International Financial Institutions:

The international financial institutions (IFIs) are financial

institutions that have been established (or chartered) by more
than one country, and hence are subjects of international law.
Their owners or shareholders are generally national governments,
although other international institutions and other organizations
occasionally figure as shareholders. The most prominent IFIs are
creations of multiple nations, although some bilateral financial
institutions (created by two countries) exist and are technically
IFIs. The best known IFIs were established after World War II to
assist in the reconstruction of Europe and provide mechanisms for
international cooperation in managing the global financial system.

International financial institutions (IFIs) are institutions that

provide financial support (via grants and loans) for economic and
social development activities in developing countries.
International financial institutions include public banks, such as
the World Bank, International Monetary Fund, and regional
development banks. They provide loans, grants, and technical
assistance to governments, as well as loans to private businesses
investing in developing countries. They also play a significant role
in the privatization and regulation of public utilities and natural
resources.

Today, the world's largest IFI is the European Investment

Bank, with a balance sheet size of Euros 512 billion in 2013. This
compares to the two components of the World Bank, the IBRD
(assets of $358 billion in 2014) and the IDA (assets of $183 billion
in 2014). For comparison, the largest commercial banks each
have assets of c.$2,000-3,000 billion.

Common goals of international financial institutions:

To improve global poverty and improve people living

conditions and standards.
 To support sustainable economic, social and institutional
development.

To promote regional cooperation and integration.

Types of international financial institution:

IMF

World bank

Asian development bank

Islamic development bank

International monetary fund:

The International Monetary Fund (IMF) is an international

organization headquartered in Washington, D.C., in the United
States, of 188 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. Formed in 1944
at the Bretton Woods Conference, it came into formal
existence in 1945 with 29 member countries and the goal of
reconstructing the international payment system. Countries
contribute funds to a pool through a quota system from which
countries with payment imbalances can borrow. As of 2010,
the fund had SDR476.8 billion, about US$755.7 billion at
then-current exchange rates.
Areas of facilitation
With its near-global membership of 188 countries, the IMF is
uniquely placed to help member governments take advantage
of the opportunitiesand manage the challengesposed by
globalization and economic development more generally. The
IMF tracks global economic trends and performance, alerts its
member countries when it sees problems on the horizon,
provides a forum for policy dialogue, and passes on know-how
to governments on how to tackle economic difficulties.
The IMF provides policy advice and financing to members in
economic difficulties and also works with developing nations to
help them achieve macroeconomic stability and reduce poverty.
Marked by massive movements of capital and abrupt shifts in
comparative advantage, globalization affects countries' policy
choices in many areas, including labor, trade, and tax policies.
Helping countries benefit from globalization while avoiding
potential downsides is an important task for the IMF. The global
economic crisis has highlighted just how interconnected
countries have become in todays world economy.
Key IMF activities
The IMF supports its membership by providing
policy advice to governments and central banks based on
analysis of economic trends and cross-country
experiences;
research, statistics, forecasts, and analysis based on
tracking of global, regional, and individual economies and
markets;
loans to help countries overcome economic difficulties;
Concessional loans to help fight poverty in developing
countries; and technical assistance and training to help
countries improve the management of their economies.
Role of IMF in economic development of Pakistan

IMF has an interesting relationship with an interesting country

Pakistan. A country facing problems like a rapidly growing
population, sizable government deficits, a heavy dependence on
foreign aid, recurrent governmental instability, terrorism and large
military expenditures. Pakistan economy is extremely depended
on foreign aid agencies such as IMF. Since the new "democratic"
government took over in 2007 the country's economy has gotten
worse and is on the brink of becoming bankrupt. Its external debt
is about $53,620,000,000 in 2010.External debt today poses one
of the biggest barriers to development for Pakistan as well as
other of the worlds less developed countries (LDC's). Excessive
external debt is often responsible for negatively effecting
economic growth which creates uncertainty and discourages the
private sector from investing in the economy for fear about the
stability of the government, and it also discourages public
investment and reforms because they are aware that any benefits
would be likely to be transferred abroad in the form of debt
servicing.

