The Role of IMF and The World Bank in helping countries to overcome Essay

The Role of IMF and The World Bank in helping countries to overcome their economic problems - Essay Example This paper describes the activities, performed by the IMF and the World Bank, in order to ensure sustainable growth of the world economy, financial stability and to reduce to some degree negative developments, such as poverty and unemployment. The issue of global economy is no doubt a critical element in today`s world. An economy is essential in micro and macro levels in order to sustain communities. In order to sustain the financial well-beings of countries, banks have been established to facilitate the process of a healthy economy. The World Bank and IMF are two of the largest institutions that are a critical component towards the vitality of underdeveloped countries. The IMF ensures the stability of the global finance system by regulating exchange rates, analyzing devaluations, and overseeing balance of payments.The IMF works on a â€Å"quota basis† in which a nation’s contributions are based on its weight in the international economy. The more â€Å"quotas† that a nation possesses the more borrowing capacity it has. Under-developed countries are able to seek and receive aid. The Consumer Price Index (CPI) enables the World Bank to examine the financial being of the well-being of the nation that is in need of assistance. The Bank also has a sub-committee known as the International Development Association. The IDA facilitates the bank process of allocating resources to certain programs. The aim of the bank is to use CPI in order to assess how conductive a country’s policy and institutional framework.