The international bank for reconstruction and development

The International Bank for Reconstruction and Development (IBRD)
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Introduction
The International Bank for Reconstruction and Development was created in 1944 to help Europe rebuild
after World War II. Today, IBRD provides loans and other assistance primarily to middle income
countries.
IBRD is the original World Bank institution. It works closely with the rest of the World Bank Group to
help developing countries reduce poverty, promote economic growth, and build prosperity.
IBRD is owned by the governments of its 188 member countries, which are represented by a 25-member
board of 5 appointed and 20 elected Executive Directors.
The institution provides a combination of financial resources, knowledge and technical services, and
strategic advice to developing countries, including middle income and credit-worthy lower income
countries. Specifically, IBRD:
 Supports long-term human and social development that private creditors do not finance.
 Preserves borrowers' financial strength by providing support in times of crisis, when poor people
are most adversely affected.
 Promotes key policy and institutional reforms (such as safety net or anti-corruption reforms).
 Creates a favorable investment climate to catalyze the provision of private capital.
 Facilitates access to financial markets often at more favorable terms than members can achieve on
their own.
Governance Structure
Management believes that effective financial risk management is critical for its overall operations.
Accordingly, the risk management governance structure is designed to manage the principal risks IBRD
assumes in its activities. The risk management governance structure supports Management in its oversight
function, particularly in coordinating different aspects of risk management and in connection with risks
that are common across functional areas.
General Governance
IBRD’s decision-making structure consists of the Board of Governors, Executive Directors, and the
President, Management and staff. The Board of Governors is the highest decision-making authority.
Governors are appointed by their member governments for a five-year term, which is renewable. The
Board of Governors may delegate authority to the Executive Directors to exercise any of its powers,
except for certain powers enumerated in IBRD’s Articles.
Board Membership
In accordance with the Articles, Executive Directors are appointed or elected every two years by their
member governments. The Board currently has 25 Executive Directors, who represent all 188 member
countries. Executive Directors are neither officers nor staff of IBRD. The President is the only member of
the Board from management, and he serves as a non-voting member and as Chairman of the Board.
The Board has established several committees. These include:

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 Audit Committee
 Budget Committee
 Committee on Development Effectiveness
 Committee on Governance and Executive Directors’ Administrative Matters
 Ethics Committee
 Human Resources Committee
The Board and its committees are in continuous session at the main IBRD offices in Washington DC, as
business requires. Each committee’s terms of reference establishes its respective roles and
responsibilities. As committees do not vote on issues, their role is primarily to serve the Board in
discharging its responsibilities. The Board is required to consider proposals made by the President on
IBRD’s loans and guarantees and on other policies that affect its general operations. The Board is also
responsible for presenting to the Board of Governors, at the Annual Meetings, audited accounts, an
administrative budget, and an annual report on operations and policies and other matters.
Audit Committee
The Audit Committee consists of eight Executive Directors. Membership in the Committee is determined
by the Board, based on nominations by the Chairman of the Board, following informal consultation with
Executive Directors.
Organizational Structure
The office of the Chief Risk Officer (CRO) is responsible for leading the risk management function at
IBRD, with primary oversight responsibility of financial and operational risks. In addition, the CRO
works closely with IFC, MIGA, and IDA’s management to review, measure, aggregate, and report on
risks and share best practices. The CRO also helps enhance cooperation between the entities and increase
knowledge sharing in the risk management function. The following three departments report directly to
the CRO:
 The Credit Risk Department identifies, measures, monitors, and manages country credit risk
faced by IBRD. By agreement with the Board, the individual country credit risk ratings are not
shared with the Board and are not made public. In addition, this department assesses loan
portfolio risk, determines the adequacy of provisions for losses on loans and other exposures, and
monitors borrowers that are vulnerable to crises in the near term. These reviews are taken into
account in determining the overall country programs and lending operations, and they are
included in the assessment of IBRD’s capital adequacy. Furthermore, whenever a new financial
product is being considered for introduction, this department reviews any implications for country
credit risk.
 The Market and Counterparty Risk Department is responsible for market, liquidity, and
counterparty credit risk oversight, assessment, and reporting. It does these in coordination with
IBRD’s financial managers responsible for the day-to-day execution of trades for the liquid asset
and derivatives portfolios within applicable policy and guideline limits. The department’s
responsibilities include establishing and maintaining guidelines, volume limits, and risk oversight
processes to facilitate effective monitoring and control; it also provides reports to the Audit
Committee and the Board on the extent and nature of risks, risk management, and oversight. The

