Role of IMF, World Bank, ADB, AIIB
🟠 Topic 97: Role of IMF, World Bank, ADB, AIIB
📌 Introduction
The International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB), and Asian Infrastructure Investment Bank (AIIB) play crucial roles in global economic stability, poverty alleviation, infrastructure financing, and regional development. Each institution has its distinct mandate, structure, and operational focus, collectively shaping global economic governance.
🔹 International Monetary Fund (IMF)
📖 Origin and Objective
✔️ Established in 1944 at the Bretton Woods Conference.
✔️ Objective: To ensure global monetary cooperation, exchange rate stability, and facilitate balanced growth of international trade.
Key Functions
| Function | Description |
|---|---|
| Surveillance | Monitors global economic trends and advises countries |
| Financial Assistance | Provides loans to countries facing balance of payments crises |
| Capacity Development | Offers technical assistance and training |
Special Drawing Rights (SDRs)
✔️ SDR is the IMF’s reserve asset, based on a basket of currencies: USD, EUR, CNY, JPY, GBP.
Role in India
✔️ Extended Fund Facility (1991) to India during the BoP crisis.
✔️ Technical assistance for fiscal reforms and statistical systems.
🔹 World Bank
📖 Origin and Objective
✔️ Established in 1944 along with IMF.
✔️ Objective: To provide long-term development finance for reducing poverty and supporting infrastructure development.
Key Institutions under World Bank Group
| Institution | Focus |
|---|---|
| IBRD (International Bank for Reconstruction and Development) | Loans to middle-income countries |
| IDA (International Development Association) | Concessional loans to low-income countries |
| IFC (International Finance Corporation) | Private sector investments |
| MIGA (Multilateral Investment Guarantee Agency) | Political risk insurance |
World Bank Focus Areas
✔️ Poverty alleviation.
✔️ Infrastructure development – roads, power, water.
✔️ Social sectors – health, education, rural development.
✔️ Climate change adaptation.
Role in India
✔️ India is the largest recipient of World Bank funding.
✔️ Key projects: Rural roads (PMGSY), Swachh Bharat Mission, Clean Ganga Project.
🔹 Asian Development Bank (ADB)
📖 Origin and Objective
✔️ Established in 1966, headquartered in Manila, Philippines.
✔️ Objective: To promote economic and social development in Asia-Pacific.
Key Functions
| Function | Description |
|---|---|
| Sovereign Lending | Loans to governments for infrastructure |
| Non-Sovereign Lending | Private sector financing |
| Technical Assistance | Policy advice, project preparation |
Sectors Covered
✔️ Transport (roads, railways, ports).
✔️ Energy (renewables, grid modernisation).
✔️ Urban infrastructure (water supply, waste management).
✔️ Climate resilience.
Role in India
✔️ Total assistance to India: Over $50 billion.
✔️ Key projects: ✔️ Delhi-Meerut RRTS corridor.
✔️ Solar power projects in Rajasthan.
✔️ Smart cities and urban water supply.
🔹 Asian Infrastructure Investment Bank (AIIB)
📖 Origin and Objective
✔️ Established in 2016, headquartered in Beijing, China.
✔️ Objective: To finance infrastructure development in Asia, with emphasis on sustainable development.
Key Features
✔️ Member-driven governance, 109 members.
✔️ Focus on green infrastructure, cross-border connectivity, digital infrastructure.
✔️ Works with World Bank, ADB, and private sector.
Role in India
✔️ India is the largest borrower from AIIB.
✔️ Key projects: ✔️ Rural roads and power transmission in Andhra Pradesh.
✔️ Mumbai Metro expansion.
✔️ COVID-19 emergency response funding.
Comparison Chart – WordPress HTML Code
🔹 Collective Role in Global Economy
| Institution | Primary Role |
|---|---|
| IMF | Macroeconomic stability |
| World Bank | Poverty reduction & infrastructure |
| ADB | Regional development in Asia |
| AIIB | Sustainable infrastructure finance |
🔹 Key Challenges Faced
1️⃣ Geopolitical Tensions
✔️ Competition between US-led World Bank and China-led AIIB.
2️⃣ Climate Finance Gap
✔️ Developing countries need over $1 trillion annually for climate goals – existing institutions fall short.
3️⃣ Project Delays
✔️ Complex approval processes delay project implementation.
4️⃣ Debt Sustainability
✔️ Excessive borrowing risks debt distress in developing countries.
5️⃣ Inclusiveness
✔️ Poorer nations demand greater voice in governance structures (quota reforms at IMF).
🔹 Way Forward
✔️ Enhance climate finance instruments (green bonds, blended finance).
✔️ Simplify project approval processes.
✔️ Strengthen debt sustainability frameworks.
✔️ Promote public-private partnerships (PPPs) for infrastructure.
✔️ Reform governance to give greater voice to developing nations.
📚 Practice MCQs
1️⃣ Which institution was created at the Bretton Woods Conference in 1944?
✅ Options:
(a) ADB
(b) AIIB
(c) IMF
(d) BRICS Bank
2️⃣ Which of the following provides concessional loans to low-income countries?
✅ Options:
(a) IFC
(b) IBRD
(c) IDA
(d) AIIB
3️⃣ Which country hosts the headquarters of ADB?
✅ Options:
(a) China
(b) Japan
(c) Philippines
(d) India
4️⃣ India is the largest borrower from which of the following institutions?
✅ Options:
(a) IMF
(b) World Bank
(c) AIIB
(d) BRICS Bank
