Multi-Lateral Summaries > World Bank Group (WB)

The World Bank is a vital source of financial and technical assistance to developing countries around the world. The World Bank Group consists of five organizations:

The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its 188 member countries. IBRD raises most of its funds on the world’s financial markets and has become one of the most established borrowers since issuing its first bond in 1947. The income that IBRD has generated over the years has allowed it to fund development activities and to ensure its financial strength, which enables it to borrow at low cost and offer clients good borrowing terms.

To meet the increasingly sophisticated demands of middle-income countries, IBRD is overhauling financial and risk management products, broadening the provision of free-standing knowledge services and making it easier for clients to deal with the Bank.

The International Development Association (IDA) provides interest-free loans—called credits— and grants to governments of the poorest countries.

The International Finance Corporation (IFC) provides loans, equity and technical assistance to stimulate private sector investment in developing countries.

The Multilateral Investment Guarantee Agency (MIGA) provides guarantees against losses caused by non-commercial risks to investors in developing countries.

The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.

Two of these are unique development institutions—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).The institutions play different but supportive roles in the Bank’s mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together they provide low-interest loans, and interest-free credit and grants to developing countries for education, health, infrastructure, communications, and many other purposes.

The IBRD and IDA offer two basic types of loans and credits: investment loans and development policy loans. Investment loans are made to countries for goods, works and services in support of economic and social development projects in a broad range of economic and social sectors. Development policy loans (formerly known as adjustment loans) provide quick-disbursing financing to support countries’ policy and institutional reforms.

Each borrower’s project proposal is assessed to ensure that the project is economically, financially, socially and environmentally sound. During loan negotiations, the Bank and borrower agree on the development objectives, outputs, performance indicators and implementation plan, as well as a loan disbursement schedule. While the Bank supervises the implementation of each loan and evaluates its results, the borrower implements the project or programme according to the agreed terms. As nearly 30 percent of Bank staff are based in some 100 country offices worldwide, three-quarters of outstanding loans are managed by country directors located away from the Bank offices in Washington.

TCB Related Programme

The Bank is the largest multilateral provider of Aid for Trade. It helps to make the world trading system more conducive to development and also contributes to shaping the growing agenda on regionalism and bilateral agreements, and to integrating trade into the growth strategies of developing countries. The Bank has been rapidly expanding its trade-related activities, which include operations, research and analysis, advocacy, training, and capacity building. Today, research work falls into various areas including poverty impacts of trade and adjustment policies; country competitiveness analyses; analysis of pro-active policies to enhance export supply response; analysis of national trade policies; the ongoing Doha Round of WTO negotiations; and the design and impact of regional trade agreements.

Trade-related lending

New World Bank trade-related lending for fiscal year 2012 (FY12) totaled $1.9 billion to help developing countries achieve their trade-reform objectives. This is nearly a fourfold increase from FY03 levels of $566 million. The share of trade-related lending in total Bank lending has also grown from an average of 2 percent in FY02-FY03 to 5 percent in FY12. New trade-related commitments in FY13 are expected to increase to US$3.0 billion, 70 percent of which will be in Africa. At the end of FY12, the stock of Bank trade-related lending was US$10.9 billion involving 189 projects. As in previous years the bulk of this lending has been driven by projects in trade facilitation and market access and in support of regional integration.

The Bank’s work on trade has two central objectives. At the global level, the Bank advocates changes in the world trading system to make it more supportive of development, especially in the poorest countries and for poor people across the developing world. This includes collaborating with the WTO, other multilateral agencies, governments in developing countries, and donors to support a “pro-development” outcome in the Doha Development agenda, as well as working with partners to maximize the development impact of regional trading agreements. The Bank undertakes research to better understand the role of international trade in development and poverty reduction. The Bank has also contributed significantly to the development of techniques and policy tools for analyzing the impact of trade policy reforms. At the same time, the Bank, through policy-based loans, has supported trade reforms in many developing countries, such as the reduction of tariffs, the elimination of quantitative restrictions, and the improvement of foreign exchange systems.

The distinguishing feature of World Bank work on international trade is that it is an integral part of the Bank’s work on development and poverty reduction. The Bank assists developing countries to formulate liberal trade policies in their process of development and poverty reduction, and provides technical assistance or policy advice to the governments towards an open trade regime.

The second objective of the Bank’s work on trade occurs at the country level. In this arena, the Bank supports developing countries in their efforts to improve their own policies, institutions and infrastructure (i.e. roads, ports and telecommunications) in order to use trade to help spur growth and reduce poverty. This work includes strategic assistance to clients in support of pro-poor trade related reforms, with special attention to the low-income countries that are most in need of Bank support.

The projects regarding trade and integration are:

  • Export development and competitiveness
  • Regional integration
  • International financial architecture
  • Technology diffusion
  • Trade facilitation and market access

Training and Capacity Building

The World Bank’s training and capacity building serves two constituencies: Bank staff, and stakeholders and decision-makers in developing countries. Internal trade-related learning and capacity building is designed to provide staff with access to technical tools, lessons of experience, and rigorous research and learning opportunities that enable them to mainstream trade in Country Assistance Strategies, and to strengthen staff’s understanding of the role of trade as an engine for sustainable growth and poverty reduction.

External training and capacity building is carried out by the World Bank Institute (WBI).

Partnerships

The World Bank Group works in partnership with the development agencies of individual countries to better coordinate aid and to more effectively achieve development goals.

At both the regional and global levels, the World Bank works with UN agencies, other international institutions, donors, civil society and professional and academic associations to improve the coordination of aid policies and practices.

List of Inter-agency Cooperation Mechanisms:

  • CEB Inter-Agency Cluster on Trade and Productive Capacity
  • Measuring Aid for Trade - Creditor Reporting System (CRS)
  • WTO’s Global Technical Assistance Database (GTAD)
  • Enhanced Integrated Framework (EIF)
  • Global Partnership Facilitation for Transportation and Trade (GFP)
  • Standards and Trade Development Facility (STDF)
  • Transparency in Trade data initiative (TNT)

TCB activities in this guide

GLOBAL ADVOCACY

  • Global dialogue on trade and development

TRADE POLICY DEVELOPMENT

  • Support to country trade policies and institutions
  • Diagnostics
  • Support for multilateral and regional trade negotiations
  • Economic and sector work
  • Trade-related research

LEGAL AND REGULATORY FRAMEWORK

  • WTO accession and trade policy training
  • Assistance on preferential trade agreements
  • Lending to meet trade standards
  • Agri-food standards support

SUPPLY CAPACITY

  • IFC assistance to agricultural trade companies
  • Supporting South-South investments

MARKET AND TRADE INFORMATION

  • World Integrated Trade System (WITS)
  • Doing Business database Research

TRADE FACILITATION

  • Trade facilitation support
  • Customs modernization handbook
  • Advisory services related to trade

PHYSICAL TRADE INFRASTRUCTURE

  • Trade related infrastructure projects lending

TRADE RELATED FINANCIAL SERVICES

  • Global trade finance programme

OTHER TRADE RELATED ACTIVITIES

  • Green trade and competitiveness

SOUTH-SOUTH AND TRIANGULAR COOPERATION

  • South-South Exchange Facility
  • Examples of cooperation

For more information: www.worldbank.org