world-bank

The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.

Mission of World Bank group

  1. To end extreme poverty: By reducing the share of the global population that lives in extreme poverty to 3 percent by 2030.
  2. To promote shared prosperity: By increasing the incomes of the poorest 40 percent of people in every country.

The organizations in the group  are, 

  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)
  6. IBRD, IFC and IDA are Specialized Agencies of the UN. ICSID and MIGA are not Specialized Agencies.

The International Bank for Reconstruction and Development

  • The International Bank for Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries.
  • As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges. 
  • It was Created in 1944 to help Europe rebuild after World War II, IBRD joined with IDA for the poorest countries, to form the World Bank.  
  • They work closely with all institutions of the World Bank Group and the public and private sectors in developing countries to reduce poverty and build shared prosperity.
  • IBRD supports government efforts to strengthen public financial management as well as improve the investment climate, address service delivery bottlenecks, and strengthen policies and institutions.
  • Source of funding: IBRD raises most of its funds in the world's financial markets. IBRD has maintained a triple-A rating since 1959. This high credit rating allows it to borrow at low cost and offer middle-income developing countries access to capital on favorable terms .IBRD earns income every year from the return on its equity and from the small margin it makes on lending. 

About IDA:

  • The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. 
  • Overseen by 173 shareholder nations, IDA aims to reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.
  • IDA complements the World Bank’s original lending arm - the International Bank for Reconstruction and Development (IBRD). IBRD was established to function as a self-sustaining business and provides loans and advice to middle-income and credit-worthy poor countries. 
  • IDA lends money on concessional terms. This means that IDA credits have a zero or very low interest charge and repayments are stretched over 30 to 38 years, including a 5- to 10-year grace period. IDA also provides grants to countries at risk of debt distress.

About ICSID:

  • ICSID is the world’s leading institution devoted to international investment dispute settlement. It has extensive experience in this field, having administered the majority of all international investment cases. 
  •  ICSID is an independent, depoliticized and effective dispute-settlement institution. 
  • States have agreed on ICSID as a forum for investor-State dispute settlement in most international investment treaties and in numerous investment laws and contracts.
  • ICSID was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). 
  • The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the World Bank to further the Bank’s objective of promoting international investment.
  • Its availability to investors and States helps to promote international investment by providing confidence in the dispute resolution process. 
  • It is also available for state-state disputes under investment treaties and free trade agreements, and as an administrative registry.
  • ICSID provides for settlement of disputes by conciliation, arbitration or fact-finding. 
  • The ICSID process is designed to take account of the special characteristics of international investment disputes and the parties involved, maintaining a careful balance between the interests of investors and host States. 
  • Each case is considered by an independent Conciliation Commission or Arbitral Tribunal, after hearing evidence and legal arguments from the parties. 
  • ICSID also promotes greater awareness of international law on foreign investment and the ICSID process. 

About IFC

  • IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused exclusively on the private sector in developing countries.
  • IFC apply their financial resources, technical expertise, global experience, and innovative thinking to help  partners overcome financial, operational, and other challenges.
  • IFC is also a leading mobilizer of third-party resources for projects. The  willingness to engage in difficult environments and leadership in crowding-in private finance enable  IFC to extend its footprint and have a development impact well beyond our direct resources.

The Multilateral Investment Guarantee Agency

  • The Multilateral Investment Guarantee Agency (MIGA) was created in 1988.
  • Its objective is  to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. 
  • MIGA fulfills this mandate by offering political risk insurance (guarantees)and non commercial risk prevention to investors and lenders.
  • As an honest broker, MIGA intervenes at the first sign of trouble to resolve potential investment disputes before they reach claim status, helping to maintain investments and keep revenues flowing. If MIGA is unable to prevent a claim, its strong balance sheet allows us to make prompt payments.
  • MIGA’s status as a member of the World Bank Group and its relationship with shareholder governments provides additional leverage in protecting investments.