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department is also responsible for ensuring effective oversight, which includes: i) maintaining
sound credit assessments, ii) addressing transaction and product risk issues, iii) providing an
independent review function, iv) monitoring market and counterparty risk in the investment,
borrowing and client operation portfolios, and v) implementing the model risk governance
framework.
 The Operational Risk Department provides direction and oversight for operational risk activities
by business unit partners in Finance and Technology and collaborates closely on such issues with
Legal and Human Resources. The department’s key operational risk management responsibilities
include (i) administering the Operational Risk 36 Committee (ORC) for IBRD, (ii) implementing
the operational risk management framework which is aligned with Basel principles and providing
direction to business unit partners to ensure consistent application (iii) assisting and guiding
business unit partners in identifying and prioritizing significant operational risks and enabling
monitoring and reporting of risks through suitable metrics (or risk indicators) and (iv) helping
identify emerging risks and trends through monitoring of internal and external risk events. The
department is also responsible for business continuity management, and enterprise risk
management functions.
IBRD’s administration is composed of the Board of Governors, the Executive Directors, the President,
other officers, and staff. All the powers of IBRD are vested in the Board of Governors, which consists of
a Governor and an Alternate Governor appointed by each member of IBRD, who exercise the voting
power to which that member is entitled. Each member is entitled to an equal number of basic votes
(representing 5.55 percent of the total voting power in aggregate) plus one vote for each share held. The
Board of Governors holds regular annual meetings. There are 25 Executive Directors. Five of these are
appointed, one by each of the five members having the largest number of shares of capital stock at the
time of such appointment (the United States, Japan, China, Germany, and France and the United
Kingdom (tied for fifth), and the remainder are elected by the Governors representing the other members.
The Board of Governors has delegated to the Executive Directors authority to exercise all the powers of
IBRD except those reserved to the Governors under the Articles. The Executive Directors function as a
board, and each Executive Director is entitled to cast the number of votes of the member or members by
which such person is appointed or elected.
The following is an alphabetical list of the Executive Directors of IBRD and the member countries by
which they were appointed or elected:
P.T.O

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IBRD’s Services
The World Bank Group works with middle income countries simultaneously as clients, shareholders, and
global actors. As this partnership evolves, IBRD is providing innovative financial solutions, including
financial products (loans, guarantees, and risk management products) and knowledge and advisory
services (including on a reimbursable basis) to governments at both the national and sub national levels.
IBRD finances projects across all sectors and provides technical support and expertise at various stages of
a project.
IBRD’s financial products and services help countries 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.
Unlike commercial lending, IBRD’s financing not only supplies borrowing countries with needed
financing, but also serves as a vehicle for global knowledge transfer and technical assistance.
Advisory services in public debt and asset management help governments, official sector institutions, and
development organizations build institutional capacity to protect and expand financial resources.
IBRD supports government efforts to strengthen not only public financial management, but to also
improve the investment climate, address service delivery bottlenecks, and other policy and institutional
actions.

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Capital Activities
As of June 30, 2015, IBRD had 188 member countries, with the top five accounting for 41% of the total
voting power. The percentage of shares held by members with credit ratings of AA and above was 41%.
The United States is IBRD’s largest shareholder, with 16.16% of total voting power. Accordingly, it also
has the largest share of IBRD’s uncalled capital, $40.5 billion, or 17.04% of total uncalled capital. Under
the Bretton Woods Agreements Act and other U.S. legislation, the Secretary of the U.S. Treasury is
permitted to pay approximately $7.7 billion of the uncalled portion of the subscription of the United
States, if called for use by IBRD, without need for further congressional action. The balance of the
uncalled portion of the U.S. subscription, $32.8 billion, has been authorized but not appropriated by the
U.S. Congress. Further action by the U.S. Congress is required to enable the Secretary of the Treasury to
pay any portion of this balance. The General Counsel of the U.S. Treasury has rendered an opinion that
the entire uncalled portion of the U.S. subscription is an obligation backed by the full faith and credit of
the U.S., notwithstanding that congressional appropriations have not been obtained with respect to certain
portions of the subscription.
Figure: Voting Power of Top Five Members as of June 30, 2015
How IBRD is Financed?
IBRD raises most of its funds in the world's financial markets. In fact, in these markets, IBRD is known
simply as the World Bank. This practice has allowed IBRD to provide more than $500 billion in loans to
alleviate poverty around the world since 1946, with its shareholder governments paying in about $14
billion in capital.
IBRD has maintained a triple-A rating since 1959. Its high credit rating allows it to borrow at low cost
and offer middle-income developing countries access to capital on favorable terms -- in larger volumes,
with longer maturities, and in a more sustainable manner than world financial markets typically provide.

