Conclusion

International Financial Institution’s comprising of World Bank and IMF came into being in
1944, for providing development loans for infrastructure development projects and for
assisting countries experiencing Balance of Payment problems respectively. But the problem
arose when these institutions began acting as promoter of the agenda and interest of
developed nations located in North at expense of economies of developing countries in South.

We saw how Washington Consensus influences the policy making in World Bank and IMF. The
fund’s in both organization’s are controlled by developed nations with United States alone
having 16.7 percent of voting rights in IMF and 16.1 percent in World Bank.

IFI’s in order to pursue its neoliberalism agenda exercises indirect influences over emerging
economies in form of conditionality’s which came in form of privatization, trade liberalization
and elimination of subsidies making the economic structure of developing countries
vulnerable and taking away their financial or economic independence.

We saw in case of African economy even after their compliance to the conditionality’s
imposed by IMF and World Bank, the policies of IFI’s failed miserably in reducing poverty and
promoting development, proving a tool of control and domination in the hands of influential
nations leading to building a neoliberal state ultimately worsening the economy of developing
countries in South.

We also looked at impact of IFI’s policies on Indian economy where we saw that mere 4
percent of non-aid sources have been received by India compared to 10 percent by Argentina
and 7 percent by Mexico in South. With laissez faire concept, abolition of subsidies in food
and fuel sector and privatization led to East Asia crisis in 1990’s.

To counter such unfulfilled need for development financing and slow pace of progress from
IFI’s policies the BRICS Nations established their own bank i.e. New Development Bank which
is parallel to IFI’s for development assistance and Balance of Payment problems. With BRICS
bank emerging economies can now organize themselves on funding and stand on their feet,

Recently, a Memorandum of Understanding was signed between World Bank and New
Development Bank for for strengthening cooperation in meeting world’s infrastructure
development needs.