You are on page 1of 37

THE WORLD BANK

INTRODUCTION
•  The World Bank (the Bank), a part of the World Bank
Group (WBG), is an internationally supported bank that
provides loans to developing countries for development
programs with the stated goal of reducing poverty. The
World Bank differs from the World Bank Group in that the
former comprises only the International Bank for
Reconstruction and Development (IBRD) and the
International Development Association (IDA).

• The IBRD focuses on middle income and creditworthy poor


countries, while IDA focuses on the poorest countries in
the world. Together they provide low-interest loans,
interest-free credit and grants to developing countries for
education, health, infrastructure, communications and
many other purposes.
THE WORLD BANK

The World Bank Group, among the world’s


largest development institutions, is a major
source of financial and technical assistance
to developing countries around the world.

The Bank Group advances ideas about


international projects on trade, finance,
health, poverty, education, infrastructure,
governance, climate change, and more to
benefit the poor seeking new opportunities.

3
THE WORLD BANK

AFFILIATES OF THE WORLD BANK GROUP


The International Bank for Reconstruction and Development
Established 1944 | 186 Members
Cumulative lending: $479 billion (effective fiscal 2005, includes guarantees)
Fiscal 2009 lending: $32.9 billion for 126 new operations in 42 countries

The International Development Association


Established 1960 | 169 Members
Cumulative commitments: $207 billion (effective fiscal 2005, includes guarantees)
Fiscal 2009 commitments: $14 billion for 176 new operations in 63 countries

The International Finance Corporation


Established 1956 | 182 Members
Committed portfolio: $34.4 billion (plus $8 billion in syndicated loans)
Fiscal 2009 commitments: $10.5 billion committed and $4 billion mobilized for
447 projects in 103 countries

The Multilateral Investment Guarantee Agency


Established 1988 | 174 Members
Cumulative guarantees issued: $20.9 billion (includes amounts leveraged through
the Cooperative Underwriting Program)
Fiscal 2009 guarantees issued: $1.4 billion

The International Centre for Settlement of Investment Disputes


Established 1966 | 143 Members
Total cases registered: 292
Fiscal 2009 cases registered: 24 4
ESTABLISHMENT
• The World Bank was formally established on
December 27, 1945, following the ratification of
the Bretton Woods agreement.
• Two years later, the Bank issued its first, and
largest, loan: $250 million to France for post-war
reconstruction; an issue which has remained a
primary focus, alongside reconstruction after
natural disasters, humanitarian emergencies and
post-conflict rehabilitation needs affecting
developing and transition economies. 
WHAT IS THE DIFFERENCE
BETWEEN THE WORLD BANK
AND A COMMERCIAL BANK?
It is owned by 186 countries. Unlike commercial
banks, the World Bank often lends at little or no
interest to countries that are unable to raise
money for development anywhere else.
Basically, the World Bank borrows the money it
lends.  It has good credit because it has large,
well-managed financial reserves.  This means it
can borrow money at low interest rates from
capital markets all over the world and channel it
to developing countries, often at much lower
rates of interest than what markets would
charge these countries
Differences between IMF &
World Bank
WHO RUNS THE BANK?

• The World Bank is like a giant cooperative where its


members are shareholders. The number of shares a
country has is based roughly on the size of its economy.
The United States is the largest single shareholder (16.4%
of total votes), followed by Japan ( 7.9% of total votes),
Germany (4.5%), the United Kingdom(4.3%), and
France(4.3). The rest of the shares are divided among the
other members.
• As a result, the World Bank is controlled primarily by
developed countries, while clients have almost exclusively
been developing countries.
Millenium Development
Goals
• The MDGs focus the efforts of the world community on achieving
significant, measurable improvements in people's lives by the year 2015.
They establish targets and yardsticks for measuring results—not just for
developing countries but for the rich countries that help fund
development programs and for the multilateral institutions that help
countries implement them.
• The Eight MDGs listed below guide the efforts of virtually all
organizations working in development and have been commonly
accepted as a framework for measuring development progress:
 Eradicate extreme poverty and hunger
 Achieve universal primary education
 Promote gender equality and empower women
 Reduce child mortality
 Improve maternal health
 Combat HIV/AIDS, malaria, and other diseases
 Ensure environmental sustainability
 Develop a Global Partnership for Development
HOW DOES THE WORLD
BANK WORK?
Fund Generation
• IBRD lending to developing countries is primarily financed by
selling AAA-rated bonds in the world's financial markets. While
IBRD earns a small margin on this lending, the greater proportion
of its income comes from lending out its own capital. This capital
consists of reserves built up over the years and money paid in
from the Bank's 185 member country shareholders. IBRD’s
income also pays for World Bank operating expenses and has
contributed to IDA and debt relief.
• IDA, the world's largest source of interest-free loans and grant
assistance to the poorest countries, is replenished every three
years by 40 donor countries. Additional funds are regenerated
through repayments of loan principal on 35-to-40-year, no-
interest loans, which are then available for re-lending. IDA
accounts for nearly 40% of the lending.
Loans
• Through the IBRD and IDA, World Bank
offers two basic types of loans and credits:
investment loans and development
policy loans. Investment loans are made to
countries for goods, works and services in
support of economic and social
development projects in a broad range of
economic and social sectors. Development
policy loans (formerly known as adjustment
loans) provide quick-disbursing financing to
support countries’ policy and institutional
reforms. IDA loans are interest free.
Grants
• Grants are designed to facilitate development
projects by encouraging innovation, co-operation
between organizations and local stakeholders’
participation in projects. In recent years, IDA
grants which are either funded directly or
managed through partnerships have been used
to:
– Relieve the debt burden of heavily indebted poor
countries
– Improve sanitation and water supplies
– Support vaccination and immunization programs to
reduce the incidence of communicable diseases like
malaria
– Combat the HIV/AIDS pandemic
– Support civil society organizations  
Analytic and Advisory Services

