85  International Financial Institutions — IMF and World Bank

85.1 Bretton Woods System

The Bretton Woods Conference (July 1944) at Mount Washington Hotel, New Hampshire, established the post-war international monetary order, creating the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, World Bank). The chief architects were John Maynard Keynes (Britain) and Harry Dexter White (USA).

85.2 International Monetary Fund (IMF)

TipIMF basics
  • Founded: 1944 (operational 1947).
  • HQ: Washington D.C.
  • Members: 190.
  • Purpose: monetary cooperation, exchange stability, balance-of-payments support.
  • Quota system — capital subscription.
  • SDR (Special Drawing Right, 1969) — IMF reserve asset.
  • Managing Director: Kristalina Georgieva (since 2019).
  • Indian quota share: ~2.75 % (post 2010 reforms).
  • First Deputy MD: Gita Gopinath (former Chief Economist).

85.3 IMF Functions

TipThree functions of IMF
  • Surveillance — annual Article IV consultations.
  • Lending — to countries with BoP crises.
  • Capacity Development — training, technical assistance.

85.4 IMF Lending Facilities

TipIMF lending instruments
  • Stand-By Arrangement (SBA) — short-term BoP support.
  • Extended Fund Facility (EFF) — structural adjustment, longer.
  • Flexible Credit Line (FCL) — for strong economies (Mexico, Colombia).
  • Precautionary and Liquidity Line (PLL).
  • Rapid Financing Instrument (RFI) — emergencies.
  • Resilience and Sustainability Trust (RST, 2022) — climate/pandemic.
  • PRGT — for low-income countries.
  • SDR Allocation — last major one $650 bn in 2021.

85.5 IMF Publications

TipFlagship publications
  • World Economic Outlook (WEO) — twice yearly.
  • Global Financial Stability Report (GFSR).
  • Fiscal Monitor.
  • External Sector Report.
  • Regional Economic Outlooks.

85.6 India and IMF

TipIndia’s IMF engagement
  • Founding member 1945.
  • Borrower in 1981 BoP crisis and 1991 BoP crisis (Rs 47 to USD; gold pledged).
  • Now contributor; net lender via NAB.
  • 1991 IMF SBA was the trigger for liberalisation reforms.
  • India advocates for quota reform — emerging-market voice.

85.7 World Bank Group

TipWorld Bank Group — 5 institutions
Institution Founded Focus
IBRD 1944 Middle-income & creditworthy countries
IDA 1960 Poorest countries; concessional
IFC 1956 Private-sector investment
MIGA 1988 Political risk insurance
ICSID 1966 Investment dispute settlement

85.8 World Bank Basics

TipWorld Bank highlights
  • HQ: Washington D.C.
  • President: Ajay Banga (Indian-American, since June 2023).
  • Members: 189 (IBRD).
  • Funding sources: IBRD bond issuance; IDA donor replenishments.
  • Voting: USA largest shareholder (~16 %).
  • Mission: Reduce poverty, build shared prosperity.
  • Twin goals (2013): end extreme poverty by 2030; promote shared prosperity (bottom 40 %).
  • 2024 mission update: “creating a world free of poverty on a liveable planet”.

85.9 World Bank Lending

TipWB lending instruments
  • Investment Project Financing (IPF).
  • Development Policy Financing (DPF).
  • Program-for-Results (PforR).
  • Multiphase Programmatic Approach (MPA).
  • Climate Investment Funds.
  • Trust funds.

85.10 Other International Financial Institutions

TipOther key IFIs
  • Bank for International Settlements (BIS) Basel (1930) — central banks’ bank.
  • Asian Development Bank (ADB) Manila (1966).
  • African Development Bank (AfDB) Abidjan (1964).
  • European Bank for Reconstruction and Development (EBRD) London (1991).
  • Inter-American Development Bank (IDB) Washington (1959).
  • Asian Infrastructure Investment Bank (AIIB) Beijing (2016) — China-led; India 2nd largest shareholder.
  • New Development Bank (NDB) Shanghai (2015) — BRICS bank; India hosts Africa region.
  • Islamic Development Bank (IsDB) Jeddah (1975).
  • OPEC Fund (OFID) Vienna.
  • G20 / Financial Stability Board.

85.11 BRICS NDB

TipNew Development Bank (NDB)
  • Founded 2015 by BRICS countries.
  • HQ Shanghai.
  • President rotation; K.V. Kamath (India) was first president.
  • Capital base $100 bn.
  • Funds infra and sustainable development.

85.12 SDRs (Special Drawing Rights)

TipSDR basics
  • Created 1969.
  • IMF’s international reserve asset.
  • Valued against basket: USD, EUR, CNY (since 2016), JPY, GBP.
  • General SDR Allocation 2021 — $650 bn.
  • Not a currency; a claim on currencies.

