World Bank
World Bank, which has official goal of reduction of poverty, provides loans to developing countries for capital programmes. World Bank comprises only two institutions viz. the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). In contrast, World Bank Group comprises three more viz. International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
World Bank is one of five institutions created at the Breton Woods Conference in 1944. World Bank is part of the United Nations system, but its governance structure is different. World Bank’s headquarter is situated at Washington DC.
World Banks Members
Kindly note that for a country to be a member of the World Bank, it is a must to be a member of International Monetary Fund. Total member countries in each institution are as follows:
- The International Bank for Reconstruction and Development (IBRD) has 189 members.
- The International Development Association (IDA) has 173 members.
- The International Finance Corporation (IFC) has 184 members.
- The Multilateral Investment Guarantee Agency (MIGA) has 181 members.
- The International Centre for Settlement of Investment Disputes (ICSID) has 161 signatory and contracting states.
World Bank President
The first president of World Bank was Eugene Meyer. Current President is Jim Yong Kim. The president chairs meetings of the Boards of Directors and is responsible for overall management of the Bank. By tradition, the Bank president is a U.S. national and is nominated by the United States, the Bank’s largest shareholder.
World Bank Lending and Marshal Plan, 1947
The first recipient of World Bank aid was France. Initially the lending of World Bank was low and it increased later on. The Marshall Plan of 1947 caused lending by the bank to change as many European countries received aid that competed with World Bank loans. The Marshall Plan or European Recovery Program was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to combat the spread of Soviet communism. The plan was in operation for four years beginning in April 1948.
After that, the emphasis of World Bank was shifted to non-European countries and until 1968; loans were earmarked for projects that would enable a borrower country to repay loans (such projects as ports, highway systems, and power plants).
From 1968 onwards, World Bank President Robert McNamara shifted bank policy toward measures such as building schools and hospitals, improving literacy and agricultural reform. This led to rise in the third world lending. This system was changed from 1980 by A.W. Clausen.
The countries with most voting power in World Bank are now the United States (15.85%), Japan (6.84%), China (4.42%), Germany (4.00%), the United Kingdom (3.75%), France (3.75%), and India (2.91%).
International Bank for Reconstruction and Development (IBRD)
IBRD provides commercial or concessional loan to only sovereign states or projects backed by sovereign states. Its loans are aimed to improve transportation and infrastructure, education, domestic policy, environmental consciousness, energy investments, healthcare, access to food and potable water, and access to improved sanitation.
IDA
Established in 1960, International Development Association (IDA) helps the world’s poorest countries and aims to reduce poverty by providing interest-free loans {called IDA Credits} and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions.
There is no interest on IDA Credits and their repayment term is stretched over 35-40 years, including a 10 year grace period. IDA also provides grants to countries at risk of debt distress. Since its inception, around 50 percent IDA credits have been given to Africa.
International Finance Corporation
IFC was created in 1956 to foster private sector investment in developing nations. It finances the private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. By doing so, IFC helps companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. The goal is to improve lives, especially for the people who most need the benefits of growth.
Multilateral Investment Guarantee Agency
As a member of the World Bank Group, MIGA’s mission is to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people’s lives.
