rescued quick.
,EFF (Extended Fund Facility): This is for countries too screwed up and requiring a long term help.
,World Bank is a much bigger institution and has two arms:n,IBRD (International Bank for Reconstruction and Development): This is the bank portion of it.
It charges a slightly higher interest rate than it borrows and it is mainly for profitable commercial projects [such as roads and dams].
This interest is still a lot lower than what the governments can get anywhere.
,IDA (International Development Association): This is a grant body.
Here interest is not charged and usually countries are given long periods for repaying.
The focus is on social projects such as immunization and education.
This is however open only for the poorest nations.
IDA ResultsCountries usually graduate out of IDA to IBRD and eventually completely out of World Bank.
Dozens of countries have got World Bank aid and then grown enough to not be eligible for it anymore.
Difference between IMF and World Bank quora
Africa is not really poor.
A big number of Africans are described as u201c pooru201d by the UN, IMF and other agencies but they are not really u201cpooru201d.
They just live a different lifestyle.
,Be careful when you say that Africa is u201cpooru201d.
I donu2019t know much many times I have to repeat this, but it is my honest opinion that many people certainly on Quora donu2019t really know the real Africa.
A big percentage of people who live in rural areas are very misrepresented.
I would argue that many live a different lifestyle than you and me.
However, they might be leading a better quality of life than you.
,Africa is not poor.
It is developing and has a diversity of countries from developed countries, middle income countries and lower income countries.
People in cities, rural areas, urban centers live different quality of lives.
We have the rich, the elites, a growing middle class, and the lower income families.
Like any continent, each country is different and being poor is relative anyway.
GDP per capita and other metrics donu2019t capture everything.
,This picture is taken somewhere in Eastern province in Rwanda.
The white kids are just getting an u201ceducationalu201d trip about how to grow up in rural Africa.
They are from an expat family in Rwanda.
The African kids in the picture are the kids owner of this herd of 50 to 100 cows.
Some farms in Eastern province are really big.
,Now, without the white kids in the picture, an NGO worker comes to Rwanda and pity these kids for not having u201c shoesu201d.
He comes and start telling: u201coh, letu2019s raise money and buy them some shoesu201d.
As a Rwandan and an African, I can tell you that the owner is already rich enough and does not need your shoes.
,In Rwanda, each one of these cows might cost between $2,000-$2,500 (If I am not mistaken, they must have gotten expensive.
Especially, the ones with long horns.
They have some cultural value attached to them.
Assuming that this owner has 50 cows at $2,000, that means that his herd financial value is about $100K.
,Letu2019s look at his net worth for a second.
The value of his assets minus his liabilities.
Any economists would agree that is a fair analysis of his financial situation.
,The farmer in the picture has about $100,000.
00 for his cows.
Whenever he needs something, sending his children to school, buying cooking oil and other stuff, he sells one of his cows or agricultural produces (cassava, potatoes, beans, green bananas, etc).
He has a couple houses worth around $20,000.
A piece of land worth about $500,000 which he cultivates.
,People who dig the fields for him, gets paid when he sells his fresh produce.
Sometimes they might even prefer to get paid in terms of food amount.
My grandmother does the same for her farm workers.
She pays her farm workers in amount of foods.
,This farmer is probably worth between $500K to $1M.
Do you think he is really poor? I donu2019t think so.
Many people in the West are not worth that much money.
They got loans and their life is miserable as you know better than me in Europe or the US.
,When this farmer comes to Kigali, the capital city of Rwanda, he is probably not dressed like he is that rich.
But many of people in cities cannot match his quality of life.
He is got a veterinarian who makes sure that his cows are healthy and vaccinated.
He is some farmers insurance schemes in case of disaster, yet, he is labeled u201cpoor but the NGO aid industry machine and westerners who do not understand his lifestyle choices at all.
,Do you really think he cannot afford whatever shoes or clothes he wants? The truth is he can.
He just does not need them for the job his kids are performing.
