News

    Reinventing the World Bank and IMF

    Since the World Bank and the International Monetary Fund, or IMF, were founded some six decades ago, the world has undergone major socio-political and economic change. And many analysts say the two institutions have failed to keep up and should be reformed.

    The World Bank and the International Monetary Fund were established in New Hampshire in 1944. The IMF's mission was to ensure the stability of the international monetary system. The World Bank was tasked with helping to rebuild Europe and Japan after World War II.

    But today's world is a different place, says economist Kent Hughes of the Woodrow Wilson International Center for Scholars in Washington. "Europe and Japan not only have fully recovered from the war, but have now become really major economic players in the world stage. Back in 1945, you still had many European colonies on Africa and Asia. All of that has disappeared,! says Highes. "And in more recent times, let's say from 1989 on, the fall of the Berlin Wall, you've had three-billion people who have joined the world economy. And now you see a whole set of emerging market countries - - Brazil, India, China - - that have also become very important factors in the global economy." 

    Headquartered in Washington, the World Bank now focuses on economic development. But critics say many of its poverty reduction programs have been ineffective, a claim that the Bank disputes. Economist V.V. Chari of the University of Minnesota says the World Bank cannot realistically eliminate poverty by itself.

    "Foreign aid as provided by the World Bank or other international organizations can at best play a marginal role. But anybody who thinks that the World Bank single-handedly can solve the problems of poverty are just kidding themselves. The bulk of that hard work will have to be done by the governments and the peoples in those countries," says Chari.

    Lending Policies 

    Some analysts argue that the World Bank, which has given poor and middle-income countries billions of dollars in loans, grants and credits over the years, has become bogged down by bureaucracy and plagued by scandals. And some critics contend that the Bank often focuses more on large-scale projects than on effective development. World Bank officials deny these accusations, although they acknowledge the need for change. Some countries say the World Bank and the IMF impose stringent conditions on loans to developing nations that hurt their poorest populations.

    Political economist Alan Meltzer of Carnegie Mellon University in Pittsburgh, Pennsylvania says part of the reason for this criticism is the World Bank's lending culture. "By a lending culture, I mean that people are rewarded for making loans. The extent to which the loans are used productively to improve the quality of life in the countries is a much less concern to the Bank. So when I headed a commission appointed by Congress, we recommended the replacement of many of these loans, especially to the poorest countries, with grants, but monitored grants. That is, the Bank would pay for performance. It would make sure that the country did what it said it was going to do," says Meltzer. 

    The International Monetary Fund has also been criticized for its lending policies and for losing focus of its primary mission over the years. In addition to securing the stability of the international monetary system, the Fund began to increase its short-term lending to nations in the 1970s.

    It has since been criticized for repeatedly bailing out bankrupt countries and contributing to Asia's financial crisis a decade ago and Argentina's economic collapse in 2001. Some analysts blame the IMF for deepening economic crises in countries like Thailand and South Korea, while advocates say things could have been a lot worse had it not been for the Fund's intervention.

    But Mark Weisbrot of the Washington-based Center for Economic Policy and Research says some of the IMF's policies have been ill-conceived. "Most recently in Africa, the IMF's independent evaluation office released a report showing that because of the IMF, from 1999 to 2005, these [African] countries were not allowed to spend seventy percent of their aid money, and a lot of this aid money was for health and urgent needs, and they couldn't spend it because the IMF made this decision. I give this example because that was kind of a disaster," says Weisbrot. 

    Lending Reforms

    Acknowledging that mistakes were made, especially in Asia, the 185 member IMF has embarked on a series of reforms to respond to demands to give its developing nation members more say in its operations. Few economists expect much progress on the voting issue. What is needed, says economist Mark Weisbrot, is more fundamental change that separates the two organizations' lending policies.

    "I would advocate making the World Bank separate from the IMF, which it formally is. There is nothing in the World Bank's charter that says they have to make any of their lending conditional on IMF conditions. And the U.S. congress could do this, and the European governments as well to say, 'As a condition of our money, we want the World Bank to be separate.' Now if they happen to agree with the IMF sometimes, that's fine. But they should not have it as a matter of policy that their lending depends on a country meeting IMF conditions," says Weisbrot.

    Six decades later, some experts argue that lending policies pursued by the World Bank and the International Monetary Fund are antiquated. And some critics say both organizations should be scrapped. But many analysts say the organizations have done some good and should be restructured as 21st century pools of expertise that focus on helping the world's poorest countries build better lives for their citizens.

    This story was first broadcast on the English news program, VOA News Now. For other Focus reports click here.

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Two-thirds of World Faces Water Shortagei
    X
    February 12, 2016 7:31 PM
    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Two-thirds of World Faces Water Shortage

    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Gateway to Mecca: Historical Old Jeddah

    Local leader Sami Nawar's family has been in the Old City of Jeddah for hundreds of years and takes us on a tour of this ancient route to Mecca, also believed to be the final resting place of Adam's wife, Eve.
    Video

    Video New Technology Aims to Bring Election Transparency to Uganda

    A team of recent graduates from Uganda’s Makerere University has created a mobile application designed to help monitor elections and expose possible rigging. The developers say the app, called E-Poll, will make Uganda's democratic process fairer. From Kampala, VOA's Serginho Roosblad reports.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video Russia Bristles at NATO Expansion in E. Europe

    Russian Foreign Minister Sergei Lavrov is meeting Friday with the head of NATO after the Western military alliance and the United States announced plans for the biggest military build-up in Europe since the Cold War. Russia has called NATO's moves a threat to stability in Europe. But NATO says the troop rotations and equipment are aimed at reassuring allies concerned about Russia as VOA's Daniel Schearf reports from Moscow.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.