The Bretton Woods Institutions and the Ethiopian Economic Reform

Course ID
Ethiopian Economics Association (EEA)
Fantahun Belew


In the past internal efforts and sufficient domestic resource mobilization used to play predominant role for successful economic development. Currently, however, whatever domestic efforts are undertaken, they are unlikely to be effective unless the rest of the world supports them. Thus, in the current international economic order, external financing plays pivotal role in developing countries development endeavor as their economy is characterized, with low income, limited domestic resources, and low rates of investment. Nevertheless, its purpose is expected to prop up internal effort and paving the way for indigenous sustained economic development. To that end, foreign finance is assumed to finance national development agenda. The two Bretton Woods institutions, the International Monetary Fund (IMF) and the World Bank plays significant role in economic and social development activities of developing countries. IMF has the aim of promoting international monetary cooperation, exchange stability and orderly exchange arrangements, to economic growth and high levels of employment. It provides temporary financial assistance to countries with internal and external imbalances. The World Bank on the other hand, has the objective of providing concessional loans to support economic development efforts of developing countries. The Bank usually involved in sectoral supports including the promotion of the private sector development, public sector management, trade and investment. Practically, any prudent lender worries about repayments and as a result it demands preconditions to be fulfilled by the recipient before advancing the loan. Like wise, when IMF and World Bank extending loans they put a range of conditionalities that the debtor countries had to fulfill. In other words, the Bretton Woods institutions commend a course of actions that the recipient country should follow. Some argued that, however, apart from their main role of extending help to developing countries they assumed the role of policy maker for all those countries. The Bretton Woods institutions, however, claimed that their policy is designed to clear the economic mess and put the economy on the right track. Being part of the developing countries and moving away from centrally planned and destitute economic condition to a market based and better economic standard, Ethiopia remained one of those countries receiving the IMF and the World Bank financial and technical assistance. To make the subsequent discussion more accessible to the reader, the following chapter highlights the role of the two international financial institutions in the developing world economies. The next section will discuss, the Bretton Woods Institutions intervention in the Ethiopian Economic Reform program and its merits and demerits of conditionality. Finally Conclusions and the way ahead would be included

Corporate Author: Alemayehu Seyoum(Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
Primary Descriptors:

World Bank; International Monetary Fund

Secondary Descriptor:

Financial institutions, International

Geographic Descriptors: Ethiopia
Cataloge Date: 02/27/2013
Broad Subject heading: Economic development
Call Number: 330.963 PRO 2004
Serial Key Title: Proceedings of the First International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: I
Publication date: 2013-05-27 00:00:00
Forum or Discussion date: 2013-02-27 00:00:00
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Fantahun Belew

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