The World Bank Objectives Organization Principles and Business

Objectives Organization Principles and Business of the World Bank

The World Bank is the abbreviation of the World Bank Group and the general name of the International Bank for Reconstruction and Development. It is also a specialized agency of the United Nations.  

The World Bank was established in 1945 and started operations in June 1946. It consists of five member institutions: the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency and the International Investment Dispute Resolution Center.

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Organization name	The World Bank
Established	December 27, 1945
Individuality	One of the three major international financial institutions
Headquarters	Washington, America
Current president	David Malpas
Member States	189 countries
Place of establishment	Bretton Woods, New Hampshire, USA
Establishment document	International Bank for Reconstruction and Development Agreement
Main business	Loan projects, non-loan assistance
Executive Board members	Including the President of the World Bank and 25 executive directors
Official website	http://www.worldbank.org/
Make a fate	Helping developing countries eliminate poverty and promote sustainable development

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The World Bank Full Description

Development path of  the World Bank

On December 27, 1945, the World Bank officially announced its establishment after the Bretton Woods Conference.

On June 25, 1946, the World Bank began operations. 

On May 9, 1947, it approved the first batch of loans to France with a loan of 250 million US dollars. 

The converted value is still the largest batch of loans provided by the World Bank.

In November 1947 became a specialized agency of the United Nations.

In the beginning, the purpose of the World Bank was to help the reconstruction of European countries and Japan after World War II.

In addition, it should assist the economic development of African, Asian, and Latin American countries.

Initially, the World Bank's loans were mainly concentrated on large-scale infrastructure such as highways, airports, and power plants. 

After Japan and Western European countries graduated (reaching a certain level of per capita income), the World Bank is completely concentrated in developing countries.

Since the early 1990s, the World Bank has also started lending to Eastern European countries and the former Soviet Union countries.

In 1980, China restored its status as a member of the World Bank and accepted the World Bank’s first loan the following year. China's reform and opening up had just begun.

China was very worried about the first economic report prepared by the World Bank. It is inevitable to doubt the World Bank's ideological attempts.

However, after the report came out, they left a deep impression on Chinese officials because they were surprised to find that the problems of socialist China have many similarities with those of developing countries that "live in dire straits."

In the 1980s, banks faced macroeconomic and debt problems; in the next decade, social and environmental issues, the assumed central stage, and more and more civil society accused banks of failing to comply with their policies in some projects.

In response to the quality of banking business, shortly after the report was released, the reform steps were examined, including the creation of the bank’s claims by the investigation team.

However, the voice of criticism continued to increase and peaked during the annual meeting held in Madrid in 1994.

Since then, the bank group has made great progress. These five institutions work independently while cooperating with each other, gradually improving internal efficiency and external efficiency.

The customer's report is roughly related to changes in the bank's service level, seeing their commitment, delivery and quality.

Compared to before, banks have played an important role in the global policy arena. 

It has been effectively engaged in post-conflict work with partners and clients in complex emergencies in the post-East Asian Crisis Assistance Center in Bosnia after the US hurricane cleanup, after the Turkish earthquake support and in Kosovo and East Timor.

In 2010, the Spring Meeting of the World Bank’s Development Committee adopted a reform plan for transferring voting rights from developed countries to developing countries on April 25. 

This reform has increased China’s voting power in the World Bank from 2.77% to 4.42%, becoming the World Bank. The third largest shareholder, after the United States and Japan. South Korea will increase from 1% to 1.6%.

Since its establishment in 1945, the World Bank has grown from a single institution to a group of five closely linked development institutions.

The mission of the World Bank has evolved from the promotion of post-war reconstruction and development through the International Bank for Reconstruction and Development to the promotion of poverty alleviation in countries around the world through close coordination with its affiliates, the International Development Association and other member agencies.

Other World Bank member institutions include the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Investment Dispute Resolution Center (ICSID).

Reconstruction is still an important part of the Bank’s work. Reducing poverty through inclusive and sustainable globalization remains the Bank’s primary goal.

On January 11, 2016, the World Bank announced the appointment of Yang Shaolin as the World Bank’s first Executive Vice President and Chief Administrative Officer, in charge of the World Bank’s corporate strategy, budget, risk management, integrity, employee ethics and informatization.

On July 18, 2016, World Bank President Jin Yong announced that US economist Paul Romer will succeed Kosik Basu as the World Bank's chief economist and senior vice president.

On January 7, 2019, then-World Bank President Jin Yong announced that he would retire early on February 1.

What is the Purpose of the World Bank?

The aim is to provide loans and investment to member countries and promote the balanced development of international trade.

WB Aim and principle

In accordance with the provisions of the International Bank for Reconstruction and Development Agreement, the purposes of the World Bank are:

(1) Through investment in production, assist the economic recovery and construction of member countries, and encourage the development of resources by underdeveloped countries.

(2) Promote private foreign investment by guaranteeing or participating in private loans and other private investments.

When member countries cannot obtain private capital under reasonable conditions, they can use the bank's own capital or funds raised to supplement the lack of private investment.

(3) Encourage international investment, assist member countries to improve production capacity, promote the balanced development of member countries' international trade and the improvement of the balance of payments situation.

(4) When providing loan guarantees, it should cooperate with other international loans.

At the beginning of the establishment of the World Bank, it was mainly to assist Western European countries to restore the economy destroyed by the war. 

