 | |
.jpg) The World Bank Group building (Washington, D.C.) | |
| Established | 4 July 1944; 81 years ago (1944-07-04) |
|---|---|
| Type | Intergovernmental organization |
| Legal status | Treaty |
| Purpose | Economic development,poverty elimination |
| Headquarters | 1818 H Street Northwest, Washington D.C., U.S.[1] |
| Membership | 189 states (188UN countries andKosovo)[2] - seeList of World Bank members |
| Ajay Banga[3] | |
MD & CFO | Anshula Kant[4] |
Main organ | Board of Directors[5] |
Parent organization | United Nations[6] |
| Website | worldbank.org |
TheWorld Bank Group (WBG) is a family of fiveinternational organizations that makeleveraged loans todeveloping countries. It is the largest and best-knowndevelopment bank in the world and an observer at theUnited Nations Development Group.[7] The bank is headquartered inWashington, D.C., in theUnited States. It provided around $98.83 billion in loans and assistance to "developing" and transition countries in the 2021 fiscal year.[8] The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity.[9] Total lending as of 2015 for the last 10 years through Development Policy Financing was approximately $117 billion.[10] Its five organizations have been established over time:
The first two are sometimes collectively referred to as theWorld Bank. They provideloans andgrants to the governments oflow- andmiddle-income countries for the purpose of pursuingeconomic development.[11] These activities include fields such as human development (e.g. education, health), agriculture andrural development (e.g. irrigation and rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, and electricity), large industrial construction projects, and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the country's economy as a whole. For example, a loan to improve coastal environmental management may be linked to the development of new environmental institutions at national and local levels and the implementation of new regulations to limit pollution.[12] Furthermore, the World Bank Group is recognized as a leading funder of climate investments in developing countries.[13]
The World Bank was established along with theInternational Monetary Fund at the 1944Bretton Woods Conference. Initially, its loans helped rebuild countries devastated byWorld War II. Over time, it has shifted its focus to development, with a stated mission of eradicating extreme poverty and boosting shared prosperity.[14]
The World Bank is amember of theUnited Nations Sustainable Development Group. It is governed by its 189 member countries, though theUnited States, as its largest shareholder, has traditionally appointed its president. The current president isAjay Banga, appointed in June 2023. The Bank's lending and operational decisions are made by a president and a board of 25 executive directors. The largest voting powers are held by the U.S. (15.85%),Japan (6.84%),China (4.42%),Germany (4.00%),France (3.75%) and theUnited Kingdom (3.75%).[15]
The Bank's activities span all sectors of development. It provides financing, policy advice, and technical assistance to governments, and also focuses on private sector development through its sister organizations. The Bank's work is guided by environmental and social safeguards to mitigate harm to people and the environment. In addition to its lending operations, it serves as one of the world's largest centers of development research and knowledge, publishing numerous reports and hosting anOpen Knowledge Repository.[16] Current priorities include financing forclimate action and responding to global crises like theCOVID-19 pandemic.
The World Bank has been criticized for the harmful effects of its policies and for its governance structure. Critics argue that the loan conditions attached to itsstructural adjustment programs in the 1980s and 1990s were detrimental to the social welfare of developing nations.[17] The Bank has also been criticized for being dominated by wealthy countries, and for its environmental record on certain projects.[18]
The World Bank was created at the 1944Bretton Woods Conference (1–22 July 1944), along with theInternational Monetary Fund (IMF). The president of the World Bank is traditionally anAmerican.[20] The World Bank and the IMF are both based in Washington, D.C., and work closely with each other.
Although many countries were represented at the Bretton Woods Conference, theUnited States andUnited Kingdom were the most powerful in attendance and dominated the negotiations.[21]: 52–54 The intention behind the founding of the World Bank was to provide temporary loans to low-income countries that could not obtain loans commercially.[22] The bank may also make loans and demand policy reforms from recipients.[22]
The agreement at Bretton Woods implied that both the World Bank and IMF would be headquartered in the United States. US Treasury SecretaryHenry Morgenthau Jr. intended them to be located inNew York, but his successorFred M. Vinson unilaterally decided that they would be inWashington, D.C. instead, noting that "the institutions would be fatally prejudiced in American opinion if they were placed in New York, since they would then come under the taint of 'international finance'".[23]: 151 The World Bank Group came into formal existence on 27 December1946, following international ratification of the Bretton Woods agreements. The Conference also provided the foundation of the Osiander Committee in 1951, responsible for the preparation and evaluation of theWorld Development Report. Commencing operations on 25 June 1946, the bank approved its first loan on 9 May 1947 (US$250 million to France for postwar reconstruction - in real terms, the largest loan the bank has issued to date).
In its early years, the bank made a slow start for two reasons: it was underfunded, and there were leadership struggles between the US executive director and the president of the organization. When theMarshall Plan went into effect in 1947, many European countries began receiving aid from other sources. Faced with this competition, the World Bank shifted its focus to non-European allies. Until 1968, its loans wereearmarked for the construction of infrastructure works, such as seaports, highway systems, and power plants, that would generate enough income to enable a borrower country to repay the loan. In 1960, theInternational Development Association was formed (as opposed to a UN fund named SUNFED), providing soft loans todeveloping countries.