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IBRD earns income every year from the return on its equity and from the small margin it makes on
lending. This pays for IBRD's operating expenses, goes into reserves to strengthen the balance sheet, and
provides an annual transfer of funds to IDA, the fund for the poorest countries.
Functions of I.B.R.D
The principal functions of the I.B.R.D are set forth in Article (1) of the Agreement as follows.
1. To assist in the reconstruction and development of the territories of its members by facilitating the
investment of capital fro productive purposes.
2. To promote private foreign investment by means of guarantee of participation in loans and other
investments made by private investors and when private capital is not available on reasonable terms to
make loans for productive purposes out of its own resources from funds borrowed by it.
3. To promote the long term balance growth of international trade and the maintenance of equilibrium in
balances of payments by encouraging international investments for development of productive resources
of members.
4. To arrange loans made guaranteed by it in relation to international loans through other channels so that
more useful projects, large and small alike, will be dealt with first.
Objectives of I.B.R.D
The objectives of I.B.R.D as incorporated in the Articles of Agreement are as follows.
1. To help in the reconstruction and development of member countries by facilitating the investment of
capital for the productive purposes, including the restoration and reconstruction of economies devastated
by war.
2. To encourage the development of productive resources in developing countries by supplying them
investment capital.
3. To promote private foreign investment through guarantees and participation in loans and other
investment made by private investors.
4. To supplement private foreign investments by direct loans out of its own capital for productive
purposes.
5. To promote long term balances growth of international trade and the maintenance of equilibrium in the
balance payments of member countries by encouraging long term international investments.
6. To bring about an easy transition from a war economy to a peace time economy.
7. To help in raising productivity, the standard of living and the conditions of labor in member countries.
The World Bank advances loans to member countries primarily to help them lay down the foundation of
sound economic growth. The loans made by the Bank either directly or through guarantees are intended
for certain specific projects of reconstruction and development in the member countries.

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Lending procedure of I.B.R.D
The I.B.R.D advances loans to member countries in the following three ways.
1. Loans out of its own Fund: As we know that the Bank collects capital contributions from its members
this results in the creation of a sizeable fund out of which the Bank advances loans to the needy member
countries.
2. Loans out of borrowed Capital: Sometimes the Bank does not grant loans out of its own funds. It
borrows funds from another member country for the purpose of giving loans to the needy members. The
Bank pays interest to the member country from which it has borrowed funds for a specific period of time.
3. Loans through Bank’s guarantee: Sometimes the Bank encourages the private investors of a country to
lend their funds to another country by guaranteeing the repayment of loans and interest there on.
Ordinarily the Bank does not lend to the member countries out of its own funds. The Bank lends out of its
funds only when private investors in member countries are not forthcoming to make loans to the
concerned country
Country Strategies
The World Bank Group is following a new approach to country engagement - the Country Partnership
Framework (CPF). This new approach aims to make our country-driven model more systematic,
evidence-based, selective and focused on the goals of ending extreme poverty and increasing shared
prosperity in a sustainable manner. The CPF takes the place of the Country Assistance Strategy (CAS)
and guides the Bank Group's support to a member country.
A Systematic Country Diagnostic (SCD) informs each new country partnership. The diagnostic
identifies the most important challenges and opportunities at the country level for reaching the corporate
goals. Consultations with a range of stakeholders informs the SCD process, from diagnostic through
completion.
How the new approach works?
Step 1: What are the biggest constraints to reducing poverty and increasing shared prosperity in a
sustainable way? A Systematic Country Diagnostic (SCD) uses data and analytic methods to support
country clients and World Bank Group teams in identifying the most critical constraints to, and
opportunities for, reducing poverty and building shared prosperity sustainably, while considering the
voices of the poor and the views of the private sector and other stakeholders.
Step 2: What are the most important contributions the World Bank Group can make? The Country
Partnership Framework (CPF) lays out the development objectives that WBG interventions expect to
help the country achieve and attendant program of indicative WBG interventions. The CPF objectives are

