mou between ISA & World Bank, World Bank makes loans for both policy reforms and projects, the IMF concerns itself with policies alone. It provides loans to member countries that have a short-term, problem meeting their foreign payments
requirements (World Bank, 2002d). world bank has entered into mou with international solar alliance(ISA) of $1trillion for increasing solar power around the world. ISA headquarter in INDIA
mou between ISA & World Bank
The World Bank and the IMF have had much influence in shaping development since the
second half of the twentieth century. Immediately after the Second World War (WWII), world
leaders saw a need for international cooperation in order to rebuild the devastated countries in
Europe. In 1944, in Bretton Woods, New Hampshire, the World Bank Group was founded to
fund the reconstruction of Europe, and later, to assist developing countries. It consists of five
closely associated institutions, including the International Bank for Reconstruction and
Development (IBRD) and the International Development Association (IDA). These two
organizations are commonly referred to as the World Bank. The World Bank is one of the
world’s largest sources of development assistance. There are currently 183 member countries.
Voting power is linked to members’ shares, which in turn are based on each country’s relative
economic strength (World Bank 2002a).
In fiscal year 2001, it lent U.S. $17 billion to its member countries (World Bank 2002b).
The World Bankís stated goal is to reduce poverty around the world (World Bank
2002b). It gets money from the worldís capital markets, and IDA funds also come from
contributions from some of the wealthier member governments. The IBRD accounts for over
50% of World Bank lending. It sells bonds and securities to pension funds, insurance companies,
banks, private corporations, and individuals. The IBRD lends with commercial interest, and the
loans must be repaid within 15-20 years, usually with a 3-5 year grace period before repayment
of the principal. The IDA was established in 1960 for countries too poor to borrow at
commercial interest rates and gives interest-free loans (World Bank 2002c).
The International Monetary Fund
The IMF was established in 1946 in order to maintain global economic stability. It aims
to promote international monetary cooperation, exchange stability, and orderly exchange
arrangements (IMF 2002). The IMF is the central institution of the international monetary
system. It is not a development agency, but a source of loans of last resort in order to achieve
short-term stability. It is a member organization, and countries pay substantial amounts to have a
ìlife insuranceî policy for their economies. It is organized as a cluster of funds, called
ìfacilities,î and aims to prevent crises by promoting ìsound economic policiesî (IMF 2002).
Also, the IMF serves as a fund for member countries needing temporary financing in order to
address balance of payments problems.
The Relationship Between the World Bank and the IMF
Membership to the World Bank is open to all countries that are members of the IMF.
However, the World Bank and the IMF are complementary, but independent, institutions. The
IMF was conceived as an adjustment institution, while the World Bank was designed to be a
development institution. At first, their roles were clearly demarcated: the World Bank was to
finance long-term projects to promote development, and the IMF was to provide short-term
balance of payment loans to cover temporary deficits (Williamson 1982:21). Their roles began to
blur after 1974, when world events led to major debts worldwide, which required major
structural change. Ever since, both organizations have reached into each otherís territory
While the World Bank makes loans for both policy reforms and projects, the IMF
concerns itself with policies alone. It provides loans to member countries that have a short-term
problem meeting their foreign payments requirements (World Bank, 2002d). While the Bank
lends only to developing or itransitioni countries, any member country can seek aid from the IMF.