At this particular time, it must have been hot outside, so they donu2019t need shirts or anything.
Most likely, they left them at home or something.
Majority of NGO and staff workers donu2019t know about this.
They just see it and assume that people are u201cpooru201d.
He does not need running water or flushing toilet.
He drinks natural clean water from the mountain and takes care of business in a well-maintained latrine.
,To be fair, this is not to say that they are not poor people in Africa.
I am just saying that some people that you think are u201cpooru201d according to your lifestyle might be really poor.
I would be laughing hard if Toms Shoes was trying to get you to buy their crappy shoes so that a kid like this can have a pair of shoes.
Now, letu2019s get back to your question.
,Is Africa poor because of colonization? The simple answer is simply u201cnou201d.
,u201cAfrica is not really poor.
It is poorly managedu201d.
Some of their issues can be traced back to colonial times, but after 40u201350 years, it is long overdue to be accountable for our mistakes and correct them to move forward into the right direction.
,Below are some of the African issues that majority of countries are facing.
,The tribalism, the identity politics, corruption we have today can be traced from the colonial era.
However, they should not be blamed on but Europeans today.
It is the African job to change that by uniting to work together, being accountable, and thinking long term striving to live instead of surviving.
,Europeans have never cared and will never care about Africans.
They invaded Africa to pursue their own interests and will always do so as long as we allow them to.
It is not their fault that they still run the show in many countries.
It is our faults.
Until we understand that, I am afraid, we will keep dancing around the merry-go around of shame and mediocrity for another 30u201350 years.
,African Hot Issues.
Work In progressCorrupt and unpatriotic leaders.
,Lack of long term planning.
,Aid dependency and poverty mentality.
,Lack of collaboration and working together sharing expertise and knowledge.
,Worshipping the West and allowing them to meddle in our business.
,Failure to changing our education systems to relate to the African story.
,An education that produces a bunch of civil servants who expect to be treated like u201cbossesu201d instead of the actual u201c servantsu201d of the people.
Corruption and u201c big manu201d mentality.
,An education that produces a bunch of job seekers ( complaining and blaming everything on the government) instead of job creators and problem solvers.
,Basically, our education system in many countries produces job seekers ( employees) for non-existing jobs instead of job creators ( employers).
,This education model was taken to fit the 1970s school of thought mentality.
Colonial style of memorizing theories and facts, but not on critical thinking and analysis.
It is at the heart of all the problems we have in higher education and huge unemployment rates for university graduates.
,Failure to develop a solid manufacturing industry to transform our raw materials into finished products.
,Allowing the West to misrepresent our lives and stories.
Dar-es-Salaam, the economic capital of Tanzania ( East Africa).
Like I said earlier, many people who are described as u201c pooru201d are not really poor.
They just live a different lifestyle.
The statistics about IMF, UNDP, World Bank and similar others can be very misleading.
Take for example, this story from one of my Quora friends from Uganda ( Innocent Masengo).
,Innocent Masengos answer to What is something most people dont know about Africa?The above agencies would call his grandpa u201cpooru201d because they canu2019t quantify the value of his assets quite easily.
Since most of them donu2019t understand his lifestyle, they would just bundle him in some lazy statistics about poverty line of u201c living on $2.
00 a day, $1 a day or whatever.
But I can tell you that at 95 years old and still kicking it, many of us do not match his quality of life.
,For more about the stories of the real Africa from actual African people, check out or follow my blog at Africa is Home or Africa is Back if you are interested.
We are tired of being misrepresented to the world.
,We give you a tour of our u201cjungleu201d so to speak.
,Hope this helps.
,The Africa they never show you.
There is also another of Africa that many people around the world donu2019t really know.
It is the Africa that is growing, developing, and probably just as developed as many people around the world.
,An affluent neighborhood of my city ( Kigali, Rwanda),Sports day and car free zone in Kigali, Rwanda.
Healthy bodies healthy minds.
,Port-Louis, the capital city of MauritiusJohannesburg, South Africa.
