Extension of 4.10 (World Bank & IMF)

Question 1

Describe the role of the World Bank

Answer 1

The world bank is a development assistance organisation that extends long term loans to developing country governments for the purpose of promoting economic development and structural changes

Question 2

Describe the role of the IMF

Answer 2

The international Monetary Fund (IMF) is a multilateral financial institution thats purpose is to oversee the global financial system, follow the macroeconomic policies of its members, stabilise exchange rates and help countries that are experiencing difficulties in paying back loans.

Question 3

Example of IMF aid

Answer 3

The IMF has reached an agreement with the Zambian authorities on a crucial three-year lending programme worth around $1.4bn that will help the country to restructure its extensive debts in 2021

Question 4

Example of World Bank aid

Answer 4

The World Bank today approved a $150 million grant from the International Development Association (IDA)* to support the improvement of learning outcomes in basic education in Chad. Project aims to increase access to primary education while also focusing on the quality of teaching through reforms of the continuous professional development system for teachers. The project also aimed expand the use of mother tongue instruction in about 1,200 schools

Question 5

Evaluate the role of the IMF

Answer 5

Pros

1) Loans carry low interest
2) Loans can be paid over a long period of time

Cons

1) Governance is dominated by rich countries
As with the world bank, voting power in the IMF is proportional to size of each economy, thus, giving rich countries a far greater power in decision making (potential enabling them to act in bad faith) – may not always have the best interests of developing nations at heart

2) Loan are Conditional
Given that all IMF loans are condition, one could suggests the loans to Zambia carried conditions such as austerity measures, trade liberation meausres which may not be in the best interest of the country receviing the aid, in this case Zambia.

Question 6

Evaluate the role of the World Bank

Answer 6

Pros
1) Foster economic development
Education —> helps breaks the poverty cycle

2) Help foster political stability
Fruitiion of policies funded by the world bank could reduce social unrest and place the government in favour with the citiznes

Cons

1) Excessive interference in a country’s domestic affairs
- critics argue that the world bank interferes in the domestic affairs of developing countries, leading to a loss of sovereignty

2) Governance is dominated by rich countries
As with the world bank, voting power in the IMF is proportional to size of each economy, thus, giving rich countries a far greater power in decision making (potential enabling them to act in bad faith) – may not always have the best interests of developing nations at heart