(IMF) and the World Bank Group (WB).
The World Bank Group is made up of several organizations that perform different functions:
- International Bank reconstruction and development (IBRD);
- International Association Development (IDA);
- International financial corporation(IFC);
- Multilateral Investment Guarantee Agency (MIGA);
- International Center for the Settlement of Investment Disputes (ICSID).
The Group's headquarters are located in Washington, DC, USA.
(IBRD) commonly known as the World Bank, is the main lending institution World Bank Group(created at the Bretton Woods Conference in 1944). In contrast, the WB provides loans for economic development countries. IBRD is the largest lender to development projects in middle-income developing countries.
(IDA), created in 1960. Its goal is to provide assistance to the poorest countries. Countries with a per capita GDP of no more than $835 are eligible to receive IDA loans. IDA provides interest-free loans with a 30-40 year repayment term and deferred principal payments for the first ten years. More than 160 countries are members of IDA.
(MFK), created in 1956. Its purpose is to stimulate the work of the private sector in developing countries. IFC finances private sector projects. Lenders' interest rates vary by country and project. Loans are repaid within 3-15 years. Deferred payments are possible for the first 3-5 years. The IFC has more than 170 member countries.
(MAGI).(Created in 1982) The purpose of the organization is to assist developing countries in attracting foreign investment by providing investors with guarantees against political risks.
Such risks may include military action, civil unrest, and expropriation. MAGI provides a standard insurance policy that guarantees investments for 25 years. Limit amount guaranteed for one project - 50 million US dollars. In addition, MIGA holds consultations with developing countries on issues of attracting foreign investment. More than 140 countries are members of MAGA.
(ICSID).(Created in 1966) The purpose of the organization is to stimulate the flow of investment by providing conditions for conciliation and arbitration negotiations between governments and foreign investors. ICSID provides advice and publishes papers on foreign investment law. About 130 countries are members of ICSID.
World Bank Group (IBRD, MAP, IFC, MIGA)
The World Bank Group (WBG) is a specialized financial institution of the UN, which includes several interrelated specialized UN organizations:
- International Bank for Reconstruction and Development - IBRD;
- International Development Association - MAP;
- International Finance Corporation - IFC;
- International Investment Guarantee Agency - MAGI.
The group is headed by a single leadership. The main goal of its activities is to provide financial support to developing countries and countries with transition economy. Each of the institutes included in the group independently carries out financing activities from its own resources and on its own terms. investment projects, promoting the implementation of economic development programs of these countries. But each structure is guided by a common goal, and its activities are subordinated to the overall strategy of the Group.
Since its inception, the World Bank Group has become one of the world's leading investment centers, accounting for about half of the annual volume of investments allocated by international organizations to developing countries.
International Bank for Reconstruction and Development
International Bank for Reconstruction and Development - IBRD is the parent organization of the Group. Created in 1944 simultaneously with the IMF within the framework of the Bretton Woods agreements. The goals of the Bank declared in accordance with the Charter are defined as follows:
- promoting the development of member countries by encouraging foreign investment in the economies of developing countries;
- encouraging private foreign investment by issuing Bank guarantees or direct project financing;
- promoting the long-term balanced development of international trade and maintaining balances of payments through the development of the productive potential of the Bank's member countries with the help of foreign investment.
The Bank's financial resources consist of contributions from member countries to Authorized capital, banking profits from its activities, as well as from funds raised in the form of loans on international loan capital markets.
The authorized capital is formed as a joint stock company by subscription to shares. Member countries pay 20% of the quota - 2% in freely convertible currency and 18% in national currency. The rest of the unpaid quota is reserve fund, under which the Bank, by issuing bond loans, borrows on the international loan capital market to finance the investment objects it lends. If necessary, the Bank may recover the unpaid portion of quotas from member countries. But in practice, the Bank has so far managed to attract more than 90% of its resources on the global financial market by issuing bonds.
The highest governing body of the IBRD is Board of Governors, A executive body- Directorate. Like the IMF, the Board of Governors is composed of finance ministers or governors central banks. To make important decisions, it meets once a year at a session together with the IMF.
Directorate consists of 24 executive directors. Five of them are appointed by countries with the largest number votes are the USA, Japan, Germany, France and the UK. At the same time, the United States has 20% of the votes, which gives it the right of veto when voting on the most important issues, when 85% of the votes are required to make a decision. China, Saudi Arabia and Russia each elect one director per country. The remaining 16 directors are each elected from a group of countries. The Directorate elects the President of the Bank, traditionally a US citizen. The headquarters of the IBRD is located in Washington.
Currently, almost all countries are members of the Bank, which justifies its name as the World Bank.
Formally, this institution is depoliticized. It clearly declares the focus of its activities on promoting democratic development within the framework of an open market economy, economic growth, to fight poverty. But the methods of achieving goals are not without political biases of the leading Western countries that have a majority of votes in governing bodies. It is ensured by the principle of weighted voting: the number of votes of each country depends on its share in the authorized capital.
In addition, according to the constituent documents of the IBRD, in a number of cases it is obliged to focus on the decisions of the IMF. The monetary and financial policy pursued by the Bank's member countries must comply with the IMF Charter. Therefore, only those countries that have joined the IMF can be members of the IBRD.
Thus, the IMF and the World Bank, as two simultaneously created Brestton-Woods financial institutions, complement each other in their activities, but each of them performs its own specific functions.
