- International Bank for Reconstruction and Development (I.B.R.D.) | World Bank
- Introduction to I.B.R.D:
- When I.B.R.D. was SetUp?
- Capital Structure:
- Principal Purposes or Objectives of the Bank:
- Principal Activities Performed to Achieve these Purposes:
- Characteristics of Bank Loan:
- Subsidiaries of the World Bank:
- Industrial Finance Corporation (IFC):
- Other Helps Extends By I.B.R.D.:
- Economists View over the Working of theI.B.R.D.:
- India andthe World Bank:
- International Bank for Reconstruction and Development (IBRD)
- Functions of International Bank for Reconstruction and Development
- Appraisal of the World Bank Activities
- World Bank Group — IBRD, IDA and 3 other institutions. UPSC Notes for IR and Economy
- World Bank Group – Basics
- World Bank Group History
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
- World Bank (IBRD) Notes
- Organizational structure of World Bank →
- Capital Structure →
- Objectives of the World Bank →
- Functions of the World Bank →
- Criticism of World Bank →
- India and the World Bank →
- Международный банк реконструкции и развития (МБРР, IBRD)
- Цели МБРР
- Основные направления деятельности МБРР
- Механизмы управления МБРР
- Мбрр и группа всемирного банка
International Bank for Reconstruction and Development (I.B.R.D.) | World Bank
Let us make an in-depth study of the international bank for reconstruction and development:- 1. Introduction to I.B.R.D 2. When I.B.R.D. was Set Up? 3. Capital Structure: 4. Principal Purposes or Objectives of the Bank 5.
Principal Activities Performed to Achieve these Purposes 6. Characteristics of Bank Loan 7. Subsidiaries of the World Bank 8. Industrial Finance Corporation (IFC) 9. Other Helps Extends By I.B.R.D. and Other Details.
Introduction to I.B.R.D:
The International Bank for Reconstitution and Development (popularly known as World Bank) was set up as a result of the decision taken in Bretton Woods Conference New Hampshire.
The conference was held in July 1944 and attended by 44 nations.
There it was decided to set up two organisations i.e., (a) the I.M.F. and (b) the I.B.R.D., to solve the monetary and financial problems of the less developed countries ly to be faced in Post-World War II period.
When I.B.R.D. was Set Up?
The I.B.R.D. or World Bank was set up on December 27, 1945. When its Articles of Agreement was signed by 29 members Government in Washington. On 30th June, 1996, 185 countries were its members.
If a country resigns its membership, it is required to pay back all loans with interest on due dates.
If the Bank incurs a financial loss in the year in which a member resigns, it is required to pay its share of the loss on demand.
The I.B.R.D. was started with an authorised capital of $ 10 billion divided into 1,00,000 shares of $ 1,00,000 of this $ 9,400 million was actually subscribed.
On 30th June 1988 the authorised Capital Stock of the I.B.R.D. Comprised 7,16,500 authorised Shares of the par value of S.D.R. (Special Drawing Rights) 1,00,000 each.
In July 1994 the total authorised bank capital was $ 185 billion with a capital increase of $ 9.3 billion.
Principal Purposes or Objectives of the Bank:
The principal purposes as set forth in its Articles of Agreement (or charter) are as follows:
1. To assist in the reconstruction and development of its member countries by facilitating the investment of capital for productive purposes, thereby promoting long range growth of international trade and improvements in standard of living.
2. To promote private foreign investment by guarantees of and participation in loans and other investments made by private investors.
3. When private capital is not available or reasonable terms to make loans for productive purposes its own resources or the funds borrowed by it.
4. To arrange the loans made or guaranteed by it in relation to international loans through other channels so that more useful and urgent small and large projects are dealt with first.
Principal Activities Performed to Achieve these Purposes:
In order to achieve these purposes, the charter authorizes the World Bank to engage in the following financing activities:
(i) It may lend funds directly, either from its capital funds or from the funds it borrowed in private investment markets.
(ii) It may guarantee loans advanced by other or it may participate in such loans.
(iii) Loans may be advanced to member countries directly or any of their political sub-divisions or to private business or agricultural enterprises in the territories of members.
(iv) It has provided loans to the developing countries for development projects and programmes because credit rating of many developing countries is poor—hence they feel difficulties in raising funds in international capital markets.
