In the course of its development, the World Bank has undergone various structural changes, therefore, the term World Bank at different stages was understood as different organizations.
Initially, the World Bank was associated with the International Bank for Reconstruction and Development, which provided financial support for the reconstruction of Western Europe and Japan after World War II. Later in 1960, the International Development Association was created, which took over some of the functions associated with the policy of this bank.
Currently, the World Bank is actually understood as two organizations:
- International Bank for Reconstruction and Development
- International Development Association
At different times, they were joined by three more organizations created to solve the problems of the World Bank:
- International Finance Corporation
- Multilateral Investment Guarantee Agency
- International Center for Settlement of Investment Disputes
All five organizations are part of the World Bank Group and are called the World Bank Group. In some cases, the World Bank is still understood as the International Bank for Reconstruction and Development, which still forms the basis of the World Bank's activities.
History
The World Bank is one of two (along with the International Monetary Fund) large financial institutions created following the Bretton Woods Conference in 1944. Delegates from 45 countries, including representatives of the Soviet Union, discussed issues of economic recovery and the structure of the world economy after the Second World War.
The Soviet Union was one of the active participants in the Conference, but subsequently refused to participate in the activities of the International Monetary Fund and the World Bank, since, in accordance with the charter, it did not have the opportunity to influence the decisions made, unlike the United States of America.
In the early stages of its activity, from 1945 to 1968, the World Bank did not carry out active lending due to increased requirements for borrowers. Under the leadership of the first president of the bank, John McCloy, France was chosen as the first borrower, it was granted a loan in the amount of USD 250 million. Moreover, the condition for granting France a loan was non-participation in the coalition government of the communists. Two other applicants (Poland and Chile) received no assistance. Subsequently, the World Bank took an active part in lending to Western Europe, which was actively rebuilding the economy destroyed by World War II, implementing the Marshall Plan. Funding for this plan came largely from the World Bank.
In 1968-1980, the activities of the World Bank were aimed at helping developing countries. The volume and structure of loans provided increased, covering various sectors of the economy from infrastructure to solving social issues. Robert McNamara, who led the World Bank during this period, brought a technocratic management style to its operations, as he had leadership experience as US Secretary of Defense and President of Ford. McNamara created a new system for the provision of information by potential borrowing countries, which made it possible to reduce the time to decide on the terms of a loan.
In 1980, A.W. Clausen succeeded McNamara as President of the World Bank at the suggestion of then US President Ronald Reagan. During this period, financial assistance was provided mainly to third world countries. The period 1980-1989 was characterized by a credit policy aimed at developing the economies of the third world in order to reduce their dependence on loans. This policy led to a reduction in loans provided for solving social problems.
Since 1989, the policy of the World Bank has undergone significant changes under the influence of criticism from various non-governmental organizations, in particular those related to environmental protection. As a result, the range of loans provided for various purposes has expanded.
Membership
The condition for membership in the World Bank is membership in the International Monetary Fund, that is, each member country of the IBRD must first become a member of the International Monetary Fund. Only those countries that are members of the IBRD can be members of other organizations in the World Bank Group.
The International Bank for Reconstruction and Development consists of 184 member countries. The last (January 18, 2007) adopted country was Montenegro. In accordance with the Charter of the International Bank for Reconstruction and Development, each country has a certain quota in the authorized capital, in proportion to the quota, votes are distributed in making decisions. As of 2006, votes were distributed as follows:
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The International Development Association has 164 member countries
Bank activity management
The World Bank is a joint stock company, the shareholders of which are 184 member countries of this organization. The number of votes held by member countries depends on their share in the capital of the Bank, which in turn is determined by their share in the world economy. These shareholders are represented by the Board of Governors, which is the highest decision-making and policy-making body of the Bank. As a rule, the governors are the finance ministers of the participating countries. The Board of Governors meets once a year during the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.
Specific authority to manage the Bank between Board meetings has been delegated to 25 executive directors who work directly from the Bank's headquarters in Washington. The executive directors form the Board of Directors, which is chaired by the President of the Bank. The Board of Directors consists of five executive directors representing the interests of the member states with the largest shareholdings: Japan, Germany, France, etc. The remaining 20 executive directors represent country groups.
The Board of Directors usually meets twice a week and provides general management of the bank's operations, including the responsibility for approving all loans and making other decisions affecting the Bank's operations:
- approval of loans and guarantees,
- definition of general principles of the bank
- approval of the Bank's budget
- developing strategies to assist countries
- making decisions regarding borrowing and other issues of financial activity.
The President of the World Bank chairs meetings of the Board of Directors and is responsible for the overall direction of the Bank's operations. Traditionally, the President of the World Bank becomes a citizen of the United States - the country that is the largest shareholder of the Bank. The President is elected by the Board of Governors for a five-year term and is eligible for re-election. Five Vice Presidents, including three Senior Vice-Presidents and two Executive Vice-Presidents, are responsible for specific regions, sectors, lines of business and other specific functions.
The World Bank has offices in more than 100 countries around the world and employs about 10,000 people.
World Bank Presidents
| The president | Terms of work in the position |
|---|---|
| Eugene Meyer | June 18, 1946 - March 17, 1947 |
| John Jay McCloy | March 17, 1947 - July 1, 1949 |
| Eugene Robert Black | July 1, 1949 - January 1, 1963 |
| George D. Woods | January 1, 1963 - April 1, 1968 |
| Robert S. McNamara | April 1, 1968 - July 1, 1981 |
| Alden W. Clausen | July 1, 1981 - July 1, 1986 |
| Barber B. Conable | July 1, 1986 - September 1, 1991 |
| Lewis T. Preston | September 1, 1991 - May 4, 1995 |
| Richard Frank, Acting | May 4, 1995 - June 1, 1995 |
| James David Wolfensohn | June 1, 1995 - June 1, 2005 |
| Paul Wolfowitz | June 1, 2005 - July 1, 2007 |
| Robert Zoellick | July 1, 2007 - July 1, 2012 |
| Jim Yong Kim | from July 1, 2012 - present |
World Bank and Russia
In the fall of 1991, the World Bank opened its temporary office in Moscow.
On January 7, 1992, the government of the Russian Federation applied to become members of the IMF and the World Bank Group. Russia became a member of these organizations in June 1992. In early 1993, the bank opens a permanent representative office in Moscow, which employs about 70 people, mostly Russian citizens.
In June 1993, the bank organized a multilateral meeting in Paris to discuss the highest priority reforms in Russia and coordinate related external assistance. In total, over $ 13 billion in loans were granted to Russia for structural reforms through the World Bank.
From January 1, 1995 to June 1, 2005, James D. Wolfensohn was President of the World Bank. He first visited the Russian Federation in October 1995 and since then has made an official visit to Russia every year.
The Bank's Moscow-based Global Development Learning Center and Public Information Center help to share experience and knowledge with Russian partners.
World Bank in Ukraine
2016: Exclusion of the IT company "Incom" from tenders because of corruption
In early July 2016, the World Bank announced the removal of the IT company Incom Alexander Kardakov from participating in its tenders due to corruption. More details.
Criticism
The activities of the World Bank have been criticized for a long time by various non-governmental organizations, scientists, among whom the Nobel laureate in economics and former chief economist of the World Bank Joseph Stiglitz occupies a prominent place.
In particular, J. Stiglitz called the policy towards developing countries developed by the IMF, the World Bank and economists in the American government erroneous. In his opinion, if this policy were followed, significant economic growth would not have occurred. He also pointed out that Russia followed the recommendations and experienced a drop in real incomes of the population, while China did not follow and is experiencing an economic recovery.
In particular, Joseph Stiglitz spoke sharply against the World Bank's policy towards Russia, criticizing the shock therapy of the transition period.
Analysis of the development of the world economy shows that the programs of the World Bank in the form as it formulated them did not ensure sustainable and equitable development of the economy. In this regard, pressure on the Bank began to grow. Nongovernmental organizations at the national and international levels began to seek open and democratic consideration of alternative solutions to the policies of the World Bank.
In 2001, the US Congress Commission assessed the performance of international financial institutions and concluded that 60% of the World Bank's projects were unsuccessful. The World Bank is committed to fighting poverty, but over the past five years, only 1% of loans have been received by the “poor” states, which are in greatest need of this kind of assistance. During this time, the level of poverty in the world has slightly decreased, which cannot be explained only by the activities of the World Bank. The success was achieved by the states that practically did not receive financial assistance from the World Bank. In those countries that were the recipients of the main aid packages, not only were there no successes in the fight against poverty, but the situation in them even worsened.
The Heritage Foundation Research Center analyzed the impact of World Bank loans on the poorest countries. During the period from 1980 to 2003, 105 “poor” states received his loans and grants. As a result, in 39 countries the gross domestic product decreased, in 17 - the GDP growth was minimal (from zero to 1%), in 33 - moderate (1-4%). Only 12 beneficiaries were able to significantly increase the pace of economic development. The situation is even more depressing in Africa. Here, 48 countries received the money of the World Bank, only three of them were able to successfully develop economically, in 23 countries there was an economic recession.
In 2010, the American academician Raj Patel became a prominent critic of the World Bank. He has published numerous critical articles on the political and pseudoscientific practices of the World Bank.
Declared goals and objectives
In 2012, in line with the Millennium Declaration, the World Bank focused on achieving the Millennium Development Goals. During the transition period to the third millennium, under the auspices of the UN, eight goals were formulated to achieve which the efforts of international organizations should be directed. The Millennium Development Goals are to be achieved by 2015 and include the following:
- the elimination of poverty and hunger;
- ensuring universal primary education;
- promoting gender equality and empowering women;
- reducing child mortality;
- improving maternal health;
- combating HIV / AIDS, malaria and other diseases;
- ensuring sustainable development of the environment;
- building a global partnership for development.
Solving the global challenges of human development, the World Bank, using the IBRD lending mechanism, lends to middle-income countries at interest rates corresponding to the market level of these countries. Another World Bank financial institution, IDA, lends to low-income countries at minimal or no interest rates.
Types and directions of activity
Two closely related institutions within the World Bank - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) - provide loans at low interest rates, at zero interest rates, or in the form of grants to countries without access to international capital markets or having such access on unfavorable terms. Unlike other financial institutions, the World Bank is not seeking profit. IBRD operates on a market basis, uses its high credit rating, which allows it to receive funds at low interest rates, in order to provide loans to its clients from developing countries also at low interest rates. Operating expenses related to these activities are covered by the Bank independently, without using external sources of financing.
Every three years, the World Bank Group develops a framework document, The World Bank Group Strategy, which is used as a framework for country engagement. The strategy helps to link the bank's programs, both for the provision of loans and analytical and advisory services, with the specific development goals of each borrowing country. The strategy includes projects and programs that can maximally influence the solution of the problem of poverty and contribute to dynamic socio-economic development. The strategy is discussed with the government of the borrowing country and with other stakeholders prior to submission to the World Bank Board of Directors.
Mobilizing funds
IBRD's loans to developing countries are financed primarily through the sale of bonds with the highest AAA reliability rating in the global financial markets. Receiving a small profit from lending, the IBRD receives more significant income from equity capital. This capital consists of reserves accumulated over many years and funds received in the form of contributions from 184 member countries of the World Bank. IBRD uses the received profit to cover operating expenses, partially transfers to IDA and uses it to ease the debt burden of countries.
IDA, the world's largest source of funding for the world's poorest countries in the form of interest-free loans and grants, is replenished every three years by 40 donor countries. IDA receives additional funds as countries repay interest-free loans for 35 to 40 years. These funds are then used again to provide loans. IDA accounts for nearly 40% of the World Bank's total lending operations.
Loans
Through IBRD and IDA, the World Bank provides two main types of loans:
- investment loans and
- development loans.
Investment loans are provided to finance the production of goods, works and services within the framework of socio-economic development projects in various sectors.
Development loans (formerly called structural adjustment loans) are provided through the allocation of financial resources to support policy and institutional reforms.
The application for project financing received from the borrower is evaluated to ensure that the project is economically, financially, socially and environmentally acceptable. At the stage of loan negotiations, the Bank and the borrower agree on the development objectives to be solved within the framework of the project, project components, expected results, project performance benchmarks and implementation plan, as well as a loan disbursement schedule. During the implementation of the project, the Bank monitors the use of funds and evaluates the results of project implementation. Three quarters of the outstanding loan funds are managed by the Country Directors based in the Bank's permanent missions in member countries. About 30 percent of the Bank's staff work in permanent missions, of which there are almost 100 worldwide.
Long-term IDA loans are interest-free, but they incur a small fee of 0.75 percent of the funds disbursed. IDA charges a reservation fee between zero and 0.5 percent of the unused loan amount; in fiscal 2006, the rate was set at 0.33 percent. For complete information on IBRD financial products, services, interest rates, and fees, visit the World Bank Treasury page. The Treasury Department manages all of the borrowing and lending activities of IBRD and acts as a treasurer for other institutions in the World Bank Group.
Grants
The World Bank provides financial support in the form of grants. The purpose of the grants is to facilitate project development by stimulating innovation, collaboration between organizations, and the participation of local stakeholders in project work. In recent years, IDA grants, either directly funded or managed through partnerships, have been used to:
- Debt relief for highly indebted countries
- Improving the efficiency of sewerage and water supply services
- Supporting immunization and vaccination programs to reduce the incidence of infectious diseases such as malaria
- Fighting the HIV / AIDS pandemic
- Support for civil society organizations
- Providing incentives to reduce greenhouse gas emissions
other services
The World Bank provides more than just financial support to member countries. It also focuses on providing the analytical and advisory services that developing countries need. Analyzing countries' policies and developing appropriate recommendations to improve the socio-economic situation in countries and improve the living conditions of the population is part of the World Bank's activities. The Bank conducts research on a wide range of topics such as environment, poverty, trade and globalization, and economic and sectoral research in specific sectors. The Bank analyzes the prospects for economic development of countries, including, for example, the banking and / or financial sector, trade, poverty and social safety nets.
Much of the effort is also directed at educational activities and the dissemination of knowledge that help solve the country's development problems.
The World Bank Institute is one of the tools for implementing knowledge dissemination policies that contribute to meeting the World Bank's objectives. The WBI works with politicians, businessmen, technical specialists, other categories of citizens, as well as with universities, training centers from different countries.
The B-SPAN Webcast Service is a web portal through which the World Bank hosts seminars and conferences on topics such as sustainable development and poverty reduction.
Directions (spheres) of activity
The World Bank's activities cover a wide range of activities:
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The World Bank is an investment bank that mediates between investor and recipient, borrowing from one and lending to another. The owners of the Bank are the governments of 156 member countries with share capital in the Bank, the value of which in 1991 was was estimated at about $ 175 billion.
The World Bank (WB) includes two large organizations: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). In addition, the WB includes a number of other organizations: united with the WB, but legally and financially independent from it - the International Finance Corporation, which mobilizes financing for private enterprises in developing countries; International Center for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency (MIGA).
The WB staff numbers more than 6,000 people working in 40 offices around the world (however, 95% of employees work at the Washington headquarters). The Bank's staff is a multi-disciplinary team: economists, engineers, urban planners, agronomists, statisticians, lawyers, portfolio experts, loan officers, project valuation experts, telecommunications, water and sanitation, transportation, education, energy specialists , rural development, population and health care, and many other areas.
IBRD obtains most of the financing it uses to lend to development countries through market borrowing through the issuance of bonds (AAA-rated as redemption is guaranteed by member governments) to individuals and private organizations in over 100 countries. IDA, which provides concessional loans, is mainly funded by donations from donor countries. The Bank is the main borrower in the global capital markets and the largest non-resident borrower in virtually all countries where its securities are sold.
The bank also borrows through the sale of bonds and bills directly to governments, their representative offices and central banks. The proceeds from the sale of these bonds are in turn lent to developing countries at reasonable rates of interest to help finance those projects and policy change programs that stand a chance of success.
The World Bank only lends money to creditworthy governments in developing countries. The poorer the country, the more favorable the conditions under which it can get loans from the Bank. Developing countries with a per capita gross national product (GNP) in excess of $ 1,200 can obtain loans from the IBRD. (GNP per capita is the share of wealth obtained by dividing the value of goods and services produced in a country in one year by the population living in that country). These loans are issued at an interest slightly higher than the market rate, at which the Bank itself borrows, and, as a rule, must be repaid within 12-15 years.
IDA lends only to the governments of very poor developing countries, whose GNP is less than $ 1,200 per capita, and about 80% of all IDA loans go to countries with annual per capita incomes below $ 700. IDA loans do not pay interest and usually have a maturity of 35-40 years.
The World Bank exists to promote the development of poor countries by providing them with technical assistance and financing projects and economic courses that can realize the economic potential of these countries. The Bank views development as a long-term holistic task.
During its first two decades of existence, two-thirds of the Bank's total assistance went to power generation and transportation projects. While such infrastructure projects remain an important link, in recent years the Bank has diversified its activities in order to enrich its experience and gain a new understanding of the economic development process.
The Bank pays particular attention to projects that benefit the poorest segments of the population in developing countries. Direct involvement of these groups in economic activity is carried out through the allocation of loans for the development of agriculture and rural areas, small businesses and cities. The Bank helps improve their productivity and access to essential needs such as reliable water and waste disposal systems, health care, birth control, food, education and housing.
In transportation projects, great importance is attached to the construction of roads between farms and product markets. Energy projects significantly increase the share of electricity supplied to villages and small farms. Industrial development projects place more emphasis on job creation and small businesses. Where practical, labor intensive construction is used. In addition to electricity, the Bank supports the development of other energy sources: oil, gas, coal, timber and biomass.
The main share of financial and technical assistance to developing countries is provided by the Bank in the form of support for specific projects. Although lending through IBRD and IDA is carried out on different financial terms, the criteria for evaluating a project used by both organizations are the same, and the same standards are used in evaluating the feasibility of projects. The decision of which IBRD or IDA organization will fund a project depends on the economic situation in the country, and not on the characteristics of the project itself.
Borrowing countries view the Bank as a source of technical assistance. To a large extent, the technical assistance provided by the Bank in recent years, exceeding $ 1 billion per year, includes loans and borrowings provided for other purposes. Recently, there has been a significant increase in the amount of Bank-financed technical assistance for self-lending and advances through the Bank's project preparation mechanisms. The Bank is also the executive body for the implementation of technical assistance projects funded by the United Nations Development Program, especially in the areas of agriculture and agriculture, energy and economic planning. The Bank is currently paying more attention to technical assistance in organizing the management structure and shaping macroeconomic policies in its member countries.
Each Bank-supported project is developed in close collaboration with national and local governments, and often in collaboration with other multilateral aid organizations. In practice, about half of all Bank-supported projects also receive co-financing from other official sources, including governments and government agencies, other multilateral financing institutions, export credit authorities that are directly involved in financing the supply of goods and services from a particular country, as well as commercial banks and other private financial institutions.
In providing loans to developing countries, the Bank does not compete with other sources of financing. It is intended to assist projects only in cases where it is not possible to obtain the necessary funds from other sources on acceptable terms. In the course of its work, the Bank is trying to strengthen the economies of countries that use its loans so that they can refuse to use the resources of the Bank and meet their financial needs directly from traditional sources of capital on the terms that they can afford.
The scope of the Bank's activities extends much wider than the implementation of credit operations. Since the decision to grant loans by the Bank depends on the economic situation of a given country, the IBRD carefully studies its economy and the needs of those sectors of the economy for which it assumes lending for capital investments or corrective measures. Such an analysis makes it possible to develop basic principles for formulating a strategy for providing assistance for the long-term development of the country's economy as a whole and its main industries.
As the borrowing countries develop, the need for loans from the IBRD and IDA disappears. Of the 34 poorest countries that have benefited from IDA loans over the years, more than 24 countries have made progress in eliminating IDA loans. Likewise, about 20 countries that previously borrowed money from the IBRD have made such progress that they have no need to do so. Japan is an example of this. For 14 years, she used loans from the IBRD. The Bank now borrows large amounts from Japan.
The active work of the WB continues in 1999, which is confirmed by the fact that a record amount of loans has already been allocated for this year - $ 30 billion. At the same time, the priority areas of lending have become the support of the poorest segments of the population, which means the fight against the natural disasters / 14 /.
As part of this, the International Bank for Reconstruction and Development (IBRD), a member of the World Bank Group, announced new types of loans and hedged financial products for its borrowers, which are expected to be introduced in September 1999.
New financial products are:
a rate-based, fixed-margin loan that offers increased flexibility to allow borrowers to adjust maturities and manage foreign exchange and bank interest risks over the life of the loan;
stand-alone hedged products associated with current IBRD loans to help borrowers manage foreign exchange, bank interest rate and commodity price risks.
The fixed margin loan has the following characteristics:
bank rate calculated on the basis of the special rate, plus the margin, which is fixed for the entire term of the loan;
choice of currencies including Euro, Japanese Yen and US Dollar. The use of other currencies is possible at the request of the client;
the ability for borrowers to set a fixed interest rate, its upper or upper and lower limits for all amounts spent at any time during the term of the loan;
the ability to cancel or establish a new fixed interest rate on the amounts spent during the entire loan term;
the ability to change currency for spent and / or unspent amounts during the entire loan term;
the opportunity, at the time of granting a loan, to adjust the repayment terms within the framework of the current financial policy, which will enable the borrower to better meet the needs of a specific project or ensure compliance with the terms of the national debt management strategy.
Offering standalone hedging products, borrowers can manage foreign exchange, bank rate and commodity price risks. These include:
currency swaps on all IBRD loans;
swapping bank rates, setting upper or upper and lower limits for existing mono-currency loans and loans with a fixed margin;
pilot commodity swaps for existing mono and fixed margin loans, negotiated on a case-by-case basis.
IBRD hopes to use the derivatives framework agreements to allow borrowers to modify the financial terms of their current obligations to IBRD. At the request of the borrowers, hedging will be permitted within the amounts and terms chosen by the borrowers. MBRD intends to offer hedging for loans with maturities of 10-12 years.
IBRD loans with longer maturities may be hedged based on the maturity of the respective currency swap markets. Converting existing loans to fixed-margin loans and using standalone hedged products will incur a commission of 1/8 to 3/8 percent of the principal.
MBRD also offers multi-currency loans - pools, mono-currency loans with variable margin, calculated at a special rate and with margin adjustment every six months, as well as mono-currency loans with a fixed rate, which is calculated separately for each amount spent. IBRD will continue to offer the first two of these products along with a new fixed-margin loan, but the existing fixed-rate loan product will only be in effect until December 1, 1999, when the new special loan commitments become effective.
The introduction of new financial products will be accompanied by a broad awareness campaign to enable borrowers to better understand the rationale behind new loans and hedged products and to make more informed decisions to make the most of the new products' flexibility.
The new loans and hedged products introduced are a natural extension of the client's own product development process that began in 1993. with the introduction of mono-currency loans and continued with the provision of a choice of currency in pool loans offered to borrowers from 1996 to 1998. Since 1996 borrowers of the IBRD preferred the terms of mono-currency loans in 95% of their obligations to the IBRD. Borrowers also converted amounts in different currencies of pool loans, equivalent to $ 6.7 billion (58%), into mono currency loans based on the conversion offer of July 1, 1998.
The World Bank approved a loan for Russia for the Second Road Repair and Maintenance Project in the amount of $ 400 million.
This project:
will contribute to significant improvements in road finance, in particular by significantly increasing road user charges for heavy trucks;
improve the condition of certain priority roads and bridges of the federal road network, including Siberia and the Far East, as well as territorial roads of the Krasnoyarsk and Khabarovsk Territories; at the same time, adverse environmental and social impacts of road works will be either completely prevented or minimized, and the institutional capacity of the Federal Road Service of Russia (FDS) will expand in terms of management and monitoring of such impacts;
improve contract management by the FDF and road administrations of the participating regions and strengthen their road maintenance capabilities;
foster the further development of the private road construction and consulting industry and move competitive bidding beyond projects financed by World Bank loans; ...
will improve the allocation of local resources allocated to road works, ensuring an economically sound selection of projects.
In order to achieve the project objectives, the share of the costs associated with the passage of heavy trucks will be increased, which will be offset by road user fees; the length of federal and territorial roads will be increased, the condition of which will improve; there will be an increase in the percentage of locally financed road and bridge works that are awarded to private firms through competitive bidding; an annual financial and technical audit of the Federal Road Fund will be carried out; the share of local resources allocated to road and bridge works will be increased based on cost-benefit analysis.
The loan is provided in US dollars at the WB standard interest rate established for mono currency loans based on the LIBOR rate; The maturity is 17 years, including a 5 year grace period.
Thus, the World Bank:
strives to promote the economic development of the world's poorest countries;
provides assistance to developing countries through long-term financing of projects and programs for their development (provides loans to developing countries with a GNP per capita of more than $ 1200 per year, through the IBRD);
provides the poorest countries with a per capita GNP of less than $ 1,200 a year special financial assistance through the International Development Association (IDA);
supports private enterprises in developing countries through its subsidiary - International Finance Corporation;
acquires most of its financial resources through loans in the international bond market;
has a registered capital of $ 175 billion, of which about 9 percent is paid by member countries;
has a workforce of about 6,000 from over 100 member countries.
The World Bank is among the most famous and large-scale international financial organizations. The activities of this institution are recognized by experts as extremely important from the point of view of the balanced development of the economies of the countries of the world. Among the key areas of the World Bank's activities is assistance to developing states in improving the model of the national economy. To successfully solve this and other tasks, several institutions have been created in the WB structure at once. What is their specificity? How are WB functions implemented?
General information about the World Bank
What is this institution - the World Bank? The full name and functions of this structure - how are they remarkable? World Bank (The World Bank, WB) - this which brings together several different institutions.
In accordance with public data reflecting the activities of the World Bank, the main task of the bank is to increase the level of economic development of states by providing them with financial assistance from wealthy countries. The organization was founded in 1945. The bank is headquartered in Washington, DC.
WB structure
Consider the specifics of the institutions that form the structure of the World Bank. The considered financial institution includes:
- IBRD (or International Bank for Reconstruction and Development);
- IDA (Development Leader Association);
- IFC (or International Finance Corporation);
- MAGI (agency in charge of investment guarantees);
- ICSID (center for the settlement of disputes in the framework of investment projects).
These organizations are called upon to provide loans to countries in need at reasonable rates, and in some cases - interest-free. It also provides support to countries through grants. The conditions for the provision of appropriate assistance to the WB are liberalization of the economy, privatization, necessary reforms in the field of education, health care, improvement of infrastructure.
Let us now consider the main functions of the World Bank.
WB functions
Researchers identify the following spectrum:
- investment activities (mainly in developing countries, in health care and education);
- consulting support to national governments on economic issues, analytical activities;
- improvement of the provided financial services;
- intermediary activity (in the distribution of resources between developed and economically lagging countries).
Thus, the considered one plays a significant role for the world economy. The mentioned functions of the World Bank are important from the point of view of balanced economic development of modern states. Let us now consider through which mechanisms the WB implements them in practice. You can consider this issue in the context of the activities of the above-mentioned institutions that are part of the structure of the World Bank. Let's start with the IBRD.
Specificity of IBRD activities
The IBRD or the International Bank for Reconstruction and Development is an institution that, apart from the WB, is also under the jurisdiction of the UN. Many functions of the World Bank are carried out on the basis of this organization. In fact, the IBRD is the head office of the World Bank. It can be noted that the institution was formed earlier than, in fact, the WB itself, in 1944. The International Bank for Reconstruction and Development was formed after the Bretton Woods Conference. The purpose of its establishment was to stimulate the recovery of the economies of states that suffered during the hostilities.
In the 50s, the IBRD began to perform some of the functions of the World Bank, which we noted above - in particular, to provide loans to developing countries. In the 90s, the organization began to issue loans of the corresponding type to countries with a transitional economic system. The specificity of IBRD loans is in the long term. The institution issues loans for a period of about 15-20 years. The bank's financial assets are formed by membership fees, the amount of which depends on the quotas defined for the member states.
The specifics of IDA activities
Another major structure responsible for the functions of the World Bank is IDA, or the International Development Association. It was formed in 1960. The purpose of its establishment was to provide soft loans with a long repayment period - about 40-50 years - to countries characterized by a low level of economic development. For example, in 1961 the organization decided to issue appropriate loans to India, Chile, Honduras, and Sudan. IDA not only provides loans to help governments in countries with low levels of economic development, but also promotes the export of goods from developed countries to developing countries. Also within the competence of IDA is the implementation of various social programs. Countries that are unable to service loans on the terms of the IBRD can count on a loan from IDA. Since its inception, the organization has provided loans worth more than $ 90 billion.
What does IFC do?
The IFC, or International Finance Corporation, is another major entity that includes the World Bank Group. Its functions are reduced to providing loans aimed at stimulating the industry of countries with a low level of economic development. The main goal of this organization is to promote investment in projects implemented in developing countries, improve the living standards of citizens living in them. IFC loans are issued to private enterprises that show good profitability figures. Loans term - within 15 years. Over the entire period of its activity, the organization has issued loans for more than 20 billion US dollars.
Features of MIGA activity
What is especially remarkable about the World Bank is that the structure and functions of this organization are fairly balanced between separate structures. Among the institutions responsible for solving a large volume of investment problems is MIGA. What does it do? MIGA, or the International Investment Guarantee Agency, deals with the issues of insurance of relevant financial investments against various non-commercial risks, as well as consulting work in the process of communications with the governments of states. MIGA encourages the attraction of capital to developing countries to improve their economic performance.
The risks analyzed by the organization's experts may reflect the specifics of currency transfers, confiscation of private property, and political instability. MIGA promotes sustainability in developing countries, as well as informing investors about the prospects for investment in the economies of the countries concerned. Among the main instruments of MIGA's activities are guarantees. Since its inception, the organization has issued more than $ 17 billion in them. The institution has supported over $ 50 billion in investments in developing countries.
Specificity of ICSID work
Studying the specifics that characterize the structure and functions of the World Bank, it is imperative to investigate the features of ICSID activities, or This organization helps to protect the interests of partners participating in certain within the framework of available legal procedures. ICSID is engaged in the elimination of possible non-economic barriers that accompany the interaction of states and enterprises in the process of international cooperation. The institution in question implements its functions through two main mechanisms - conciliation, as well as arbitration proceedings. ICSID services are paid, participation in them is voluntary.
Features of WB loans
Let us study the specifics of loans that are provided in order to solve the main task that is within the competence of such an institution as the World Bank - the development of countries with lagging economies. The organization provides loans in two main types. First, these are investment loans. They are provided for the purpose of financing industrial sectors in the economies of developing countries, as well as in other segments of economic systems that are important in terms of solving social and economic problems. Secondly, it is aimed at stimulating the political development of countries. Their receipt presupposes that the states carry out the necessary reforms.
Consulting support
In some cases, the World Bank may perform functions that actually amount to intermediation between other financial institutions or investors and governments of countries in need of financial support. So, for example, the receipt of the necessary loans by the state in a number of cases may be associated with the need for their economies and political systems to meet certain criteria that lenders wish to see. The activities of the World Bank can be associated, therefore, with consulting support to governments of states for the implementation of measures aimed at achieving compliance of the national economic and political systems with the necessary criteria.
WB Group business strategy
The main directions of the WB activities, both in the field of credit policy and in the field of consulting services, are recorded in a separate document - the Strategy of the WB Group. This source is used as a key one in the interaction of the World Bank with the governments of states in need of financial assistance. At the same time, the strategy is of a framework nature. Specific directions of the World Bank's activities in the field of assistance to a particular state are being worked out based on the specifics of its economy and political system.
Sources of financing for activities
So we looked at some of the key aspects of an institution like the World Bank. The decoding and functions of this organization are also known to us. Let us now study such an aspect of the WB's activities as raising funds for financing activities. From what sources does this international organization function?
There are different ways of attracting WB funds for development, as well as performing key functions. For example, with regard to IBRD loans to developing countries, the corresponding financial resources are attracted through the sale of bonds with high ratings. Another source involved in the activities of the World Bank is its own capital, which is contributed by the member countries of the organization. This resource is also used to fulfill obligations related to servicing debt obligations to the IBRD. The WB also has more than US $ 193 billion at its disposal. In practice, the organization has not yet used this resource, but it has such a right.
WB and other international organizations
So, we have explored the key features that characterize the World Bank. The full name and functions of this institution are also known to us. Can we say that the World Bank is a unique institution of its kind? This is partly true. But there is also a number of international organizations whose functions have certain signs of similarity to the activities of the World Bank. Let's look at some examples.
In particular, the functions of the World Bank and OPEC have a certain proximity. The fact is that a significant percentage of the countries that are members of the Organization of Petroleum Exporting Countries are developing countries. OPEC's functions are expressed, in particular, in stimulating the development of their economies through streamlined procedures for the export of the corresponding type of raw materials to world markets.
World Bank and IMF
The functions and role in the world economy of the World Bank are sufficiently close to those for these organizations are also united by the fact that both of them were established with the aim of restoring the economies of the countries of the world after the Second World War. The principles of building the organizational structure of the WB and the IMF are quite close. So, for example, the amount of contribution of a particular state to the total capital of an institution determines the degree of its influence on the activities of the institution. The similarity of the functions of these organizations can be traced in the fact that they are concentrated around solving the problems of stimulating the economic development of countries that need external financial support - for example, due to the balance of payments deficit.
The World Bank, a multilateral lending institution, consists of 5 closely related institutions, the common goal of which is to improve living standards in developing countries through financial assistance from developed countries:
The International Bank for Reconstruction and Development (IBRD) was founded in 1945 to provide loans to relatively wealthy developing countries. IBRD is the main constituent of the World Bank Group. This bank is often called the World Bank.
The International Development Association (IDA) was founded in 1960 to provide particularly concessional loans to the poorest developing countries that are unable to borrow from the World Bank.
The International Finance Corporation (IFC) was founded in 1956 to promote economic growth in developing countries by supporting the private sector.
The Multilateral Investment Guarantee Agency (MIGA) was founded in 1988 to encourage foreign investment in developing countries by providing guarantees to foreign investors against losses caused by non-commercial risks.
The International Center for the Settlement of Investment Disputes (ICSID) was founded in 1966 1 - to promote increased flows of international investment through the provision of arbitration and dispute resolution services between governments and foreign investors; consulting, research, information on investment legislation of various countries.
The International Bank for Reconstruction and Development was created in 1945 after 28 countries signed the "Status of Agreement on the International Bank for Reconstruction and Development", which was developed at the United Nations conference on monetary and financial issues, held in 1944 in Bretton -Woods (USA). The IBRD charter has changed several times. The Bank, as a specialized agency of the United Nations, is part of the United Nations system.
Residence - Washington. It currently unites more than 180 countries around the world. The authorized capital is 142 billion dollars. Countries pay 20% of their quotas in the authorized capital, with 2% in convertible currency, and 18% in national.
Currently, the IBRD is focused on providing assistance to developing countries and countries with economies in transition, incl. CIS. Russia joined the IBRD on June 16, 1992.
Only the IMF states can join the IBRD at the time and on the terms determined by the bank. Each member country of the IBRD must become a subscriber of its capital, and the minimum share of the contributed capital is determined by the bank.
Objectives:
promoting the reconstruction and development of the territories of the Member States by encouraging investment for production purposes;
encouraging private foreign investment and, in addition to private investment, if difficult to secure, the provision of funds for production;
stimulating long-term balanced growth and helping to maintain balance of payments by encouraging international investment to develop productive resources of the Bank's member states.
Structure:
Board of Governors.
Executive Board of Directors (Executive Board), Committees.
Development Committee.
President of the Bank.
All powers of the Bank are vested in Board of Governors, supreme body of the IBRD. Each state is represented on the Council by one governor (plus 1 deputy governor) appointed by each member country for 5 years (reappointment is possible). This is usually a government official at the ministerial level (minister of finance or chairman of the central bank). Once a year, the Boards of Governors of both the IMF and the IBRD meet in separate and joint sessions as part of the Annual Meeting. With the exception of certain powers specially reserved for them in accordance with the Agreement Status (admission of new countries, increase or decrease in authorized capital, suspension of the membership of any state, etc.), the managers delegate their powers to the Executive Board of Directors. Decisions are taken by a majority of the votes cast, unless otherwise specifically provided for by other rules of procedure (on important issues it is necessary to collect 85%). The weight of each state's vote is proportional to its share in the Bank's capital (the United States has more than 17% of votes, i.e. the same as 140 developing countries, and the quota of Russia is 1.8%, and Ukraine's is 0.8 %).
Executive Board (elected for 2 years) is responsible for carrying out the main day-to-day (operational) activities (Bank policies, loan and credit proposals, auditing of accounts, administrative budgets, annual reports on the Bank's policies and operations). Five of the 24 Executive Directors are nominated by the five largest shareholders in the Bank (the United States, Japan, Germany, France and the United Kingdom); the other countries are organized into 19 groups, each of which is represented by one Executive Director elected by a country or group of countries. The number of countries each of these 19 Executive Directors represents varies considerably. It is up to them to decide how states are grouped, often according to geographic location, as well as political and cultural factors. In its work, the Executive Board of Directors relies on the assistance of various committees: joint audit and interim committees, committees on personnel policy, on the development of regulations, on cost efficiency and budgetary practice, on administrative issues.
Development Committee, The Joint Ministerial Committee of the Board of Governors of the IBRD and the IMF on the transfer of real resources to developing countries, composed of 24 people (finance ministers or officials of comparable level) was established in 1974. It advises and prepares reports for the Boards of Governors of the Bank and Fund. The Committee examines issues such as poverty reduction, private sector development, the impact of industrialized country policies on developing countries, debt reduction and resource transfer. The committee's recommendations are sent to the Boards of Governors of the IBRD and the IMF.
President of the IBRD, a long tradition nominated by the US Executive Director and elected by the Executive Directors for a 5-year term. He can be neither the manager, nor the director, nor their representative. He is responsible for the management of the day-to-day operations of the Bank, which he organizes, appoints and terminates staff members under the overall supervision of the Executive Directors. His assistants are 3 managing directors. The President is the chairman of the Board of Executive Directors, who elect and remove him from this office. He manages the operational staff and manages the day-to-day affairs of the Bank as directed by the Executive Directors.
Sources of financing.
IBRD, whose capital is subscribed to by all member states, finances its lending operations primarily from this capital, borrowed funds from financial markets, as well as through payments to repay previously issued loans.
Activity.
Unlike the IMF, whose activities are relevant during periods of short-term macroeconomic crises, the IBRD deals with the problems of long-term economic development. The World Bank Group provides mainly two types of bank lending:
providing loans to developing countries that are unable to pay interest rates close to market rates. The funds for these loans come from investors who buy the bonds issued by the IBRD.
loans are intended only for the poorest countries, which are usually insolvent in international financial markets and are unable to pay interest rates close to market rates. The International Development Association (IDA) provides loans to these countries.
Priority for the IBRD are such structural transformations as foreign trade liberalization, privatization, reforms in education and health care systems, investment in infrastructure. The IBRD provides long-term loans, usually on commercial terms, although poor countries are provided loans at preferential, greatly reduced interest rates. The bank specializes in two types of loans. Targeted loans are intended to finance specific investment projects, such as the construction of roads, bridges or power plants. The program loans are designed to help the government implement structural reforms in key areas of the economy, for example, to liberalize foreign economic relations. In this case, a loan is not a security for a specific investment project, but a means of general financing of the state budget in accordance with a cardinal change in economic policy.
In 1995, the IBRD formulated 4 main areas of its activities:
Seeking a new agreement to attract sufficient resources to meet the needs of developing countries.
A unified approach to the Bank's development policy for its continuation unchanged.
Strengthening and expanding the circle of World Bank partners, both globally and locally.
Improving the functions of the Bank.
The Bank's technical assistance activities fall into 3 main categories:
technical assistance financed as an integral part of Bank loans and credits, perpetual loans and technical assistance loans, and technical assistance financed through the Project Preparation Facility (PPF);
technical assistance provided but not financed by the Bank (Bank as an administrative agency; Bank-led projects) and a paid technical assistance program for high-income developing countries such as oil refineries and the International Fund for Rural Development;
technical assistance provided through the administrative budget.
The Bank's guarantee policy provides 2 options for obtaining guarantees: partial risk guarantees, which allow limited recourse in project financing, and partial loan guarantees used to distribute risks.
Project cycle the IBRD has 6 stages: project definition, preparatory work, preliminary cost estimation, negotiations and presentation of the project to the Bank's management, practical implementation and control over it, evaluation of results.
Inspection Team, composed of individuals selected on the basis of their development knowledge and experience, may, upon request, address complaints of non-compliance by the Bank with its procedures and policies.
Institute for Economic Development, Founded in 1995, it organizes and delivers training courses and seminars for officials from developing countries. It assists educational and research management institutions, prepares, publishes and distributes teaching materials.
The Bank has an extensive research program to support its operations and respond appropriately to the pressing challenges faced by its members. The objectives of such studies: providing information on economic and technical topics, as well as on the development and implementation of programs related to its credit, analytical, educational and preparatory activities and the provision of technical assistance; enhancing development knowledge; promoting political dialogue with member countries and increasing their research capacity.
Since 1995, the IBRD is a member of the advisory body created by Canada, France, Holland, the United States, the ADB (Asian Development Bank), IFAD (International Fund for Agricultural Development) and the UN Capital Development Fund to coordinate the activities of creditor countries on systematic financing of programs and for providing these countries and borrowing countries with the necessary tools.
Institutional Development Fund is a quick response tool for financing small, action-oriented plans driven by the Bank's economy-wide industry work and policy dialogue in low- and middle-income countries.
The Global Environment Facility is a financing mechanism through which funds are provided to developing countries for projects and activities to protect the environment by promoting environmentally friendly development. At the same time, the bank performs the tasks of the trustee and the secretariat of the Fund, as well as the customer of projects.
World Bank - 1 of the sponsors Advisory Group on International Agricultural Research (CGIAR), created to harness modern science to promote sustainable agriculture in poor countries. The Bank and some 40 donors are jointly supporting 18 international agricultural research centers, which, in close collaboration with national research institutes, are developing more resource-efficient food production technologies, while protecting and improving natural resources as the backbone of food production.
IBRD collaborates at the national and local levels with a number of non-governmental organizations, advising and financing them and assisting them in the implementation of various projects.
Regional missions Banks operate in Africa, Asia, Europe and Latin America.
Information
In 1994, the Bank opened information centers in Washington, London, Paris and Tokyo offering information on projects in member countries approved by the Executive Director after January 3, 1994. Here you can get project documentation, expert reviews, national environmental programs, reports on individual countries and sectors of the economy (information on the national economy of countries, their specific features, living standards, government spending).
In 1992-98 The IBRD provided loans to Russia for $ 14.4 billion for the implementation of 41 projects (as of the end of 1998, 5.4 had been used). In 1998, Russia became the largest IBRD borrower in Europe and Central Asia. During the 1997-98 financial year, it received loans for $ 1.63 billion (Russia ranks 5th in the world list of recipients).
In 1997, Russia for the first time participated in the session of the World Bank and the IMF (in Hong Kong) as a full member and declared its direct and full interest in discussing world financial problems.
In August 1998, at a meeting of the World Bank's Board of Directors, a project for lending to Russia in the amount of $ 105 billion was approved. The maturity period is 7 years with a 3-year grace period. The loan was provided in three tranches: $ 300 million (immediately), $ 500 (in December 1998) and $ 700 (in June 1999).
Having become a member of the IBRD, Russia also joined the MAIG.
The International Development Association was established in 1960 as an affiliate of the IBRD. As a specialized agency, it belongs to the United Nations system. IDA is in many ways no different from IBRD. Both organizations finance development projects, have one and the same staff, and the President of the Bank is also the President of IDA. The main differences between the two organizations are in how they acquire funds for lending and in the terms on which they lend to developing countries. The IBRD obtains most of its funding from global financial markets and provides loans to developing countries at lower interest rates and longer maturities than commercial banks do. Unlike IBRD, IDA provides developing countries with interest-free loans. Its funding sources are contributions from donor countries.
Objectives:
promoting economic development;
increasing labor productivity;
improving living standards in developing IDA countries.
The member states are divided into 2 groups:
group I - economically more developed countries (more than 25 countries);
group II - less developed countries (more than 130 countries).
Membership is open to all IBRD member countries within terms and conditions that may be established by IDA.
Structure:
Board of Governors.
Executive Directorate.
The president.
Members Board of Governors, Executive Directorate and President ex officio, as well as officials and staff members of the IBRD, concurrently perform similar duties in the International Development Association. IDA's staff is divided into 4 sectors: operations, financing, policy, planning and research.
Sources of financing
The bulk of IDA's financial resources come from three sources: transfers from IBRD profits; capital to which the member states are subscribers; contributions from mostly wealthier IDA members, including a number of middle-income countries (replenishment usually occurs every 3 years). 34 Member States agreed to provide $ 18 billion during the Tenth IDA Funding (IDA10), held in 1993-96. to step up efforts to combat poverty, pursue economic reforms, improve management and ensure economically sustainable development.
Activities
Loans IDA targets the poorest and least creditworthy countries and is allocated based on the size of the country, annual per capita income and policy effectiveness. Only countries with an annual per capita income of less than $ 1,305 are eligible for IDA loans. Most IDA loans go to countries with an annual per capita income of $ 800 or less. Loan repayment begins after 10 years of grace period; they are provided for 35 or 40 years and no interest.
Each IDA-funded project undergoes a political and economic review to ensure the most efficient use of financial assistance. Loans are provided in the national currency of the state or its territory.
The Special Assistance Program is supporting low-income, high-debt sub-Saharan countries. The Executive Directors publish the rules and conditions for IDA loans.
The IFC was created at the initiative of the United States as an affiliate of the IBRD in 1956 by ratifying the charter of the International Finance Corporation. The IFC is a separate legal entity and financial institution that is part of the World Bank Group and belongs to the United Nations system as a specialized agency. Residence - Washington. The IFC includes more than 170 countries. Russia entered on April 12, 1993.
Purpose:
Promoting the economic growth of member countries by encouraging entrepreneurship in the manufacturing sector, i.e. at the micro level, thus complementing the activities of the IBRD.
Structure:
Board of Governors.
Directorate.
President, Executive Vice President.
Banking Advisory Commission.
Business Advisory Committee.
The supreme body of the International Finance Corporation is Board of Governors.Each Governor and Deputy Governor of the IBRD, appointed by a member of the Bank who is also a member of the International Finance Corporation, is, by virtue of his position, a Governor and Deputy Governor on its Board of Governors. With the exception of certain powers retained by the IFC charter only for Board members (such as admitting new members, determining admission conditions, increasing or decreasing authorized capital, suspension of membership, amendments to the charter), the governors have delegated their powers to the Directorate. The IFC Annual Meeting is held concurrently with the IBRD Annual Meeting.
Directorate,consisting of 24 directors, who are all executive directors of the Bank (and their deputies) appointed / elected by a member or group of members of the Corporation, is responsible for the day-to-day operations of the IFC.
President of the Corporationis the President of the World Bank. responsible for general management and day-to-day operations. He relies on a management team of seven vice presidents for planning and decision-making. Three vice presidents of operations oversee regional and industry departments. In addition, each vice president oversees a specific area of \u200b\u200bactivity. All work is carried out through 5 regional (sub-Saharan Africa; Asia; Central Asia, the Middle East and North Africa; Europe; Latin America and the Caribbean) and four sectoral (agribusiness; chemistry, petrochemicals and fertilizers; infrastructure; oil, gas and mining ) department. The Capital Markets and Corporate Financial Services Department provides paid advisory services to state-owned enterprises and governments on privatization issues and to private companies on financial restructuring.
Banking Advisory CommissionConsisting of 10 executives from leading international financial institutions, meets regularly with IFC's management team to exchange views on the Corporation's policies and activities.
Business Advisory Committee is made up of renowned industrialists, bankers and government officials from all parts of the world who share their knowledge, experience and views on business issues with the management of IFC.
Sources of financing
IFC resources consist primarily of contributions from member states, IDB loans, interest on loans granted, finance charges, dividends and profit sharing, proceeds from the sale of shares, service fees, deposits and securities transactions, and proceeds from in international capital markets.
Activities
The IFC provides loans for 5 to 15 years to highly profitable private enterprises, but unlike the IBRD, without a government guarantee. In this way, IFC facilitates additional funding for private sector projects. At the same time, the IFC usually limits its participation in each specific project to 25% of its cost. But it helps to find investors.
Three principles define IFC's regional and sectoral objectives:
catalyst principle: attracting private investors to participate in the project;
the principle of cost-effectiveness to justify cooperation with the private sector;
the principle of IFC participation as a measure that complements the natural market process.
IFC promotes private sector development by:
Financing (loans, equity, joint funds);
Resource mobilization (pooling of loans provided, insurance, provision of guarantees, investment in private companies);
Risk management (swap transactions related to exchange rates and interest rates, hedging mechanisms);
Technical assistance and consulting (changes in the capital market, foreign direct investment, privatization, corporate restructuring, project preparation and appraisal);
Development of a strategy for cooperation with IBRD on private sector assessment (for tax purposes for individual countries, development of national strategies, reform of the financial sector).
