World Bank Building at washington

We are all aware of the “World Bank”. However, very few of us know its functioning and challenges. This article will cover the working of the world bank. The world bank grants loans to developing countries to establish their economies. Since its inception in 1944, The world bank has disbursed loans to many countries to alleviate poverty, reduce unemployment and other Challenges.

Its stated mission is to fight poverty and inequality. It offered money and advice to developing countries. It was conceived in 1944 at the same conference Bretton Woods, New Hampshire, that invented the International Monetary Fund (IMF), whereas the fund is to tackle the acute crisis. These crises include currency misalignment, capital flight it and sudden shortages of dollars. The bank is charged with tackling chronic, long-run problems of deprivation and backwardness. A big part of its original mission was to help rebuild Europe’s war blasted infrastructure. The World Bank gave is the first loan to France. But 803 countries sun came knocking too. Chile asks for help up a few months after the Bank opened its doors in 1946.

A view of Dollar Currency

Today, the bank is composed of five organizations, including an agency that guarantees loans, a center that settles investment disputes, a corporation that invests in private firms and promotes entrepreneurship and the two biggest units which together constitute world Bank proper: The International Development Association (IDA) and the International Bank for reconstruction and development (IBRD).

IDA is the simpler of the two institutions. It collects donations every three years from the bank’s richer Nations and gives the money to the world’s poorest countries. This money is in the form of zero interest loans or outright grants that need not be repaid. It recently gave 90 million dollars to Benin to help reduce the country’s fertility rate by providing contraception and education to young women. In the last fiscal year, IDA doled out 24 billion dollars, of which thirty-six percent went to its three biggest beneficiaries: Ethiopia, Bangladesh, and Nigeria. Countries supposed to graduate out of receiving IDA’s assistance. China took its last money e in 1999 while India in 2014.

2005: IBRD loans and IDA credits

IBRD is more controversial. Because it has the backing of the world governments. It can borrow money cheaply e on the International Financial markets. It then lends that money e a little less cheaply middle-income countries, including Brazil and China. Critics have pointed out that many of these governments can now borrow in abundance from foreign investors themselves, without the bank stepping in. The IBRD’s supporters argue that the bank’s lending gives it skin in the game and a more receptive audience for its policy advice. This is how it really makes a difference.

Dollar Course: The currencies of many developing states show a declining trend

On April 5th, 2019 the World bank appointed boss: David Malpass, a former economic advisor to president Donald Trump and senior official in the Treasury Department. One of IBRD’s critic is Mr. Malpass. He wants the bank to focus more tightly on promoting economic growth and to lend less to its richer borrowers especially China. What does the world bank do? Too much, according to the man who now leads it. The future of the world bank is solely dependent on its policies for developing countries. The world bank may sooner or later introduce new reforms to make it a more viable option for developing as well as the developed states. Many rising economies consider the world bank as a savior. However, the practical work of the world bank is directly related to its long term and distinctive policies for the developing countries.