Page last updated at 14:49 GMT, Tuesday, 17 April 2012 15:49 UK

Profile: IMF and World Bank

IMF headquarters in Washington
IMF headquarters in Washington DC

The International Monetary Fund, or IMF, and the World Bank's forerunner were set up to manage the post-World War II global economy.

They were conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire.

By fostering economic cooperation and helping countries with balance of payments problems the founders hoped to avoid a repeat of the 1930s Great Depression.



The IMF aims to preserve economic stability and to tackle - or ideally prevent - financial crises. Over time, its focus has switched to the developing world.

IMF head Rodrigo Rato at refugee camp on Chad/Sudan border
IMF's role in the developing world has been scrutinised

The World Bank's predecessor - the International Bank for Reconstruction and Development - was set up to drive post-war recovery. Now, it is the world's leading development organisation, working for growth and poverty reduction.

Owned by the governments of its 185 member states, the Bank channels loans and grants and advises low and middle-income countries.

The IMF is funded by a charge - known as a "quota" - paid by member nations. The quota is based on a country's wealth and it determines voting power within the organisation; those making higher contributions have greater voting rights.

The Fund acts as a lender of last resort, disbursing its foreign exchange reserves for short periods to any member in difficulties.

Crisis response

The IMF and World Bank attempt to help countries or regions in economic turmoil.

In October 2008 the IMF activated an emergency funding scheme for countries facing economic distress resulting from the global financial crisis. As of August 2010, it had committed around $200 billion in lending to a number of economies affected by the crisis. The biggest borrowers were Hungary, Romania and Ukraine.

The eurozone crisis of 2010 also triggered extensive IMF intervention, including hefty bail-outs for countries such as Greece and Ireland.

Past interventions by the IMF have included providing funds for countries caught up in the 1997 Asian financial crisis, and loans to help South American countries such as Argentina and Brazil stave off debt default crises.

The IMF can also grant emergency loans following natural disasters; these have included the 2004 Asian tsunami.

Developing countries

The IMF and World Bank set up the Poverty Reduction and Growth Facility in 1999. The scheme grants loans with conditions attached.

A strategy paper - called a Letter of Intent - specifies the elements of a country's recovery plan. In return, loans are agreed as and when the targets laid down in the letter are met.

The IMF may demand reforms to promote good governance and to tackle corruption. The Fund maintains that a good climate for business is essential for growth and poverty reduction.

The World Bank funds specific infrastructure projects. One of its agencies, the International Development Association, focuses on the world's poorest nations. The Bank has pledged its support for UN-backed Millenium Development Goals to reduce key indicators of poverty by 2015.

Debt relief

The Highly Indebted Poor Countries Initiative (HIPC), launched by the IMF and the World Bank in 1996, aims to reduce the debt owed by the world's poorest countries in return for economic reform.

States are eligible if their debt is unsustainable and cannot be tackled by traditional methods. The reforms they have to undertake often include privatisations.

By 2005 nearly 40 countries had started programmes under the HIPC. Debt relief kicks in when a country meets what is called the "decision point". The end of the process is known as the "completion point".

By the end of 2010, 32 countries had reached their completion points and were receiving full debt relief from the IMF and other creditors under proposals drawn up in 2005 by the finance ministers of the G8 group.



  • Conceived: Bretton Woods, New Hampshire, USA in 1944
  • Headquarters: Washington DC
  • IMF-World Bank membership: 187 countries
  • World Bank staff: 10,000
  • IMF staff: 2,500


IMF managing director: Christine Lagarde

Christine Lagarde is the first woman to head the IMF in the 65 years of the organisation's history.

Christine Lagarde gives her first briefing as head of the IMF in Washington DC on 6 July 2011
Ms Lagarde has promised to make the IMF more credible and connected

She trained as a lawyer and for over two decades worked for a Chicago-based international law firm, where she specialised in major labour and anti-trust cases.

She served as French trade minister from 2005 to 2007, when she was made finance minister, becoming the first woman to hold such a post in any of the G8 major industrial countries.