Before 1974, the reconstruction and development loans the World Bank made were relatively small. Its staff was aware of the need to instill confidence in the bank.Fiscal conservatism ruled, and loan applications had to meet strict criteria.[21]: 56–60
The first country to receive a World Bank loan was France in 1947. The bank's president at the time,John McCloy, chose France over two other applicants, Poland and Chile. The loan was for US$250 million, half the amount requested, and came with strict conditions. France had to agree to produce a balanced budget and give priority of debt repayment to the World Bank over other governments. World Bank staff closely monitored the use of the funds to ensure that the French government met the conditions. In addition, before the loan was approved, theUnited States Department of State told the French government that its members associated with the Communist Party would first have to be removed. The French government complied and removed theCommunistcoalition government—the so-calledtripartite. Within hours, the loan to France was approved.[24]
From 1974 to 1980, the bank concentrated on meeting the basic needs of people in thedeveloping world. The size and number of loans to borrowers greatly increased, as loan targets expanded from infrastructure into social services and other sectors.[25]
These changes can be attributed toRobert McNamara, who was appointed to the presidency in 1968 byLyndon B. Johnson.[14][21]: 60–63 McNamara implored bank treasurerEugene Rotberg to seek out new sources of capital outside of the northern banks that had been the primary sources of funding. Rotberg used the global bond market to increase the capital available to the bank.[26] One consequence of the period of poverty alleviation lending was the rapid rise ofdebt of developing countries. From 1976 to 1980, developing world debt rose at an average annual rate of 20%.[27][28]
The World Bank Administrative Tribunal was established in 1980, to decide on disputes between the World Bank Group and its staff where allegation of non-observance of contracts of employment or terms of appointment had not been honored.[29]
McNamara was succeeded by U.S.PresidentJimmy Carter's nominee,Alden W. Clausen, in 1980.[30][31] Clausen replaced many members of McNamara's staff and crafted a different mission emphasis. His 1982 decision to replace the bank's Chief Economist,Hollis B. Chenery, withAnne Krueger was an example of this new focus. Krueger was known for her criticism of development funding and for describing developing countries' governments as "rent-seeking states".
During the 1980s, the bank emphasized lending to service debt of developing countries, andstructural adjustment policies designed to streamline the economies of developing nations.UNICEF reported in the late 1980s that the structural adjustment programs of the World Bank had been responsible for "reduced health, nutritional and educational levels for tens of millions of children inAsia,Latin America, andAfrica".[17]
TheInternational Bank for Reconstruction and Development (IBRD) has 189 member countries, while theInternational Development Association (IDA) has 174. Each member state of IBRD should also be a member of theInternational Monetary Fund (IMF) and only members of IBRD are allowed to join other institutions within the bank (such as IDA).[32] The five United Nations member states that are not members of the World Bank areAndorra,Cuba,Liechtenstein,Monaco, andNorth Korea.Kosovo is not a member of the UN, but is a member of theIMF and the World Bank Group, including the IBRD and IDA. Other non-members arePalestine, theHoly See (Vatican City), Taiwan, and the following de facto states:Abkhazia,Northern Cyprus, theSahrawi Arab Democratic Republic,Somaliland,South Ossetia, andTransnistria.
TheRepublic of China joined the World Bank on December 27, 1945.[33] After theChinese Civil War, the government fled to Taiwan and continued its membership in the WBG until April 16, 1980, when the People's Republic of China replaced the ROC. Since then, it uses the name "Taiwan, China".[34]
All of the188 UN members andKosovo that are WBG members participate at a minimum in the IBRD. As of May 2016, all of them also participate in some of the other four organizations (IDA, IFC, MIGA, and ICSID).
WBG members by the number of organizations in which they participate:[2]
In 2010, voting powers at the World Bank were revised to increase the voice of developing countries, notablyChina. The countries with most voting power are now the United States (15.85%), Japan (6.84%),China (4.42%),Germany (4.00%), theUnited Kingdom (3.75%),France (3.75%),India (2.91%),[35]Russia (2.77%),Saudi Arabia (2.77%) andItaly (2.64%). Under the changes, known as 'Voice Reform – Phase 2', countries other than China that saw significant gains includedSouth Korea,Turkey,Mexico,Singapore,Greece,Czech Republic,Hungary,Brazil,India, andSpain. Most developed countries' voting power was reduced, along with a few developing countries such asNigeria. The voting powers of theUnited States,Russia andSaudi Arabia remained unchanged.[15][36]
The changes were brought about to make voting more universal in regards to standards, rule-based objective indicators, and transparency among other things. Now, developing countries have an increased voice in the "Pool Model", backed especially by Europe. Additionally, voting power is based on economic size in addition to the International Development Association contributions.[37]
The following table shows the subscriptions of the top 20 member countries of the World Bank by voting power in the following World Bank institutions as of December 2014 or March 2015: theInternational Bank for Reconstruction and Development (IBRD), theInternational Finance Corporation (IFC), theInternational Development Association (IDA), and theMultilateral Investment Guarantee Agency (MIGA). Member countries are allocated votes at the time of membership and subsequently for additional subscriptions to capital (one vote for each share of capital stock held by the member).[38][39][40][41]
| Rank | Country | IBRD | Country | IFC | Country | IDA | Country | MIGA |
|---|---|---|---|---|---|---|---|---|
| World | 2,201,754 | World | 2,653,476 | World | 24,682,951 | World | 218,237 | |
| 1 |  United States | 358,498 | United States | 570,179 | United States | 2,546,503 | United States | 32,790 |
| 2 |  Japan | 166,094 | Japan | 163,334 | Japan | 2,112,243 | Japan | 9,205 |
| 3 |  China | 107,244 |  Germany | 129,708 |  United Kingdom | 1,510,934 | Germany | 9,162 |
| 4 | Germany | 97,224 |  France | 121,815 | Germany | 1,368,001 | France | 8,791 |
