Understanding IMF and the World Bank.

Byline: Muhammad Nadeem Malik

"It's your world", the motto of the United Nations (UN) embodies the importance of the unity of the nations to advance peace and prosperity. The death and destruction caused by the World Wars led the global community to sit together and deliberate on the ways to ensure global peace. This paved the way for the establishment of the United Nations Organization in 1945. One of the four objectives of the UN is "Fostering cooperation between nations in order to solve economic, social, cultural, or humanitarian international problems". This shows that solving economicproblems of the member countries is also the joint responsibility if the global community represented in the UN.

Each country has a unique geographic location, geo political situation and available natural resources. As such, every country has its own distinctive economic set up and face different set of economic problems and issues. Due to globalization and international trade, the modern world especially its economies have become interdependent. Economic recession in one country or the region can create financial ripples travelling across the globe economy and can adversely affect the global economic system. To check this adverse economic effect and ensure better global economy, the world community has established various organizations to help and strengthen the struggling economies to minimize the contagious effects of economic meltdowns. IMF and World Bank are the two most important organizations in this regard.

IMF and World Bank are functioning across the world providing help and assistance to all the countries facing financial restraints to come out of economic shambles. However, their role in developing countries has always been suspected and questioned. Moreover, most of the people generally confuse IMF and World Bank being two names for the same organization. The basic purpose of this article is to help the readers understand the difference between IMF and World Bank and to review the criticism these organizations generally face, especially in Pakistan.

Let us start with their globally acknowledged characterizations explained on their respective websites.

The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The World Bank is a...