Business English Chapter 11 PDF

BUSINESS ENGLISH BILJANA NAUMOSKA-SARAKINSKA 2024-2025 Chapter 11. International financial institutions  International financial institutions:  offer policy expertise, economic analysis and knowledge products;  offer considerable development resources and strong ti...

BUSINESS ENGLISH BILJANA NAUMOSKA-SARAKINSKA 2024-2025 Chapter 11. International financial institutions  International financial institutions:  offer policy expertise, economic analysis and knowledge products;  offer considerable development resources and strong ties to national governments;  play a major role in the social and economic development programs of nations with developing or transitional economies;  this includes advising on development projects, funding them and assisting in their implementation.  an important function of the money market – it provides an outlet for large companies with temporary excess cash to invest that cash in short-term money market instruments. Chapter 11. International financial institutions  Goals and objectives of international financial institutions:  to reduce global poverty and improve people's living conditions and standards;  to support sustainable economic, social and institutional development, and  to promote regional cooperation and integration.  These objectives may be achieved through public procurement opportunities, such as:  loans,  credits, and  grants to national governments;  technical and advisory assistance;  conducting considerable research on development issues. Chapter 11. International financial institutions  IFIs are increasingly lending directly to sub-national government entities, as well as to the private sector;  they fall under the radar of international law since they are established by more than one country;  their owners (or shareholders) are mainly national governments;  other international institutions and other organizations may occasionally show up as shareholders;  the most prominent IFIs are creations of multiple nations, although some bilateral financial institutions (created by two countries) exist and are technically IFIs:  many of these are Multilateral Development Banks (MDBs) = basically 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;  large amounts of funds + planned policy advice = MDBs are central in establishing the direction of development policy, including approaches to sustainability across Latin America, Asia, Africa, and Central and Eastern Europe. Chapter 11. International financial institutions  Importance of IFIs  include the World Bank, the regional development banks, and the International Monetary Fund (IMF);  the largest source of development finance in the world  typically lend between US$30-$40 billion to low and middle-income countries annually;  IFIs, and in particular the World Bank, are a primary source of development knowledge, publishing research that shapes the debate on development issues;  other donor institutions often take their lead from the World Bank and the IMF, thus increasing the impact of those institutions’ lending approaches and decisions. Chapter 11. International financial institutions  Some consequences of IFIs’ actions  IFI loans to finance investment projects and policy reforms in developing countries are intended to reduce poverty and encourage economic development;  however, badly-thought out IFI loans have often caused widespread environmental and social damage, including irreversible impacts on natural habitats and dislocated communities;  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;  despite some progress, the IFIs still do not release detailed information quickly during project design and implementation;  as publicly financed institutions, the IFIs should be held responsible for the consequences of the funds they loan to developing countries. Chapter 11. International financial institutions  World Trade Organization (WTO)  the only international financial institution that controls the global trade rules between nations;  tries to maintain the international rules of trade between nations;  based on agreements signed by the majority of the world’s trading nations;  main function of the organization  to help producers of goods and services, exporters and importers, to protect and manage their businesses.  supporters of the WTO, particularly multinational corporations, believe that it is beneficial to business;  they see the stimulation of free trade and a decrease in trade disagreements as beneficial to the global economy. Chapter 11. International financial institutions  World Trade Organization (WTO)  skeptics believe that the WTO weakens the principles of organic democracy and widens the international wealth gap;  they point to the decline in domestic industries and increasing foreign influence as negative impacts on the world economy;  there are currently 166 member countries in the WTO, and 23 'observer' countries;  the WTO has both positive and negative effects on globalization: + the WTO's efforts have increased global trade expansion, - there has been a negative impact on local communities and human rights. Chapter 11. International financial institutions  International Monetary Fund (IMF)  originally created in 1945 as an attempt to encourage international financial cooperation by introducing a system of convertible currencies at fixed exchange rates;  aims to promote global economic growth and financial stability,  encourages international trade;  aims to reduce poverty;  based in Washington, D.C. and it currently consists of 191 member countries  each country has representation on the IMF's executive board in proportion to its financial importance = the most powerful countries in the global economy have the most voting power;  its mission is “to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”;  its primary methods for achieving these goals: monitoring, capacity building, and lending. Chapter 11. International financial institutions  International Monetary Fund (IMF)  it collects massive amounts of data on national economies, international trade, and the global economy as a whole, and provides regularly updated economic forecasts at the national and international level;  provides technical assistance, training and policy advice to member countries through its capacity building programs;  makes loans to countries that are experiencing economic difficulties in order to prevent or ease financial crises;  members contribute the funds for this lending to a pool based on a quota system;  these funds total around $932 billion as of mid-December 2023. Chapter 11. International financial institutions  International Bank for Reconstruction and Development (IBRD)  a component of the United Nation’s World Bank Group, which was established in 1944/45 with the original objective of providing funding towards the post-WWII rebuilding efforts;  its main aim was to provide financing for the European nations which had been destroyed in WWII;  nowadays, the IBRD's main objective is to provide loans and other financial services to less fortunate countries so as to reduce global poverty.  the IBRD and its lending arm, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.  Chapter 11. International financial institutions  International Bank for Reconstruction and Development (IBRD)  it is a global development association owned by 189 member countries;  as the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries;  it also coordinates responses to regional and global challenges;  it raises capital for the loans through issuing AAA rated bonds;  in 2023 it issued about $43 billion in bonds,  it has a AAA credit rating = excellent (1959)  credit rating – refers to an evaluation of how credit-worthy a borrower is generally or with respect to a particular debt or financial responsibility.