The IMF regulates the monetary system, promotes external payments between member countries of the Fund through a mechanism for providing loans in foreign currency to align payment and settlement balances. IMF loans can be used by all members - both rich and poor countries, as from financial situation countries depend on the stability of the world monetary system.
The IBRD is primarily a lending institution. Its goal is to help overcome poverty in developing countries, their economic growth and integration into world economy. It provides loans only to developing countries.
The peculiarity of the Bank's credit policy is that it accumulates funds from the world capital market and, through this, issues loans to those states that have limited access to this market, either directly to their governments, or under government guarantees; in fact, it plays the role of an intermediary.
Without changing the purpose and mechanism of lending, the IBRD changes directions, methods and forms of activity depending on the conditions prevailing in the world and in individual regions, taking into account the accumulated experience.
After the Second World War, the Bank's activities were aimed at assisting in the reconstruction and development of the economies of Western European countries and Japan, and from the mid-50s, when the economies of these countries were restored, its activities moved to the developing world and aimed at the development of countries freed from colonial dependence.
Later, the Bank's activities expanded to countries with economies in transition.
Until the 1980s, the Bank mainly provided loans for project financing. Moreover, the Bank's loans covered no more than 30% of the cost of the loaned object. The rest of the costs should be covered by internal sources. This stimulates the investment process in the country. But the Bank's loans were of a tied nature. And, as critics noted, given significant disruptions in the countries’ economies, project financing could not effectively influence the general economic situation in these countries.
The debt crisis that broke out in 1982 confirmed the correctness of such conclusions. And in the 80s, the Bank introduced the practice of providing unrelated loans to support economic reforms. But still, the leading role remains with project financing. In order to attract additional resources for the objects it lends, the IBRD practices joint financing. Co-investors have certain benefits when co-financing: the Bank carries out an examination of the project and removes the risk of non-payment.
Monetary and financial crisis of 1997-1998 influenced credit policy Jar. He refocused his activities on the region of Southeast and East Asia, which was the epicenter of the crisis. In 1998 financial year loans allocated to countries in this region amounted to 1/3 of total amount credit funds provided by the Bank. At the same time, the share of loans not tied to specific objects increased significantly, from 27 to 39%. And a large amount of loans was allocated to the financial sector, its share was 22% versus 6% compared to the previous year.
After the collapse of the Soviet Union, the countries of the former republics of the USSR, as well as the states of Central and of Eastern Europe. They also become recipients of Bank loans. The Bank provides them with loans for structural adaptation and to support economic reforms. These loans are not tied, are usually provided for specific programs and are disbursed faster.
The IBRD's requirements for issuing loans to support economic reform programs are similar to those put forward by the IMF. These are price liberalization, weakening state influence on the economy and reliance on private capital.
The bulk of IBRD loans to developing countries are directed to agriculture, since, according to management, it is in agricultural areas that the maximum poverty and backwardness are concentrated, the fight against which is the Bank’s primary task. The allocated loans are used for development Agriculture, infrastructure, education, healthcare. Much less loans are allocated for the development of manufacturing industries.
IBRD provides loans for long term from 15 to 20 years, which significantly exceeds the lending terms of commercial banks.
The cost of loans is determined by the conditions of the global financial market, since the Bank accumulates the bulk of its resources by issuing bonds. But the margin is credit funds low, from 0.25 to 0.5%, since making a profit is not the purpose of the Bank’s activities.
The IBRD protects private capital, so loans provided by the Bank are also conditional. The Bank's requirements for borrowers are quite strict. They are required to create a favorable legal and administrative climate for the activities of TNCs, exempt foreign investors from taxes, and ensure the free export of profits. The borrowing country must significantly reduce or eliminate subsidies for domestic consumers and liberalize foreign economic activity, devaluation of the national currency, etc.
International Development Association
International Development Association(MAP) created in 1960 to expand the range of developing countries admitted to credit resources. Formally, it is independent from the Bank, but in fact it is its branch. They are led by a single governing body and one president.
By the 60s of the last century, a number of developing countries were identified for which IBRD loans were unavailable. Firstly, because of their high cost. And secondly, the lending conditions were unacceptable to them. These were the poorest, the most backward countries. They needed preferential loans. Especially for providing such countries borrowed money on preferential terms and the International Development Association was created by the Bank. Therefore get preferential loans Only those countries that are members of the IBRD and have low income per capita. In 1997-1999 the per capita GDP limit giving the right to preferential lending was $925 per year.
MAP loans are available in national currency borrower country only to state governments for a period of up to 35-40 years, while Grace period is 10 years. No interest is charged on loans. The borrower only covers administrative costs of 0.5% per annum.
MAP resources are generated through contributions from developed donor countries that are members of the organization, and net profit IBRD.
Providing preferential terms Lending from these sources should not be considered a charitable activity. After all, the goal of the MDB is to fight poverty. And the lending mechanism on the Bank's terms turned out to be ineffective for a number of developing countries. By creating an opportunity preferential lending through MAP, the Bank has significantly expanded its influence on developing countries.
The nature of loans provided by MAP is social in nature. The largest share in the structure of borrowed funds of its clients are loans for the development of healthcare, education, agriculture and rural areas. Unlike the IBRD, this organization practically does not allocate funds to the financial sector. Because MAP's clients are poor countries that are not integrated into the global financial market, they are not affected by financial crises.
Thus, in the strategic plan, IBRD and MAP fulfill general tasks, but the functions between them are separated.