But after 1948, European countries began to rely mainly on the US "Marshall Plan" to restore the post-war economy, so the World Bank mainly turned to Developing countries provide medium and long-term loans and investments to promote economic and social development in developing countries.

The World Bank is striving to close this gap and transform the resources of rich countries into the economic growth of poor countries.

As one of the institutions that provide the most development assistance in the world, the World Bank supports the efforts of governments in developing countries to build schools and hospitals, supply water and electricity, prevent and cure diseases and protect the environment.

Shareholding principle

The World Bank was established on the principle of a joint stock company.

In the early days of its establishment, the World Bank's legal capital was US $ 10 billion, and its total capital was 100,000 shares at US $ 100,000 per share.

All member countries are required to subscribe for shares in the bank, and the subscription amount is negotiated by the applicant country and the World Bank and approved by the World Bank's Board of Directors. 

Generally speaking, the number of shares subscribed by a country depends on the economic strength of the country, and also refers to the country ’s share of the International Monetary Fund.

There are two methods for payment of shares subscribed by Member States:

(1) Shares subscribed by Member States are paid 20% first. Of these, 2% will be paid in gold or US dollars, and 18% will be paid in the member’s national currency.

(2) The remaining 80% of the shares shall be paid in gold, US dollars or the currency required by the World Bank when the World Bank urges the payment.

Weighted voting

The World Bank and the International Monetary Fund (IMF) use a weighted voting system. 

The terms of the International Bank for Reconstruction and Development Agreement stipulate that the membership of the World Bank is open to all members of the IMF. Countries applying for membership in the IMF must provide their economic data for the data of the IMF and other member countries with similar economies.

Make a comparison, and then obtain a quota equivalent to the amount subscribed to the IMF, which determines the country’s voting weight in the IMF.

Each new member of the World Bank receives 250 votes, plus one share per share in the World Bank’s share capital. 

The quota given by the IMF is used to determine the number of shares allocated to each new member country of the World Bank.

The important matters of the World Bank all need to be decided by the Member States by voting. 

The size of the voting rights is proportional to the share capital subscribed by the Member States and is the same as the regulations on voting rights of the International Monetary Fund.

Every member of the World Bank has 250 basic voting rights, and every additional subscription of 100,000 US dollars of capital will add one vote.

The United States has the largest number of shares subscribed for, with 226,178 votes, accounting for 17.37% of the total votes.

It plays an important role in the decisions of World Bank affairs and important loan projects.

After the World Bank's second-stage voting rights reform was completed, the IBRD Executive Board was composed of 25 executive directors, 6 of which were directly assigned by the countries with the most shares, the United States, Japan, China, Germany, France, and the United Kingdom, and did not participate in the elections.

The remaining 20 executive directors are composed of directors of other member states in 20 constituencies.

They are elected every two years, with Saudi Arabia and Russia as separate constituencies. 

The voting weight distribution of the World Bank Group institutions varies.

After the second phase of the World Bank voting rights reform, the top five IBRD shareholder countries are the United States (15.85%), Japan (6.84%), China (4.42%), Germany (4.00%), France (3.75%) and the United Kingdom (3.75%).

 

What are the Sources of Funds of the World Bank?

(1) Shares paid by member countries

(2) Borrowing money from international financial markets

(3) Issue bonds and collect interest on loans.

The World Bank makes loans to governments or public enterprises, but a government (or "sovereignty") must guarantee the repayment of the loan. Funds for loans come mainly from the issuance of World Bank bonds.

The credit of these bonds is listed as AAA (highest) because the member countries’ shared capital supports them, and the borrower has a sovereign guarantee.

Because the World Bank’s credit is very high, it can borrow at very low interest rates.

Since the credit of most developing countries is much lower than that of this loan, even if the World Bank withdraws about 1% of the management fees from the lenders, the World Bank’s loans to these countries are very attractive to these countries.

In addition, the International Development Association of the World Bank Group provides "soft" loans to the poorest countries (average per capita annual income is less than US $ 500), with a loan period of about 30 years and no profits. The IDA funds come directly from the contributions of member countries.

What is the Main target of the Worls bank?

The World Bank provides long-term loans and technical assistance to developing countries to help these countries achieve their anti-poverty policies.

World Bank loans are used in a very wide range of fields, from the reform of the medical and educational systems to the construction of environments and infrastructure such as dams, roads, and national parks. 

In addition to financial assistance, the World Bank provides consultants and technical assistance in all aspects of economic development.

Since James Wolfensohn became president in 1996, the World Bank has focused its efforts on the anti-corruption campaign.

Some people think that this practice violates the “non-political” stipulated in Section 10, Section 10 of the World Bank Agreement.

However, in the name of socio-economics, the World Bank has repeatedly involved national reforms and even elections.

The World Bank began to abandon the economic development it had been pursuing and focused more on poverty alleviation.

It also began to pay more attention to supporting small regional enterprises.

It realized that clean water, education, and sustainable development were critical to economic development, and began to invest heavily in these projects. 

In response to criticism, the World Bank has adopted many environmental and social protection policies to ensure that its projects do not cause damage to local people or groups in the loaned country.

Nevertheless, NGOs still often condemn the World Bank Group’s projects for environmental and social damage and failure to achieve their original goals.

Private sector development is a World Bank strategy whose purpose is to promote the privatization of developing countries. 

