I'm sorry, I know I am inundating the site with posts but I'm playing news catch up here. I haven't read my forums and posts for about a week and I am VERY far behind.
This particular post is something that we should all be aware of.
I found the information fascinating and quite useful in the grand scheme of things. I hope you enjoy it too.
-Laura, whereabouts
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The World Bank and the International Monetary Fund (IMF) are key bodies within the global economy that provide loans.

The
World Bank’s focus is on community development, while the IMF’s role is
to stabilise global economic systems and monitor the world’s
currencies.

Both institutions – created at the end of World
War II to help rebuild Europe – are extremely important and powerful.
But despite this, many people don’t know much about them.

The International Monetary Fund
The
IMF provides financial assistance to members facing short-term crises
and promotes economic stability and growth within these countries. It
currently has 184 member countries.

The World Bank
The
World Bank is not a traditional bank, rather it is a specialised agency
linked to the United Nations. Its mission is to help reduce global
poverty.

The World Bank also has 184 members. Once a
country is a member of the World Bank, it can obtain loans to finance
development projects.





Development
of countries takes large amounts of money for infrastructure like
roads, dams and ports, or to develop new industries that will provide
employment.

Often the world’s poorest countries can’t afford
to borrow the amounts needed on the international financial market, so
they can approach the International Monetary Fund (IMF) or World Bank
for assistance.

Being able to get these loans is very important to most developing countries – but they come with conditions.

Obtaining Loans
A poor country must agree to conditions like economic restructuring before the IMF will provide it with a loan.

These
measures are intended to eliminate inefficient government-run
enterprises, help enable a country to pay off its foreign debt and
assure other governments that the country is a safe place to invest.
However there is controversy about their real effects.

Restructuring requires the government of the developing country to:

• increase taxes and reduce government spending


• privatise its public enterprises, including water, electricity and telecommunications


• liberalise
  financial operations by removing restrictions and allowing foreign
  banks and businesses to buy, own and operate businesses within the
  country.

Countries need to have made sufficient progress in such ‘reforms’ before they are eligible for loans for development projects.




The
economic changes demanded by the IMF are supposed to help a country
improve its economy. But in practice they often increase the hardship
of the poorest people.

Basic rights and services can suffer
Cuts
in government spending usually result in schools, hospitals and health
clinics charging for their services. The poorest people can’t afford to
pay, and so lose access to medical care and education.

Likewise,
when services like water and electricity are privatised and government
subsidies are removed, many can’t afford to pay for them.

Foreign investment can be positive if it stimulates a country’s economy. However there are problems.

The
wages paid by global corporations in poor countries are usually kept
low to reduce costs. Conditions for workers can be unsafe or hazardous.


With few environmental standards in place, foreign companies
can exploit natural resources and damage the environment. The effects
of this are usually felt most by the poorest people, who may rely on
rivers or forests for their livelihood.

Left with less to produce own food
Poor
countries have been encouraged by the IMF to develop their economy
through the export of commodities like cotton, coffee and minerals,
rather than more valuable processed goods.

However, falling global commodity prices make selling these products less profitable for poor countries.

The
pressure to produce commodities also means poor countries have to use
more and more land to produce commodities which are earning less money.


This leaves a country with less land to grow food for its own
people. Even worse, poor countries can end up having to import food
they once grew themselves.

Making decisions
Voting on decisions in the IMF and the World Bank isn’t a simple matter of ‘one country, one vote’.

While
all member countries have the same minimum number of votes, countries
get additional votes based on how much money they have contributed to
the IMF and World Bank, and how strong their economies are globally.

This
means that the wealthiest countries have the most votes, even though it
is poor countries that are affected most by the decisions.

Seven
rich countries (the United States, the United Kingdom, Japan, Germany,
France, Canada and Italy) hold 45 percent of voting power at the IMF
and 40 percent at the World Bank.

As a result, their interests
are served, rather than the interests of the poorest people who these
institutions are supposed to be helping.

A decision needs an
85 percent majority to be passed, but since the United States holds
around 17 percent of the vote, it can veto any decision it does not
support, even if all 183 other countries support it.





Both the World Bank and the IMF have acknowledged problems with their policies and have responded to many of them.

For
instance the World Bank is changing its practices so that it can better
fulfil its mission to help reduce poverty. It is beginning to assess
the environmental and social effects of its policies. It is providing
interest-free loans or grants to some of the world’s low-income
countries, and is working to reduce the debt burden of the world’s poorest countries.

The Bank and the IMF have both signed on to the Millennium Development Goals,
a serious international attempt to halve extreme poverty by 2015. These
institutions have great power to help achieve this – but only if they
ensure their policies are genuinely helping the poorest countries to
develop.