International Finance Corporation
International Finance Corporation (IFC) established in 1956 as a specialized agency of the UN. Legally and in financially is an independent organization. However, in fact this is a branch of the IBRD. They have a common leadership. The highest body of the IFC is the Board of Governors, the duties of which are concurrently performed by members of the Board of Governors of the IBRD. The functions of the Chairman of the IFC Directorate are also concurrently performed by the President of the IBRD.
The purpose of the Corporation is to promote the development of the private sector in the economies of developing countries, attracting an influx of national and foreign investment into this sector.
Considering that the Bank does not lend much to industry, one of the main activities of the IFC is lending to industrial facilities. In this case, loans are allocated to the private sector without government guarantees. Because the credit risks the organization undertakes, it credits projects for no more than 25% of the cost and subject to the high profitability of these projects.
The Corporation provides borrowed funds for a period of up to 15 years, the interest rate is at the level of the average annual rates of the world capital market for similar loans. Loans are repaid in the same currency in which they were issued.
IFC resources are generated from various sources. Firstly, through contributions from member countries. The largest amount contributed
The USA, which initiated the creation of this organization, as well as England, France and others the developed countries. Secondly, the IFC has at its disposal a number of funds that were created specifically to finance individual investment projects. In addition, the IFC has the right to attract external resources from the global capital market, like the IBRD. But the mechanism for attracting them is different. It acquires shares of companies, carries out and own investments into the share capital of enterprises being built in developing countries without the intention of gaining a foothold in them as an owner. The acquired assets are subsequently resold to private capital.
However, compared to IBRD and even compared to MAP, the financial resources available to the Corporation are significantly smaller. But despite the limited financial opportunities, IFC plays an important role in developing and strengthening the private sector in developing countries, in mobilizing investment resources in developing countries, and in shaping emerging stock markets.
Multilateral Investment Guarantee Agency
Multilateral Investment Guarantee Agency(MAGI) was formed in 1988 in addition to the IBRD to multilaterally guarantee foreign direct investment in developing countries. Capital in the amount of US$1 billion was generated by member countries.
MAGI guarantees the following types of investments:
- contributions in cash or in kind to share capital;
- loans provided by shareholders;
- some forms of non-equity direct investment.
- The warranty period is from 15 to 20 years. Guarantees can cover up to 90% of the investment.
The range of risks covered by MAGA guarantees is wide. The agency insures these investments against political risks in the event of wars, civil unrest, expropriation of the investor's property, failure to fulfill contractual obligations due to political decisions made by the government (for example, a ban on the import of goods into the country) and other political disasters.
Investments can be insured against non-commercial risks in financial sector, such as, for example, the abolition of currency convertibility and the obstacles that arose in connection with the withdrawal of profits from the country.
Failure to fulfill contractual obligations related to investments due to force majeure circumstances can also be insured by MIGA.
In addition to insuring non-commercial risks, MIGI advises government authorities of developing member countries on issues related to the development and implementation of policies and programs to attract foreign investment. To do this, it organizes meetings and negotiations between the governments of interested countries and international business circles.
Thus, IBRD, MAP, IFC and MIGA form four closely interconnected international financial institutions. They are united by a common goal of activity, which is to provide financial support to developing countries. Within the framework of this goal, each of them performs its assigned functions. Together they form the World Bank Group, the world's largest investment institution, whose mission is to fight poverty and underdevelopment in developing countries, promote economic growth and the development of market relations in these countries and countries with economies in transition.
In the process of its development, the World Bank has undergone various structural changes, therefore, the term World Bank at different stages meant different organizations.
Initially, the World Bank was associated with the International Bank for Reconstruction and Development, which provided financial support for the reconstruction of Western Europe and Japan after World War II. Later in 1960, the International Development Association was created, which took over some of the functions related to the policies of this bank.
Currently, the World Bank actually refers to two organizations:
- International Bank for Reconstruction and Development;
- International Development Association.
At different times, they were joined by three more organizations created to solve the problems of the World Bank:
- International Center for Settlement of Investment Disputes.
All five organizations are members of the World Bank Group and are called the World Bank Group. In some cases, the World Bank still refers to the International Bank for Reconstruction and Development, which still forms the basis of the World Bank's activities.
Story
The World Bank is one of two (along with the International Monetary Fund) large financial institutions created as a result of the Bretton Woods Conference, held in the United States in 1944. Delegates from 45 countries, including representatives of the Soviet Union, discussed issues of economic recovery and the structure of the world economy after World War II.
Soviet Union was one of the active participants in the Conference, but subsequently refused to participate in the activities of the International Monetary Fund and the World Bank, since, in accordance with the charter, he did not have the opportunity to influence decisions made, unlike the United States of America.
In the early stages of its activity from 1945 to 1968, the World Bank did not actively lend due to increased requirements for borrowers. Under the leadership of the bank's second president, John McCloy, France was chosen as the first borrower and was issued a loan in the amount of $250 million. Moreover, the condition for granting a loan to France was non-participation in the communist coalition government. Two other applicants (Poland and Chile) did not receive assistance. Subsequently, the World Bank took an active part in lending to Western European countries, which were actively restoring the economy destroyed by World War II, implementing the Marshall Plan. Funding for this plan came largely from the World Bank.
In 1968-1980, the World Bank's activities were aimed at helping developing countries. The volume and structure of loans provided increased, covering various industries economy from infrastructure to solving social issues. Robert McNamara, who led the World Bank during this period, brought a technocratic management style to its activities, as he had leadership experience as US Secretary of Defense and President of Ford. McNamara created a new system for potential borrowing countries to provide information, which made it possible to reduce the time for making a decision on the terms of a loan.
