The IMF and World Bank

Creative ways to not help developing countries

Promotes long-term development and poverty reduction

Works on specific projects, like building schools, providing water/electricity etc.

Get funding through selling bonds, interest on loans and member nations contributions

The World Bank

What benefits would the World Bank have over individual countries giving aid?

What are some disadvantages to a World Bank giving aid?

Discussion

When individual countries give aid it is rarely altruistic, US food aid is used to subsidize US farmers

Water Wars in Bolivia caused by the World Bank

Problems

World Bank wouldn't renew a $25 million loan to Bolivia unless they privatized water service in certain regions

Reason was the local government was not capable of creating an efficient water service

Rates increased 35% and communal wells were given metres

Bolivia

How else could the project be salvaged?

What would be reasonable conditions to attach to aid?

In the Bolivian case since there was little return on the loan, privatization was seen as an alternative

Discussion

Help countries to build and maintain strong economies

Provides short term loans so that countries can pay their debts (see Greece)

Gets funds from member nations and interest on loans

International Monetary Fund (IMF)

With these loans there is usually economic conditions that the recipient country must follow

Usually include trade liberalization, deregulated financial sector and privatization

In 1982 Mexico defaulted on its loans, the IMF loan included a SAP, as a result the economy was stagnant for 10 years

SAPs

What are the consequences when a country defaults on their loans?

Who is the IMF really serving?

Discussion