(v) The World Bank is a vital source to the developing countries, when the member Government in whose territory the project is located, is not the borrower, the World Bank asks the member Government for a guarantee.
Characteristics of Bank Loan:
Some basic provisions of Bank Loan may be mentioned as such:
1. They are meant for high priority productive purposes mainly to develop the infrastructure for the development such as:
(a) Electric supply,
(e) Ports and inland waterways airlines and airports etc.
2. They must be used to meet only the foreign exchange components of the projects.
3. The interest rate of the bank is somewhat lower in relation to market rate.
4. From July 1, 1982-Bank adopted a policy of resulting its lending rates half-yearly.
Subsidiaries of the World Bank:
There are two subsidiaries of the World Bank. They are:
1. International Development Association (I.D.A.), and
2. International Finance Corporation (I.F.C.)
1. International Development Association (IDA):
This association was set up in 1960. It is an aiding centre for those developing countries who look up to it for financial assistance. It is an association of donor countries who have come under the “Aegis” (protection of) of the World Bank. It offers credit to the eligible developing countries on extremely favourable terms.
The main criteria for the allocation of I.D.A. (International Development Association) credit are the per capita income of the recipient country. Countries which have an annual per capita Gross National Product (G.N.P.
) of less than $ 681 (in 1989) dollars are eligible for I.D.A. credits.
Other parameters taken into consideration are Country’s credit Worthiness, its accessibility to commercial borrowing its, economic performance, the density of its population and the existence of viable projects in the borrowing nations.
I.D.A. interests free credit are available to Governments only and may be obtained on payment of nominal service charges at 0.75% per annum. The period of repayment of loan is 40 years.
The purposes for which the I.D.A.
has advanced the credits are agriculture, rural development education, energy, industrial development and finance, population and nutrition, transportation and tourism, telecommunication etc.
India has been the largest beneficiary from I.D.A. Since its inception India’s share is 40% of I.D.A. Funds. India has not been able to utilise this aid fully, both because of infrastructural difficulties at home and the adverse conditions imposed by donor countries governing such aid.
Industrial Finance Corporation (IFC):
This corporation was set up in 1956. It extends credits to private business enterprises. It provides equity and loan capital for private enterprises in association with private investors and management, encourages the development of local capital market and stimulates the international form of private capital.
It supports joint ventures which provide opportunities to combine domestic knowledge of market and other conditions with the technical and managerial experience available in the industrial nations. The corporation has about 200 members. Its paid up capital is about 544 million dollar and its retained earing were 205 million dollars.
The project, for which the corporation advances assistance, must satisfy the following conditions:
(i) It should have the prospects of earning profits,
(ii) It should boost the economy of the best country,
(iii) Local investors should be able to participate in the project in the beginning of the project or later,
(iv) The required funds for the project are not available from private investors at reasonable terms,
(v) The management should be capable and experienced,
(vi) The sponsor of the project has a substantial holding in the enterprise.
India is the topmost borrower of I.D.A. Loans. The prospects of getting larger funds from the World Bank seem to be bleak because of constraints on resources. The situation is not much better as regards I.D.A. Loans because of the failure of the U.S.A. to provide funds for its replenishment.
Other Helps Extends By I.B.R.D.:
Various other helps have been provided by the World Bank and they are as follows:
1. The I.B.R.D. helps in providing training, technical assistance, inter-organisational co-operation, research and studies and in the settlement of investment disputes of its members.
2. The Bank has established a Staff College, known as the Economic Development Institute (E.D.I.) for training senior officials of the member developing countries. It helps to improve the management of their economies and to increase the efficiency of their investment programmes.
3. It provides technical assistance to the needy country under two categories: (a) engineering related such as engineering design and construction supervision, and (b) Institution related such as diagnostic policy and institutional studies, management support and training.
4. The bank also extends inter-organisational Co-operational. Co-operation between the I.B.R.D. and other international organisation the F.A.O.; the W.H.O.; the G.A.T.T.; the United Nations Environment Programme (U.N.E.P), the U.N.D.P., the United Nations Industrial Development Organisation (U.N.I.D.O.) the Industrial Fund for Agricultural Development (I.F.A.D.) etc.
5. Centre for Settlement of Investment Disputes: The bank has established the International Centre of Settlement of Investment Disputes (I.C.S.I.D.) between States and Nationals of other states.
All members of the Bank have signed over the paper.
