World Bank

When ordinary people need money to build or buy a home or start or improve a business, the bank is one of the most practical places to go where one can make a loan. People borrow money for various pursposes, which they believe would make their lives better. Banks, on the other hand, lend money for business, which is geared either towards making profits or towards helping a community or maybe both. Whatever purposes each party has, money made a point that it is vital in the realization of individual development specifically in terms of ensuring material wealth and economic stability. If banks in the micro-ecoomic perspective already play an essential role, how much more for bigger economic needs? In other words, where do nations go when they need money to finance their development projects? Practically, a super power bank can only address a national need and World Bank is one.

The World Bank is no alien name especially for people living in third world countries. It is the bank division of the World Bank Group that was organized and established in December 27, 1945 following the Monetary and Financial Conference of the United Nations in July 1944. The conference resolved to organize a financial institution that would aid post-war and post-natural disaster rehabilitation needs of developing and poor nations.

So what does the World Bank do? It finances big infrastructure and poverty-alleviation projects of poor countries through loans. World Bank loans have been very helpful in building and rebuilding nations stricken by economic crisis and various forms of nation’s conflict that undermines the economic and socila welfare of its people. The first loan and even the biggest ever granted by the bank is the $250 million post-war reconstruction fund for France in 1946.

Organization

World Bank is not actually a bank where ordinary people can open savings deposits account and avail other banking services. It is actually a non-profit organization funded by 185 member countries, which serve as shareholders. The United States, United Kingdom, France, Germany and Japan are the five biggest shareholders of the bank. World Bank is consist of two implementing agencies namely the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Goals

Global poverty reduction is the main goal of World Bank. In fact, it continues to work with United Nations in helping achieve the Millennium Development Goals, which calls for the elimination of poverty and the implementation of sustainable development in the entire nations of the world.

Providing low or no interest loans and financial grant to poor countries, which has no or little access to international credit markets is one of the ways the bank adopts to realize its goals.

Condition

The bank critically provides loan under economically sustainable conditions such that the project proposal for the loan should meet significant economical , financial, and environmental impact.

So how does the World Bank earn? The bank actually obtains operation funds mainly from the sale of AAA-rated bonds of IBRD to the financial markets of the world. Aside from thea IBRD also generates income from capital lending. The IDA, on the other hand, sources out majority of its funds from the 40 donor countries, which constantly replenish the bank with money every three years. Loan repayments also contribute in the income of the bank.

Moreover, World Bank also provides analytical and advisory services to underdeveloped countries in implementing long-term economic and social improvements that are geared towards global progress.

Many issues are being hurled against World Bank especially with regards to granting loans and setting priority countries. However, it is undeniable that since its existence millions of people from around the world had better lives because of the financial aids and projects the bank has imparted to their countries particularly its government.