World Bank

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World Bank

The World Bank provides over $30 billion in assistance to developing and transition countries every year. The Bank’s projects and policies affect the lives and livelihoods of billions of people worldwide – sometimes for the better, but very often in controversial and problematic ways.

 

The World Bank is restructuring the way that it applies environmental and social safeguards to its investments, which will affect investors and governments worldwide –

Click here to learn more about the Safeguards Review

The World Bank was originally established to support reconstruction in Europe after World War II, but has since reframed its mission and expanded its operations both geographically and substantively. Today, the Bank’s mission is to reduce poverty. It has over 184 member countries and provides over $30 billion annually for activities ranging from agriculture to trade policy, from health and education to energy and mining. The World Bank provides funding for bricks-and-mortar projects, as well to promote economic and policy prescriptions it believes will promote economic growth.

The World Bank is not a bank in the common sense of the word. A single person cannot open an account or ask for a loan. Rather, the Bank provides loans, grants and technical assistance to countries and the private sector to reduce poverty in developing and transition countries.

The World Bank Group is actually comprised of five separate arms. Two of those arms – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) work primarily with governments and together are commonly known as “the World Bank”. Two other branches – the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) – directly support private businesses investing in developing countries. The fifth arm is the International Center for Settlement of Investment Disputes (ICSID), which arbitrates disagreements between foreign investors and governments. This webpage outlines key features of the two arms that are now collectively referred to as the World Bank: IBRD and IDA.

 

BIC’s work

People and communities have a right to understand what the World Bank is doing in their country, and participate in and influence the development of Bank projects and policies. Bank Information Center activities to promote these goals include:

  • investigating problematic Bank-funded projects that are negatively impacting people and the environment
  • participating in World Bank policy reviews, and promoting increased transparency, accountability and public participation in the institution’s operations
  • tracking thematic issues such as human rights, climate change and governance, constantly challenging and expanding the dominant discourse around these important topics
  • providing hard-to-obtain information about the Bank to concerned individuals and organizations, thus expanding access to and understanding of the institution and its impacts
The World Bank Group is comprised of five separate entities: the International Bank for Reconstruction and Development (IBRD, est. 1945), the International Finance Corporation (IFC, est. 1956), the International Development Association (IDA, est. 1960), the International Centre for the Settlement of Investment Disputes (ICSID, est. 1966) and the Multilateral Investment Guarantee Agency (MIGA, est. 1988). This webpage outlines key features of the two arms that are now collectively referred to as the World Bank: IBRD and IDA.

Organization

Nearly 10,000 staff members perform the work of the IBRD and IDA, both at headquarters in Washington, DC, and in over 109 country offices. The World Bank is the third largest employer in Washington, DC.

The World Bank is owned by 186 member governments. Each member government is a shareholder of the Bank, and the number of shares a country has is based roughly on the size of its economy. This “one-dollar-one-vote” structure affords richer countries greater power in decisions-making processes at the institutions than poor, borrowing countries.

The United States is the largest single shareholder, with 16.41 percent of votes, followed by Japan (7.87%), Germany (4.49%), the United Kingdom (4.31%) and France (4.31%). The remaining shares are divided among the other member countries. All developing country borrowers have 39% of the voting share combined. The 47 sub-Saharan African nations command less than 6% of the votes.

The World Bank organizes its operations primarily through 27 Vice-Presidential Units. Six regional vice-presidencies control a large-degree of decision making on Bank operations within their own regions: Africa, East Asia & Pacific, Europe & Central Asia, Latin America & the Caribbean, Middle East & North Africa, and South Asia. Other vice presidencies include 7 “Network Vice Presidential Units”-responsible for certain cross-cutting issue areas such as the financial sector or private sector development. The rest 13 cover such areas as external affairs, development economics, legal, and human resources.