Ms Lagarde took over the helm of the IMF in July 2011 at a time when the organisation was facing some extremely tough challenges, with the eurozone in a state of deep crisis and fears looming that countries such as Greece could default on their loans.

Never afraid of speaking her mind, she has blamed the 2008 worldwide financial crisis partly on the male-dominated, testosterone-fuelled culture at global banks.

She is viewed with high regard in the international arena and in 2009 was named best finance minister in Europe by the Financial Times.

She has pledged to improve diversity at the IMF and to push ahead with reforms to give emerging economies more influence in the organisation.

However, with the eurozone crisis likely to absorb a considerable amount of her energies for some time to come, it will be a tough call to persuade emerging markets that their interests do not come second.

Within weeks of her appointment, however, Ms Lagarde found herself in trouble at home. A French court is to investigate her over alleged abuse of authority during her term as finance minister in relation to President Nicolas Sarkozy's election campaign.

World Bank president (outgoing): Robert Zoellick

World Bank President Robert Zoellick
Robert Zoellick

The US nominated Robert Zoellick to replace former US deputy defence secretary Paul Wolfowitz, who stepped down in June 2007 after becoming embroiled in a scandal over alleged favouritism.

Mr Zoellick's previous experience of international finance included a spell as a senior executive at the Wall Street investment bank Goldman Sachs.

He also served as US Trade Representative from 2001 to 2005, in which capacity he completed negotiations to bring China and Taiwan into the World Trade Organisation and also pushed for a Central American Free Trade Agreement.

As Deputy Secretary of State under George W. Bush (2005-6), he was seen as a major architect of the US administration's policies regarding China.

He also took a strong interest in the conflict in Sudan's Darfur region, and was involved in negotiating the May 2006 peace accord between the government of Sudan and the Sudan Liberation Movement.

World Bank president-designate: Jim Yong Kim

The USA nominated Jim Yong Kim for the post of World Bank president in March 2012, and he saw off challenges from Nigerian and Venezuelan candidates to win the support of the Bank's member-states in April.

Dr Kim, an American of Korean descent, is a physician who has worked in developing countries on alleviating problems of health and poverty.

Critics have registered his lack of direct experience in finance, but supporters, including outgoing World Bank President Robert Zoellick, have praised his work in tackling poverty. Dr Kim will take office for a five-year term on 1 July 2012.

World Bank observers say that the appointment continues a tacit agreement by which the World Bank president is a US citizen and the IMF managing director a European.



The Fund and the Bank serve as a rallying point for disparate causes - from environmentalists to anarchists - and meetings have occasionally been accompanied by violent street protests.

Protesters and critics are largely united in their distaste for globalisation: broadly speaking, the integration of world economies. They cite the exploitation of the poor and the environment and argue that freer trade threatens the livelihoods of millions of people.

Anti-IMF/World Bank protesters in Washington DC
IMF and World Bank policies have stoked opposition

The IMF has admitted that forcing developing countries to open their markets to foreign investors can increase the risk of financial crises.

Its former managing director Horst Koehler said in 2002 that the benefits of globalisation had not been equally shared. But he added that "the objective should not be less globalisation but more and better globalisation."

Campaigners also argue that loans and long-term agreements can lock countries into aid dependency.


Developing countries - as well as some of Asia's rapidly-growing economies - have voiced dissatisfaction with what they say is their lack of influence in the IMF and World Bank.

They have called for changes to the quota system in which votes in the IMF are weighted in line with member nations' financial contributions.

Under this system, the US has 17% of the vote in the Fund, whereas India, with more than three times the population of the US, has less than one third. And because constitutional changes in the IMF require 85% of the vote, the US has a veto.

The long-standing arrangement under which the IMF is usually led by a European, while the World Bank is led by an American, has also been called into question.

IMF Managing Director Christine Lagarde has declared her intention to improve diversity within the organisation, and one of her first steps on taking office was to appoint Zhu Min - a former deputy governor of the People's Bank of China - to the newly created post of deputy managing director.

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