Good Morning

MULTILATERAL FINANCIAL INSTITUTIONS

Presented byGroup 6

International Monetary Fund

HISTORY• Gold standard • World war I• After World war 1…• The Great Depression of 1930s • World war II

A Conference of 44 major countries was held at Bretton Woods, New Hampshire, in July 1944…….

& the result was

“Bretton Woods twins”

IMF

IBRD

Objectives

International monetary co-operationExpansion & balanced growth of international tradeExchange stabilityEstablishment of Multilateral system of paymentBoost member’s confidence

Organisation of IMF

• Came in December 1945…….functioned in March 1947

• Autonomous Organization, affiliated to UNO

• Initial 30 members……..187 members at present

Management of Fund

Board of Governors Board of Executive Directors

oResources of IMFSubscribed by membersSubscription quota

o 25% in International reserve assets 75% in own currency

25% Quota in Special Drawing Rights(SDR) 1969

national income position in international trade

Functions

• Maintaining Exchange Stability• Determination of par values• Balancing Demand & Supply of Currencies• Maintenance of Liquidity• Interest charges• Technical Assistance• Allocation of Profits

Credit Facilities

Basic credit facilityExtended fund facilityCompensatory financing facilityBuffer stock facilitySupplementary financing facilitySpecial oil facilityTrust fundStructural adjustment facility

World Bank

Founded – 1944No. of membership – 187 countriesPresident – Robert B. ZoellickAffiliate Institution – IBRD & IDAObjective – providing loan to developing countries

International Bank for Reconstruction and Development (IBRD)

Founded – 1945Objective – finance those nation affected by world war IILoan period – maximum 15yrs

International Development Association (IDA)

Founded – 1960No. of member countries – 169Objective of creation – providing loan to the poorest countriesLoan period – 35 to 40 yrs

REGIONAL DEVELOPMENT BANKS

Reasons for the establishment of regional development banks:-

Flow of external capital for financing their development was inadequate.

Existing international credit mechanism was considered quantitatively defective.

Existing international financial institutions could not be expected to take care of many financial problems

REGIONAL DEVELOPMENT BANKS

Inter American Development Bank (IADB)

Founded in 1959, oldest and largest of the regional development banks 46 Member countriesIt includes not only South America

but also developed countries of North America, West Europe and Japan Lend to governments and to public and private entities

For specific economic and social development projects and for sectoral forms

Lending consists of long term & market based loans

Operates the fund for special operations

Multilateral Investment Fund for technical cooperation, human resource development and small enterprises development

financing in 2009 totaled $15.9 billion

Asian Development Bank

Established in 1966

Membership has grown to 67 from 31

Raises funds through bond issues, while also utilizing its members' contributions and earnings from lending

Objectives

The social and economic development of the Asian and Pacific countries.

To boost cooperative and simultaneous regional growth among member countries.

Functions of ADB

• Technical assistance provided to members, so that they can plan and execute development strategies and projects.

• Assistance to DMCs (Developing Member Countries) to coordinate policies designed for development.

• Equity investments and loans to member nations.

• Encouragement to member nations to invest private and public capital for development

African Development Bank

• Established in 1964

• Intention of promoting economic and social development in Africa

• Membership 78 countries

Banks Principal Function

• it makes loans and equity investments for the economic and social advancement of the regional member countries (RMC)

• it provides technical assistance for the preparation and execution of development projects and programs

• it promotes investment of public and private capital for development purposes

• it assists in coordinating development policies and plans of RMCs

European Bank for Reconstruction and Development

• The European Bank for Reconstruction and Development was established in 1991

• It is owned by 60 countries and two intergovernmental institutions (EU and EIB).

• The EBRD is the largest single investor in the region and mobilizes significant foreign direct investment beyond its own financing.

EBRD investment objectives:

Help move a country closer to a full market economy: the transition impact

Take risk that supports private investors

Apply sound banking principles

EBRD promotes

• Structural and sectorial reforms • Competition, privatization and entrepreneurship • Stronger financial institutions and legal systems • Infrastructure development needed to support the

private sector • Adoption of strong corporate governance, including

environmental sensitivity • Co-financing and foreign direct investment • Mobilizing domestic capital • Providing technical assistance

To be eligible for EBRD funding, the project must

be located in an EBRD country of operations have strong commercial prospects involve significant equity contributions in-cash or in-kind from the project sponsor benefit the local economy and help develop the private sector satisfy banking and environmental standards

THANK YOU