973 Words Essay on World Bank


The World Bank was formally established on December 27, 1945, following the ratification of the Breton Woods agreement. The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later, the Bank issued its first, and largest, loan: $250 million to France for post-war reconstruction; an issue which has remained a primary focus, alongside reconstruction after natural disasters, humanitarian emergencies and post-conflict rehabilitation needs affecting developing and transition economies.

The World Bank is one of the three Breton Wood Institutions which were created in 1944 to rebuild the destroyed Europe after World War II. Later, after the economic revival of Europe, the World Bank’s activities became focused on developing countries. By financing infrastructure projects, poverty should be reduced. Today the focus is on the achievement of the Millennium Development Goals (MDGs), goals calling for the elimination of poverty and the implementation of sustainable development.

The constituent parts of the Bank, the IBRD and the IDA, achieve their aims through the provision of low or no interest loans and grants to countries with little or no access to international credit markets. The Bank is a market based non-profit organization, using its high credit rating to make up for the low interest rate of loans. The Bank’s mission is to aid developing countries and their inhabitants achieve the MDGs, through the alleviation of poverty, by developing an environment for investment, jobs and sustainable growth, thus promoting economical growth and through investment in and empowerment of the poor to enable them to participate in development.


The World Bank sees the five key factors necessary for economic growth and the creation of a business environment as:

1. Capacity Building – Strengthening governments and educating government officials.

2. Infrastructure creation – implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts.

3. Development of Financial Systems – the establishment of strong systems capable of supporting endeavors from micro credit to the financing of larger corporate ventures.


4. Combating corruption – Eradicating corruption to ensure optimal effect of actions.

5. Research, Consultancy & Training – World Bank Provide platform for research on development issues, consultancy and conduct training programs (web based, on line, video/tele conferencing and class room based open for those who are interested from academia, students, government & NGO officers etc.

The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-rated bonds in the world’s financial markets. Although this does generate some profit, the majority of the IBRD’s income is generated from lending its own capital. The IDA obtains the majority of its funds from forty donor countries who replenish the bank’s funds every three years, and from loan repayments, which then become available for re-lending. The Bank offers two basic types of loans; investment loans and development policy loans.

The former are made for the support of economic and social development projects, whereas the latter provide quick disbursing finance to support countries’ policy and institutional reforms Although the IBRD provides loans with a low interest rate (between 0.5-1% for a standard Bank loan), the IDA’s loans are interest free. The project proposals of borrowers are evaluated for their economical, financial, social and environmental aspects to ensure that they are viable before any amount of money is distributed. The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. IDA grants are predominantly used for:


★ Debt burden relief in the most indebted and poverty struck countries

★ Amelioration of sanitation and water supply

★ Support of vaccination and immunization programs for the reduction of communicable diseases such as malaria

★ combating the HIV/AIDS pandemic


★ Support civil society organizations

★ Creating initiatives for the reduction of greenhouse gases

The Bank not only provides financial support to its member states, but also analytical and advisory services to facilitate the implementation of the lasting economic and social improvements that are needed in many under­developed countries, as well as educating members with the knowledge necessary to resolve their development problems while promoting economic growth. For the poorest developing countries in the world the Bank’s assistance plans are based on Poverty Reduction Strategies; by combining a cross-section of local groups with an extensive analysis of the country’s financial and economical situation the World Bank develops a strategy pertaining uniquely to the country in question.

The government then identifies the country’s priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts correspondingly. Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support US business interests, and that the bank has actually increased poverty and been detrimental to the environment, public health, and cultural diversity.


Others point out that the World Bank has consistently pushed a neo-liberal agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. It has also been suggested that the World Bank is an instrument for the promotion of US and ‘Western’ interests in certain regions of the world and seven South American nations have established a “Bank of the South” in order to minimize US influence in the region. But all said, the work done by World Bank in helping various nations can never be undermined.

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