Ex. 5. Sum up the content of the main dialogue. Use the phrases from Ex. 5 (Unit 1).

Ex. 6. Read the dialogue, translate the Russian remarks into English and act it out:

Russian: Общеизвестно, что Всемирный Банк имеет одну основную цель – содействовать экономическому и социальному прогрессу в развивающихся странах, помогая им повысить свой жизненный уровень. Вы предоставляете кредиты развивающимся странам для реализации проектов в области образования, здравоохранения, защиты окружающей среды и т.д. Сумма кредитов, предоставленных Банком в 1998 году, была рекордно высокой. Чем это было вызвано?

Foreigner. The World Bank's lending really jumped to record levels boosted by its support for countries hit by the financial crisis and by the support for social safety nets, I mean social security for the unemployed and pensioners in some countries.

R.: В 1998 году вы также оказывали значительную помощь странам, пострадавшим от ураганов, наводнений, засух, землетрясений. Используя различные механизмы финансирования, вы помогали восстанавливать дороги, мосты, строить новые школы, больницы, развивать бизнес. Какие финансовые средства вы использовали для этих целей?

F.: We used our own resources, mobilized donor resources, we also worked in tandem with the IMF.

R.: Это понятно, вы две родственные организации, созданные после Второй мировой войны для поддержания всей структуры мирового экономического и финансового порядка.

F.: That's right, but there is a great difference between us. The World Bank is an investment bank. The IMF is an association of governments.

R.: Да, те, кто профессионально связаны с МВФ и ВБ, понимают, что в противовес вам главной целью МВФ является достижение экономической стабильности в мире, устойчивого роста, помощь странам, имеющим сложности с платежным балансом. МВФ считает, что необходимым условием этого является упорядоченная валютная система, которая содействует торговле, создает рабочие места, расширяет экономическую активность и поднимает жизненный уровень во всем мире.

F.: I can't agree more with you here.

Ex. 7. Work on vocabulary and grammar.

a) Study the key words of the unit in the dictionary at the back of this book:

adjustment, balance of payments, exchange rate, trade, parity, disequilibrium;

b) Think of the verbs that are most commonly used with:

payments, transaction, monitoring, inflation, project, maladjustments, balance, subscription, loans, fiscal issues;

c) Think of the nouns that are most often used with:

to govern, to set up, to found, to establish, to negotiate, to support, to correct, to assist, to draw, to maintain, to relieve, to consult, to repay, to envisage, to stipulate, to specify;

d) Make your own sentences with any five word combinations from (b) and (c).

e) Match the verbs from (a) with the nouns from (b) below:

 

a) to address b) export controls

to affect individuals

to provide relationships

to define interests

to reconcile accounts

to impose impact

to strengthen benefits

to adjust functions

to settle problems

f) Write out from the main text international words like investor, channel, role, etc. Transcribe them and read aloud.

Ex. 8. a) Supply the articles where necessary.

b) Write down 3-5 questions about the text.

c) Describe the purposes for which the IMF was set up.

International Monetary Fund

 

The International Monetary Fund, an association of governments, was set up on 27th December, 1945, as a result of the Bretton Woods Agreements which were designed to translate the bitter lessons of global depression into... stable and cooperative international monetary system. The organizational structure of the IMF is set out in its Articles of Agreement, which entered into... force in December 1945. The goals of... IMF are to promote international monetary cooperation through a permanent institution; to facilitate the expansion and balanced growth of international trade; to promote exchange stability; to assist in the establishment of a multilateral system of payments in respect of current transactions between members; and to provide members with an opportunity to correct maladjustments in their balance of payments without resorting to measures destructive to national and international prosperity. Over many years the IMF has been directly involved in supporting... efforts of developing countries to pursue broad structural reforms and achieve sustainable growth. As of August 1, 1994, 179 countries were members of the IMF. Each member government has been set... quota to be paid into the Fund, payable partly in... gold and partly in the member's own currency; the quota determines the member's voting power and... amount of foreign exchange that it may draw from the Fund. A member may purchase foreign exchange, paying its own currency, but... member must "repurchase" its own currency within three or, at the outside, five years to maintain the balance in the Fund pool. Currencies drawn from the Fund may be used to relieve... member's balance-of-payments difficulties; the funds may not be used for military purposes or for programmes of economic development. The aim is to assure... maintenance of fixed exchange rates in the face of short-term fluctuations. Many countries have been helped in this way. Each member undertakes to establish and maintain an agreed par value for its currency, and to consult the Fund on any change in... initial parity. In addition, the Fund consults with members on their international financial situation and on specific problems as they arise. On request, the Fund furnishes expert missions to advise and assist... governments in working out monetary problems on the spot. In any event, members are kept informed of... latest developments. Policies are laid down by a Board of Governors, representing all members, which normally meets annually. Many of its powers are delegated to a Board of Executive Directors. In recent years, the resources of the Fund have been supplemented by resources of... Group of Ten.