Organizational Chart of the World Bank, effective January 1, 2012 (World Bank website)

President

The President of the World Bank is simultaneously the head of all five arms of the World Bank Group. S/He is neither chosen democratically nor is s/he representative of all of the Bank’s countries. The selection of the President of the World Bank Group is based on a “gentlemen’s agreement” between the world’s richest countries: the United States Government chooses the head of the World Bank, while the largest countries of Western Europe name the head of the Interntional Monetary Fund (IMF). Formally the World Bank President is approved by the Board of Directors to a five-year renewable term.

Appointments

The World Bank President controls appointments in four general categories: within his own office, at the Vice-Presidential level, at the Country Director level, and to assist with special initiatives.

Turnover of some key staff is common when a new President takes office, as is slight remodeling of the institution.

Board of Governors

Ultimate decision-making authority rests with the Board of Governors, to which each member country appoints a representative. For most countries, the Governor is the Minister of Finance (or national equivalent). The Board of Governors makes key determinations on strategic direction, membership, capital stock, budgets, and distribution of income. The Board of Governors meet once a year at the IMF/World Bank Annual Meetings to review and set broad policies and priorities.

IBRD and IDA Governors (World Bank website)

Board of Executive Directors

Executive Directors oversee the day-to-day operations of the World Bank, approving all lending operations, policies and strategies, and institutional budgets and audits. They also hold discussions on operations evaluations, development trends, and strategic directions for the Bank. The Executive Directors also formally appoint (although the U.S. Government selects and nominates) the President of the World Bank, who serves as chair of the Board of Directors.

The Board of Directors is made up of 25 Executive Directors, representing all member countries of the World Bank. The five largest shareholders are entitled to appoint their own representatives: United States, Germany, France, Japan, and the United Kingdom. Three “single constituency” Board chairs also have their own seat: the Peoples Republic of China, the Russian Federation, and Saudi Arabia. Sixteen Board chairs are divided among the remaining member governments. All 47 sub-Saharan Africa countries are represented by just three Executive Directors.

The Board operates largely behind closed doors, without public access to its deliberations or details about its decisions. Full Board meetings are held at least twice a week (currently on Tuesday and Thursday) to approve all World Bank Group financing and to monitor the Bank Group’s day-to-day work. Smaller Board committees meet almost daily.

World Bank Executive Directors Directory (BIC website)
Executive Directors’ Monthly Calendar (World Bank website)

Board Committees

Each Executive Director is also a member of a Board committee that focuses on specific administrative or topical issues. Committees include:

Audit Committee: advises the Board on financial management, corporate governance, and oversight issues;
Budget Committee: considers budget issues, business processes, administrative policies, and standards;
Personnel Committee: advises Board on compensation and other significant personnel policies;
Committee on Development Effectiveness (CODE): advises Board on operations, policy evaluation and development, and development effectiveness;
Committee on Governance and Executive Directors’ Administrative Matters (COGAM): advises Board on issues of governance, including measures to strengthen capacity of Executive Director offices of developing countries

Civil Society groups concerned about the Bank’s policies often engage directly with CODE members given their role in making recommendations to the Board on the development of, and public consultations on, operational policies and strategies.

CODE and COGAM members (BIC website)

Development Committee

While not a formal governing structure according to the Bank’s articles, the Development Committee exercises important influence on the direction of Bank policy. The Development Committee advises the Boards of Governors of the Bank and the International Monetary Fund on development issues and financial resources. Established in 1974, the Committee has 24 members, usually Ministers of Finance or Development, who are appointed by each of the countries, or groups of countries, represented on the Boards of Executive Directors of the Bank and Fund. The Development Committee meets twice per year; in the spring in tandem with the International Monetary and Financial Committee, and in the fall before the Bank-Fund Annual Meetings.

Development Committee website (World Bank website)

IDA Deputies

The World Bank and other multilateral development banks (MDBs) require assistance from their member governments to finance their operations. Because many of their loans are low-interest or interest-free, and have long grace and repayment periods, the MDBs continually need to have money injected into their coffers. This periodic allocation of funds by donor governments is known as replenishment. World Bank IDA replenishments occurs every three years. The next round begins in 2013. The seventeenth such replenishment process, it will be called IDA-17.

