What does the World Bank do?
   What is the World Bank Group?
  Who runs the World Bank?
  Where does the World Bank get its money?
  How does the World Bank work?
  Why does it make sense to borrow from the World Bank?

WHAT DOES THE WORLD BANK DO?

The World Bank is one of the world's largest sources of funding and knowledge for transition and developing countries. Its primary focus is on helping the poorest people and the poorest countries. It uses its financial resources, its staff, and its extensive experience to help developing countries reduce poverty, increase economic growth, and improve their quality of life.

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WHAT IS THE WORLD BANK GROUP ?

The World Bank comprises five different agencies that together make up the World Bank Group:

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

•The International Development Association, or IDA, plays a key role in supporting the World Bank's poverty reduction mission. Its assistance is focused on the poorest countries-- with a per person income of less than $885--to which it provides interest-free loans and grants. IDA depends on contributions from its wealthier member countries - including some developing countries - for most of its financial resources.

•The International Finance Corporation, or IFC, promotes growth in the developing world by financing private sector investments and providing technical assistance and advice to governments and businesses. In partnership with private investors, IFC provides both loan and equity finance for business ventures in dveloping countries.

•The Multilateral Investment Guarantee Agency, or  MIGA, encourages foreign direct investment in developing countries by providing guarantees to foreign investors against loss caused by non-commercial risks. MIGA also provides technical assistance to help developing countries promote investment opportunities and uses its legal services to smooth possible impediments to investment.

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

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WHO RUNS THE WORLD BANK?

The World Bank Group is run like a cooperative, with its member countries as shareholders. The number of shares that a country has is based roughly on the size of its economy.

• Ultimate Decision-Making Authority - The World Bank's government shareholders are represented by a Board of Governors. Generally, these governors are ministers, such as Ministers of Finance or Ministers of Development. The governors are the ultimate policy makers in the World Bank. They meet once a year at the World Bank's annual meetings.

•   Day to Day Decision-Making - Because these ministers meet only once a year, they delegate specific duties to their Executive Directors, who work on-site at the World Bank. Every member government of the World Bank Group is represented by an Executive Director. The five largest shareholders - France, Germany, Japan, the United Kingdom, and the United States - appoint an

Executive Director, while other member countries are represented by 19 Executive Directors.

WHERE DOES THE WORLD BANK GET ITS MONEY?

IBRD, the main lending arm of the World Bank Group, raises most of its money in the world's financial markets by selling its AAA-rated World Bank bonds - usually to financial institutions, pension funds, and other institutional money managers, as well as to central banks. Unlike other institutions, however, the World Bank does not operate for profit - it uses its high credit rating to pass the low interest it pays for its finance to its developing country borrowers.

IDA funds, which account for about one quarter of all World Bank lending, provide the poorest countries with interest free loans and grants. Some 40 donors replenish the IDA facility - the world's largest source of interest free assistance to poor countries - every three years, enabling it to continue its programs. IDA also helps mobilize and coordinate aid from donor countries and other international organizations.


HOW DOES THE WORLD BANK WORK?

As Banker

The main business of the World Bank is to lend for development projects. Over the years, the World Bank has developed a variety of lending instruments to meet its borrowers' needs. There are two main lending arms of the World Bank - IBRD and IDA.

As Broker

Other sources of development funding include loans or grants from wealthier countries through bilateral agreements ( that is a borrowing agreement between two countries), from international organizations or groups of countries through multilateral agreements ( that is, agreements among multiple countries), from export credit agencies, or from private business.

As Donor

Although primarily a lending institution, the World Bank Group oversees a number of grant facilities. The Development Grants Facility, for example, funds pilot projects that test innovative approaches and technologies to solve development problems. World Bank grants have supported projects in the areas of rural development, health, education, economic policy, environmental protection, and private-sector development.

As Advisor

World Bank advice draws on years of development experience, analysis, and research. In fact, the World Bank is one of the world's largest centers for research in the areas of development economics, studying poverty, trade, globalization, and the environment. Additionally, each project has a research phase when Bank staff and their partners examine many factors that are important to a country's economic and social health. These factors range from economic and trade prospects, to poverty levels, and whether safety nets are working. The World Bank also has specialized departments that advise in areas of health, education, nutrition, financial services, justice, law, and environment.

As Knowledge Resource

In line with the World Bank's goal of helping countries help themselves, the World Bank Institute, the training arm of the World Bank, offers teaching and informational programs, often in conjunction with local research and teaching institutions, to enhance members' development skills. The World Bank Institute also develops and maintains databases and networks for sharing knowledge on international development.

WHY DOES IT MAKE SENSE TO BORROW FROM THE WORLD BANK?

Unlike other lenders, funds from the World Bank come with advice, as well as the fruit of experience and research. Also, the conditions on which the loans are provided are competitive.

Countries that borrow from the IBRD have more time to repay than if they borrowed from a commercial bank - 15 to 20 years with a three-to-five year grace period before the repayment of principal begins.

IBRD offers middle-income countries a cheap alternative for raising the funds they need to back reforms and public services.

IDA helps the world's poorest countries reduce poverty by providing grants and "credits", which are loans at zero interest with a 10-year grace period and maturities of 35 to 40 years. These countries lack the financial ability to borrow from the IBRD or from commercial markets.

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