Words you may need:

to be designed быть предназначенным для чего-л.

to enter into force вступать в силу

balanced adj сбалансированный

multilateral system многосторонняя система

in respect of в отношении

to correct maladjustments исправлять диспропорции

resort (to) v прибегать к

structural reforms структурные реформы

voting power голоса в руководящих органах

purchase v покупать

to maintain the balance поддерживать баланс

pool n пул

relieve v облегчать

fluctuation n колебание

par value валютный паритет, номинал

parity n паритет

furnish v (зд.) предоставлять

on the spot на месте

lay down v устанавливать, формулировать

Board of Governors Совет управляющих

powers n полномочия

delegate v делегировать

Board of Executive Directors Совет исполнительных директоров

Eх. 9. a) Supply the prepositions where necessary.

b) Write down 3-5 questions about the text.

c) Describe the purposes for which the organization was set up.

Your Partner EBRD

 

The EBRD (European Bank for Reconstruction and Development) is a multinational institution set... with the specific aim of assisting the countries of Central and Eastern Europe to develop into market-oriented economies. Its 59 shareholders include countries from both this region and the rest... the world, plus the European Community and the European Investment Bank.

The strongest comparative advantage of the Bank relative to other international financial institutions lies in its ability to operate both in the public and private sectors and to have... its disposal the broadest range and flexibility of financing instruments. The Bank is uniquely equipped in both staff and range of instruments to support the different stages of transition.

Specifically, the EBRD seeks to promote the development of the private sector within these economies... its investment operations and through the mobilization of foreign and domestic capital. In relation to private commercial banks, the EBRD's main advantages lie in its willingness and ability to bear risk. This allows the Bank to act at the frontier of commercial possibilities. It also shares the project risk... acting with other private sector entities, such as commercial banks and investment funds, as well as multilateral lenders and national export credit agencies.

While its structure is unlike that of a commercial bank, the EBRD has a similar approach... dealing with projects and it prices its products... a commercial basis. With its AAA credit rating, the Bank is able to raise funds... the finest rates from the international capital markets.

For a project to be considered it has to be commercially viable. The Bank does not issue guarantees... export credits or provide retail banking services.

Foreign joint ventures are one of the EBRD's main vehicles for financing; joint ventures offer partners an effective way to gain access... foreign and domestic markets, encourage foreign private investments in the region, reduce risk, and facilitate the transfer... technology and management skills.

Words you may need:

shareholder n акционер

relative to относительно

flexibility n гибкость

specifically adv (зд.) конкретно

in relation to что касается

willingness n готовность

to bear risk нести риск

multilateral lenders многосторонние кредиторы

AAA credit rating показатель кредитоспособности ААА

viable adj жизнеспособный

Ex. 10. a) Open the brackets putting the verbs into the correct forms,

b) Describe the IMF's activities during the anniversary year.

Fiftieth Anniversary of the Bretton Woods Conference

 

The fiftieth anniversary of the Bretton Woods Conference that led to the foundation of the International Monetary Fund (IMF) (to mark) by a considerable increase in all areas of the IMF's operations. The anniversary (to stimulate) an assessment of changes in the international monetary system and reflections on the ways in which the IMF should respond to them.

In this connection 1995, the anniversary year, (to be) the year of intense activity for the IMF. First of all, the IMF adequately (to respond) to the financial crisis in Mexico. The year also (to see) а further evolution in the IMF's role of assisting countries in the transition from command to market economies. The IMF (to approve) substantial financial arrangements for Russia and Ukraine, extended its financial support to a large number of developing countries, increased access to its resources for all members, and carried out surveillance over members' economic policies.

In 1995 the call on the IMF to provide financial support (to lead) to exceptionally heavy demands on the IMF resources. Total drawings from the IMF's General Resources Account during 1994/95 (to amount) to SDR 10.6 billion. Of this total, SDR 7.6 billion was provided under stand-by arrangements; SDR 1.6 billion – under extended arrangements; SDR 0.3 billion – under the compensatory and contingency financing facility (CCFF); and SDR 1.1 billion-under the systemic transformation facility (STF). In addition, SDR 0.6 billion in concessional assistance (to disburse) under the structural adjustment facility (SAF) and enhanced structural adjustment facility (ESAF). Among the IMF's most important responsibilities (to be) its mandate to oversee the effective functioning of the international monetary system and to exercise firm surveillance over members' economic policies.

The IMF (to fulfil) these oversight and surveillance roles in a variety of ways. The IMF has regular annual consultations with member countries. The IMF (to assess) a member's macroeconomic and structural policies and (to encourage) all members to adopt policies that are in their long-term interests and contribute to their expansion and balanced growth of the world economy.

During the anniversary year this work (to give) an added impetus by the "Madrid Declaration" adopted by the IMF in 1994.

Access to technical assistance and training (to become) an increasingly valuable benefit of the IMF membership. The global revolution in favour of market-oriented economies and the widening implementation of structural adjustment policies (to increase) member countries' requests for IMF assistance.

It should be mentioned, however, that in spite of the activities serious policy challenges (to remain), like how to sustain economic growth, to reduce unemployment, to prevent a resurgence of inflation in the industrial countries, to maintain and extend growth through strong programs of adjustment and structural reform in developing countries, to integrate the economies in transition into the world economy and to set them firmly on the path of sustainable growth.

Words you may need:

anniversary n годовщина

reflection n размышление

further evolution эволюция, дальнейшее развитие

surveillance n надзор

General Resources Account счет общих ресурсов

SDR (Special Drawing Rights) специальные права заимствования

stand-by arrangement соглашение о резервных кредитах

compensatory and contingency financing facility система компенсационного финансирования и финансирования непредвиденных расходов

systemic transformation facility механизм финансирования системных преобразований

concessional assistance помощь, предоставляемая на льготных условиях

disburse v оплачивать, платить

structural adjustment facility механизм финансирования структурной перестройки

enhanced structural adjustment facility механизм расширенного финансирования структурной перестройки

mandate n мандат

oversee v наблюдать

oversight n присмотр, надзор

impetus n стимул, толчок

in spite of prep несмотря на

resurgence n возрождение, восстановление

sustainable growth устойчивый рост

Ex. 11. a) Fill each gap with a suitable word from the box.

b) Sum up the text in 5-7 sentences and present your summary in class.

c) Describe the World Bank's activities. Say how they differ from those of the IMF.

 

board	encourage	member	financed
bear	setup	growth	provides
per	focused	carries out	operations
imbalances	policy	purposes	countries
established

World Bank – International Bank for Reconstruction and Development (IBRD)

 

The "World Bank" refers to the International Bank for Reconstruction and Development (IBRD) and its affiliate, the International Development Association (IDA). The Bank was ______together with the IMF by the Bretton Woods Conference of 1945 as an international bank for two_______: to help finance the rebuilding of war-devastated areas and to aid in the advancement of less-developed_______.

Operations started in 1946. The Bank is _______ partly by contributions paid by_______countries, partly by bond issues. The national contributions constitute the bank's capital and relate to the individual countries' share of world trade. The bond issues finance the lending_______of the bank.

In financing the economic _______ of member countries the International Bank complements the IMF, which finances temporary balance of payments_______. Loans are made to governments or government-guaranteed entities. Besides lending funds, the Bank _______technical advice to governments or other borrowers on a wide range of development problems. It_______general economic surveys for governments wishing to study resources and to plan long-range _______of development.

At first devoted to the reconstruction needs of industrial countries the World Bank by the 1950s had _______ its attention on the developing world. In 1956 the IBRD formed the International Finance Corporation (IFC) the purpose of which was to_______growth in the private sector of developing countries and to mobilize domestic and foreign capital for this purpose. In 1960 the IBRD_______the International Development Association in order to assist the poorer developing countries (those with an annual_______capita GNP of less than $731 in 1980 prices). Loans to these countries_______no interest and are repayable over 50 years with an initial grace period of 10 years.

The Bank's strategy has been to ensure that its aid reaches the broad masses of the people; this is to be done by investments encouraging productivity and integrating the broad masses of people as active partners into the development process.

The powers of the Bank are vested in a_______of Governors.

Words you may need:

affiliate n филиал

war-devastated areas разоренные войной территории

bond issue выпуск облигаций

complement v дополнять

survey n обследование

International Finance Corporation Международная финансовая корпорация

repayable adj подлежащий погашению (уплате)

grace period льготный период

integrate v интегрировать; (зд.) включать, вовлекать

vest v облекать, наделять властью

DISCUSSION

Ex. 12. a) Read the text.

b) Describe the facilities under which resources are made available to the IMF members.

c) Explain the "conditionally" principle of the IMF.

 

The IMF's financial resources are made available to its members under a variety of facilities and policies, depending on the circumstances, especially the nature of the macroeconomic and structural problems to be addressed.

The IMF makes resources available under both its general resources and its concessional financing facilities. Member countries use the general resources of the IMF by making a purchase (drawing) of other members' currencies or SDRs with an equivalent amount of their own currencies. The IMF levies charges on these drawings and requires that members repurchase (repay) their own currencies from the IMF with other members' currencies or SDRs over a specified time. Concessional financing under the structural adjustment and enhanced structural adjustment facilities is made available in the form of loans.

Regular facilities include: Reserve tranche, Credit tranches, Standby Arrangements, Extended Fund Facility. In providing financial support to any member country, the IMF must be assured that the member is pursuing policies that will ameliorate or eliminate its external payments problem. The requirement that members make a commitment to a set of policy measures aimed at correcting economic and financial imbalances within a reasonable period in return for IMF financial support is known as "conditionally". "Conditionally" is designed to ensure that members using IMF resources will be able to repay the IMF in a timely manner.

IMF-supported programmes emphasize certain key aggregate economic variables, including domestic credit, the public sector deficit, international reserves, and external debt. They also emphasize crucial elements of the pricing system – including the exchange rate, interest rate, and, in some cases, commodity prices – that significantly affect the country's public finances and foreign trade.

A successful adjustment programme must elicit an adequate response from the supply side of the economy. Interest rates and exchange rates are particularly important, since they influence savings and investment decisions and, therefore, a member country's growth prospects.

Adjustment programmes, typically, have an impact on income distribution, employment and social services. While the promotion of sound macroeconomic policies and structural reforms contributes to sustained growth and employment, adjustment may also involve short-term social costs to vulnerable groups. The IMF staff analyse the implications of reform measures for vulnerable groups and advise the authorities on how best to integrate social safety nets and their financing into programmes.

Words you may need:

facility n (зд.) схема кредитования, механизм финансирования

address v обращаться (к чему-л.)

concessional financing facility механизм льготного финансирования

regular facilities обычные механизмы финансирования

reserve tranche резервный транш

ameliorate v улучшать

external payments problem проблема внешних платежей

"conditionality" n (зд.) обусловленность кредитов (МВФ)

timely adj своевременный

aggregate economic variables совокупные экономические переменные (величины)

crucial adj решающий

elicit v извлекать, выявлять

sound policy разумная политика

vulnerable adj уязвимый

implication n смысл, значение (событии)

Ex. 13. Read the dialogue, sum up its content and act it out:

Fiscal Issues Are a Growing Concern of the IMF

(Interview with the IMF's Fiscal Affairs Department Head)

Interviewer: Fiscal discipline is a vital element of the IMF's macroeconomic policy advice to member countries. How would you describe your department's role in IMF surveillance and policy advice?

