Question

1. Discuss how the following agencies facilitate international trade and financial transactions

1. International Monetary Fund (IMF)
2. World Bank
3. World Trade Organisation (WTO)
4. International Finance Corporation (IFC)

Answer 1

International Monetary Fund

The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The IMF stands ready to lend foreign currencies to member countries to assist them during periods of significant external deficits. A pool of gold and currencies contributed by members provides the IMF with the resources required for these lending operations. The funds are only lent under strict conditions and borrowing countries’ macroeconomic policies are continually monitored. The IMF’s main mandate is to ensure the stability of the international monetary system, the system of exchange rates and international payments that enables countries to buy goods and services from each other. More specifically, the IMF:

1. Provides a forum for cooperation on international monetary problems;

2. Facilitates the growth of international trade and promotes employment, economic growth, and poverty reduction;

3. Supports exchange rate stability and an open system of international payments;

4. Lends foreign exchange to members when needed, on a temporary basis and under adequate safeguards, to help them address balance of payments problems.

World Bank

The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.

The World Bank’s main objective is to help developing countries fight poverty and enhance environmentally sound economic growth. For developing countries to grow and attract business, they have to

1. Strengthen their governments and educate their government officials;

2. Implement legal and judicial systems that encourage business;

3. Protect individual and property rights and honour contracts;

4. Develop financial systems robust enough to support endeavours ranging from microcredit to financing larger corporate ventures;

5. Combat corruption.

World Trade Organization

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible. The WTO provides the legal and institutional foundation of the multinational trading system.

The WTO’s most important functions are the implementation, administration, and operation of individual agreements; acting as a platform for negotiations; and settling disputes. Moreover, the WTO has the mandate to review and propagate its members’ trade policies and ensure the coherence and transparency of trade policies through surveillance in a global policy setting. The WTO also provides technical cooperation and training to developing, least-developed, and low-income countries to assist with their adjustment to WTO rules. In addition, the WTO is a major source of economic research and analysis, producing ongoing assessments of global trade in its publications and research reports on special topics. Finally, the WTO is in close cooperation with the other two Bretton Woods institutions, the IMF and the World Bank.

International Finance Corporation (IFC).

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries.

The Bank Group has set two goals for the world to achieve by 2030 end extreme poverty and promote shared prosperity in every country.

IFC is also a leading mobilizer of third-party resources for projects. Their willingness to engage in difficult environments and their leadership in crowding in private finance enable us to extend our footprint and have a development impact well beyond our direct resources.