| 5 | France | 87,241 | United Kingdom | 121,815 | France | 908,843 | United Kingdom | 8,791 |
| 6 | United Kingdom | 87,241 |  India | 103,747 |  Saudi Arabia | 810,293 | China | 5,756 |
| 7 | India | 67,690 |  Russia | 103,653 | India | 661,909 | Russia | 5,754 |
| 8 | Saudi Arabia | 67,155 |  Canada | 82,142 | Canada | 629,658 | Saudi Arabia | 5,754 |
| 9 | Canada | 59,004 |  Italy | 82,142 | Italy | 573,858 | India | 5,597 |
| 10 | Italy | 54,877 | China | 62,392 | China | 521,830 | Canada | 5,451 |
| 11 | Russia | 54,651 |  Netherlands | 56,931 |  Poland | 498,102 | Italy | 5,196 |
| 12 |  Spain | 42,948 |  Belgium | 51,410 |  Sweden | 494,360 | Netherlands | 4,048 |
| 13 |  Brazil | 42,613 |  Australia | 48,129 | Netherlands | 488,209 | Belgium | 3,803 |
| 14 | Netherlands | 42,348 |  Switzerland | 44,863 | Brazil | 412,322 | Australia | 3,245 |
| 15 |  South Korea | 36,591 | Brazil | 40,279 | Australia | 312,566 | Switzerland | 2,869 |
| 16 | Belgium | 36,463 |  Mexico | 38,929 | Switzerland | 275,755 | Brazil | 2,832 |
| 17 |  Iran | 34,718 | Spain | 37,826 | Belgium | 275,474 | Spain | 2,491 |
| 18 | Switzerland | 33,296 |  Indonesia | 32,402 |  Norway | 258,209 |  Argentina | 2,436 |
| 19 | Australia | 30,910 | Saudi Arabia | 30,862 |  Denmark | 231,685 | Indonesia | 2,075 |
| 20 |  Turkey | 26,293 | South Korea | 28,895 |  Pakistan | 218,506 | Sweden | 2,075 |
Together with four affiliated agencies created between 1957 and 1988, the IBRD is part of the World Bank Group. The group's headquarters are inWashington, D.C. It is an international organization owned by member governments; although it makes profits, they are used to support continued efforts in poverty reduction.[42]
Technically the World Bank is part of the United Nations system,[43] but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes that depend on financial contributions to the organization. The president of the World Bank is nominated by the president of the United States and elected by the bank's Board of Governors.[44] As of 15 November 2009, the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, the United Kingdom 4.3%, and France 4.3%. As changes to the bank's Charter require an 85% supermajority, the U.S. can block any major change in the bank's governing structure.[45] Because the U.S. exerts formal and informal influence over the bank as a result of its vote share, control over the presidency, and the bank's headquarters location in Washington, D.C., friends and allies of the U.S. receive more projects with more lenient terms.[46]
The World Bank Group consists of
The term "World Bank" generally refers to just the IBRD and IDA, whereas the term "World Bank Group" or "WBG" is used to refer to all five institutions collectively.[44]
TheWorld Bank Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries.
The IBRD has 189 member governments, and the other institutions have between 153 and 184.[2] The institutions of the World Bank Group are all run by a board of governors meeting once a year.[44] Each member country appoints a governor, generally its minister of finance. Daily, the World Bank Group is run by a board of 25 executive directors to whom the governors have delegated certain powers. Each director represents either one country (for the largest countries), or a group of countries. Executive directors are appointed by their respective governments or the constituencies.[44]
The agencies of the World Bank are each governed by their Articles of Agreement that serves as the legal and institutional foundation for all their work.[44]
The activities of theIFC andMIGA include investment in the private sector and providing insurance, respectively.
Traditionally, the bank president has been a U.S. citizen nominated by the president of the United States, the bank's largest shareholder. The nominee is subject to confirmation by the executive directors, to serve a five-year, renewable term.[44]
Ajay Banga is the current and 14thpresident of the World Bank Group.
The managing director of the World Bank is responsible for organizational strategy; budget and strategic planning; information technology; shared services; Corporate Procurement; General Services and Corporate Security; the Sanctions System; and the Conflict Resolution and Internal Justice System. The present managing director, Shaolin Yang, assumed the office afterSri Mulyani resigned to become finance minister ofIndonesia.[47][48] The managing director and World Bank Group chief financial officer is Anshula Kant since 7 October 2019.[49]
After longstanding criticisms fromcivil society of the bank's involvement in the oil, gas, andmining sectors, the World Bank in July 2001 launched an independent review called theExtractive Industries Review (EIR—not to be confused withEnvironmental Impact Report). The review was headed by an "Eminent Person",Emil Salim (former Environment Minister of Indonesia). Salim held consultations with a wide range of stakeholders in 2002 and 2003. The EIR recommendations were published in January 2004 in a final report, "Striking a Better Balance".[50] The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment inrenewable energy andclean energy. The World Bank published its Management Response to the EIR in September 2004[51] after extensive discussions with the board of directors. The Management Response did not accept many of the EIR report's conclusions, but the EIR served to alter the World Bank's policies on oil, gas, and mining in important ways, as the World Bank documented in a recent follow-up report.[52] One area of particular controversy concerned the rights of indigenous peoples. Critics point out that the Management Response weakened a key recommendation that indigenous peoples and affected communities should have to provide 'consent for projects to proceed; instead, there would be 'consultation'.[53] Following the EIR process, the World Bank issued a revised Policy on Indigenous Peoples.[54]
The World Bank plays a significant role in global economicgovernance due to its broad mandate, its vast resource base, its frequent and regular interactions with governments as clients, and its many publications and databases.[55] In 2020, the World Bank's total commitments amounted to USD 77.1 billion and it operated in 145 countries.[55] World Bank projects cover a range of areas from building schools to fighting disease,providing water and electricity, andenvironmental protection.[55]
As a guideline to the World Bank's operations in any particular country, a Country Assistance Strategy is produced in cooperation with the local government and any interested stakeholders and may rely on analytical work performed by the bank or other parties.
The World Bank'snegative pledge clause prohibits its debtor countries from using public assets to repay other creditors before they repay the World Bank.[56]: 134
To ensure that World Bank-financed operations do not compromise these goals but instead add to their realisation, the following environmental, social, and legal safeguards were defined: Environmental Assessment, Indigenous Peoples, Involuntary Resettlement, Physical Cultural Resources, Forests, Natural Habitats, Pest Management, Safety of Dams, Projects in Disputed Areas, Projects on International Waterways, and Performance Standards for Private Sector Activities.[57]
At the World Bank's 2012 annual meeting in Tokyo, a review of these safeguards was initiated, which was welcomed by several civil society organisations.[58] As a result, the World Bank developed a new Environmental and Social Framework, which has been in implementation since 1 October 2018.[59]
The World Bank or the World Bank Group is also a sitting observer in theUnited Nations Sustainable Development Group.[60]
Beginning in 1989, in response to harsh criticism from many groups, the bank began including environmental groups and NGOs in its loans to mitigate the past effects of its development policies that had prompted the criticism.[21]: 93–97 It also formed an implementing agency, in accordance with the Montreal Protocols, to stopozone-depletion damage to the Earth's atmosphere by phasing out the use of 95% of ozone-depleting chemicals, with a target date of 2015. Since then, in accordance with its so-called "Six Strategic Themes", the bank has put various additional policies into effect to preserve the environment while promoting development. For example, in 1991, the bank announced that to protect againstdeforestation, especiallyin the Amazon, it would not finance any commercial logging or infrastructure projects that harm the environment.
For thepoorest developing countries in the world, the bank's assistance plans are based onpoverty reduction strategies; by combining an analysis of local groups with an analysis of the country's financial and economic situation the World Bank develops a plan pertaining to the country in question. The government then identifies the country's priorities and targets for the reduction of poverty, and the World Bank instigates its aid efforts correspondingly.[citation needed]
Forty-five countries pledged US$25.1 billion in "aid for the world's poorest countries", aid that goes to the World BankInternational Development Association (IDA), which distributes the loans to eighty poorer countries. Wealthiernations sometimes fund their own aid projects, including those for diseases. Robert B. Zoellick, the former president of the World Bank, said when the loans were announced on 15 December 2007, that IDA money "is the core funding that the poorest developing countries rely on".[61]
World Bank organizes theDevelopment Marketplace Awards, a grant program that surfaces and funds development projects with potential for development impact that are scalable or replicable. The grant beneficiaries are social enterprises with projects that aim to deliver social and public services to groups with the lowest incomes.[citation needed]
In 2013 the bank adopted the concept of shared prosperity as one of the World Bank's "Twin Goals" for that year, with the other one focusing on poverty reduction, aiming to reduce the share of people in extreme poverty to 3 percent of the global population by 2030.[55][62] The bank definedshared prosperity as increasing the income of the bottom 40 percent of the population in each country. As a result, reducing inequality, in this definition, had become an integral part of the World Bank's objectives.[55]
The World Bank has been criticized for not embracing the reduction of inequality (be iteconomic inequality within a country, orinternational inequality between countries) as a goal. Instead, the bank has taken an instrumental approach to the issue, in which inequality policies were seen as useful as long as they contributed to reducing (extreme) poverty or promoting average economic growth.[55]
As part of the2030 Agenda,Sustainable Development Goal 10 (SDG 10) aim to reduce inequalities within countries and among countries. World Bank officials participated in the negotiations for SDG 10 in the years prior to 2015. They advocated for the adoption of the bank's own preferred benchmarks.[55] The World Bank is also one of nine custodian agencies for SDG 10.[63]
The bank has stated its ambition to help catalyze the SDGs through "thought leadership, global convening, and country-level uptake". However, scholars have stated that the World Bank strategically uses the power of theSustainable Development Goals (SDGs) in its favor to reinforce its own policies or interests while minimizing the chance of being itself reshaped or transformed by these goals.[55]
Based on an agreement between the United Nations and the World Bank in 1981,Development Business became the official source for World Bank Procurement Notices, Contract Awards, and Project Approvals.[64]
In 1998, the agreement was renegotiated, and included in this agreement was a joint venture to create an online version of the publication. Today,Development Business is the primary publication for all major multilateral development banks, U.N. agencies, and several national governments, many of which have made the publication of their tenders and contracts inDevelopment Business a mandatory requirement.[64]
The World Bank collects and processes large amounts of data and generates them on the basis of economic models. These data and models have gradually been made available to the public in a way that encourages reuse,[65] whereas the recent publications describing them are available asopen access under aCreative Commons Attribution License, for which the bank received the SPARC Innovator 2012 award.[16]
The World Bank hosts theOpen Knowledge Repository as an official open access repository for its research outputs and knowledge products.[66] The World Bank's repository is listed in theRegistry of Research Data Repositories re3data.org.[67]
The World Bank also endorses thePrinciples for Digital Development.[68]
Together with theWorld Health Organization, the World Bank administers theInternational Health Partnership (IHP+). IHP+ is a group of partners committed to improving the health of citizens in developing countries. Partners work together to put international principles foraid effectiveness and development cooperation into practice in thehealth sector. IHP+ mobilizes national governments, development agencies, civil society, and others to support a single, country-led national health strategy in a well-coordinated way.