Despite all these problems in Pakistani economy IMF still provides

loans to Pakistan. It is vital to consider that in spite of the trouble
linked with excessive debts, Pakistan have the obligation to
accomplish the contractual terms to which it committed to when
they took loans from the IMF. Though it is a real brave move by
IMF to help a country in such problems and debt but the problem
is that after IMF gives out loans, many in Pakistan view that it fails
in keeping in check on what is done or where the loan is used. It is
argued in Pakistan that the vast quantities of loans that are
provided to Pakistan are misused by corrupt governments and the
loans are used in bad projects that fail to turn out the required
amount of profits necessary to service their loans. And mostly in
Pakistan, loans are used in non-developmental projects. Therefore
IMF should also emphasize more to check whether the loan is
used for development projects which would help the economy or
whether they are used in corruption or in any other wrong uses.

It is argued that the conditions of IMF loans cause more harm than
good. In the Asian Crisis of 1997, many criticize the IMF's
insistence on Spending cuts and tax rises and higher interest
rates and due to that the IMF turned a minor financial crisis into a
major economic recession with unemployment rates in countries
like Thailand, Indonesia and Malaysia shooting up. Another policy
that IMF follows is that "One Size Fits All". The IMF often argues for
the same economic policies not considering that the situation is
not the same everywhere and different policies would be needed
for different situations. For example, dropping of the exchange
rate may help many countries, but, it doesn't mean that this is
always the solution. Policies of privatization and system
disinvolvement may work better in developed countries in the
West, but, maybe more difficult to implement in the developing
world like Pakistan. The World Bank is also criticized for such
policies but the World Bank involves itself more in projects related
to education and helping the people of national disasters such as
the recent floods and health sector rather than just giving out the
loan.
Even though IMF has many policies which caused problems for
Pakistani economy but IMF plays an important role in the modern
day economy. It can be seen as lender of last resort. When a
Pakistan was on the edge of becoming bankrupt, the IMF provided
crucial loans to stabilize the economy and prevent a collapse of
confidence. It can be argued that the IMF can also impose
necessary reforms on the economy. Reforms such as privatization
control of Money supply, and attacking corruption. But for all
these policies to work for the economy the Pakistani government
too has to coordinate and implement the policies. These policies
may cause short term pain, but, are important for preventing
future crisis and long term developments. It provides an external
review of the economy, which helps the government to implement
popular ideas. Yet, despite the potential benefits of having a
monetary fund which can provide an effective counter to financial
crisis, the role of the IMF has proved very controversial. Another
important role the IMF plays is that it prevents international
financial system from collapsing

Many critics attack the IMF for making its loans conditional.
Making loans conditional on a package prevents real economic
recovery and crushes the hope of the people of the country. The
IMF takes away political autonomy from the Pakistan government.
It takes away the ability to decide their own national policy and
instead they have to follow the policies of IMF such as reduction of
government spending, rising taxes etc. which usually causes
increase in unemployment and increase in poverty rate and
inflation. A recent example for this would be when IMF extended
Pakistan loans as the Pakistan government has to pass an
economic bill, RGST (reformed generals sales tax) in order to get
the next installment of the IMF loan. The IMF said that "The
extension will provide time to the Pakistani authorities to
complete the reform of the general sales tax, implement
measures to correct the course of fiscal policy and amend the
legislative framework for the financial sector" but the bill which
was planned for implementation in July, now seems unlikely to be
passed. Only due to this bill the government in Pakistan lost its
majority as its collation partners left the government due to this
bill and the government is likely to fall.

So is the IMF a saint or a sinner. I think that the IMF is something

in between. It should be remembered that IMF is called in the
times of crisis and at times of crisis there is no easy way to solve
the situation. In this case corrupt government is also a factor in
the worsening of the economy. But this does not mean that the
IMF is spotless. The IMF sometimes does too much which creates
moral hazard which encourages the government to be reckless
and it relies too much on the IMF. Yet, while it is easy to criticize
the doctor which prescribes a bitter pill, there is an agreement
that, now, we need an effective international organization which
can deal with the many financial crisis that are occurring around
the world.

World Bank:

World Bank is formed in 27 December 1945. The World Bank

Group (WBG) is a family of five international organizations that
make leveraged loans to developing countries. It is the largest
and most famous development bank in the world and is an
observer at the United Nations Development Group. The bank is
based in Washington, D.C. and provided around $30 billion in
loans and assistance to "developing" and transition countries in
2012. The bank's stated mission is to achieve the twin goals of
ending extreme poverty and building shared prosperity. Its five
organizations are the International Bank for Reconstruction and
Development (IBRD), the International Development
Association (IDA), the International Finance Corporation (IFC), the
Multilateral Investment Guarantee Agency (MIGA) and
the International Centre for Settlement of Investment
Disputes(ICSID).