A vibrant city that needs no introduction.
,Malabo, the capital city of Equatorial Guinea ( West Africa).
10 Richest Countries In Africa 2014 - GDP per capitaAll women flight crew from Ethiopian Airlines, from pilots, co-pilots and flight attendants.
Addis Abbaba, EthiopiaDowntown Kigali, the capital city of Rwanda.
Rwandan ladies showing their fashion styles .
No comment, they are beautiful.
,Anyway, what I am trying to show you is that Africa is diverse land.
You donu2019t bundle Africa into one.
The narrative that the western media and aid industry keep pushing out is not a representative of the real Africa.
The real Africa is rich.
It has some issues to deal with and some low income people.
,Just like New York has 16th Avenue and the projects or Chicago has some parts of South side.
What African people want is a fair representation of their stories.
We are definitely misrepresented around the world.
Those of you who pity Africa should not be.
The elite and the middle class Africans can help those need help.
,In the end, I want to tell you that Africa is rich and beautiful.
Europeans have nothing to do with African issues today.
Our issues are ours and only we can solve them.
When majority of you say that Africa is u201cpooru201d, you have no idea of what you are talking about honestly.
,The real Africa can only be described by Africans, not CNN, BBC, or other western media.
Else, check out Africa is Back, Africa is Home, or the The African Way.
,God bless Africa.
Negative impact of IMF and World Bank on developing countries
Does the drop in Chinese economic growth to its lowest level since 1992 have any long term significance or is it a minor blip?The emphasis should not on China but on the Economy.
The global economy is cooling down because of the ongoing political uncertainties and trade wars.
,3 days ago, IMF updated its new global growth forecast.
Here it is.
,The global outlook remains precarious with a synchronized slowdown and uncertain recovery.
As you can see, pretty much all major economies are cooling down considerably from last year.
,China is relatively OK.
Of course it has problems, but having the second highest GDP in the world AND being the fastest growing major economy at the same time right now, I mean, if the sky is falling on China, the other 190 countries in the world would already be in a deep ditch God-knows-where!,The one that pretty much all traders are really watching is Europe, where the economy is falling like a rock, AND the ECB is already doing negative interest rate, meaning that if sh*t hits the fan, thereu2019s no ammunition left for the European Central Bank to do much.
,But Iu2019ll tell you the difference of the u201cChina impactu201d between this time and the 2008u20132009 Great Recession, triggered by the subprime mortgage crisis.
Great Recession The previous one was an unforeseen shock, so the Chinese government rushed in a ~ $600 billion stimulus package.
Chinese economic stimulus program - Wikipedia As you know, China largely acts as the u201cmiddlemanu201d between developing countries and developed countries.
It buys raw material and resources from developing countries, and sells finished goods to developed countries.
So Chinau2019s stimulus program effectively acted as a u201cdamu201d, and blocked the global recession from spilling over to the developing countries.
So the GDP growth map looked like this in 2009:,Source: Great Recession - WikipediaThis time, because the economic contraction is quite foreseeable (visible ongoing trade wars, tariff increases, growing inequality led to weakening retail demand), the Chinese exporters started proactively cutting down resource and capital equipment imports (i.
, import slow down faster than export slow down), while the Chinese government has been cutting down on fiscal support since 3 years ago (to cool down its domestic real estate market and buttress up economic resiliency ), so China is not acting like a dam as much as the last time.
Meaning that to a large extent, contractions in developed countries will just float right u201cpass-throughu201d China to the resource-exporter countries.
,Which means that a lot of countries really canu2019t afford to think u201clong-termu201d right now.
The next 18 months.
Live or die.
Thatu2019s the question.
,Transcript of October 2019 IMF Asia and Pacific Department Press Briefing,PS: Tbh, looking at the world economy right now, in all countries, itu2019s irrational for an ENGLISH-speaking portal to care more about the CHINESE economy when their own economy is more at risk.
