Saturday, March 28, 2015

Int'l Development Banks - ADB, WB, IMF, NDB, AIIF

There are several development banks in the world with the principal goal of development among others. From India's point of view, the most notable among those development banks are the followings -

  • Asian Development Bank (ADB)
  • World Bank (WB)
  • International Monetary Fund (IMF)
  • New Development Bank (BRICS-NDB)
  • Asian Infrastructure Investment Bank (AIIF), etc.
Here we shall discuss each of them in brief. Note that NDB (click me) and AIIF (click me) were already discussed in previous articles.

Asian Development Bank (ADB)
ADB is a regional development bank, headquartered in Metro Manila, Philippines. It was established on Aug 22, 1966, to facilitate economic development in Asia, with the motto 'Fighting poverty in Asia and the Pacific'.

President - Takehiko Nakao
Membership - 67 countries

ADB invests in -  
  • Infrastructure
  • Health care services
  • Financial system
  • Public administration system
  • Preventing Climate change
  • Managing natural resources, etc.

Devices for ADB's assistance -
  • Loans
  • Grants
  • Policy Dialogue
  • Technical assistance
  • Equity Investments, etc.

ADB recently released its Asian Development Outlook (ADO) with the title 'Financing Asia's Future Growth'. It forecasted that India will overtake China in terms of growth rate in fiscal years 2015 and 2016

Below is a comparative chart published by ADB -

World Bank (WB)
World Bank is a financial institution of United Nations (UN), established on July 1944, headquartered in Washington D.C., USA. It provides loans to developing countries for their capital programs. The official goal of WB is the reduction of poverty, and the motto is 'Working for a World Free of Poverty'.

President - Jim Yong Kim
Membership - IBRD (188 countries), IDA (172 countries)

Note that World Bank is a component of World Bank Group (WBG), which is a family of 5 international organizations that make leveraged loans to poor countries -
  • International Bank for Reconstruction and Development (IBRD) - lends to governments of middle-income and creditworthy low-income countries
  • International Development Association (IDA) - provides interest-free loans, called credits, and grants to governments of the poorest countries
  • International Finance Corporation (IFC) - is the largest global development institution focused exclusively on the private sector (not governments)
  • Multilateral Investment Guarantee Agency (MIGA) - promotes foreign direct investment (FDI) into developing countries to support economic growth, reduce poverty and improve people's lives. It fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders.
  • International Center for Settlement of Investment Disputes (ICSID) - provides international facilities for conciliation and arbitration of investment disputes.

Note that, together, IBRD and IDA make up the World Bank, whereas all these 5 institutions form the World Bank Group.

International Monetary Fund (IMF)
IMF is an international financial organization, established on December 27, 1945, headquartered in Washington D.C., USA

President - Christine Lagarde
Membership - 188 countries

IMF work area -
  • promotes international monetary cooperation
  • promotes exchange rate stability
  • facilitates balanced growth of international trade
  • provides resources to help members in balance of payments (BOP) difficulties
  • assist with poverty reduction

Devices of IMF's assistance -
  • Keeps track of the economic health of member countries, it alerts them to risks on the horizon
  • provides policy advice
  • lends to countries in difficulty
  • provides technical assistance
  • training to help countries improve economic management

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