World Bank & imf

1. World Bank & imf Do they help or hurt the developing world?

2. WELCOME! • Please grab your journal and take your seats!

3. JOURNAL • When are you willing to loan money to someone? • What type of people will you loan to? • What people WONT you loan to? • Does it matter what the person wants to do with your money? • Do you expect to get your money back… and if so, when?

4. JOURNAL • What is, to you, a “livable” salary Honestly!! • Think about what’s “essential” to you • How much do these essentials cost? How cheaply can you get them? • What’s the bare minimum you could make as an adult and survive in the US? • What do you think the poverty line is in the US? • What about in developing countries???

5. POVERTY LINE • $22350 for a family of four in the US • $1.25 a day in developing world (per person)

6. Objectives • Describe differences and similarities between the IMF and WB • Explain the purpose of both organizations • Understand the complex issues surrounding international aid and development

7. VOCABULARY + ABBREVIATIONS • IMF- International Monetary Fund • IBRD- International Bank for Reconstruction and Development (World Bank org.) • IDA- International Development Association (World Bank org.) • Bretton Woods Convention: 1944 meeting during which the World Bank and IMF were created • Gross National Product: Value of goods and services produced in a country during one year • Globalization: The spread of ideas, practices, and knowledge across the globe

8. What’s the international monetary fund? • “An organization of countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.” Quite a mission!…..So… are they trying to save the world?

9. IMF Basics • 188 country members • Headquarters in Washington, DC • NON-members include: • Cuba, N. Korea, Andorra, Monaco, Liechtenstein, and Vatican City • Made up of mostly economists & financial experts • Leader is always European • 2300 staff members

10. Goals of imf • Maintain a stable global economy • Loan small amounts of money to countries who need to stabilize their economies • Promote exchange of foreign currencies • Advise all countries on financial matters

11. What do you need to do to join? • Require countries to relinquish sovereignty • Their currency must be able to be freely exchanged with other foreign currencies • Most inform IMF of major changes in $$$ policy • Take advice of IMF • So… why join? • You can get help if you need it!! • INSIGHT • You know about the economies of alllll other nations! This is good info to have.

12. Who do they loan to & where does the $$$ come from? • IMF will loan to ANY member country that needs help • Developing OR developed. • SMALL, short-term loans… Pay them back within 3 years, 10 maximum. • Majority of IMF $$$ comes from members’ dues.

13. Criticisms of imf • They’re “clueless” about the culture and monetary situations within the countries they loan to • Some citizens get mad when their leaders give in to IMF requests and requirements…. It circumvents nation’s sovereignty • Some say funds are anti-developmental. They’re a short-term fix for larger problems, especially in the developing world. • Not all countries that need help are granted it.

14. What’s the WORLD BANK? • A lending organization that seeks to promote the economic and social development of the world’s poorer countries by providing financial and technical support to countries.

15. Wb basics • Provides loans to developing countries for capital programs • Reduce poverty • Made up of two programs • IBRD-187 members • IDA- 171 members • Over 7,000 staff members • Always led by a U.S. Citizen

16. Wb goals • Focus on developing the following in developing countries: • Roads • Dams • Power Stations • Agriculture • Industry • Clean Air

17. Who do they loan to, and where does the $$$ come from? • They ONLY loan to poverty-stricken countries!!! • GNP of less than $865 per person. (ie: When each person makes only $865 a year) • Money comes from investors, individuals, institutions, and other member nations • LONG TERM , low-interest or interest-free loans… generally loans are paid within 12-15 years

18. Criticism of the world bank • Same as the IMF- they don’t know much about the countries they loan to. Sometimes the help isn’t “sustainable” • Voting Power • US has 15.85% of power, followed by Japan, China, Germany, UK, France, Russia and Saudi Arabia. • “Shock Therapy”