The Bank in this has successfully mediated in solving many international investment disputes such as the River Water Dispute between India and Pakistan and of the Suez Canal between Egypt and the U.K.
In the end we can say that the Bank’s overall performance must be judged not on its lending but on its success in providing advice and technical assistance. The Bank is laying greater emphasis on developing human resources health and nutrition and on environment.
Economists View over the Working of theI.B.R.D.:
Economists are of this view that the Bank has been quite successful in achieving the principal objective of reconstruction and developing. No doubt it has helped in the reconstitution of Europe after the destruction in the Second World War. But some economists are not lacking in saying that its lending policies are not proper and satisfactory.
Further they have written that:
1. The Bank charges a very high rate of interest on loans as also an annual commitment charge on undistributed balance.
2. Further they have said that it has failed to meet the financial needs of the developing countries fully. Its loan has just touches the fringes of the total capital requirements for their economic and social uplift.
3. The lending procedure of the bank is faulty because it lays emphasis on the repaying capacity of the borrowing country before granting any loan. Such a condition is not proper rather it is harsh and discriminatory for developing countries which are mostly poor and need financial help on a large scale.
4. The Bank has also been criticised for being discriminatory in its purpose-wise and region-wise assistance to its members.
India and the World Bank:
As we are aware that India is one of the founder members of the Bank and has occupied a permanent seat on its Board of Executive Directors for a number of years.
Therefore, India is very much attached and is in link with the bank and has received many benefits which are as follows:
1. The Bank has extended assistance to India in its planned economic development by granting loans, conducting field surveys, rendering expert advice and training Indian personnel at the E.D.I. (Economic Development Institute).
2. The Bank has established a Chief of Mission of the Bank at New Delhi, who monitors the aided projects in India.
3. It is said that India has been the largest receiver of the World Bank assistance.
4. The Bank also helped India to solve amicably its river water dispute with Pakistan.
In the end it can be said that India has gained much for being the member of the World Bank for the development of agriculture, industry, energy and transport. In future India, will have to borrow more from the Bank.
International Bank for Reconstruction and Development (IBRD)
International Bank for Reconstruction and Development (IBRD) and its associated institutions a group are known as the World Bank. The Second World War damaged economies of the most of the countries particularly of those who were directly involved in the war.
The global war had completely dislocated the multilateral trade and dislocated multilateral trade and had caused massive destruction of life and property. In 1945, it was realised to concentrate on reconstructing these war-affected economies in a planned way.
International Bank for Reconstruction and Development (IBRD) was established in December 1945 with the IMF on the basis of the recommendation of Bretton Wood Conference. This is the reason why IMF and IBRD are called ‘Bretton Wood Twins’. International Bank for Reconstruction and Development (IBRD) started functioning in June 1946. World Bank and IMF are complementary institutions.
India is a member of four constituents of the World Bank Group i.e. IBRD, IDA, IFC, and MIGA (Multilateral Investment Guarantee Agency) but not of its fifth institute ICSID (International Centre for the Settlement of Investment Disputes).
Read Also: Monetary PolicyAccording to the Clause I of the agreement made at the time of establishment of World Bank, it was assigned the following objectives:1. To Provide long-run capital to member countries for economic reconstruction and development.
World Bank provides capital mainly for following purposes –(i) To rehabilitate war ruined economies (this objective is fully achieved)(ii) To finance productive efforts according to peacetime requirement.(iii) To develop resources and production facilities in underdeveloped countries.2.
To induce long-run capital investment for assuring BOP equilibrium and balanced development of international trade. (This objective was adopted to increase the productivity of member countries and to improve economic condition and standard of living among them).3.
To promote capital investment in member countries in following ways:(i) To provide guarantee on private loans and capital investment.(ii) If private capital is not available even after providing the guarantee, then International Bank for Reconstruction and Development (IBRD) provides loans for productive activities in considered conditions.4.
To provide the guarantee for loans granted to small and large units and other projects of member countries.5. To ensure the implementation of development projects so as to bring about a smooth transference from a war- time to the peace economy.IMF and World Bank are Bretton Wood Twins.
Both the institutions were established to promote international economic cooperation but a basic difference is found in the nature of economic assistance given by these two institutions. World Bank provides long term loans for balanced economic development while IMF provides short-term loans to member countries for eliminating BOP disequilibrium.