In 1981, McNamara was succeeded as president of the World Bank. Clausen on the proposal of then US President Ronald Reagan. During this period, financial assistance was provided mainly to Third World countries. The period 1980-1989 was characterized by a lending policy aimed at developing third world economies in order to reduce their dependence on loans. This policy led to a reduction in loans provided to solve social problems.
Since 1989, World Bank policy has undergone significant changes due to criticism from various non-governmental organizations, in particular those related to environmental protection. As a result, the range of loans provided for various purposes has expanded.
Goals and objectives
Currently, in accordance with the Millennium Declaration, the World Bank has focused its activities on achieving the Millennium Development Goals. IN transition period By the third millennium, under the auspices of the UN, eight goals were formulated to achieve which the efforts of international organizations should be directed. The Millennium Development Goals are to be achieved by 2015 and include the following:
- eradication of poverty and hunger;
- ensuring universal primary education;
- promoting gender equality and women's empowerment;
- reduction in child mortality;
- improving maternal health;
- combating HIV/AIDS, malaria and other diseases;
- ensuring sustainable development of the environment;
- forming a global partnership for development.
Solving global problems of human development, the World Bank, using the IBRD loan mechanism, lends to middle-income countries at interest rates corresponding to the market level of these countries. Other financial institution The World Bank IDA lends to countries with low level income at minimal interest rates or without interest.
Types and areas of activity
Two closely related institutions within the World Bank - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) - provide loans at low interest rates, zero interest rates, or in the form of grants to countries without access to international capital markets or having such access on unfavorable terms. Unlike others financial institutions The World Bank does not seek to make a profit. The IBRD operates on a market basis, uses its high credit rating, which allows it to receive funds against low percentage, in order to provide loans to its developing country clients also at low interest rates. The Bank covers operating expenses associated with this activity independently, without using external sources of financing.
Every three years, the World Bank Group develops a framework document: the World Bank Group Strategy, which is used as the basis for cooperation with the country. The strategy helps link the bank's lending, analytical and advisory programs to the specific development goals of each borrowing country. The strategy includes projects and programs that can have the greatest impact on solving the problem of poverty and contribute to dynamic socio-economic development. Before submission to the Board of Directors of the World Bank, the strategy is discussed with the government of the borrowing country and with other interested structures.
Mobilization of funds
Investment loans are provided to finance the production of goods, works and services as part of socio-economic development projects in a variety of sectors.
Development loans (formerly called structural adjustment loans) are provided by issuing financial resources to support political and institutional reforms.
The B-SPAN webcast service is an Internet portal through which the World Bank hosts seminars and conferences on topics such as sustainable development and poverty reduction.
Directions (areas) of activity
The World Bank's activities cover a wide range of activities:
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The Bank is currently involved in financing more than 1,800 projects in almost all sectors of the economy of developing countries. Projects are financed in a wide variety of fields. Examples include developing microcredit in Bosnia and Herzegovina, improving AIDS prevention in Guinea, supporting girls' education in Bangladesh, improving health care in Mexico, helping to rebuild post-independence East Timor, and helping India recover from the devastating Gujarat earthquake.
Bank activity management
The World Bank is a joint stock company whose shareholders are 188 member countries of this organization. The number of votes that member countries have depends on their share in the Bank's capital, which in turn is determined by their share in the world economy. These shareholders are represented by the Board of Governors, which is the highest decision-making body and policy-maker of the Bank. As a rule, the managers are the finance ministers of the participating countries. The Board of Governors meets once a year during the Annual Meetings of the Governing Boards of the World Bank Group and the International Monetary Fund.
Specific powers to manage the Bank during the period between meetings of the Board of Governors are delegated to 25 executive directors who work directly at the Bank's headquarters in Washington. The executive directors form the Board of Directors, which is headed by the President of the Bank. The Board of Directors consists of five executive directors representing the interests of the member states with the largest shareholdings: the United States, Japan, Germany, France and the United Kingdom. The remaining 20 executive directors represent country groups.
The Board of Directors usually meets twice a week and exercises general management of the Bank, including responsibility for approving all loans and making other decisions affecting the Bank's activities:
- approval of loans and guarantees;
- definition general principles bank activities;
- approval of the Bank's budget;
- developing country assistance strategies;
- making decisions regarding borrowings and other financial matters.
The President of the World Bank (currently Jim Yong Kim) presides over meetings of the Board of Directors and is responsible for the overall direction of the Bank's activities. By tradition, the President of the World Bank is a citizen of the United States, the country that is the Bank's largest shareholder. The President is elected by the Board of Governors for a five-year term and may be re-elected. Five vice presidents, including three senior vice presidents (English Senior Vice-Presidents) and two executive vice presidents (English Executive Vice-Presidents) are responsible for specific regions, sectors, areas of activity and perform other specific functions. The Senior Vice President - Chief Economist of the World Bank develops the bank's development strategy.
The World Bank has offices in more than one hundred countries and employs about 10,000 people.