The World Bank's (the IBRD and IDA's) activities are focused
on developing countries, in fields such as human development
(e.g. education, health), agriculture and rural development (e.g.
irrigation and rural services), environmental protection (e.g.
pollution reduction, establishing and enforcing regulations),
infrastructure (e.g. roads, urban regeneration, and electricity),
large industrial construction projects, and governance (e.g. anti-
corruption, legal institutions development). The IBRD and IDA
provide loans at preferential rates to member countries, as well as
grants to the poorest countries. Loans or grants for specific
projects are often linked to wider policy changes in the sector or
the country's economy as a whole. For example, a loan to improve
coastal environmental management may be linked to
development of new environmental institutions at national and
local levels and the implementation of new regulations to limit
pollution, or not, such as in the World Bank financed constructions
of paper mills along the Rio Uruguay in 2006

Role of World bank in the economic development of Pakistan:

The World Bank's strategy is to support implementation of the

Government of Pakistans own Poverty Reduction Strategy Paper
(PRSP) and to provide financing and technical assistance for both
economic and human development. The strategy is built around
three main themes which correspond to the pillars of the PRSP.
SUSTAINING HIGH AND BROAD BASED GROWTH, AND IMPROVING
COMPETITIVENESS Pakistans PRSP emphasizes the importance of
sustaining rapid and broad-based economic growth as the
principle means of reducing poverty. While significant progress
has been made in reducing state intervention in the economy and
improving the regulatory framework for private business, firms
continue to face significant policy, regulatory, and infrastructure
constraints. To help address these constraints and create an
environment conducive to healthy private sector growth, the Bank
program will support legal and regulatory reforms to improve the
business environment along with investments in water, power,
transport, and other infrastructure sectors.
IMPROVING GOVERNANCE improving government performance is
a central element of Pakistans poverty reduction strategy. The
Bank is assisting the governments efforts in this area by
supporting reforms in public financial management and
procurement; restructuring of the tax administration bureaucracy;
support for civil service reforms; and assistance to local and
municipal governments to improve their capacity for delivering
public services.

IMPROVING LIVES AND PROTECTING THE VULNERABLE The World

Bank also supports Pakistans efforts to improve the lives of its
citizens through efforts to improve access to, and quality of,
public services in education, health, electricity, water supply, and
sanitation, with an emphasis on addressing gender disparities. At
the same time the Bank is assisting in efforts to reduce
vulnerability and poverty through effective safety nets and the
Bank will continue to support implementation of targeted
activities in poor communities, especially in rural and drought-
prone areas. The Bank will seek to build on the successful
experience of the Pakistan Poverty Alleviation Fund (PPAF) which
has reached 6,500 communities through micro credit and
community-driven physical infrastructure projects, and ongoing
Community Infrastructure Projects in AJK and KPK.
Lending of World Bank to Pakistan:

Pakistan joined the World Bank in July of 1950. Since 1952, the
World Bank has approved 266 loans and credits for Pakistan (100
loans and 166 credits), totaling more than US$15.7 billion, of
which about US$9 billion remains outstanding. The FY06 ongoing
portfolio consists of 17 projects under implementation with a net
commitment of US$1.1 billion.

Asian Development Bank:

The Asian Development Bank (ADB) is a regional development

bank established on 22 August 1966 which is headquartered in
Metro Manila, Philippines, to facilitate economic development in
Asia. The bank admits the members of the United Nations
Economic and Social Commission for Asia and the
Pacific (UNESCAP, formerly the Economic Commission for Asia and
the Far East or ECAFE) and non-regional developed
countries. From 31 members at its establishment, ADB now has
67 members, of which 48 are from within Asia and the Pacific and
19 outside. The ADB was modeled closely on the World Bank, and
has a similar weighted voting system where votes are distributed
in proportion with members' capital subscriptions. Since 2014,
ADB releases annual report of Creative Productivity Index and
comparatively includes Finland and United States for the list
of Asia-Pacific members.