Donor countries appoint Deputies to represent and negotiate their interests during the process. Although not a formal governing structure of the Bank, the Deputies decide on several pertinent issues related to IDA countries, including prescribing policy reforms, benchmarks, and conditions for IDA borrowers during IDA replenishment negotiations.

U.S. Government Oversight (BIC website)

Complaint and Accountability Mechanism: The Inspection Panel

Established in 1993, The Inspection Panel is a body of three members that is empowered to receive and investigate Requests for Inspection (referred to as “claims”) from people they have been or are likely to be harmed by World Bank projects due to violations of Bank policy, procedures and loan agreements.

World Bank Accountability (BIC website)
Inspection Panel webpage (World Bank website)

The World Bank’s mission is to reduce poverty – an important commitment to which the Bank should be held and against which its activities should be evaluated. In its first year of operation, 1946, the Bank lent less than $500 million. Today, the World Bank provides over $30 billion annually for activities ranging from agriculture to trade policy, from health and education to energy and mining.

The World Bank is among the largest sources of public financing in the world. However its various roles as lender, knowledge broker, and gatekeeper to development finance collectively serve another purpose: to steer investor dollars and aid flows to targeted countries and sectors. The poverty focus of these investments is often questionable.

The World Bank as lender

The World Bank lends money to low and middle-income governments for two general uses: investment projects and policy reforms. Investment project lending typically supports public works such as water systems, roads and schools. The World Bank also lends money for economic, institutional or other policy reforms, often known as “structural adjustment” or “development policy” lending. These reforms can influence the amount and composition of public spending in your country and the design of your government’s economic and social policies, affecting things like the cost of electricity and water, labor laws and investment regulations.

World Bank lending can take the form of loans or grants, and the poorest countries often receive both. In recent years, the Bank has increased the proportion of its financing provided through grants.

The Bank typically requires certain actions of borrowing countries in advance of loan/grant approval and/or in the course of a project’s implementation – known as “conditions” or “conditionality.” Conditions can range from requiring a government to privatize its state-owned companies or adopt lower trade tariffs, to mandating new budget and procurement procedures. The Bank’s imposition of controversial conditions on borrowing governments has been heavily criticized over the years, as a violation of a country’s sovereignty and an undemocratic way to force reforms that can have substantial consequences on people and planet.

The World Bank as knowledge broker

The Bank has cornered the market on development research, publishing numerous books and reports that frame the debate on development issues. In the absence of alternative sources of information, many countries get their information about economic policies and development models from the World Bank. In 2000, the World Bank created its own research and training group – the World Bank Institute (WBI) – to directly influence development discourse. The WBI conducts trainings of government officials, including parliamentarians, and civil society representatives on various dimensions of development policy and planning.

The World Bank as gatekeeper to development finance

Finally, the World Bank influences the overall amount and composition of development financing available to countries. Both the World Bank’s own lending and other donors’ decisions are shaped by the Bank’s research and analysis – in particular, by Bank studies like the Country Policy and Institutional Assessments (CPIA) and Investment Climate Assessments (ICA), which rate countries largely on the basis of their economic policies and openness to foreign investment. Since many donors take their lead from the Bank, the institution’s financing decisions and evaluations of country development strategies affect borrowing country access to capital from a broad spectrum of sources. The Bank’s gatekeeper role is much stronger for aid-dependent countries without credit ratings than for countries that have access to international capital markets.

IBRD

The IBRD lends only to sovereign governments or for projects guaranteed by sovereigns. During fiscal 2008, the IBRD committed $13.5 billion for 99 operations, new loans, guarantees, and guarantee facilities for middle-income countries. Development-policy lending represented 29 percent of total IBRD lending, up slightly from 28 percent in fiscal 2007. IBRD borrowers are generally considered to be middle-income countries, roughly defined by the IBRD as countries with a per capita income between US$936 to US$11,455. Countries with higher per capita incomes may borrow from the IBRD under special circumstances as may some countries with lower income levels, but which are deemed creditworthy for IBRD lending. The IBRD offers loans at near-market terms but with more time to repay than if they borrowed from a commercial bank-typically 15 to 20 years with a three-to-five-year grace period before repayment of principal begins. IBRD borrowers typically have some access to private capital markets.

With a US$4.4 billion share of total IBRD commitments in 2008, Latin America and the Caribbean had the highest lending percentage among the regions at 32 percent. Europe and Central Asia followed with US$3.7 billion (28 percent) and East Asia and Pacific with US$2.7 billion (20 percent).

The IBRD has lent over US$440 billion since its founding over 60 years ago. While the IBRD had new lending commitments for 99 operations in 2008, 53 percent of total IBRD lending went to the five largest borrowers – Argentina, China, India, Turkey and Colombia – down from 56 percent in fiscal 2007. Major attention was paid to transportation lending. Figures of regional lending by theme and sector are recorded in the 2008 World Bank Annual Report.

While IBRD has developed a large range of lending “products,” IBRD loans generally take one of two forms: investment lending for specific projects (roads, dams, etc.) or adjustment lending conditioned on structural and policy reforms by the borrower. IBRD adjustment lending has ranged from 35-64 percent of total commitments over the past five years despite Bank policy not to exceed a 25 percent cap.

IBRD is financed primarily by selling bonds to private investors in international capital markets, backed up by the pledges of its member governments. Upon joining the IBRD, member governments must “subscribe” to a portion of the Bank’s capital stock, in effect promising to purchase a specified number of shares. Members are required to purchase only a small portion of their subscription (“paid-in capital”) while the remaining portion (“callable capital”) remains an outstanding pledge (which Bank has never needed to request). In 2008, the IBRD had paid-in capital of US$11.5 billion and callable capital of US$178 billion. With capital backing of nearly US$200 billion from its member governments, the IBRD is able to raise significant funds on international capital markets at preferred “AAA” credit rates and then lend those funds to borrowers at rates slightly below those offered by commercial lenders. In fiscal 2008 the IBRD raised US$19 billion at medium to long-term maturities.

Conservative financial and lending policies and practices instill a high degree of investor confidence in IBRD securities. These policies and practices also instill a high degree of discipline in the IBRD’s relations to its borrowers. These policies and practices include:

  • All loans are made directly to, or guaranteed by, a member country of IBRD.
  • IBRD is recognized by the major credit rating agencies to enjoy a preferred creditor status with its borrower-shareholders, in effect, putting the IBRD first in line for debt repayment.
  • Since its inception in 1945, IBRD has never written off a loan.
  • The IBRD freezes loan approvals and disbursements if a country fails to pay obligations on time.
  • Strict limits are set on loan concentration in individual countries.
  • It is IBRD practice not to reschedule interest or principal payments on its loans (though this does occur from time to time).
  • The IBRD has made a profit every year of its existence-over US$1.65 billion in 2007.

According to the World Bank’s website, the IBRD is “committed to make further improvements to the services it provides its members.” To meet the growing demands of middle-income countries, the IBRD is “overhauling financial and risk management products, broadening the provision of free-standing knowledge services and making it easier for clients to deal with the Bank.”

IDA

The International Development Association-the Bank’s “concessional,” or low-cost lending arm, provides funding to the poorest member governments of the World Bank. These governments have been assigned credit ratings so low that they are unable to borrow from commercial lenders or from the main lending arms of the MDBs. IDA is an important source of credit for these countries, with average annual lending commitments of US$10.8 billion over the last 3 years (compared to US$8.3 billion over the previous 3-year period).

Since its inception in 1960, IDA has lent over US$182 billion, with over US$100 billion outstanding for repayment. IDA’s largest single borrowers are India, Pakistan, Nigeria, Vietnam, and Ethiopia. In fiscal 2008, IDA commitments reached $11.2 billion for 199 operations ($7.8 billion in credits and $3.4 billion in grants). In 2008, major attention was paid to public administration lending (including law and justice) which received $2.9. Figures of lending by region, by theme, or by sector are recorded in the 2008 World Bank Annual Report.

