WORLD BANK
The World Bank is an international financial institution, owned by 187 countries. It was
established at the July 1944 Bretton Woods Conference, along with the International Monetary
Fund (IMF).
Though titled as a bank, the World Bank is not necessarily a bank in the traditional, chartered
meanings of the world. The World Bank and its subsidiary groups operate within their own
provisions and develop their own proprietary financial assistance products, all with the same
goal of serving countries’ capital needs internationally.
The World Bank provides financial and technical assistance to low and medium-income
countries to aid their economic advancement for reducing poverty. It provides low-interest loans,
interest-free credits, and subsidies to eligible governments to support the development of
individual economics.
No person, organization, government, or nation owns the World Bank. It is an organization
made up of member countries, represented by a Board of Governors. This Board governs the
organization, creates policies, and appoints executive directors. The executive directors govern
the Bank’s business and budget, and grant loan approvals. The President and managers
manage the day-to-day operations. The headquarters of the World Bank is in
Washington D.C.; however, it has locations in more than 170 countries.
As of 2022, the World Bank identified 17 goals that it aims to achieve by 2030. The top two were
mentioned in their mission statement. The first is to end extreme poverty by decreasing the
number of people living on less than $1.90 a day to below 3% of the world population. The
second is to increase overall prosperity by increasing income growth in the bottom 40% of every
country in the world.
The World Bank Group consists of five closely associated institutions each institution having a
distinct role to play in the mission to fight poverty and improve the living standards for people in
the developing world. The institutions are
i) International Bank for Reconstruction and Development (IBRD): It aims to
reduce poverty in middle-income and creditworthy poorer countries by promoting
suitable development through loans, guarantees, and advisory services
ii) International Development Association (IDA): It provides highly concessional
financing to the world’s poorest countries in the form of interest-free credits and
grants.
iii) International Financing Corporation (IFC): It aims to promote economic
development through the private sector.
iv) Multinational Investment Guarantee Agency (MIGA):It helps to promote foreign
direct investment to developing countries by providing guarantees to investors
against non-commercial risk
v) International Centre for Settlement of Investment Disputes (ICSID): It helps in
encouraging foreign investment by providing international facilities for conciliation
and arbitration of investment disputes.
Initially, IBRD was nicknamed as World Bank. The term now has become official
shorthand for IBRD and IDA. Both IBRD and IDA function similarly except for their
target group.
Objectives of World Bank:
i) To provide long-term capital to its member nations for economic development and
reconstruction.
ii) To induce long-term capital for improving the balance of payments and thereby
balancing international trade.
iii) To promote capital investment in member nations in the following ways:
a) To provide a guarantee on private loans or capital investment
b) If capital is not available even after providing a guarantee, the IBRD provides
loans for productive activities on specific conditions.
iv) To ensure the implementation of development projects to bring about a smooth
transference from wartime to a peaceful country.
Purposes of the World Bank:
The following are the important purposes of the World Bank
i) It wants to create an environment that is a pro-investment.
ii) Through investment, it plans to promote the socio-economic status of the society.
iii) It wants to ensure that the judicial and legal systems are developed and individual
rights are protected.
iv) Strengthening the government of its member nations by promoting education.
v) Combating corruption and to ensure that there are adequate training opportunities
and research facilities.
vi) It is working towards achieving sustainable growth.
vii) It provides loans with low-interest rates and also interest-free credits.
viii) Increasing the opportunities for jobs and business in member countries which are
under-developed.
The World Bank or World Bank Group is the largest provider of financial aid to poor countries. It
also provides technical support and policy advice, as well as oversees the implementation of
free-market reforms on behalf of international creditors.
The financial reserves of the World Bank come from several sources such as fees paid in by
member nations, funds raised in the financial markets, contributions made by wealthier nations,
and earnings on its investment.
It has a key role in regulating economic policy and modernizing public institutions in developing
nations, as well as establishing the global macro-economic agenda, alongside the IMF and the
WTO.