Difference between IMF and World Bank

In the following article we will explore some of the Differences Between IMF and World Bank. Globalization is a process facilitated by three main organizations. These organizations include the World Trade Organization (WTO), International Monetary Fund (IMF) and the World Bank. In most cases, many of us get a little confused when we look at the World Bank and the International Monetary Fund (IMF) in terms of member countries, functions, objectives and structures.

These two organizations are different but the main difference Between IMF and World Bank is that World Bank has been designated as a development organization while IMF is established as a cooperative organization.

To further explain this; The World Bank provides financial assistance to developing countries around the world while the International Monetary Fund (IMF) reduces poverty, facilitates high levels of employment, increases financial stability and also promotes international trade.

What is the International Monetary Fund (IMF)?

The International Monetary Fund (IMF) is a Bretton Woods Institution founded in 1994 and headquartered in Washington, DC, USA. However it started operations in 1947. In its early stages, the IMF only had 31 member countries, and has now increased to 188 countries. The International Monetary Fund (IMF) is a unitary organization and is affiliated with the United Nations Organization (UNO). Its member countries have access to both soft and non-soft resources.

The main function of the IMF is to take a critical look at the International Monetary System. In 2012, its area of ​​operation was expanded and allowed it to oversee all matters relating to finance as well as macroeconomics. This ensures that the system generates sustainable economic growth, reduces poverty, enables financial stability and promotes international trade.

Each member country has its own borrowing rights as well as the voting power determined by the quota which is considered a base. Each member country contributes to the fund in a fixed quota as determined by its national income and international trade.

What is the World Bank?

The World Bank is a global organization that works to provide loans to developing countries to help them eliminate poverty. Just like the IMF, it was formed at the Bretton Woods conference held in Washington DC, in 1994.

This financial institution started as a single organization but currently consists of a group of five organizations namely; International Bank for Reconstruction and Development (IBRD), International Center for Settlement of Investment Disputes (ICSID), International Finance Cooperation (IFC), International Development Association (IDA) and Multilateral Investment Guarantee Agency (MIGA).

The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) are the two main constituents of the World Bank. It is part of the World Bank Group and is also a member of the United Nations Development Group.

Currently, the member countries of the International Bank for Reconstruction and Development (IBRD) are 188 countries and those of the International Development Association (IDA) are 172 countries.

The reason behind the establishment of the World Bank was to help the economy which had suffered due to World War 2 but then aimed to help less developed countries in eradicating poverty and becoming developed.

Difference between IMF and World Bank

The following are some of the differences between the IMF and the World Bank in terms of their definitions, functions, organizational structure, size, operations and constituents:

Definition
The IMF is the organization that controls the International Monetary System while the World Bank is a global financial institution that lends money to developing countries to eradicate poverty and promote economic development.

Function
The IMF focuses on economic stability, poverty reduction and stable economic growth of member countries. The World Bank on the other hand focuses on the economic development of developing countries and provides channels for loans.

Size
The World Bank is larger than the IMF in terms of size as measured by staff members. The IMF has about 2,300 staff members, while the World Bank estimates around 7,000 staff members. The World Bank is three times larger than the IMF.

Organizational structure
IMF is a unitary organization with four lines of credit while the World Bank is a Bilateral organization with two main constituents namely; International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA).

constituent
The IMF has 188 member countries while the World Bank has 188 member countries of the International Bank for Reconstruction and Development (IBRD) and 172 member countries of the International Development Association (IDA).

Operation
The IMF provides advice and assistance, while the World Bank lends money to member countries.

Objective
The main objective of the IMF is to deal with financial and macroeconomic issues. The main objective of the World Bank on the other hand is to promote economic development.