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World Bank Group

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World Bank Group
Established4 July 1944; 80 years ago (1944-07-04)
TypeIntergovernmental organization
Legal statusTreaty
PurposeEconomic development, poverty elimination
Headquarters1818 H Street Northwest,
Washington D.C., U.S.[1]
Membership
189 states (188 UN countries and Kosovo)[2]
Ajay Banga[3]
MD & CFO
Anshula Kant[4]
Main organ
Board of Directors[5]
Parent organization
 United Nations[6]
Websiteworldbank.org

The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group.[7] The bank is headquartered in Washington, D.C., in the United States. It provided around $98.83 billion in loans and assistance to "developing" and transition countries in the 2021 fiscal year.[8] The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity.[9] Total lending as of 2015 for the last 10 years through Development Policy Financing was approximately $117 billion.[10] Its five organizations are:

The first two are sometimes collectively referred to as the World Bank.

The activities of the World Bank (the IBRD and IDA) focus on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation and rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, and electricity), large industrial construction projects, and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the country's economy as a whole. For example, a loan to improve coastal environmental management may be linked to the development of new environmental institutions at national and local levels and the implementation of new regulations to limit pollution.[11] Furthermore, the World Bank Group is recognized as a leading funder of climate investments in developing countries.[12]

History

Founding

The WBG came into formal existence on 27 December 1946 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary and Financial Conference (1–22 July 1944). It also provided the foundation of the Osiander Committee in 1951, responsible for the preparation and evaluation of the World Development Report. Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 (USD 250M to France for postwar reconstruction, in real terms the largest loan the bank has issued to date).

Membership

World Bank Group:
  Member states of all five WBG organizations
  Member states of four WBG organizations
  Member states of three WBG organizations
  Member states of two WBG organizations
  Member states only of the IBRD

All of the 188 UN members and Kosovo that are WBG members participate at a minimum in the IBRD. As of May 2016, all of them also participate in some of the other four organizations (IDA, IFC, MIGA, and ICSID).

WBG members by the number of organizations in which they participate:[2]

  1. Only in the IBRD:
  2. The IBRD and one other organization: San Marino, Nauru, Tuvalu, Brunei
  3. The IBRD and two other organizations: Antigua and Barbuda, Suriname, Venezuela, Namibia, Marshall Islands, Kiribati
  4. The IBRD and three other organizations: India, Mexico, Belize, Jamaica, Dominican Republic, Brazil, Bolivia, Uruguay, Ecuador, Dominica, Saint Vincent and the Grenadines, Guinea-Bissau, Equatorial Guinea, Angola, South Africa, Seychelles, Libya, Somalia, Ethiopia, Eritrea, Djibouti, Bahrain, Qatar, Iran, Malta, Bulgaria, Poland, Russia, Belarus, Kyrgyzstan, Tajikistan, Turkmenistan, Thailand, Laos, Vietnam, Palau, Tonga, Vanuatu, Maldives, Bhutan, Myanmar
  5. All five WBG organizations: the rest of the 138 WBG members

Non-members are Andorra, Cuba, Liechtenstein, Monaco, Palestine, the Holy See (Vatican City), Taiwan, and North Korea, of which Andorra is the only IMF member state did not join WBG.

The Republic of China joined the World Bank on December 27, 1945.[13] After the Chinese Civil War, the government fled to Taiwan and continued its membership in the WBG until April 16, 1980, when the People's Republic of China replaced the ROC. Since then, it uses the name "Taiwan, China".[14]

Excluded from the list are the following de facto states: Abkhazia, Artsakh, Northern Cyprus, the Sahrawi Arab Democratic Republic, Somaliland, South Ossetia, and Transnistria.

