MG214: Principles of Public Sector Management Assignment 2

NAME: Kishan Krishneel Goundar (S11145264)

World Bank group and the international monetary fund was, “Founded at the Bretton Woods
conference in 1944, the two institutions have complementary missions. The World Bank Group
works with developing countries to reduce poverty and increase shared prosperity, while the
International Monetary Fund serves to stabilize the international monetary system and acts as a
monitor of the world’s currencies. The World Bank Group provides financing, policy advice, and
technical assistance to governments, and also focuses on strengthening the private sector in
developing countries. The International Monetary Fund keeps track of the economy globally and
in member countries, lends to countries with balance of payments difficulties, and gives practical
help to members” (World Bank, 2019). Thus, this essay will be elaborating on the conducting of
research and critically analyses the role of the World Bank and the International Monetary Fund
(IMF) in the restructuring of the public sector in the Pacific Island state as Fiji.

To begin with, The World Bank promotes long-term economic development and poverty
reduction by providing technical and financial support to help countries such as Fiji to reform
certain sectors or implement specific projects, for example, as building schools and health
centers in the pacific island countries, providing water and electricity, fighting disease, and
protecting the environment. The main difference between the International Monetary Fund (IMF)
and the World Bank lies in their respective purposes and functions. The IMF oversees the
world's monetary system's stability, while the World Bank’s goal is to reduce poverty by offering
assistance to middle-income and low-income countries such as Fiji and the pacific are the good
examples of low and middle income that takes place in our country. “Both organizations are
based in Washington, D.C., and were established as part of the Bretton Woods Agreement in
1945. The Bretton Woods Agreement was a monetary and exchange rate management system
that attempted to encourage international financial cooperation through the introduction of a
system of convertible currencies at fixed exchange rates, with the dollar trading for gold at $35
per ounce” (Investopedia, 2019).
“ Moreover, The IMF keeps account of trade balances between members states, basically who
owes whom how much, as an independent auditor. The World Bank on the other hand, gives
more long term loans for more general purposes. The World Bank is an investment bank
“

mediating between lenders and borrowers. It sells bonds and lends that money to borrowing
governments. The IMF was originally founded to oversee the currency exchange market and help
stabilize countries’ currencies. The IMF has a pool of funds from which member countries can
borrow for up to five years when they need to quickly stabilize their currencies, much like bank
overdraft protection . ”

“ Furthermore, The International Monetary Fund (IMF) is the central institution embodying the
international monetary system and promotes balanced expansion of world trade, reduced trade
restrictions, stable exchange rates, minimal trade imbalances, avoidance of currency
devaluations, and the correction of balance-of-payment problems. The IMF's goal is to prevent
and remedy international financial crises by encouraging countries to maintain sound economic
policies. Because of its size, the IMF is also a forum for discussion of global economic policies.
And the roles of international monetary funding is to; to promote international monetary
cooperation through a permanent institution which provides the machinery for consultation and
collaboration on international monetary problems. To facilitate the expansion and balanced
growth of international trade, and to contribute thereby to the promotion and maintenance of
high levels of employment and real income and to the development of the productive resources
of all members as primary objectives of economic policy . ”

“ Moving on, it’s another role is to also to promote exchange stability, to maintain orderly
exchange arrangements among members, and to avoid competitive exchange depreciation. To
assist in the establishment of a multilateral system of payments for instance, in respect of current
transactions between members and in the elimination of foreign exchange restrictions which
hamper the growth of world trade. And to give confidence to members by making the general
resources of the Fund temporarily available to them under adequate safeguards, for example,
providing them with opportunity to correct maladjustments in their balance of payments without
resorting to measures destructive of national or international prosperity . ”

Moving on, today, “the World Bank consists of two main bodies, the International Bank for
Reconstruction and Development (IBRD) and the International Development Association (IDA),
established in 1960. The World Bank is part of the broader World Bank Group, which consists of
five interrelated institutions: the IBRD; the IDA; the International Finance Corporation (IFC),
which was established in 1956; the Multilateral Investment Guarantee Agency (MIGA), which
was established in 1988; and the International Centre for Settlement of Investment Disputes
(ICSID), which was established in 1966. These additional members of the World Bank Group
have specific purposes as well. The IDA typically provides interest-free loans to countries with
sovereign guarantees. The IFC provides loans, equity, risk-management tools, and structured
finance. Its goal is to facilitate sustainable development by improving investments in the private
sector. The MIGA focuses on improving the foreign direct investment of developing countries.
The ICSID provides a means for dispute resolution between governments and private investors
with the end goal of enhancing the flow of capital” (Courses.lumenlearning.com, 2019).

