The upcoming discussion will update you about the similarities and difference between IMF and World Bank.
Both these institutions are called Bretton Woods institutions. They have the same membership no admission to the World Bank without the IMF membership.
The management structure of the Bank is largely similar to that of the Fund. Voting rights in these institutions depend primarily on capital contribution of the member countries.
But there are same fundamental differences between these two institutions. Basically, the Fund is a monetary institution while the Bank is a developmental institution. The main concern of the IMF is to reform the international monetary system. It grants credit to member countries to correct temporary BOP deficit. It pledges to maintain a stable exchange rate.
The WB, on the other hand, was set up for financing war-damaged economies of Europe caused by World War II. As soon as the Marshall Aid programme was rolled out in meeting resource needs of Europe, the Bank shifted its focus to developing countries and came to be known as the ‘World Bank’. Being a development institution, it finances long and medium term development programmes. That is, the IMF’s main concern is macro element while the Bank focuses on micro aspects of development.
In recent years, the Bank has shifted its attention from project financing to economic reform packages. However, both these institutions provide conditional loans the structural adjustment loans (SALs). The Bank took up this lending in 1980 through the stabilisation programme with conditionality’s which were adopted by the IMF in the 1970s. Today, we observe overlapping activities of these institutions.
The Bank is now moving to macro issues and the Fund now shapes policies for the developing and ex-communist countries to build up a market economy. Today, in a variety of areas, both these institutions are cooperating one intrudes into the domain of the other.
Cooperation between these institutions is observed ‘in supporting governments in implementing poverty reduction strategies in low income countries, providing debt relief for the poorest countries, and assessing the financial sectors of countries.’ In view of these developments, it has now become increasingly difficult to identify the differences between these institutions.