Presidents of the World Bank
| The president | Duration of tenure |
|---|---|
| Eugene Meyer | June 18, 1946 – March 17, 1947 |
| John McCloy | March 17, 1947 – July 1, 1949 |
| Eugene "Gene" Robert Black, Sr. | July 1, 1949 - January 1, 1963 |
| George D. Woods | January 1, 1963 - April 1, 1968 |
| Robert S. McNamara | April 1, 1968 - July 1, 1981 |
| Alden W. Clausen | July 1, 1981 - July 1, 1986 |
| Barber B. Conable | July 1, 1986 - September 1, 1991 |
| Lewis T. Preston | September 1, 1991 - May 4, 1995 |
| Richard Frank, and. O. | May 4, 1995 - June 1, 1995 |
| James D. Wolfensohn | June 1, 1995 - June 1, 2005 |
| Paul Wolfowitz | June 1, 2005 - July 1, 2007 |
| Robert Zoellick | July 1, 2007 - July 1, 2012 |
| Jim Yong Kim | July 1, 2012 - February 1, 2019 |
| David Malpass | from April 9, 2019 |
Membership
A condition of membership in the World Bank is membership in the International Monetary Fund, that is, each member country of the IBRD must first become a member of the International Monetary Fund. Only those countries that are members of the IBRD can be members of other organizations within the World Bank Group.
The International Bank for Reconstruction and Development has 189 member countries, and the International Development Association has 173 members. In accordance with the Charter of the International Bank for Reconstruction and Development, each country has a certain quota in the authorized capital, and votes are distributed in proportion to the quota when making decisions. As of 2006, votes were distributed as follows:
The International Development Association has 173 member countries.
World Bank and Russia
Recognizing the value of the knowledge and experience of local specialists, the World Bank actively cooperates with them in the implementation of its projects. 80% of the employees of the World Bank office in Moscow are national personnel. As in other countries, the World Bank, within the framework of the tasks it solves, pays great attention to analytical activities and consultations
In the process of its development, the World Bank has undergone various structural changes, so the term World Bank has meant different organizations at different stages.
The World Bank was initially associated with the International Bank for Reconstruction and Development, which provided financial support for the reconstruction of Western Europe and Japan after World War II. Later, in 1960, the International Development Association was created, which took over some of the functions related to the policies of this bank.
Currently, the World Bank actually refers to two organizations:
- International Bank for Reconstruction and Development
- International Development Association
At different times, they were joined by three more organizations created to solve the problems of the World Bank:
- International Finance Corporation
- Multilateral Investment Guarantee Agency
- International Center for Settlement of Investment Disputes
All five organizations are members of the World Bank Group and are called the World Bank Group. In some cases, the World Bank still refers to the International Bank for Reconstruction and Development, which still forms the basis of the World Bank's activities.
Story
The World Bank is one of two (along with the International Monetary Fund) large financial institutions created as a result of the Bretton Woods conference, held in 1944. Delegates from 45 countries, including representatives of the Soviet Union, discussed issues of economic recovery and the structure of the world economy after World War II.
The Soviet Union was one of the active participants in the Conference, but subsequently refused to participate in the activities of the International Monetary Fund and the World Bank, since, in accordance with the charter, it did not have the opportunity to influence decisions made, unlike the United States of America.
In the early stages of its activities from 1945 to 1968, the World Bank did not actively lend due to increased requirements for borrowers. Under the leadership of the bank's first president, John McCloy, France was chosen as the first borrower and was issued a loan in the amount of US$250 million. Moreover, the condition for granting a loan to France was non-participation in the communist coalition government. Two other applicants (Poland and Chile) did not receive assistance. Subsequently, the World Bank took an active part in lending to Western European countries, which were actively restoring the economy destroyed by World War II, implementing the Marshall Plan. Funding for this plan came largely from the World Bank.
In 1968-1980, the World Bank's activities were aimed at helping developing countries. The volume and structure of loans provided increased, covering various sectors of the economy from infrastructure to solving social issues. Robert McNamara, who led the World Bank during this period, brought a technocratic management style to its activities, as he had leadership experience as the US Secretary of Defense and the president of Ford. McNamara created a new system for potential borrowing countries to provide information, which made it possible to reduce the time for making a decision on the terms of a loan.
In 1980, McNamara was replaced as president of the World Bank by A.W. Clausen, at the suggestion of then US President Ronald Reagan. During this period, financial assistance was provided mainly to third world countries. The period 1980-1989 was characterized by a lending policy aimed at developing third world economies in order to reduce their dependence on loans. This policy led to a reduction in loans provided to solve social problems.
Since 1989, World Bank policy has undergone significant changes under the influence of criticism from various non-governmental organizations, in particular those related to environmental protection. As a result, the range of loans provided for various purposes has expanded.
Membership
A condition of membership in the World Bank is membership in the International Monetary Fund, that is, each member country of the IBRD must first become a member of the International Monetary Fund. Only those countries that are members of the IBRD can be members of other organizations within the World Bank Group.
The International Bank for Reconstruction and Development consists of 184 member countries. The last country (18 January 2007) accepted was Montenegro. In accordance with the Charter of the International Bank for Reconstruction and Development, each country has a certain quota in the authorized capital, and votes are distributed in proportion to the quota when making decisions. As of 2006, votes were distributed as follows:
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The International Development Association has 164 member countries
Bank activity management
The World Bank is Joint-Stock Company, whose shareholders are 184 member countries of this organization. The number of votes that member countries have depends on their share in the Bank's capital, which in turn is determined by their share in the world economy. These shareholders are represented by the Board of Governors, which is the highest decision-making body and policy-maker of the Bank. As a rule, the managers are the finance ministers of the participating countries. The Board of Governors meets once a year during the Annual Meetings of the Governing Boards of the World Bank Group and the International Monetary Fund.