Thus with this, the roles of the World Bank is to; address failures in international markets and
end poverty. It offers grants, zero interest credits and low-interest loans or investments as well as
advice and training. Currently, for instance, it has over 10,000 employees and is comprised of
five institutions, including the International Finance Corporation (IFC) and the International
Bank for Reconstruction and Development (IBRD). Moving on, “The organization has been
involved in more than 12,000 development projects since its inception. Currently, its primary
goal is to reduce the global extreme poverty rate to no more than 3 percent by 2030. Another
function of the World Bank is to promote environmental sustainability and green growth.
Furthermore, its members sponsor and participate in conferences and other events that tackle the
world's development challenges” (Bizfluent, 2019).

World Bank assistance is typically long-term, funded by countries mainly the worlds- richest
“

that are members of the bank through the issuing of bonds. The bank’s loans are not used as a
type of bailout, as is the case with the IMF, but as a fund for projects that help develop an
underdeveloped or emerging market nation and make it more productive economically. Moving
on, the World Bank role is such that it supports the poorest countries. Poverty reduction and
sustainable growth in the poorest countries, especially in Africa. For example, Fiji our country is
one of them that falls under. Post conflict and fragile states. Solutions to the special challenges of
post conflict countries and fragile states. Middle-income countries such as Fiji which is a
developing country right now. Development solutions with customized services as well as
financing for middle-income countries. Global public goods for example it’s a public sector.
Addressing regional and global issues that cross national borders, such as climate change,
infectious diseases, and trade. Knowledge and learning. Leveraging the best global knowledge to
support development . ”

“ It can be concluded from the above essay that, the IMF also provides member countries with
technical assistance to create and implement effective policies, particularly economic, monetary,
and banking policy and regulations. And it can be said that the IMF promotes its objectives
through surveillance and consultation with member countries rather than regulation. It still
provides short-term loans to member countries having balance-of-payment problems, and
countries seeking assistance must meet or exceed certain thresholds related to inflation rates,
budget deficits, money supplies, and political stability. Where the World Bank also has an
important role to play in making globalization work better for the poorer parts of the world. In
this way, it is clear that the international financial institutions like WTO, IMF and World Bank
have aided the acceleration of globalization by working to spread its benefits evenly to all parts
of the world. And also the World Bank Group is one of the world’s largest sources of funding
and knowledge for developing countries. Its five institutions share a commitment to reducing
poverty, increasing shared prosperity, and promoting sustainable development . ”
 Reference

World Bank. (2019). the World Bank Group and the International Monetary Fund (IMF).
[Online] Available at: https://www.worldbank.org/en/about/history/the-world-bank-group-and-
the-imf [Accessed 10 Sep. 2019].

Investopedia. (2019). International Monetary Fund (IMF) vs. the World Bank: What's the
Difference? [Online] Available at: https://www.investopedia.com/ask/answers/043015/what-
difference-between-international-monetary-fund-and-world-bank.asp [Accessed 24 Sep. 2019].

Courses.lumenlearning.com. (2019). Reading: What Is the Role of the IMF and the World Bank?
| International Business. [Online] Available at: https://courses.lumenlearning.com/suny-
internationalbusiness/chapter/6-2-what-is-the-role-of-the-imf-and-the-world-bank/ [Accessed 24
Sep. 2019].

Bizfluent. (2019). the Role of the World Bank. [Online] Available at: https://bizfluent.com/info-
7743652-role-world-bank.html [Accessed 24 Sep. 2019].

Bretton Woods Project. (2019). what are the main criticisms of the World Bank and the IMF? -
Bretton Woods Project. [Online] Available at:
https://www.brettonwoodsproject.org/2019/06/what-are-the-main-criticisms-of-the-world-bank-
and-the-imf/ [Accessed 25 Sep. 2019].