At the end of 2013, Japan holds the largest proportion of shares at

15.67%. The United States holds 15.56%, China holds 6.47%,
India holds 6.36%, and Australia holds 5.81%

The highest policy-making body of the bank is the Board of

Governors, composed of one representative from each member
state. The Board of Governors, in turn, elect among themselves
the twelve members of the Board and their deputy. Eight of the
twelve members come from regional (Asia-Pacific) members while
the others come from non-regional members.
Organization of the Asian development bank:
The Board of Governors also elects the bank's president, who is
the chairperson of the Board of Directors and manages ADB. The
president has a term of office lasting five years, and may be
reelected. Traditionally, and because Japan is one of the largest
shareholders of the bank, the president has always been
Japanese.

The most recent president was Takehiko Nakao, who succeeded

Haruhiko Kuroda in 2013.

The headquarters of the bank is at 6 ADB Avenue, Mandaluyong

City, Metro Manila, Philippines,[8][9] and it has representative
offices around the world. The bank employs 3,051 people, of
which 1,463 (48%) are from the Philippines.
Role of Asian development bank in economic development
of Pakistan:

Today, ADB remains one of Pakistans largest development

partners, having provided more than $25 billion in loans, as well
as more than $200 million in grants, as of 31 December 2014.
This funding has included 316 loans to improve Pakistans
infrastructure and services, and to support reforms.

ADB and the Government of Pakistan have implemented the

country partnership strategy (CPS), 2009-2013, a $4.4 billion
lending program to facilitate structural change, promote
investment, and improve Pakistans institutional effectiveness.

Islamic Development Bank:

Establishment
Related Links
 IDB Group in Brief ( 1.8MB)
39 Years in the Service of Development ( 2.5MB)
Annual Reports
The Islamic Development Bank is an international financial
institution established in pursuance of the Declaration of Intent
issued by the Conference of Finance Ministers of Muslim Countries
held in Jeddah in Dhul Q'adah 1393H, corresponding to December
1973. The Inaugural Meeting of the Board of Governors took place
in Rajab 1395H, corresponding to July 1975, and the Bank was
formally opened on 15 Shawwal 1395H corresponding to 20
October 1975.

Purpose
The purpose of the Bank is to foster the economic development
and social progress of member countries and Muslim communities
individually as well as jointly in accordance with the principles of
Shari'ah i.e., Islamic Law.

Functions
The functions of the Bank are to participate in equity capital and
grant loans for productive projects and enterprises besides
providing financial assistance to member countries in other forms
for economic and social development. The Bank is also required to
establish and operate special funds for specific purposes including
a fund for assistance to Muslim communities in non-member
countries, in addition to setting up trust funds. The Bank is
authorized to accept deposits and to mobilize financial resources
through Shari'ah compatible modes. It is also charged with the
responsibility of assisting in the promotion of foreign trade
especially in capital goods, among member countries; providing
technical assistance to member countries; and extending training
facilities for personnel engaged in development activities in
Muslim countries to conform to the Shari'ah.
Membership
The present membership of the Bank consists of 56 countries. The
basic condition for membership is that the prospective member
country should be a member of the Organisation of Islamic
Cooperation (OIC), pay its contribution to the capital of the Bank
and be willing to accept such terms and conditions as may be
decided upon by the IDB Board of Governors.

Capital
As per the decision of the 38th Annual Meeting of the Board of
Governors, the authorized capital of the IDB was raised to ID 100
billion and its subscribed capital to ID 50 billion.
Head Office and Regional Offices
The Bank's principal office is in Jeddah in the Kingdom of Saudi
Arabia. Four regional offices were opened in Rabat, Morocco
(1994), Kuala Lumpur, Malaysia (1994). Almaty, Kazakhstan
(1997), and Dakar, Senegal (2008). It also has two country
gateway offices in Ankara, Turkey and Jakarta (Indonesia) and
field representatives in 14 member countries (Afghanistan,
Azerbaijan, Bangladesh, Burkina Faso, Guinea, Iran, Mali, Pakistan,
Sudan, Turkmenistan, Uzbekistan, Yemen, Mauritania and Libya).
Financial Year
The Bank's financial year is the lunar Hijra Year.
Language
The official language of the Bank is Arabic, but English and French
are additionally used as working languages.