• While World Bank is best known as a


financier, another of its roles is to
provide analysis, advice and
information to member countries so
they can deliver the lasting economic
and social improvements their
people need.
THE WORLD BANK

Fiscal Year Highlights


In fiscal 2009, IBRD committed $32.9 billion for 126 new
operations in 42 middle-income and creditworthy low-income
countries.

The World Bank is able to triple its support to IBRD borrowers


to up to $100 billion through fiscal 2011 to raise the living
standard of the poor, support countries facing large budget
shortfalls, and help sustain long-term investment projects.

14
THE WORLD BANK

Fiscal Year Highlights

IDA committed a record $14 billion for


176 new operations in 63 low-income
countries, a 25 percent increase over
last year’s $11.2 billion.

15
ROLE OF WORLD BANK IN
SOUTH ASIA
• South Asia is home to the largest number of people
in the world living below one dollar a day, so the
agenda for poverty alleviation in the region remains
very large. Looking ahead, the Bank will focus on
cross-cutting reforms such as governance and fiscal
management, and continue addressing deficiencies
in the region’s investment climate, such as weak
infrastructure, red tape, and corruption. It will also
deepen its engagement in states where poverty is
increasingly concentrated, such as Orissa and Bihar
in India and Sindh in Pakistan.
THE WORLD BANK ANNUAL
REPORT 2009

South Asia
Regional Snapshot
Total population 1.5 billion
Population growth 1.5%
Life expectancy at birth 65 years
Infant mortality per 1,000 births 59
Female youth literacy 74%
Number of people living with HIV/AIDS 2.6 million
2008 GNI per capita $986
GDP per capita index (1998=100) 164
Note: Life expectancy at birth and infant mortality rate per 1,000 live births, female youth literacy, and people
living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators
database. HIV/AIDS data are from the UNAIDS/WHO 2008 Report on the Global AIDS Epidemic.

Total Fiscal 2009 Total Fiscal 2009

New Commitments Disbursements

IBRD $1,286 IBRD $1,202


million million
19
IDA $4,148 IDA $2,792
THE WORLD BANK

IBRD and IDA Lending by Region │ Fiscal


2009
Share of Total Lending of $46.9 Billion

20
THE WORLD BANK

South Asia
IBRD and IDA Lending by Theme, Fiscal 2009
Share of Total Lending of $5.4 Billion

21
THE WORLD BANK

South Asia
IBRD and IDA Lending by Sector, Fiscal 2009
Share of Total Lending of $5.4 Billion

