International Finance

The World Bank provides financial assistance to developing countries through grants and loans and especially the poorest countries whose incomes are below $1,025 per capita. The IMF lends money to developing countries that are experiencing problems in balance of payments so as to offer short-term financing and at the same time supporting reforms for economic adjustments with aim of finding a solution for the underlying problem (Eiras, 2003). Rather than being a solution to the various problems being experienced in the developing countries, the financial assistance have presented a major problem. The grants and loans extended to these countries breeds corruption while at the same time, deterring growth since these loans lead to removal of incentives that could enable government to facilitate economic freedom. The financial assistance offered to these countries does not achieve the intended purpose due poor economic policies, weak rule of law and high level of corruption. For instance , despite Bangladesh occupying top 3 position in terms of funds recipients , it is the ranked the most corrupt country globally (Eiras, 2003). 

Countries in the third world have incurred huge amounts of debts from loans that are extended by the IMF and World Bank with an aim of helping people who are stricken with poverty. Most of these monies are lost through development projects, which are ridden by corruption. The government officials awarding these contracts collude with contractors to overprice the projects so that they can steal the extra amount. Some economists have revealed that over $ 1-trillion have been lost in such projects or even trough outright looting (Sharife, 2009). This issue has been common in the history of the institutions offering financial aid.

References

Eiras, A.,(2003).IMF and World Bank Intervention: A Problem, Not a Solution. Retrieved from: http://www.heritage.org/monetary-policy/report/imf-and-world-bank-intervention-problem-not-solution

Sharife, K,(2009).Of gingerbread havens and cannibalised economies. Retrieved from: http://www.africafiles.org/article.asp?ID=20475