In the 1930s, the economies saw a great depression, which failed. The countries had to raise barriers and decline the usage of foreign exchange. They also had to devalue their currencies.
These factors led to declining high unemployment and world trade. Then, under a new monetary system, there was the creation of the IMF and World Bank.
- The International Monetary Fund (IMF) primarily aims to maintain global financial stability, while the World Bank focuses on long-term economic development and poverty reduction.
- IMF provides short-to-medium-term financial assistance to countries facing balance-of-payment crises. In contrast, the World Bank offers long-term loans, grants, and technical assistance for various development projects.
- The IMF encourages monetary cooperation and exchange rate stability, while the World Bank supports infrastructure, education, healthcare, and agriculture projects.
IMF vs World Bank
IMF stands for International Monetary Fund and is an organization that provides advice to countries for their monetary system and short-term loans to countries in debt. World Bank is an organization that provides loans to countries for building infrastructure, and it promotes economic development.
IMF, or the International Monetary Fund, is an organization that provides advice in making strategies and policies for the monetary system.
It gives out short-term loans to countries that are in debt and are not able to meet international payment obligations. The working staff is economists with experience in macroeconomics.
World Bank has the goal of reducing poverty. It promotes economic development and helps countries financially so that they can reform their various sectors.
The assistance that it provides is long-term. It also helps in different projects like building infrastructure, developing the education sector, and proper flow of electricity and water.
|Parameters Of Comparison
|IMF is short for International Monetary Fund. It is an organization that is there to stabilize the monetary system.
|World Bank is an organization that look forward to the growth of developing nations.
|To have a stable economy.
|To reduce poverty from different nations.
|It give suggestions for a better policy design and keep a check on exchange rates.
|It give out loans for long term projects and give out suggestions for development.
|It has a strict policy for giving out loans.
|It gives out loans without any interest.
What is IMF?
The International Monetary Fund (IMF) is an institution that is a part of the Bretton Woods Agreement at the conference that took place in 1945. It oversees the monetary system, international payments, and exchange rates.
Its main aim is to stabilize the whole system. The policies that it creates enable the people to do an exchange of goods and services smoothly.
There are twenty-nine member countries, and it has headquarters in Washington, D.C. The IMF carries on its work in a strict and complicated way with some rules and regulations.
Due to this, it has both supporters and critics. The criticism is due to the following points-
- It has specific conditions for loans. The country asking for a loan must implement the economic policies as told by the IMF.
- It has reforms on exchange rates, due to which it fails to understand the dynamics sometimes.
- It makes its way into the decision-making, and they do not appreciate this at all.
- It supports military dictatorship.
Apart from this, many countries are also giving good remarks to the IMF for helping in maintaining their finances. Its lending capacity has increased to around $750 billion, and it also made some changes to reduce the criticism.
What is World Bank?
World Bank is an organization that provides grants to middle and low-income countries. It is a part of the Bretton Woods Agreement and came in 1944.
It lends money with no interest rate to the countries that need help. Its main aim is to reduce poverty around the world.
It consists of five bodies-
- International Bank for Reconstruction and Development(IBRD)
- International Development Association(IDA)
- International Finance Corporation(IFC)
- Multilateral Investment Guarantee Agency(MIGA)
- International Center for Settlement of Investment Disputes(ICSID)
IBRD and IDA are the main bodies with 189 member countries.
Its primary focus is on the following themes-
- Sustainable growth of poorest countries.
- Providing solutions to the various challenges in fragile states and post-conflict countries.
- Strategies for development and growth in middle-income companies, and providing them finance as well.
- Addressing global issues such as any infectious disease or climate change.
- Looking forward to the Arab world.
- Putting in the best effort to leverage global knowledge for supporting development.
There is a sovereign guarantee of repayment of the amount in the general conditions. The World Bank is not there to fund a trade deficit, but it gives out loans for big projects. It issues $25 billion of bonds in a year.
Main Differences Between IMF and World Bank
- IMF is a monetary institution, while the World Bank is a developmental institution.
- The IMF looks forward to maintaining a stabilizing monetary system. On the other hand, the World Bank looks forward to reducing poverty.
- IMF oversees strategies and policies and gives suggestions for a better economy. The World Bank provides huge grants with no interest rates to the countries in need.
- Twenty-three hundred staff members are working in the IMF, where most of them are economists. While in the world bank they have a staff of 7000 total members.
- IMF is a single institution. On the other hand, the World Bank has five bodies- IBRD, IDA, IFC, MIGA, and ICSID.
- There are certain strict conditions on loans given out by the IMF, but the World Bank has an interest-free policy.
Last Updated : 09 September, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.