All other World Bank strategies must be coordinated with this strategy.

The World Bank has set 2 goals for the world to achieve by 2030:

1. End extreme poverty and reduce the proportion of the population whose daily living cost is less than US $ 1.25 to less than 3%.
2. Promote shared prosperity and promote the income growth of the bottom 40% of the population in each country.

What is the Organizational Structure of the World bank?

Council

The council is composed of a director and deputy director appointed by each member state. This position is usually held by the country’s finance minister, central bank governor or a senior official of equivalent rank.

The directors and deputy directors are appointed for a term of five years and can be reappointed.

If a country is a member of the World Bank, International Finance Corporation (IFC) or International Development Association (IDA), its appointed directors and deputy directors also serve as directors and deputy directors of the IFC and IDA Councils.

Unless otherwise stated, they also serve as national representatives in the Administrative Council of the International Investment Dispute Resolution Center (ICSID). 

The directors and deputy directors of the Multilateral Investment Guarantee Agency (MIGA) are appointed separately.

Board duties

In the "Articles of Agreement", all the power of the World Bank is controlled by its highest decision-making body, the Council. 

However, the Council delegated to the executive directors all the powers except those mentioned in the "Articles of Agreement". Specific powers include:

1. Accept membership and discontinue membership
2. Increase or decrease the approved share capital
3. Determine the distribution of the World Bank's net income
4. Decide on the appeals made by the executive director based on the interpretation in the Articles of Agreement
5. Make formal and comprehensive arrangements for cooperation with other international organizations
6. Terminate the World Bank business
7. Increase the number of elected executive directors
8. Review and approve amendments to the Articles of Agreement.

Executive Board

The members of the Executive Board include the President of the World Bank and 25 executive directors.

The president presides over the meetings of the board of directors, usually without voting rights, but with a decisive vote in favor of a negative vote.

Without the explicit authorization of the Executive Board, executive directors cannot exercise any power alone, nor can they make a commitment or represent the World Bank alone. Starting from the new term on November 1, 2010, the number of executive directors will increase by 1 to a total of 25.

In the absence of an executive director, the deputy executive director may exercise full authority on behalf of the executive director. In addition, senior consultants and consultants assist executive directors in their work.

They can attend most executive board meetings as deputy executive directors, but they have no voting rights.

Composition of successive executive boards

According to the provisions of Article 5 (4) (b) of the "Articles of the International Bank for Reconstruction and Development Agreement", the first Executive Board shall consist of 12 executive directors.

To increase the number of elected executive directors, it must be decided by the board of directors, and the approval vote must reach 80% of the total votes.

Before November 1, 1992, the number of executive directors was 22, of which 17 were elected. In 1992, in view of the number of new member countries joining the World Bank, the number of elected executive directors increased to 20.

Two new seats in countries such as Russia and Switzerland bring the total number of executive directors to 24.

During the tenure that began in 2010, the number of executive directors increased by 1 to a total of 25.

The World Bank Secretariat is responsible for member countries to complete the coordination of the regular capital increase procedures of the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation and the multilateral investment guarantee institutions.

The World Bank Secretariat provides guidance on the procedures for member countries to subscribe for additional shares in accordance with the resolution approved by the Council, including required documents and payment procedures for subscription shares.

 

Leadership

President, World Bank Group	David Malpas
Chief Executive Officer	Kristalina Georgieva
Acting Executive Vice President and Chief Financial Officer	Axel von Torsenberg
Executive Vice President and Chief Administrative Officer	Yang Shaolin
Chief Economist	Penilopi Kogano Goldberg
Senior Vice President and General Counsel	Santi Okoro
Senior Vice President, responsible for the 2030 Development Agenda, United Nations relations, and partner affairs	Mahmoud Musindin
Vice President, in charge of budget, performance management and strategic planning affairs	Antonella Basani
Chairman of the Independent Monitoring Group	Immlana Jalal
World Bank Group Chief Ethics Officer	Jorge Dajani Gonzalez
Vice President, Regional Affairs in Africa	Hafez Ganim
Vice President, in charge of South Asia Regional Affairs	Issel Senhauser
Deputy Governor, in charge of Latin American and Caribbean affairs	Jorge Familia Calderon
Deputy Governor, in charge of regional affairs in the Middle East and North Africa	Fiorde Berhagi
Vice President, responsible for East Asia and Pacific Affairs	Victoria Kwa
Vice President, Europe and Central Asia	Cyril Mueller
Chief Information Officer and Vice President of the World Bank Group, in charge of information management and technology	Dennis Robitay
Vice President, Human Development	Annette Dixon
Vice President, Sustainable Development	Laura Tucker
Deputy Governor, Fair Growth, Finance and Institutions	Ceyla Pazarbasioglu
Vice President, Infrastructure	Marta Diop
Director of the Independent Evaluation Bureau	Alison Evans
Deputy Governor, Group Controller	Bernard Lawwells
Vice President, Institutional Integrity Affairs	Pascal Helen DuBois
Vice President, Group Human Resources	Usman Diagana
Vice President and Auditor General, Internal Audit	Anke D'Angelo
Vice President and Treasurer	Hua Jingdong
Vice President, Business Policy and Country Service	Manuela Ferro
Vice President and Group Chief Risk Officer	Lakshmi Hiam-Sander
Vice President, Head of Development Finance	Axel von Torsenberg
Vice President and Secretary General of the Organization	Yvonne Zikata
Vice President, Compliance Advisor / Ombudsman	Osvaldo Luis Gratac
International Finance Corporation
CEO	Philippe Le Houérou
COO	Stephanie von Friedeburg
Chief Operating Officer Vice President Stephanie von Friedeburg, in charge of Latin America and the Caribbean, Europe and Central Asia	Georgina Baker
Director of the President's Office	Elena Bourganskaia
Chief Executive Officer, IFC Asset Management Company	Marcos Brujis
Vice President, responsible for cooperation, news and publicity	Feng Guiting
Vice President, Institutional Risk and Sustainability	Mohamed Gouled
Vice President and Treasurer	Hua Jingdong
Vice President, Economics and Private Sector Development	Hans Peter Lankes
Vice President, Corporate Strategy and Resources	Monish Mahurkar
Vice President, Middle East and Africa	Sérgio Pimenta
Vice President, Asia Pacific	Nina Stojkovic
Vice President, responsible for legal, compliance risks, environmental, social and corporate governance sustainability and general counsel	Ethiopian Tafala