Both these institutions are complementary to each other. The eminent world economist George Schultz had suggested in American Economic Association Conference in January 1995, for the merger of IMF and World Bank.Read Also: IMF Vs World Bank How IMF and World Bank are different?Generally, every member country of the IMF automatically becomes the member of World Bank.
Similarly, any country which quit IMF automatically expelled from the World Bank’s membership. But under a certain provision, a country leaving the membership of IMF can continue its membership with World Bank. If 75% member of the bank gives their vote in its favour.Any member country can be debarred from the membership of World Bank on following grounds:1.
Any member country can quit the bank simply by written notice to bank, but such country has to repay the granted loans on terms and conditions decided at the time of sanctioning the loan.2. Any country working against the guidelines of the bank can be debarred from membership by the board of governors.
IMF, World Bank has also two types of members: ‘founder members’ and ‘general members’ the world bank has 30 founder members who attained membership by December 31, 1945. India is also among these founder members. The countries joining the World Bank after December 13, 1945, come under the category of general members. At present total membership of the World Bank is 182.
The voting right of the member country is determined on the basis of member country’s share in the total capital of the bank. Each member has 240 votes plus one additional vote for each 1,00,000 shares of the capital stock held.
Don’t Miss: International Economic AssociationThe initial authorized capital of World Bank was $ 10,000 million, which was divided in 1 lakh share of $ 1 lakh each. The authorized capital of the bank has been increased from time to time with the approval of member countries. On June 30, 1996, the authorized capital of the bank was $ 188 billion which $ 180.
6 billion (96% of total authorized capital) was issued to member country in the form of shares. Member countries repay the share amount to the world bank in following ways:
- Two percent of allotted shares are repaid in Gold, USD or SDR.
- Every member country is free to repay 18% of its capital share in its own currency.
- The remaining 80% share is deposited by member country only on demand by the World Bank.
Bank is managed by an elected President. On July 1, 2007, Robert B. Zoellick became the 11th President of the World Bank. The headquarter of World Bank is in Washington DC.IDA (established on Septemeber 24, 1960) and IFC (established in July 1956) are the tow main associate institutions of International Bank for Reconstruction and Development (IBRD). These institutions work under the supervision of World Bank. MIGA is also an associate institution in the World Bank group.International Bank for Reconstruction and Development (IBRD) gives loan to members in any or more of the following ways:
1. By granting or participating in direct loans but its own funds.
2. By granting loans the fund raised in the market of a member or otherwise borrowed by the banks and
3. By guaranteeing the whole or part loans made by private investors through the investment channels.
Before alone is made or guaranteed the bank ensure that the –1. Project fro which the loan is asked has been carefully examined by the competent committee as regards the merits of the proposal.2. The borrower has the reasonable prospect for the repayment of loans.3. The loan is meant for productive purposes and4. The loan is meant for reconstruction and development.
Read Also: Information on Nationalised Banks
Functions of International Bank for Reconstruction and Development
Presently, The World Bank is playing the main role of providing loans for development works to member countries, especially to under-developed countries. The World Bank provides long-term loans for various development projects of 5 to 20 years duration. The loan system of the bank can be explained with the help of following points:1.
Bank can grant loans to a member country up to 20% of its share in paid up capital.2. Bank also provides the loan to private investors belonging to member countries on its own guarantee, but for this loan private investors have to seek prior permission from those countries where the amount will be collected.
For such loans, the consent of that country is also required whose currency is given in loans. For granting such guarantee, the Bank charges 1% to 2% as service charge.3. The quantum of loans, interest rate and term and conditions are determined by the Bank itself.4.
Generally, Bank grants loan for a particular project duly submitted by the member country.5. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.Besides, granting loans for reconstruction and development, World Bank also provides various technical services to the member countries.
For this purpose, the Bank has established ‘The Economic Development Institute’ and a Staff College in Washington.
Appraisal of the World Bank Activities
Bank has sanctioned 75% of its total loans to developing countries of Africa, Asia, and Latin America while only 25% was given to developed nations of Europe. IFC, IDA, and MIGA were established as the associate institutions of the World Bank in extending financial assistance to member countries.
Besides, the Bank also tried its best to coordinate the functioning of nations granting loans to underdeveloped countries. In 1958, the Bank played an important role in establishing ‘India Aid Club’ for providing specific economic assistance to India. It has now been renamed as ‘India Development Forum’. Such types of clubs and forums have also been established for other developing countries.
