1. Unit 27. The World Bank

2. I. What is the world bank?

3. A. Background of the World Bank The World Bank refers to the International Bank for Reconstruction and Development (IBRD- 国际复兴与开发银行 ) and its affiliates, the International Development Association (IDB- 国 际开发署 ), the International Finance Corporation (IFC- 国际金融 公司 ) and the Multilateral Investment Guarantee Agency (MIGA- 多边投资担保机构 ). The world bank is to help raise standards of living in developing countries by channeling financial resources to them from developed countries.

4. B. Operations of IBRD The IBRD, whose capital is subscribed by its member countries, finances its lending operations primarily from its own borrowings in the world capital markets. A substantial contribution to the IBRD’s resources also comes from its retained earnings ( 保留盈余 ) and the flow of repayments on its loans. IBRD loans generally have a grace period ( 宽限期 ) of 5 years and are repayable over 15 to 20 years. They are directed toward developing countries at more advanced stages of economic and social growth. The interest rate IBRD charges on its loans is calculated in accordance its cost of borrowing.

5. C. Basic Rules Govern the Operations of IBRD It must lend only for productive purposes and must stimulate economic growth in the developing countries in which it lends. It must pay due regard to the prospects of repayment. Each loan is made to a government or must be guaranteed by the government concerned. The use of loans can not be restricted to purchases in any particular member country, and the IBRD’s decisions to lend must be based on economic considerations alone.

6. D. The Use of the World Bank’s Loans While the World Bank has traditionally financed all kinds of infrastructure, such as roads and railways, telecommunications, and port and power facilities, its development strategy emphasizes investments that can directly affect the well-being of the masses of poor people of developing countries by making them more productive and by integrating them as active partners in the development process. The bank’s efforts to reduce poverty across sectoral lines and include investments to improve education, ensure environmental protections, expand economic opportunities for women, strengthen birth control, health, and nutrition services, and develop the private sector. The bank’s support of economic restructuring in many of its borrowing member country is based on the preconditions for the knowledge of restoring economic growth, the cornerstone of successful development and poverty reduction is structural adjustment.

7. II. IDA IDA was established in 1960 to provide the assistance for the same purposes as the IBRD, but primarily in the poorer developing countries. The funds used by IDA come mostly in the form of subscriptions, general replenishments from IDA’s more industrialized and developed members, and transfers from the net earnings of the IBRD. The terms of IDA’s credits, which are traditionally made only to governments, are ten-year grace period ( 宽限期 ), thirty-five or forty-year maturities, no interests.

8. III. IFC IFC was established in 1956. Its function is to assist the economic development of less-developed countries by promoting growth in the private sector of their economies and helping to mobilize domestic and foreign capital for this purpose. Membership in the IBRD is a prerequisite for the membership in the IFC, which totals 146 countries now. legally and financially, the IFC and IBRD are separate entities. The IFC has its own operating and legal staff, but relies on the IBRD for administrative and other services.

9. IV. MIGA MIGA was established in 1988, has a specialized mandate: to encourage equity investment and other direct investment flows to developing countries through the mitigation of non-commercial investment barriers. To carry out this mandate, MIGA offers investors guarantee, against non- commercial risks, advises the developing member governments on the design and implementation of policies, programs and procedures related to foreign investments, and sponsors a dialogue between international business community and governments on investment issues.