Analysis and Working of World

Bank

What is World Bank

The World Bank is a vital source of financial and technical
assistance to developing countries around the world. It
helps governments in developing countries reduce poverty
by providing them with money and technical expertise they
need for a wide range of projects-such as education,
health, infrastructure, communications, government
reforms and many other purposes.
The World Bank is like a cooperative in which 185 member
countries are shareholders.
The term "World Bank" refers to the International Bank for
Reconstruction and Development (IBRD) and the
International Development Association (IDA).

Where does the World Bank get its

money?
IBRD lending to developing countries is primarily financed
by selling AAA-rated bonds in the world's financial
markets. IBRD bonds are purchased by a wide range of
private and institutional investors in North America,
Europe and Asia. While IBRD earns a small margin on
this lending, the greater proportion of income comes
from lending out World Banks own capital. This capital
consists of reserves built up over the years and money
paid in from the bank's 185 member country
shareholders.

Does the World Bank make a profit and, if

so, what is done with it?
World Bank often do have a surplus at the end of the fiscal
year, which is earned from the interest rates charged on
some loans and from fees charged for some of its
services. Some of the surplus goes to IDAthe part of
the bank that provides grants and interest free loans to
the world's poorest countries. The rest of the surplus is
either used for debt relief for heavily indebted poor
countries, added to financial reserves, or helps it
respond to unforeseen humanitarian crises.

Lending by World Bank

Most recent Bank lending to developing countries by
IBRD/IDA totaled just under $25 billion. The world's
poorest countrieswhich usually can't afford to borrow
on commercial termsreceive grants and no interest
loans (credits) from IDA.
In terms of the maximum amount any one country can
borrow from the Bank, countries are generally restricted
to $14.5 billion.

What happens if a country can't repay

what it owes?
If a country fails to meet a scheduled repayment, after 30
days World Bank will suspend any new loans being
prepared for that country. After 60 days, it will cease to
provide any money under existing loans.

World Banks approach towards

privatization of Industries and Assets
Its advice is shaped by the needs and circumstances of
each country. In some cases, state-owned industries are
propped up with public funds that could be better used to
improve health care, hire new teachers or build roads.
Each country is different, and therefore it assesses a
country according to its own circumstances and tailor its
advice to best implement the policies the country has
laid out for economic and social development.

Political consideration while lending to

any country
World Banks Board of Directors represents all 185 member
countries. When the board makes a decision on lending,
the decision is based on management's estimation of
how the project will benefit the developing country that
asks for its support. It is true that during the Cold War
years aid was politically motivated. Now however, aid is
being delivered to countries most in need and to those
who show they are determined to use it well.

Other Unique Operations of World Bank

1.

The worlds largest external funder of education:

Its support is tailored to the needs of the country and
includes: ensuring that all children especially girls and
disadvantaged children are enrolled in and able to
complete a full course of quality primary education as
an essential foundation for further education and
training; equipping secondary and tertiary education
students with skills, attitudes and values that are
relevant for a growing competitive economy and
expanding lifelong learning opportunities to enable all
to participate in the knowledge society.

2. One of the worlds largest external funder in the fight

against HIV/AIDS
As a sponsor of UNAIDS (the group that co-ordinates the
international response to the epidemic), in the past five
years World Bank has committed more than US$1.8
billion to fight the spread of HIV/AIDS around the world.

3. A leader in the fight against corruption worldwide

Since 1996, World Bank has launched hundreds of
governance and anticorruption programs in nearly 100
developing countries. Initiatives range from requiring
government officials to publicly declare their assets and
introducing public spending reforms, to training judges
and teaching investigative reporting to journalists.

4. Strongly supports debt relief to the poorest, most

heavily indebted countries
In 1996, with the International Monetary Fund (IMF),
World Bank launched the Heavily Indebted Poor
Countries (HIPC) Initiativethe first comprehensive
effort to cut the debts of the worlds poorest, most
indebted countries. Today, 28 countries are receiving
debt relief that will amount to US$56 billion over time.

5. One of the largest international funders of

biodiversity projects
Concern for the environment is central to World Banks
mission to reduce poverty. Its environment strategy
focuses on climate change, forests, water resources,
pollution management and biodiversity, among others.
Currently, projects it funds, that have clear environmental
objectives, amount to around US$11 billion.

6. Work in partnership more than ever before

During the past six years, World Bank has joined a large
range of partners in the international fight against
poverty. For example, to help reduce the effects of global
warming, it worked with governments and the private
sector to launch the new BioCarbon Fund and with the
International Emissions Trading Association (IETA) to
launch the Community Development Carbon Fund
(CDCF).

7. Helping to bring clean water, electricity and

transport to poor people
Infrastructure is not simply about the construction of large
projects. It is about delivering basic services that people
need for everyday life, such as upgrading slums and
providing roads to connect the poorest urban areas.
Infrastructure is also an important part of its efforts to
help achieve the Millennium Development Goals.

8. Civil society plays a larger role in its work

The growth of civil society over the past 20 years has
been one of the most significant trends in international
development. Civil society organizations (CSOs)--which
include groups that do not belong to government or the
private sector such as, labor unions, NGOs, faith-based
organizations, community groups and foundations--are
not only influential in the international development policy
debate but have become important channels for the
delivery of social services and new development
programs.

9. Helps countries emerging from conflict

World Bank is active in 35 countries affected by conflict. It
works with government and non-government partners
(local and international) to help people who have been
affected by war, resume peaceful development, and
prevent violence from breaking out again.

10. Responding to the voices of poor people

World Bank believes that people who live in poverty
should not be treated as a liability, but as a resource and
a partner in the fight against poverty. Its approach to
reducing poverty puts poor people at the center of
development and creates the conditions where they can
gain increased control over their lives through better
access to information and greater involvement in
decision-making.