International Bank for Reconstruction and Development
|Type||Development finance institution|
|Purpose||Development assistance, poverty reduction|
|Headquarters||Washington, D.C., U.S.|
President of the World Bank
|World Bank Group|
The International Bank for Reconstruction and Development (IBRD) is an international financial institution that offers loans to middle-income developing countries. The IBRD is the first of five member institutions that compose the World Bank Group, and is headquartered in Washington, D.C. in the United States. It was established in 1944 with the mission of financing the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association, are collectively known as the World Bank as they share the same leadership and staff. Following the reconstruction of Europe, the Bank's mandate expanded to advancing worldwide economic development and eradicating poverty. The IBRD provides commercial-grade or concessional financing to sovereign states to fund projects that seek to improve transportation and infrastructure, education, domestic policy, environmental consciousness, energy investments, healthcare, access to food and potable water, and access to improved sanitation.
The IBRD is owned and governed by its member states, but has its own executive leadership and staff which conduct its normal business operations. The Bank's member governments are shareholders which contribute paid-in capital and have the right to vote on its matters. In addition to contributions from its member nations, the IBRD acquires most of its capital by borrowing on international capital markets through bond issues. In 2011, it raised US$29 billion in capital from bond issues made in 26 different currencies. The Bank offers a number of financial services and products, including flexible loans, grants, risk guarantees, financial derivatives, and catastrophic risk financing. It reported lending commitments of $26.7 billion made to 132 projects in 2011.
The International Bank for Reconstruction and Development (IBRD) and International Monetary Fund (IMF) were established by delegates at the Bretton Woods Conference in 1944 and became operational in 1946. The IBRD was established with the original mission of financing the reconstruction efforts of war-torn European nations following World War II, with goals shared by the later Marshall Plan. The Bank issued its inaugural loan of $250 million ($2.6 billion in 2012 dollars) to France in 1947 to finance infrastructure projects. The institution also established its first field offices in Paris, France, Copenhagen, Denmark, and Prague in the former Czechoslovakia. Throughout the remainder of the 1940s and 1950s, the Bank financed projects seeking to dam rivers, generate electricity, and improve access to water and sanitation. It also invested in France, Belgium, and Luxembourg's steel industry. Following the reconstruction of Europe, the Bank's mandate has transitioned to eradicating poverty around the world. In 1960, the International Development Association (IDA) was established to serve as the Bank's concessional lending arm and provide low and no-cost finance and grants to the poorest of the developing countries as measured by gross national income per capita.
While the IBRD and the IDA historically prioritized funding infrastructure projects, since the 1990s, the Bank has directed less lending to infrastructure projects in favor of other development projects such as fighting climate change, eradicating poverty and ensuring good governance.
The IBRD is governed by the World Bank's Board of Governors which meets annually and consists of one governor per member country (most often the country's finance minister or treasury secretary). The Board of Governors delegates most of its authority over daily matters such as lending and operations to the Board of Directors. The Board of Directors consists of 25 executive directors and is chaired by the President of the World Bank Group. The executive directors collectively represent all 189 member states of the World Bank. The president oversees the IBRD's overall direction and daily operations. As of 9 April 2019[update], David Malpass serves as the President of the World Bank Group. The Bank and IDA operate with a staff of approximately 10,000 employees.
The IBRD finances its activities from the shares its members hold, as well as borrowing on international capital markets by issuing World Bank bonds. The Bank raised US$54.0 billion worth of capital in fiscal 2019 from bonds issued in 27 different currencies. The IBRD has enjoyed a triple-A credit rating since 1959, which allows it to borrow capital at favorable rates. It also generates income from the return on its equity and from the small margins on the loans. As the IBRD does not seek profit, it transfers part of its excess income to the IDA ($259 million in fiscal 2019).
The IBRD provides financial services as well as strategic coordination and information services to its borrowing member countries. The Bank only finances sovereign governments directly, or projects backed by sovereign governments. The World Bank Treasury is the division of the IBRD that manages the Bank's debt portfolio of over $100 billion and financial derivatives transactions of $20 billion.
