INTERNATIONAL FINANCIAL INSTITUTIONS

The International Financial Institutions and Poverty



The International Financial Institutions and Poverty

Introduction

International Financial Institutions have played a significant role in improving the economic conditions of countries globally. These institutes have emphasized on balanced expansion of global trade, stabilization of exchange rates, avoidance of competitive devaluation of the currency values, and correction of balance of payments to reduce poverty in countries. International Financial Institutions which have played a key role in improving the economic conditions of poor countries include World Bank, IMF, Asian Development Bank, and African Development Bank.

Role of International Financial Institutions and Poverty

The impact of the World Bank and IMF's new policy structure for reducing poverty has been substantial in stabilizing the economy. In year 2006, International Financial Institutions served 52 countries through Poverty Reduction Strategy Plans. Eleven new African countries are conforming to the strategies of IMF and World Bank from Year 2009 (World Bank 2010, 38). These countries have been concern with developing a poverty-reduction strategy to continue receiving loans and financial assistance from IMF and World Bank. Significant impact of IMF, World Bank, and ADB Bank are observed in improving the living standard of Asian countries through financial assistance programs for economic stability. Main Asian countries where relative decline in poverty level is observed in last decade include Bangladesh, India, Pakistan, Indonesia, Malaysia, China, and Philippines (Bradlow 2010, 76).

Role of IFIs in African countries is very crucial to control poverty and improve economic stability. Irrespective of the fact that PRS would direct improved economic condition and superior accountability, there is insufficient substantiation to determine the impact of IFI strategies for reducing poverty in major African countries. IFIs strategies itself cannot be the sole factor for reducing poverty; it requires restructuring in fiscal policies and tightening of monetary policies. Recently, Pakistan entered into an agreement ...