Unit - V

IBRD PROFILE
 Also known as ‘World Bank’
 Type - International organization
 Purpose/focus – Development assistance and
Poverty Reduction
 Location - Washington DC
 Membership - 188 countries
 President – Jim Yong Kim
 Parent Organization –World Bank Group
Introduction
 Established in 1944 as the original institution of the World Bank
Group.

 IBRD is structured like a cooperative that is owned and operated

for the benefit of its 188 member countries.

 The World Bank is an international financial institution that

provides long term capital assistance to developing countries
for capital programmes.

 The World Bank has a goal of reducing poverty. By law, all of its
decisions must be guided by a commitment to promote foreign
investment, international trade and facilitate
capital investment.
 WORLD BANK GROUP

OTHER
WORLD BANK
ORGANIZATIONS

IBRD - International Bank for IFC - International Finance

Reconstruction and Development Corporation

IDA - International Development MIGA - Multilateral

Association Investment Guarantee Agency

ICSID - International Centre

for Settlement of Investment
Disputes
History of IBRD
 The World Bank is one of five institutions created at
the Bretton Woods Conference in 1944.

 Delegates from many countries attended the Bretton

Woods Conference. The most powerful countries in
attendance were the United States and United Kingdom
which dominated negotiations.

 Although both are based in Washington, D.C., the World

Bank is, by custom, headed by an American, while the IMF
is led by a European.
 Until 1967 the bank undertook a relatively low level of
lending.
Contd…..
 Bank president John McCloy selected France to be the first recipient of World Bank
aid; two other applications from Poland and Chile were rejected.

 The loan was for $250 million, half the amount requested and came with strict
conditions. Staff from the World Bank monitored the use of the funds, ensuring
that the French government would present a balanced budget and give priority of
debt repayment to the World Bank over other governments.

 The United States State Department told the French government that communist
elements within the Cabinet needed to be removed. The French Government
complied with this command and removed the Communist coalition government.
Within hours the loan to France was approved.

 From 1989, World Bank policy changed in response to criticism from many groups.
Environmental groups and NGOs were incorporated in the lending of the bank in
order to mitigate the effects of the past that prompted such harsh criticism. Bank
projects "include" green concerns.
Functions of IBRD
 To assist in the reconstruction & development of its
member countries.

 To promote private foreign investment.

 To promote balanced growth of international trade.

 To bring about a smooth transition from a war time

economy to peace time economy.

 IBRD aims to reduce poverty in middle-income and

creditworthy poorer countries by promoting sustainable
development through loans, guarantees, risk management
products, and analytical and advisory services.
Membership
 All countries which are members of IMF are members of World
bank.

 A country holding the membership of bank must subscribe to

the charter of the bank.

 If a country resigns its membership, it is required to pay back all

loans granted to it through interest on due date.

 Each member of the world bank has a capital subscription which

is similar to but not identical with its quota in the fund.

 The member’s subscription also measures roughly its voting

power, but again the smaller nations have a slightly higher vote.
Activities by IBRD
 Basic education and health services

 Safety needs

 Infrastructure development

 Environment protection

 Private sector development

 Governance and investment climate

 Technical assistance

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Organization structure
PRESIDENT

BOARD OF GOVERNORS

BOARD OF EXECUTIVE DIRECTORS

BOARD COMMITTEE - MANAGING DIRECTORS

VICE PRESIDENT & FINANCIAL OFFICERS

DEVELOPMENT COMMITTEE
President
 The president of the Bank, elected by the executive
directors, is also their chairman, although he is not entitled
to a vote, except in case of an equal division.

 Subject to their general direction, the president is

responsible for the conduct of the ordinary business of the
Bank.

 Action on Bank loans is initiated by the president and the

staff of the Bank. The amount, terms, and conditions of a
loan are recommended by the president to the executive
directors, and the loan is made if his recommendation is
approved by them.
Board of Governors
 All powers of the Bank are vested in its Board of Governors, composed
of one governor and one alternate from each member state.

 Ministers of Finance, central bank presidents, or persons of

comparable status usually represent member states on the Bank's
Board of Governors. The board meets annually.

 The Bank is organized somewhat like a corporation. According to an

agreed-upon formula, member countries subscribe to shares of the
Bank's capital stock. Each governor is entitled to cast 250 votes plus 1
vote for each share of capital stock subscribed by his country.

 The Executive Directors make up the Boards of Directors of the World

Bank. They normally meet at least twice a week to oversee the Bank's
business, including approval of loans and guarantees, new policies, the
administrative budget, country assistance strategies and borrowing and
financial decisions.
Executive Directors
 The Bank's Board of Governors has delegated most of its authority to
24 executive directors.

 According to the Articles of Agreement, each of the five largest

shareholders—the United States, Japan, Germany, France and the
United Kingdom—appoints one executive director.

 The other countries are grouped in 19 constituencies, each represented

by an executive director who is elected by a group of countries.

