Subsidiaries of World Bank

22/12/2020 1 By indiafreenotes

It comprises two institutions: The International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).

World Bank Group

The World Bank Group is an extended family of five international organizations, and the parent organization of the World Bank, the collective name given to the first two listed organizations, the IBRD and the IDA:

  • International Bank for Reconstruction and Development (IBRD)
  • International Development Association (IDA)
  • International Finance Corporation (IFC)
  • Multilateral Investment Guarantee Agency (MIGA)
  • International Centre for Settlement of Investment Disputes (ICSID)

The World Bank’s activities are focused on developing countries, in fields such as, human development (e.g., education, health), agriculture and rural development (e.g., irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. loads, urban regeneration and electricity) 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 t e poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy.

For example, a loan to improve coastal environmental management may be linked to development of new environment institutions at national and local levels and to implementation of new regulations to limit pollution. The activities of the IFC and MIGA include investment in the private sector and providing insurance respectively.

Organizational Structure:

Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank Group. The Group’s headquarters in Washington, D.C. It is an international organization owned by member governments; although it makes profits, these profits are used to support continued efforts in poverty reduction.

Technically the World Bank is part of the United Nations system, 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 which depend on financial contributions to the organization.

As a result, the World Bank is controlled primarily by developed countries, while clients have almost exclusively been developing countries. Some critics argue that a different governance structure would take greater account of developing countries’ needs.

As of November 1, 2006, the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5% and the United Kingdom and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any such major change.

World Bank Group Agencies:

The World Bank Group consists of:

  1. The International Bank of Reconstruction and Development (IBRD), established in 1945, which provides debt financing on the basis of sovereign guarantees;
  2. The International Financial Corporation (IFC), established in 1956, which provides various forms of financing of without sovereign guarantees, primarily to the private sector;
  3. The International Development Association (IDA), established in 1960, which provides concessional financing (interest-free loans or grants), usually with sovereign guarantees;
  4. The Multilateral Investment Guarantee Agency (MIGA), established in 1988, which provides insurance against certain types of risks, including political risk, primarily to the private sector;
  5. The International Centre for Settlement of Investment Disputes (ICSID), established in 1966, which works with governments to reduce investment risk.

The term “World Bank” generally refers to the IBRD and IDA, whereas the World Bank Group is used to refer to the institutions collectively.

Governments can choose which of these agencies they sign up to individually. The IBRD has 185 member governments and other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of Governors meeting once a year. Each member country appoints a governor, generally its Minister of Finance.

On a daily basis the World Bank Group is run by a Board of 24 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.

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

The Bank also serves as one of several implementing agencies for the UN Global Environment Facility (GEF).