MULTILATERAL FINANCIAL INSTITUTIONS

GROUP MEMBERS & CONTRIBUTIONS

Sanket Wajge : Co-ordination, Preparation of Final Document & PPT Rajendra Kelkar : Introductory Info, Assistance in preparing Final document Rahul Kumar : PPT preparation, Data collection Ameya Desai : Data collection [IBRD] Atul Pathrabe : Data collection [IDA] Kunal Patel : Data collection [MIGA] Vaibhav Alone : Data collection [ICSID] Pramod Kamble : Data collection [IMF] Suchit Kurry : Data collection [Critics of IMF & WB]

INTRODUCTION

The assistance is provided by one country to another for the purpose of bridging the gap between rich and poor countries, is termed as ODA (Official Development Assistance). What are Multilateral Financial Institutions?

WORLD BANK GROUP (WBG)International Finance Corporation (IFC) International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID)

INTERNATIONAL FINANCE CORPORATION (IFC)

Background: The IFC was established in 1956 to assist theeconomic development of less developed countries

Member Countries: 153 Purpose: IFC backs loans for private sector investment inmember countries

Sources of Funds: Its money comes from capitalsubscription of its members

Function: IFC's investment are in manufacturing followed bymining, energy, tourism and public utilities.

INTERNATIONAL BANK FOR RECONSTRUCTION & DEVELOPMENT (IBRD)

Background: All IBRD loans are guaranteed by creditorgovernments, through appropriations decided by their individual governments. Founded in 1944

Member Countries: 176 Purpose: It lends money to help to reduce poverty and to financeinvestments that contribute to economic growth

Sources of Funds: Most IBRD funds come directly from bondsales.

Functions: It lends money at near-market rates to developingcountries. It includes various developmental projects like Nathpa Jhakri Project, National Dairy Project, etc

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)

Background: Founded in 1960 IDA finances larger % of totalproject than a bank

Member Countries: 150 Purpose: Concessional loans to poor countries. Sources of Funds: IBRDs income, contribution from therich countries govts

Function: Gives 90% loans to poorer countries in the field ofagriculture and rural development.

MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA)Background: Founded in 1988 Member Countries: 101 Purpose: To encourage the flow of private foreign investment tothe developing countries

Sources of Funds: IBRD backup for guarantees issued, Itsown Capital base

Function: MIGA also offers investors guarantees against noncommercial risks, advises developing member governments on the design and implementation of policies, programs and procedures related to foreign investments

INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID)

Background: Opened in 1965 is a multilateral treaty formulated bythe Executive Directors of the International Bank for Reconstruction and Development (the World Bank).

Member States: 155 signatory States Purpose: ICSID was created by the Convention as an impartialinternational forum providing facilities for the resolution of legal disputes between eligible parties, through conciliation or arbitration procedures.

Sources of Funds: Function: ICSID provides the basic procedural framework forconciliation and arbitration of investment disputes arising between member countries and investors that qualify as nationals of other member countries.

INTERNATIONAL MONETARY FUND (IMF)

What is IMF ?It is an organization of 185 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.

Functions of IMF:Policy advice to governments and central banks based on analysis of economic trends and cross-country experiences Research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets Loans to help countries overcome economic difficulties Concessional loans to fight poverty in developing countries and Technical assistance and training to help countries improve the management of their economies

(IMF-WB)Though, they are different institutions, there are several reasons to believe that they are inseparable twins: Membership in IMF is a prerequisite for membership in WB Annual meetings of IMF and WB are held jointly Their governing structures are similar. In fact there are some overlapping in membership of the executive board These two institutions share the same perception and paradigm of development.

CRITICS & CRITICISM ABOUT IMF & WB

Conditionalities imposed on borrower countries The ethical issues related to the development projects funded by IBRD & IDA

World Bank and IMF governance structures are dominated by industrialized countries.developing countries hold little voting power

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