 

Multilateral Investment Guarantee Agency
Executive Vice President and Chief Executive Officer	Honda Keiko
Institutional Risk Director	Santiago Aserini
Director of Legal Affairs and Claims and General Counsel	Aradhana Kumar-Capoor
Director of Operations	Sarvesh Suri
Director of Economy and Sustainable Development	Merli Margaret Baroudi
Deputy Director and Chief Underwriter, Operations Bureau	Muhamet Bamba Fall

Source: According to the data of the World Bank official website in May 2019

The World Bank administrative organization is composed of the president, several vice presidents, directors, directors, and staff. 

The president is elected by the executive board and is the head of the bank ’s administrative management organization.

Under the guidance of the relevant policies and policies of the executive board, he is responsible for the day-to-day administrative management of the bank, and appoints and removes bank senior staff and staff, but no voting rights.

Only when the votes of both sides in the executive board vote are equal, a critical vote can be cast.

Decision-making

The institutions of the World Bank Group are owned by the member governments, and the member governments have the final decision-making power on all matters, including policies, finances, and membership qualifications.

Member States manage the World Bank Group through the Council and the Executive Board. All major decisions of various agencies are made by the Council and the Executive Board.

The terms of the International Bank for Reconstruction and Development Agreement (En) stipulate that for a country to become a member of the World Bank, it must first join the International Monetary Fund (IMF). 

Joining the International Bank for Reconstruction and Development is a prerequisite for becoming a member of the International Development Association, International Finance Corporation and multilateral investment guarantee institutions.

The World Bank Secretariat cooperates with the IMF and consults with other Bank Group employees to coordinate the membership of new member countries and is responsible for maintaining relevant information on the status of member countries, including the update of member list.

Institutional Operation of the World Bank

The World Bank conducts daily operations under the leadership and guidance of the President and the institutions responsible for regional, industry, and integrated management.

5 Institutions

The World Bank Group includes five institutions:

The International Bank for Reconstruction and Development (IBRD), established in 1945. 

It provides loans to governments of middle-income countries and reputable low-income countries, 188 member countries.

International Finance Corporation (IFC), established in 1956 is the world's largest development agency focused on the private sector.

IFC helps developing countries achieve sustainable growth through investment and financing, mobilizing funds in international financial markets, and providing consulting services to businesses and governments, with 184 member countries.

International Development Association (IDA), established in 1960; provides interest-free loans (also called credit) and grants to governments in the poorest countries, 172 member countries.

The Multilateral Investment Guarantee Agency (MIGA), established in 1988, aims to promote foreign direct investment in developing countries to support economic growth, reduce poverty and improve people’s lives.

MIGA fulfills its mission by providing investors and lenders with political risk guarantees to 181 member countries.

The International Investment Dispute Resolution Center (ICSID), established in 1966.

It provides a mediation and arbitration mechanism for international investment disputes.

As the secretariat operates, its secretary general is elected by the Administrative Management Committee and changes every six years. The President of the World Bank Group is the Chairman of the Administrative Management Committee, 150 member countries.

The executive vice presidents of IFC and MIGA report to the President of the World Bank Group.

Management Department

General Management Department (EN)

Development Economics Research Department, Development Finance Bureau, Institutional External Relations Department, Human Resources Department, Information and Technology Solutions Bureau, Institutional Integrity Department, Legal Department, Treasury Department, World Bank Academy, Conflict Resolution Mechanism, Appeal Service, Mediation Service, Professional Ethics, Appeal Board, Workplace Advisor, Executive Director and Deputy Executive Director, Integrated Services, Independent Evaluation Bureau, Internal Audit, Executive Vice President, Evaluation and Qualification Suspension or Sanctions Office, President’s Office, Corporate Responsibility, Chief Financial Officer, Controller, Institutional Finance and Risk Management, Institutional Secretariat

Regional Department

Africa, East Asia and Pacific, Europe and Central Asia, Latin America and the Caribbean, Middle East and North Africa, South Asia

Interdepartmental Bureau

Global Development Practice Bureau

Agriculture, education, energy and extractive industries, environment and natural resources, finance and markets, governance, 'health, nutrition and population', macroeconomic and fiscal management, poverty, social security and labor, 'society, urban, rural and disaster risks Management ', trade and competitiveness, transportation and ICT, water

Cross-sectoral solutions

Climate change, ‘vulnerability, conflict and violence’, gender, employment, public and private sector cooperation

Main Business of the World Bank

Financial products and services

The World Bank is an important source of funding and technical assistance for developing countries around the world.

