International Financial Institutions

Subject: Politics & Government
Pages: 6
Words: 1410
Reading time:
6 min
Study level: College

The International Monetary Fund

The International Monetary Fund (IMF) is a financial institution with a mandate to reduce the effects of poverty and bad economic policies in impoverished countries. The IMF is in this way concerned with the issues of nations and global fiscal framework. Its exercises are aimed at advancing approaches and procedures through which its individuals can cooperate to guarantee a steady world budgetary framework and maintain financial development (Bird & Rowlands, 2017). The IMF creates an environment for global financial collaboration, which facilitates efficient development money related undertaking to the contracts of law, moral persuasion, and understanding. Thus, the IMF deals with issues that threaten the global financial system.

The reasons for the International Monetary Fund are:

  1. To advance financial collaboration through a perpetual organization, which supports, monitor, and coordinate financial issues.
  2. To advance trade security and maintain an organized trade course of action among individuals, and to sustain a strategic distance from focused trade devaluation.
  3. To create a multilateral financial partnership among member countries and to eliminate trade restrictions.
  4. To offer confidence to developing countries by providing funds under satisfactory terms while creating the chance to redress maladjustments in the economy.

The World Bank

The World Bank is a financial institution that aids its developing and underdeveloped nations in overcoming economic and monetary challenges. Developing need, quick changes in its condition, and an administrative structure that represses a forcefully strategic plan have prompted mission vagueness and objective congestion (Bird & Rowlands, 2017). Poverty reduction is a focused agenda of the World Bank. However, the ways through which this objective has been pursued, the developing enhancement of the Bank’s operational needs, and the exceedingly political nature of the planning process have disintegrated the value of poverty alleviation as they grapple, giving a strong argument against pressures of expansion.

While realizing that poverty mitigation is the official line, the Bank’s workforce hold as varying perspectives as those outside the foundation of what the Bank’s mission is and should be. For some activities critical to advancement, even in the poorest nations, the Bank sees undiscovered potential for private venture on business terms. Thus, the World Bank can help by diminishing danger while guaranteeing that capital projects work for poor nations and individuals.

Based on this premise, the mission of the World Bank lies on six key subjects, which include the poorest nations, post-conflict countries, middle-income nations, international public goods, the Arab world, and knowledge and learning. The World Bank gives low-premium advances, premium free loans, and grants to underdeveloped nations. It is important to note that the World Bank is coordinated to make credits for capital projects but cannot support a trade deficiency (Bird, Mylonas, & Rowlands, 2015). These credits must have a sensible probability of being reimbursed. By moving toward this path of giving building credits to poorer nations, the World Bank wants to make the contention that its “strategy loaning” exercises, for example, Adjustment programs, can enhance borrowers’ exchange execution in the economy while it develops control over internal administration and economies.

The World Trade Organization

The World Trade Organization (WTO) is an arbiter that organizes and moderates international trade among member countries. The organization creates enabling laws that make it easy for member nations to participate in international trade and monetary operations (Shabbir, 2014). Thus, WTO acts as a business arbiter, a courthouse, an observatory agency, and a trainer. Global trade is administered by principles created by the WTO’s coordinators. Therefore, countries must apply these principles when trading with each other. The WTO acts as a trade arbiter, guaranteeing that standards are respected. In addition, member countries use their comparative advantage to trade in public goods. As an arbiter, WTO imposes sanctions on nations bounded by the Trade Act. By regulating international trade, member nations encourage the inclusion of non-member countries. One of the primary objectives of the WTO is to settle trade issues between its members.

The WTO assumes the responsibility of a trade court, where individuals may document complaints against other countries that neglect to submit to the standards of world trade. There are three stages to trade settlement. First, the disputing nations endeavor to settle their disparities without external influence. If it fails to address the conflict, the case is treated by a board made up of three specialists, which issues a decision. Once a decision has been issued, the losing party must consent. If the indicted nation does not adhere to its recommendations, trade sanctions are imposed as a last resort. The WTO frequently surveys the exchange approaches of member nations. These surveys evaluate whether member nations are complying with WTO standards and measure the effectiveness of their economic policies on global trade (Shabbir, 2014). Thus, this responsibility prevents trade conflicts among member nations. The WTO gives training projects to government authorities from underdeveloped nations, for instance, immigration and customs agents. The WTO spends around 40 million Swiss francs every year on these projects.

