The World Bank is an international development organization owned by 187 countries. The role it provides is to reduce poverty by giving money to the national authorities of its poorer members to improve their economies and to improve the standard of living of their citizens. It also owns one of the world’s largest research centers in development. It has specialized departments that use this knowledge to advise countries in areas like health, education, nutrition, finance, justice, law and the environment. The World Bank Institute, also another crucial part of it, offers training to government and other officials in the world through local research and teaching institutions to improve their well-being.
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Table of Contents
The History Behind World Bank
The world bank was established in 1944. It was created to help rebuild Europe and Japan after the world war took place. Back then, the official name of it was International Bank for Reconstruction and Development. It had 38 members when it first started their operations.
Do we Really Require a World Bank?
The world’s many developing and poor countries will face many problems without the help of the World Bank. They wouldn’t have bigger finance for their much-needed projects. These projects help them to establish a parameter for education, health, employment programs and many more required aspects. So the benefits of the World Bank are enormous to sustain a stable economy.
Loans and the World Bank
WOrld Bank lends money to many developing and third world countries at lower interest rates than other commercial Banks. Also, it lends money to the poorest countries who cannot often find other loan sources. The countries that borrow money from the bank also get a much longer time to repay their money than other commercial banks. Alldocumentspsd is a website which offers all the digital documents in template files.
How decisions are made
The system of the Bank runs like a giant cooperative, where its members are shareholders and is operated for the benefits and improvements of those using its services. The number of shares a country has is based roughly on the size of its economy. The United States is the largest single shareholder, followed by Japan, Germany, the United Kingdom, and France. The rest of the shares are divided among the other member countries. A Board of Governors represents the Bank’s government shareholders. Generally, these governors are country ministers, such as Ministers of Finance or Ministers of Development. The governors are the ultimate policymakers in the World Bank. They meet once a year at the Bank’s Annual Meetings. At the Annual Meetings, all of the Bank’s and International Monetary Fund ‘s (IMF) governors decide how best to address global development issues and decide what the world should focus on in the upcoming year (and near future) to help reduce poverty in the world. Since the governors meet only once a year, they give specific duties to their Executive Directors, who work on-site at the Bank. Every member government is represented by an Executive Director. The five largest shareholders (France, Germany, Japan, the United Kingdom and the United States) appoint an executive director each, while other member countries are represented by 19 Executive Directors. The Bank’s 24 Executive Directors oversee the Bank’s business, including approving loans and guarantees, new policies, the administrative budget, country assistance strategies, and borrowing and financial decisions.
Source of money
The Bank borrows the money it lends. It has good credit because it has large, well-managed financial reserves. This means it can borrow money at low interest rates from capital markets all over the world to then lend money to developing countries on very favorable terms. The Bank’s financial reserves come from several sources – from funds raised in the financial markets, from earnings on its investments, from fees paid in by member countries, from contributions made by members (particularly the wealthier ones) and from borrowing countries themselves when they pay back their loans. The Bank lends only a portion of the money needed for a project. The borrowing country must get the rest from other sources or use its own funds. Eventually, since the country has to pay back its loans, it ends up paying for most, if not all, of the project itself.