 The number of countries each of these 19 directors represents varies

widely. For example, the executive directors for China, the Russian
Federation, and Saudi Arabia represent one country each, while one
director speaks for 24 Francophone African countries and another
director represents 22 mainly English-speaking African countries.
 How the World Bank operates
 188 Member Countries
appoint their Governors.
Board of Governors

 Governors delegate
Executive specific duties to
Directors
Executive Directors.

Office of the
President  President of the World
Bank reports to the Board
of Executive Directors

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Purposes
 To assist in bringing about a smooth transition from
wartime to peaceful economies,

 To promote economic development that benefits poor

people in developing countries.

 Loans are provided to developing countries to help

reduce poverty and to finance investments that
contribute to economic growth.
Contd…..
 Investments include roads, power plants, schools, and
irrigation networks, as well as activities like agricultural
extension services, training for teachers, and nutrition-
improvement programs for children and pregnant women.

 Some World Bank loans finance changes in the structure of

countries' economies to make them more stable, efficient,
and market oriented.

 The World Bank also provides technical assistance to help

governments make specific sectors of their economies
more efficient and more relevant to national development
goals.
Staff
 A diverse staff of more than 12,000 employees from over 160
countries works at the World Bank.

 Two-thirds of it are based in Washington DC, while the

remaining third are at work in more than 100 country offices in
the developing world.

 There are economists, educators, environmental scientists,

financial analysts, and managers, as well as foresters,
agronomists, engineers, information technology specialists and
social scientists, to name a few. It apply its skills and the Bank's
resources to bridge the economic divide between poor and rich
countries, to turn rich country resources into poor country
growth and to achieve sustainable poverty reduction.
World Bank Staff

 Total Bank staff numbers about 12,000.

 8,000 at HQ and 4,000 in the field.

 Developing country nationals represent 55%

of total staff.

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What are the biggest global challenges for
IBRD?

 Population growth

 Elimination of global poverty

 Global life expectancy

 Aid to education
Millennium Development Goals (MDGs)
Goal 1: Wipe out extreme poverty and hunger

Goal 2: Offer all children a good basic education

Goal 3: Help women get equal rights and empower them

Goal 4: Reduce death rate of young children

Goal 5: Improve the health of mothers

Goal 6: Combat HIV/AIDS, malaria, and other diseases

Goal 7: Help countries protect their environments

Goal 8: Promote a global partnership for development

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How IBRD is financed?
 At its establishment, the IBRD had an authorized capital of US$ 10 billion.
IBRD raises most of its funds on the world's financial markets. It has become
one of the most established borrowers since issuing its first bond in 1947 to
finance the reconstruction of Europe after World War Two. Investors see IBRD
bonds as a safe and profitable place to put their money and their cash finances
projects in middle-income countries.

 IBRD became a major player on the international capital markets by

developing modern debt products, opening new markets for debt issuance, and
by building up a broad investor base around the world of pension funds,
insurance companies, central banks, and individuals.

 The World Bank's borrowing requirements are primarily determined by its

lending activities for development projects. As World Bank lending has
changed over time, so has its annual borrowing program. In 1998 for example,
IBRD borrowing peaked at $28 billion with the Asian financial crisis. It is now
projected to borrow between $10 to 15 billion a year.
Where does the money come
from?
 IBRD raises funds on capital markets

 Donors give money to IDA for the world’s poorest

countries, with additional money coming from
repayments and from the Bank’s earnings

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World Bank funding
 Education: $1.9 billion

 HIV-AIDS: $2.5 billion for UNAIDS

 Health: $2.2 billion for health, nutrition, and population projects.

 Debt Relief: 27 countries

 Environment: $2.49 billion

 Partnerships: $4.8 billion

 Governance: $2.6 billion

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World Bank Borrowers
 France was the first borrower for $250 million to finance
post-war reconstruction in 1946.

 Many developed nations who are now donors, were also

borrowers, such as Austria, Australia, Denmark, Japan,
Italy, Finland, and Greece

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Lending operations
 The IBRD lends to member governments, or, with government
guarantee, to political subdivisions, or to public or private
enterprises.

 The IBRD normally makes long-term loans, with repayment

commencing after a certain period.

 The length of the loan is generally related to the estimated

useful life of the equipment or plant being financed.

 Since July 1982, IBRD loans have been made at variable rates. The
lending rate on all loans made under the variable-rate system is
adjusted semiannually, on 1 January and 1 July, by adding a
spread of0.5% to the IBRD's weighted average cost during the
prior six months.
Projects
 At any given moment in locations around the globe, people are
engaged in development projects designed to improve living standards
and reduce poverty.

 Last year, the World Bank provided $46.9 billion for 303 projects in
developing countries worldwide, with its financial and technical
expertise aimed at helping those countries reduce poverty.

 The Bank is currently involved in more than 1,800 projects in virtually

every sector and developing country. The projects are as diverse as
providing microcredit in Bosnia and Herzegovina, raising AIDS-
prevention awareness in Guinea, supporting education of girls in
Bangladesh, improving health care delivery in Mexico, and helping
East Timor rebuild upon independence and India rebuild Gujarat after
a devastating earthquake.
THANK YOU