Founding Father of both the World Bank and the International Monetary Fund (IMF). John Maynard Keynes.

Harry Dexter White.

International Monetary Fund World Bank

IMF came into Existence on 1945 with 29 member countries with a goal of reconstructing international payment system.

It now plays central role in the management of Balance of Payments deficit and international financial crisis.

World Bank created on 1944.

Working for a world free of poverty.

Basic Differences betweenIMF World Bank

Oversees the International Monetary System.

Provides Short to Medium term credits.

Assists all member countries that are facing difficulties in Balance of Payments.

Generate its financial resources mainly through the quota system of its member countries

Promote Economic Development of the developing countries.

Provides long-term financing of developments projects.

Assists developing countries whose per capita GNP is less $865 a year.

Raises most of its funds on the world’s financial market by selling world bank bonds to investors.

International Monetary Fund (IMF)

• Voting power

• Effects of the quota system

• Inflexibility of voting power

• Overcoming borrower/creditor division

World bank

• Voting power

Programs of IMF in Pakistan Pakistan’s relationship with the IMF dates back to 1958. However, the association deepened with the structural

Adjustment Program of 1988. Pakistan is one of those countries that have frequently

approached the IMF for standby loans, adjustment lending and Economic stabilization packages

In 1988, when loan of US$516 Million was extended to Pakistan. It was the largest loan advanced by the Fund to any country under this Facility. It was a “soft loan but with hard adjustment” as interest rate was low but conditions attached were severe.

Pakistan entered into nine different agreements with the IMF during the period 1988- 2000.

The 1990s, was a ‘lost decade’ for Pakistan’s economy. During the 1990s, growth in per capita income dropped to slightly over 1%. Poverty resurfaced and about one third of the population now lives below the poverty line of $ 1 per day.

The structural Adjustment Facility program (SAF) was introducedby the IMF in 1988 however, the Program failed to achieve thetargets. The objectives of the program were consistent with theearlier program:

reducing budget deficit, bringing down public expenditures through elimination of

subsidies, increasing Foreign exchange reserves, reducing external debt

In May 1998, Pakistan declared itself a nuclear state and foreign currency accounts were frozen to avert the likely outflow of capital from the country. There was military takeover in Oct 1999. The balance of Payment position had deteriorated badly. Pakistan, therefore, again approached the IMF once again for standby loans in 2000.

The structural Adjustment Facility program (SAF) was introduced by the IMF in 1988 however, the Program failed to achieve the targets.

The conditions attached with the Adjustment Package were incorporated in the budget of 1989-1990. General sales Tax was imposed through the Sales tax Act 1990. The government reduced the support price for essential crops like wheat, cotton, sugarcane and oilseeds.

The economy took a kick-start and till 2007, Pakistan was enjoying high growth rates. Pakistan did not even withdraw the last two installments from IMF, claiming that the country has regained its economic sovereignty and loans from the Fund were no longer required.

The macroeconomic situation, however, deteriorated sharply since 2007/2008. Thereby, Pakistan had to embark on a stabilization program for 2008-2009 and 2009-10. The program aimed at restoring fiscal stability. The stabilization program called for tightening of monetary and fiscal policy in order to bring down inflation and strengthen external position

2013-2016 International Monetary Fund (IMF) had reviewed

Pakistan's economic performance according to which it will make available a further $510 million to the country as part of a three-year, $6.4 billion financial assistance program.

Pakistan received its final payment of $102 million tranche in October 2016. According to Christian Lagarde, Completion of the IMF programme reflects very positively on Pakistan.

IMF stated that all end-March 2016 quantitative performance criteria, including the budget deficit target and the floor on the SBP’s net international reserves, have been met.

The agreement was reached after the IMF mission held discussions with Finance Minister Ishaq Dar, SBP Governor Ashraf Wathra and other senior officials in Dubai from May 2 to May 11.

Programs and Impacts of World BankStructural adjustment polices(SAP)

1)saps have been imposed to ensure debt repayment and economic restructuring. 2)it also introduced structural adjustment programs (saps) in developing countries so that not only macroeconomic stability can be attained but also structural reforms aimed at accelerating growth can be undertaken.3) it has shifted its emphasis from the financing on specific projects towards non-project linked programs. It works in developing economies with the focus of helping the poorest people and the poorest countries.

Reducing of Black Money Operation1)world bank programs are also found to have a significantly positive influence on the difference between the official and the black market exchange rate. 2)although the bank does not directly force countries to devalue their currencies, some adjustment programs aim at liberalizing the exchange rate . as a consequence, overvalued currencies may devalue which decreases the black market premium.

Knowledge Bank The Bank provides advice and expertise.

It now puts more emphasis on institutional technical assistance and infrastructure assistance. Over the years, it has been able to generate and disseminate policy relevant knowledge. Today, it has been concentrating more on this asset rather than financial resources. This organization is now called the ‘knowledge bank’.

The number of programs in operation increases economic freedom due to either the direct effect of conditionality on policies or to the transfer of knowledge and advice, which increases with the number of contacts between a recipient country and the IMF or World Bank.

Negative Impacts of World Bank Social and environmental concern 1)about the types of development projects funded. Many infrastructure

projects financed by the world bank group have social and environmental implications for the populations in the affected areas and criticism has centered on the ethical issues of funding such projects. For example, world bank-funded construction of hydroelectric dams in various countries has resulted in the displacement of indigenous peoples of the area.2)the bank’s role as a central player in climate change mitigation and adaptation efforts is in direct conflict with its carbon-intensive lending portfolio and continuing financial support for heavily polluting industries, which includes coal power.3)world bank working in partnership with the private sector may undermine the role of the state as the primary provider of essential goods and services, such as healthcare and education, resulting in the shortfall of such services in countries badly in need of them.

Abetting environmental destruction: 1)No assessment for the environmental worthiness and

impact of financial investments.2) Civil society groups see the Bank as unfit for a role in climate finance because of the conditional ties and advisory services usually attached to its loans

Controlling foreign direct investment: approval in the case of developing countries.

World Bank and the IMF are concerned about the ‘conditionalities’ imposed on borrower countries. The World Bank and the IMF often attach loan conditionality based on what is termed the ‘Washington Consensus’, focusing on liberalization—of trade, investment and the financial sector—, deregulation and privatization of nationalized industries.

Political and bureaucratic control of developed countries over developing countries:

1) The design of loan conditionality is intrinsically highly political because it involves policies and processes which affect the welfare of most people and thus changes the power balances between the political actors involved in the domestic democratization process.

Ten Reasons to Abolish the IMF1. Immoral system of modern day colonization.

2. Serves wealthy country members.

3. Imposing a fundamentally flawed development model.

4. A secretive institution.

5. Policies promote corporate welfare.

6. Unsatisfied workers due to IMF’s policies.

7. IMF’s policies affect women the most.

8. IMF’s policies affecting the environment.

9. The IMF bails out rich bankers.

10. The IMF’s bail outs deepen, rather than, solving economic crisis.