INTERNATIONAL FINANCIAL ORGANISATIONS

Presented by:
Koustav Ghosh
Yuvraaj Yadav
An international financial institution (IFI) is a financial institution that
has been established by more than one country, and hence are
subjects of international law.

Its owners or shareholders are generally national governments,

although other international institutions and other organizations
occasionally figure as shareholders.

The best known IFIs were established after World War II to assist in
the reconstruction of Europe and provide mechanisms for
international cooperation in managing the global financial system.
INTERNATIONAL
MONETARY FUND
 INTRODUCTION
The International Monetary Fund (IMF)
is an organization of 189 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.

Created in 1945, the IMF is governed

by and accountable to the 189
countries that make up its near-global
 World War II had its adverse effect on global economy. To remedy
the situation, an international monetary conference was convened in
1944, at Bretton Woods in America.
It was attended by the represenatives of 44 countries.

It was decided in this Conference to set up IMF for the economic

development of all countries.
 PROBLEMS

Three main problems outlined by the IMF to be addressed

on priority are:
• Economic order and peace
• Reconstruction of economies
• Stable world peace
 OBJECTIVES OF
IMF
• To Promote International Monetary Cooperation

• To Establishment a System of Multilateral Payments

• To Maintain Stability in the Rate of Exchange

• To Provide Aid to Members during emergency

• To reduce Disequilibrium in Balance of Payments

• To promote balanced economic development

 FUNCTIONS OF IMF
• Policy advice to governments and central banks in its
membership.

• Research, statistics, forecasts and analysis in field of economics

• Facilities during emergency

• It serves as a short-term credit institution

• Determining Exchange Rate for every country

• Technical assistance and training for countries to improve

 WHERE THE IMF GETS ITS MONEY

• Most comes from the quota subscriptions
The money each member contributes when joining the IMF. The
Capital resources of the fund are subscribed by the various
member countries by way of their respective quotas. Each Member
country is required to subscribe its quota partly in gold and partly
in its own national currency.
• General Arrangements to Borrow (1962)
 Line of credit set up with several governments and banks
throughout the world.
 SPECIAL DRAWING RIGHT (SDR)
• The SDR is an international reserve asset, created by the IMF in 1969

to supplement its member countries’ official reserves.

• The value of the XDR is determined by the value of several

currencies important to the world’s trading and financial systems.
Currently, it includes the strongest performing currencies like the US
dollar, the euro, the British pound and the Japanese yen. It also

includes the Chinese renminbi from 2016 onwards.

• The SDR currency value is calculated daily and the valuation basket is
reviewed and adjusted every five years.

• The IMF’s SDR department keeps records of all members’ SDR

 MEMBERSHIP
• There are two types of members of the Fund

ORIGINAL MEMBERS- All those countries whose representatives took part in

Bretton Woods Conference and who agreed to be the member of the fund prior
to 31st December, 1945, are called Original Members.

ORDINARY MEMBERS- All those countries who became its member

subsequently are called Ordinary Members.

• Any country may apply to be a part of the IMF. Post-IMF formation, in the
early postwar period, rules for IMF membership were left relatively loose.
Members needed to make periodic membership payments towards their
quota, to refrain from currency restrictions unless granted IMF permission, to
• Member countries of the IMF have access to information on the
economic policies of all member countries, the opportunity to influence
other members' economic policies, technical assistance in banking,
fiscal affairs, and exchange matters, financial support in times of
payment difficulties, and increased opportunities for trade and
investment.

• Any country can cease to be its member after giving a notice in writing
to that effect. Fund can terminate the membership of such a country
which does not observe its rules.

• In 1945, the number countries was in 44, in year 2007 the number of
member countries was 185. Today, the total count stands at 189.
MEMBERS WITH LARGEST QUOTAS
 SUCCESS OF IMF

• Establishment of a Monetary Reserve Fund

• Monetary Discipline and Cooperation
• Check on Competitive Currency Devaluation
• Technical Assistance to Members
• Use of the Gold Standard
• Expansion in World Market
• Eliminate Disequilibrium in Balance of Payment
 FAILURES OF IMF

• Limited Scope
• Indifferent Treatment
• Unscientific Fixation of Quotas
• Failure to Remove Exchange Controls
• Failure to Attain Exchange Stability
• No Solution of Liquidity Problem
• Failure to Tackle the Problem of Dollar System
• Dominance of Developed Countries
 IMF AND INDIA
India signed the agreement for original membership with an initial
subscription os 300 million US dollars and became a full fledged
member when the fund began its operations in March 1947.

