The World Bank and International Monetary Fund are terms that are quite familiar to most people from what they hear or read on the news. However, only a few can easily distinguish their key differences in terms of their specific roles and functions in the global economy.
If you who don’t use these terms on a daily basis, you might have a vague idea of what these organizations actually do and why they matter – but did you know that both the IMF and the World Bank were established in 1945 as a part of the Bretton Woods Agreement?
Here are some of the key differences and primary roles of the two institutions that you should know about.
- Its primary goal is to reduce, if not to eliminate poverty, in developing countries by delivering both financial and technical support to these poorer regions in the world.
- It helps these nations restructure their often problematic and unproductive economic sectors.
- It helps the target countries recover from poverty by funding schools, health centers as well as providing infrastructure to source basic necessities like water and electricity.
- Through issuing of bonds, its funds come from countries that are members of the institutions.
- Its funds are not meant to help a country recover from an economic crisis; instead, the organization was created to finance projects and help emerging markets take the first step to economic productivity.
- The organization’s main goal is to promote monetary cooperation across the globe.
- It provides assistance and timely advice to countries with struggling economy, especially those that don’t have the financial power to fund their international obligations.
- The IMF is popularly known to provide loans, usually loaded with several conditions and high interest rates, to help countries rise and recover from an economic failure.