Organizational structure

The World Bank Group Building in Washington, D.C.
The World Bank Sign on the building

Together with four affiliated agencies created between 1957 and 1988, the IBRD is part of the World Bank Group. The group's headquarters are in Washington, D.C. It is an international organization owned by member governments; although it makes profits, they are used to support continued efforts in poverty reduction.[15]

Technically the World Bank is part of the United Nations system,[16] but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes that depend on financial contributions to the organization. The president of the World Bank is nominated by the president of the United States and elected by the bank's Board of Governors.[17] As of 15 November 2009, the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, the United Kingdom 4.3%, and France 4.3%. As changes to the bank's Charter require an 85% supermajority, the U.S. can block any major change in the bank's governing structure.[18] Because the U.S. exerts formal and informal influence over the bank as a result of its vote share, control over the presidency, and the bank's headquarters location in Washington, D.C., friends and allies of the U.S. receive more projects with more lenient terms.[19]

World Bank Group agencies

The World Bank Group consists of

The term "World Bank" generally refers to just the IBRD and IDA, whereas the term "World Bank Group" or "WBG" is used to refer to all five institutions collectively.[17]

The World Bank Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries.

The IBRD has 189 member governments, and the other institutions have between 153 and 184.[2] The institutions of the World Bank Group are all run by a board of governors meeting once a year.[17] Each member country appoints a governor, generally its minister of finance. Daily, the World Bank Group is run by a board of 25 executive directors to whom the governors have delegated certain powers. Each director represents either one country (for the largest countries), or a group of countries. Executive directors are appointed by their respective governments or the constituencies.[17]

The agencies of the World Bank are each governed by their Articles of Agreement that serves as the legal and institutional foundation for all their work.[17]

The activities of the IFC and MIGA include investment in the private sector and providing insurance, respectively.

Presidency

Traditionally, the bank president has been a U.S. citizen nominated by the president of the United States, the bank's largest shareholder. The nominee is subject to confirmation by the executive directors, to serve a five-year, renewable term.[17]

Current president

Ajay Banga is the current and 14th President of the World Bank Group.

Managing director

The managing director of the World Bank is responsible for organizational strategy; budget and strategic planning; information technology; shared services; Corporate Procurement; General Services and Corporate Security; the Sanctions System; and the Conflict Resolution and Internal Justice System. The present managing director, Shaolin Yang, assumed the office after Sri Mulyani resigned to become finance minister of Indonesia.[20][21] The managing director and World Bank Group chief financial officer is Anshula Kant since 7 October 2019.[22]

Extractive Industries Review

After longstanding criticisms from civil society of the bank's involvement in the oil, gas, and mining sectors, the World Bank in July 2001 launched an independent review called the Extractive Industries Review (EIR—not to be confused with Environmental Impact Report). The review was headed by an "Eminent Person", Emil Salim (former Environment Minister of Indonesia). Salim held consultations with a wide range of stakeholders in 2002 and 2003. The EIR recommendations were published in January 2004 in a final report, "Striking a Better Balance".[23] The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment in renewable energy and clean energy. The World Bank published its Management Response to the EIR in September 2004[24] after extensive discussions with the board of directors. The Management Response did not accept many of the EIR report's conclusions, but the EIR served to alter the World Bank's policies on oil, gas, and mining in important ways, as the World Bank documented in a recent follow-up report.[25] One area of particular controversy concerned the rights of indigenous peoples. Critics point out that the Management Response weakened a key recommendation that indigenous peoples and affected communities should have to provide 'consent for projects to proceed; instead, there would be 'consultation'.[26] Following the EIR process, the World Bank issued a revised Policy on Indigenous Peoples.[27]

Criticism

A young World Bank protester in Jakarta, Indonesia
World Bank/IMF protesters smashed the windows of this PNC Bank branch located in the Logan Circle neighbourhood of Washington, D.C.
Main article: World Bank § Criticisms and controversy

The World Bank has long been criticized by a range of non-governmental organizations and academics, notably including its former chief economist Joseph Stiglitz, who is equally critical of the International Monetary Fund, the US Treasury Department, and the US and other developed country trade negotiators.[28] Critics argue that the so-called free market reform policies—which the bank advocates in many cases—in practice are often harmful to economic development if implemented badly, too quickly ("shock therapy"), in the wrong sequence, or in very weak, uncompetitive economies.[28] World Bank loan agreements can also force procurements of goods and services at uncompetitive, non-free-market, prices.[29]: 5  Other critical writers, such as John Perkins, label the international financial institutions as 'illegal and illegitimate and a cog of coercive American diplomacy in carrying out financial terrorism.[30]

