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What is the World Bank?

   What is the purpose of the World Bank?

   How is the World Bank different from a commercial bank?

   What is the difference between the World Bank and IMF?

    How are loans made?

   How are citizens represented at the World Bank? 

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

WHAT IS THE PURPOSE OF THE WORLD BANK?

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.

 

The World Bank is not a "bank" in the common sense. The World Bank is an international organization owned by the 187 countries¾both developed and developing¾that are its members.

 

It was set up in 1944 as the International Bank for 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 that the country itself designs with help from the World Bank and many other donors, aid groups, and civil society organizations.

 

More information about :
   The various agencies that make up the World Bank 

 

WHAT IS THE DIFFERENCE BETWEEN THE WORLD BANK AND A COMMERCIAL BANK?

While it lends and even manages funds much like a regular bank, the World Bank is different in many important ways. It is owned by 187 countries. 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 ten years.

 

Basically, the World Bank borrows the money it lends.  It has good credit because it has large, well-managed financial reserves.  This means it can borrow money at low interest rates from capital markets all over the world and channel it to developing countries, often at much lower rates of interest than what markets would charge these countries.

More information about:
  Repayment conditions for loans

 

WHAT IS THE DIFFERENCE BETWEEN THE WORLD BANK AND THE IMF?

People sometimes confuse the World Bank with the International Monetary Fund (IMF), which was also set up at the Bretton Woods conference in 1944. Although the IMF’s functions complement those of the World Bank, it is a totally separate organization. While the World Bank provides support to developing countries, the IMF aims to stabilize the international monetary system and monitors the world’s currencies.

Also see:
 IMF website

HOW ARE LOANS MADE?

 

The World Bank offers two basic types of loans: investment loans for goods, work and services to support economic and social development projects in a broad range of sectors; and adjustment loans to support policy and institutional reforms.

 

During loan negotiations, the World Bank agrees with the borrowing country on the development objective of the project or program, outputs, performance indicators (to measure the impact and success of the project) and a plan to put it all into practice. Once a loan is approved and becomes effective, the borrower puts the project or program into practice according to the terms agreed to with the World Bank.

 

The World Bank supervises how each loan is used and evaluate the results. All loans are governed by operational policies, which make sure that operations are economically, financially, socially and environmentally sound.


 Learn more about types of financial assistance.

 

 HOW ARE CITIZENS 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 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.

 

Learn more:

  Complete list of World Bank Executive Directors for each country.
   Voting shares for each country

 
 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. 



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