The original Bretton Woods conference called for the creation of three international organizations. While the IMF and the World Bank were created shortly after the conference, an international organization devoted to the facilitation of international trade was only created in 1996, when the World Trade Organization (WTO) was established incorporating the General Agreement on Tariffs and Trade (GATT). While the IMF cooperates with a large number of international organizations, including all the regional development banks, the common origin and complementary mandates of the IMF, World Bank, and WTO led to intense and well-defined forms of cooperation.

The original Bretton Woods conference called for the creation of three international organizations. While the IMF and the World Bank were created shortly after the conference, an international organization devoted to the facilitation of international trade was only created in 1996, when the World Trade Organization (WTO) was established incorporating the General Agreement on Tariffs and Trade (GATT). While the IMF cooperates with a large number of international organizations, including all the regional development banks, the common origin and complementary mandates of the IMF, World Bank, and WTO led to intense and well-defined forms of cooperation.

Collaboration with the World Bank

Overlap of IMF and World Bank Activities

The IMF and the World Bank were given different, but complementary, mandates. The World Bank was established to promote post-war reconstruction and the flow of capital to developing countries. Its core objective today is to promote economic growth and conditions conducive to efficient resource allocation and poverty reduction, which it pursues through project financing and through sectoral and structural adjustment lending.

Though their core mandates are different, there has always been some overlap of activities and policy concerns:

  • Structural policies. IMF surveillance and lending operations moved away from a narrow focus on exchange rate and other macroeconomic policies to a broader focus encompassing structural policy issues, given their impact on macroeconomic stability and the sustainability of policies. There are two reasons for this: (a) the IMF’s recognition of the longer-term and supply-oriented nature of the balance of payments adjustment process and (b) the IMF’s increased involvement, over time, in surveillance and lending operations in developing and transition countries, where long-run structural problems are of central importance to economic stabilization and growth. The creation of the Structural Adjustment Facility in 1986, the Enhanced Structural Adjustment Facility in 1987, and the Poverty Reduction and Growth Facility in 1999 reflected this shift in emphasis.

  • Poverty-reduction. The IMF has become increasingly concerned about the social and poverty impact of its policy advice in low-income countries.

  • Macroeconomic policy environment. The World Bank’s experience led to the recognition that the overall macroeconomic policy environment is crucial to the success of individual investment projects and sectoral programs. In response to the serious balance of payments problems affecting many developing countries stemming from the sharp deterioration of the terms of trade and from the weakness in domestic policies and institutions, the Bank introduced structural adjustment lending in 1980 to support policies to promote economy-wide structural changes. Subsequently, it introduced sector adjustment lending to support structural changes in specific sectors.

The overlap and increasing integration of the activities and policy concerns of the two institutions required strategic decisions to avoid potentially undesirable consequences, including cross-conditionality and conflicting policy advice, duplication of effort and waste of resources, and confusion among the membership regarding which institution is responsible for what. Accordingly, the IMF and the World Bank have in place guidelines for collaboration between the two institutions since 1966, which have been revised and strengthened on a number of occasions since then. The current procedures are set out in a 1989 Concordat (Bank-Fund Collaboration in Assisting Member Countries); and a 1998 Report of the Managing Director and the President on Bank-Fund Collaboration. Additional guidelines exist for Bank-Fund collaboration in financial sector work and on public expenditure issues.127

An External Review Committee on Bank-Fund Collaboration has been set up to review basic parameters of Fund-Bank collaboration. The committee is preparing a report that will benefit from extensive discussions with IMF and World Bank staff, management, and Boards, and will be discussed with the G-20.

Lead Roles of the IMF and the World Bank

The 1989 Concordat and the 1998 Report of the Managing Director and the President re-affirm the original mandates of the IMF and the World Bank, and set out the primary areas of responsibility of each institution in the pursuit of that mandate. In situations where both institutions are involved in policy-based lending to a country, each institution takes the lead role in the areas in which it has primary responsibility. Where responsibility is shared, the lead agency is determined on a case by case basis. Staff reports on the use of IMF resources usually contain a box explaining the allocation responsibilities for structural measures between the IMF and the World Bank and which agency takes the lead role in individual reform areas.

Areas of primary responsibility of the IMF include macroeconomic analysis and forecasting, macroeconomic policy advice, budgeting and public expenditure management, fiscal and macroeconomic management, institutional arrangements underlying monetary and exchange rate policies, balance of payments adjustment and financing, crisis prevention and resolution, offshore financial center assessments, transparency standards, collection, compilation, and dissemination of macroeconomic statistics, and training in macroeconomics.

Areas of primary responsibility of the World Bank include national development strategies and policies, poverty analysis and monitoring, social protection, sector strategies and policies, project financing, public administration, public enterprise reform, product and labor market reforms, market integrity standards, and training in development economics.

Areas of shared responsibility include tax policy and administration, financial sector work, trade policy, public expenditure policy and administration, public debt management, and the establishment of an environment conducive to private sector development.

To oversee and strengthen collaboration in their work on the financial sector and on low-income countries, the IMF and World Bank set up a Financial Sector Liaison Committee (FSLC) in September 1998 and a Joint HIPC/PRSP Implementation Committee (JIC) in April 2000.128 The committees work to resolve differences of view between the staff of two institutions, ensure seamless cooperation, and coordinate work programs and the production of reports and briefings to the Executive Boards of the two institutions. The FSLC has played a critical role in coordinating and monitoring FSAP exercises, as well as devising measures to improve the program in recent years. A forthcoming report of the External Review Committee may make recommendations on the division of labor.

