IMF and WB (not the tv station, the bank)

The International Monetary Fund (IMF), located in Washington D.C., U.S.A. and now comprised of 186 member-states, oversees the global financial system and promotes (arguable) healthy macroeconomic goals.  Established at the famed Bretton Woods conference in 1944, the IMF's "primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to buy goods and services from each other [which]...is essential for sustainable economic growth, increasing living standards, and alleviating poverty".  According to The Economist web site, the IMF responded to the breakdown of the Bretton Woods exchange rate regime by "bec[oming] more involved with its member countries’ economic policies, doling out advice on fiscal policy and monetary policy as well as microeconomic changes such as privatization of which it became a forceful advocate" and continued "in the 1980s, it played a leading part in sorting out the problems of developing countries’ mounting debt."   "More recently," the web site reads, the IMF "has several times coordinated and helped to finance assistance to countries with a currency crisis". 

Here are some "Fast Facts" about the IMF.

The World Bank, also headquartered in Washington, D.C. and born from Bretton Woods, focuses on giving loans to LEDCs (and others in crisis) as a sort of international lender of last resort.  "Collectively", the Economist web site states, "it aims to promote economic development in the world’s poorer countries through advice and long-term lending, averaging $30 ­billion a year, spread around 100 countries."  The World Bank (the International Bank for Reconstruction and Development International Development Association - IDA) is NOT the World Bank Group (the World Bank two plus the International Finance Corporation - IFC, the Multilateral Investment Guarantee Agency - MIGA, and the International Centre for Settlement of Investment Disputes - IBRD and the -ICSID).

Again, intuitively, this sounds great!  What could go wrong?

From The Economist web site:

"Critics of the World Bank say that it often worsens the problems facing developing countries. Its advice has often been guided by economic fashion, which led it to support a centrally planned brand of development economics in the 1960s and 1970s, before switching to privatization and structural adjustment in the 1980s and then to promoting democracy and economic transparency, and attacking crony capitalism, in the late 1990s. Until recently, it has generally supported big, ­high-profile projects rather than more economically useful smaller schemes. It has often failed to ensure that its loans have been spent on the intended project. Its willingness to pump money into struggling countries creates a potential moral hazard, in which politicians may have little incentive to govern well because they believe that, if they do a bad job, the World Bank will come to the rescue. The increase in private-sector lending to and investment in emerging markets has led to growing discussion of whether the World Bank is any longer needed."

So what is this structural adjustment (SAPs) with "conditionalities" used by both the IMF and WB?  Basically, the former aims to change the structure of the economy via policy changes and the latter are the strings attached to (sometimes enormous) loans.  Obviously, if countries must do x, y and z to get the loans, there are going to be debates as to whether or not these required structural adjustments are best for the countries (and to what extent they help economic agents in MEDCs). 

This link provides a fairly comprehensive overview of SAPs and "conditionalities" in words other than my own or through a source I usually cite.