Defenders of the World Bank contend that no country is forced to borrow its money. The bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to international capital markets. Furthermore, the loans, both to poor and middle-income countries, are below market-value interest rates. The World Bank argues that it can help development more through loans than grants because money repaid on the loans can then be lent for other projects.

Criticism was also expressed towards the IFC and MIGA and their way of evaluating the social and environmental impact of their projects. Critics state that even though IFC and MIGA have more of these standards than the World Bank, they mostly rely on private-sector clients to monitor their implementation and miss an independent monitoring institution in this context. This is why an extensive review of the institutions' implementation strategy of social and environmental standards is demanded.[31]

Allegations of corruption

The World Bank's Integrity Vice Presidency (INT) is charged with the investigation of internal fraud and corruption, including complaint intake, investigation, and investigation reports.[32]

Investments

The World Bank Group has also been criticized for investing in projects with human rights issues.[33]

The Compliance Advisor/Ombudsman (CAO) criticized a loan the bank made to the palm oil company Dinant after the 2009 Honduran coup d'état. There have been numerous killings of Campesinos in the region where Dinant was operating.[34]

Other controversial investments include loans to the Chixoy Hydroelectric Dam in Guatemala while it was under military dictatorship, and to Goldcorp (then Glamis Gold) for the construction of the Marlin Mine.

In 2019, the Congressional-Executive Commission on China questioned the World Bank about a loan in Xinjiang, China, that was used to buy high-end security gear, including surveillance equipment.[35][36] The bank launched an internal investigation in response to the allegation. In August 2020, U.S. lawmakers questioned the continued disbursement of the loan.[37]

List of presidents

Main article: President of the World Bank Group

List of chief economists

Main article: World Bank Chief Economist

List of World Bank Directors-General of Evaluation

Main article: World Bank Director-General Evaluation
  • Christopher Willoughby, Successively Unit Chief, Division Chief, and Department Director for Operations Evaluation (1970–1976)
  • Mervyn L. Weiner, First Director-General, Operations Evaluation (1975–1984)
  • Yves Rovani, Director-General, Operations Evaluation (1986–1992)
  • Robert Picciotto, Director-General, Operations Evaluation (1992–2002)
  • Gregory K. Ingram, Director-General, Operations Evaluation (2002–2005)
  • Vinod Thomas, Director-General, Evaluation (2005–2011)
  • Caroline Heider, Director-General, Evaluation (2011–present)

