4.3.3C PART 2 - International organisation

Question 1

What is IMF conditionality

Answer 1

• refers to the requirements that IMF imposes on national governments when providing emergency financial assistance during an economic/currency crisis
• these conditions tend to be fiscal austerity, monetary policy reforms, exchange rate adjustements, supply side (privatisation and deregulation) and welfare reforms

Question 2

What is the role of the IMF

Answer 2

● Like the World Bank, the IMF was set up in the Bretton Woods Conference but it was
not set up to promote economic development, instead to ensure that exchange rate
systems work well.
● They provide loans to help countries when there are international exchange rate
crises or when they cannot afford to pay off their international debt

Question 3

Criticisms of IMF

Answer 3

• IMF has received criticism for conditional loans because it causes problems for countries.
• Usually, it involves reducing imports and increasing exports which reduces the amount of resources available for domestic consumption.
• It can also be in the form of lower government spending.-

Question 4

examples of IMF conditionality being a positive

Answer 4

• sri lanka $3bn bailout is conditional on anti corruption reforms
• anti-corruption reforms should ensure that the government enforces its rules and holds corrupt officials and private businesspeople to account, including for past malfeasance.
• include recovering stolen assets, imposing back pay and penalties for tax evasion, and stemming illicit financial flows out of the country.

Question 6

examples of IMF conditionality being negative

Answer 6

• certain conditions on the sri lanka bailout loan undermined people’s economic and social rights
  -government has announced policies that effectively reduce salaries in public service agencies, eliminate subsidies, and increase regressive taxes – steps that could degrade public services and further raise prices at a time when a large segment of the population is already struggling due to high inflation

Question 7

How else was the sri lanka bailout loan bad

Answer 7

• programme: any increase in public wages to less than inflation, effectively reducing real salaries, and reducing total spending on wages from 5 to 3.6 percent of GDP.
• liminates subsidies for both fuel and electricity and imposes an excise tax on fuel, but does not ensure that these critical measures are carried out in a way that fulfills rather than erodes rights
  eval: government should adequately invest in social protection, the use of renewable energy sources,

Question 8

define NGO

Answer 8

A non-governmental organization (NGO) is a non-profit organization that furthers some social or humanitarian mission around the globe

Answer 9

• provide direct assistance to countries in the form of project work, for example Oxfam or CAFOD. This can range from education to wells to healthcareand can either be emergency or long term.
• act as pressure groups to lobby governments to adopt more pro-development strategies.

Question 10

Cons of NGOs

Answer 10

● A problem of NGOs is that it is believed that they alone can never solve the
problem, it is the government who has to fix the issues.
● On top of this, many see them as having an anti-capitalist agenda which blames
problems on the World Bank, the IMF and the WTO. This causes divisions in the
development project and is also an issue since past experience suggests global
capitalism is the best system for developmen

Question 11

what is world bank made up of

Answer 11

o the International Bank for Reconstruction and Development (IBRD)
o the International Development Association (IDA)
o the International Finance Corporation (IFC)
o the Multilateral Investment Guarantee Agency (MIGA)
o and the International Centre for Settle of Investment Disputes (ICSID).

Question 12

success of world bank

Answer 12

● The World Bank has funded over 12,000 development projects since 1947 through
interest free loans and grants and supports long term human and social
development.

Question 13

Role of diff areas of world bank

Answer 13

• The IBRD and IDA provide financing, policy advice and technical assistance :
  + IDA helps the poorest countries whilst
  + IBRD helps middle income and creditworthy poorer countries.
• IFC, MIGA and ICSID help strengthen the private sector in developing
  countries by providing them with finance, technical assistance, political risk
  insurance and settlement of disputes.

Question 14

criticism of world bank

Answer 14

• It funnels multi-lateral aid to poorer countries, mainly in the form of long-term soft loans for infrastructure or health or education project
• It is criticised by some economists because the aid is often granted in return for the country adopting more market oriented development policies which may result in more control over the country’s economy and resources by big western multinational companies.