Several times India has been able to obtain financial facilities from the
IMF. The first being a loan of 100 US dollars during 1948-1949, our
initial years of gaining freedom.

India’s rank is 13th among 185 member nations is an original member in

the organization.
 IMF AND INDIA:
ADVANATAGES
•Independence of the Indian Rupee

•Membership of the World Bank

•Availability of Foreign Currencies

•Reputation in International Circle

•Sale and Purchase of Foreign Exchange

•Freedom from Sterling

 SUMMARY
The IMF works to foster global growth and economic stability. It provides

policy advice and financing to members in economic difficulties and also
works with developing nations to help them achieve macroeconomic
stability and reduce poverty
THE WORLD
BANK
THE WORLD BANK
•Formed: July 1945

•189 member countries

•Staff from more than 170 countries

•Offices in over 130 locations

•The World Bank Group is a unique

Headquarters: NW Washington, DC USA
global partnership: five institutions
working for sustainable solutions that
reduce poverty and build shared
 THEIR MISSION

To end extreme poverty:

By reducing the share of the global population that lives in extreme poverty to
3 percent by 2030.

To promote shared prosperity:

By increasing the incomes of the poorest 40 percent of people in every country.

The World Bank Group is one of the world’s largest sources of funding and knowledge
for developing countries. Its five institutions share a commitment to reducing poverty,
increasing shared prosperity, and promoting sustainable development.

IBRD IDA IFC

The International The International The International
Bank for Development Finance
Reconstruction Association Corporation
and Development
MIGA ICSID
The Multilateral The International
Investment Centre for
Guarantee Agency Settlement of
WHERE THEY WORK

The World Bank Group works in more than 170 countries, working with partners in the
public and private sectors in their efforts to end poverty and tackle some of the most
pressing development challenges.

REGIONS COUNTRY GROUPS

•Africa •European Union

•East Asia and Pacific •Middle Income Countries
•Europe and Central Asia •Organization of Eastern Caribbean
•Latin America and Caribbean States
•Middle East and North Africa •Pacific Islands
•South Asia •Small States
•Gulf Cooperation Council
•Western Europe
 INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT

• The world’s largest development bank, IBRD provides financial products and policy advice
to help countries reduce poverty and extend the benefits of sustainable growth to all of their
people.

• It supports the World Bank Group’s mission by providing loans, guarantees, risk
management products, and advisory services to middle-income and creditworthy low-income
countries, as well as by coordinating responses to regional and global challenges.

•How IBRD is Financed: IBRD raises most of its funds in the world's financial markets.
This has allowed it to provide more than $500 billion in loans to alleviate poverty around the
world since 1946, with its shareholder governments paying in about $14 billion in capital.
 Photo Credits: World Bank

•India has a massive need for energy. Its per capita consumption of electricity is less
than one third the world average.

•To meet its target of generating 100 GW of solar energy by 2022, India has installed
solar parks on large tracts of unused land across the country.

•Now, thanks to a new partnership between the World Bank and the State Bank of India
(SBI), India’s largest bank, the market for rooftop solar has also begun to take off.
 INTERNATIONAL DEVELOPMENT ASSOCIATION

•The International Development Association (IDA) is the part of the World Bank that helps
the world’s poorest countries. Overseen by 173 shareholder nations, IDA aims to reduce
poverty by providing loans (called “credits”) and grants for programs that boost economic
growth, reduce inequalities, and improve people’s living conditions.

•IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of
which are in Africa, and is the single largest source of donor funds for basic social services in
these countries.

•IDA is a multi-issue institution, supporting a range of development activities that pave the
way toward equality, economic growth, job creation, higher incomes, and better living
conditions. IDA's work covers primary education, basic health services, clean water and
 Improving Access to
Education for the Poor in
Haiti April 11, 2017

Photo: Mary Stokes/ World Bank

•Over 430,000 tuition waivers were financed, allowing disadvantaged children to attend
school free of charge.

•Daily hot meals, snacks, deworming, and vitamin A were provided to more than 370,000
students across 430 schools.

