World Bank V/S International Monetary FundDifference between functions of World Bank and IMF :- Deep Khandelwal

Functions Of World Bank :-

To provide long-run capital to member countries for economic reconstruction and development.

To induce long-run capital investment for assuring Balance of Payment (BOP) equilibrium and balanced development of international trade.

Bank grants loan to a member country up to 20% of its share in the paid-up capital.

The quantities of loans, interest rate and terms and condition are determined by the bank itself.

To ensure the implementation of development project so as to bring about a smooth transference from a war-time to peace economy.

To promote capital investment in member countries by following ways:-

(a) To provide guarantee on private loans (b) IBRD provide loans for productive activities on considerate conditions.

Functions Of IMF :-

IMF main function is to purchase and sell the member countries currencies.

If any country is facing adverse balance of payment, it can get short term credit from the fund to clear the debt.

The IMF allows the country to purchase foreign currency in exchange for its own currency up to 75% of its quota plus an addition 25% each year. The max. limit is 200% (special circumstances).

If the demand of any particular country currency increases and its stock with IMF falls below 75% of its quota, the IMF can declare it scare.

But IMF also tries to increase its supply by Purchasing or borrowing.

The main aim of IMF is to promote exchange stability among the member countries. So it advises the member countries to conduct  exchange transactions at agreed rates.

Counties can change exchange rate without the consent of the IMF but it should not be more than 10%.

The country can not change the exchange rate if IMF does not allow.

When the devaluation policy is indispensable or any country then IMF provides loan to correct the balance of payment of that country.

Conclusion

Difference between functions of World Bank and IMF

International Monetary Fund World Bank

Oversees the international monetary system.

Promotes exchange stability and orderly exchange relations among its member countries.

Draws its financial resources principally from the quota subscriptions of its member countries.

Seeks to promote the economic development of the world's poorer countries.

Assists developing countries through long-term financing of development projects and programs.

Acquires most of its financial resources by borrowing on the international bond market.

International Monetary Fund World Bank

Provide loans to the countries up to 75% of there quota in IMF.

So, basically it works as the controller of currency exchange rate & helps countries in maintaining BOP.

Provide loans to the countries up to 20% of there paid-up capital in World bank.

So, basically it works as a bank which provide long-term loans & helps countries in developing item selfs.