International Financial Management

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Undertaken at


Submitted in the partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION
 Under the Supervision       Submitted by  
and Guidance ofRAMAN KUMAR
Ms. Sakshi Goel 05117003910
(Lecturer IFM)MBA- 3rd Sem

                                                                                                                                       SESSION: 2010 - 2012
(Approved by AICTE, Ministry of HRD, Govt. of India)
Affiliated To Guru Gobind Singh Indraprastha University, Delhi INSTITUTIONAL AREA, MADHUBAN CHOWK, ROHINI, DELHI- 110085, Website: Fax No: 27555120, Tel: 27555121-24
Ques 1) Bring out the similarities and dissimilarities in the financing facilities at IMF and World Bank. Discuss how the two institutions help in the development of developing countries?

World Bank and IMF

* The World Bank and the IMF are twin pillars supporting the world's economic and financial structure. The World Bank is an investment bank owned by its member nations. The IMF functions more like a credit union whose members can draw from a common pool of funds to assist in emergencies. As of Aug. 31, 2010, its biggest borrowers were Romania, Ukraine and Hungary. 1944--1969

* From July 1 to 22, 1944, the IMF and World Bank Articles of Agreement were formulated at the International Monetary and Financial Conference in Bretton Woods, New Hampshire. On May 8, 1947, France became the first nation to borrow from the IMF. On Sept. 29, 1967, the IMF board approved a plan to establish special drawing rights (SDRs), which are international reserve assets used by member countries to supplement their foreign exchange reserves. 1970--1985

* On Aug. 15, 1971, the U.S. stopped using the gold standard to settle international transactions. In 1974, the IMF adopted a new method of SDR valuation based on a basket of 16 currencies. This basket was simplified on Sept. 17, 1980, to hold five currencies, and today it holds four: the U.S. dollar, euro, Japanese yen and pound sterling. On Dec. 2, 1985, the two agencies expressed support for a U.S. initiative for comprehensive adjustment measures by debtors, increased and more effective structural lending by multilateral development banks, and expanded lending by commercial banks. 1986-Onward

* On Dec. 29, 1987, the IMF established the Enhanced Structural Adjustment Facility (ESAF) to provide resources to developing nations undergoing fundamental debt restructuring and economic reform. Countries of the former Soviet Union joined the two agencies in 1992. The IMF, in conjunction with the G7, helped stabilize the 1995 Mexican peso crisis and the 1997 Asian currency crisis. On Jan. 8, 2001, the IMF and the Bank announced debt relief for 22 countries, 18 of them in Africa. On Apr. 13, 2003, a joint IMF-World Bank project was launched to monitor the policies and actions needed to achieve the United Nations Millennium Development Goals by 2015. On Sept. 25, 2005, agreement was reached on a G7/G8 proposal to provide 100 percent debt relief to the world's heavily indebted poor countries (HIPCs). During their April 2006 meetings, the IMF and the Bank focused on ways to finance clean energy in developing countries, and the role of governance in meeting worldwide social, health and economic goals.

Similarities & Differences
The overall structure of the United Nations System and World Bank Group has been described in previous posts. Both of those groups have expanded exponentially since their creation. Given that both the UN and World Bank were born from the same parents almost simultaneously, the extent of differences among organizations both within and between those two broad institutional systems is surprising: 1. Although membership in all...
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