IBRD and IDA The oldest of the World Bank agencies - the International Bank for Reconstruction and

Development (IBRD) - was set up in !"" at a conference convened in the town of Bretton Woods# $ew %ampshire# at the end of the &econd World War with the original intention of providing low interest loans to 'urope and (apan to help re)uild their infrastructure after the devastation of the war* This plan was scuppered when these countries opted instead to take mone+ from the ,nited &tates -arshall .lan# which provided grants (mone+ that does not have to )e repaid)# for the same purpose* /ver the ne0t few decades the IBRD rewrote its original mandate to provide cheap loans to the Third World instead* The two men who shaped the institution were pro)a)l+ (ohn -a+nard 1e+nes# the )rains )ehind the Bretton Woods conference (also the architect of the 2ross $ational .roduct economic indicator) and Ro)ert -c$amara# who headed up the World Bank in the !34s# after he left his 5o) at the .entagon spearheading the 6ietnam War for the ,nited &tates* Toda+ the IBRD7s policies are dictated )+ the mem)er countries who run the institution* Although almost ever+ countr+ in the world is a mem)er# the agenc+ is ruled on the principal 8one dollar# one vote8 and so it is controlled )+ the ,&# the ,1# (apan# 2erman+# 9rance# :anada# and Ital+ -- the 82roup of 3#8 which holds over "4; of the votes on their )oards In fiscal !!!# the IBRD loaned out ,&<==*= )illion# up from ,&<= )illion dollars the previous +ear# making it the )iggest source of development capital for Third World countries and the former &oviet )loc* -an+ of these loans are for ma5or industrial development pro5ects like dam )uilding# power plants and mining for non-renewa)le resources like gold and copper* In addition the IBRD dispenses loans for social matters such as education and health )ut these loans are often linked to strict economic policies such as &tructural Ad5ustment .rograms that have often e0acer)ated local pro)lems* 9inall+ )ecause these loans are often designed in Washington )+ the Bank7s own staff# the+ often reflect theoretical models that have little relevance in the )orrowing countries* A leaked -a+ !!! draft Bank review of structural and sectoral ad5ustment loans severel+ critici>ed their treatment of environmental and social issues* The review assessed ?" such loans approved )etween (ul+ !!3 and Decem)er !!@ and found that onl+ =4; contained a environmental goals or conditionalities - down from A4; in !!"* 9urthermore# according to the document# 77the majority of loans do not address poverty directly, the likely economic impact of proposed operations on the poor, or ways to mitigate negative effects of reform*77 Although most pro5ects did achieve their short-term ph+sical o)5ectives# according to the report# onl+ ""; were likel+ to )e sustained after completion - largel+ )ecause staff appraisals underestimated the pro5ects7 recurrent costs# which would have to )e )orne )+ the agenc+7s )orrowers*

The IBRD makes loans to countries at the )est possi)le market rates )ecause its )onds have the highest possi)le credit rating on Wall &treet* The agenc+ has this high rating )ecause almost all its )orrowers pa+ their loans )ack on time# although the wa+ man+ )orrowers do this is )+ taking out fresh loans* In fact the Bank often receives more mone+ in de)t repa+ments than it makes in loans* :ontrar+ to pu)lic opinion# the agenc+ is not even a non-profit organi>ationB the Bank routinel+ makes a )illion dollars in profits ever+ +ear on the loans it makes* IBRD has three ma5or sister agencies - the International Development Agenc+ (IDA)# the International 9inance :orporation (I9:) and the -ultilateral Investment 2uarantee Agenc+* These four and the much smaller International :enter for the &ettlement of Investment Disputes (I:&ID) make up the World Bank group* ,nlike the IBRD the IDA makes loans at almost no interest over much longer periods of time (a 4*?; handling fee is charged) to the poorest countries* This agenc+ loaned out ,&<A*@ )illion dollars in fiscal !!!# down from the ,&<3*? )illion dollars that it loaned out in !!@* The I9: and -I2A do not make loans to countries* Instead the I9: makes loans to private corporations that have pro5ects in the Third World and former &oviet )loc* This includes ma5or multinational corporations like &hell and :oca-:ola* -I2A provides political risk insurance to companies that are worried that their assets ma+ )e sei>ed )+ local governments or destro+ed in war or other civil distur)ances* The region that received the most loans from IBRD and IDA was 'ast Asia and the .acific# struggling to recover from the financial crisis of !!3-!@# with ,&<!*@ )illion# followed )+ Catin America and the :ari))ean with ,&<3*3 )illion* The region suffered ripple effects from the 'ast Asian meltdown as well as the ravages of %urricane -itch# which struck :entral America in /cto)er# !!@* 'urope and :entral Asia came third# with ,&<?*D )illion in new commitments# followed )+ &outh Asia ,&<=*A )illion# su)&aharan Africa with ,&<=* )illion and the -iddle 'ast and $orth Africa with ,&< *A )illion* Argentina is the Bank7s largest )orrower with ,&<D*= )illion in commitments from the Bank in fiscal !!!# followed )+ Indonesia# with ,&<=*3 )illion in commitments# :hina with ,&<=* )illion# &outh 1orea with ,&<= )illion# Russia with ,&< *! )illion# Bra>il with ,&< *3 )illion# Thailand with ,&< *D )illion# India with ,&< * )illion# Bangladesh ,&< )illion# and -e0ico with ,&<!?4 million* 9inancing designed to support over-arching polic+ themes such as privati>ation of state enterprises and commerciali>ation of services dominated the new commitments# with loans for 7multi- sector7 pro5ects and polic+ reforms amounting to ,&< 4*D* &ome ,&<"*? )illion went to transportation# industrial# oil and gas# energ+ and mining pro5ects# with another ,&<=*@ )illion for agriculture# ,&<3?D million for water and sanitation and ,&<A"3 million dollars for ur)an development* .opulation# health and nutrition pro5ects accounted for another ,&< * )illion dollars* 'ducation garnered ,&< *D )illion and ,&<=*3 )illion were earmarked for social programs* 'nvironmental lending amounted to ,&<?"4 million*

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