The Bank has also established its mission in various developing countries for providing technical assistance for the development project in these countries. The Bank also takes the guidance of experts of various international institutions FAO, WHO, UNIDO, UNESCO for providing assistance for various projects related to agriculture, education and water supply.
International Financial Reporting Standards (IFRS)Structure of International Monetary Fund
World Bank Group — IBRD, IDA and 3 other institutions. UPSC Notes for IR and Economy
The World Bank Group (WBG) is an important international institution and is also regularly seen in the news. Hence, it is very important for the IAS exam. In this article, you can read all about the World Bank Group, its constituent institutions, and also how the World Bank Group is different from the World Bank.
World Bank Group UPSC Notes:- Download PDF Here
World Bank Group – Basics
The World Bank Group is an international partnership comprising 189 countries and five constituent institutions that works 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)
Point to note: The IBRD and the IDA together form the World Bank.
World Bank Group History
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 original focus of the IBRD was the reconstruction of countries ravaged by the Second World War through loans.
- Gradually, there was a shift from reconstruction to development with a particular emphasis on infrastructure, power grids, roads and transportation, dams, etc.
- 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.
- Currently, the group engages in multifarious activities through its institutions and funds.
- There is a special focus on developing and underdeveloped countries.
- The infographic above shows the brief functions and the year of formation of the five institutions.
The WBG is one of the world’s largest sources of funding and knowledge for developing nations. Its five institutions share a commitment to decreasing poverty, enhancing shared prosperity, and boosting sustainable development.
The WBG is headquartered in Washington, D.C. The World Bank Group is a specialized agency of the United Nations.
World Bank Group Membership
- To join the World Bank Group, a country must first become a member of the IMF.
- To become members of the IDA, IFC, and MIGA, the countries must first become members of IBRD.
- Membership of the ICSID is subject to all the following conditions:
- IBRD membership
- Party to the Statute of the International Court of Justice (ICJ)
- Invitation of the ICSID Administrative Council by a vote of two-thirds of its members
The following section talks about the functions of the various institutions under the WBG.
International Bank for Reconstruction and Development (IBRD)
The IBRD calls itself a global development cooperative. It has a membership of 189 countries.
- It is the world’s largest development bank.
- It provides loans, guarantees, advisory services, and risk management products to middle-income and creditworthy low-income countries.
- Middle-income countries represent more than 60% of the IBRD’s portfolio.
- IBRD finances investments across all sectors and offers technical support and expertise at every stage of a project.
- IBRD deals only with sovereign governments and not private players.
- It also assists governments in augmenting the investment climate of countries, removing service delivery bottlenecks, and strengthening institutions and policies.
- IBRD sources most of its funds from the world’s financial markets.
IBRD and India
- India is a founding member of IBRD.
- It started lending to India in 1949, the first project being undertaken for the Indian Railways.
- Since the 1960s, the IBRD is an important source of long-term funding for India.
- India is the largest IBRD client of the World Bank.
- India is a blend country, which means it is transitioning from a lower-middle-income to a middle-income country.
- India is eligible for loans from both the IBRD and the IDA.
International Development Association (IDA)
The main objective of the IDA is to provide grants and concessional loans to the world’s poorest countries.
To know more about the International Development Association (IDA), click on the linked article.
International Finance Corporation (IFC)
The IFC is a sister organization of the World Bank (IDA + IBRD). It is the largest international development institution focused on the private sector in developing countries.
- It functions as the private sector arm of the WBG.
- It works for economic development by investing in for-profit and commercial projects for poverty reduction and augmenting development.
- It also engages in mobilizing third-party resources for projects.
- The IFC works with the private sector to boost entrepreneurship and create sustainable businesses.
- The IFC provides investment, advice, and asset management offerings.
- It lends to businesses and private sector projects.
IFC and India
- India is a founding member of the IFC.
- Over the past few years, IFC has augmented its portfolio in India, improving profitability and investing in high impact projects.
- It is expanding its activities in the LIS (the Low Income States and the NE States) in India.
- Improving the investment climate for private sector development and inclusive growth.
- Financial inclusion by focusing on microfinance institutions.
- Focus on renewable energy and cleaner production methods.
- Developing PPP transactions with a focus on social services (health and education) and climate change impact projects.
