 |
|
TEXT 7. WORLD BANK GROUP
The World Bank is a public international financial institution created at the end of World War II whose mission is to provide loans and credits to developing countries for projects that alleviate poverty and promote social and economic development. The Bank’s lending to governments is done through the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). IBRD loans are made with favourable interest rates and rather long repayment schedules. IDA credits are extended to the poorest of the poor countries (defined largely in terms of per capita income) at no interest, with very relaxed loan repayment schedules. The IBRD and IDA also provide loans and guarantees in support of private sector projects. However, the majority of Bank financing for private sector operations is done through the International Finance Corporation (IFC) and the Multilateral International Guarantee Agency (MIGA).
Thus, the World Bank Group consists of IBRD, IDA, IFC and MIGA. In general IBRD and IDA make loans for public sector projects, and IFC and MIGA promote private sector investment. IBRD and IDA share the same staff, and must meet the World Bank’s policies and procedures. The IFC and MIGA have recently adopted their own policies and procedures. At this time, only IBRD and IDA are subject to the jurisdiction of the Inspection Panel. For the past several years, there have been negotiations and commitments to extend the Inspection Panel to IFC and MIGA. In the meantime, however, a Compliance Advisor/Ombudsman (CAO) function for IFC and MIGA was created and began operation in July 1999. The CAO is an important step toward greater accountability in the private sector side of the World Bank Group operations. It was designed in part to address the concerns of the local communities who are adversely affected by IFC and MIGA-supported projects and to advise senior management. The CAO reports directly to the President of the Bank.
The World Bank Group is owned and governed by national governments, which become members by contributing to its capital stock. To join IBRD, countries must first be members of the International Monetary Fund (IMF). The amount of shares and voting power each member is allocated reflects its quota in the IMF. There are 181 member governments of IBRD and 160 members of IDA. These countries are represented by a Board of Executive Directors, which has 24 members. Voting power is determined by shares, so the more economically powerful countries control a greater percentage of the vote. For instance, the United States as the largest shareholder controls approximately 17% of the vote. The Board must approve all projects financed by the Bank that are proposed by the Bank Management. The President of the Bank is appointed by the Board, and also serves as Chairman of the Board.
The World Bank Group is a multilateral development bank that provides loans and credits to developing countries to stimulate social and economic development. Although the Bank's mandate is poverty alleviation, it often provides financial support to projects that have significant negative social and environmental impacts.
There are two main parts to the World Bank Group. The first component is the World Bank, which provides project-oriented loans and credits to developing country governments through the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) but also exerts enormous influence through macroeconomic policy prescriptions, research and technical advice. In recent years, the World Bank has worked closely with the International Monetary Fund (IMF) in designing the financial sector reform and economic bailouts for economic crises in Indonesia, Thailand, Korea, Russia, Argentina and Brazil.
The second component consists of the International Finance Corporation (IFC) and the Multilateral International Guarantee Agency (MIGA), which provide funding for private sector projects.