In September 2020, during theCOVID-19 pandemic, the World Bank announced a $12 billion plan to supply "low and middle income countries" with a vaccine once it was approved.[69] In June 2022, the bank reported that $10.1 billion had been allocated to supply 78 countries with the vaccine[70]
The US Treasury has committed $667 million for the World Bank's global Pandemic Fund, a third of the $2 billion the fund hopes to raise.[71] The Pandemic Fund, established in September 2022, is a collaborative initiative among countries, implementing partners, philanthropies, and civil society organizations. It aims to fund investments that address critical gaps in pandemic prevention, preparedness, and response capacities at national, regional, and global levels, with a particular focus onlow- and middle-income countries.[72]
The World Bank has been criticized for the slow response of itsPandemic Emergency Financing Facility (PEF), a fund that was created to provide money to help manage pandemic outbreaks.[73] The terms of the PEF, which is financed by bonds sold to private investors, prevent any money from being released from the fund until 12 weeks after the outbreak was initially detected (23 March). The COVID-19 pandemic met all other requirements for the funding to be released in January 2020.[74]
World Bank PresidentJim Yong Kim said in 2012:
A 4-degree warmer world can, and must be, avoided—we need to hold warming below 2 degrees ... Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today. Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.[75]
In December 2017, Kim announced the World Bank would no longer financefossil fuel development.[76][77] In 2019, theInternational Consortium of Investigative Journalists reported that the bank continues to finance fossil fuel infrastructure and that the bank "has yet to meaningfully shift away from fossil fuels."[78] Civil society groups, includingExtinction Rebellion, joined with EU finance ministers in November 2019 to call for an end to World Bank funding of fossil fuels.[79][80][81]
In 2023, U.S. presidentJoe Biden nominatedAjay Banga for president of the World Bank partly due to Banga's support forclimate action. The previous presidentDavid Malpass faced criticism for challenging thescientific consensus on climate change.[82] The same year, the UN operationalized the Fund for Responding to Loss and Damage, which the World Bank hosts to provide climate finance directly to vulnerable frontline communities.[83]
In 2025, the bank faced criticism fromenvironmental andanimal welfare activists for continuing to finance greenhouse gas intensiveindustrial animal agriculture operations despite promising to align its investments with the 2015Paris Agreement. Between 2018 and 2024, activists say the bank invested $650 million in such projects.[84]
The following table lists the top 15 DAC 5 Digit Sectors[85] to which the World Bank has committed funding, as recorded in itsInternational Aid Transparency Initiative (IATI) publications. The World Bank states on the IATI Registry website that the amounts "will cover 100% ofIBRD andIDA development flows" but will not cover other development flows.[86]
| Committed funding (US$ millions) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sector | Before 2007 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Sum |
| Road transport | 4,654.2 | 1,993.5 | 1,501.8 | 5,550.3 | 4,032.3 | 2,603.7 | 3,852.5 | 2,883.6 | 3,081.7 | 3,922.6 | 723.7 | 34,799.8 |
| Social/ welfare services | 613.1 | 208.1 | 185.5 | 2,878.4 | 1,477.4 | 1,493.2 | 1,498.5 | 2,592.6 | 2,745.4 | 1,537.7 | 73.6 | 15,303.5 |
| Electrical transmission/ distribution | 1,292.5 | 862.1 | 1,740.2 | 2,435.4 | 1,465.1 | 907.7 | 1,614.9 | 395.7 | 2,457.1 | 1,632.2 | 374.8 | 15,177.8 |
| Public finance management | 334.2 | 223.1 | 499.7 | 129.0 | 455.3 | 346.6 | 3,156.8 | 2,724.0 | 3,160.5 | 2,438.9 | 690.5 | 14,158.6 |
| Rail transport | 279.3 | 284.4 | 1,289.0 | 912.2 | 892.5 | 1,487.4 | 841.8 | 740.6 | 1,964.9 | 1,172.2 | −1.6 | 9,862.5 |
| Rural development | 335.4 | 237.5 | 382.8 | 616.7 | 2,317.4 | 972.0 | 944.0 | 177.8 | 380.9 | 1,090.3 | −2.5 | 7,452.4 |
| Urban development and management | 261.2 | 375.9 | 733.3 | 739.6 | 542.1 | 1,308.1 | 914.3 | 258.9 | 747.3 | 1,122.1 | 212.2 | 7,214.9 |
| Business support services and institutions | 113.3 | 20.8 | 721.7 | 181.4 | 363.3 | 514.0 | 310.0 | 760.1 | 1,281.9 | 1,996.0 | 491.3 | 6,753.7 |
| Energy policy and administrative management | 102.5 | 243.0 | 324.9 | 234.2 | 762.0 | 654.9 | 902.1 | 480.5 | 1,594.2 | 1,001.8 | 347.9 | 6,648.0 |
| Agriculturalwater resources | 733.2 | 749.5 | 84.6 | 251.8 | 780.6 | 819.5 | 618.3 | 1,040.3 | 1,214.8 | 824.0 | −105.8 | 7,011.0 |
| Decentralisation and support to subnational government | 904.5 | 107.9 | 176.1 | 206.7 | 331.2 | 852.8 | 880.6 | 466.8 | 1,417.0 | 432.5 | 821.3 | 6,597.3 |
| Disaster prevention and preparedness | 66.9 | 2.7 | 260.0 | 9.0 | 417.2 | 609.5 | 852.9 | 373.5 | 1,267.8 | 1,759.7 | 114.2 | 5,733.5 |
| Sanitation - large systems | 441.9 | 679.7 | 521.6 | 422.0 | 613.1 | 1,209.4 | 268.0 | 55.4 | 890.6 | 900.8 | 93.9 | 6,096.3 |
| Water supply - large systems | 646.5 | 438.1 | 298.3 | 486.5 | 845.1 | 640.2 | 469.0 | 250.5 | 1,332.4 | 609.9 | 224.7 | 6,241.3 |
| Health policy and administrative management | 661.3 | 54.8 | 285.8 | 673.8 | 1,581.4 | 799.3 | 251.5 | 426.3 | 154.8 | 368.1 | 496.0 | 5,753.1 |
| Other | 13,162.7 | 6,588.3 | 8,707.1 | 11,425.7 | 17,099.5 | 11,096.6 | 16,873.4 | 13,967.1 | 20,057.6 | 21,096.5 | 3,070.3 | 140,074.5 |
| Total | 24,602.6 | 13,069.4 | 17,712.6 | 27,152.6 | 33,975.6 | 26,314.8 | 34,248.6 | 27,593.9 | 43,748.8 | 41,905.2 | 7,624.5 | 297,948.5 |
The World Bank has long been criticized by non-governmental organizations, such as the indigenous rights groupSurvival International, and academics, includingHenry Hazlitt,Ludwig Von Mises, and its former Chief EconomistJoseph Stiglitz.[87][88][89] Stiglitz is equally critical of theInternational Monetary Fund, theUS Treasury Department, and the US and other developed country trade negotiators.[90] Hazlitt argued that the World Bank along with the monetary system it was designed within would promote world inflation and "a world in which international trade is State-dominated" when they were being advocated.[91] Stiglitz argued that thefree market reform policies that the bank advocates are often harmful toeconomic development if implemented badly, too quickly ("shock therapy"), in the wrong sequence or in weak, uncompetitive economies.[88][92]
