Objective & Function of the World Bank (WB)

World Bank

Establish: July 1945

Headquarter: Washington, D.C., U.S.

Membership: 189 countries (IBRD), 173 countries (IDA)

President: click here

Website: http://www.worldbank.org/

The function of the World Bank:

  1. Granting reconstruction loans to war-devastated countries.
  2. Granting developmental loans to underdeveloped countries.
  3. Providing loans to governments for agriculture, irrigation, power, transport, water supply, educations, health, etc
  4. Providing loans to private concerns for specified projects.
  5. Promoting foreign investment by guaranteeing loans provided by other organizations.
  6. Providing technical, economic and monetary advice to member countries for specific projects
  7. Encouraging industrial development of underdeveloped countries by promoting eco­nomic reforms.

The objective of the World Bank:

  1. To provide long-run capital to member countries for economic reconstruction and development
  2. Induce long-run capital investment for assuring Balance of Payments (BoP) equilibrium and balanced development of international trade
  3. To provide the guarantee for loans granted to small and large units and other projects of member countries
  4. Ensure the implementation of development projects so as to bring about a smooth transference from a war-time to peace economy
  5. To promote capital investment in member countries by the following ways –
    1. To provide a guarantee on private loans or capital investment.
    2. If private capital is not available even after providing a guarantee, then IBRD provides loans for productive activities on considerate conditions.

Purpose of the World Bank

  1. Reduce poverty.
  2. Develop an investment-environment.
  3. Increase job opportunities.
  4. Work towards sustainable economic growth.
  5. Promote socioeconomic growth through investment.
  6. Strengthen governments with education.
  7. Empower the development of legal and judicial systems, business opportunities and protection of individual rights.
  8. Benefit from microcredit as well as large corporate undertakings.
  9. Combat corruption.
  10. Promote research and training opportunities
  11. Provides low-interest loans,
  12. Interest-free credits
  13. Grants to include investments in education, Health, Public Administration, Infrastructure,
  14. Financial and private sector development,
  15. Agriculture, Environmental and natural resource management.

There are 5 World Bank Groups:

  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)

International Bank for Reconstruction and Development (IBRD)

The IBRD, the original arm of the WB, offers assistance to middle income and poor but creditworthy countries and it also works as an umbrella for more specialized bodies under the World Bank.

International Development Association (IDA)

The IDA offers loans to the world’s poorest countries. These loans come in the form of “credits,” and are essentially interest-free. They offer a 10-year grace period and hold a maturity of 35 years to 40 years.

International Finance Corporation (IFC)

The IFC works to promote private sector investments by both foreign and local investors. It provides advice to investors and businesses and it offers normalized financial market information through its publications, which can be used to compare across markets. The IFC also acts as an investor in capital markets and will help governments privatize inefficient public enterprises.

Multilateral Investment Guarantee Agency (MIGA)

The MIGA supports direct foreign investment into a country by offering security against the investment in the event of political turmoil. These guarantees come in the form of political risk insurance, meaning that MIGA offers insurance against the political risk that an investment in a developing country may bear.

International Centre for Settlement of Investment Disputes (ICSID)

The ICSID facilitates and works towards a settlement in the event of a dispute between a foreign investor and a local country.

IMPORTANT QUESTION:

Q: Goals of World Bank includes

  1. promotion of foreign investment
  2. promotion of international trade
  3. facilitation of capital investment
  4. all of the above

Q. First country who has received the loan from World Bank is

  1. United Kingdom
  2. Russia
  3. France
  4. Germany

Q. Organization which is not a member of World Bank Group is

  1. International Monetary Fund
  2. International Finance Corporation
  3. International Development Association
  4. International Bank for Development and Reconstruction

Q. World Bank is a recognized member of

  1. United Nations Development Council
  2. United Nations Development Group
  3. United Nations Security Council
  4. United Nations General Assembly

Q. International financial institution ‘World Bank’ was founded in

  1. October 1948
  2. April 1949
  3. July 1944
  4. May 1945

Q. What is the other name of World Bank

  1.  International Monetary Fund
  2. International Bank for Development
  3. ASIAN Bank
  4. None of them

Q. How many members the World Bank currently has?

  1. 130
  2. 189
  3. 175
  4. 188

Q. The World Bank has its headquarters in _____________.

  1. Paris
  2. Washington, DC
  3. Hague
  4. India

If you feel any mistake in the answer to any question or there is an update about this post, please let us know by leaving a comment in the comment box below.


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