The World Bank provides low-interest loans, interest-free loans and grants to developing countries to support investments in education, health, public management, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.

Some World Bank projects are jointly financed by the government, other multilateral institutions, commercial banks, export credit agencies, and private sector investors.

The Bank also provides or mobilizes funds through trust funds established in cooperation with bilateral and multilateral donor agencies.

Many partners have asked the Bank to help manage programs and projects designed to address cross-industry and cross-regional needs.

From 1947 to 2015, the World Bank has carried out 12,215 projects in 173 countries. 

Among them, 384 projects have been carried out in China, with a cumulative loan of US $ 55.12 billion.

Innovative knowledge sharing

The World Bank provides support to developing countries through policy advice, analytical research, and technical assistance.

The analytical work usually provides a basis for the World Bank’s own financing decisions, and also provides a reference for the developing countries’ own investment activities.

In addition, we support capacity building in countries served by the World Bank.

Usually, the World Bank also sponsors or widely participates in conferences and forums that discuss various development issues. These events are often co-organized with partners.

To ensure that countries obtain global best practices and help create cutting-edge knowledge, the World Bank continues to seek ways to improve knowledge sharing and maintain contact with customers and the general public.

The main priorities include:

Results: The World Bank continues to place strong emphasis on helping developing countries achieve measurable results.

Reform: The World Bank strives to improve all aspects of its work, including how to design projects, how to provide information externally (access to information), how to make the bank’s projects and operations more in line with the needs of the client ’s government and community, and so on.

Open development: The World Bank provides more and more freely accessible tools, research and knowledge to help people meet the development challenges facing the world today.

For example, the public data website provides comprehensive and downloadable indicators of the development status of countries around the world for free.

The World Bank also hosts the World Bank webcast, a webcast seminar open to the people of all countries in the world, and uses it as an important content of the spring and annual meetings of the World Bank and the International Monetary Fund.

Loan item

For low-income countries that are eligible for IDA grants and interest-free loans, before preparing for World Bank assistance projects, country aid strategy principles must be included in the poverty reduction strategy document.

Since 1999, the strategic poverty reduction document-poverty reduction must be the focus of any development plan and full participation of the private sector and civil society-is a prerequisite for access to financial assistance and other assistance, and in some cases A requirement for debt relief.

Since poverty reduction is still a very important issue in most middle-income countries, the World Bank can play its role through IBRD loans.

This usually means creating an investment environment that is conducive to attracting more private capital, helping to formulate effective and fair social spending programs, and creating conditions for establishing human capital and providing fair economic opportunities.

A large part of the world s poor population lives in middle-income countries, which generally have access to international capital markets, but to a limited extent and often with volatility.

Providing loans to member countries, especially developing countries, is the World Bank's main business. 

The World Bank loan has a strict set of conditions and procedures from the determination of the project to the return of the loan.

Loan regulations

1. Loan objects: official, state-owned enterprises, and private enterprises in member countries. If the borrower is not a government, a government guarantee is required.

2. Use of loans: mostly for project loans, used in many fields such as industry, agriculture, energy, transportation, education and so on.

The bank only provides 20% to 50% of the total investment in the project construction, and the rest is financed by the borrowing country itself, which is what we usually call domestic matching funds.

Bank loans must be earmarked for specific purposes, and the borrowing country must accept bank supervision.

3. The loan term: about 20 to 30 years, the grace period is 5 to 10 years.

4. Loan interest rate: Determined according to the interest rate raised by the World Bank from the capital market. Adjust every three months or half a year.

The loan interest rate is lower than the market interest rate, and the incidental fee charged to the loan is also less. Only the unpaid loan after signing the contract is charged a 0.75% commitment fee.

5. Loan amount: It depends on the gross national product per capita of the borrowing country, the strength of the debt and credit, the development goals and needs of the borrowing country, the feasibility of investment projects, and the order of development in the world economy.

6. Types of loans: 

First, specific investment loans

Second, department loans

Third, structural adjustment loans

Fourth, technical assistance loans; and fifth, emergency recovery loans.

7. Loan procedures: the procedures are cumbersome and strict, and generally takes one and a half to two years.

8. Repayment: due repayment, no arrears and no change in repayment date.

9. Risk taking: The borrowing country bears the risk of exchange rate changes.

What is the Loan procedure of the World Bank?

(1) The selection of the project

As the first stage of the project cycle, project selection is crucial.

Whether a feasible project can be selected from a large number of projects in the borrowing country is directly related to the success or failure of the World Bank loan business.

Therefore, the World Bank has selected the project Work has always attached great importance.

The World Bank mainly adopts several methods for project selection: i. Carry out various aspects of economic research with the borrowing country

ii. Formulate loan principles and clarify the loan direction

iii.  Discuss the loan plan with the borrowing country

(2) Preparation of the project

After the World Bank and the borrowing country carried out the project appraisal and jointly selected the loan project, the project entered the preparation stage.

