BB0030 – Role of International Finance Institutions

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Bachelor of Business Administration-BBA Semester 6

BB0030 – Role of International Finance Institutions- 2 Credits

(Book ID: B0172)

Assignment Set- 1 (30 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q1. Explain briefly the methods by which the IMF lends funds to member countries.

The International Monetary Fund (IMF) is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries; in particular those with an impact on exchange rates and the balance of payments. It is an organization formed to stabilize international exchange rates and facilitate development. 

 The Buffer Stock Financing Facility (BSFF) –

The Buffer Stock Financing Facility (BSFF) was established in 1969 to provide assistance to members in connection with their contributions to international buffer stocks of primary products, operating in the context of approved international commodity agreements (ICAs). The BSFF was the Fund's contribution to the international community's efforts to stabilize commodity prices, which were seen at the time as excessively volatile,

Q2. Write a brief note on the lending operations of IBRD. How are they different than the IMF.

Ans- IBRD LENDING OPERATIONS

Fund    Generation

IBRD lending to developing countries is primarily financed by selling AAA-rated bonds in the world's financial markets. While IBRD earns a small margin on this lending, the greater proportion of its income comes from lending out its own capital. This capital consists of reserves built up over the years and money paid in from the Bank's 185 member country shareholders. IBRD’s income also pays for World Bank operating expenses and has contributed to IDA and debt relief.

Loans

Q3. In the current scenario, examine the relevance of the above two institutions.

The International Monetary Fund (IMF)

The IMF is an international organization of 184 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment.

Since the IMF was established its purposes have remained unchanged but its operations—which involve surveillance, financial assistance, and technical assistance—have developed to meet the changing needs of its member countries in an evolving world economy.

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