The Bank offers flexible loans with maturities as long as 30 years and custom-tailored repayment scheduling. The IBRD also offers loans in local currencies. Through a joint effort between the IBRD and the International Finance Corporation, the Bank offers financing to subnational entities either with or without sovereign guarantees. For borrowers needing quick financing for an unexpected change, the IBRD operates a Deferred Drawdown Option which serves as a line of credit with features similar to the Bank's flexible loan program. Among the World Bank Group's credit enhancement and guarantee products, the IBRD offers policy-based guarantees to cover countries' sovereign default risk, partial credit guarantees to cover the credit risk of a sovereign government or subnational entity, and partial risk guarantees to private projects to cover a government's failure to meet its contractual obligations. The IBRD's Enclave Partial Risk Guarantee to cover private projects in member countries of the IDA against sovereign governments' failures to fulfill contractual obligations. The Bank provides an array of financial risk management products including foreign exchange swaps, currency conversions, interest rate swaps, interest rate caps and floors, and commodity swaps. To help borrowers protect against catastrophes and other special risks, the bank offers a Catastrophe Deferred Drawdown Option to provide financing after a natural disaster or declared state of emergency. It also issues catastrophe bonds which transfer catastrophic risks from borrowers to investors. The IBRD reported $23.2 billion in lending commitments for 100 projects in fiscal year 2019. The top 10 borrowers were India, Indonesia, Jordan, Egypt, Argentina, China, Morocco, Turkey, Ukraine and Colombia. The most supported sector was Public Administration.
- Ottenhoff, Jenny (2011). World Bank (Report). Center for Global Development. Retrieved 2012-06-05.
- World Bank. "History". World Bank Group. Retrieved 2012-07-17.
- International Bank for Reconstruction and Development. "Background". World Bank Group. Retrieved 2012-07-17.
- Proceedings and Documents of the United Nations Monetary and Financial Conference. United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1–22, 1944. Washington, D.C.: U.S. Department of State. 1948. Retrieved 2012-07-17.
- "CPI Inflation Calculator". U.S. Bureau of Labor Statistics. Retrieved 2012-06-20.
- World Bank. "Interactive Timeline". World Bank Group. Retrieved 2012-07-21.
- Wang, Hongying (February 2017). "New Multilateral Development Banks: Opportunities and Challenges for Global Governance". Global Policy. 8 (1): 115. doi:10.1111/1758-5899.12396.
- International Bank for Reconstruction and Development. "Leadership". World Bank Group. Retrieved 2012-07-17.
- "David Malpass profile on the world bank web page". Retrieved 2019-10-14.
- "World Bank (IBRD & IDA) Structure". Bank Information Center. Archived from the original on 2012-02-08. Retrieved 2012-07-01.
- The World Bank Annual Report 2019 (PDF) (Report). World Bank Group. Retrieved 2012-07-20.
- International Bank for Reconstruction and Development. "How IBRD is Financed". World Bank Group. Retrieved 2019-10-14.
- International Bank for Reconstruction and Development. "Products and Services". World Bank Group. Retrieved 2012-07-17.
- "World Bank (IBRD & IDA) Lending". Bank Information Center. Archived from the original on 2011-11-05. Retrieved 2012-07-01.
- International Bank for Reconstruction and Development. "How IBRD is Financed". World Bank Group. Retrieved 2012-07-17.
- International Bank for Reconstruction and Development. "Financing". World Bank Group. Retrieved 2012-07-17.
- World Bank (2012). World Bank Group Guarantee Products (PDF) (Report). World Bank Group. Retrieved 2012-07-22.
- International Bank for Reconstruction and Development. "Hedging Products". World Bank Group. Retrieved 2012-07-17.
- International Bank for Reconstruction and Development. "Disaster Risk Financing". World Bank Group. Retrieved 2012-07-17.