Question

1. Evaluate the effects of IMF and the World Bank on international trade and their advantages and disadvantages. Treat them together as much as you can.

Answer 1

The IMF promotes international monetary cooperation, providing policy advice and support for capacity-building to help countries build and maintain strong economies. The IMF also offers medium-term loans and helps countries develop policy strategies to resolve balance of payment issues when there is insufficient financing to meet net foreign payments. IMF loans are short- and medium-term and are funded primarily by the pool of quota contributions received by its members. IMF personnel are primarily economists with broad macroeconomic and financial policy experience.

The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform some sectors or implement specific projects — such as building schools and health centres, providing water and electricity, fighting disease, and protecting the environment. World Bank aid is typically long-term, and is financed by donations from member countries as well as bond issuance. World Bank personnel are often specialists on specific issues, sectors or techniques.

As part of the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI), the IMF and the World Bank have worked together to reduce the external debt burdens of the most heavily indebted poor countries. To date, the HIPC initiative has approved debt reduction packages for 36 countries out of 39 eligible countries , providing $76 billion in debt-service relProjects funded by the World Bank have also been constantly found to be in direct, grave violation of international human rights standards. Major recurring issues include mass evictions and forced displacement of peoples and communities for major infrastructure and agricultural projects, violations of indigenous and forest rights, targeting human rights defenders, triggering local food insecurity and serious violations of labor rights, such as child and forced labour, allegedly used in projects funded by the Bank.ief over time. The IMF and the World Bank continue to work together to help low-income countries meet their development goals without causing potential debt problems

In general, as demonstrated by the worsening climate crisis, the growth-based approach to poverty reduction that the World Bank and IMF both advocate has enormous environmental impacts. Climate change is the result of the world's greatest market failure. "Since its inception, the BWIs have played a formative role in supporting and encouraging the global forces that triggered this market failure, by promoting economic growth as the central component of their development model, despite conflicting evidence that economic growth and poverty reduction are linked together.