During 1940s, the biggest problem before the world economy was the reconstruction of the economies, the war had devastated.
It was realised that not merely achieving a sound financial system with balance of payments aid would be necessary for accelerated growth but arranging long term finance was also required.
Long term finance would not only help countries to globally compete but ultimately also result in liberalisation of trade.
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The current emphasis of IBRD is to support the less developed countries as most of the developed countries’ economies recovered quickly. The IBRD, known as the World Bank, came into force on July 1, 1944, during the Bretton Woods Conference. It is a sister institution to the IMF, but has s separate, distinct objective. Its head office is located in Washington D.C., USA.
Presently there are 185 members of the Bank. Membership is allowed only to those countries who are also members of the IMF. A member country’s voting power is dependent on the capital contribution. Like the IMF, the World Bank is also being dominated by the major Western countries.
Objectives:
The main objectives of IBRD are to assist the less developed countries in their development process through the provision of:
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i. Loans (particularly the guaranteeing of loans) for development projects, like infrastructure and/or industry.
ii. Technical assistance, being not available with the less developed countries, is being provided by the Bank. The Bank finances the cost of outside and domestic experts for preparation of feasibility and impact analysis of the projects.
Organisational Structure:
Like IMF, at the top is the Board of Governors. Each member nation appoints a Governor and an Alternate Governor. The Chairperson of the Board of Governors is the President of the World Bank. The Board of Governors is the main organ of the Bank to take policy decisions on the Bank’s activities, admission or suspension of any member, changes in the authorised capital stock, distribution of income, and endorsement of financial statements and budgets. The Board meets once a year.
Since the Board of Governors meets once a year, the bulk of the powers of the Board are delegated to the Board of Executive directors, who are responsible for operationalising the policy measures. The Executive Board comprises of five executive directors appointed by largest shareholders and 19 executive directors are elected by rest of the members. This Board meets twice a week to oversee loan applications and guarantees, new policies, the administrative budget, country assistance strategies, and borrowing and financial decisions.
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The President of the Bank, elected by the executive directors, is responsible for the management of the operations of the Bank. It employs 8,000 staff at the head quarters and 2000 in the field.