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23. Imf and the world bank

Lead-in:

1. the IMF – МВФ (Міжнародний Валютний Фонд)

2. statutory purpose – установлений законом намір

3. global prosperity – глобальний добробут

4. stability of exchange rates – стабільність валютного курсу

5. labour market – ринок праці

6. sustainable economic growth – сталий економічний ріст

7. poverty reduction – зниження бідності

8. budget transparency – прозорість бюджету

9. to bolster the social sector – підтримувати суспільний сектор

The International Monetary Fund is a specialized agency of the United Nations set up in 1945 to help promote the health of the World economy. The IMF was conceived in 1944 at a United Nations Conference at Bretton Woods, when representatives of 45 governments agreed on a framework for economic cooperation. This cooperation was designed to avoid a repetition of the disastrous economic policies of the Great Depression.

The statutory purposes of the IMF today are the same as when they were formulated in 1944, but they have become more important because of the expansion of its membership. The number of IMF member countries has more than quadrupled from the 45 states involved in its establishment and now the Fund has 184 members.

The IMF works for global prosperity by promoting the balanced expansion of world trade, stability of exchange rates, monitoring economic and financial developments, giving advice to its members. The IMF also lends to member countries to support reform policies, provides the governments and central banks of its member countries with technical assistance and training. After the collapse of the Soviet Union, for example, the IMF helped the Baltic States, Russia, Ukraine and other former Soviet countries in the transition from planned to market-based economic systems.

The IMF’s main business is a macroeconomic and financial sector policies.

The IMF focuses mainly on a country’s macroeconomic policies – that is, policies relating to the government’s budget, the management of money and credit, and the exchange rate. It also concentrates on financial sector policies, including the regulation and supervision of banks and other financial institutions. In addition, the IMF pays due attention to structural policies that effect macroeconomic performance – including labour market policies.

The IMF advises each member on how its policies in these areas may be improved to achieve such goals as high employment, low inflation and sustainable economic growth. Strengthening the international financial system, promoting sound economic policies among its member countries, the IMF is helping to make globalization work for the benefit of all.

At the same time as IMF was created, the International Bank for Reconstruction and Development (IBRD), more commonly known as the World Bank, was set up to promote long-term economic development. The IMF and the World Bank Group – which includes the International Finance Corporation (IFC) and the International Development Association (IDA) – complement each other.

The World Bank is concerned mainly with longer-term development and poverty reduction issues.The activities include lending to developing countries and countries in transition to finance infrastructure projects, the reforms of particular sectors of the economy, and broader structural reforms.

Each institution must focus on its areas of expertise, but in areas where they both have expertise – such as fiscal management, budget execution, budget transparency, tax and customs administration – they coordinate closely.

And now a few words about partnership of the World Bank and Ukraine.

The agreement was signed in September 1992 at the ceremony at the US State Department and Ukraine became the 167th member of the Bank. Since 1992 partnership between Ukraine and the World Bank resulted in a number of joint projects.These projects were designed to improve the public and private sectors, to raise agriculture and energy, to protect the environment, to bolster the social sector. The World Bank has launched the preparation of the new 2004 to 2006 Country Assistance Strategy for Ukraine and this project will involve cooperation with a wide range of stakeholders.

Questions for comprehension check-up and discussion:

  1. When was the IMF set up?

  2. What was the purpose of the fund?

  3. What does the IMF mainly focus on?

  4. Are there any more questions that the IMF pays due attention to?

  5. What institutions does the World Bank Group include?

  6. Can you characterize the spheres that each institution of the World Bank Group must focus on?

  7. Name the sectors of the economy where Ukraine and the World Bank cooperate.