10.world bank

8/6/2019 10.World Bank

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WORLD BANK


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International Bank for

Reconstructionand Development Foundedin 1944 to help Europerecover

from World WarII

theInternational Bank forReconstructionand Development (IBRD) isoneof fiveinstitutionsthatmakeupthe World BankGroup.


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Itisnota bankinthecommonsense;Itismadeupoftwouniquedevelopment

institutionsowned by 186 membercountries:theInternational Bank forReconstructionand Development (IBRD)andtheInternational Development

Association (IDA).


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Theirworkiscomplemented by thatoftheInternationalFinance Corporation (IFC),

MultilateralInvestment Guarantee Agency(MIGA) andtheInternational Centre forthe SettlementofInvestment Disputes(ICSID).


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IBRD isthepartofthe World Bank

(IBRD/IDA) thatworkswith middle-incomeandcreditworthy poorercountries

topromotesustainable, equitableand job-creating growth, reducepoverty andaddressissuesofregionaland globalimportance.


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supports long-term human and social developmentneeds that private creditors do not finance;

preserves borrowers' financial strength by providingsupport in crisis periods, which is when poor people

are most adversely affected; uses the leverage of financing to promote key policy

and institutional reforms (such as safety net oranticorruption reforms);

creates a favorable investment climate in order to

catalyze the provision of private capital; provides financial support (in the form of grantsmade available from the IBRD's net income) in areasthat are critical to the well-being of poor people in allcountries.


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IBRD worksclosely with theInternationalFinanceCorporation (IFC), the MultilateralInvestment

Guarantee Agency (MIGA), theInternational MonetaryFund (IMF) andothermultilateraldevelopment banks.

Together, they providelow-interestloans, interest-freecreditsand grantstodeveloping countries forawide

array ofpurposesthatincludeinvestmentsineducation, health, publicadministration, infrastructure,financialandprivatesectordevelopment, agriculture,andenvironmentalandnaturalresourcemanagement.

IBRD alsostrivestocapitalizeonmiddle-incomecountries'ownaccumulatedknowledgeanddevelopmentexperiencesandcollaborateswithfoundations, civilsociety partnersanddonorsinthedevelopmentcommunity


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IBRD raisesmostofits fundsontheworld'sfinancialmarketsand has becomeoneofthe

mostestablished borrowerssinceissuing its firstbondin 1947.

IBRD becameamajorplayerontheinternationalcapitalmarkets by developing

moderndebtproducts, opening newmarkets fordebtissuance, and by building upa broadinvestorbasearoundtheworldofpension funds,insurancecompanies, central banks, andindividuals.

TheincomethatIBRD has generatedovertheyears hasalloweditto funddevelopmentactivitiesandtoensureits financialstrength,which enablesitto borrowatlowcostandoffer

clients good borrowing terms.


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firstcurrency swapininternationalmarketsin1981,

theintroductionofthe first global bondin 1989, the first fully integratedelectronic bondofferingviatheInternetin 2000.

In 2003, the World Bankexecutedthe first fullyelectronicswapauction.

Innovations by IBRD havealsosupporteditsgoalofpromoting development.

IBRD hasoverthe yearsoffered bondsinmorethan 40 differentcurrencies.

Itsissuesinnascentcapitalmarkets haveoftenbeenacatalyst forimproving marketinfrastructureandefficiency.


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Evaluation

Themajority ofmiddle-incomecountriescontinuetorely onIBRD tomobilizeinvestmentsininfrastructure, health, education, cleanenergyandtheenvironment.

IBRD helpsclients gainaccesstocapitaland

financialriskmanagementtoolsinlargervolumes, on betterterms, atlongermaturities,andinamoresustainablemannerthantheycouldreceive fromothersources.

Unlikecommercial banks, IBRD isdriven bydevelopmentimpactratherthanprofitmaximization.

IBRD hasalsosupportedmiddle-incomecountriesintimesofcrisiswhentheiraccessto

capital hasdriedup.


