Economics
International Loans
International loans refer to financial transactions where a country borrows money from foreign entities or international organizations. These loans are often used to finance development projects, infrastructure, or to address balance of payment deficits. They can be in the form of bilateral loans between two countries or multilateral loans involving multiple lenders and borrowers.
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3 Key excerpts on "International Loans"
eBook - PDFInternational Organizations
Politics, Law, Practice
- Ian Hurd(Author)
- 2020(Publication Date)
- Cambridge University Press(Publisher)
The Bank adds fees to each loan on top of its own costs of borrowing, and so the Bank makes a profit on its regular oper-ations – but even with this premium over the market rate, its lending terms are far more favorable than most of its members could generate themselves on the international market. 156 The International Monetary Fund and the World Bank Compliance The core of the Bank’s lending happens through the IBRD, and its oper-ations are limited by the Articles of Agreement to loans “for the purpose of specific projects of reconstruction or development” (Art. 3(4)vii). This is crucial to understanding the Bank’s role in international development, and its distinction from the International Monetary Fund. The Bank is engaged in project-specific lending, and those projects must fit under the heading of “reconstruction or development.” In the 1940s, when the Bank began, this was understood to mean “reconstruction” from World War II but today it is read as a general mandate against poverty and deprivation. Projects are initiated when a state approaches the Bank with a proposal regarding a development project for which it seeks funding. From there a negotiation takes place between the government and Bank officials over the nature of the project, the terms of the loan, and other details. Other parts of the World Bank Group may lend to private actors, but the IBRD lends only to states and to borrowers for whom a state is willing to provide guaranteed backing. IBRD loans generally have long maturities, often thirty years, and the Bank usually insists that the borrower find other funding partners to supplement the Bank’s contribution so that the risk is diversified. Appendix 6.B shows one agreement between Argentina and the Bank that led to a $70 million loan in 2005 to fund flood-management construction in Buenos Aires. The Bank’s political controversies arise both over the way it grants its loans and over the terms of the loans.
eBook - PDF- John Edwards(Author)
- 2019(Publication Date)
- Taylor & Francis(Publisher)
Included among the latter are adjustment pro-grams by borrowing countries under the aegis of the IMF and the World Bank, the stretch-out of repayments, and some net new lending by commercial banks. It is nevertheless necessary to examine the causes of the debt problem and try to identify the lessons to be drawn from it if private lending is again to play an important (though less dominant) role in intermediating capital transfers to the developing countries over the long run. The causes fall into three broad categories: the economic policies of the borrowing countries; world economic development; and the lending practices of the commercial banks. Policies of Developing Countries Domestic economic policies are the fundamental determinant of the economic performance of developing countries, the effectiveness of their 132 Commercial Lending use of foreign capital, and their capacity to service their external debts. However, shortcomings of domestic policies are by no means the only cause of recent debt-servicing problems. Even with sound economic policies, countries have had extreme difficulties in coping with the severity of the external shocks experienced in the late 1970s and early 1980s (high oil prices, steeply rising interest rates, and worldwide recession). However, flexible policies and structures based on market-determined prices and resource allocation can cushion the impact of even severe external shocks. The essential role of foreign capital is to promote growth by permitting a country to invest more than it could if it had to rely only on national savings. In the early stages of development, when a country's capital stock is small, returns on investment are generally higher than those in mature industrial countries. Inflows of capital from abroad are therefore economically justified. Indeed, from an idealized perspective, a developing country can be expected to go through a kind of investment life cycle.
eBook - PDFInternational Organizations
Politics, Law, Practice
- Ian Hurd(Author)
- 2017(Publication Date)
- Cambridge University Press(Publisher)
The Bank adds fees to each loan on top of its own costs of borrowing, and so the Bank makes a profit on its regular operations – but even with this premium over the market rate, its lending terms are far more favorable than most of its members could generate them- selves on the international market. 152 The International Monetary Fund and the World Bank Compliance The core of the Bank’s lending happens through the IBRD, and its operations are limited by the Articles of Agreement to loans “for the purpose of specific projects of reconstruction or development” (Article 3(4)vii). This is crucial to understand- ing the Bank’s role in international development, and its distinction from the International Monetary Fund. The Bank is engaged in project-specific lending, and those projects must fit under the heading of “reconstruction or development.” Projects are initiated when a state approaches the Bank with a proposal regarding a development project for which it seeks funding. From there a negotiation takes place between the government and Bank officials over the nature of the project, the terms of the loan, and other details. Other parts of the World Bank Group may lend to private actors, but the IBRD lends only to states and to borrowers for whom a state is willing to provide guaranteed backing. IBRD loans generally have long maturities, often thirty years, and the Bank usually insists that the borrower find other funding partners to supplement the Bank’s contribution so that the risk is diversified. Appendix 6.B shows one agreement between Argentina and the Bank that led to a $70 million loan in 2005 to fund flood-management construction in Buenos Aires. The Bank’s political controversies arise both over the way it grants its loans and over the terms of the loans. The Bank has operated under a number of overarching concepts since 1947 and these define distinct periods in its history.
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