World Bank - International Bank for Reconstruction and Development (ibrd)

The "World Bank" refers to the International Bank for Reconstruction and Development (IBRD) and its affiliate, the International Development Association (IDA). The Bank' was _______together with the IMF by the Bretton Woods Conference of 1945 as an international bank for two________: to help finance the rebuilding of war-devastated areas and to aid in the advancement of less-developed________.

Operations started in 1946. The Bank is ________ partly by contributions paid by________ countries, partly by bond issues. The national contributions constitute the bank's capital and relate to the individual countries' share of world trade. The bond issues finance the lending________of the bank.

In financing the economic ________ of member countries the International Bank complements the IMF, which finances temporary balance of payments________. Loans are made to governments or government-guaranteed entities. Besides lending funds, the Bank ________technical advice to governments or other borrowers on a wide range of development problems. It________general economic surveys for governments wishing to study resources and to plan long-range ________of development.

At first devoted to the reconstruction needs of industrial countries the World Bank by the 1950s had________ its attention on the developing world. In 1956 the IBRD formed the International Finance Corporation (IFC) the purpose of which was to________growth in the private sector of developing countries and to mobilize domestic and foreign capital for this purpose. In 1960 the IBRD________the International Development Association in order to assist the poorer developing countries (those with an annual________capita GNP of less than $731 in 1980 prices). Loans to these countries________no interest and are repayable over 50 years with an initial grace period of 10 years.

The Bank's strategy has been to ensure that its aid reaches the broad masses of the people; this is to be done by investments encouraging productivity and integrating the broad masses of people as active partners into the development process.

The powers of the Bank are vested in a________of Governors.

Words you may need:

affiliate n - филиал

war-devastated areas - разоренные войной территории

bond issue - выпуск облигаций

complement v - дополнять

survey n - обследование

International Finance Corporation - Международная финансовая корпорация

repayable adj - подлежащий погашению (уплате)

grace period - льготный период

integrate v - интегрировать; включать, вовлекать (зд.)

vest v - облекать, наделять властью

Discussion

Ex. 12.

a) Read the text.

b) Describe the facilities under which resources are made available to the IMF members.

c) Explain the "conditionality" principle of the IMF.

The IMF's financial resources are made available to its members under a variety of facilities and policies, depending on the circumstances, especially the nature of the macroeconomic and structural problems to be addressed.

The IMF makes resources available under both its general resources and its concessional financing facilities. Member countries use the general resources of the IMF by making a purchase (drawing) of other members' currencies or SDRs with an equivalent amount of their own currencies. The IMF levies charges on these drawings and requires that members repurchase (repay) their own currencies from the IMF with other members' currencies or SDRs over a specified time. Concessional financing under the structural adjustment and enhanced structural adjustment facilities is made available in the form of loans.

Regular facilities include: Reserve tranche, Credit tranches, Stand­by Arrangements, Extended Fund Facility. In providing financial support to any member country, the IMF must be assured that the member is pursuing policies that will ameliorate or eliminate its external payments problem. The requirement that members make a commitment to a set of policy measures aimed at correcting economic and financial imbalances within a reasonable period in return for IMF financial support is known as "conditionality". "Conditionality" is designed to ensure that members using IMF resources will be able to repay the IMF in a timely manner.

IMF-supported programmes emphasize certain key aggregate economic variables, including domestic credit, the public sector deficit, international reserves, and external debt. They also emphasize crucial elements of the pricing system - including the exchange rate, interest rate, and, in some cases, commodity prices - that significantly affect the country's public finances and foreign trade.

A successful adjustment programme must elicit an adequate response from the supply side of the economy. Interest rates and exchange rates are particularly important, since they influence savings and investment decisions and, therefore, a member country's growth prospects.

Adjustment programmes, typically, have an impact on income distribution, employment and social services. While the promotion of sound macroeconomic policies and structural reforms contributes to sustained growth and employment, adjustment may also involve short-term social costs to vulnerable groups. The IMF staff analyse the implications of reform measures for vulnerable groups and advise the authorities on how best to integrate social safety nets and their financing into programmes.

Words you may need:

facility n (зд.) - схема кредитования, механизм финансирования

address v - обращаться (к чему-л.)

concessional financing facility - механизм льготного финансирования

regular facilities - обычные механизмы финансирования

reserve tranche - резервный транш

ameliorate v - улучшать

external payments problem - проблема внешних платежей

"conditionality" n (зд.) - обусловленность кредитов (МВФ)

timely adj - своевременный

aggregate economic variables - совокупные экономические переменные (величины)

crucial adj - решающий

elicit v - извлекать, выявлять

sound policy - разумная политика

vulnerable adj - уязвимый

implication n - смысл, значение (событий)

Ex. 13. Read the dialogue, sum up its content and act it out: