INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

 

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

IBRD

Introduction:

The world’s largest development bank, IBRD provides financial products and policy advice to help countries reduce poverty and extend the benefits of sustainable growth to all of their people. The International Bank for Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries. As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges.

The World Bank was created at the 1944 Bretton Woods Conference, along with the International Monetary Fund (IMF). The president of the World Bank is, traditionally, an American. The World Bank and the IMF are both based in Washington, D.C., and work closely with each other.

The intention behind the founding of the World Bank was to provide temporary loans to low-income countries which were unable to obtain loans commercially. The Bank may also make loans and demand policy reforms from recipients.

Organization:

The World Bank is like a cooperative, made up of 189 member countries. These member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank. Generally, the governors are member countries' ministers of finance or ministers of development. They meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.

The governors delegate specific duties to 25 Executive Directors, who work on-site at the Bank. The five largest shareholders appoint an executive director, while other member countries are represented by elected executive directors.

The World Bank Group President chairs meetings of the Boards of Directors and is responsible for overall management of the Bank. The President is selected by the Board of Executive Directors for a five-year, renewable term.

The Executive Directors make up the Boards of Directors of the World Bank. They normally meet at least twice a week to oversee the Bank's business, including approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financial decisions.

The World Bank operates day-to-day under the leadership and direction of the president, management and senior staff, and the vice presidents in charge of Global Practices, Cross-Cutting Solutions Areas, regions, and functions.

In time, the focus shifted from reconstruction to development, with a heavy emphasis on infrastructure such as dams, electrical grids, irrigation systems, and roads.  With the founding of the International Finance Corporation in 1956, the institution became able to lend to private companies and financial institutions in developing countries.  And the founding of the International Development Association in 1960 put greater emphasis on the poorest countries, part of a steady shift toward the eradication of poverty becoming the Bank Group’s primary goal.  The subsequent launch of the International Centre for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency further rounded out the Bank Group’s ability to connect global financial resources to the needs of developing countries.

Today the Bank Group’s work touches nearly every sector that is important to fighting poverty, supporting economic growth, and ensuring sustainable gains in the quality of people’s lives in developing countries.  While sound project selection and design remain paramount, the Bank Group recognizes a wide range of factors that are critical to success—effective institutions, sound policies, continuous learning through evaluation and knowledge-sharing, and partnership, including with the private sector.  The Bank Group has long-standing relationships with more than 180 member countries, and it taps these to address development challenges that are increasingly global.  On critical issues like climate change, pandemics, and forced migration, the Bank Group plays a leading role because it is able to convene discussion among its country members and a wide array of partners.  It can help address crises while building the foundations for longer-term, sustainable development.

The evolution of the Bank Group has also been reflected in the diversity of its multidisciplinary staff, who include economists, public policy experts, sector experts, and social scientists, based at headquarters in Washington, D.C., and in the field.

IBRD Mission

To end extreme poverty:

By reducing the share of the global population that lives in extreme poverty to 3 percent by 2030.

To promote shared prosperity:

By increasing the incomes of the poorest 40 percent of people in every country.

One World Bank Group:

Five institutions have their own country membership, governing boards, and articles of agreement, they  work as one to serve the partner countries. 

IBRD

The International Bank for Reconstruction and Development

IDA

The International Development Association

IFC

The International Finance Corporation

MIGA

The Multilateral Investment Guarantee Agency

ICSID

The International Centre for Settlement of I Pic Courtesy :worldbank.org

Where does IBRD Work?

The World Bank Group works in more than 170 countries, working with partners in the public and private sectors in their efforts to end poverty and tackle some of the most pressing development challenges.

President of IBRD:

David R. Malpass, an American economist was selected as 13th President of the World Bank Group by its Board of Executive Directors on April 5, 2019.  His five-year term began on April 9.

David R. Malpass

Boards of Governors:

The Boards of Governors consist of one Governor and one Alternate Governor appointed by each member country. The office is usually held by the country's minister of finance, governor of its central bank, or a senior official of similar rank. The Governors and Alternates serve for terms of five years and can be reappointed.   

If the country is a member of the Bank and is also a member of the International Finance Corporation (IFC) or the International Development Association (IDA), then the appointed Governor and his or her alternate serve ex-officio as the Governor and Alternate on the IFC and IDA Boards of Governors. They also serve as representatives of their country on the Administrative Council of the International Center for Settlement of Investment Disputes (ICSID) unless otherwise noted. Multilateral Investment Guarantee Agency (MIGA) Governors and Alternates are appointed separately.

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Notes compiled from
https://www.worldbank.org/

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International Monitory Fund (IMF)

 

International Monitory Fund (IMF)

Founding and mission:

The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference in New Hampshire, United States.

Head Quarters at Washington D.C Pic Courtesy Wikipedia                            IMF Logo 

The 44 countries sought to build a framework for international economic cooperation and avoid repeating the competitive currency devaluations that contributed to the Great Depression of the 1930s.

The IMF's primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other.

Pic Courtesy IMF website 

Surveillance:

In order to maintain stability and prevent crises in the international monetary system, the IMF monitors member country policies as well as national, regional, and global economic and financial developments through a formal system known as surveillance.

The IMF provides advice to member countries and promotes policies designed to foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards.

 It also provides periodic assessments of global prospects in its World Economic Outlook, of financial markets in its Global Financial Stability Report, of public finance developments in its Fiscal Monitor.

Financial assistance: 

Providing loans to member countries that are experiencing actual or potential balance-of-payments problems is a core responsibility of the IMF.

Individual country adjustment programs are designed in close cooperation with the IMF and are supported by IMF financing..

In response to the global economic crisis, in April 2009 the IMF strengthened its lending capacity and approved a major overhaul of its financial support mechanisms, with additional reforms adopted in subsequent years.

 These changes enhanced the IMF’s crisis-prevention toolkit, bolstering its ability to mitigate contagion during systemic crises and allowing it to better tailor instruments to meet the needs of individual member countries.

Loan resources available to low-income countries were sharply increased in 2009, while average limits under the IMF’s concessional loan facilities were doubled.

Capacity development:

The IMF provides technical assistance and training to help member countries build better economic institutions and strengthen related human capacities.

This includes, designing and implementing more effective policies for taxation and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative frameworks, and economic statistics.

Organization & Finances:

The IMF has a management team and 17 departments that carry out its country, policy, analytical, and technical work. One department is charged with managing the IMF’s resources. This section also explains where the IMF gets its resources and how they are used.

Management

The IMF has a Managing Director, who is head of the staff and Chairperson of the Executive Board. The Managing Director is appointed by the Executive Board for a renewable term of five years and is assisted by a First Deputy Managing Director and three Deputy Managing Directors.

Staff

The IMF’s employees come from all over the world; they are responsible to the IMF and not to the authorities of the countries of which they are citizens. The IMF staff is organized mainly into area; functional; and information, liaison, and support responsibilities.

IMF Resources

Most resources for IMF loans are provided by member countries, primarily through their payment of quotas.

Quotas

Quota subscriptions are a central component of the IMF’s financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy.

Special Drawing Rights (SDRs)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.

Special drawing rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by IMF member countries for which they may be exchanged.

While the ISO 4217 currency code for special drawing rights is XDR, they are often referred to by their acronym SDR. Both refer to the name "special drawing rights".

Gold

Gold remains an important asset in the reserve holdings of several countries, and the IMF is still one of the world’s largest official holders of gold.

Borrowing Arrangements

While quota subscriptions of member countries are the IMF's main source of financing, the Fund can supplement its quota resources through borrowing if it believes that they might fall short of members' needs.

Resources:

Member quotas are the primary source of IMF financial resources.

 A member’s quota broadly reflects its size and position in the world economy.

 The IMF regularly conducts general reviews of quotas. The lastest review (the 14thReview) was concluded in 2010 and the quota increases became effective in 2016.

This review doubled quota resources to SDR 477 billion (about US$661 billion).

 In addition, credit arrangements between the IMF and a group of members and institutions provide supplementary resources of up to about SDR 182 billion ($253 billion), and are the main backstop to quotas.

As a third line of defence, member countries have also committed resources to the IMF through bilateral borrowing agreements, totaling about SDR 317 billion ($440 billion).

Governance and organization:

The IMF is accountable to its member country governments.

At the top of its organizational structure is the Board of Governors , consisting of one governor and one alternate governor from each member country, usually the top officials from the central bank or finance ministry.

The Board of Governors meets once a year at the IMF–World Bank Annual Meetings .

Twenty-four of the governors serve on the International Monetary and Financial Committee, or IMFC, which advises the IMF's Executive Board on the supervision and management of the international monetary and financial system.

The day-to-day work of the IMF is overseen by its 24-member Executive Board , which represents the entire membership and supported by IMF staff.

 The Managing Director is the head of the IMF staff and Chair of the Executive Board and is assisted by four Deputy Managing Directors.

Kristalina Georgieva was selected Managing Director of the IMF on September 25, 2019. She assumed her position on October 1, 2019.

Mr. Geoffrey Okamoto as First Deputy Managing Director, effective March 19, 2020. 

Deputy Managing Director                                               Antoinette Sayeh

Deputy Managing Director                                               Mitsuhiro Furusawa

Deputy Managing Director                                               Tao Zhang

Economic Counsellor and Research Department Director   Gita Gopinath

Resource compiled from

https://www.imf.org