The World Bank provides over $30 billion in assistance to developing and transition countries every year.
The Bank’s projects and policies affect the lives and livelihoods of billions of people worldwide – sometimes for the better, but often in controversial and problematic ways.
The World Bank is restructuring the way that it applies environmental and social safeguards to its investments, which will affect investors and governments worldwide. Click here to learn more about the Safeguards Review.
The World Bank is not a bank in the common sense of the word. A single person cannot open an account or ask for a loan. Rather, the Bank provides loans, grants and technical assistance to countries and the private sector to reduce poverty in developing and transition countries.
The World Bank Group is actually comprised of five separate arms. Two of those arms – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) work primarily with governments and together are commonly known as “the World Bank”. Two other branches – the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) – directly support private businesses investing in developing countries. The fifth arm is the International Center for Settlement of Investment Disputes (ICSID), which arbitrates disagreements between foreign investors and governments. This webpage outlines key features of the two arms that are now collectively referred to as the World Bank: IBRD and IDA.
People and communities have a right to understand what the World Bank is doing in their country, and participate in and influence the development of Bank projects and policies. Bank Information Center activities to promote these goals include:
- investigating problematic Bank-funded projects that are negatively impacting people and the environment
- participating in World Bank policy reviews, and promoting increased transparency, accountability and public participation in the institution’s operations
- tracking thematic issues such as human rights, climate change and governance, constantly challenging and expanding the dominant discourse around these important topics
- providing hard-to-obtain information about the Bank to concerned individuals and organizations, thus expanding access to and understanding of the institution and its impacts
The World Bank is owned by 188 member governments. Each member government is a shareholder of the Bank, and the number of shares a country has is based roughly on the size of its economy. This “one-dollar-one-vote” structure affords richer countries greater power in decisions-making processes at the institutions than poor, borrowing countries.
The World Bank organizes its operations primarily through Vice-Presidential Units. Six regional vice-presidencies control a large-degree of decision making on Bank operations within their own regions: Africa, East Asia & Pacific, Europe & Central Asia, Latin America & the Caribbean, Middle East & North Africa, and South Asia. Other vice presidencies include “Network Vice Presidential Units”-responsible for certain cross-cutting issue areas such as the financial sector or private sector development. The rest cover such areas as external affairs, development economics, legal, and human resources.
Organizational Chart of the World Bank, effective January 1, 2013 (World Bank website)
The World Bank President controls appointments in four general categories: within his own office, at the Vice-Presidential level, at the Country Director level, and to assist with special initiatives.
Turnover of some key staff is common when a new President takes office, as is slight remodeling of the institution.
Board of Governors
Ultimate decision-making authority rests with the Board of Governors, to which each member country appoints a representative. For most countries, the Governor is the Minister of Finance (or national equivalent). The Board of Governors makes key determinations on strategic direction, membership, capital stock, budgets, and distribution of income. The Board of Governors meet once a year at the IMF/World Bank Annual Meetings to review and set broad policies and priorities.
IBRD and IDA Governors (World Bank website)
Board of Executive Directors
The Board of Directors is made up of Executive Directors, representing all member countries of the World Bank. The five largest shareholders are entitled to appoint their own representatives: United States, Germany, France, Japan, and the United Kingdom. Three “single constituency” Board chairs also have their own seat: the Peoples Republic of China, the Russian Federation, and Saudi Arabia. Sixteen Board chairs are divided among the remaining member governments. All sub-Saharan Africa countries are represented by just three Executive Directors.
The Board operates largely behind closed doors, without public access to its deliberations or details about its decisions. Full Board meetings are held at least twice a week (currently on Tuesday and Thursday) to approve all World Bank Group financing and to monitor the Bank Group’s day-to-day work. Smaller Board committees meet almost daily.
Audit Committee: advises the Board on financial management, corporate governance, and oversight issues;
Budget Committee: considers budget issues, business processes, administrative policies, and standards;
Personnel Committee: advises Board on compensation and other significant personnel policies;
Committee on Development Effectiveness (CODE): advises Board on operations, policy evaluation and development, and development effectiveness;
Committee on Governance and Executive Directors’ Administrative Matters (COGAM): advises Board on issues of governance, including measures to strengthen capacity of Executive Director offices of developing countries
Civil Society groups concerned about the Bank’s policies often engage directly with CODE members given their role in making recommendations to the Board on the development of, and public consultations on, operational policies and strategies.
