Most of the topics covered related to World Bank

2. THE WORLD BANK
B

3. Presented By
Kashif Hussain

4. OUTLINE
 Introduction
 Brief History
 Mission
 Goals
 Objectives
 Structure
 Governance
 Functions
 Membership
 Institutions of World Bank
 Role of World Bank in Pakistan
 Resources of World Bank
 Conclusion
 References

5. Introduction
 An international organization dedicated to
providing financing, advice and research to
developing nations to aid their economic
advancement.

6. Brief History
 The World Bank Group (WBG) was established in 1944 to rebuild post-World
War II Europe under the International Bank for Reconstruction and
Development (IBRD) in Breton Wood Conference.
 The World Bank officially began operations in June 1946.
 Beginning in the mid-1950s, it played a major role in financing investments
in infrastructural projects in developing countries, including roads,
hydroelectric dams, water and sewage facilities, maritime ports, and
airports.
 Since its inception, the World Bank has lent and given grants and credits
worth $400 billion.
 The International Bank for Reconstruction and Development (IBRD),
established in 1945

7. Cont………
 The International Finance Corporation (IFC), established in 1956
 The International Development Association (IDA), established in 1960
 the International Centre for Settlement of Investment Disputes (ICSID)
 The Multilateral Investment Guarantee Agency (MIGA), established in
1988.

8. Mission
 The World Bank Group’s mission is to reduce poverty and encourage
economic growth and thereby contributing to the achievement of the
Millennium Development Goals. Through its five institutions, the
World Bank Group works in more than 100 developing economies,
providing loans, grants, policy advice, and technical assistance to
improve living standards and eliminate poverty.

9. Goals
 Eradicate extreme poverty and hunger
 Achieve universal primary education
 Promote gender equality and empower women
 Reduce child mortality
 Improve maternal health
 Combat HIV/AIDS, malaria and other diseases
 Ensure environmental sustainability
 Develop a global partnership for development

10. Objectives
 To assist in the reconstruction and development of territories of members by
facilitating the investment of capital for productive purpose.
 To promote private investment by means of guarantee or participation in loans
and other investments made by private investors.
 When private capital is not available on reasonable terms, to supplement
private investment by providing on suitable conditions finance for productive
purpose out of its own capital funds raised by it and its other resources.
 To promote the long-range balanced growth of international trade and the
maintenance of equilibrium in balances of payments by encouraging
international investment for the development of the productive resources of
members, thereby assisting in raising productivity, the standard of living, and
conditions of labor in their territories.

11. Cont….
 To arrange the loans made or guaranteed by it in relation to international loans
through other channels so that the more useful and urgent projects, large and
small alike, will be dealt with first.
 To conduct its operations with due regard to the effect of international
investment on business conditions in the territories of members and in the
immediate post war years, to assist in bringing about a smooth transition from a
war time to peace time economy.

12. Structure of WB

13. Governance
 It is directed by board of governors composed of one representative from each
member country, and the governors direct the IBRD based on weighted voting rights
that are determined by each country's agreed annual contributions to the World
Bank.
 The United States is the largest contributor and has the most weighted voting power
 Twenty-four executive directors oversee the daily operations of the World Bank,
including five permanent spots given to the United States, Japan, Great Britain,
Germany, and France.
 Twenty-four executive directors oversee the daily operations of the World Bank,
including five permanent spots given to the United States, Japan, Great Britain,
Germany, and France.

14. Cont…..
 In total, the World Bank has more than 10,000 employees, spread out
over 100 offices around the world and headquartered in Washington,
D.C.

15. Functions of World Bank
 Granting reconstruction loans to war devastated countries.
 Granting developmental loans to underdeveloped countries.
 Providing loans to governments for agriculture, irrigation, power, transport, water
supply, educations, health, etc
 Providing loans to private concerns for specified projects.
 Promoting foreign investment by guaranteeing loans provided by other
organizations.
 Providing technical, economic and monetary advice to member countries for
specific projects
 Encouraging industrial development of underdeveloped countries by promoting
economic reforms.

16. Institutions of World Bank
 Hiroshi Naka is the current Vice President of World Bank while Dr. Jim
Yong Kim is the president.
A family of five international organizations that make leveraged loans to
poor countries:
1. International Bank for Reconstruction and Development (IBRD)
2. International Development Association (IDA)
3. International Finance Corporation (IFC)
4. Multilateral Investment Guarantee Agency (MIGA)
5. International Centre for Settlement of Investment Disputes (ICSID)

17. International Bank for Reconstruction and Development
(IBRD)
 IBRD offers loans, guarantees, and analytical and advisory services to middle-
income countries and creditworthy poorer countries.
 It provides its clients with access to capital on favorable terms in larger volumes,
with longer maturities and in a more sustainable manner than the market.
 IBRD raises most of its funding by selling bonds on the international capital
markets.