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derived from those country development goals that reflect the Bank Group’s comparative advantage as
well as alignment with the goals of ending extreme poverty and increasing shared prosperity.
Step 3: How are we doing? Performance and Learning Reviews identify and capture lessons; determine
midcourse corrections, and help build the WBG’s knowledge base, including effective approaches for
integrating inclusion and sustainability dimensions (including gender and environmental sustainability)
into the SCD and CPF.
Step 4: What did we learn? Completion and Learning Reviews identify and capture end-of-cycle
learning to contribute to the WBG’s knowledge base.
Country Lending Summaries-Bangladesh
Figure: Lending amounts by year

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Figure: Number of Projects by year
Results
The World Bank has helped millions of poor people in middle income countries gain access to jobs,
markets, and social services; helped provide them with essential services such as water, electricity, and
roads; and worked with governments to improve governance and public sector management.
The International Bank for Reconstruction and Development (I.B.R.D) better known as the World Bank
was established at the same time as the International Monetary Fund to tackle the problem of International
investment in 1944. Since the I.M.F was designed to provide temporary assistance in correcting balance
of payments difficulties, there was need of an institution to assist long term investment purposes. Thus
I.B.R.D was established for promoting long term investment loans on reasonable terms.
The World Bank is an inter-government institution corporate informs the capital stock of which is entirely
owned by its member governments. Initially only nation there were members of the I.M.F could be
members of the World Bank but the restriction on membership was subsequently released.
Financial Performance
IBRD’s principal assets are its loans to member countries. These are financed by IBRD’s equity and
proceeds of borrowings from capital markets.

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Condensed Balance Sheet
Table: Condensed Balance Sheet
The primary source of IBRD’s income is equity contributions, followed by the net interest margin on its
loans funded by borrowings, and the margin earned on its investment portfolio. IBRD also earns revenue
from other development activities (Section IV). IBRD’s allocable income was $686 million in FY15,
compared with $769 million in FY14. On a reported basis, IBRD had a net loss of $786 million in FY15,
compared with a net loss of $978 million in FY14. The following is a discussion on the key drivers of
IBRD’s financial performance, including a reconciliation between IBRD’s allocable income and reported
net income.
Key Drivers of IBRD’s Financial Performance

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Revenue
Results from Lending and Borrowing Activities – Net Interest Margin
As of June 30, 2015, IBRD’s equity to loans ratio was 25.1%, indicating that approximately 25% of
IBRD’s net loans and other exposures is funded by equity, and the remainder funded by borrowings. For
the portion of loans funded by borrowings, IBRD earned a net interest margin of $838 million for FY15,
compared to $861 million and $799 million in FY14 and FY13, respectively. The lower net interest
margin earned in FY15 compared to FY14 is primarily due to the increase in the volume of variable
spread loans in FY15 relative to fixed spread loans. These loans carry a lower lending spread compared
with fixed spread loans. IBRD’s weighted average lending spread remained at about 60 basis points on
average over the four year period, after the effect of derivatives on the loan and borrowing portfolios.
Figure: Derived Spread
Investment Operations
Funds raised through IBRD’s borrowing activity which have not yet been deployed for lending, are held
in IBRD’s investment portfolio to ensure liquidity for its operations. IBRD restricts its liquid assets to
high-quality investments as its investment objective prioritizes principal protection over yield. Liquid
assets are therefore managed conservatively, and are primarily held for disruptions in IBRD’s access to
capital markets. IBRD keeps liquidity volumes above a prudential minimum. The prudential minimum
level is set at $27.5 billion for FY16, an increase of $1.5 billion over FY15, reflecting higher projected
debt service and loan disbursements for the coming year. The maturity profile of IBRD’s liquid asset
portfolio reflects a high degree of liquidity, with $26.3 billion (approximately 60% of total volume)
maturing within six months, of which $12 billion is expected to mature within one month. As of June 30,
2015, the net investment portfolio totaled $45.1 billion (Figure 7), with $44.0 billion representing the
liquid asset portfolio (see Note C: Investments in the Notes to the Financial Statements). This compares
with an investment portfolio valued at $42.7 billion a year earlier, with $41.6 billion representing the
liquid asset portfolio.

