Hostname: page-component-76fb5796d-22dnz Total loading time: 0 Render date: 2024-04-26T13:38:51.403Z Has data issue: false hasContentIssue false
  • English
  • Français

The changing relationship between the World Bank and the International Monetary Fund

Published online by Cambridge University Press:  22 May 2009

Richard E. Feinberg
Richard E. Feinberg
Affiliation:
Vice President of the Overseas Development Council in Washington, D.C.
Get access

Abstract

The World Bank and the International Monetary Fund have been bedeviled since their common creation over how to define their areas of specialized competence and how to interact in areas of overlapping jurisdiction. The multiple shocks that have destabilized the global economy over the last two decades have stimulated the Bank and Fund to alter fundamentally their programs and approaches, often without fully taking into account their relation to the work of the other Bretton Woods agency.

The Fund's traditional focus on short-term stabilization, correcting external account imbalances, and fighting inflation, contrasted with the World Bank's provision of long-term funds for investment in capital-intensive projects. But more recently, with the establishment of the IMF's Extended Fund Facility and the Bank's structural adjustment lending, both institutions share the objective of adjustment with growth, and each claims some responsibility for an extremely wide range of policy instruments. The new Structural Adjustment Facility, in particular, has the potential to link more tightly decision-making on Fund stand-by arrangements and Bank structural adjustment lending, increasing the probability of new forms of cross-conditionality—termed here consultative cross-conditionality, interdependent cross-conditionality, and indirect financial linkage.

The Bank and Fund need to find ways to better delineate and manage their new relationship. Problems that should be addressed to do so include proper modes of collaboration between Bank and Fund staff, issue specialization, the avoidance of piling on excessively detailed performance requirements, and decisions on ineligibility. Enhanced cooperation between the Bank and Fund can not only produce more coherent adjustment programs, but can also help to mobilize other sources of official and private capital.

Type
Articles
Information
International Organization , Volume 42 , Issue 3 , Summer 1988 , pp. 545 - 560
Copyright
Copyright © The IO Foundation 1988

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. Horsefield, J. Keith, ed., The International Monetary Fund 1945–65: Twenty Years of International Monetary Cooperation (Washington, D.C.: IMF, 1969), vol. 3, p. 39Google Scholar.

2. Oliver, Robert W., International Economic Co-operation and the World Bank (New York: Holmes and Meier, 1975), Appendix A, pp. 297–98Google Scholar. Interestingly, in this 1941 draft White gave the Bank the power to make short-term as well as long-term loans.

3. Ibid, pp. 298–99.

4. Horsefield, , International Monetary Fund 1945–65, pp. 14–15Google Scholar.

5. Moggridge, Donald, ed., The Collected Writings of John Maynard Keynes, Vol. XXVI Activities 1941–46 (London: MacMillan, 1980), p. 194Google Scholar.

6. American Bankers Association, Practical International Financial Organization Through Amendments to Bretton Woods Proposals, 02 1, 1945Google Scholar. As cited in Dell, Sidney, “The Question of Cross-Conditionality,” mimeo, 06 1986, note 20Google Scholar.

7. IMF, Articles of Agreement, Article X; and World Bank, Articles of Agreement, Article V, Section 8.

8. Cited in Mason, Edward S. and Asher, Robert E., The World Bank Since Bretton Woods (Washington D.C.: Brookings Institution, 1973), p. 551Google Scholar.

9. Cited in Gold, Joseph, “The Relationship between the International Monetary Fund and the World Bank,” Creighton Law Review 15 (1981–1982), p. 514, note 57Google Scholar.

10. IMF, Selected Decisions of the International Monetary Fund (Washington, D.C.: IMF, 1981), ninth issue, pp. 26–27Google Scholar.

11. World Bank, Annual Report 1980 (Washington, D.C.: World Bank), pp. 67–68Google Scholar.

12. Kahn, Moshin S.Knight, and Malcolm D., Fund-Supported Adjustment Programs and Economic Growth (Washington, D.C.: IMF, 1985), Occasional Paper No. 41, p. 4Google Scholar.

13. Ibid., tables 2, 3 and 7.

14. A review of some of the main issues can be found in Hino, Hiroyuki, “IMF-World Bank Collaboration,” Finance and Development 23 (09 1986), pp. 10–14Google Scholar.

15. IMF Survey, 28 October 1985, p. 309, para. 9(b).

16. IMF Survey, September 1985, p. 14, para. 137.

17. Dell, , “Question of Cross-Conditionality,” p. 6Google Scholar. Dell notes that in deriving this definition he sought the views of Joseph Gold, the Fund's former general counsel and director of the legal department.

18. World Bank News, “Sector Adjustment Lending,” Special Report, April 1986, p. 11.

19. IMF Survey, 31 March 1986, p. 109.

20. IMF Survey, 21 April 1986, p. 121.