18. International Development Association (IDA)
 IDA provides grants and loans with 40 year maturity and no interest to the
poorest countries.
 IDA credits are granted to developing countries with a GDP per capita of less
than $1,135, and which do not – or only to a limited extend – have access to
commercial lending and IBRD loans.
 In the fiscal year of 2011 IDA made commitments amounting to $16.3 billion
for 228 new operations.

19. International Finance Corporation (IFC)
 IFC facilitates private investment in regions and sectors not otherwise favored by
private investors.
 IFC is the largest single publicly funded source of financing of investments in the
private sector in developing countries. It invests in and provides loans to private
enterprises.
 IFC invests in projects which are considered commercially sustainable, but cannot
obtain financing or technical assistance from other sources.

20. Multilateral Investment Guarantee Agency (MIGA)
 MIGA supports foreign investment in the developing countries by insuring against
non-commercial risks, such as political unrest, currency constraints etc.
 Through emission of guarantees, counseling and legal assistance, MIGA helps
developing countries to attract and retain private investment.

21. International Centre for Settlement of Investment
Disputes (ICSID)
 ICSID is an international organ for settlement of disputes arising in
connection with foreign investments in the member states of the Bank.
 It intermediates in investment disputes between a government and a private
foreign investor.

22. Membership of World Bank
 Currently IBRD has 188 Members Countries which is the Primary part of World Bank
 To become a member, however, a country must first join the International Monetary
Fund (IMF).
 The cost of a subscription to the World Bank is a factor of the quota paid to the IMF.
 There is an obligatory subscription fee, is equivalent to 88.29% of the quota that a
country has to pay to the IMF.
 A country is obligated to buy 195 World Bank shares (US$120,635 per share, reflecting
a capital increase made in 1988).
 0.60% must be paid in cash in U.S. dollars while 5.40% can be paid in a country's local
currency, in U.S. dollars, or in non-negotiable non-interest bearing notes.

23. Cont……..
 The 195 shares are Callable capital act as a reserve in World Bank .
 A country can subscribe a further 250 shares, which do not require payment at the time
of membership but are left as "callable capital.
 The president of the World Bank comes from the largest shareholder, which is the United
States, and members are represented by a Board of Governors
 The five largest shareholders - the U.S., U.K., France, Germany and Japan - each have an
individual ED, and the additional 19 EDs represent the rest of the member states as
groups of constituencies.
 China, Russia and Saudi Arabia have opted to be single country constituencies, which
mean that they each have one representative within the 19 EDs.

24. Resources of World Bank
IBRD Resources
IDA Resources

25. IBRD Resources
 IBRD issues bonds in international capital markets and provides loans,
guarantees, and other risk management products, as well as technical
assistance for economic reform projects and programs to middle-income
countries and creditworthy low-income countries.
 In fiscal 2014, it raised USDeq 51 billion by issuing bonds in 22 currencies.
 IBRD has AAA credit Rating
 IBRD’s equity comprises primarily paid-in capital and reserves.
 Subscribed capital is expected to increase by $87.0 billion, of which $5.1
billion will be paid in over a five-year period. As of June 30, 2014, the
cumulative increase in subscribed capital totaled $42.6 billion. Related paid-
in amounts in connection with the capital increase were $2.5 billion.

26. Cont……..
 Of fiscal 2013 allocable net income, the Board of Executive Directors approved
the addition of $147 million to the general reserve and recommended to the
Board of Governors the transfer of $621 million to IDA and the allocation of
$200 million to surplus.
 One summary measure of IBRD’s risk profile is the ratio of equity to loans,
which is closely managed in line with its financial and risk outlook. This ratio
stood at 25.7 percent as of June 30, 2014.
 As one of the pioneers of the green bond market and one of the largest issuers
of green bonds, IBRD has raised USDeq over $6.3 billion in 66 green bond
transactions denominated in 17 currencies since its first green bond was issued
in 2008.

27. Cont…..

28. IDA Resources
 IDA is financed largely by contributions from partner governments. Additional
financing comes from transfers from IBRD’s net income, grants from the
International Finance Corporation (IFC), and borrowers’ repayments of earlier IDA
credits.
 Every three years, partner governments and representatives of borrower countries
meet to agree on IDA’s strategic direction, priorities, and financing for the
subsequent three-year implementation period.
 During the IDA16 Replenishment amounted to 33.8 billion in Special Drawing Rights
(SDR) (equivalent to $50.8 billion). Of this amount, SDR 31.7 billion (equivalent to
$47.6 billion) was made available, including unqualified partner contributions of
SDR 16.7 billion (equivalent to $25.1 billion) from 46 countries and contributions to
the Multilateral Debt Relief Initiative (MDRI) of SDR 2.2 billion (equivalent to $3.3
billion).