Seventy-nine countries are currently considered eligible to borrow from IDA. To be eligible, IDA borrowers must (a) lack sovereign creditworthiness, (b) have a per capita income of less than US$1,095 (in fiscal year 2009) and (c) must meet certain “performance” criteria set by the World Bank.

IDA loans, known as “credits” have 20, 35, or 40-year repayment periods with a 10-year grace period on repayment of principal. IDA credits do not carry interest charges per se, but do carry a .75 percent “service charge” on disbursed funds (no grace period on this fee). In the past several years IDA has increasingly provided a portion of its funding in the form of grants.

IDA is funded through three main sources: reflows from previous loans, transfers from IBRD net income, and contributions from IDA donors. Negotiations over the 15th Replenishment of IDA came to a conclusion in December 2007 with records pledges of US$27.3 billion Special Drawing Rights (SDR) (about US$41.7 billion) The funding is divided into $25.2 billion in new pledges made by donors; $16.5 billion from previous pledges for financing the cost of debt relief, IDA’s credit reflows and investment income; and $3.5 billion from internal financing from the World Bank Group. Reflow payments from past loans to the poorest countries have become an increasingly important source of IDA resources. However, with the implementation of the Multilateral Debt Relief Initiative (MDRI), some internal resources are no longer available and will be replaced by donor contributions under the MDRI replenishment (IMF website).

IDA donors come together every three years to negotiate the amount of new resources required to replenish IDA’s lending program and to discuss lending policies and priorities. The fifteenth replenishment (IDA15) finances projects over the three-year period ending 2011. During the IDA15 replenishment meetings, donors provided additional contributions for the MDRI replenishment of SDR 4.1 billion (US$6.3 billion), in order to cover IDA’s debt relief costs due to the MDRI during the IDA15 disbursement period (FY09-19) as agreed under the MDRI. Donors will meet to review the progress of IDA15 at a Mid-Term Review Meeting to be held in the fall of 2009. The IDA replenishment process provides a degree of influence on setting development priorities by the IDA Deputies. For more information, see BIC’s Web page on MDB replenishments.

IDA lending flows to an immense array of programs and projects, from basic health and education provision to economy-wide adjustment operations, from water supply and sanitation to oil, gas, and mining projects. Over the past decade adjustment lending has comprised anywhere from 16 to 27 percent of IDA annual commitments. The bulk of IDA lending supports individual investment projects. In recent years IDA has become, according to the Bank, “the single largest source of donor funds for basic social services to the poorest countries.” IDA has increased its investment lending in social sectors from roughly 20 percent of overall commitments in the late 1980s to around 40 percent by the mid-1990s. Over the past several years IDA has targeted 50 percent of its new commitments to countries in Africa.

IDA webpage (World Bank website)
IDA Borrowers (World Bank website)

Operational Policies

The Operational Manual on the World Bank website includes all Operational Policies, Bank Procedures, Good Practices and Operational Directives. Link to the Table of Contents to find specific policies.

Environmental and Social Policies

The World Bank’s ten environmental and social policies are known as Safeguard Policies. Visit BIC’s World Bank Environmental and Social Policies webpage for more information.

Concerted grass-roots activism, NGO advocacy efforts, and shareholder pressure pushed the World Bank to adopt policies that require varying degrees of due diligence in addressing environmental and social impacts of MDB-financed projects. For example, the Bank established a policy on involuntary resettlement in 1980, and in 1982 it established a policy on “Tribal People in Bank-Financed Projects.” While the World Bank had adopted general environmental guidelines in the 1970s, it was not until 1987 before it instituted mandatory environmental review procedures and 1989 before it had a formal environmental assessment policy.

Information Disclosure Policies

People have the right to know what is being planned for their communities in order to make informed decisions about development processes that affect their lives. The World Bank Information Disclosure Policy details: principles of disclosure; exceptions to disclosure; routine disclosure; ad request-driven disclosure.

