Economic Governance: International Monetary Fund & World Bank (Edexcel A Level Politics): Revision Note

The role and significance of the International Monetary Fund

• The IMF is an intergovernmental organisation (IGO) which promotes globalisation

  • It was established in conjunction with the United Nations at the close of World War 2 to secure global financial stability

• 191 nation states are members of the IMF

  • They contribute financially based on their economic capacity

  • Higher contributing states have more voting power

• The IMF monitors and attempts to stabilise the global financial system

• It supports increased trade, economic growth and interconnectedness 

• It provides advice and financial assistance to states in the form of loans and aid

  • Loans come with conditions requiring the state to restructure its economy and focus on reducing debt and spending cuts 

    • For example, Argentina has received multiple IMF loans, including a recent $20 billion loan, making it the IMF’s most indebted country

    • These loans come with conditions that require structural economic reforms aimed at stabilising the economy

The role and significance of the World Bank

• The World Bank provides loans and policy advice to nation states

  • It was established in conjunction with the United Nations at the close of World War 2 to end extreme poverty 

• 189 nation-state members work together to help countries develop economically and socially 

• They emphasise sustainable development and often focus on projects which promote green technology

  • For example they have funded solar power projects in Bangladesh; agricultural reform projects in Türkiye and forestry management in Liberia

• Like the IMF, The World Bank also provides loans and imposes conditions

• Voting power and decision-making power are determined by a state’s wealth

Voting power in the World Bank

Criticism of the IMF and World Bank

• Some argue that the IMF and the World Bank are  controlled by wealthy states, as the higher-contributing states

  • They have more voting power and a greater say in decision-making.

• Some say loans issued come with harsh conditions and expectations which infringe upon state sovereignty