World Bank

Background and evolution

As the Second World War drew to a close, delegates from 44 countries met at Bretton Woods, New Hampshire, to design institutions that would prevent the economic chaos of the interwar years. Two bodies emerged: the International Monetary Fund, to oversee exchange rates and balance of payments, and the International Bank for Reconstruction and Development, to finance post-war reconstruction and later development. India's delegation, led by Sir Jeremy Raisman with economists including C. D. Deshmukh, took part.

The IBRD's first loan, in 1947, went to France for reconstruction. As Europe recovered with help from the Marshall Plan, the Bank shifted its focus to developing countries in Asia, Africa and Latin America. In 1960 the International Development Association was set up to give concessional loans and grants to the poorest countries, which could not borrow on IBRD terms.

Key features and provisions

• IBRD: lends to middle-income and creditworthy lower-income countries at near-market rates, raising money by issuing bonds on world capital markets.
• IDA: provides long-term, low-interest or interest-free credits and grants to the poorest countries, funded by donor contributions replenished every three years.
• IFC: invests in private sector companies in developing countries.
• MIGA: provides political risk insurance to investors.
• ICSID: provides facilities for settling investment disputes between governments and foreign investors.
• Governance: voting power is linked to capital subscriptions, giving the largest shareholders, led by the United States, the most influence; the US holds enough votes to veto certain major decisions.
• Knowledge role: the Bank produces research, data and policy advice, including country diagnostics and global reports.