Development Committee website (World Bank website)
Donor countries appoint Deputies to represent and negotiate their interests during the process. Although not a formal governing structure of the Bank, the Deputies decide on several pertinent issues related to IDA countries, including prescribing policy reforms, benchmarks, and conditions for IDA borrowers during IDA replenishment negotiations.
U.S. Government Oversight (BIC website)
Complaint and Accountability Mechanism: The Inspection Panel
The World Bank’s mission is to reduce poverty – an important commitment to which the Bank should be held and against which its activities should be evaluated. In its first year of operation, 1946, the Bank lent less than $500 million. Today, the World Bank provides $60 billion annually for activities ranging from agriculture to trade policy, from health and education to energy and mining.
The World Bank is among the largest sources of public financing in the world. However its various roles as lender, knowledge broker, and gatekeeper to development finance collectively serve another purpose: to steer investor dollars and aid flows to targeted countries and sectors. The poverty focus of these investments is often questionable.
The World Bank as lender
World Bank lending can take the form of loans or grants, and the poorest countries often receive both. In recent years, the Bank has increased the proportion of its financing provided through grants.
The Bank typically requires certain actions of borrowing countries in advance of loan/grant approval and/or in the course of a project’s implementation – known as “conditions” or “conditionality.” Conditions can range from requiring a government to privatize its state-owned companies or adopt lower trade tariffs, to mandating new budget and procurement procedures. The Bank’s imposition of controversial conditions on borrowing governments has been heavily criticized over the years, as a violation of a country’s sovereignty and an undemocratic way to force reforms that can have substantial consequences on people and planet.
The World Bank as knowledge broker
The World Bank as gatekeeper to development finance
While IBRD has developed a large range of lending “products,” IBRD loans generally take one of two forms: investment lending for specific projects (roads, dams, etc.) or adjustment lending conditioned on structural and policy reforms by the borrower. IBRD adjustment lending has ranged from 35-64 percent of total commitments over the past five years despite Bank policy not to exceed a 25 percent cap.
IBRD is financed primarily by selling bonds to private investors in international capital markets, backed up by the pledges of its member governments. Upon joining the IBRD, member governments must “subscribe” to a portion of the Bank’s capital stock, in effect promising to purchase a specified number of shares. Members are required to purchase only a small portion of their subscription (“paid-in capital”) while the remaining portion (“callable capital”) remains an outstanding pledge (which Bank has never needed to request). With capital backing from its member governments, the IBRD is able to raise significant funds on international capital markets at preferred “AAA” credit rates and then lend those funds to borrowers at rates slightly below those offered by commercial lenders.
Conservative financial and lending policies and practices instill a high degree of investor confidence in IBRD securities. These policies and practices also instill a high degree of discipline in the IBRD’s relations to its borrowers. These policies and practices include:
- All loans are made directly to, or guaranteed by, a member country of IBRD.
- IBRD is recognized by the major credit rating agencies to enjoy a preferred creditor status with its borrower-shareholders, in effect, putting the IBRD first in line for debt repayment.
- Since its inception in 1945, IBRD has never written off a loan.
- The IBRD freezes loan approvals and disbursements if a country fails to pay obligations on time.
- Strict limits are set on loan concentration in individual countries.
- It is IBRD practice not to reschedule interest or principal payments on its loans (though this does occur from time to time).
- The IBRD has made a profit every year of its existence.
According to the World Bank’s website, the IBRD is “committed to make further improvements to the services it provides its members.” To meet the growing demands of middle-income countries, the IBRD is “overhauling financial and risk management products, broadening the provision of free-standing knowledge services and making it easier for clients to deal with the Bank.”
To be eligible, IDA borrowers must (a) lack sovereign creditworthiness, (b) have a per capita income below a certain line, and (c) must meet certain “performance” criteria set by the World Bank.
IDA loans, known as “credits” have 20, 35, or 40-year repayment periods with a 10-year grace period on repayment of principal. IDA credits do not carry interest charges per se, but do carry a .75 percent “service charge” on disbursed funds (no grace period on this fee). In the past several years IDA has increasingly provided a portion of its funding in the form of grants.
IDA is funded through three main sources: reflows from previous loans, transfers from IBRD net income, and contributions from IDA donors. However, with the implementation of the Multilateral Debt Relief Initiative (MDRI), some internal resources are no longer available and will be replaced by donor contributions under the MDRI replenishment (IMF website).
IDA donors come together every three years to negotiate the amount of new resources required to replenish IDA’s lending program and to discuss lending policies and priorities. The IDA replenishment process provides a degree of influence on setting development priorities by the IDA Deputies.