See also

References

  1. ^ "About the World Bank". worldbank.org.
  2. ^ a b c "Member Countries". World Bank Group. Retrieved 3 June 2016.
  3. ^ "U.S. Businessman Ajay Banga Approved to Lead World Bank". scroll.in. Retrieved 19 June 2023.
  4. ^ "SBI MD Anshula Kant appointed as MD, CFO of World Bank Group". antopedia.org. Retrieved 13 July 2019.
  5. ^ "Board of Directors". Web.worldbank.org. Retrieved 31 May 2010.[permanent dead link‍]
  6. ^ "UN System". Retrieved 17 February 2024.
  7. ^ "RDSI Sign Gold". United Nations Development Group. Retrieved 27 May 2012.[dead link‍]
  8. ^ "Fiscal year data". World Bank. Retrieved 7 December 2021.
  9. ^ The World Bank, Press release: "World Bank Group Commitments Rise Sharply in FY14 Amid Organizational Change", July 1 2014, http://www.worldbank.org/en/news/press-release/2014/07/01/world-bank-group-commitments-rise-sharply-in-fy14-amid-organizational-change
  10. ^ "2015 Development Policy Financing Retrospective – Results and Sustainability". worldbank.org.
  11. ^ World bank – structured financial products (PDF). Washington: World bank. 5 April 2016. Archived (PDF) from the original on 9 October 2022. Retrieved 5 November 2018.
  12. ^ "Climate Solutions that Work". World Bank. Retrieved 26 May 2024.
  13. ^ "Member Countries". World Bank. Retrieved 10 December 2019.
  14. ^ "Taiwan, China | Data".
  15. ^ FAQ-About The World Bank Archived 12 March 2013 at the Wayback Machine, Worldbank.org.
  16. ^ The United Nations system: Principal Organs Archived 3 March 2016 at the Wayback Machine, Colorado.edu.
  17. ^ a b c d e f "About Us" Archived 11 June 2012 at the Wayback Machine, wordbank.org, accessed 30 May 2007.
  18. ^ US Blocks Stronger African Voice At World Bank Retrieved 7 August 2007.
  19. ^ Clark Richard and Lindsay Dolan. "Pleasing the Principal: U.S. Influence in World Bank Policymaking." 2021. American Journal of Political Science 65(1): 36-51. https://doi.org/10.1111/ajps.12531
  20. ^ "More Chinese at helm of international organisations". The Straits Times. Archived from the original on 3 October 2018. Retrieved 3 October 2018.
  21. ^ "Indonesia's president appoints World Bank's Sri Mulyani as finance minister". The Star. Retrieved 3 October 2018.
  22. ^ "Anshula Kant".
  23. ^ "Striking a Better Balance", worldbank.org, January 2004, accessed 30 May 2007.
  24. ^ "Striking a Better Balance", Archived 13 November 2005 at the Wayback Machine, "World Bank Group Management Response" to "The World Bank Group and Extractive Industries: The Final Report of the Extractive Industries Review: World Bank Group Management Response",17 September 2004, accessed 30 May 2007.
  25. ^ "Oil, Gas, Mining, and Chemicals" (follow up report)[permanent dead link‍], accessed 30 May 2007.
  26. ^ "The Energy Tug of War" Archived 30 September 2007 at the Wayback Machine, The New Internationalist, No. 373 (November 2004), accessed 30 May 2007.
  27. ^ "World Bank Operational Manual: Operational Policies: Indigenous Peoples" (Op 4.10), worldbank.org, July 2005, accessed 30 May 2007. Archived version from 7 May 2008
  28. ^ a b See Joseph Stiglitz, The Roaring Nineties, Globalization and Its Discontents, and Making Globalization Work.
  29. ^ "Microsoft Word - IFI Watch Bangladesh_Vol_1 No_1.doc" (PDF). Archived from the original (PDF) on 8 November 2004. Retrieved 31 May 2010.
  30. ^ Perkins, John (2004). Confessions of an Economic Hit Man. Plume. p. 259. ISBN 0-452-28708-1.
  31. ^ Korinna Horta (February 2013). "Most relevant review". dandc.eu.
  32. ^ "Integrity Vice Presidency - The Investigative Process". Web.world bank.org. Archived from the original on 10 December 2011. Retrieved 27 May 2012.
  33. ^ Mychalejko, Cyril (23 January 2014). "Beyond Reform: It's Time to Shut Down the World Bank". Upside Down World. Retrieved 5 April 2014.
  34. ^ Malkin, Elisabeth (10 January 2014). "World Bank Is Criticized for Honduran Loan". The New York Times. Retrieved 5 April 2014.
  35. ^ Allen-Ebrahimian, Bethany (27 August 2019). "The World Bank Was Warned About Funding Repression in Xinjiang". Foreign Policy. Retrieved 28 August 2019.
  36. ^ Allen-Ebrahimian, Bethany (11 December 2019). "Scoop: China tried to get World Bank to fund surveillance in Xinjiang". Axios. Retrieved 14 August 2020.
  37. ^ Allen-Ebrahimian, Bethany (14 August 2020). "Lawmakers demand answers from World Bank on Xinjiang loan". Axios. Retrieved 14 August 2020.
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