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IBRD meetsmoresophisticateddemandsofitsmiddle-incomeclients by providing financialservicesthatprotect

themagainstexchangeandinterestraterisksandtheturbulenceofthecommodity markets.

In fiscal 2007, itcarriedout $5.4 billionininterestrateandcurrency riskmanagementtransactionson behalfofitsmembers.

Inthesameperiod, IBRD committed $12.8 billion for112projects.The Bankassistsclientcountriesnotonlythrough its finance butalso by providing accesstoitsdevelopmentknowledgeresources.

The Bank'sknowledgeactivitiesrange fromconductingcountry research, todeveloping analyticandconceptualframeworks forcountry assistance, to building thecapacity forsustainabledevelopmentwithinclientcountries.


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The International Development

Association (IDA) isthepartofthe World Bankthat helpsthe

worldspoorestcountries.

Establishedin 1960, IDA aimstoreducepoverty by providing interest-freecreditsand grants forprogramsthat boosteconomic growth, reduceinequalitiesand

improvepeoplesliving conditions.


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IDA complementsthe World Banksotherlending armtheInternational Bank forReconstructionand Development (IBRD)

IDA isoneofthelargestsourcesofassistance fortheworlds 79 poorestcountries, 39 ofwhich arein Africa.

Itisthesinglelargestsourceofdonorfunds forbasicsocialservicesinthepoorestcountries.


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IDA lendsmoney (knownascredits) onconcessionalterms.

ThismeansthatIDA credits havenointerestchargeandrepaymentsarestretchedover35 to 40 years, including a10-yeargraceperiod.

butcreditsdocarry asmallservicecharge, currently 0.75 percenton fundspaidout.

IDA alsoprovides grantstocountriesat

riskofdebtdistress.


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IDA is fundedlargely by contributions fromthegovernmentsofitsrichermembercountries.

Additional fundscome fromIBRD'sincomeand

from borrowers'repaymentsofearlierIDAcredits.

Donors gettogetherevery three yearstoreplenish IDA funds. Donorcontributionsaccount for60% ofthe SDR 27.3 billion(US$41.6 billion) intheIDA15 replenishment,which financesprojectsoverthethree-yearperiodending June 30, 2011.


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Allocation Criteria

Themain factorthatdeterminestheallocationofIDAresourcesamong eligiblecountriesiseach country'sperformanceinimplementing policiesthatpromote

economic growth andpoverty reduction. Thisisassessed by the Country Policy andInstitutionalAssessment (CPIA), which forthepurposesofresourceallocationisreferredtoas theIDA Resource AllocationIndex (IRAI).

TheIRAIandportfolioperformancetogetherconstitutetheIDA Country Performance Rating (CPR).

Inadditiontothe CPR, populationandpercapitaincomealsodetermineIDA allocations. Beginning 2005, thenumericalIRAIaswellas the CPR aredisclosed.


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Sinceitsinception, IDA creditsand grantshavetotaledUS$207 billion,

averaging US$14 billiona yearinrecentyearsand

directing thelargestshare, about 50percent, to Africa


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Eligibility forIDA support

depends firstand foremostonacountrysrelativepoverty, definedas GNIpercapita belowanestablishedthresholdandupdatedannually

(in fiscal year2010:US$1,135). IDA alsosupportssomecountries, including

severalsmallislandeconomies, which areabovetheoperationalcutoff butlackthecreditworthinessneededto borrow fromIBRD


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Somecountries, such asIndia, IndonesiaandPakistan, areIDA-eligible basedonpercapitaincomelevels, butarealsocreditworthy for

someIBRD borrowing.They arereferredtoasblendcountries.Thesecant get grants

Seventy-ninecountries arecurrently eligibletoreceiveIDA resources.Together, thesecountriesare hometo 2.5 billionpeople, halfofthetotalpopulationofthedeveloping world. Anestimated 1.5 billionpeopletheresurviveonincomesofUS$2 orlessaday.

10.world bank

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