International Monetary Fund (IMF) and World Trade Organisation (WTO)

The International Monetary Fund (IMF) and the World Trade Organization (WTO) are influential global institutions shaping our economy and trade. The WTO is the sole international organization that regulates trade rules between countries, established on January 1, 1995, after the Marrakesh Agreement. It ensures smooth and predictable trade across borders.

What are the Objectives of the International Monetary Fund (IMF) and the World Trade Organisation (WTO)?

Objectives of World Trade Organisation (WTO)

• Trade Liberalisation: The WTO aims to gradually liberalise service trade as outlined in the General Agreement on Trade in Services (GATS), ensuring flexibility for developing countries.
• Supporting Developing Nations: The WTO is committed to considering the needs of developing countries, particularly small and medium service providers while maintaining the principles and framework of the GATS.

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Objectives of International Monetary Fund (IMF)

• Global Monetary Cooperation: The IMF aims to foster cooperation among its member countries by providing a platform for discussion and collaboration on international monetary issues.
• Exchange Rate Stability: The IMF works to maintain stable exchange rates among member countries, preventing unnecessary competitive devaluations.
• Promoting International Trade: The IMF seeks to promote and expand global trade, ensuring its balanced and steady growth.
• Eliminating Exchange Controls: One of the IMF's goals is to remove prevalent exchange controls before World War II, helping maintain fair and predictable exchange rates.

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Functions of WTO & IMF

Functions of World Trade Organisation (WTO)

1. Trade Negotiations: The WTO facilitates trade negotiations among member countries.
2. Enforcing Trade Rules: The WTO ensures that member countries adhere to agreed trade policies and review mechanisms.
3. Collaboration: The WTO works with other international organizations, such as the World Bank and the IMF.
4. Technical Assistance: The WTO provides technical support to member countries on trade-related issues and offers a platform for discussing future trade policies.
5. Global Trade Database: The WTO maintains a global trade database and provides tools for managing and operating bilateral and multilateral trade agreements.

Functions of International Monetary Fund (IMF)

1. Maintaining Exchange Stability: The IMF works to stabilise exchange rates and prevent sudden swings in currency values.
2. Financial Assistance: The IMF provides financial support to member countries by lending foreign currencies to address short-term balance-of-payment issues.
3. Setting Currency Values: The IMF helps establish the values of its member countries' currencies.
4. Economic Advice: The IMF offers advice on financial and economic matters, helping member countries stabilize their economies.
5. Credit Facilities: The IMF maintains various borrowing and credit facilities to assist countries in managing their balance of payments problems.

Role of International Monetary Fund and World Trade Organisation

Role of International Monetary Fund (IMF)

1. Economic Monitoring: The IMF reviews member countries' economies, highlighting issues like large deficits or high debt levels that could impact trade.
2. Financial Support: The IMF provides up to $300 billion in loans to countries facing financial crises, funded by member contributions.
3. Loan Conditions: Countries often need to meet specific conditions to receive IMF loans, such as reducing deficits, controlling inflation, and removing trade barriers.
4. Technical Assistance: The IMF offers reports and educational resources to help countries improve their economic policies.

Role of World Trade Organisation (WTO)

1. Dispute Resolution: It acts as a tribunal where countries can file complaints about trade rule violations, and over 400 cases have been handled since 1995.
2. Trade Policy Monitoring: The WTO regularly reviews member countries' trade policies to ensure compliance with international rules and assess their impact on global trade.
3. Training and Support: The WTO provides training, especially in developing regions, to help improve trade practices.
4. Resource Allocation: It ensures that trade agreements include provisions for least-developed countries, helping them gain better trade opportunities and support for developing their trade infrastructure.

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