Transparency at the World Bank (BIC website)
Information Disclosure Policy (World Bank website)

Accountability

From the perspective of communities impacted by Bank projects and programs, mandatory policies must establish minimum “do no harm” protections and provide the means for holding these institutions accountable for their actions. Citizens may file claims of harm at the World Bank Inspection Panel for perceived policy violations.

Accountability at the World Bank (BIC website)

People have the right to know what is being planned for their communities in order to make informed decisions about development processes that affect their lives. Concerned citizens can access information about the World Bank through several sources: the World Bank itself, their government, and civil society organizations.

Information Disclosure Policy

The World Bank first adopted an Information Disclosure Policy in 1994, and has updated it several times since. The Policy details: principles of disclosure; exceptions to disclosure; routine disclosure; ad request-driven disclosure. See BIC’s Transparency at the World Bank webpage for more details on information disclosure policies and practices at the World Bank Group.

Useful World Bank Websites

Much of the information about World Bank Group operations is routinely available through the World Bank, IFC and MIGA websites.

  • The Projects Database links visitors to information on over 9000 World Bank projects, including relevant project documents.
  • The Document Database links visitors to approximately 27,000 World Bank public documents.
  • World Bank Country Pages provide information on current projects and priorities in borrowing countries, and link visitors to relevant country and project documents.
  • The World Bank’s Monthly Operational Summary includes brief information on projects in preparation.
  • The Infoshop’s New Documents webpage lists newly released operational documents.
  • Visit the World Bank’s newsletter sign-up page to begin receiving updates on a number of issues.

Public Information Centers

The World Bank has a Public Information Center (PIC) in almost every borrowing country. PICs are places for the public to access information about World Bank operations. A full list of PICs can be found on the World Bank website.

PICs should provide the following:

  • Direction on how to acquire information on Bank activities and Bank documents in local languages
  • Publicly available Bank documents and publications, including those regarding projects in that country
  • Adequate and accessible facilities with at least one computer with internet access
  • Many PICs also provide a reference library with government and NGO publications on economic, statistical, and development topics, and conduct outreach programs to raise awareness about Bank operations and to disseminate information locally.

If you have trouble locating or accessing your country’s PIC, contact the Bank’s disclosure team, the Country Director or your Executive Director.

Making requests to the InfoShop:

The WBG’s main Public Information Center is called the Infoshop, and it is located in Washington, DC. Any information not available through the World Bank, IFC or MIGA website can be requested through the Infoshop by email, fax, telephone or mail, at the addresses listed below. Information about the IFC operations may also be requested from the IFC’s Corporate Relations Unit at the addresses listed below.

  • World Bank Group InfoShop
    1818 H Street, NW
    MSN J1-100
    Washington, DC 20433 USA
    Tel.: +1-202-458 5454
    Fax.: +1-202-522 1500
    Email: infoshop@worldbank.org
  • International Finance Corporation
    Corporate Relations Unit
    2121 Pennsylvania Avenue, NW
    Washington, DC, 20433 USA
    Tel.: +1-202-476-3800
    Fax.: +1-202-974-4384
    Email addresses listed at: www.ifc.org/contacts

Tips on making a request:

  • Be specific
  • Start local. Contact the Bank office in your country first.
  • Put your request for information in writing.
  • If your request is denied, ask for a written explanation.
  • Be persistent

To request information that’s more than 10 years old, contact the WBG archives department.

Country Offices

The World Bank has many Country Offices. Find contact information for each Country Office at the World Bank website.

Annual & Spring Meetings

The Board of Governors of the World Bank and the IMF hold an Annual Meeting of their member governments in the fall of each year. The joint Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee are also officially convened. The meetings are held at the headquarters in Washington, DC, two of every three years; every third year they are hosted by another member country.

Each spring, the joint Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee hold meetings to discuss progress on the work of the Bank and Fund.

Externals

Connect to other networks working on these issues through the links below.

Global Transparency Initiative
ARTICLE 19: Global Campaign for Free Expression
Transparency International