International financial institutions


Where does the World Bank get its money?


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15.3.6 Where does the World Bank get its money?
The World Bank raises money for its development programmes 
by tapping the world’s capital markets and in the case of the IDA, 
through contributions from wealthier member governments. IBRD, 


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which accounts for about three-fourths of the Bank’s annual lending, 
raises almost all its money in financial markets. One of the world’s 
most prudent and conservatively managed financial institutions, the 
IBRD sells AAA-rated bonds and other debt securities to pension 
funds, insurance companies, corporations, other banks and 
individuals around the globe. IBRD charges interest from its 
borrowers at rates, which reflect its cost of borrowing. Loans must be 
repaid in 15 to 20 years; there is a three to five year grace period 
before repayment of principal begins. IDA helps to promote growth 
and reduce poverty in the same ways as does the IBRD but using 
interest free loans (which are known as IDA “credits”), technical 
assistance and policy advice. IDA credits account for about one-fourth 
of all Bank lendings. Borrowers pay a fee of less than 1 per cent of the 
loan to cover administrative costs. Repayment is required in 35 to 40 
years with a 10 years grace period. Nearly 40 countries contribute to 
IDA’s funding, which is replenished every three years. IDA’s funding is 
managed in the same prudent, conservative and cautious way as is 
the IBRD’s. Like the IBRD, there has never been default on an IDA 
credit.
15.3.7 Who runs the World Bank?
The World Bank is owned by more than 180 member countries 
whose views and interests are represented by a board of governors 
and a Washington based board of directors. Member countries are 
shareholders who carry ultimate decision making power in the World 
Bank. Each member nation appoints a governor and an alternate 
governor to carry out these responsibilities. The governors, who are 


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usually officials such as ministers of finance or planning, meet at the 
Bank’s annual meetings each fall. They decide on key Bank policy 
issues, admit or suspend country members, decide on changes in the 
authorised capital stock, determine the distribution of the IBRD’s net 
income and endorse financial statements and budgets.

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