Specific powers to manage the Bank during the period between meetings of the Board of Governors are delegated to 25 executive directors who work directly at the Bank's headquarters in Washington. The executive directors form the Board of Directors, which is headed by the President of the Bank. The Board of Directors consists of five executive directors representing the interests of the member states with the largest shareholdings: , Japan, Germany, France and. The remaining 20 executive directors represent country groups.
The Board of Directors usually meets twice a week and exercises general management of the Bank, including responsibility for approving all loans and making other decisions affecting the Bank's activities:
- approval of loans and guarantees,
- determination of the general principles of the bank's activities
- approval of the Bank's budget
- development of strategies to assist countries
- making decisions regarding borrowings and other financial matters.
The President of the World Bank presides over meetings of the Board of Directors and is responsible for the overall direction of the Bank's activities. By tradition, the President of the World Bank is a citizen of the United States, the country that is the Bank's largest shareholder. The President is elected by the Board of Governors for a five-year term and may be re-elected. Five vice presidents, including three Senior Vice-Presidents and two Executive Vice-Presidents, are responsible for specific regions, sectors, business lines and other specific functions.
The World Bank has offices in more than one hundred countries and employs about 10,000 people.
Presidents of the World Bank
| The president | Duration of tenure |
|---|---|
| Eugene Meyer | June 18, 1946 – March 17, 1947 |
| John McCloy | March 17, 1947 – July 1, 1949 |
| Eugene Robert Black | July 1, 1949 - January 1, 1963 |
| George D. Woods | January 1, 1963 - April 1, 1968 |
| Robert S. McNamara | April 1, 1968 - July 1, 1981 |
| Alden W. Clausen | July 1, 1981 - July 1, 1986 |
| Barber B. Conable | July 1, 1986 - September 1, 1991 |
| Lewis T. Preston | September 1, 1991 - May 4, 1995 |
| Richard Frank, acting | May 4, 1995 - June 1, 1995 |
| James D. Wolfensohn | June 1, 1995 - June 1, 2005 |
| Paul Wolfowitz | June 1, 2005 - July 1, 2007 |
| Robert Zoellick | July 1, 2007 - July 1, 2012 |
| Jim Yong Kim | from July 1, 2012 - present |
World Bank and Russia
In the fall of 1991, the World Bank opened its temporary office in Moscow.
On January 7, 1992, the government of the Russian Federation submitted an application to become members of the IMF and the World Bank Group. Russia became a member of these organizations in June 1992. At the beginning of 1993, the bank opened a permanent representative office in Moscow, which employs about 70 people, mostly Russian citizens.
In June 1993, the bank organized a multilateral meeting in Paris to discuss Russia's highest priority reforms and coordinate related foreign assistance. In total, Russia received loans worth over $13 billion through the World Bank for structural reforms.
From January 1, 1995 to June 1, 2005, James D. Wolfensohn served as President of the World Bank. He visited for the first time Russian Federation in October 1995 and since then has visited Russia every year on an official visit.
Moscow-based Questions Training Center global development and the Bank's Public Information Center help share experience and knowledge with Russian partners.
World Bank in Ukraine
2016: Exclusion of the IT company Inkom from tenders due to corruption
At the beginning of July 2016, the World Bank announced the removal of the IT company Inkom, Alexander Kardakov, from participating in its tenders due to corruption. Read more.
Criticism
The activities of the World Bank have been criticized for a long time by various non-governmental organizations and scientists, among whom a prominent place is occupied by Nobel laureate in economics and former chief economist of the World Bank Joseph Stiglitz.
In particular, J. Stiglitz called the policy towards developing countries developed by the IMF, the World Bank and economists in the American government erroneous. In his opinion, if this policy had been followed, significant economic growth would not have occurred. He also pointed out that Russia followed the recommendations and experienced a drop real income population, but China did not follow and is experiencing an economic recovery.
In particular, Joseph Stiglitz expressed himself sharply negatively about the World Bank's policy towards Russia, criticizing shock therapy transition period.
An analysis of the development of the world economy shows that the World Bank's programs, as it formulated them, did not ensure sustainable and equitable economic development. In this regard, pressure on the Bank began to increase. Non-governmental organizations at national and international level began to seek open and democratic consideration of solutions alternative to World Bank policies.
In 2001, a US Congressional Commission assessed the performance of international financial institutions and concluded that 60% of World Bank projects failed. The World Bank is designed to fight poverty, but over the past five years, only 1% of loans went to “poor” states that are most in need of this kind of assistance. During this time, the level of poverty in the world has decreased slightly, which cannot be explained solely by the activities of the World Bank. Successes were achieved by states that received virtually no financial assistance from the World Bank. In those countries that were recipients of major aid packages, not only did the fight against poverty fail, but the situation in them even worsened.
The Heritage Foundation Research Center analyzed the impact of World Bank loans on the poorest countries. During the period from 1980 to 2003, 105 “poor” states received its loans and grants. As a result, in 39 countries the gross domestic product decreased, in 17 the GDP growth was minimal (from zero to 1%), in 33 it was moderate (1-4%). Only 12 recipients were able to significantly increase the pace of economic development. The situation is even more depressing in Africa. Here, 48 states received World Bank money; only three of them were able to develop successfully economically; in 23, economic recession.
In 2010, American academic Raj Patel became a prominent critic of the World Bank. He has published numerous articles critical of the World Bank's political and pseudoscientific practices.