Itu2019s like worrying about the dog poop in your neighboru2019s yard when your own house is on fire.
When that happens, people will think u201cwhy then, it must not be your own house thatu2019s on fireu201d.
Or maybe this is the real u201cpsychological truthu201d, that deep down, you feel this is not your house, but Trumpu2019s house, or the Queenu2019s house, or Jamie Dimonu2019s house?
Role of IMF and World Bank in developing countries
The IMF is focusing its activity on providing credits and loans to help stabilize the financial system and macroeconomic indicators of a country.
Usually, it finances developing countries and transitional economies.
In return, however, it demands strict adherence to its requirements, which often entail unpopular measures taken by the local governments, such as budget spending cuts, reduced welfare benefits, etc.
The organization has been strongly criticized for bringing about heavy indebtedness of a majority of Latin American countries in the 1970s and 1980s.
There are many more examples of the adverse impact it has on the recipient countriesu2019 economies.
(Greece can serve as one of them.
),The World Bank Group is a group of international financial institutions comprised of the International Bank for Reconstruction and Development (IBRD, often referred to as the World Bank per se), the International Finance Corporation, and the IDA.
All these institutions are about development.
They finance (co-finance with the local governments) specific development projects in developing and transitional economies, and monitor the implementation of these projects from A to Z.
The IBRD provides loans to the governments of countries against these countriesu2019 sovereign guarantees.
In addition to financing, the World Bank also provides new technologies and managerial skills, which appears to be very helpful for the recipient countries.
The interest rates are low and the terms of the loans are long.
The World Bank is not a u201csharku201d like the IMF.
The International Finance Corporation provides loans to private sector companies against good guarantees, not necessarily sovereign, at the recipient countryu2019s market interest rates.
All projects financed by the IFC are development projects, too.
I like the IFC very much.
Itu2019s flexible, very client-oriented, and helpful.
,The International Development Agency (IDA) focuses on financing developing countries only.
It is most active in Africa and Asia.
,The World Bank Group has a much better reputation than the IMF and is considered a first-class international financial institution.
,For more information, you can visit these organizationsu2019 websites as well as related websites.
What is the purpose of the International Monetary Fund and the World Bank answers
The International Monetary Fund (IMF) is a multilateral/international institution whose primary purpose is to be a lender of last resort to member governments.
,If one of its member countries is having a financial, banking or related crisis, or is about to have one, the IMF is there to lend that countrys government money to help avert/end the crisis and get it back on its feet.
,It also provides technical assistance, publishes research and knowledge, and monitors/surveys the health and stability of the global financial system and the economic health of its member countries.
,About the IMF,Some more background on what the IMF doesLike any lender, loans are rarely dispersed without an economic program in place such that the borrowing government can pay back the loan with reasonable confidence and not need another one, via a stable and healthy/healthier economy (this is where some of the IMFu2019s historic controversy comes into play.
Many of the conditions it would attach to the loans it provided to developing countries in the 1970s were not very helpful.
Since then, economic policy and research has advanced to better understand what might work and what might not in different contexts).
,Related to this, the IMF also monitors the health and stability of the global financial system.
It publishes surveillance reports on country exchange rates, macro economic reports on member countries, research papers on macro, financial, fiscal and monetary issues, and other technical expertise (see Karim Fodas answer to What are the important annual and biannual reports prepared by IMF?).
,IMF operations and lending are overseen by its Executive Board, made up of Executive Directors that represent its constituent countries.
Voting power is distributed by how much each country contributes to the IMFs resources.
In 2010, member countries agreed on a new distribution of u201cquotasu201d that gave rising emerging market economies more weight to account for their increasing weight in the world economy.
This new allocation didnt take place until years later (in short, it was held up by Senate Republicans during the Obama administration, but the rest of the world, including the rest of the US government, was on board).
,Ill stop there, because this could easily turn into a full blown paper on the IMF, its founding as a Bretton Woods institution, its role in global economic governance and in the global economy, which is a bit more than what the question asked.