World Bank loan agreements can also force procurements of goods and services at uncompetitive, non-free-market, prices.[93]: 5 Other critical writers, such asJohn Perkins, label the international financial institutions as 'illegal and illegitimate and a cog of coercive American diplomacy in carrying out financial terrorism.[94]
Defenders of the World Bank contend that no country is forced to borrow its money. The bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to internationalcapital markets. Furthermore, the loans, both to poor and middle-income countries, are below market-valueinterest rates. The World Bank argues that it can help development more through loans than grants because money repaid on the loans can then be lent for other projects.
The IFC and MIGA and their way of evaluating the social and environmental impact of their projects has also been criticized. Critics state that even though IFC and MIGA have more of these standards than the World Bank, they mostly rely on private-sector clients to monitor their implementation and miss an independent monitoring institution in this context. This is why an extensive review of the institutions' implementation strategy of social and environmental standards is demanded.[95]
One of the most common criticisms of the World Bank has been the way it is governed. While the World Bank represents 188 countries, it is run by a small number of economically powerful countries. These countries (which also provide most of the institution's funding) choose the bank's leadership and senior management, and their interests dominate.[96]: 190 Titus Alexander argues that the unequal voting power of western countries and the World Bank's role indeveloping countries makes it similar to the South African Development Bank under apartheid, and therefore a pillar ofglobal apartheid.[97]: 133–141
In the 1990s, the World Bank and the IMF forged theWashington Consensus, policies that includedderegulation and liberalization of markets,privatization and thedownscaling of government. Though the Washington Consensus was conceived as a policy that would best promote development, it was criticized for ignoring equity, employment, and how reforms like privatization were carried out. Stiglitz argued that the Washington Consensus placed too much emphasis on GDP growth and not enough on the permanence of growth or on whether growth contributed to better living standards.[89]: 17
TheUnited States Senate Committee on Foreign Relations report criticized the World Bank and other international financial institutions for focusing too much "on issuing loans rather than on achieving concrete development results within a finite period of time" and called on the institution to "strengthen anti-corruption efforts".[98]
James Ferguson has argued that the main effect of many development projects carried out by the World Bank and similar organizations is not the alleviation of poverty. Instead, the projects often serve to expand the exercise of bureaucratic state power. His case studies of development projects inThaba-Tseka show that the World Bank's characterization of the economic conditions inLesotho was flawed, and the bank ignored the political and cultural character of the state in crafting its projects. As a result, the projects failed to help the poor but succeeded in expanding the government bureaucracy.[99]
Criticism of the World Bank and other organizations often takes the form ofprotesting, such as theWorld Bank Oslo 2002 Protests,[100] the 2007October Rebellion,[101] and the 1999Battle of Seattle.[102] Such demonstrations have occurred all over the world, even among the BrazilianKayapo people.[103]
Another source of criticism has been the tradition of having an American head the bank, implemented because the United States provides the majority of World Bank funding. "When economists from the World Bank visit poor countries to dispense cash and advice," observedThe Economist in 2012, "they routinely tell governments to rejectcronyism and fill each important job with the best candidate available. It is good advice. The World Bank should take it."[104]
In 2021, an independent inquiry of the World Bank'sDoing Business reports by the law firmWilmerHale found that World Bank leaders, including then-Chief ExecutiveKristalina Georgieva and then-PresidentJim Yong Kim,[105] pressured staff members of the bank to alter data to inflate the rankings forChina,Saudi Arabia,Azerbaijan and theUnited Arab Emirates.[106][107]
In September 2023, it was revealed that the World Bank had poured billions of dollars into fossil fuel projects in 2022. Campaigners estimated that about $3.7bn in trade finance was supplied to oil and gas projects despite the World Bank's green pledges.[108]
The World Bank's Integrity Vice Presidency (INT) is charged with the investigation of internal fraud and corruption, including complaint intake, investigation, and investigation reports.[109]
The effect ofstructural adjustment policies on poor countries has been one of the most significant criticisms of the World Bank.[110] The1979 energy crisis plunged many countries into economic crisis.[111]: 68 The World Bank responded withstructural adjustment loans, which distributed aid to struggling countries while enforcing policy changes in order to reduce inflation and fiscal imbalance. Some of these policies included encouragingproduction, investment and labour-intensive manufacturing, changing realexchange rates, and altering the distribution of government resources. Structural adjustment policies were most effective in countries with an institutional framework that allowed these policies to be implemented easily. For some countries, particularly inSub-Saharan Africa, economic growth regressed and inflation worsened.