Principles of IMF-World Bank Collaboration

The 1989 Concordat and the 1998 Report of the Managing Director and the President set out the broad principles that should guide collaboration between the IMF and the World Bank.

  • Countries in which both institutions are actively involved should have a clear understanding of which institution has primary responsibility in any given area of policy advice and reform.

  • Before finalizing its position on key elements of a country’s policies and reform agenda, each institution will solicit the views of the other and share its own thinking at as early a stage as feasible. When there are differences of view between the two institutions about policies and priorities in countries where both are involved, the disagreement should be resolved at the staff level or raised to the level of senior management for resolution. If the issue cannot be resolved at the management level before a World Bank lending operation or IMF-supported program is to be presented to the respective Executive Board, then management would highlight the disagreement to the Board prior to the Board discussion, and at the time of meeting, indicate the nature of the disagreement and ensure that staff from the other institution are present at the Executive Board to present their views.

  • Where a country’s program supported by one institution includes macroeconomic and structural measures which fall within the other institution’s areas of primary responsibility, advice to the authorities on the design of measures in the country’s program and the subsequent monitoring should be provided by the institution with primary responsibility. Program reviews by each institution should be closely coordinated to the maximum extent possible.

  • Integration and coordination of the views of either institution requires timely input from the other institution. In situations where either institution does not have the capacity or is unable to provide policy advice and expertise, whichever institution can provide input should do so in order to ensure that the country’s program does not suffer. At the same time, the institution that is unable to provide input would review its work priorities with a view to better aligning them to the requirements of the country’s program.

  • Programs supported by the IMF and the World Bank should be complementary and part of an overall reform agenda owned by the member country. When presenting documents to their respective Executive Boards, the staff of the two institutions will indicate how programs supported by both institutions complement each other in supporting the overall reform agenda of the government.

  • Each institution retains separate accountability for its lending decisions. Each institution proceeds with its own financial assistance according to the standards laid down in its Articles of Agreement and the policies adopted by its Executive Board.

  • There should be a systematic exchange of information between the two institutions on future country work and mission plans by country. Deviations from the work plan or calendar would be communicated to the other institution without delay. Mission briefing papers and terms of reference should be shared with the other institution before they are finalized, to the extent feasible.

  • The daily interactions and ad hoc contacts involving management and staff, and the monthly as well as ad hoc meetings between the Managing Director and the President, are supplemented with regular meetings of the senior staff of each institution. In addition, meetings are held to review the strategies of each institution for countries of common concern.

  • Cross-participation in each institution’s missions and parallel missions are effective ways to facilitate the coordination and timely integration of macroeconomic and structural policies in countries’ programs and reform agendas. To be most effective, in cross-participation and joint missions the participating Bank or IMF staff should have a clear assignment of responsibilities.

Collaboration with the World Trade Organization

The IMF and the WTO work together on many levels, with the aim of ensuring greater coherence in global economic policymaking and reflecting the underlying common policy goal of limiting the use of restrictions on the international flow of goods and services, which can be affected through exchange or trade restrictions.

On an operational level, the IMF established the Trade Integration Mechanism (TIM) in April 2004 to support progress under the WTO’s Doha round of trade talks (TIM is discussed in Chapter 5).

The collaboration of the IMF and the WTO was formalized in an agreement shortly after the creation of the WTO in 1996.129 Article X of the IMF’s Articles of Agreement calls for the IMF to cooperate with any general international organization and with public international organizations having specialized responsibility in related fields, while Article III.5 of the Marrakesh Agreement Establishing the World Trade Organization specifically calls for the WTO to cooperate with the International Monetary Fund such as reciprocal attendance at meeting sharing documents and IMF participation in the Balance of Payments Committee of the WTO.

The IMF has observer status at the WTO, and participates actively in many meetings of WTO committees, working groups, and bodies. For this purpose, the IMF maintains an office in Geneva to facilitate the regular interaction with the WTO. Trade policy issues feature prominently in IMF program and surveillance work wherever macro-relevant. Equally, IMF surveillance reports, including assessments of exchange rate policies, are important inputs to the WTO’s Trade Policy Review Mechanism (TPRM) and the periodic reports on member countries’ trade policies (Trade Policy Reviews).


The WTO is required to consult the IMF when it deals with issues concerning monetary reserves, balance of payments, and foreign exchange arrangements. For example, WTO agreements allow countries to apply trade restrictions in the event of balance of payments difficulties. The WTO’s Balance of Payments Committee bases its assessments of restrictions on the IMF’s determination of a member’s balance of payments situation.

Informal consultations between IMF and WTO staff concern mainly trade policy developments and advice for individual countries. The IMF and WTO also regularly share data and research. For example, in the context of the Doha Development Agenda and in response to a WTO request, the IMF completed studies on the erosion of preferences, trade-related loss of fiscal revenue, export subsidies, balance of payments safeguards, and exchange rate volatility and trade.

Trade Liberalization in Least-Developed Countries

The IMF and the WTO work together in the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries that was put in place in 1997. The Integrated Framework aims at strengthening the capacity of these countries to formulate trade policy, negotiate trade agreements, and tackle production challenges in their domestic economies. In addition, the Integrated Framework seeks to ensure that poorer member countries incorporate appropriate trade reforms into their Poverty Reduction Strategy documents, which form the basis for concessional support by the IMF.