A Critical Overview of the IMF and the World Bank

The World Bank and the International Monetary Fund (IMF) were both created at the Bretton Woods Conference in 1944. The initial impetus for establishing both the World Bank and the IMF was to create a mechanism that was to rebuild Europe after the devastation of World War II (The World Bank Group: Overview, 2001). With 183 member nations, these institutions have played an increasingly significant role in the economic development initiatives undertaken across the globe. The first World Bank loan, in the amount of $250 million went to France in 1947 for post-war construction. Also in 1947, the World Bank was incorporated into the United Nations system and retained its focus on reconstruction while developing a new focus on poverty reduction (The World Bank Group: Overview, 2001).

The IMF officially came into existence on December 27, 1945, when 29 countries signed its Articles of Agreement agreed to at the Bretton Woods Conference. The IMF was created to promote international monetary cooperation, facilitate expansion and balanced growth of trade, promote exchange stability, assist in the establishment of a multilateral system of payments, shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members, and to make its resources temporarily available to members experience such difficulties (The IMF at a glance, 2001).

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by stating that they had taken steps to streamline their policy processes. Nevertheless, many NGOS and others are raising questions about the role and the effectiveness of lending through the World Bank's International Development Association (IDA). Many organizations feel that the tendency to limit assistance to countries with weak governance has the effect of worsening the plight of the poor (World Bank lendingà, 2001). An independent review of IDA performance since 1994 concluded that poverty trends in most IDA recipient countries have been disappointing. In particular, it notes that the linkages between country programs and poverty outcomes need to be better articulated and more needs to be done in terms of governance and institutional capacity. Part of the problem is that the IDA has an index designed to assess countries needs and policies that is standardized and not specific to each recipient country's reform priorities or needs (World Bank lendingà, 2001). Guttal (2000) argues that the policies of the World Bank and the IMF are riddled with internal contradictions. At the core of the IMF and World Bank reform programs are a standard array of macroeconomic and structural adjustment conditionalities. Often, the
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Approximate Pages = 13 (250 words per page)