Multilateral Investment Guarantee Agency (MIGA)
MIGA’s chief goal is to enhance cross-border investment in developing countries by giving guarantees (political risk insurance and credit enhancement) to lenders and investors.
- The agency’s guarantees to protect investments against non-commercial risks.
- It emphasizes on Fragile and Conflict-affected States.
- Political risk insurance products:
- Coverage against losses due to war, terrorism, and civil disturbance.
- Coverage against expropriation by governments.
- Coverage against breach of contract.
- Protection against losses arising from an inability to legally convert local currency into hard currency.
- Credit enhancement – protection when governments fail to honor financial obligations.
- India became a member of the MIGA in 1994.
International Centre for 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 administrative registry.
- 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.
World Bank (IBRD) Notes
The International Bank for Reconstruction and Development (IBRD) commonly referred to as World Bank, is an international financial institution whose purposes include assisting the development of its member nation’s territories, promoting and supplementing private foreign investment and long term balance growth in international trade.
World Bank was established in July 1994 at United Nations monetary and financial conference in Bretton Woods, New Hampshire. It started operating on June 1946 and helped in reconstruction of nations devastated by World War II.
The World Bank has at present, three affiliates –
◊International Development Association (IDA)
◊International Finance Corporate (IFC)
◊Multilateral Investment Guarantee Agency (MIGA)
The members of the international monetary fund are the members of IBRD. It has 188 members 15th August, 2015. If a country resigns its membership, it is required to pay back all loans with interest on due dates.
Organizational structure of World Bank →
The organization of the bank consists of the president, Board of Governors, Board of Executive Directors, the advisory and loan committee and other staff members.
Board of Governors is the supreme policy making body consisting of one governor and alternative governor appointed for 5 years by each member country.
Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders namely, USA, UK, West Germany, France, Japan, India, the rest 15 are elected by the remaining countries. The board meets regularly once a month to carry out routine working of the bank.
The President is appointed by the board of executive directors. He acts as the chief Executive of the bank and is responsible for conducting day to day business of the bank.
The Advisory and Loan committees are appointed by the board of Directors. It consists of 7 members.
The Board of Governor and Executive Directors both hold voting power related to the contribution of Government which it represents.
Capital Structure →
The initial authorized capital of the World Bank was $10 billion divided into 1 lakh shares of $ 1 lakh each. On June 30, 1996, the authorized capital was $ 188 billion which $ 180.6 billion was issued to member countries in form of shares. The repayment by member countries is done in the following way –
◊ 2% of allotted shares are repaid in gold, US dollar or SDR
◊ 18% of its capital share in its own currency
◊ 80% of the share at the demand of the World Bank
Objectives of the World Bank →
→ To provide long run capital to member countries for economic reconstruction and development.
→ To induce long-term capital investment for assuring Balance of Payment equilibrium and balanced development of international trade.
→ To provide guarantee for loans granted to small and large units of member countries.
→ To ensure the implementation of development projects.
→ Promote capital investment in member countries by – (a) Providing guarantee on private loans (b) Providing loans for productive activities
Functions of the World Bank →
(I) Borrowing Activities –The IBRD is a corporate institution where capital is subscribed by its members. It finances its lending operations from its own medium and long term borrowings in the international capital market and currency swap agreements (CSA).
It also borrows under the Discount – Note Programme – it places bond and notes directly with its member government and offers issued to investors and in public markets.
IBRD has also evolved two new borrowing instruments –
(a) Central Banking facility (CBF) – It is a one year US dollar dominated facility for borrowing from official sources.
(b) Floating Rate Notes (FRNs) – Borrowings in FRNs is meant to help the IRBD to meet the objectives of its funding strategy.
(II) Lending Activities – The bank lends to its member countries in any of the following ways –
(a) By marketing or participating in Loans its own fund
(b) By making or participating in direct loans funds raised in the market of the member or otherwise borrowed by bank.
(c) By guaranteeing in whole or in part loans made by private investors.
It provides the following facilities to member countries →
- Structural Adjustment Facility (SAF) – It was introduced to borrowing countries in 1985 in order to reduce their Balance of Payment deficits while maintaining their economic growth. SAF funds are used to finance general imports.
- Enhanced Structural Adjustment Facility (ESAF) – It was set up to increase the availability of concessional resources to low-income member countries.