85.14 Practice Questions

Q 01Bretton WoodsEasy

Bretton Woods Conference was held in:

  • A1944
  • B1945
  • C1947
  • D1950
View solution
Correct Option: A
July 1944, New Hampshire.
Q 02IMF HQEasy

IMF headquarters is in:

  • AWashington D.C.
  • BNew York
  • CGeneva
  • DParis
View solution
Correct Option: A
Washington D.C.
Q 03SDRMedium

SDR was created in:

  • A1969
  • B1944
  • C1976
  • D2016
View solution
Correct Option: A
Special Drawing Right (1969).
Q 04SDR basketHard

Yuan (CNY) joined SDR basket in:

  • A2016
  • B2008
  • C1999
  • D2020
View solution
Correct Option: A
CNY added October 2016.
Q 05BangaMedium

Current World Bank President is:

  • AAjay Banga
  • BDavid Malpass
  • CKristalina Georgieva
  • DGita Gopinath
View solution
Correct Option: A
Ajay Banga (Indian-American), since June 2023.
Q 06KeynesHard

British architect of Bretton Woods was:

  • AJ.M. Keynes
  • BHarry White
  • CHayek
  • DFriedman
View solution
Correct Option: A
John Maynard Keynes.
Q 07IDAMedium

IDA (1960) lends to:

  • APoorest countries
  • BPrivate firms
  • CMiddle-income only
  • DDonor countries
View solution
Correct Option: A
International Development Association — concessional.
Q 08AIIBMedium

AIIB was founded by:

  • AChina-led, 2016
  • BIndia 2015
  • CG7
  • DADB
View solution
Correct Option: A
Asian Infrastructure Investment Bank, Beijing 2016; India is 2nd largest shareholder.
Q 09NDBHard

BRICS New Development Bank is HQ in:

  • AShanghai
  • BMumbai
  • CBeijing
  • DJohannesburg
View solution
Correct Option: A
Shanghai, 2015.
Q 10India 1991Medium

India's 1991 BoP crisis triggered IMF:

  • AStand-By Arrangement
  • BPRGT
  • CRFI
  • DRST
View solution
Correct Option: A
SBA + reform package; gold pledged.
Q 11GopinathHard

Gita Gopinath holds which IMF position:

  • AFirst Deputy MD
  • BPresident
  • CDirector Asia
  • DDirector GFSR
View solution
Correct Option: A
First Deputy MD since 2022.
Q 12BISHard

Bank for International Settlements is in:

  • ABasel
  • BFrankfurt
  • CGeneva
  • DBrussels
View solution
Correct Option: A
Basel, Switzerland; founded 1930.
Q 13WEOMedium

World Economic Outlook is published by:

  • AIMF
  • BWorld Bank
  • CUNCTAD
  • DWTO
View solution
Correct Option: A
IMF flagship, twice yearly.
Q 14RSTHard

IMF's RST (2022) is for:

  • AClimate and pandemic resilience
  • BCurrency stabilisation
  • CSME lending
  • DFDI promotion
View solution
Correct Option: A
Resilience & Sustainability Trust.
Q 15MatchHard

Match WB Group:

(i) IBRD (a) Political risk insurance
(ii) IDA (b) Investment disputes
(iii) MIGA (c) Poorest
(iv) ICSID (d) Middle-income
  • A(i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
  • D(i)-(c), (ii)-(a), (iii)-(b), (iv)-(d)
View solution
Correct Option: A
IBRD—Middle income; IDA—Poorest; MIGA—Political risk; ICSID—Investment disputes.

85.14.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: IMF lends for short-term BoP support.
R: World Bank lends for long-term development projects.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: B
S 1Statement-basedMedium

WB Group institutions: (i) IBRD. (ii) IDA. (iii) IFC. (iv) MIGA. (v) ICSID.

  • AAll five
  • B(i), (ii), (iii) only
  • C(iv) and (v) only
  • D(i) only
View solution
Correct Option: A
S 2Statement-basedHard

SDR basket currencies: (i) USD. (ii) EUR. (iii) CNY. (iv) JPY. (v) GBP.

  • AAll five (since 2016)
  • B(i), (ii), (iii) only
  • C(iv) and (v) only
  • D(i) only
View solution
Correct Option: A

85.15 Quick Recall

ImportantQuick recall
  • Bretton Woods (1944) — Keynes (UK) + Harry Dexter White (US); created IMF + IBRD.
  • IMF: 190 members; Washington DC; MD Kristalina Georgieva (since 2019); First Deputy MD Gita Gopinath.
  • IMF functions: Surveillance · Lending · Capacity Development.
  • IMF facilities: SBA · EFF · FCL · PLL · RFI · RST (2022) · PRGT · SDR allocation ($650 bn 2021).
  • SDR (1969) basket: USD, EUR, CNY (since 2016), JPY, GBP.
  • IMF flagships: WEO · GFSR · Fiscal Monitor · External Sector Report.
  • India: founder; 1981 + 1991 SBA → liberalisation.
  • World Bank Group: IBRD (1944), IDA (1960), IFC (1956), MIGA (1988), ICSID (1966); HQ Washington DC; President Ajay Banga (2023).
  • WB lending: IPF · DPF · PforR · MPA · CIF.
  • Other IFIs: BIS Basel 1930 · ADB Manila 1966 · AfDB · EBRD · IDB · AIIB Beijing 2016 (India 2nd) · NDB Shanghai 2015 (BRICS, Kamath first president) · IsDB.
  • Modern: climate finance · pandemic preparedness · CBDC research · MDB reform (Bridgetown) · Common Framework · de-dollarisation · G20 India presidency 2023.