By the late 1980s, some international organizations began to believe that structural adjustment policies were worsening life for the world's poor, due to a reduction in social spending and an increase in the price of food, as subsidies were lifted. It also have been criticized for beingDebt-trap diplomacy. The World Bank changed structural adjustment loans, allowing for social spending to be maintained, and encouraging a slower change to policies such as transfer of subsidies and price rises.[111]: 70 In 1999, the World Bank and the IMF introduced thePoverty Reduction Strategy Paper approach to replace structural adjustment loans.[112]: 147
Some critics,[113] most prominently the authorNaomi Klein, are of the opinion that the World Bank Group's loans and aid have unfair conditions attached to them that reflect the interests, financial power and political doctrines (notably theWashington Consensus) of the bank and the countries that are most influential within it. Among other allegations, Klein says the Group's credibility was damaged "when it forced school fees on students in Ghana in exchange for a loan; when it demanded that Tanzania privatise its water system; when it made telecom privatisation a condition of aid forHurricane Mitch; when it demanded labour 'flexibility' in Sri Lanka in the aftermath of theAsian tsunami; when it pushed for eliminating food subsidies in post-invasion Iraq".[114]
A study of the period 1970–2004 found that a less-developed country would on average receive more World Bank projects during any period when it occupied one of the rotating seats on the UN Security Council.[115]
The World Bank requiressovereign immunity from countries it deals with.[116][117][118] Sovereign immunity waives a holder from all legal liability for their actions. It is proposed that this immunity from responsibility is a "shield which The World Bank wants to resort to, for escaping accountability and security by the people".[116] As the United States has veto power, it can prevent the World Bank from taking action against its interests.[116]
Criticism was also leveled under the presidency ofJim Yong Kim, particularly regarding financial management and staff morale. Reports of a controversial $94,000 bonus awarded to the Bank's CFO,Bertrand Badré (2013–2016), at his request on top of a tax-free salary of $379,000, while significant staff cuts and austerity measures were being implemented, drew criticism from within and outside the organization. This bonus, revealed by Senior Country OfficerFabrice Houdart amidst a broader effort by Kim to implement cost-cutting reforms, sparked debates over transparency, ethics, and the organization's commitment to its own principles, further exacerbating concerns about trust and leadership within the World Bank. Badré renounced the bonus and left the Bank shortly after.[119][120][121][122][123]
The World Bank was the subject of a scandal with its then-presidentPaul Wolfowitz and his aide,Shaha Riza, in 2007.[124]
According to reports citing a recording of a 2018 staff meeting shared by awhistleblower, World Bank staff were informed Robert Malpass, a recent economics graduate ofCornell University and the son ofDavid Malpass, then USUnder Secretary of the Treasury for International Affairs and laterPresident of the World Bank Group, would be hired as an analyst in July of that year. On the recording, staff were reportedly told Robert Malpass was a "prince" and an "important little fellow" who could go "running to daddy." Bank officials also believed David Malpass was more influential than then-US Treasury SecretarySteven Mnuchin, who they said "has little or no clue on things."[125] In April 2018, the US Treasury had changed its position to back a $13 billion capital infusion for the bank.[126]
Malpass served as undersecretary of theUS Treasury in theTrump administration before being appointed by Trump in February 2019 to be World Bank's president. Before Malpass became president, his son Robert had joined theInternational Finance Corporation (IFC), a branch of the World Bank Group that lends money to private sector businesses and whoseUSD 5.5 billion funding from a USD 13 billion World Bank capital increase was secured by the US Treasury at the time that David Malpass was the Treasury's undersecretary.[125]
Almost 45% of all the World Bank's resources are going to Africa, despite this the region continues to face significant financing gaps and development challenges.[127]
On 9 August 2023, the World Bank announced it was suspending new loans to Uganda because it claims that a newanti-homosexuality act, enacted in May 2023, contradicts its core values on human rights. The World Bank joined the United States in imposing sanctions against Uganda over the anti-homosexuality law. Uganda dismissed the move by the World Bank as unjust and hypocritical.[128]
The World Bank funded a program in Tanzania supposed to help nature conservation. The program was criticized because it led to severe violation of human rights toward theMaasai people.[129]
The World Bank Group has also been criticized for investing in projects with human rights issues.[130]
TheCompliance Advisor/Ombudsman (CAO) criticized a loan the bank made to the palm oil company Dinant after the2009 Honduran coup d'état. There have been numerous killings of Campesinos in the region where Dinant was operating.[131]
Other controversial investments include loans to theChixoy Hydroelectric Dam in Guatemala while it was under military dictatorship, and toGoldcorp (then Glamis Gold) for the construction of theMarlin Mine.
In 2019, theCongressional-Executive Commission on China questioned the World Bank about a loan inXinjiang, China, that was used to buy high-end security gear, including surveillance equipment.[132][133] The bank launched an internal investigation in response to the allegation. In August 2020, U.S. lawmakers questioned the continued disbursement of the loan.[134]
The president of the bank is the president of the entire World Bank Group. The president is responsible for chairing meetings of the boards of directors and for overall management of the bank.
