Financial Institutions
Saima Ashraf
Bretton Woods Conference
• The Bretton Woods Conference was held from the 1st to 22nd of July
1944 .
• Contained 730 delegates from all 44 Allied nations in Bretton Woods
• To regulate the international monetary and financial order after the
conclusion of World War II.
Created two major institutions
1. World bank : long term loan for distressed economy and member countries
2. IMF : grants the short-term loans to develop the cyclical disturbance in
economy.
World Bank Why it came into existence?
• An international organization dedicated to providing financing, advice and
research to developing nations to aid their economic advancement.
• The World Bank was created at the end of World War II as a result of
many European and Asian countries needing financing to fund
reconstruction efforts.
• The Bank is successful in providing financing for these devastated
(destroyed) countries
• The International Bank for Reconstruction and Development was the first
“Multilateral Development Bank. "Before World War II had ended
Key Dates
• The “World Bank Group” first came into being in the 1960s
• 1946: World Bank founded along with sister institution, the International
Monetary Fund.
• 1956:International Finance Corporation(IFC) created to support private
ventures and industrial loans.
• 1960:International Development Association(IDA) created to give “soft
loans” to very poor countries.
• 1966: International Center for the Settlement of International Disputes
(ICSID)
• 1988: The new Multilateral Investment Guarantee Agency (MIGA) insures
against political risks and to encourage private investments.
Five organizations of World Bank Group
• The International Bank for Reconstruction and Development(IBRD): Lends to
government of middle-income and creditworthy low-income countries.
• The International Development Association(IDA): Provides interest free loans to
poorest countries.
• The International Finance Corporation(IFC): help developing countries achieve
sustainable growth, Finance the investment, mobilizing capital in international
financial markets Provide advisory services to businesses and governments
• The Multilateral Investment Guarantee Agency(MIGA): Promotes FDI in
developing countries.
• The International Centre for Settlement of Investment Disputes(ICISD): Facilities
for conciliation and arbitration of investment disputes.
OBJECTIVES
• To provide long-run capital to member countries for economic reconstruction and
development.
• To induce long-run capital investment for assuring Balance of Payments (BoP)
equilibrium and balanced development of international trade.
• To provide guarantee for loans granted to small and large units and other projects of
member countries.
• To ensure the implementation of development projects so as to bring about a smooth
transference from a war-time to peace economy.
• To promote capital investment in member countries by the following ways;
• To provide guarantee on private loans or capital investment.
• If private capital is not available even after providing guarantee, then IBRD provides loans for
productive activities on considerate conditions.
World bank's top borrowers World Bank's Top contributor's
Mexico USA 16.39%
Brazil Japan 7.87%
Turkey Germany 4.49%
Pakistan UK 4.30%
China France 4.30%
India
The International Monetary Fund (IMF)
• It 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.
• The IMF works to foster global growth and economic stability. It
provides policy advice and financing to members in economic
difficulties and works with developing nations to help them achieve
macroeconomic stability and reduce poverty
IMF Policies for Pakistan
• Pakistan has been a member of the International Monetary Fund
(IMF) since 1950. Due to unpredictable nature of the economy and
heavily dependent on imports, IMF has given loan to Pakistan on
twenty-two occasions since its membership, recent in 2019. GRA
(General Resources Account ) is used to give loan on stand-by
arrangement.
Conditionality's of IMF Loan