IDA lending flows to an immense array of programs and projects, from basic health and education provision to economy-wide adjustment operations, from water supply and sanitation to oil, gas, and mining projects. The bulk of IDA lending supports individual investment projects. In recent years IDA has become, according to the Bank, “the single largest source of donor funds for basic social services to the poorest countries.”
The Operational Manual on the World Bank website includes all Operational Policies, Bank Procedures, Good Practices and Operational Directives. Link to the Table of Contents to find specific policies.
Environmental and Social Policies
The World Bank’s ten environmental and social policies are known as Safeguard Policies. Concerted grass-roots activism, NGO advocacy efforts, and shareholder pressure pushed the World Bank to adopt policies that require varying degrees of due diligence in addressing environmental and social impacts of MDB-financed projects. For example, the Bank established a policy on involuntary resettlement in 1980, and in 1982 it established a policy on “Tribal People in Bank-Financed Projects.” While the World Bank had adopted general environmental guidelines in the 1970s, it was not until 1987 before it instituted mandatory environmental review procedures and 1989 before it had a formal environmental assessment policy.
Information Disclosure Policies
People have the right to know what is being planned for their communities in order to make informed decisions about development processes that affect their lives. The World Bank Information Disclosure Policy details: principles of disclosure; exceptions to disclosure; routine disclosure; ad request-driven disclosure.
From the perspective of communities impacted by Bank projects and programs, mandatory policies must establish minimum “do no harm” protections and provide the means for holding these institutions accountable for their actions. Citizens may file claims of harm at the World Bank Inspection Panel for perceived policy violations.
Tools for Activists: An Information and Advocacy Guide to the World Bank Group
Information Disclosure Policy
The World Bank first adopted an Information Disclosure Policy in 1994, and has updated it several times since. The Policy details: principles of disclosure; exceptions to disclosure; routine disclosure; ad request-driven disclosure.
Useful World Bank Websites
Much of the information about World Bank Group operations is routinely available through the World Bank, IFC and MIGA websites.
- The Projects Database links visitors to information on over 9000 World Bank projects, including relevant project documents.
- The Document Database links visitors to approximately 27,000 World Bank public documents.
- World Bank Country Pages provide information on current projects and priorities in borrowing countries, and link visitors to relevant country and project documents.
- The World Bank’s Monthly Operational Summary includes brief information on projects in preparation.
- The Infoshop’s New Documents webpage lists newly released operational documents.
- Visit the World Bank’s newsletter sign-up page to begin receiving updates on a number of issues.
Public Information Centers
The World Bank has a Public Information Center (PIC) in almost every borrowing country. PICs are places for the public to access information about World Bank operations.
PICs should provide the following:
- Direction on how to acquire information on Bank activities and Bank documents in local languages
- Publicly available Bank documents and publications, including those regarding projects in that country
- Adequate and accessible facilities with at least one computer with internet access
- Many PICs also provide a reference library with government and NGO publications on economic, statistical, and development topics, and conduct outreach programs to raise awareness about Bank operations and to disseminate information locally.
Making requests to the InfoShop:
The WBG’s main Public Information Center is called the Infoshop, and it is located in Washington, DC. Any information not available through the World Bank, IFC or MIGA website can be requested through the Infoshop by email, fax, telephone or mail, at the addresses listed below. Information about the IFC operations may also be requested from the IFC’s Corporate Relations Unit at the addresses listed below.
- World Bank Group InfoShop
1818 H Street, NW
Washington, DC 20433 USA
Tel.: +1-202-458 5454
Fax.: +1-202-522 1500
- International Finance Corporation
Corporate Relations Unit
2121 Pennsylvania Avenue, NW
Washington, DC, 20433 USA
Email addresses listed at: www.ifc.org/contacts
Tips on making a request:
- Be specific
- Start local. Contact the Bank office in your country first.
- Put your request for information in writing.
- If your request is denied, ask for a written explanation.
- Be persistent
To request information that’s more than 10 years old, contact the WBG archives department.
Annual & Spring Meetings
The Board of Governors of the World Bank and the IMF hold an Annual Meeting of their member governments in the fall of each year. The joint Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee are also officially convened. The meetings are held at the headquarters in Washington, DC, two of every three years; every third year they are hosted by another member country.
Each spring, the joint Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee hold meetings to discuss progress on the work of the Bank and Fund.
Connect to other networks working on these issues through the links below.