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Figure: Net Investment Portfolio
During FY15, interest revenue net of funding cost, from the investment portfolio, amounted to $40
million. This compares with $15 million during FY14 and $156 million during FY13. The increase in net
interest revenue during FY15, was primarily due to the lower unrealized mark-to-market losses in FY15
compared with FY14, on a debt security issued by an Austrian bank, Hypo Alpe-Adria, which was fully
guaranteed by the state of Carinthia. The loss in the value of the security was the result of legislation
passed in FY14 to cancel the underlying debt. This FY14 legislation was overturned subsequent to June
30, 2015. IBRD will continue to monitor the value of this investment and related market developments.
This investment had a carrying value of $13 million as of June 30, 2015 ($88 million as of June 30, 2014
and $214 million as of June 30, 2013).
Reconciliation between Allocable Income and Reported Net Income
The preceding discussion focused on the key drivers of IBRD’s allocable income. Management
recommends distributions out of net income at the end of each fiscal year to augment reserves and support
developmental activities. Net income allocation decisions are based on allocable income. As illustrated in
Table 4, the key differences between allocable income and reported net income relate to unrealized mark-
to-market gains and losses on IBRD’s non-trading portfolios, and expenses related to Board of
Governors-approved and other transfers.
Allocable income in FY15 was $686 million. Of this amount, on August 6, 2015, the Board approved the
allocation of $36 million to the General Reserve. In addition, the Board recommended to IBRD’s Board
of Governors a transfer of $650 million to IDA. Allocable income in FY14 was $769 million. Of this
amount, the Board of Governors approved the transfer of $635 million to IDA and $134 million to
Surplus.

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Table: Allocation of Income
Capital Adequacy
IBRD’s capital adequacy is the degree to which its equity is sufficient to withstand unexpected shocks.
The Board monitors IBRD’s capital adequacy within a Strategic Capital Adequacy Framework, using the
equity-to-loans ratio as a key indicator of IBRD’s capital adequacy. The framework seeks to ensure that
IBRD’s capital is aligned with the financial risk associated with its loan portfolio as well as other
exposures over a medium-term capital-planning horizon. Under this framework, IBRD evaluates its
capital adequacy as measured by stress tests and an appropriate minimum level for the long term equity-
to-loans ratio. For FY15, the outcome of the stress tests was satisfactory. The framework was first
adopted in 2008, based on an assessment of historical non-accrual shock size over the previous ten years.
Since 2008, IBRD’s portfolio credit quality has improved significantly, as a result of which the capital
adequacy framework was reviewed in FY14 and the minimum equity-to-loans ratio of 23% was 37
reduced to 20% . The lowering of the equity-to-loans ratio allows IBRD to use shareholder capital more
effectively to support a larger volume of development lending and thus enhance IBRD’s commitment
capacity, including for responding to potential crises.
Figure: Equity-to-Loans Ratio (%)

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At the beginning of the 2008 global financial crisis, the equity-to-loans ratio, at 38%, significantly
exceeded the capital requirements of the Strategic Capital Adequacy Framework, allowing IBRD to
respond effectively to the borrowing needs of its member countries, resulting in the higher leveraging of
IBRD’s capital and a corresponding decline in the ratio. This is part of a strategy to maximize the use of
capital for lending operations.
Table: Equity-to-Loans Ratio (%)
IBRD’s equity-to-loans ratio decreased to 25.1% as of June 30, 2015, from 25.7% as of June 30, 2014,
and remained above the minimum level of 20% (Table 20). The decrease in the ratio was primarily due to
the $10 billion increase in net positive loan disbursements during the year. This was partially offset by the
$1.2 billion increase in usable paid-in capital due to the GCI/SCI subscriptions (Table 19). Under IBRD’s
currency management policy, to minimize exchange rate risk in a multicurrency environment, IBRD
matches its borrowing obligations in any one currency (after derivatives activities) with assets in the same
currency. In addition, IBRD’s policy is to minimize the exchange rate sensitivity of its capital adequacy
as measured by the equity-to-loans ratio. It implements this policy by periodically undertaking currency
conversions to align the currency composition of its equity with that of its outstanding loans, across major
currencies. As a result, the exchange rate movements during the year, which were primarily due to the
18% depreciation of the euro against the U.S. dollar, did not have an impact on IBRD’s equity-to-loans
ratio.