22
THE WORLD BANK ANNUAL
REPORT 2009
SOUTH ASIA
Total IBRD and IDA Lending, Fiscal 2004 to 2009
(millions of dollars)

23
WORLD BANK & PAKISTAN
• The World Bank’s approach to participation in South Asia is to
empower community groups to make development decisions,
direct resources, and play a role in projects that affect them. The
emphasis is on equity and the inclusion of poorer regions,
communities, and households in development projects.
• Under the Pakistan Poverty Alleviation Fund, some 10,000
community infrastructure projects have been completed that touch
the lives of more than 2.5 million people in about 5,000 villages.
More than half of these projects provide safe drinking water or
access to sanitation. In fiscal 2007, the fund received additional
financing of $138 million to address housing reconstruction in
areas devastated by the earthquake that struck on October 8, 2005
POVERTY ALLEVIATION
PROGRAM IN PAKISTAN
• The World Bank funded Pakistan Poverty
Alleviation Fund Project (PPAF) is
designed to reduce poverty and empower
the rural and urban poor in Pakistan
through the provision of resources and
services to the poor, especially women.
This is being achieved through an
integrated approach that includes building
institutions of the poor and then providing
them with micro-credit loans; grants for
small-scale infrastructure projects; training
and skill development. PPAF has also
contributed significantly in rebuilding lives,
fostering resilience and restoring assets of
the poor who have suffered from the
earthquake and drought.
• Micro finance: 1.5 million micro-
credit loans, (average loan-size US$
150) provided by PPAF, benefiting
nearly 9 million people. Over the last
7 years PPAF has driven the micro
finance sector growth from 60,000
borrowers to more than 1.25 million
active borrowers in the sector. 
How does World Bank
select priorities?
• Working with governments and civil society, the World Bank
develops an action plan known as the Country Assistance
Strategies (CAS) to broadly reduce poverty and promote economic
development.  The CAS describes what support and how much could
be provided to a country during a 3-year period.
• The CAS supports the Government's own development program.  In
this manner, the CAS is specifically designed to the local conditions
in the country and designates funding targets for projects, studies,
and other support. For example, in Brazil, the focus of the CAS is on
accelerating growth, creating new economic opportunities, and fine
tuning the role of the public sector
World Bank believes that poverty is about more than inadequate
income. It is also about lack of fundamental freedom of action,
choice and opportunity. It is about vulnerability to abuse and
corruption. They believe that people who live in poverty should
not be treated as a liability, but as a resource and a partner in
the fight against poverty. Their approach to reducing poverty
puts poor people at the center of development and creates the
conditions where they can gain increased control over their lives
through better access to information and greater involvement in
decision making.
Today, World Bank supports a variety of community-driven
development projects with funding of more than US$2 billion.
Other ways of supporting poor people include community
managed school programs, judicial reform and access to justice
programs and providing citizens with the ability to rate basic
services, such as access to water, education and health which
are amongst the priorities of World Bank.
CURRENT VIEW OF WORLD
BANK ON PAKISTAN
• The Bank’s Country Assistance Strategy
FY 06-09 envisages a flexible lending
program of up to US$6.5 billion a
substantial increase over the previous
CAS period. This includes between $200
and $850 million annually from IBRD. The
current portfolio consists of 22 projects,
with total commitments of US$2.3 billion.
LENDING BY VOLUME IN
MILLIONS OF US DOLLARS
CURRENT LENDING BY
SECTOR IN NUMBER OF
PROJECTS – PAKISTAN
CRITICISM OF WORLD BANK
• The World Bank has long been criticized by a range of
non-governmental organizations and academics,
including its former Chief Economist Joseph Stiglitz, who
is equally critical of the International Monetary Fund, the
US Treasury Department, US and other developed
country trade negotiators, and indigenous rights groups,
such as Survival International. Critics argue that the so-
called free market reform policies—which the Bank
advocates in many cases—in practice are often harmful
to economic development if implemented badly, too
quickly ("shock therapy"), in the wrong sequence, or in
very weak, uncompetitive economies
• In Masters of Illusion: The World Bank and the Poverty of Nations (1996),
Catherine Caufield argues that the assumptions and structure of the World
Bank operation in the end harms southern nations rather than promoting
them. Caufield first criticizes the highly homogenized and Western recipes of
"development" held by the Bank. To the World Bank, different nations and
regions are indistinguishable, and ready to receive the "uniform remedy of
development". She argues that to attain even small portions of success,
Western approaches to life are adopted and traditional economic structures
and values are abandoned. A second assumption is that poor countries
cannot modernize without money and advice from abroad.
• One of the strongest criticisms of the World Bank has been the way in which
it is governed. While the World Bank represents 185 countries, it is run by a
small number of economically powerful countries. These countries choose
the leadership and senior management of the World Bank and as such, their
interests are dominant within the bank
CONCLUSION
• In my opinion, World Bank is necessary for developing countries in
providing medium- and long-term support , it yearly update’s on
prospects for developing countries. Many developing countries have
adopted reform programs needed for sustained growth, by cutting
inflation, increasing their integration with the global economy, and
improving the education and health of their citizens, which should
boost growth over the long term. This progress has greatly
improved the prospects for growth and for a substantial reduction in
poverty.
• In addition to this developing countries have limited mobilization of
domestic resources in the form of savings to finance their growing
economic needs. So they do need the World Bank.
• On the other hand, The World Bank is naturally controlled by those countries
that have given resources to the bank for use or lending to developing
countries. And by looking at the balance sheet it is visible that major resources
of the World Bank come from the United State Subscriptions, therefore there is
a major influence of United States on the Decision-making by World Bank.

• There have been quite a few instances where the influence of United States on
decision-making regarding the use of resources has quite visibly shown us the
political dimension of decisions. In reference in the past the World Bank’s
refusal to build Aswan dam in Egypt, although the World Bank has approved the
project but after the nationalization of Suez canal, the World Bank, on direction
from USA withdrew this assistance. There are many instances of political
influences of developed countries on the resources used by the World Bank.
• Reconstruction remains an important focus of their work, given
the natural disasters and post conflict rehabilitation needs that
affect developing and transition economies. They have,
however, broadened their portfolio's focus to include social
sector lending projects, poverty alleviation, and debt relief and
good governance. At today's World Bank, they have sharpened
their focus on poverty reduction as the overarching goal of all
their work. The World Bank also provides an extensive array of
advice and facilitates to private sector investments in
developing countries to promote growth and opportunity.

You might also like