World Bank Flashcards
World bank: Introduction
Technically, world bank is a part of UN. But, its governance structure is different Each institution in world bank is owned by its member countries
Voting power of each country is proportional to its share
IMF and WBG
A country has to first join IMF to become a member of WBG
WBG: Structure
Refer to Acads
World Bank
IBRD + IDA
Indian bank for reconstruction and development
International development agency
World Bank Group (WBG)
IBRD + IDA + IFC + ICSID + MIGA
International Finance Corporation
International centre for settlement of investment disputes
Multilateral Investment guarantee agency
WB: Focus area
Wood banks focus is on developing countries on areas like
- Human development
- Education and health - Agriculture and rural development
- irrigation
- Rural service etc - Environmental Protection
- Infrastructure
- Governance
WB loans
WB gives loan at concessional rates or grants for these objectives. Policy change condition are associated with loans e.g. Loan to improve coastal environment may be linked to setting up of institution
IFC
Invests in Private sector
- IFC facilitates private investment in developing countries as a way to improve people’s life.
- Largest multilateral source for loans and equity financing for private sector projects in developing world
- India has 3.43 of IFC share capital and 3.38 voting rights
- IFC engagement in India is increasing especially in low income states.
MIGA
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfill the mandate by offering political risk insurance guarantees to investors and lenders
Established to promote FDI in developing countries
How?
- Mostly by providing insurance
- Advising governments on how to attract investment
IBRD
The International Bank for Reconstruction and Development (IBRD) lends to governments of middle income and creditworthy low-income countries
Raises funds from world finance market
IDA
Poorest
Sources
a. Contribution from Richer countries
b. Income of IBRD and IFC
c. Repayment
IDA funds replenish every three year
IDA 16 (2011-14) 50B USD
ICSID
Providing facilities for conciliation and arbitration of investment disputes between member countries and individual investors.
India and WB
Advantage: Advantage of borrowing from world bank
- Low interest rate
- Longer maturity period
IDA Funds: are one of the most concessional external loans for Gold and are used largely in social sector
projects that lead to achievement of MDG.
IBRD Funds: are semi concessional. Utilised primarily for Infrastructure projects
India’s commitment: Banks cumulative commitment to India:
IBRD $48 B
IDA-$43 B
