The IMF and World Bank summary

History of the Global Now
The IMF and World Bank
Terese Howard
9/10/09

In this brief paper I shall summarize the workings of the IMF and World Bank, their differences, and how they are implemented. I shall conclude by labeling the justification or logic of these organizations as free markets, capitalism, democracy, and “worldwide poverty alleviation.”

Two monumental forces in the globalization game are the International Monetary Fund and the World Bank. The IMF defines itself on its website as,
“The International Monetary Fund (IMF) is an organization of 186 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.” http://www.imf.org/external/about.htm
The World Bank never gives a definitions of themselves on their website but they do describes themselves as “a vital source of financial and technical assistance to developing countries around the world” http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,,pagePK:50004410~piPK:36602~theSitePK:29708,00.html
These two organizations both were started as a result of the Bretton Woods Conference in 1944 as a post-war agenda.
The two organizations are so similar it is hard to tell the difference between them. David D. Driscoll lists some of their similarities.
“Both are in a sense owned and directed by the governments of member nations. Both institutions concern themselves with economic issues and concentrate their efforts on broadening and strengthening the economies of their member nations. The two institutions hold joint annual meetings….” http://www.imf.org/external/pubs/ft/exrp/differ/differ.htm
In a since both the IMF and the World Bank are international loan agencies that work hand and hand.
Nonetheless, they are two separate entities and their differences are significant. At their inception in 1944 their separate roles, as well as the growing trend of separating powers, gave them reason to keep the two separate. The IMF was “charged with overseeing the international monetary system to ensure exchange rate stability and encouraging members to eliminate exchange restrictions that hinder trade” http://www.imf.org/external/about.htm and it continues to have this role today. The World Bank, on the other hand, was given the role of funding post-war development through loans. Today the World Bank focuses most of its attention on development in the poorest countries around the world.
While the IMF does give out loans to member countries, its primary function is not the loans, but monitoring exchange and enforcing the code of Agreements. For the IMF the loans are more of a bribe to get countries to follow the code. Driscoll summarizes the code saying,
“code is simple: it requires members to allow their currency to be exchanged for foreign currencies freely and without restriction, to keep the IMF informed of changes they contemplate in financial and monetary policies that will affect fellow members' economies, and, to the extent possible, to modify these policies on the advice of the IMF to accommodate the needs of the entire membership.” http://www.imf.org/external/pubs/ft/exrp/differ/differ.htm
However, “changes…in financial and monetary policies that will affect fellow members' economies” (IMF.org) entails much more then reporting on data. Member countries are required to follow all kinds of “agreements” such as not subsidizing their countries market so as to give it an unequal advantage (even though America does this with its farmers), privatizing water rights, and endless other requirements that are seen to affect the “fellow member economies.”
The IMF and World Bank also differ in how they get their money. The IMF gets all its money from member countries entry fees or other fees, whereas the World Bank gets its money from member countries as well as through investments from private sectors.
The IMF and World Bank have their head corridors in Washington DC and the president of the organization is American. The IMF has a weighted voting system in which the more money a country pays in the more votes they have. Accordingly, America has had by far the most votes since the beginning of the IMF. In the IMF America has veto power over all decisions.
In practice the IMF and the World Bank have supported hundreds of dictators, helped implement numbers of governments resulting from military coups (see list in Toussaint, The World Bank, 1), played “a central role in helping the countries of the former Soviet bloc transition from central planning to market-driven economies” http://www.imf.org/external/about.htm or more particularly, they extract all communist elements from their member countries (such as the first loan where they informed “the French Government that Communist elements within the Cabinétte needed to be removed” before they would give them the loan), facilitate general dependence of poorer countries on the rich through all sort of methods (such as “giving” countries cheep food such that their own farmers cannot make it and the country becomes starving and dependent – as seen in Haiti), and much more.
How do they justify these actions? Under the name of free markets, capitalism, democracy, and “worldwide poverty alleviation.” Give with your lift hand, take with your right, and “do not let your right hand know what your left is doing” (Matt 6:3).

Toussaint, Eric. The World Bank: a critical primer, Pluto Press: London, 2008.
http://www.imf.org/external/about.htm
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,,pagePK:50004410~piPK:36602~theSitePK:29708,00.html
http://www.imf.org/external/pubs/ft/exrp/differ/differ.htm