Tag Archives: World Bank

IMF vs. World Bank: Major roles and key differences

Image source: afdb.org
Image source: afdb.org

 

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.

 

World Bank

Image source: thecable.ng
Image source: thecable.ng
  • 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.

 

International Monetary Fund

Image source: kurzweilai.net
Image source: kurzweilai.net

 

  • 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.