Head: Since the early 60s when the department was created, we have been largely involved with technical assistance, with helping countries in Africa and elsewhere create fiscal institutions. Recently, the role of technical assistance has broadened.

Int.: Has it been connected with the movement of the economies in transition to market-oriented systems?

Head: Yes, with regard to economies in transition we had to help to create institutions as well as to reform policies. We have been much involved in setting up tax administrations, treasuries, budget offices, as well as creating and reforming customs policies.

Int.: Your role in trying to make tax systems more efficient and equitable is well known.

Head: Thank you. Besides, we have done a lot to improve public expenditure management systems, in other words, all activities that allow a country to gain better control over its expenditure. Work on social safety nets has also become an important activity of our department. And the first reason for this is the major economic policy changes in the transition economies.

Int.: Oh, it is quite understandable, the changes were accompanied by very high inflation that dramatically reduced the income of some groups, such as pensioners, right?

Head: Also, disposable incomes on the whole fell sharply. So, it was necessary to help these countries reform policies to protect the people. The other reason why we became more active in the safety net area was to provide some sort of targeted protection for particularly vulnerable population groups in countries engaged in major macroeconomic adjustment efforts that were accompanied by large withdrawals of subsidies.

Int.: So, your department has become involved in several new areas. I mean poverty, social safety, income distribution, and others. What is the nature of the work in these areas, and how would you assess its relevance to the IMF's main macroeconomic work and its value to members?

Head: Our interest in poverty and social problems has much to do with strengthening the political sustainability of reforms. When a country undertakes a major reform, the distribution of income often deteriorates in the short run. If it deteriorates too much and large groups become impoverished in the process, they may become supporters of populist policies that would defy the reform. We pay attention to poverty to help sustain reform and achieve macroeconomic stability and thereby to expand economic activity and income.

Int.: What future directions and roles do you envisage for FAD?

Head: FAD has been a demand-driven department to a large extent. The pressures on this department are enormous. I take pride in this department's role as one of the world's main fiscal observatories. We have one of the best concentrations of fiscal economists in the world. We try to anticipate fiscal problems and provide intellectual leadership for their solution. I hope, I've made myself clear, haven't I?

Words you may need:

fiscal issues вопросы бюджетно-налоговой политики

customs policy таможенная политика

public expenditure management system система управления государственными расходами

disposable income располагаемый доход

targeted protection адресная защита

relevance n уместность

impoverished adj обнищавший

populist policy популистская политика

defy v выступать (против)

envisage v предусматривать

to a large extent в значительной степени

enormous adj громадный

to take pride (in) гордиться (чём-л.)

I hope, I've made myself clear. Надеюсь, я ясно все объяснил.

Ex. 14. Give extensive answers to these discussion questions:

 

1. What is the international monetary system?

2. When did the system emerge?

3. What institutions does it comprise?

4. What functions does the IMF perform? What powers does it have?

5. What international reserve asset has been created by the IMF? How is the SDR value determined?

6. Under what financing facilities does the IMF offer resources to its members?

7. What is "conditionally" designed to ensure?

8. Is Russia (other former republics of the USSR) an IMF's member?

9. What role does the World Bank play?

10. What organizations help reschedule debts?

In order to get prepared for participation in the class discussion of the questions, write a short essay on:

 

a) The World Bank.

(Use: purpose, to promote, progress, to carry out, to lend, to provide services, to stimulate investments, to borrow, subscription, funds)

b) The IDA.

(Use: to provide assistance, per capita income, favourable terms, to share the same staff)

c) The IMF.

(Use: association, to set up, goals, to promote, to facilitate, balanced trade, to establish, payment system, exchange stability, to correct maladjustments, quota, voting power, to consult, mission, to train)

Ex. 15. Prepare a talk on the following:

 

a) In what ways are individuals affected by international monetary developments?

b) Relations between Russia and international institutions such as GATT, OECD, BIS, UNCTAD, IMF. In what ways do countries benefit from the membership in these organizations?

c) Your opinion on Russia's borrowings from the IMF. Is it the only way to cover the budget deficit?

d) Your opinion on Russia's relations with the Paris Club and the London Club. Do you think that the nation's Soviet-era foreign depts should be written off?