What is the purpose of the World Bank?

The goal of the World Bank is to reduce poverty and to improve the living standards of the people in low and middle-income countries.

 

The World Bank is one of the world’s largest sources of funding and knowledge to support governments of member countries in their efforts to invest in schools and health centers, provide water and electricity, fight disease and protect the environment. This support is provided through project or policy-based loans and grants, as well as technical assistance like advice and studies.

 

The World Bank is not a ‘bank’ in the common sense. The World Bank is an international organization owned by the 184 countries¾both developed and developing¾that are its members.

 

The Bank was set up in 1944 as the International Bank for Reconstruction and Development to act as facilitator of post-World War II reconstruction and development . The number of member countries increased sharply in the 1950s and 1960s, when many countries became independent nations.  As membership grew and their needs changed, the World Bank expanded and is currently made up of five different agencies.

All support to a borrowing country is guided by a single strategy (called the 'Country Assistance Strategy') that the country itself designs with help from the World Bank and many other donors, aid groups, and civil society organizations.

 

More information:
  How the World Bank assists countries
    "About Us" section
  How are countries represented at the World Bank
    The various agencies which make up the World Bank Group

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  How is the World Bank Group organized?

As membership grew, and needs changed, the World Bank expanded and now comprises five different agencies that together make up the World Bank Group:

 

  The International Bank for Reconstruction and Development provides assistance to middle income countries. IBRD obtains most of its funds through the sales of bonds in international capital markets.
 

  The International Development Association assists the poorest countries with a per capita income of less than $885--to which it provides interest-free loans, technical assistance and policy advice.
 

  The International Finance Corporation (IFC) promotes growth in client countries by financing private sector investments.
 

  The Multilateral Investment Guarantee Agency (MIGA)helps encourage foreign investment by providing guarantees to foreign investors against loss caused by non-commercial risks in developing countries, thereby creating investment opportunities in those countries.
 

  The International Centre for Settlement of Investment Disputes provides facilities for the settlement by conciliation or arbitration of investment disputes between foreign investors and their host countries.

 

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What is the Difference Between the World Bank and a Commercial Bank?

The World Bank is not a bank in the traditional sense. It is an international organization owned by the 184 countries -- both developed and developing -- that are its members.

While the World Bank lends and even manages funds much like a regular bank, it is different in many important ways. The financial support and advice the World Bank provides its member countries is designed to help them fight poverty. And unlike commercial banks, the World Bank often lends at little or no interest to countries that are unable to raise money for development anywhere else.

Countries that borrow from the World Bank also have a much longer period to repay their loans than commercial banks allow.  In some cases, they don’t have to start repaying for 10 years.

Basically, the World Bank borrows the money it lends. It has good credit because if has large, well-manages financial reserves. This means it can borrow money at low interest rates from capital markets and channel it to developing countries, often at much lower rates of interest than these countries would receive on their own.

More information:
   Re-payment conditions for loans

 

 

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More information:
   The IMF website

 

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  How does the World Bank lend money?

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How are countries represented at the World Bank?

The World Bank is run like a cooperative, with member countries as shareholders. The number of shares a country has is based roughly on the size of its economy. The United States is the largest single shareholder, with 16.41 percent of the votes, followed by Japan (7.87 percent), Germany (4.49 percent), the United Kingdom (4.31 percent), and France (4.31 percent). The rest of the shares are divided among the other member countries.

Every member government is represented by an Executive Director. The five largest shareholders (France, Germany, Japan, the United Kingdom and the United States) appoint an Executive Director each, while other member countries are represented by 19 Executive Directors.

The 24 Executive Directors based in Washington D.C. make up our Board of Directors. They normally meet twice a week to oversee business, including reviewing loans and guarantees, new policies, the administrative budget, country support strategies, and borrowing and financial decisions.


More information: 
   Complete list of World Bank Executive Directors for each country 
  How representatives to the World Bank are are selected 
  Voting shares for each country

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   How can I learn about decisions being made at the World Bank?

The  Board Calendar contains the work program for the Board of Executive Directors and the  Board Minutes summarize the decisions reached at its meetings.

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