Is World Bank a Multilateral Development Bank?
The Department of Treasury leads the Administration's engagement in the multilateral development banks (MDBs), which include the World Bank, Inter-American Development Bank, Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.
Multilateral banks focus on infrastructure, step in to unlock capital necessary to fund new projects. Jin Liqun is the president of the Asian Infrastructure Investment Bank and he sat down with Wall Street week's David Westin to help explain his bank's role.
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.
The largest multilateral development bank in the world is the World Bank's International Bank for Reconstruction and Development – has 189 members indicating that almost every country in the world holds a share in this institution.
Unlike development banks, the IMF does not lend for specific projects. Instead, the IMF provides financial support to countries hit by crises to create breathing room as they implement policies that restore economic stability and growth. It also provides precautionary financing to help prevent crises.
To achieve this, we will work with all clients as one World Bank Group, in close partnership with other multilateral institutions, the private sector, and civil society. The World Bank Group is one of the world's largest sources of funding and knowledge for developing countries.
The World Bank, which has been semi-officially dominated by the U.S. since its founding, is one of these institutions. Unlike commercial banks, MDBs do not seek to maximize profits for their shareholders. Instead, they prioritize development goals, such as ending extreme poverty and reducing economic inequality.
| The World Bank Group building (Washington, DC) | |
|---|---|
| Established | 4 July 1944 |
| Type | Intergovernmental organization |
| Legal status | Treaty |
| Purpose | Economic development, poverty elimination |
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.
Despite these and other similarities, however, the Bank and the IMF remain distinct. The fundamental difference is this: the Bank is primarily a development institution; the IMF is a cooperative institution that seeks to maintain an orderly system of payments and receipts between nations.
What was the first multilateral development bank?
World Bank
The first, the International Bank for Reconstruction and Development (IBRD), was created in 1944. The IBRD provides primarily market-based loans (often referred to as non-concessional financial assistance) to the governments of middle-income countries.
The World Bank Group,
Founded in 1944, The World Bank group supports a broad range of programs aimed at reducing poverty and improving living standards in the developing world through its loans, policy advice and technical assistance.
The United States is the largest single shareholder, followed by Japan, Germany, the United Kingdom, and France. The rest of the shares are divided among the other member countries. A Board of Governors represents the Bank's government shareholders.
Member countries govern the World Bank Group through the Boards of Governors and the Boards of Executive Directors. These bodies make all major decisions for the organizations. To become a member of the Bank, under the IBRD Articles of Agreement, a country must first join the International Monetary Fund (IMF).
At the major MDBs they are one-size-fits-all, legalistic and inflexible policies, an approach that does not recognise the vastly different quality of legal frameworks and enforcement capacity across developing countries. They are time-consuming and expensive, and these costs are borne by the borrower.
IMF membership, which includes nearly all the world's nations, can facilitate this cooperation. IMF monitoring focuses on individual countries or bilateral surveillance, and the global economy or multilateral surveillance.
The Department of Treasury leads the Administration's engagement in the multilateral development banks (MDBs), which include the World Bank, Inter-American Development Bank, Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.
THE WORLD BANK MANDATE
World Bank assistance is generally long-term and is funded by member country contributions and by issuing bonds.
The Bottom Line. The World Bank is an international financial organization that provides funding to developing countries to support development. Financial assistance may come in the form of low-interest loans, zero-interest credits, or grants.
- International Bank for Reconstruction and Development. ...
- Korea Development Bank. ...
- Asian Development Bank. ...
- Development Bank of Japan. ...
- Brazilian Development Bank. ...
- International Finance Corporation. ...
- Bank Gospodarstwa Krajowego. ...
- Asian Infrastructure Investment Bank.
Is the World Bank a development finance institution?
The World Bank's Development Finance (DFi) Vice Presidency is responsible for managing and monitoring policies and procedures for World Bank development financing vehicles.
Criticisms of the World Bank
Conditionality: The World Bank has been criticized for attaching conditions to its loans and assistance, which are often referred to as "policy conditionality." Critics argue that these conditions can be onerous and may not reflect the needs and priorities of the recipient countries.
The comparative advantage of the World Bank comes from its powerful combination of country depth and global breadth, public and private sector instruments and relations, multisector knowledge, and the ability to mobilize and leverage financing.
India takes the top spot. Its $39.7bn debt towards the WB recorded at the end of 2021 is double that of the next biggest debtor, Indonesia, with $19.6bn. Pakistan and Bangladesh follow with $18.3bn and $17.8bn, respectively, according to WB figures.
World bank only uses per capita income for measuring development while UNDP uses many other factors like infant mortality, healthcare facility education level which help in improving the quality of life and helps in making the citizens more productive.