29. Cont……
 IDA16 funding also included credit reflows of SDR 8.9 billion (equivalent to $13.4
billion); fully paid contributions from IBRD and IFC, including associated investment
income, of SDR 1.8 billion (equivalent to $2.7 billion); and balances carried forward
from prior replenishments of SDR 2.0 billion (equivalent to $3.0 billion).
 IDA16 special themes included crisis response, gender, climate change, and fragile
and conflict-affected situations
 The process for the IDA17 Replenishment (IDA17), which will cover fiscal years 2015–
17, was completed in December 2013. The record envelope of SDR 34.6 billion
(equivalent to $52.1 billion) represented an increase over IDA16 of 5.3 percent in
SDR terms (5.7 percent in U.S. dollar terms), as agreed upon at the final IDA16
pledging session.

30. Cont…….
 Forty-seven partners, three of which are new contributing partners, pledged SDR
17.3 billion (equivalent to $26.1 billion) in grants, of which SDR 0.6 billion
(equivalent to $0.9 billion) is the grant element from concessional partner loan
contributions.
 Contributions from World Bank Group resources, through transfers from IBRD and
IFC, including associated investment income, are planned at SDR 2.1 billion
(equivalent to $3.2 billion); such transfers are approved annually by the IBRD’s
Board of Governors and the IFC’s Board of Directors, based on evaluations of the
institutions’ annual results and financial capacities.

31. WORLD BANK AND PAKISTAN
 sustaining high and broad based growth, and improving
competitiveness
 improving governance
 improving lives and protecting the vulnerable

32. Significance of the topic “Role of World Bank
towards Developing economics: A case study for Pakistan
 The significance of the topic is because Pakistan is a Developing
Economy
 There are several development projects which are financially
supported by world bank
 Active projects 47
 Closed projects 275
 Dropped projects 32
 Projects in Pipeline 7

33. 7 Projects in Pipeline and commitment Amounts
in U.S. million $ for Pakistan
 Sindh Global Partnership for Education Project 66.0
 PK Sindh Public Sector Management Reform Project 50.0
 PK-Sindh Barrages Improvement Phase I Project 160.0
 PK: Sindh Agricultural Growth Project 76.4
 National Immunization Support Project 50.0
 Global Partnership for Education - Balochistan Education
Project 34.0
 Enhanced Nutrition for Mothers and Children 36.24

34.  Dasu Hydropower Stage I Project 588.4
 IDA Partial Credit Guarantee for Dasu Hydropower Phase-I Project
460.0
 Power Sector Reform: Development Policy Credit 600.0
 PK Fiscally Sustainable and Inclusive Growth DPC 400.0
 MDTF KP Emergency Roads Recovery Project 9.0
 MDTF KP Emergency Roads Recovery Project 9.1
 Pakistan: Punjab Public Management Reform Program 50.0
 Competitive Industries Project for Khyber Pakhtunkhwa 9.0
 Punjab Health Sector Reform Project 100.0
 Pakistan: Second Sindh Education Sector Project 400.0
47 Active Projects and commitment Amounts in
U.S. million $ for Pakistan year 2013-14

37. Criticism
 Participation with IMF
 Environmental and Social Concerns
 Over Burden of Debt
 An Agency of US and Collation powers

38. Conclusion
 It is not surprising that there is a clash of opinion over how aid is given.
Indeed, those that offer assistance are going to want to have a say in how
the loans are used and what kind of economic policies are fostered in a
country's developmental process. Many developing and poor nations,
however, are stuck in an enormous of debt and impoverishment, no
matter how much assistance they receive. Given this, we may need to
remember that the process of aid is also a developing state, in which both
the giver and the receiver should be helping each other reach a poverty-
free world.

39. References
 Investopedia (2013) What Is the World Bank [Online] Available from:
http://www.investopedia.com/articles/03/042303.asp [Accessed: May 12, 2015]
 Your Article Library (2013) World Bank: its Objectives and Functions [Online] Available
From: http://www.yourarticlelibrary.com/economics/world-bank-its-objectives-and-
functions/23534/ [Accessed: May 12, 2015]
 Preserve Article (2013) what are the objectives of World Bank? [Online] Available
From: http://www.preservearticles.com/201012291899/objectives-of-world-bank.html
[Accessed: May 12, 2015]
 Preserve Article (2013) what are the Functions of World Bank [Online] Available From:
http://www.preservearticles.com/2012022923911/what-are-the-functions-of-world-
bank.html [Accessed: May 12, 2015]

40. Cont……
 World Bank (2014) the Roles of IBRD and IDA [Online] Available From:
http://www.worldbank.org/en/about/annual-report/roles-resources [Accessed:
May 12, 2015]
 Pakistan Today (2014) IMF and World Bank’s restructuring agreement for
Pakistan [Online] Available From:
http://www.pakistantoday.com.pk/2014/11/15/comment/imf-and-world-banks-
restructuring-agreement-for-pakistan/ [Accessed: May 12, 2015]
 Madura (2009) International Financial Management McGraw-Hill Inc.