The role of International Financial Organizations

The role of international organizations in developing financial sector among the countries over the world is realized in the recent years. In the same direction, the countries have made changes to develop their financial markets.

World Bank

One of the most known International Financial Organizations is the World Bank. World Bank is an international financial institution that provides leveraged loans to developing countries for capital programs. World Bank comprises two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
IDA provides low or no interest loans and grants to low income countries with little or no access to international credit markets. The IBRD is a market-based non-profit organization, using its high credit rating to make up for the relatively low interest rate on its loans, while the IDA is funded primarily by periodic grants voted to the institution by its more affluent member countries

The World Bank’s current focus is lending primarily to “middle-income countries” at interest rates which reflect a small mark-up over its own borrowings from capital markets. The Bank’s mission is to aid developing countries and their inhabitants to achieve development and the reduction of poverty, including achievement of the MDGs, by helping countries develop an environment for investment, jobs and sustainable growth, thus promoting economic growth through investment and enabling the poor to share the fruits of economic growth.

International Monetary Fund

Another known organization is The International Monetary Fund (IMF) created in 1946. It is the international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development. It also offers highly leveraged loans, mainly to poorer countries. Its headquarters are in Washington, D.C., United States.

The IMF describes itself as “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”.

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