IBRD introduction, Function, Use, Activities

1. By: Vaibhav Agarwal
Asst. Prof.
SOM
BBDU, Lucknow
MBA
International Business
Unit 3

2. IBRD: INTRODUCTION
The International Bank for Reconstruction and Development (IBRD) is a global
development cooperative owned by its 188 member countries.
IBRD 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.
As the largest development bank in the world and part of the World Bank Group, IBRD
has two main goals: To end extreme poverty by 2030 and to promote shared prosperity
in a sustainable manner. It seeks to achieve these goals primarily by providing loans,
guarantees, risk management products, and expertise on development-related
disciplines, as well as by coordinating responses to regional and global challenges.

3. FUNCTIONS OF IBRD
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.
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

4. IBRD SERVICES
 The World Bank Group works with middle income countries simultaneously as clients,
shareholders, and global actors.
 IBRD is providing innovative financial solutions, including financial products (loans,
guarantees, and risk management products) and knowledge and advisory services to
governments at both the national and subnational 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 flexibility to shocks by
facilitating access to products that diminish the negative impact of currency, interest
rate, and commodity price volatility, natural disasters and extreme weather.
 IBRD’s financing supplies borrowing countries with needed financing and also serves as
a vehicle for global knowledge transfer and technical assistance.

5. IBRD FUNDING: HOW IBRD GETS FINANCE FOR ITS FUNCTIONING
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.
IBRD provided 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.
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.
IBRD issues bonds in international capital markets to support sustainable
development.

6. In fiscal 2015, IBRD raised $57.7 billion by issuing bonds in 21
currencies.
 Its standing in the capital markets and its financial strength allowed
IBRD to borrow these large volumes on very favorable terms.
As a cooperative institution, IBRD seeks not to maximize profit but to
earn enough income to ensure its financial strength and sustain its
development activities. Of fiscal 2015 allocable net income, the Board
of Executive Directors recommended to the Board of Governors the
transfer of $650 million to IDA and the allocation of $36 million to
General Reserve.

7. INDIA & IBRD: A Sustainable Relationship
India is a member of four of the five constituents of the World Bank Group.
International Bank for Reconstruction and Development(IBRD)),
International Development Association (IDA)),
International Finance Corporation (IFC))
Multilateral Investment Guarantee Agency (MIGA)).
International Centre for Settlement of Investment Disputes (ICSID)) [India is not its
member].
 India is one of the founder members of IBRD, IDA and IFC. World Bank assistance in India started from 1948 when
a funding for Agricultural Machinery Project was approved.
 First investment of IFC in India took place in 1959 with US$ 1.5 million.
 India became a member of MIGA in January 1994.
 India has an Executive Director, in the Board of Directors of IBRD / IFC / IDA/ MIGA.
 The Executive Director from India represents a constituency comprising of four countries: India, Bangladesh,
Bhutan and Sri Lanka.
 Mr. M. N. Prasad represents India in the Board of Directors w. e. f. 30th September 2011. Mr. Kazi M. Aminul Islam
from Bangladesh is currently the Alternate Executive Director for this constituency.

8. INDIA’S SHAREHOLDING IN IBRD
In 2011-12, India purchased 5757 shares from IBRD.
On 30th March, 2012, India holds 50,552 shares amounting to US$ 6098.3 million.
India became the 7th largest shareholder in IBRD with voting power of 2.91%.
As a constituency (comprising of four countries - India, Bangladesh, Sri Lanka and Bhutan),
India's voting power will increase to 3.26%.
The total assistance extended by IBRD by way of loans to India was US$ 39075.96 million
as on 31 December, 2010. During the period from 1 January, 2011 to 31 December, 2011,
new commitments of US$ 3049 million were approved taking total assistance to US$
42124.96 million as on 31 December, 2011. The main sectors for which IBRD assistance of
US$ 3049 million has been provided are roads & highways, energy, urban infrastructure
(including water & sanitation), rural credit, disaster management and the financial services
sector.

9. IBRD Top-10 Borrowers Fiscal 2014
$2,098
$1,822
$1,400 $1,400
$1,345 $1,337
$1,150
$1,055
$1,000 $966
$0
$500
$1,000
$1,500
$2,000
$2,500
Commitments($millions)

10. 27%
15%
17%
14%
8%
18%
Share of total lending of $42.5 billion
Africa
East Asia and Pacific
Europe and Central Asia
Latin America and the
Caribbean
Middle East and North Africa
South Asia
IBRD and IDA Lending by Region Fiscal 2015

11. INDIA AND IBRD

12. Sources:
1. http://www.worldbank.org/en/about/annual-report/roles-resources
2. http://www.worldbank.org/en/projects-operations/products-and-services#3
3. http://www.worldbank.org/en/country/mic/overview
4. http://www.worldbank.org/en/about/annual-report/fiscalyeardata
5. http://www.worldbank.org/en/about/what-we-do/brief/ibrd
6. http://www.worldbank.org/en/country/india/overview
7. http://data.worldbank.org/country/india
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