During the project preparation phase, the World Bank will send a delegation of experts from all walks of life to formally prepare for the project's use of loans together with the borrowing country, laying the foundation for the next stage of feasibility analysis and evaluation.

The project preparation work is generally the direct and primary responsibility of the borrowing country.

(3) Evaluation of the project

After the project preparation is completed, it enters the evaluation phase.

The project evaluation is basically done by the World Bank itself.

The content of the World Bank assessment has five main parties, namely technology, economy, finance, institution, society and environment.

(4) Negotiation of the project

Project negotiations are generally negotiated by the World Bank and the borrowing country, and then the World Bank invites the borrowing country to send a delegation to Washington to negotiate.

The two parties generally confirm the terms of the two legal documents, the loan agreement and the project agreement, and start discussions on relevant technical issues.

(5) Implementation of the project

After the negotiation, the borrower and the project beneficiary shall formally confirm the negotiated loan agreement and project agreement.

On this basis, the World Bank’s management department will submit the project in question to the World Bank’s Executive Board for approval in accordance with the loan plan.

After the project was approved, the World Bank and the borrowing country officially signed the agreement.

After the agreement is officially signed, the borrowing country can go through the relevant legal certification procedures and send the legal documents required for the entry into force to the World Bank for review according to the conditions necessary for the loan to take effect.

If the formalities are complete, the World Bank announces that the loan agreement will take effect and the project will enter the implementation phase.

(6) Post-evaluation of the project

Within a certain period of time after the closure of a project loan account, the World Bank shall summarize the project, that is, the post-evaluation of the project.

Evaluate the degree of realization of the project's expected benefits by reviewing the completed project, reviewing it, summing up the experience and lessons learned during the project's several cycles.

Non-loan assistance

For projects that can improve the development capacity of the borrowing country, the borrowing country can receive both loans and non-loan assistance.

The economic and sectoral work is to fully understand the development issues of the borrowing country, the need for external financing and the availability of external funds, as well as an analytical framework for evaluating development strategies and donor assistance activities.

An important goal of economic and sectoral work is to identify high-yield projects that the poor can directly benefit from in advance.

The World Bank’s economic and sectoral work laid the foundation for its analysis of policy and public expenditure advice and the development of projects and other businesses.

Grants are an integral part of the World Bank’s development work. In addition to providing grants through the International Development Association, the World Bank also manages more than a dozen grant projects and trust funds for approximately 850 donors (more than $ 1 billion in annual payments).

Emergency assistance is provided in the event of a natural disaster or any event that has a significant economic impact and requires a rapid response.

There are many forms of such assistance. For example, the World Bank can develop a recovery strategy to adjust the structure of the existing loan portfolio to support recovery.

The World Bank also issued emergency aid loans that were quickly disbursed.

For example, the World Bank provided $ 160 million in aid to Ethiopia, Malawi and Zambia to help it recover from drought.

The World Bank also provided India with a loan of approximately US $ 600 million for reconstruction after the Gujarat earthquake in January 2001.

In implementing flood prevention and forest fire prevention measures, the World Bank has also designed some disaster management projects.

Since 1980, the World Bank has also approved more than 500 disaster-related businesses with an amount of more than US $ 38 billion.

Preventing conflict and post-conflict reconstruction is essential for poverty reduction.

The role of the World Bank in this area far exceeds the reconstruction of post-war infrastructure.

Multi-party cooperation

The World Bank and the United Nations have cooperated in most regions and industries. 

This cooperation has continued to deepen since the international community adopted the Millennium Development Goals (En).

On February 10, 2017, the World Bank representative office in China learned that the World Bank’s Executive Board had approved a US $ 100 million loan to Shaanxi Province for rural community development projects in poor areas of the province to increase farmers’ income.

Coordinated position

The World Bank maintains this strategic partnership in a proactive and forward-looking manner through its representative office in New York, and coordinates positions with executives and employees of various World Bank departments involved in United Nations affairs when necessary.

The World Bank's New York Representative Office focuses on three levels of work:

Intergovernmental: Communicate with the diplomatic missions of various countries in New York and the agencies that manage the UN General Assembly, the Economic and Social Council (ECOSOC) and the Security Council.

Inter-agency: Interact with the Chief Executive Board (CEB) under the leadership of the UN Secretary General and the UN Development Group (UNDG) (the World Bank is an observer of the group).

Institutional level: interact with the UN Secretary General, UN Secretariat, UNDP, UNFPA, UNICEF and other agencies and foundations.

This substantive diplomatic dialogue ensures and promotes enhanced cooperation on development issues of common concern, including cooperation in key thematic areas such as fragile countries, climate change, and human development.

The New York Representative Office also represents World Bank management at important United Nations conferences, establishes strategic alliances, and provides information and information to Bank staff, assists in communication between World Bank senior management and senior United Nations officials, and participates in United Nations activities, Conferences, round tables and summits are facilitated.

The Bank’s job is to ensure that the Bank maintains its position as the main development advocate in the UN system, that the Bank’s opinions are accurately included in the UN’s agenda, and that the Bank properly understands UN policies and actions and, where appropriate, will It is incorporated into the development work of the World Bank.

What is the World Bank and IMF Relationship?

The members of the World Bank must be members of the IMF, but not all members of the IMF may participate in the World Bank. 

Both the World Bank and the International Monetary Fund play a cooperative role.

The International Monetary Fund is mainly responsible for issues related to international monetary affairs.

