The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, came into existence on December 27, 1945 following international ratification of the agreements reached at the Bretton Woods Conference of July 1 - July 22, 1944.
The World Bank is an international organization that provides long term loans, grants, and technical assistance, to help developing countries implement their poverty reduction strategies. As such, World Bank financing can be used in many different areas, from reform of health and education sector, to environmental and infrastructure projects, including dams, roads, and national parks.
Commencing operations on June 25, 1946, it approved its first loan on May 9, 1947 ($250m to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date).
Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank Group. The Group's headquarters are in Washington, D.C.. The World Bank Group is presently headed by president (1995-2005) James D. Wolfensohn, who is president of the IBRD as well as the four affiliated institutions. The Bank also serves as one of several Implementing Agencies for the UN Global Environment Facility (GEF).
The IBRD provides loans to governments and public enterprises, always with a government (or "sovereign") guarantee. The funds for this lending come from a combination of the repayment of past loans and the issuing of bonds on the global capital markets. The IBRD is one of the highest rated borrowers on the international markets, and is thus able to borrow at relatively low interest rates. It lends to countries at interest rates that are usually still quite attractive to them, by adding a small margin (about 1%) to its borrowing costs to cover administrative overheads.
The IBRD's three major affiliated agencies are: the International Development Association (IDA) which was established in 1960, the International Finance Corporation (IFC) established in 1956, and the Multilateral Investment Guarantee Agency (MIGA) established in 1988. IDA provides "soft" loans, with repayment periods of some 30 years and no interest, to the poorest countries (generally with per capita incomes below $500 per year). IFC provides financing to the private sector, while MIGA provides political risk insurance for private companies making investments in developing countries. IDA lending is funded by direct contributions from rich country governments, while IFC and MIGA get their funds through bonds issued on the global capital markets (like IBRD).
In addition to financing, the World Bank Group provides advice and assistance to developing countries on almost every aspect of economic development.
Each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital. The IBRD has 185 member governments, and the other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of 24 Executive Directors, with each Director representing either one country (for the largest countries), or a group of countries. Directors are appointed by their respective governments.
Though repeatedly relied upon by impoverished governments around the world as a contributor of development finance, the Bank has been criticised by opponents of corporate "neo-colonial" globalization for undermining the national sovereignty of recipient countries through its pursuit of economic liberalisation.
The IBRD was established mainly as a vehicle for reconstruction of Europe and Japan after World War II, with an additional mandate to foster economic growth in developing countries in Africa, Asia and Latin America. Originally the bank focused mainly on large scale infrastructure projects, building highways, airports, and powerplants. As Japan and its European client countries "graduated" (achieved certain levels of income per capita), the IBRD became focused entirely on developing countries. Since the early 1990s the IBRD has also provided financing to the post-Socialist states of Eastern Europe and the Former Soviet Union.
In recent years the World Bank Group has been moving from targeting economic growth in aggregate, to aiming specifically at poverty reduction. It has also become more focused on support for small scale local enterprises. It has embraced the idea that clean water, education, and sustainable development are essential to economic growth and has begun investing heavily in such projects. In response to external critics, the World Bank Group's institutions have adopted a wide range of environmental and social safeguard policies, designed to ensure that their projects do not harm individuals or groups in client countries. Despite these policies, World Bank Group projects are frequently criticized by non-governmental organizations (NGOs) for causing environmental and social damage and for not achieving their intended goal of poverty reduction.