- Special Action Programme (SAP) – It was started in 1983 to strengthen the IRBD’s ability to assist member countries in adjusting to the current economic environment. Its major elements include expansion in lending for high priority operations, accelerated disbursements, expanded advisory services on policies.
(III) Training – It set up the Economic Development Institute(EDI) for training senior officials and help them to improve the management of their economics and to increase the efficiency of their investment programmes.
(IV) Technical and Advisory Assistance – It consists of two broad categories –
(a) Engineering related – Feasibility studies, Engineering design and Construction supervision.
(b) Institution related – Diagnostic policy and Institutional studies, Management support and Training.
(V) Economic and Social Research – It devotes roughly 3% of its budget to economic and social research. It established Research Policy Council(RPC) to provide leadership in the guidance, coordination and evaluation of all bank research. It published World Development Report every year.
(VI) Operations Evaluation – It helps borrowers in the post evaluation of their bank assisted projects. It set up the Operations Evaluation Department (OED) for this purpose.
(VII) Settlement of Investment Disputes – It set up the International Centre of Settlement of Investment Disputes(ICSID) between States and Nationals of other States River Water Dispute and Suez Canal Dispute are some successful examples.
Criticism of World Bank →
→High interest rate – It charges a very high interest rate on loans, and also an annual commitment charge and a front-end fee. Presently it is 7.6%.
→Less aid to developing countries – Its lending operations account for only a small proportion of the total net and to developing countries.
→Faulty lending procedure – It is regarded to be faulty as it lays emphasis on the repaying capacity of the borrowing country before granting loans.
→Discriminatory – The bank has been criticized to be discriminatory in its purpose-wise and region-wise assistance to its members.
→Hard conditionality – The introduction of SAF and ESAF has made loan terms tighter. The borrowing country is required to follow an action programme set out in a letter of development policies.
India and the World Bank →
World Bank has made a significant contribution to India’s planned economic development through its direct and indirect assistance.
◊ Founder–member – India is a founder member of the Bretton Woods Twins, i.e. the World Bank and IMF. It has a permanent place on the bank’s executive board.
◊ Loans – India has been the largest recipient of development finance from the World Bank. It granted loans worth Rs. 1992 cores in 1999-2000.
◊ Assistance from IDA – World Bank’s subsidiary institution IDA provides loans from its soft window. It received loan worth Rs. 3464 crore in 1999-2000 from IDA.
◊ Purpose of Loans – Its purpose for providing loans has mainly been for development activities. It financed projects railway, power aviation, agricultural development etc. It has extended loans to financial institutions IDBI and ICICI.
◊ Technical Assistance – It sent a number of missions to India to evaluate the working and progress of its five year plan.
◊ Assistance from Aid India Club – The World Bank founded Aid India Club in 1950 to provide massive assistance to finance India’s developmental plans
Международный банк реконструкции и развития (МБРР, IBRD)
Международный банк реконструкции и развития (МБРР, IBRD, International Bank for Reconstruction and Development) — основное кредитное учреждение Всемирного банка.
Международный банк реконструкции и развития — специализированное учреждение ООН, межгосударственный инвестиционный институт, учреждённый одновременно с МВФ в соответствии с решениями Международной валютно-финансовой конференции в Бреттон-Вудсе в 1944 г.
Соглашение о МБРР, являющееся одновременно и его уставом, официально вступило в силу в 1945 г., но банк начал функционировать с 1946 г. Местонахождение МБРР — Вашингтон.
- оказание помощи в реконструкции и развитии экономики стран-членов;
- содействие частным иностранным инвестициям;
- содействие сбалансированному росту международной торговли и поддержание равновесия платёжных балансов;
- сбор и публикация статистической информации.
Первоначально МБРР был призван с помощью аккумулированных бюджетных средств капиталистических государств и привлекаемых капиталов инвесторов стимулировать частные инвестиции в странах Западной Европы, экономика которых значительно пострадала во время Второй мировой войны. С середины 50-х гг.
, когда хозяйство стран Западной Европы стабилизировалось, деятельность МБРР во все большей степени стала ориентироваться на страны Азии, Африки и Латинской Америки.
Основные направления деятельности МБРР
В отличие от МВФ, Международный банк реконструкции и развития предоставляет кредиты для экономического развития. МБРР — самый крупный кредитор проектов развития в развивающихся странах со средним уровнем доходов на душу населения и в кредитоспособных бедных государствах. Страны, подающие заявку на вступление в МБРР, должны сначала быть приняты в МВФ.