Its main task is to provide member countries with short-term foreign exchange funds to resolve temporary imbalances in the balance of payments to eliminate foreign exchange controls and promote exchange rate stability and the expansion of international trade.

The World Bank is mainly responsible for economic recovery and development, and provides medium and long-term loans for economic development to member countries.

In order to apply the principles of the comprehensive development framework, the World Bank and the International Monetary Fund jointly launched the Poverty Reduction Strategy Document (PRSP), which was developed by each country and became the basis for debt reduction and preferential loans.

The purpose of formulating the poverty reduction strategy paper is to expand the representation of civil society, especially the poor people themselves, in participating in the design of poverty reduction strategies, strengthen coordination among various development partners, and concentrate analysis and research, policy consultation and financial resources of the international community Get up to achieve the actual effect of reducing poverty.

China Relations with the World Bank

Contact with the World Bank

China is one of the founding countries of the World Bank,

Governor of the People's Bank of China meets Wolfowitz

Governor of the People's Bank of China meets Wolfowitz

After the founding of New China, China’s seat in the World Bank has long been occupied by the Taiwan authorities.

On May 15, 1980, China’s legal seats in the World Bank and its affiliated International Development Association and International Finance Corporation were restored.

On September 3, 1980, the bank's board of directors voted to increase China's shares in the bank from 7,500 to 12,000. China has the right to vote in the World Bank. In the World Bank's executive board, China has a single director.

China has borrowed from the bank since 1981. Since then, the cooperation between China and the World Bank has gradually expanded and expanded.

The World Bank has promoted the development of key national construction projects such as transportation, industry transformation, energy, agriculture, and finance, cultural and environmental protection in China by providing long-term project loans.

At the same time, through its own training institutions, it has trained a large number of management personnel in China who understand the World Bank's business and are familiar with professional knowledge.

In May 2004, the Shanghai Global Poverty Alleviation Conference hosted by the World Bank and co-sponsored by China was a model of international development cooperation between the two sides.

The conference promoted the international community's re-recognition of the global concept and practice of poverty alleviation, and promoted the consensus of the international community to act to reduce poverty.

In December 2007, China announced the first donation of US $ 30 million to the World Bank Soft Loan Window International Development Association, which was generally well received by the international community, marking a new milestone in the cooperation between the two parties.

In 2008 and 2009, China and the World Bank successfully co-organized two "Advanced Seminars on Shared Development Experiences between China and Africa". 

The seminar explained China's challenges, measures and achievements in the process of reform and development.

It compared the different economic, historical and cultural backgrounds of African countries and promoted the mutual learning of development experiences and models.

The representative highly praised it and was regarded by the World Bank as a successful example of South-South cooperation.

In October 2008, the Chinese government donated US $ 300,000 to the World Bank South-South Knowledge Cooperation Fund as a founding donor country, once again demonstrating to the international community China's attitude towards actively promoting South-South cooperation.

In May 2008, Lin Yifu was officially appointed as the chief economist of the World Bank. This is the first time that the World Bank has appointed people from developing countries as chief economists since its establishment in 1945. 

It also fully illustrates the World Bank’s Recognition of development achievements and experience.

What is the Relationship of the World Bank with IBRD?

China is one of the founding countries and restored the legal seat of the World Bank Group in 1980. Since 2010, China’s voting rights in the International Bank for Reconstruction and Development accounted for 4.42% of the total votes, ranking third.

As of the end of fiscal 2011, IBRD’s committed loans to China totaled approximately US $ 39.2 billion.

What is the World Bank Relationship with the International Development Association?

In 1980, China restored its legal seat in the World Bank Group and became a member of the International Development Association.

China has 411,541 voting rights in the International Development Association, accounting for 2.04% of the total voting rights.

As of July 1999, the association has provided China with about US $ 10.2 billion in soft loans.

Since July 1999, the International Development Association has stopped providing loans to China.

In December 2007, China donated US $ 30 million to the International Development Association.

In December 2010, China promised to donate US $ 50 million to the 16th capital increase of the International Development Association and double-accelerate the repayment of IDA loans in accordance with the provisions of the World Bank’s legal provisions, and voluntarily repay an additional US $ 1 billion in advance on this basis.

For the voluntary one-time advance payment of USD 1 billion, the World Bank converted it into approximately USD 110 million and included it in my direct donation to IDA16.

World Bank Interactions with International Finance Corporation

In 1980, China restored its legal seat in the World Bank Group and became a member of the International Finance Corporation.

China subscribed for 24,500 shares in IFC, equivalent to 24.5 million US dollars, accounting for 1.03% of the total authorized capital of IFC. China's voting rights in IFC are 24,750 votes, accounting for 1.02% of the total voting rights.

Since IFC approved the first project in China in 1985, by the end of fiscal 2011, IFC had invested a total of 218 projects in China and provided US $ 5.43 billion in funding for these projects, of which US $ 4.15 billion was with its own funds, US $ 1 billion comes from other banks in the syndicate, and US $ 280 million is the guarantee provided by IFC.

China strategy

According to the World Bank's "Country Partnership Strategy" for China, the World Bank mainly provides China with the following assistance:

1. Promote the integration of China's economy with the world economy. Deepen China's participation in multilateral economic institutions, reduce domestic and foreign trade and investment barriers, and provide assistance for China's overseas development assistance.

