FAQs on IMF & World Bank - Indian Economy for UPSC CSE
|1. What is the role of the IMF and the World Bank in the global economy?
Ans. The International Monetary Fund (IMF) and the World Bank are two international financial institutions that play a crucial role in the global economy. The IMF primarily focuses on maintaining global financial stability, providing financial assistance to countries facing balance of payments difficulties, and offering policy advice to member countries. On the other hand, the World Bank aims to reduce poverty and promote economic development by providing financial and technical assistance to developing countries for various projects, such as infrastructure development and social programs.
|2. How do the IMF and the World Bank differ in terms of their objectives and activities?
Ans. While both the IMF and the World Bank work towards promoting global economic stability and development, they have distinct objectives and activities. The IMF primarily deals with macroeconomic issues, such as exchange rates, monetary policies, and fiscal policies, to ensure financial stability and prevent financial crises. In contrast, the World Bank focuses on long-term development projects, such as poverty reduction, education, healthcare, infrastructure, and environmental sustainability. The IMF provides short-term financial assistance, whereas the World Bank provides long-term loans and grants.
|3. How do countries become members of the IMF and the World Bank?
Ans. Membership in the IMF and the World Bank is open to any country that meets certain criteria and agrees to comply with the institutions' rules and regulations. To become a member of the IMF, a country must apply and be accepted by a majority of the existing member countries. The country also needs to contribute to the IMF's financial resources based on its economic size and participate in the institution's governance. Similarly, countries become members of the World Bank by subscribing to its capital stock and agreeing to the terms and conditions set by the institution.
|4. Can countries borrow money from the IMF and the World Bank?
Ans. Yes, countries can borrow money from both the IMF and the World Bank, but the purposes and conditions of borrowing differ. The IMF provides financial assistance to member countries facing balance of payments difficulties. This assistance is usually in the form of loans with conditions attached, such as implementing specific economic reforms or policies to address the underlying issues. The World Bank, on the other hand, provides development loans and grants to countries for various projects aimed at reducing poverty and promoting sustainable economic development.
|5. How do the IMF and the World Bank address the needs of developing countries?
Ans. The IMF and the World Bank have specific programs and initiatives to address the needs of developing countries. The IMF's Poverty Reduction and Growth Trust (PRGT) provides financial assistance to low-income countries with the aim of reducing poverty and promoting economic growth. The World Bank's International Development Association (IDA) focuses on providing interest-free loans and grants to the world's poorest countries for projects that enhance education, healthcare, infrastructure, and other development priorities. Additionally, both institutions offer technical assistance and policy advice to help developing countries implement effective economic and social policies.