The World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Fund (IDA), is part of the World Bank Group. This also includes IFC (International Financing Company), Miga (International Investment Guarantee Agency) and ICCID (International Center for Investment Conflict). According to Abbreviationfinder, World Bank is also known as WB.
Miga provides insurance against so-called non-commercial risks in order to promote investment in developing countries, and Icsid has been added to promote investment by mediating disputes between foreign investors and the host country.
The head of the IBRD is also the top manager of the other institutions. Like the International Monetary Fund (IMF), the World Bank Group belongs to the UN Economic and Social Council (Ecosoc), but in practice the institutions are independent from the rest of the UN.
Organization and decision-making
The World Bank is organized as a cooperative, in which the member countries have shares. Each member state has a representative on the Board of Governors, who ultimately has the power and responsibility. The Board of Governors normally meets once a year, at the annual meeting of the World Bank and the IMF. Sweden is represented by the Minister of Finance.
The World Bank’s organization is in many ways similar to the IMF’s (see also IMF: Structure). In order for a country to become a member of the World Bank, it must first be a member of the IMF. At the beginning of 2016, the IBRD had 188 member countries, while the IDA had 173 member countries.
Like the IMF, the World Bank’s Board of Governors delegates most of its work to an executive board with 25 members. Six of these are nominated by the six countries that make the largest contributions to the World Bank: the United States, Japan, China, Germany, France and the United Kingdom. The other 19 members are elected in two years by different groups of the other countries’ representatives in the Board of Governors.
Sweden shares a representative with the other Nordic and Baltic countries. Each member has a certain number of votes depending on how many countries he or she represents and depending on the size of the countries’ membership contributions. This means that the members’ voting power varies greatly, but decisions are normally made by consensus.
The Executive Board is responsible for the World Bank’s lending policy and approves all loans. It is also responsible for the budget and the activity report before the Board of Governors. The head of the World Bank is traditionally always American and is appointed by the largest lender in the United States for five years at a time. The World Bank Governor leads the day-to-day operations with the help of staff at Washington’s headquarters.
In total, the bank has over 10,000 employees from more than 160 countries; about two-thirds of them work in Washington. The rest are in more than a hundred offices around the world. The World Bank has significantly more regional and local branches than the IMF.
In the same way as in the International Monetary Fund (IMF), member countries make contributions to the International Bank for Reconstruction and Development (IBRD) that are proportionate to their economic strength. The contribution of each Member State is based on its quota in the IMF.
A small part of the contribution (just over one twentieth) is paid to the bank, while the rest is a guarantee amount that can be made available when needed.
Most of the IBRD’s resources, however, come from borrowing in the world’s capital markets, which strengthens the organization’s independence from the lending member states. In total, the bank borrowed over $ 400 billion on the market during its first 60 years, while taxpayers around the world contributed about $ 11 billion.
The IBRD also receives capital from the interest income on its lending. Profitability contributes to giving IBRD a high credit rating, which in turn means favorable interest terms for the borrowing of capital.
The International Development Fund (IDA) is mainly financed by grants from the World Bank’s richer member countries. The donor countries meet every three years to decide how much resources are needed for IDA’s activities over the next three years. For the period 2014–2017, donor countries are assisting with just over $ 35 billion. IDA also receives resources from the IBRD, which transfers part of its interest profit, and through recipient countries repaying loans.
The richest developed countries are the largest contributors to IDA, but the number of donor countries has increased and some grants are now given by countries that are IBRD borrowers and several countries that have previously been IDA borrowers, such as Egypt, China and Turkey. Unlike the IBRD, IDA cannot increase its funds through loans on the international market.