The International Finance Corporation is the investment bank of the World Bank Group for developing countries. IFC is the world's largest source of direct financing for private equity projects in developing countries. It provides loans directly to private companies and invests its own funds in them without government guarantees, and also attracts other sources of financing for private sector projects, such as:
1) promotion of entrepreneurial activity, including small business;
2) mobilization of funds;
3) investments in infrastructure development projects;
4) environmental protection initiatives;
5) consulting services and technical assistance.
IFC offers a variety of financial transactions and services to companies in developing member countries:
long-term loans provided in major currencies at fixed or variable rates;
equity investments, other lending mechanisms (subordinate loans, securities with income);
provision of guarantees and ancillary financing;
risk management (mobilization of capital through swap transactions with currencies and interest rates; provision of hedging funds).
The corporation advises businesses and governments in developing countries on a variety of issues, including physical and financial restructuring, developing business plans, identifying markets, products, technologies, financial and technical partners, and mobilizing resources to finance projects.
Founded in 1986, the Foreign Investment Advisory Service (FIAC), overseen by a committee chaired by the IFC Executive Vice President, assists governments in meeting long-term development needs by maximizing the value of foreign investment (capital, technology, management expertise and knowledge). FIAC provides advice to governments on legislation, policies, rules and procedures, knowledge of which is essential to create an attractive investment climate.
The African Project Development Advisory Bureau, established in 1986, provides advice to African entrepreneurs looking to expand or modernize existing businesses or create new ones.
The South Pacific Project Development Advisory Bureau assists entrepreneurs in nine of IFC's island member states in developing bankable projects, or starting new businesses, or expanding and diversifying existing ones.
In recent years, IFC has paid particular attention to providing technical assistance to 1 private firms, which is funded through the Technical Assistance Fund.
IFC representatives work in Africa, Asia, Europe and Latin America.
INFORMATION
In 1994, IFC established a disclosure policy and offers information on the Corporation's operations, environmental documents, and other project data, financial information, and IFC discussion papers (economics and research).
Public information on IFC activities can be obtained from the World Bank's Public Information Center (PIC) in Washington; you can request information online or at the World Bank offices in London, Paris and Tokyo.
The New Markets Database offers information on new markets. The introduction of IFC investment indices, which reflect the openness of selected new markets to foreign investors, is intended to meet the growing needs of investors. The database will constantly expand the scope of services offered.
Since 1956, IFC has committed more than $ 21.2 billion of its own funds to various projects and organized financing for 852 enterprises in 129 developing countries worth $ 15 billion.
Since 1993, IFC has approved financing for 38 Russian projects for $ 563 million from its own funds and $ 223 million from the funds of the participants in the syndicated funds attraction program. The total cost of these projects was $ 1.9 billion.
The total volume of loans and investments in all areas of corporation activities is $ 7 billion.
The Multilateral Investment Guarantee Agency was created in 1988 as a subsidiary of the World Bank, but is financially independent. As a specialized agency, the Agency is part of the UN system. The MAIG includes more than 130 states, including the Russian Federation. Membership is open to all IBRD members.
Purpose:
Encouraging production investment in member states, especially developing countries, by:
provision of guarantees, including joint reinsurance against non-commercial risks in the form of capital allocation in some member countries, which is attracted in others;
implementation of appropriate supporting activities to facilitate the flow of investment to and between developing countries.
Functions:
increasing the capacity of other insurers through co-insurance or reinsurance;
insurance of investments in countries that are not subject to such insurance by other insurers due to the policy of the latter;
servicing investors who do not have access to other officially recognized insurers;
providing guarantees to investors of various nationalities who are members of a multinational syndicate, which creates favorable conditions for the conclusion of insurance contracts and the settlement of claims.
Structure:
Board of Governors.
Directorate, Chairman of the Directorate.
Executive Vice President.
The supreme body of the Agency is Board of Governors. He can delegate his powers to the Directorate, with the exception of those specifically assigned to the Council (admission of new members, suspension of membership, increase or decrease in capital). The Council consists of governors and their deputies (1 from each member country). The Chairman of the Council is elected from among the governors.
Directorate consists of 20 directors (each has 1 deputy) and is responsible for the general operational activities of the Agency. The Chairman of the Directorate is the President of the IBRD.
Executive Vice President MIGA is appointed by the Directorate on the recommendation of the Chairman and performs its functions under the overall control of the Directorate. He is responsible for the organization of work, appointment and dismissal of personnel. Officials and other IBRD staff members work part-time with the Agency.
Sources of financing
The most important source of funding is fixed capital ($ 948 million), which provides guarantees in the amount of $ 745 million. The MIGA Convention stipulates that industrialized countries must contribute 10% of their share in convertible currency. Another 10% each country contributes in the form of non-traded interest-free debt. The remainder represents reserve capital. Up to 25% of the contributions of developing countries can be made in their own currency.
Activities
MIGA complements the activities of existing investment insurers through coinsurance and reinsurance. The agency provides its chosen investors with guarantees (covering up to 90% of the volume of investments) for a period of 15-20 years for investments in member states (developing countries) against non-commercial risks, i.e. provides a kind of insurance against political, economic and other types of risks. MIGA offers four main types of guarantees:
Currency non-convertibility
Protection against losses arising from the inability to convert local currency into foreign for its transfer outside the country.
Expropriation
Protection against losses caused by actions of the host government to restrict or liquidate ownership or control over it, as well as the right to insured investments.
War and civil unrest
Protection against losses caused by hostilities or civil disturbances leading to destruction or damage to the tangible assets of the enterprise or to the creation of obstacles to its activities.
Breach of contract 1
Protection against losses associated with the fact that the investor cannot achieve the adoption of a court or arbitration court decision and / or its implementation in a claim against the host country that has canceled or violated the investment contract.
MIGA examines projects through the application process to ensure they are financially, economically and environmentally sound and contribute to meeting the development needs of the host country.
MIGA provides a variety of technical assistance services to support member countries' efforts to stimulate foreign direct investment. In 1994, MIGA provided a range of services, ranging from policy advisory services to improve investment regimes, to assistance in increasing foreign investment flows and legal advice on foreign investment.
In 1994, MIGA began to focus on capacity-building to promote “investment; development of electronic tools (a global electronic network dedicated to specific sectors“ CD-ROM ”) began to accelerate the dissemination of information on investment opportunities in developing countries and countries in transition. The withdrawal of policy advisory services to conserve the resources needed to facilitate expansion of guarantee activities resulted in the withdrawal of financial support from MIGA to the Foreign Investment Advisory Service. With the exception of investment promotion and information dissemination, FIAC was transferred. serviceswas renamed into Investment Marketing Service.
Investment promotion includes meetings, conferences, training programs and seminars, as well as industry and cross-border study tours. The information policy of the Agency provides for the use of the latest communication means in order to establish and maintain contacts with potential investors.
In 1994, MIGA conducted a series of workshops to assist member countries in “building marketing capacity to improve and strengthen relationships with investors and to carry out investment promotion missions.
INFORMATION
MIGA publishes, among others, the MIGA News (since 1994 in French) and publishes an annual report.
IPANET is a global information exchange and communication network on the Internet.
EBRD
EBRD - III influential credit institution. It was created in 1990 as a result of the signing of the Agreement establishing the European Bank for Reconstruction and Development (started operations in April 1991). Residence - London.
Objectives:
supporting the transition of the countries of Central and Eastern Europe and towards an open market economy;
promoting the development of private entrepreneurship in countries committed to the principles of multi-party democracy, pluralism and market economy.
Functions:
organization, modernization and expansion of production, competitive and private business activities, especially small and medium-sized enterprises;
mobilization of national and foreign capital and good governance;
investments in production in order to create a competitive environment and increase productivity, quality of life and improve working conditions;
providing technical assistance in the preparation, financing and implementation of projects;
stimulating and encouraging the development of capital markets;
implementation of solid and economically viable projects involving more than one recipient country;
environmentally sustainable development.
supporting member countries - recipients of assistance in carrying out structural and sectoral economic reforms, including demonopolization and privatization in order to fully integrate their economies into the world economy by promoting:
The EBRD includes about 60 countries and institutions (European Union, European Investment Bank).
Members of the Bank can become:
European countries.
Non-European countries that are members of the IMF.
European Community (European Union).
European Investment Bank.
Structure:
Board of Governors.
Directorate, committees.
President, Vice Presidents.
Environmental Advisory Board.
