International Bank for Reconstruction and Development (IBRD) - A World Bank Initiative

Introduction:

The mission of the World Bank is defined by two goals
  1. To end extreme poverty by reducing the percentage of people living on less than $1.90 per day to no more than 3% globally by 2030; and 
  2. To promote shared prosperity in a sustainable manner by fostering income growth for the bottom 40% of the population of every developing country
To adhere its mission World Bank established subsidiaries which function as its arm to concentrate on particular areas as a focus. One such institution is IBRD ( International Bank for Reconstruction and Development)

What is IBRD?


  • The International Bank for Reconstruction and Development was established in the year 1944 to help Europe rebuild after World War II. Today, IBRD provides loans and other assistance to middle income countries primarily.
  • IBRD belongs to World Bank group. It works closely with the rest of the World Bank Group in order help developing countries reduce poverty, promote economic growth, and ultimately to build prosperity.
  • The institution constitutes of/ owned by the governments of its 189 member countries, which are represented by a 25-member board (5 appointed and 20 elected Executive Directors).
  • It provides financial resources, knowledge and technical services, and strategic advice to developing countries, including middle income and lower income countries which are credit-worthy.

The five largest of IBRD’s shareholders are

  • The United States of America(with 16.63% of the total voting power), 
  • Japan (7.19%), 
  • China (4.64%),
  • Germany (4.21%), and 
  • France and the United Kingdom (with 3.94% each)

Functions of IBRD

  • It supports long-term human and social development which private creditors do not finance.
  • Provides support in times of crises which preserves borrowers' financial strength, when poor people are most adversely affected.
  • IBRD promotes key policy and institutional reforms (such as safety or anti-corruption reforms)
  • Facilitates in Creation of a favorable investment climate to catalyze the provision of private capital
  • It also facilitates access to financial markets often at more favourable terms than member countries can achieve on their own


Services offered by IBRD

  • The World Bank works with middle income countries simultaneously as clients, shareholders, and global actors. As this association evolves, IBRD provides innovative financial solutions, including financial products (loans, guarantees, and risk management products and services) and knowledge and also advisory services (on a reimbursable basis also) at both the national and subnational levels to members (countries).
  • IBRD finances projects across all sectors and provides technical support and expertise at various stages of ongoing projects.
  • IBRD’s helps countries to build resilience to shocks by facilitating access to products that mitigate the negative impact of currency, interest rate, and commodity price volatility, natural disasters and extreme weather by innovative financial products and services.
  • Unlike commercial lending, it's (IBRD’s) financing not only supplies borrowing countries with needed funding/financing, but also serves as a vehicle for knowledge transfer and technical assistance globally.
  • Advisory services in the areas of public debt and asset management help governments, and development organizations build institutional capacity to protect and expand financial resources of nations.
  • It supports government efforts to strengthen not only public finance, but to also cater enhanced investment climate, other policy and institutional actions and address service delivery bottlenecks.
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