Declared goals and objectives
In 2012, in accordance with the Millennium Declaration, the World Bank focused its activities on achieving the Millennium Development Goals. During the transition period to the third millennium, under the auspices of the UN, eight goals were formulated to achieve which the efforts of international organizations should be directed. The Millennium Development Goals are to be achieved by 2015 and include the following:
- eradication of poverty and hunger;
- ensuring universal primary education;
- promoting gender equality and women's empowerment;
- reduction in child mortality;
- improving maternal health;
- combating HIV/AIDS, malaria and other diseases;
- ensuring sustainable development of the environment;
- forming a global partnership for development.
Solving global problems of human development, the World Bank, using the IBRD loan mechanism, lends to middle-income countries at interest rates corresponding to the market level of these countries. Another World Bank financial institution, IDA, lends to low-income countries at minimal or no interest rates.
Types and areas of activity
Two closely related institutions within the World Bank - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) - provide loans at low interest rates, zero percent or in the form of grants to countries without access to international markets capital or having such access on unfavorable terms. Unlike other financial institutions, the World Bank does not seek profit. The IBRD operates on a market basis, using its high credit rating, which allows it to obtain funds at low interest rates, in order to provide loans to its clients from developing countries, also at low interest rates. The Bank covers operating expenses associated with this activity independently, without using external sources of financing.
Every three years, the World Bank Group develops a framework document: the World Bank Group Strategy, which is used as the basis for cooperation with the country. The strategy helps link the bank's lending, analytical and advisory programs to the specific development goals of each borrowing country. The strategy includes projects and programs that can have the greatest impact on solving the problem of poverty and contribute to dynamic socio-economic development. Before submission to the Board of Directors of the World Bank, the strategy is discussed with the government of the borrowing country and with other interested structures.
Mobilization of funds
Loans provided by the IBRD to developing countries are financed primarily through the sale of bonds that have the highest reliability rating of “AAA” on global financial markets. While receiving a small profit from lending, the IBRD receives more significant income from equity. This capital consists of reserves accumulated over many years and funds received in the form of contributions from the World Bank's 184 member countries. The IBRD uses the resulting profit to cover operating expenses, partially transfers it to IDA and uses it to ease the debt burden of countries.
Resources from IDA, the world's largest source of funding poorest countries world in the form of interest-free loans and grants, replenished every three years by 40 donor countries. IDA receives additional funds as countries repay interest-free loans provided for a period of 35 to 40 years. These funds are then used again to provide loans. IDA accounts for almost 40% of the total credit operations World Bank.
Loans
Acting through the IBRD and IDA, the World Bank provides loans of two main types:
- investment loans and
- development loans.
Investment loans are provided to finance the production of goods, works and services as part of socio-economic development projects in a variety of sectors.
Development loans (formerly called structural adjustment loans) are provided by providing financial resources to support policy and institutional reforms.
The borrower's application for project financing is assessed to ensure that the project is economically, financially, socially and environmentally acceptable. At the loan negotiation stage, the Bank and the borrower agree on the development objectives to be solved within the project, project components, expected results, project performance benchmarks and implementation plan, as well as the loan disbursement schedule. During project implementation, the Bank monitors the use of funds and evaluates the results of project implementation. Three-quarters of outstanding loan funds are managed by Country Directors based in the Bank's permanent missions in member countries. About 30 percent of the Bank's staff work in permanent missions, of which there are almost 100 worldwide.
Long-term IDA loans are interest-free but charge a small fee of 0.75 percent of the funds advanced. IDA's commitment fee ranges from zero to 0.5 percent of the unused loan amount; in fiscal year 2006, the rate of this levy was set at 0.33 percent. Full information about financial products, services, interest rates and IBRD fees can be obtained from the World Bank Treasury Department page. The Treasury manages all of IBRD's borrowing and lending operations and also serves as treasurer for other institutions within the World Bank Group.
Grants
The World Bank provides financial support in the form of grants. The purpose of the grants is to facilitate project development by stimulating innovation, collaboration between organizations and the participation of local stakeholders in project work. IN last years IDA grants, either directly funded or managed through partnerships, were used for the following purposes:
- Relieving the debt burden of countries with high level debt
- Improving the efficiency of sewerage and water services
- Support immunization and vaccination programs to reduce the incidence of infectious diseases such as malaria
- Fighting the HIV/AIDS pandemic
- Support to civil society organizations
- Creating incentives to reduce greenhouse gas emissions
other services
The World Bank provides not only financial support to member countries. Its activities are also aimed at providing analytical and advisory services needed by developing countries. Analyzing the policies pursued by countries and developing appropriate recommendations in order to improve the socio-economic situation in countries and improve the living conditions of the population is part of the activities of the World Bank. The bank is engaged research work on a wide range of issues, such as environment, poverty, trade and globalization, and economic and industrial research in specific sectors. The Bank analyzes the prospects for economic development of countries, including, for example, the banking and/or financial sector, trade, poverty and social protection systems.
A significant part of the efforts is also aimed at educational activities and the dissemination of knowledge that helps solve the country's development problems.
The World Bank Institute is one of the tools for implementing policies to disseminate knowledge that contributes to solving the tasks of the World Bank. IWB works with politicians, businessmen, technical specialists, and other categories of citizens, as well as with universities and educational centers from different countries.
The B-SPAN webcast service is an Internet portal through which the World Bank hosts seminars and conferences on topics such as sustainable development and poverty reduction.