Collaboration between these Multinational Institutions to Improve the Economy

Coherence is the consequence of accomplishing more noteworthy congruity between trade strategies and other monetary strategies, for example, macroeconomic, budgetary, and development policies (Shabbir, 2014). Since policy proposals fall under the sovereign duty of nations, procedures to accomplish strategic intelligibility must start at the national level. At the multilateral level, coherence between national policies based on acceptable rules and principles is welfare upgrading and critical for expanding the viability of these approaches at the national level. Thus, international organizations like WTO, IMF, and World Bank need to collaborate to help this process (Bird et al., 2015). They have demonstrated to be a successful system for the development of exercises, projects, and activities led by the three foundations at the staff level, aimed at advancing rationality in financial policymaking.

The areas of collaboration between these institutions include joint seminars, treatment of monetary reserves and taskforce of small states, data exchange, country reports, technical cooperation, and commodity risk management. Thus, cooperation envelops almost all elements of the WTO, World Bank, and the IMF as they collaborate with their partners in the staff of the Bretton-Woods establishments. The WTO and the IMF are two important monetary and economic rule-making associations. In both cases, the standards are advancing, and in specific zones, plans and strategies are converging. The connections and interfaces between monetary progression, capital controls, practical regulations, and reinforcing global monetary design are a long way from being explored with participation required between the WTO, the IMF, and the World Bank (Stubbs, Kentikelenis, & King, 2016).

Criticisms Trailing the Advancement of Trade Liberalization and Economic Growth

Advocates of market advancement by the IMF and World Bank assert that such approaches will prompt higher financial development. However, such claims have not been documented by reliable surveys. Throughout the time in which the IMF and World Bank have forced such approaches on the poor nations, the per capita monetary rates have reliably declined (Shabbir, Rehman, & Akhtar, 2016). Despite what targets may be created by each government, the IMF and World Bank have demanded their goals being met and have utilized conditions on credits to execute and implement its mission in developing countries. The IMF and World Bank twist many concessions and pledge out of governments with covert credit records, consulted without public interference, and even parliaments are remaining prohibited and ignorant.

Most rich nations that give credits and advances to poorer nations will first look to the IMF to judge whether a nation’s financial arrangements are “sound” before offering credits or help. Since the majority of governments in developing countries are intensely subject to foreign assistance and two-sided credits to both reimburse their current obligations and spending plans, most are helpless before the IMF, whose “blessing” is an indicator for other reciprocal aid and advances (Oberdabernig, 2013). As a result, these institutions utilize their position to misuse this reliance and evade democratic procedures even where they exist. Likewise, the World Trade Organization holds its fundamental arrangements in mystery, unaccountable procedures, and ensures its members act in accordance with its standards or face ejection and trade sanctions. Consequently, in both philosophical terms and in operational goals, the IMF and World Bank credit conditions have matched with WTO participation prerequisites to undermine the capacity of nations to control their economies, advance local business, and secure public concern. The most recent push for trade liberalization is the “resurrection” of adjustment program grants, which are less expensive for the bank to make and control than capital loans.


Bird, G., & Rowlands, D. (2017). The effect of IMF programs on economic growth in low income countries: An empirical analysis. The Journal of Development Studies, 53(12), 2179-2196.

Bird, G., Mylonas, J., & Rowlands, D. (2015). The political economy of participation in IMF programs: A disaggregated empirical analysis. Journal of Economic Policy Reform, 18(3), 221-243. Web.

Oberdabernig, D. (2013). Revisiting the effects of IMF programs on poverty and inequality. World Development, 46(1), 113-142. Web.

Shabbir, M. (2014). The level of entrepreneurship growth and obstacles in trade openness: A comparative study of Asian countries Pakistan, India, and Malaysia. Journal of Contemporary Management, 3(1), 33-47.

Shabbir, M., Rehman, A., & Akhtar, T. (2016). The role of global actors in the liberalization of Indonesian economy through its financial institutions. Journal of Internet Banking and Commerce, 21(1), 1-11.

Stubbs, T., Kentikelenis, A., & King, L. (2016). Catalyzing aid? The IMF and donor behavior in aid allocation. World Development, 78(1), 511-528. Web.