Why are international financial institutions important?
The International Financial Institutions (IFIs) include the World Bank, the regional development banks, and the International Monetary Fund (IMF). They are the largest source of development finance in the world, typically lending between US$30-$40 billion to low and middle-income countries each year.
The IFIs, and in particular the World Bank, are a primary source of development knowledge, publishing research that frames the debate on development issues. Other donor institutions often take their lead from the World Bank and the IMF, thus amplifying the impact of those institutions’ lending approaches and decisions.
IFI loans to finance investment projects and policy reforms in developing countries are intended to reduce poverty and encourage economic development. However, ill-conceived IFI loans have often caused widespread environmental and social damage including irreversible impacts on natural habitats, displaced communities, and indigenous peoples.
IFI activities are often carried out without the informed participation of affected people, non-governmental organizations (NGOs), and-in many cases-even the legislatures of the Banks’ borrowing countries. Moreover, despite some progress the IFIs still do not release comprehensive information in a timely manner during project design and implementation. Finally, as publicly financed institutions, the IFIs should be held accountable for the consequences of the funds they loan to developing countries.
World Bank Group:
The Multilateral Development Banks (MDBs) are the largest source of development finance in the world.
The MDBs, and in particular the World Bank, are also a primary source of development ‘knowledge’ and policies. With large volumes of finance coupled with formulated policy advice, MDBs are central in determining the direction of development policy, including approaches to sustainability across Latin America, Asia, Africa, and Central and Eastern Europe.
MDB loans for projects and economic policy in developing countries are intended to reduce poverty and encourage economic development. However, MDB loans have also been responsible for causing widespread environmental and social damage from ill-conceived programs, adversely affecting millions of people in developing countries. BIC monitors the activities of the MDBs listed below. Select each link to learn more about each Bank’s structure, how to obtain information from the Bank, policies and problem projects on which BIC has been active, accountability mechanisms, and other information.