Board of Governors, in which each member of the EBRD is represented by one governor and one deputy (total of 118 members), is the supreme body that determines the main directions of the Bank. Each member of the Bank is represented on the Board of Governors and the Board of Directors. Meetings are held once a year, additional meetings may be called by the Board of Governors or Directorate. The Board of Governors may fully or partially delegate its powers to the Directorate, with the exception of admitting and determining the conditions for admitting new members, changing the size of the authorized capital, suspension of membership, electing directors and the president, determining the salaries of directors and deputy directors, approving the general balance sheet, amending the Agreement and termination of the Bank's operations. At the same time, the Board of Governors retains full authority over all tasks assigned to the Directorate. The number of votes held by each member is equal to the number of his subscribed shares in the share capital of the Bank.
The president (four-year mandate, possibly re-elected) manages the day-to-day affairs as directed by the Directorate. He presides over the meetings of the Directorate and can take part in the meetings of the Board of Governors. He is the authorized representative of the Bank. As head of the Bank's staff, the President is responsible for organizing the work of the EBRD and hiring and firing staff, in accordance with the rules established by the Directorate. Vice Presidents appointed on the recommendation of the President by the Directorate, which determines the terms of office, as well as their powers and functions. The EBRD structure includes nine departments (banking, finance, project appraisal, chief economist's department, etc.). The Banking Department has three divisions: country groups, 1 industry group, 2 operations support groups. Each department is made up of teams that include experts from the private and public sectors of the Bank's member countries.
Environmental Advisory Boardconsists of environmental experts from Central and Eastern Europe and OECD countries, as well as policy and strategy advisers related to the Bank's “environmental mandate”.
Sources of financing
The capital resources of the Bank include share capital, borrowings and funds received for repayment of loans or guarantees of the Bank, income derived from the Bank's investments, and any other financial resources and income that are not part of the resources of the Bank's special funds.
The share capital is 10 billion euros (the euro is the official currency of the bank, all its assets, liabilities and financial statements are denominated in euros) and is divided into 1 million shares with a par value of 10,000 euros. The total par value of the paid-in shares is $ 4.3 billion, i.e. 30% of the original authorized share capital. Russia's quota in the EBRD's capital is 40 thousand shares, which provides it with its own director on the Board of Directors.
A number of foundations have been established in accordance with the founding agreement:
1) with the participation of Denmark, Iceland, Norway, Finland and Sweden, the Baltic Special Investment Fund to promote the private sector by supporting small and medium-sized enterprises in the Baltic countries and the Baltic Special Technical Assistance Fund to promote the development of market economies in the Baltic countries;
2) Russian Special Small Business Fund for the Development of the Private Sector;
3) Russian Special Fund for Technical Assistance to Small Business.
Activities
The EBRD is committed to helping its member countries implement structural and sectoral economic reforms, including demonopolization, decentralization and privatization, tailored to the needs of these countries at various stages of transition to a market economy. Its activities include promoting private sector development, strengthening financial institutions and legal systems, and building or upgrading the infrastructure required for private sector activities. The Bank encourages co-financing1 and foreign direct investment by the private and public sectors. The EBRD cooperates with international financial institutions and other international organizations.
The EBRD operates on a commercial basis, providing loans at market interest rates that take into account risks (financial instruments: loans, equity investments and guarantees). The Bank provides direct financing for private sector development projects, structural reforms and privatizations, as well as infrastructure development. Joint ventures are the main source of lending by the Bank, especially those with foreign sponsors.
Through its technical cooperation program, the Bank funds research and project-related analytical work, advisory services and training.
Priority areas are privatization and structural reforms, financial systems, energy (including nuclear reactor safety), telecommunications, transport and environmental infrastructure, agriculture, natural resources and tourism.
In 1993, the Group of 7 officially proposed the EBRD to establish a Nuclear Safety Account to attract contributions from donor countries to subsidize nuclear safety projects in the region. The Bank prepares projects and submits them for consideration to the Assembly of Investors. It acts as the secretariat of the Nuclear Safety Account. Priority is given to high-risk reactors, which must be reduced through prompt and cost-effective safety upgrades. The EBRD is a universal institution and brings together various directions: it provides loans to the governments of 25 countries and at the same time pays attention to supporting the private sector in these countries.
The Bank opened representative offices in Eastern and Central Europe (Albania, Belarus, Bulgaria, Hungary, Kazakhstan, Latvia (for the Baltic states), Poland, Romania, the Russian Federation (Moscow with regional offices in St. Petersburg and Vladivostok), Slovakia, Ukraine, Uzbekistan and Czech Republic).
INFORMATION
The Bank publishes general information on the EBRD's activities, periodicals, policy papers on various sectors, environmental and privatization papers, and research and working papers.
The World Bank will support the poorest countries in the current financial crisis, Mexican Finance Minister Agustin Carstens, chairman of the Development Committee, said at a press conference in Washington.
The World Bank Group (WB) or the World Bank is a multilateral lending institution consisting of several closely related financial institutions whose common goal is to improve the living standards of developing countries through financial assistance from developed countries.
The WB was formally created on December 27, 1945, after most of the participating countries ratified the 1944 Bretton Woods Accords.
The World Bank began work on June 25, 1946, the first loan was issued on May 9, 1947 (France received $ 250 million for the reconstruction of the economy destroyed by the Second World War).
The main objective of the World Bank is to promote sustainable economic growth that leads to poverty reduction in developing countries by helping to increase production through long-term financing of development projects and programs. At the same time, it prioritizes structural transformations: trade liberalization, privatization, education and health care reform, investment in infrastructure.
Each World Bank loan must be guaranteed by the respective government and, except in special circumstances, must be provided for specific projects.
The main advantage of cooperation with the World Bank for the recipient country lies in the significantly lower interest rates on loans in comparison with other international lenders. Another promising benefit for the recipient of the WB assistance is that international loans follow the WB loans.
The World Bank Group includes:
The International Bank for Reconstruction and Development (IBRD) is the main lending institution of the World Bank Group. IBRD is the largest lender of development projects in developing countries with an average per capita income.
International Bank for Reconstruction and Development (IBRD) was established simultaneously with the International Monetary Fund (IMF) in accordance with the decisions of the International Monetary and Financial Conference in Bretton Woods in 1944. The IBRD Agreement officially entered into force in 1945, but the bank began operations in 1946.
International Development Association(IDA) is a member of the World Bank Group. Created in 1960. Its goal is to help the poorest countries. Countries with a per capita GDP of no more than $ 835 are eligible to receive loans from IDA.
International Finance Corporation (IFC) is an international financial institution that is part of the World Bank. IFC was created in 1956 to provide a steady flow of private investment to developing countries.
Multilateral Investment Guarantee Agency (MIGA) is an autonomous international institution that aims to facilitate foreign direct investment in developing countries, provide insurance and guarantees to private investors, and provide advisory and information services. MIGA was founded in 1988.
International Center for Settlement of Investment Disputes(ICSID), founded in 1995, promotes increased international investment flows by providing arbitration and dispute resolution services between governments and foreign investors.
Membership in the World Bank
A different number of countries participate in the five financial institutions of the World Bank. Members of the International Bank for Reconstruction and Development (IBRD) are 184 states, that is, almost all countries of the world. The International Development Association (IDA) includes 163 states, the International Finance Corporation (IFC) - 175 states, the Multilateral Investment Guarantee Agency - 158 states, and the International Center for Settlement of Investment Disputes (ICSID) - 134 states.
Russia became a full member of the World Bank Group in June 1992. In addition to the International Bank for Reconstruction and Development, Russia is a member of the International Finance Corporation (IFC), the International Development Association (IDA) and the Multilateral Investment Guarantee Agency (MIGA).
According to the World Bank's charter, strategic decisions require at least 85% of shareholders' votes.
As of the end of 2007, the largest shareholders of the World Bank are the USA (16.4% of shares), Japan (7.9%), Germany (4.5%), Great Britain and France (4.3% each).
Every three years, the World Bank Group develops a framework document, The World Bank Group Strategy, which is used as a framework for country engagement. The strategy helps to link the bank's lending and analytical and advisory programs to the specific development goals of each borrowing country.
Manual
President of the World Bank, Head of the Board of Managing Directors of the World Bank, Head of the International Development Association, Head of the Board of Directors of the International Finance Corporation, Head of the Multilateral Investment Guarantee Agency - Robert Zoellick (holds this post since July 1, 2007).
The material was prepared on the basis of information from RIA Novosti and open sources