A:

The primary difference between the International Monetary Fund (IMF), and the World Bank lies in their respective purposes and functions. The IMF exists primarily to stabilize exchange rates, while the World Bank’s goal is to reduce poverty. Both organizations were established as part of the Bretton Woods Agreement in 1945.

The International Monetary Fund

The International Monetary Fund promotes monetary cooperation internationally and offers advice and assistance to facilitate building and maintaining a country’s economy. The IMF also provides loans and helps countries develop policy programs that solve balance of payment problems if a country cannot obtain financing sufficient to meet its international obligations. The loans offered by the IMF, however, are loaded with conditions. Often, a loan provided by the IMF as a form of "rescue" for countries in serious debt ultimately only stabilizes international trade and eventually results in the country repaying the loan at rather hefty interest rates. For this reason, the IMF has many critics worldwide.

 

The World Bank

The World Bank's purpose is to aid long-term economic development and reduce poverty in developing countries. It accomplishes this by making technical and financial support available to countries. The bank initially focused on rebuilding infrastructure in Western Europe following World War II and then turned its operational focus to developing countries. World Bank support helps countries reform inefficient economic sectors and implement specific projects, such as building health centers and schools or making clean water and electricity more widely available. World Bank assistance is typically long-term, funded by countries that are members of the bank through the issuing of bonds. The bank’s loans are not used as a type of bailout, like with the IMF, but as a fund for projects that help develop an underdeveloped or emerging market nation and make it more productive economically. (For related reading, see: What Is the World Bank?)

RELATED FAQS
  1. How Are Global and International Funds Different?

    In English, 'global' and 'international' tend to be used interchangeably—hence the confusion. Read Answer >>
  2. What caused the European / Eurozone debt crisis?

    During the European debt crisis, several countries in the Eurozone were faced with high structural deficits, a slowing economy ... Read Answer >>
  3. What factors are the primary drivers of banks' share prices?

    Bank share prices are driven by the same forces as any other shares including market sentiment, expectations about the future ... Read Answer >>
  4. What indicators are used in exchange rate forecasting?

    Learn what economic indicators are most widely used to forecast a country’s exchange rate and how various foreign exchange ... Read Answer >>
  5. Is Mexico an emerging market economy?

    Learn the difference between a developed economy and an emerging market economy, and understand why Mexico is an emerging ... Read Answer >>
Related Articles
  1. Insights

    An Introduction To The International Monetary Fund (IMF)

    Chances are you've heard of the IMF. But what does it do, and why is it so controversial?
  2. Insights

    IMF, WTO and World Bank: How Do They Differ?

    Understand what IMF, WTO and the World Bank are, how they differ, and why some people question their motives.
  3. Insights

    IMF Grants Egypt $12 Billion Bailout

    The IMF has agreed on a $12B bailout for Egypt
  4. Insights

    IMF on the 4 Headwinds of U.S. Economic Growth

    Explore the four major economic headwinds that the International Monetary Fund (IMF) identifies as principal obstacles to strong U.S. economic growth.
  5. Personal Finance

    What Is the Bank for International Settlements?

    Headquartered in Basel, Switzerland, Founded in the 1930's the Bank for International Settlements (BIS), is a bank for central banks.
  6. Investing

    IMF Or ETF: Which Is Right For You?

    Here's what the professionals think about these similar, but critically different, investment vehicles.
  7. Insights

    Could Ukraine's Debt Crisis Destabilize The EU?

    A financial crisis in Ukraine could be a bigger threat to European security than the current financial crisis in Greece.
  8. Investing

    The Week Ahead: April 11-15, 2016

    Market Volatility reared its head again on Thursday, the VIX rallying 10% as stock markets and interest rates fell sharply amidst global growth concerns.
  9. Insights

    World Bank Data For Dummies

    Developing countries can't always afford to track the data crucial to setting the right economic policies and programs. That's where the World Bank steps in.
  10. Trading

    How the Bretton Woods System Changed the World

    While the Bretton Woods system is no longer in place, it fundamentally changed the international monetary order.
RELATED TERMS
  1. International Monetary Fund - IMF

    The International Monetary Fund is an international organization ...
  2. General Agreements To Borrow - GAB

    General Agreements to Borrow (GAB) refers to a lending medium ...
  3. Credit Tranche

    Credit tranches are phased loans from the International Monetary ...
  4. The World Bank

    The World Bank is an international organization dedicated to ...
  5. IMF Nonfuel Commodity Index

    The IMF Nonfuel Commodity Index, also called the Primary Commodity ...
  6. Conditionality

    Conditionality refers to conditions attached to the provision ...
Trading Center