With 189 member countries, staff from more than 170 countries, and offices in over 130 locations, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
The World Bank Group is an international partnership comprising 189 countries and five constituent institutions that work towards eradicating poverty and creating prosperity.
The five development institutions under the World Bank Group are:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Guarantee Agency (MIGA)
- International Centre for the Settlement of Investment Disputes (ICSID).
World Bank Group – The World Bank History.
- Its headquarters at Washington.
- The United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference held in 1944 led to the formation of the International Monetary Fund (IMF in 1945) and the International Bank for Reconstruction and Development (IBRD in 1944).
- The other institutions such as the IDA, IFC, etc. were formed over the years, and all five institutions (IBRD, IDA, IFC, MIGA, and ICSID) came to be called the World Bank Group
- Worldbank was Set up in 1944 with a charter to drive post-World War II reconstruction
- World Bank is Officially known as IBRD ( International Bank for Reconstruction and Development)
- Provides long term soft loans to rebuild the third world (Soft loans → interest rate is very low)
- The official goal or mission of the World Bank is the reduction of poverty
- Aim – Promotion of foreign investment and international trade + Facilitation of capital investment.
Key Function Areas
Partnering With Governments
Together, IBRD and IDA form the World Bank, which provides financing, policy advice, and technical assistance to governments of developing countries. IDA focuses on the world’s poorest countries, while IBRD assists middle-income and creditworthy poorer countries.
Partnering With The Private Sector
IFC, MIGA, and ICSID focus on strengthening the private sector in developing countries. Through these institutions, the World Bank Group provides financing, technical assistance, political risk insurance, and settlement of disputes to private enterprises, including financial institutions.
One World Bank Group
While World Bank’s five institutions have their own country membership, governing boards, and articles of agreement, it works as one to serve the partner countries. Today’s development challenges can only be met if the private sector is part of the solution. But the public sector sets the groundwork to enable private investment and allow it to thrive. The complementary roles of the institutions give the World Bank Group a unique ability to connect global financial resources, knowledge, and innovative solutions to the needs of developing countries.
- Universal Primary Education
- Gender Equality
- Reduce Child Mortality
- Improve Maternal Health
- Poverty and Hunger
- Combat HIV/AIDS, Malaria, and Other Diseases
- Ensure Environmental Sustainability
- Develop a Global Partnership for Development
The World Bank is like a cooperative, made up of 189 member countries. These member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank. Generally, the governors are member countries’ ministers of finance or ministers of development. They meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.
The governors delegate specific duties to 25 Executive Directors, who work on-site at the Bank. The five largest shareholders appoint an executive director, while other member countries are represented by elected executive directors.
- The World Bank Group President chairs meetings of the Boards of Directors and is responsible for overall management of the Bank. The President is selected by the Board of Executive Directors for a five-year, renewable term.
- The Executive Directors make up the Boards of Directors of the World Bank. They normally meet at least twice a week to oversee the Bank’s business, including approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financial decisions.
The World Bank operates day-to-day under the leadership and direction of the president, management and senior staff, and the vice presidents in charge of Global Practices, Cross-Cutting Solutions Areas, regions, and functions.
The five development institutions under the World Bank Group and their Function:
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD).
The world’s largest development bank, IBRD provides financial products and policy advice to help countries reduce poverty and extend the benefits of sustainable growth to all of their people.
The International Bank for Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries. As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges.
Created in 1944 to help Europe rebuild after World War II, IBRD joins with IDA, our fund for the poorest countries, to form the World Bank. They work closely with all institutions of the World Bank Group and the public and private sectors in developing countries to reduce poverty and build shared prosperity.
Creating good jobs, supporting a strong private sector.
International Finance Corporation (IFC).
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in developing countries. The Bank Group has set two goals for the world to achieve by 2030: end extreme poverty and promote shared prosperity in every country.
To leverage the products and services—as well as products and services of other institutions across the World Bank Group—to create markets that address the biggest development challenges of our time. To make the financial resources, technical expertise, global experience, and innovative thinking to help our clients and partners overcome financial, operational, and other challenges.
Multilateral Guarantee Agency (MIGA)
MIGA —a sister organization of the World Bank. Miga can help investors and lenders deal with these risks by insuring eligible projects against losses relating to:
DETERRING HARMFUL ACTIONS
MIGA’s status as a member of the World Bank Group and its relationship with shareholder governments provides additional leverage in protecting investments.
PROVIDING ENVIRONMENTAL AND SOCIAL EXPERTISE
MIGA helps investors and lenders ensure that projects comply with what are considered to be the world’s best social and environmental safeguards.
As an honest broker, MIGA intervenes at the first sign of trouble to resolve potential investment disputes before they reach claim status, helping to maintain investments and keep revenues flowing. If MIGA is unable to prevent a claim, our strong balance sheet allows us to make prompt payments.
Our guarantees can help investors obtain project finance from banks and equity partners.
The agency can provide insurance coverage for up to 15 years (in some cases 20), which may increase the tenor of loans available to investors.Providing extensive country knowledge – MIGA applies decades of experience, global reach, and knowledge of developing countries to each transaction.
LOWERING BORROWING COSTS
MIGA-guaranteed loans may help reduce risk-capital ratings of projects.
International Centre for the Settlement of Investment Disputes (ICSID)
ICSID engages in international investment dispute settlement.
• It settles disputes between investors and governments.
• It also settles state-state disputes under investment treaties and free trade agreements and acts as an
• The Centre provides for settlement of disputes by arbitration, conciliation or fact-finding.
• It also disseminates information on international law on foreign investment.
• India is not a member of the ICSID because it claims that the ICSID’s functioning and structure are
biased towards the developed countries.
• India set up the BRICS Arbitration Centre (BRICS Centre) to address and reinforce international
arbitrations with foreign investors. Although this is limited to the BRICS countries, it will be available
for all developing countries in the future