The WORLD BANK GROUP is an association comprising of five of the world’s largest loan granting international organizations. The group is also an observer at the United Nations Development Group. The headquarters of the group is situated in Washington, D.C.
The bank’s stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity. The purpose of formation of this bank group was economic development and poverty elimination. The profits earned by this group are used to support continued efforts in poverty reduction. Current president is JIM YONG KIM. Managing director is KYLE PETERS.
The foundation of WORLD BANK GROUP was laid on 27 December 1945. The group commenced its operations on 25 June 1946. It approved its first loan on 9 May 1947 (issued to France). As of today, around 193 UN members and Kosovo (non UN member) participate in the institutions of the World Bank Group.
Organs of World Bank Group
- The International Bank for Reconstruction and Development (IBRD), established in 1945, which provides debt financing on the basis of sovereign guarantees; it lends to governments of middle-income and creditworthy low-income countries.
- The International Finance Corporation (IFC) was established in 1956. It provides various forms of financing (without sovereign guarantees) primarily to the private sector. It is the largest global development institution focused exclusively on the private sector. It provides advisory services to businesses and governments of developing countries. It also focuses on helping these countries achieve sustainable growth by financing investment and mobilizing capital in international financial markets.
- The International Development Association (IDA) was established in 1960. It provides concessional financing (interest-free loans or grants) to the governments of the poorest countries (usually with sovereign guarantees).
- The Multilateral Investment Guarantee Agency (MIGA) was founded in 1988 with a basic objective to promote foreign direct investment into developing countries. It offers political risk insurance (guarantees) to investors and lenders.
- The International Centre for Settlement of Investment Disputes (ICSID) established in 1965, provides international facilities for conciliation and arbitration of investment disputes
There is a distinction between the term “World Bank” and the term “World Bank Group”. While the former refers just to IBRD and IDA, the later is used to refer to all five institutions collectively.
The governance structure of the World Bank Group is quite different from the United Nations System. The member governments of the group own its institutions and subscribe to its basic share capital, with votes proportional to shareholding. Voting rights are conferred on all the member states equally though there are additional votes also which depend on financial contributions to the organization.
The President of the World Bank is nominated by the President of the United States. But the nomination is subject to the confirmation by the Bank’s Board of Governors. The term of an elected president of the World Bank is five years which is renewable also. The World Bank is currently presided over by Mr. JIM YONG KIM.
All the institutions of the WBG are run by a Board of Governors meeting which is held once in a year. A governor (generally minister of finance) is appointed by each member country. A board of 25 Executive Directors runs the World Bank Group. Executive Directors are appointed by their respective governments or the constituencies. The legal and institutional foundation of the work of each agency of the WBG is their Articles of Agreement.
Independent Evaluation group
The Independent Evaluation Group (IEG) is an independent unit which plays an important check and balance role in the World Bank and reports evaluation findings directly to the Bank’s Board of Executive Directors. The object behind these evaluations is obtaining an objective basis for assessing the results of the Bank’s work, and ensuring accountability of World Bank management to the member countries (through the World Bank Board) in the achievement of its objectives. Caroline Heider is the Director-General, Evaluation.
Access to Information
The group has come up with a new policy on access to information, under which it will disclose any information (information about projects under preparation, projects under implementation, analytic and advisory activities, and Board proceedings) in its possession that is not on a list of exceptions. This policy ensures transparency and accountability in the working of the group.