В отличие от МВФ, МБРР не использует стандартных условий кредитования. Сроки, объёмы и ставки кредитов МБРР определяются особенностями кредитуемого проекта. Как и МВФ, МБРР обычно обуславливает предоставление кредитов определёнными условиями.
Все займы банка должны гарантироваться правительствами стран-членов. Займы выделяются под процентную ставку, которая меняется каждые 6 месяцев.
Займы предоставляются, как правило, на 15-20 лет с отсрочкой платежей по основной сумме займа от трёх до пяти лет.
Необходимо подчеркнуть, что банк покрывает своими кредитами лишь 30 % стоимости объекта, причём наибольшая часть кредитов направляется в отрасли инфраструктуры: энергетику, транспорт, связь. С середины 80-х гг. МБРР увеличил долю кредитов, направляемых в сельское хозяйство (до 20 %), в здравоохранение и образование.
В промышленность направляется менее 15 % кредитов банка. В последние годы МБРР занимается проблемой урегулирования внешнего долга развивающихся стран: 1/3 кредитов он выдаёт в форме так называемого совместного финансирования.
Банк предоставляет структурные кредиты для регулирования структуры экономики, оздоровления платёжного баланса.
Основная цель, которую изначально провозгласили учредители МБРР, заключалась в том, чтобы банк прежде всего был инициатором и организатором частных инвестиций, добивался для них в странах-заёмщиках благоприятных условий и «климата».
Банк мог предоставлять кредиты государствам под гарантии правительств, но должен был уклоняться от вложения своего капитала в высокодоходные, быстроокупающиеся предприятия. Предполагалось, что МБРР будет сосредоточивать свои операции исключительно на тех объектах, которые важны для государств, но в которые неохотно вкладывается частный инвестор.
Фактически же МБРР сразу начал широко вмешиваться во внутренние дела стран-заёмщиков в интересах своих хозяев (США), оказывал давление на правительства, навязывая свои «программы развития». В итоге все программы «реконструкции и развития» подразумевали сохранение стран-заёмщиков в качестве аграрно-сырьевых придатков индустриальных держав.
Миссии банка, его «технические советы», «консультации» и «рекомендации» сводились в итоге к развитию сельского хозяйства в странах-заёмщиках и увеличению добычи полезных ископаемых для увеличения объёмов их вывоза в США и ряд других индустриальных капиталистических стран.
Так, миссии банка, обследовавшие в 1952 году экономику Ирана и в 1954 году экономику Сирии, рекомендовали правительствам этих стран сосредоточить главное внимание на развитии сельского хозяйства и транспорта.
Миссия банка в Турции нашла, что ведущееся турецким правительством промышленное строительство не учитывает реальных финансовых возможностей страны, и рекомендовала ему прекратить (!) дальнейшие вложения гос. средств в промышленность и сосредоточить свои усилия на развитии сельского хозяйства, энергетики и транспорта. Эти рекомендации вызвали возмущение турецкой общественности, что вынудило турецкое правительство в марте 1954 года потребовать удаления из Турции миссии банка.
Механизмы управления МБРР
Высшими органами МБРР являются Совет управляющих и Директорат как исполнительный орган. Во главе банка находится президент, как правило, представитель высших деловых кругов США.
Сессии Совета, состоящего из министров финансов или управляющих центральными банками, проводятся раз в год совместно с МВФ. Членами банка могут быть только члены МВФ, голоса также определяются квотой страны в капитале МБРР (более 180 млрд долл.).
Хотя членами МБРР являются 187 стран, лидирующее положение принадлежит семёрке: США, Японии, Великобритании, ФРГ, Франции, Канаде и Италии.
Источниками ресурсов банка помимо акционерного капитала являются размещение облигационных займов, главным образом на американском рынке, и средства, полученные от продажи облигаций.
Мбрр и группа всемирного банка
В дополнение к МБРР были созданы следующие финансовые институты:
Все эти финансовые институты работают в тесном взаимодействии, образуя Группу Всемирного Банка. В начале 2009 г. в состав членов этих организаций входили 186 стран. За период своего существования банк и его организации предоставили свыше 5 тыс. займов на общую сумму 245 млрд долл. Почти 3/4 всех займов приходится на МБРР.