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Figure: GCI/SCI Subscriptions as of June 30, 2015
As a result of the General and Selective Capital Increase (GCI/SCI) resolutions, which became effective
during FY11, IBRD is expected to receive $87 billion in subscribed capital, of which $5.1 billion will be
paid-in. As of June 30, 2015, $62.7 billion was subscribed, resulting in additional paid-in capital of $3.7
billion. Of this amount, $1.2 billion was received in FY15.
Liquid Asset Portfolio—Average Balances and Returns
Table: Liquid Asset Portfolio—Average Balances and Returns
The maturity profile of IBRD’s liquid asset portfolio reflects a high degree of liquidity, with $26.3 billion
(approximately 60% of total volume) maturing within six months, of which $12 billion is expected to
mature within one month.
Capital Increases
In 2010, to enhance IBRD’s financial capacity following its response to the global economic crisis,
IBRD’s shareholders agreed to a package of financial measures. The package included an increase in
IBRD’s authorized capital and a General Capital Increase (GCI), which became effective in FY11.
Concurrently, as part of the ―Voice reforms‖ aimed at enhancing the voice and participation of
Developing and Transitional Countries

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(DTCs) in IBRD, shareholders agreed to two Selective Capital Increases (SCI), one of which was for
allocating fully callable shares to certain DTCs. As a result of these capital increases, the voting power of
DTCs increased to 45.1% as of June 30, 2015, from 42.6% as of June 30, 2008.
The GCI subscription period is for five years and ends March 16, 2016. On March 30, 2015, the
subscription period for the SCI was extended from March 16, 2015 to March 16, 2016 for members
requesting extensions of one year, and to March 16, 2017 for members requesting extensions of two
years.
As a result of the GCI and SCIs, IBRD is expected to receive $87 billion of subscribed capital, of which
$5.1 billion will be paid in, as follows:
 GCI of $58.4 billion, of which $3.5 billion will be paid in. As of June 30, 2015, $39.6 billion has
been subscribed and $2.4 billion paid in.
 SCI of $27.8 billion, of which $1.6 billion will be paid in. As of June 30, 2015, $22.2 billion has
been subscribed and $1.3 billion paid in.
 SCI of $0.9 billion which represented the allocation of fully callable shares to certain DTCs and
for which a paid-in amount was not required. As of June 30, 2015, $0.8 billion was subscribed.
Table: Breakdown of IBRD Subscribed Capital
Paid-In Capital
Paid-in capital has two components:
 The U.S. dollar portion, which is freely available for use by IBRD.
 NCPIC portion, usage of which is subject to certain restrictions under the Articles. This paid-in
component is also subject to Maintenance-Of-Value (MOV) requirements. For additional details
see the Notes to the Financial Statements: Note A—Summary of Significant Accounting and
Related Policies.
Credit Risk
IBRD faces two types of credit risk: country credit risk and counterparty credit risk. Country credit risk is
the risk of loss due to a country not meeting its contractual obligations, and counterparty credit risk is the
risk of loss attributable to a counterparty not honoring its contractual obligations. IBRD is exposed to
commercial as well as non-commercial counterparty credit risk.

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Conclusion
The International Bank for Reconstruction and Development (IBRD) is one of five institutions that
comprise the World Bank Group. The IBRD is an international organization whose original mission was
to finance the reconstruction of nations devastated by World War II. Now, its mission has expanded to
fight poverty by means of financing states. Its operation is maintained through payments as regulated by
member states. It came into existence on December 27, 1945 following international ratification of the
agreements reached at the United Nations Monetary and Financial Conference of July 1 to July 22, 1944
in Bretton Woods, New Hampshire.
The IBRD provides loans to governments, and public enterprises, always with a government (or
"sovereign") guarantee of repayment subject to general conditions. The funds for this lending come
primarily from the issuing of World Bank bonds on the global capital markets—typically $12–15 billion
per year. These bonds are rated AAA (the highest possible) because they are backed by member states'
share capital, as well as by borrowers' sovereign guarantees. (In addition, loans that are repaid are
recycled, or relent.) Because of the IBRD's credit rating, it is able to borrow at relatively low interest
rates. As most developing countries have considerably lower credit ratings, the IBRD can lend to
countries at interest rates that are usually quite attractive to them, even after adding a small margin (about
1%) to cover administrative overheads.

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