The World Bank (collective name of IBRD and IDA) is a vital source of financial and technical assistance to developing countries around the world.
It provides low-interest loans, zero to low interest credits, and grants to developing countries which support a wide array of investments in areas such as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.
- The World Bank Group has set two goals for the world to achieve by 2030:
- End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%
- Promote shared prosperity by fostering the income growth of the bottom 40% for every country
The World Bank Group consists of 5 institutions, which are:
International Bank for Reconstruction and Development (IBRD):
- It supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges.
International Development Association (IDA):
- IDA aims to reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.
- IDA complements the World Bank’s original lending arm—the International Bank for Reconstruction and Development (IBRD).
- IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards
International Finance Corporation (IFC):
- IFC is the largest global development institution focused on the private sector in developing countries.
Multilateral Investment Guarantee Agency (MIGA):
- MIGA promotes cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders.
- These guarantees help protect investments against noncommercial risks and can help investors obtain access to funding sources with improved financial terms and conditions.
International Centre for Settlement of Investment Disputes (ICSID):
- ICSID is the world’s leading institution devoted to international investment dispute settlement by conciliation, arbitration or factfinding.
India and the World Bank Group
India is a member of four of the five constituents of the World Bank Group except for ICSID.
India is one of the founder members of IBRD, IDA, and IFC and became the member of MIGA in January 1994.