Context: The World Bank confirmed Ajay Banga was selected as its next president on Wednesday, taking charge at a pivotal time for the development lender as it looks to better address climate change. The Bank’s board voted to approve his leadership for a five-year term. He will take over the role from David Malpas in June.
About world bank
World Bank came into existence in the year of 1944 along with IMF at the meeting of the UN Monetary and financial conference, commonly known as the Bretton woods conference.
Now it has 189 members
India is one of the foundational members of the world bank
World bank Organization
- The World Bank is like a cooperative, made up of 189 member countries.
- These member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank.
- Generally, the governors are member countries’ ministers of finance or ministers of development.
- They meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.
World Bank is not a single entity rather it is a group of five institutions
IBRD
- Created in 1944 to help Europe rebuild after World War II.
- IBRD joins with IDA, our fund 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
- 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.
IDA
- The International Development Association (IDA) is part of the World Bank that helps the world’s poorest countries.
- Established in 1960 and headquartered in Washington DC, IDA aims to reduce poverty by providing zero to low-interest loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.
IFC
- Established in the year 1956
- Headquarters at Washington DC
- It makes investments in productive private enterprises in association with private investors.
- It concentrates on areas where sufficient private capital is not forthcoming on reasonable terms and conditions.
- It acts as a clearing house for bringing together investment opportunities, private capital and experienced management.
- It stimulates the international flow of capital.
- It assists the development of capital markets in less-developed countries.
- It encourages private sector activity in developing countries through three types of activities.
MIGA
MIGA is the World Bank Group’s most recent agency (1988), created in Washington DC with the aim of attracting private capital to unfavourable environments, usually countries with a lower level of income and in contexts that are unappealing for investments.
This agency works as a complement to the IFC, providing guarantees to foreign investors against so-called “political risks”, which are risks related to the country where the investment will be applied, such as:
- Losses related to currency convertibility (difficulties in converting local currency into dollars or euros) and transfer restrictions of the same nature;
- Countries in violent contexts (wars, etc.);
- Contractual violations by local governments which place the investment at risk;
- Seizure of private investors’ assets or properties and failure to meet financial obligations on the part of the Host State
ICSID
- It 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.
- ICSID is an independent, depoliticized and effective dispute-settlement institution.
- 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 the settlement of disputes by conciliation, mediation, arbitration or fact-finding.
