Everything about The International Bank For Reconstruction And Development totally explained
The
International Bank for Reconstruction and Development (IBRD) is one of five institutions that comprise the
World Bank Group. The IBRD is an
international organization whose original mission was to finance the reconstruction of nations devastated by the
World War II. Now, its mission has expanded to fight
poverty by means of financing
states. Its operation is maintained through payments as regulated by member states. It came into existence on
December 27,
1945 following international ratification of the agreements reached at the
United Nations Monetary and Financial Conference of
July 1 to
July 22,
1944 in
Bretton Woods, New Hampshire.
The IBRD provides loans to governments, and public enterprises, always with a government (or "sovereign") guarantee of repayment. The funds for this lending come primarily from the issuing of World Bank
bonds on the global
capital markets—typically $12–15 billion per year. These bonds are rated AAA (the highest possible) because they're backed by member states' share capital, as well as by borrowers' sovereign guarantees. (In addition, loans that are repaid are recycled, or relent.) Because of the IBRD's credit rating, it's able to borrow at relatively low interest rates. As most developing countries have considerably lower credit ratings, the IBRD can lend to countries at interest rates that are usually quite attractive to them, even after adding a small margin (about 1%) to cover administrative overheads.
History
Commencing operations on
June 25,
1946, it approved its first loan on
May 9,
1947 ($250m to
France for postwar reconstruction, in
real terms the largest loan issued by the Bank to date).
The IBRD was established mainly as a vehicle for reconstruction of Europe and Japan after World War II, with an additional mandate to foster economic growth in developing countries in Africa, Asia and Latin America. Originally the bank focused mainly on large-scale infrastructure projects, building
highways,
airports, and
powerplants. As Japan and its European client countries "graduated" (achieved certain levels of income per capita), the IBRD became focused entirely on developing countries. Since the early 1990s the IBRD has also provided financing to the post-Socialist states of
Eastern Europe and the former
Soviet Union.
Further Information
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