Traditionally, based on a tacit understanding between the United States and Europe, thepresident of the World Bank has been selected from candidates nominated by the United States, the largest shareholder in the bank. The World Bank tends to lend more readily to countries that are friendly with the United States, not because of direct U.S. influence but because of the employees of the World Bank.[135] The nominee is subject to confirmation by the board of executive directors to serve a five-year, renewable term. While most World Bank presidents have had banking experience, some have not.[136][137]
On 23 March 2012, U.S. presidentBarack Obama announced that the United States would nominateJim Yong Kim as the next president of the bank.[138] Jim Yong Kim was elected on 27 April 2012 and reelected to a second five-year term in 2017. He announced his resignation effective 1 February 2019 and[139] was replaced on an interim basis by now-former World Bank CEOKristalina Georgieva, then byDavid Malpass on 9 April 2019. Malpass faced criticism in 2023 as he had "sparked outcry by appearing to question therole of humans in climate change".[82]
In 2023, a new president was appointed:Ajay Banga. His term began on 2 June 2023. He was supported by the American presidentJoe Biden partly because he supportsclimate action.[82] He is also expected to help low-income countries deal with debts. He is the first Indian American to lead the bank.[82]
| Name | Dates | Nationality | Previous work |
|---|---|---|---|
| Eugene Meyer | 1946–1946 | United States | Newspaper publisher andChairman of the Federal Reserve |
| John J. McCloy | 1947–1949 | United States | Lawyer andUnited States Assistant Secretary of War |
| Eugene R. Black, Sr. | 1949–1963 | United States | Bank executive withChase Bank and executive director with the World Bank |
| George Woods | 1963–1968 | United States | Bank executive withFirst Boston |
| Robert McNamara | 1968–1981 | United States | President of theFord Motor Company,United States Secretary of Defense under presidentsJohn F. Kennedy andLyndon B. Johnson |
| Alden W. Clausen | 1981–1986 | United States | Lawyer, bank executive withBank of America |
| Barber Conable | 1986–1991 | United States | New York State Senator and US Congressman |
| Lewis T. Preston | 1991–1995 | United States | Bank executive withJ.P. Morgan & Co. |
| James Wolfensohn | 1995–2005 | United States and Australia | Wolfensohn was a naturalised American citizen before taking office. Corporate lawyer and banker |
| Paul Wolfowitz | 2005–2007 | United States | US Ambassador to Indonesia, US Deputy Secretary of Defense, dean of the School of Advanced International Studies (SAIS) at Johns Hopkins University, a prominent architect of2003 invasion of Iraq, resigned World Bank post due to ethics scandal[140] |
| Robert Zoellick | 2007–2012 | United States | United States Deputy Secretary of State andUS Trade Representative |
| Jim Yong Kim | 2012–2019 | United States | Former Chair of the Department of Global Health and Social Medicine atHarvard, president ofDartmouth College, naturalized American citizen[136] |
| Kristalina Georgieva (acting) | 2019 |  Bulgaria | FormerEuropean Commissioner for the Budget and Human Resources and 2010's "European of the Year" |
| David Malpass | 2019–2023 | United States | Under Secretary of the Treasury for International Affairs |
| Ajay Banga | 2023–present | United States | Former head ofMastercard[82] |
The vice presidents of the bank are its principal managers, in charge of regions, sectors, networks and functions. There are two executive vice presidents, three senior vice presidents, and 24 vice presidents.[141]
The boards of directors consist of the World Bank Group president and 25 executive directors. The president is the presiding officer, and ordinarily has no vote except to break a tie. The executive directors as individuals cannot exercise any power or commit or represent the bank unless the boards specifically authorized them to do so. With the term beginning 1 November 2010, the number of executive directors increased by one, to 25.[142]
| Name | Dates | Nationality |
|---|---|---|
| Hollis B. Chenery | 1972–1982 | United States |
| Anne Osborn Krueger | 1982–1986 | |
| Stanley Fischer | 1988–1990 | United States and Israel |
| Lawrence Summers | 1991–1993 | United States |
| Michael Bruno | 1993–1996 | Israel |
| Joseph E. Stiglitz | 1997–2000 | United States |
| Nicholas Stern | 2000–2003 | United Kingdom |
| François Bourguignon | 2003–2007 | France |
| Justin Yifu Lin | 2008–2012 | China |
| Kaushik Basu | 2012–2016 | India |
| Paul Romer | 2016–2018 | United States |
| Shanta Devarajan(Acting) | 2018–2018 | |
| Penny Goldberg[144][145][146] | 2018–2020 | |
| Aart Kraay(Acting)[147][148] | 2020–2020 | |
| Carmen Reinhart | 2020–2022 | United States |
| Indermit Gill | 2022–present | India |
In 2020, the World Bank had 12,300 full-time staff, and it operated in 145 countries.[55]
Some notablepoliticians who worked for the World Bank include:
Mr. Clausen was chosen by President Jimmy Carter to lead the World Bank shortly before Mr. Carter was defeated by Ronald Reagan in 1980, but the new administration supported Mr. Clausen's nomination.
That focus paid dividends when President Jimmy Carter nominated him in 1980 to succeed Robert McNamara as president of the World Bank.
Text was copied from this source, which is available under aCreative Commons Attribution 4.0 International License
{{cite report}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)Kim is a naturalized US citizen who was born in Korea.
Media related toWorld Bank Group at Wikimedia Commons
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