2. Reduce poverty, inequality and social exclusion: promote the balanced development of urbanization, guarantee rural life, expand basic social services and infrastructure services, especially in rural areas.

3. Respond to resource shortages and environmental challenges: reduce air pollution, save water resources, optimize energy use (partly through price reforms), improve land administration, and implement international environmental conventions.

4. Deepen the role of financial intermediary: expand financial services (especially SMEs), develop capital markets, respond to systemic risks, and maintain financial stability.

5. Strengthen the public sector and market system: enhance the competitiveness of enterprises, reform the public sector, and rationalize intergovernmental fiscal relations.

According to these goals, the World Bank mainly implements aid programs in three ways: Investment loans, technical assistance loans and grants (grants are often provided by multilateral cooperation agencies and managed by the World Bank), as well as analysis reports, policy consultations, seminars and Non-financial services, such as training, can be combined in one or more ways to achieve specific goals as needed.

World Bank President

By convention, the president of the World Bank is an American, and the president of the International Monetary Fund is a member of the European Union.

The President of the World Bank is also the President of the World Bank Group and the President of the other four organizations of the Group.

The World Bank's Articles of Agreement does not specify the nationality of the president, but is routinely nominated by the executive directors of the United States.

According to a long-term, informal agreement, the President of the World Bank is American, and the President of the International Monetary Fund is European.

The first term is five years, and the second term can be five years or less than five years.

 

World Bank Presidents List

From 1946 to 2019, a total of 13 people served as World Bank Presidents, all of whom are American.

1. Eugene Isaac Meyer June 18, 1946-December 4, 1946

2. John Jay McCloy March 17, 1947-July 1, 1949

3. Eugene Robert Black (Eugene Robert Black) July 1, 1949-January 1, 1963

4, George David Woods (George David Woods) January 1, 1963-April 1, 1968

5. Robert Strange McNamara (Robert Strange McNamara) April 1, 1968-July 1, 1981

6, Alden Winship Clausen (Alden Winship Clausen) July 1, 1981-July 1, 1986

7. Barber Benjamin Conable July 1, 1986-September 1, 1991

8. Lewis Thompson Preston (Lewis Thompson Preston) September 1, 1991-February 1, 1995

Acting Governor Ernest Stern (Ernest Stern) February 1, 1995-June 1, 1995

9, James David Wolfensohn (James David Wolfensohn) June 1, 1995-June 1, 2005

10. Paul Bruce Zoellick (June 1, 2005-July 1, 2007)

11. Robert Bruce Zoellick (January 2007-July 1, 2012)

12. Jin Yong Kim, January 2012-February 1, 2019

Acting President Kristalina Georgiev (Kristalina Georgiev), February 1, 2019-April 9, 2019

13. David Robert Malpass, September 2019-present

 

International influence of the World Bank

The World Bank is an institution whose responsibilities become increasingly blurred in a globalized economy.

To some extent, the World Bank is a loan institution. But the World Bank’s largest borrower is the source of power for fast-developing developing countries, that is, China, India and other countries.

The controversial point is that these countries can borrow large amounts of capital from their own private investors.

The World Bank is also an aid agency, providing assistance to some of the world's poorest countries. 

But these aid funds only account for a small portion of aid funds provided by private groups such as developed countries, the Gates Foundation, and other agencies.

At the same time, the World Bank is also an investor, investing in private companies in emerging economies. 

But these investments are like a drop in the ocean compared to the large amounts of money that can be easily flown to places that were once considered to be poor or dangerous.

But it is not clear whether the core business of the World Bank-the International Bank for Reconstruction and Development for profit-still makes sense.

 

Criticism of the World Bank

Although many poor governments around the world rely on the World Bank to fund their development plans, the World Bank is often criticized by opponents of the "new colonialist" globalization of large companies.

These anti-globalization people are also the main critics of the World Bank. They criticize the World Bank for using various structural adjustment measures to weaken the sovereignty of the government of the loaned country, pursue economic liberalism, and weaken the role of the country.

A general criticism is that the World Bank is politically influenced by some countries (especially the United States), so its policies tend to be in the interest of these countries.

Another criticism is that the purpose of the World Bank is neoliberalism, whose principle is to believe that the market is the only function that can bring wealth to a country.

A country can flourish only if it implements free market competition. But neoliberal principles and reforms do not work in countries with military conflicts (civil war or foreign war) or in countries that have been oppressed for a long time (dictatorship or colonialism) and in countries with political instability and un-democracies.

Under these circumstances, the World Bank prefers to introduce foreign companies to destroy the development of the local economic system.

On the other hand, liberals criticized the World Bank as a political organization. They believe that the World Bank does not believe in the market's ability to regulate the economy, but that a country owns and adjusts the international economy. 

Its purpose is to cover up the control of these countries' policies on the world economy.

The work of the World Bank is often severely criticized by non-governmental organizations and academics, and sometimes the World Bank’s own internal review also questions certain decisions.

The World Bank is often accused of being an executor of economic policies that benefit the United States or Western countries in favor of their own.

In addition, market economic reforms that are often introduced too quickly, incorrectly, in the wrong order, or under unsuitable circumstances Instead, the economy of developing countries caused damage.

The real controller of the World Bank is the World Bank giant. Their ultimate goal is to chase profits. The situation can be said to be a result of compromise.