•Schooling was provided to more than 6,500 children in poor, children were also provided
with school textbooks and pedagogical materials.
 INTERNATIONAL FINANCE CORPORATION

•IFC works with the private sector in developing countries to create markets that
open up opportunities for all.

•IFC is a sister organization of the World Bank and member of the World Bank
Group. It is the largest global development institution focused exclusively on the
private sector in developing countries.

•The Bank Group has set two goals for the world to achieve by 2030:
* To end extreme poverty
* To promote shared prosperity in every county
 Sweetening Prospects for
Ivoirian Cocoa Co-Ops.

With support from IFC, Cargill

launched a project to make
affordable credit available to
Ivoirian farmer cooperatives

Helping Small Businesses in

Lebanon Gain Better Access To
Finance

A $1,500 loan from an IFC client

enabled Farid Sobh to buy a
delivery van
Source: worldbank.org
 MULTILATERAL INVESTMENT
GUARANTEE AGENCY

•The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank
Group. Their mandate is to promote cross-border investment in developing countries by
providing guarantees (political risk insurance and credit enhancement) to investors and
lenders.

Their Strategy:

•A re-affirmed focus on the poorest through support for projects in IDA countries

•A continuing emphasis on Fragile and Conflict-affected States, where MIGA has

opportunity to have impact where private PRI insurers are unwilling to go, and

•An expanded commitment to climate change mitigation and adaptation, targeting 28% of
Source: worldbank.org
 INTERNATIONAL CENTRE FOR
SETTLEMENT OF INVESTMENT DISPUTES

•ICSID is the world’s leading institution devoted to international investment dispute

settlement. It has extensive experience in this field, having administered the majority of all
international investment cases.

•States have agreed on ICSID as a forum for investor-State dispute settlement in most
international investment treaties and in numerous investment laws and contracts.

•The ICSID Convention is a multilateral treaty formulated by the Executive Directors of

the World Bank to further the Bank’s objective of promoting international investment. ICSID
is an independent, depoliticized and effective dispute-settlement institution.
Partnering With Governments
•Together, IBRD and IDA form the
World Bank, which provides financing,
policy advice, and technical assistance
to governments of developing
countries.
• IDA focuses on the world’s poorest
countries, while IBRD assists middle-
Partnering With The Private Sector
•IFC, MIGA, and ICSID focus on
strengthening the private sector in developing
countries.
•Through these institutions, the World Bank
Group provides financing, technical assistance,
political risk insurance, and settlement of
disputes to private enterprises, including
One World Bank Group
While the five institutions have their own country
membership, governing boards, and articles of agreement,
they work as one to serve their partner countries. Today’s
development challenges can only be met if the private
sector is part of the solution. But the public sector sets
the groundwork to enable private investment and allow it
to thrive. The complementary roles of their institutions
give the World Bank Group a unique ability to connect
global financial resources, knowledge, and innovative
solutions to the needs of developing countries.
WORLD TRADE
ORGANIZATION
 INTRODUCTION: WORLD TRADE ORGANISATION

The World Trade Organization (WTO) is the only global

international organization dealing with the rules of trade
between nations. The goal is to ensure that trade flows
smoothly. The WTO provides a forum for negotiating
agreements aimed at reducing obstacles to international trade
and ensuring a level play field for all thus contributing for
economic growth and development. The goal is to help
producers of goods and services, exporters, and importers
conduct their business.
• Location: Geneva, Switzerland
• Established: 1January 1995
• Created by: Uruguay Round negotiations (1986-94)
• Membership: 164 members, representing 98% of world
trade.
• Budget: $180 million
 HISTORY

• The World Trade Organization (WTO) came into existence on January 1st
1995. It was the outcome of the lengthy (1986-1994) Uruguay round of
GATT (General Agreement on Tariffs and Trade) negotiations. The WTO
was essentially an extension of GATT
• It extended GATT in two major ways. First GATT became only one of the
three major trade agreements that went into the WTO [the other two
being the General Agreement on Trade in Services (GATS) and the
agreements on Trade Related Aspects of Intellectual Property Rights
(TRIPS)].
• Second the WTO was put on a much sounder institutional footing than
GATT. With GATT the support services that helped maintain the
agreement had come into being in an ad hoc manner as the need arose.
The WTO by contrast is a fully fledged institution (GATT also was, at least
formally, only an agreement between contracting parties and had no
 MAJOR ACTIVITIES:

• TRADE NEGOTIATIONS: Negotiating the reduction

or elimination of obstacles to trade (import tariffs,
other barriers to trade) and agreeing on rules
governing the conduct of international trade (e.g.
antidumping, subsidies, product standards, etc.)
• IMPLEMENTATION & MONITORING: WTO
agreements require governments to make their
trade policies transparent by notifying the WTO
about laws in force and measures adopted.
Various WTO councils and committees seek to
ensure that these requirements are being
followed and that WTO agreements are being
properly implemented.
• DISPUTE SETTLEMENT: The WTO’s procedure for
resolving trade quarrels under the Dispute
Settlement Understanding is vital for enforcing
the rules and therefore for ensuring that trade
flows smoothly.
• BUILDING TRADE CAPACITY: WTO agreements
contain special provision for developing countries,
including longer time periods to implement
 WORLD TRADE ORGANIZATION:

Organizational Decision Making

structure Process
Dispute
Settlement
Mechanism
ORGANIZATIONAL STRUCTURE:
 ORGANIZATIONAL STRUCTURE:

• WTO is a member driven Institution.

• Negotiating Agreements and Implementing them all done by members themselves.
• No executive Body & Very Small Secretariat(just 600 staff)
• Secretariat is headed by a Director General.
• Ministerial Conference is topmost Decision Making Body. It comprises of Trade and
Commerce Ministers of Member Countries.
 DECISION MAKING PROCESS:

In Theory: In Practice:

Voting Procedure GATT Style Consensus method

One Country One Vote Principal Supplier Principle

Decision By Simple Majority Green Room Meetings.

 DISPUTE SETTLEMENT MECHANISM:

Implementation
DSB Adopts Of
Consultation
Report(60 days) Recommendatio
n)
OR Non-
Establishment of Appeal Implementation
Report(60 to 90 of
Panel(45 Days ) days) Recommendatio
n
Panel
Exmination and Panel Report
Final Panel Submitted to Retaliation
Report(6 DSB(6 months)
months)
 PRINCIPLES OF WTO

Predictability: through binding and transparency Free trade: gradually, through negotiation
Sometimes, promising not to raise a trade barrier can Lowering trade barriers is one of the most obvious
be as important as lowering one, because the promise means of encouraging trade. The barriers concerned
gives businesses a clearer view of their future include customs duties (or tariffs) and measures such
opportunities. With stability and predictability, as import bans or quotas that restrict quantities
investment is encouraged, jobs are created and selectively. From time to time other issues such as red
consumers can fully enjoy the benefits of competition tape and exchange rate policies have also been
— choice and lower prices discussed.
Trade without discrimination
• Most-favoured-nation (MFN): treating other people equally Under
the WTO agreements, countries cannot normally discriminate
between their trading partners. Grant someone a special favour and
you have to do the same for all other WTO members.
• National treatment: Treating foreigners and locals equally Imported
and locally-produced goods should be treated equally — at least after
the foreign goods have entered the market. The same should apply to
foreign and domestic services, and to foreign and local trademarks,
 Encouraging development and economic reform
The WTO system contributes to development. On the
other hand, developing countries need flexibility in the
time they take to implement the system’s agreements.
And the agreements themselves inherit the earlier
provisions of GATT that allow for special assistance
and trade concessions for developing countries.
Promoting fair competition
The WTO is sometimes described as a “free trade”
institution, but that is not entirely accurate. The system
does allow tariffs and, in limited circumstances, other
forms of protection. More accurately, it is a system of
rules dedicated to open, fair and undistorted
competition.

Predictability: through binding and transparency

Sometimes, promising not to raise a trade barrier can
be as important as lowering one, because the promise
gives businesses a clearer view of their future
opportunities. With stability and predictability,
investment is encouraged, jobs are created and
 WTO MEMBERSHIP BENEFITS

• The WTO also provides its members with a fair method to resolve trade disputes.
• The WTO negotiates improved trade arrangements among its members.
• Membership also lowers the costs of doing business by removing volatility.
• WTO grants each member Most Favored Nation status, which means that WTO
members must treat each other the same. They give no preferential trade benefit to
any one member without giving it to all.
• WTO members have lower trade barriers with each other. That includes tariffs, import
quotas, and regulations. Lower trade barriers allow members larger markets for their
goods. Larger markets lead to greater sales, more jobs, and faster economic growth.
• Around two-thirds of WTO members are developing countries. Their membership
gives them immediate access to developed markets at the lower tariff rate. This gives
them time to catch up with sophisticated corporations and their mature industries.
That means developing countries don't immediately have to open their markets to
 AGREEMENTS