Directions (areas) of activity
The World Bank's activities cover a wide range of activities:
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The World Bank will support the poorest countries in the current situation financial crisis, Mexican Finance Minister Agustin Carstens, Chairman of the Development Committee, said at a press conference in Washington.
The World Bank Group (WB) or World Bank is a multilateral lending institution consisting of several closely related financial institutions whose common goal is to improve the living standards of developing countries through financial assistance from developed countries.
The World Bank was officially created on December 27, 1945, after the majority of participating countries ratified the 1944 Bretton Woods agreements.
The World Bank began work on June 25, 1946, the first loan was issued on May 9, 1947 ($250 million was received by France for the reconstruction of the economy destroyed by World War II).
The World Bank's primary mission is to promote sustainable economic growth that leads to poverty reduction in developing countries by helping to increase production through long-term financing projects and development programs. At the same time, his priorities are structural transformations: trade liberalization, privatization, education and healthcare reform, investment in infrastructure.
Each World Bank loan must be guaranteed by the appropriate government and, except in special circumstances, must be made for specific projects.
The main advantage of cooperation with the World Bank for the recipient country is significantly lower interest rates on loans compared to other international lenders. Another promising benefit for the recipient of WB assistance is that WB loans are followed by international loans.
The World Bank Group includes:
The International Bank for Reconstruction and Development (IBRD) is the main lending institution of the World Bank Group. IBRD is the largest lender to development projects in middle-income developing countries.
International Bank for Reconstruction and Development(IBRD) was established simultaneously with the International Monetary Fund (IMF) in accordance with the decisions of the International Monetary and Financial Conference at Bretton Woods in 1944. The IBRD agreement officially came into force in 1945, but the bank began operating in 1946.
International Development Association(IDA) is an organization that is part of the World Bank Group. Created in 1960. Its goal is to provide assistance to the poorest countries. Countries with a per capita GDP of no more than $835 are eligible to receive IDA loans.
International Finance Corporation(IFC) is an international financial institution that is part of the World Bank. IFC was created in 1956 to ensure a sustainable flow of private investment into developing countries.
Multilateral Investment Guarantee Agency(MAGI) is an autonomous international institution whose purpose is to facilitate foreign direct investment in developing countries, provide insurance and guarantees to private investors, and provide advisory and information services. MIGA was founded in 1988.
International Center for Settlement of Investment Disputes(ICSID), founded in 1995, promotes international investment flows by providing arbitration and dispute resolution services between governments and foreign investors.
Membership in the World Bank
Participates in five financial institutions of the World Bank different quantities states Members of the International Bank for Reconstruction and Development (IBRD) are 184 states, that is, almost all countries of the world. The International Development Association (IDA) includes 163 states, the International Finance Corporation (IFC) - 175 states, the Multilateral Agency for investment guarantees- 158 states, and the International Center for Settlement of Investment Disputes (ICSID) - 134 states.
Russia became a full member of the World Bank Group in June 1992. In addition to the International Bank for Reconstruction and Development, Russia is a member of the International Finance Corporation (IFC), the International Development Association (IDA) and the Multilateral Investment Guarantee Agency (MIGA).
According to the World Bank's charter, strategic decisions require at least 85% of shareholder votes.
As of the end of 2007, the largest shareholders of the World Bank are the USA (16.4% of shares), Japan (7.9%), Germany (4.5%), Great Britain and France (4.3% each).
Every three years, the World Bank Group develops a framework document: the World Bank Group Strategy, which is used as the basis for cooperation with the country. The strategy helps link the bank's lending, analytical and advisory programs to the specific development goals of each borrowing country.
Management
President of the World Bank, head of the board of managing directors of the World Bank, head of the International Development Association, head of the board of directors of the International Finance Corporation, head of the Multilateral Investment Guarantee Agency - Robert Zoellick (holds this post since July 1, 2007).
The material was prepared based on information from RIA Novosti and open sources
The World Bank- an international financial organization created for the purpose of organizing financial and technical assistance to developing countries.
The World Bank was founded in 1944. The headquarters is located in Washington ( Federal District Colombia). The organization has more than 100 offices around the world, employing approximately 9,000 people.
Structure of the World Bank
The World Bank now consists of several organizations that are part of a single entity known as the World Bank Group. These organizations:
- International Bank for Reconstruction and Development (IBRD). Provides financing to governments of middle-income and creditworthy low-income countries.
- International Development Association (IDA). Provides interest-free loans and grants to governments of the world's poorest countries.
- International Finance Corporation (IFC). Large organization development focused on private sector. Helps developing countries with investments, raising funds from international financial markets, consulting companies and governments.
- Multilateral Investment Guarantee Agency (MIGA). Helps attract direct foreign investment to developing countries by insuring investors and creditors against political risks.
- International Center for the Settlement of Investment Disputes (ICSID).
World Bank Office
The World Bank is governed as a cooperative society whose shareholders are the organization's 188 member countries. Shareholders are represented by the Board of Governors, which is the highest policy-making body of the Bank. Typically, the managers are the countries' ministers of finance or development. The Board of Governors meets once a year during the Annual Meetings of the Governing Boards of the World Bank Group and the International Monetary Fund.
Specific powers have been delegated to 25 executive directors. The five executive directors represent the countries with the largest stakes: the USA, Japan, Germany, France, the United Kingdom. The remaining 20 executive directors represent country groups.