• These agreements are often called the WTO’s trade rules, and the WTO is
often described as “rules-based”, a system based on rules. This chapter
focuses on the Uruguay Round agreements, which are the basis of the
present WTO system.
• The WTO agreements cover goods, services and intellectual property.
• They spell out the principles of liberalization, and the permitted exceptions.
• They include individual countries’ commitments to lower customs tariffs and
other trade barriers, and to open and keep open services markets.
• They set procedures for settling disputes.
• They prescribe special treatment for developing countries.
• They require governments to make their trade policies transparent by
notifying the WTO about laws in force and measures adopted, and through
regular reports by the secretariat on countries’ trade policies.
• The agreements fall into a simple structure with six main parts: an umbrella agreement
(the Agreement Establishing the WTO); agreements for each of the three broad areas
of trade that the WTO covers (goods, services and intellectual property); dispute
settlement; and reviews of governments’ trade policies.

• The agreements for the two largest areas — goods and services — share a common
three-part outline, even though the detail is sometimes quite different.

• They start with broad principles: the General Agreement on Tariffs and Trade(GATT)
(for goods), and the General Agreement on Trade in Services (GATS). The third
area, Trade-Related Aspects of Intellectual Property Rights (TRIPS), also falls into this
category although at present it has no additional parts.

• Then come extra agreements and annexes dealing with the special requirements of
specific sectors or issues.

• Finally, there are the detailed and lengthy schedules (or lists) of commitments made by
individual countries allowing specific foreign products or service-providers access to
THE BASIC STRUCTURE OF THE WTO AGREEMENTS:
how the six main areas fit together — the umbrella WTO Agreement, goods,
services, intellectual property, disputes and trade policy reviews.
 AN OVERVIEW OF THE AGREEMENTS

Tariff: Developed countries increased the number of imports whose tariff rates are “bound”
(committed and difficult to increase) from 78% of product lines to 99%. For developing
countries, the increase was considerable: from 21% to 73%. Economies in transition from
central planning increased their bindings from 73% to 98%. This all means a substantially higher
degree of market security for traders and

Agriculture: to make sure that enough food is produced to meet the country’s needs
to shield farmers from the effects of the weather and swings in world prices
to preserve rural society.

Standards and safety: The Technical Barriers to Trade Agreement (TBT) tries to ensure that
regulations, standards, testing and certification procedures do not create unnecessary
obstacles.

Textiles: From 1974 until the end of the Uruguay Round, the trade was governed by
Intellectual Property Rights: The WTO’s TRIPS Agreement is an attempt to narrow the gaps in the
way these rights are protected and enforced around the world, and to bring them under common
international rules. It establishes minimum standards of protection and enforcement that each
government has to give to the intellectual property held by nationals of fellow WTO members.

Anti-dumping: The WTO agreement does not pass judgement. Its focus is on how governments can
or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-
Dumping Agreement”. (This focus only on the reaction to dumping contrasts with the approach of
the Subsidies and Countervailing Measures Agreement.)

Non tariff barriers: Although less widely used now than in the past, import licensing systems are
subject to disciplines in the WTO. The Agreement on Import Licensing Procedures says import
licensing should be simple, transparent and predictable. For example, the agreement requires
governments to publish sufficient information for traders to know how and why the licences are
granted.

Plurilaterals: The Agreement on Trade in Civil Aircraft entered into force on 1 January 1980, The
Services: GATS explained
The General Agreement on Trade in Services has three elements: the main text containing
general obligations and disciplines; annexes dealing with rules for specific sectors; and
individual countries’ specific commitments to provide access to their markets, including
indications of where countries are temporarily not applying the “most-favoured-nation”
principle of non-discrimination.

Agreement on Government Procurement was first negotiated during the Tokyo Round and
entered into force on 1 January 1981. Its purpose is to open up as much of this business as
possible to international competition.
Trade policies: the WTO conducts regular reviews of individual countries’ trade policies —
the trade policy reviews. These reviews are part of the Uruguay Round agreement, but they
began several years before the round ended — they were an early result of the negotiations
THANK
YOU.