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November 14, 2019
The World Bank
The World Bank, the oldest and largest multilateral
The President of the World Bank is selected by the Board
development bank, provides financial assistance to
of Directors for a five-year, renewable term. Traditionally,
developing countries to promote economic development.
the Bank President has always been nominated by the
Established in 1945, the Bank initially focused on providing
United States. David Malpass, previously the Under
financing for large infrastructure projects. During the past
Secretary for International Affairs at the Treasury
75 years, its role has broadened to include poverty
Department, was selected as the 13th World Bank President
reduction efforts through social projects (such as education
in April 2019. Headquartered in Washington, DC, the
and health) and policy-based loans. The United States is a
World Bank has more than 120 offices and 10,000
founding member of the World Bank and the largest
employees worldwide.
financial contributor. Congress shapes U.S. policy at the
World Bank through oversight, legislation, and
Projects and Financing
authorization and appropriation of U.S. financial
The IBRD and IDA fund development projects around the
commitments to the World Bank.
world and in a variety of sectors (Figure 1). In terms of the
World Bank’s active portfolio by region, Africa, South
Structure and Governance
Asia, and East Asia and the Pacific are the top recipients.
The World Bank has two major lending “windows” or
By sector, the World Bank has projects focused on
“facilities.” The International Bank for Reconstruction
transportation, energy, and water and sanitation, among
and Development (IBRD), created in 1945, provides loans,
others. The IBRD and IDA disbursed $20.2 billion and
guarantees, risk management products, and advisory
$17.5 billion, respectively, to developing countries in
services to middle-income countries and some creditworthy
FY2019.
low-income countries. The IBRD currently has 189 member
countries. In 1960, at the suggestion of the United States,
Figure 1. World Bank Active Portfolio, FY2019
the International Development Association (IDA) was
created to make concessional loans (with low interest rates
and long repayment periods) to the poorest countries. IDA
also now provides grants to these countries. IDA currently
has 173 member countries.
The IBRD and IDA operate according to procedures
established by their Articles of Agreement, documents that
outline the conditions of membership and general principles
of organization, management, and operations. The World
Bank’s highest decision-making authority is the Board of
Governors, which meets annually. Each member country is
represented on the Board of Governors, usually by the
finance minister or central bank governor. The U.S.
Governor is currently Treasury Secretary Steven Mnuchin.
The Board of Governors has delegated day-to-day authority
over operational policy, lending, and other matters to the
Board of Directors. There are 25 Executive Directors. The
five largest Bank shareholders (China, France, Germany,
the United Kingdom, and the United States) appoint their
own Executive Director. Other member countries are
represented by elected Executive Directors. The U.S.
Executive Director is currently DJ Nordquist, previously at
the Council of Economic Advisors among other positions.
Board decisions are reached through voting. Each member
Source: World Bank Annual Report 2019.
country’s voting share is weighted on the basis of its
Notes: Middle East and North Africa (MENA).
financial contributions to the World Bank. U.S. voting
power at the IBRD is 15.98% and at IDA is 10.20%. The
The World Bank is able to extend financial assistance to
United States has unique veto power over amendments to
developing countries due to the financial commitments of
the IBRD Articles of Agreement, but the U.S. cannot
its more prosperous member countries. The IBRD borrows
unilaterally veto day-to-day decisions, such as the approval
money from international capital markets and then relends
of individual projects.
the money to developing countries. The IBRD is able to
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The World Bank
borrow from international capital markets because it is
source of capital to developing countries (Figure 2), raising
backed by the guarantees of member governments. The
questions about its continuing relevancy.
IBRD’s total capital is $280 billion. Most of the capital
Proponents argue the World Bank finances critical
($263 billion) are guarantees from donor countries
(“callable” c
development projects that would otherwise go unfunded by
apital) and a small portion ($17 billion, about
6%) has been paid to the IBRD by donor countries (“paid
private investors, is uniquely positioned to address cross-
-
in” capital). The United States has the largest financial
border development challenges, can effectively allocate aid
globally based on need, and produces important research
commitment to the IBRD, accounting for 16.57% of total
and data on development. The World Bank also pools
IBRD resources. U.S. paid-in capital is $2.9 billion and
contributions from many donors to facilitate cost-sharing of
U.S. callable capital is $43.5 billion. To date, the IBRD has
development projects.
never drawn on its callable capital. The IBRD earns income
on its equity investments and the interest it charges on
Skeptics are concerned that the World Bank crowds out
loans, which it uses to pay for World Bank operating
private financing, is overly focused on approving new
expenses. The IBRD also annually transfers a portion of its
projects rather than delivering results, emphasizes short-
net income to IDA.
term outputs like reports and frameworks at the cost of
long-term objectives, places administrative demands on
IIDA is able to provide low-cost loans and grants based on
developing countries, and lacks a clear division of labor
direct contributions by donor countries, in addition to the
with other multilateral aid organizations. Broader U.S.
annual transfer from IBRD. IDA also started issuing its own
concerns focus on the limited control the United States has
bonds in 2018 as a new way to raise resources. As IDA
over multilateral aid provided through the World Bank and
extends concessional loans and grants to low-income
other institutions, compared to bilateral aid programs,
countries, the window's resources become depleted. Donor
among other issues.
countries meet every three years, to replenish resources.
Across the 18 replenishments of resources since IDA’s
In addition, questions have been raised about whether
creation, donor countries have contributed $258 billion to
reforms could improve World Bank transparency and
IDA. The United States has contributed $53.2 billion, about
effectiveness; the appropriateness of IBRD lending to
21% of the total.
China, when China has resources to fund its own overseas
U.S. Policy
investment projects; the optimal size of World Bank
resources; and whether the World Bank should be more
The United States has traditionally played a leadership role
focused on development research and technical assistance
at the World Bank. Within the U.S. government, the
relative to project lending.
Treasury Department is the lead agency in the Executive
Branch managing U.S. participation in the World Bank.
Figure 2. Select Capital Flows to Developing
Congress also shapes U.S. policy at the World Bank.
Countries, 2017
Congress authorizes and appropriates U.S. financial
commitments to the World Bank and, at times, has withheld
funding unless certain reforms are completed. Congress has
also passed legislation directing U.S. representatives at the
World Bank and other international financial institutions
(IFIs) to advocate and vote for specific policies, as well as
legislation requiring reports from the Treasury Department
on World Bank and other IFI issues. In addition,
presidential appointments for the U.S. representatives at the
World Bank (the Governor, the Executive Director, and
their alternates) require Senate confirmation.
For FY2020, the Administration requested authorization
and appropriations to participate in a $60 billion IBRD
capital increase. This would require authorization for $1.4
billion in callable capital, and appropriations of $206.5
million towards the first of six installments for paid-in
capital. The Administration has also requested $1.1 billion
Source: OECD International Development Statistics, World Bank
for IDA, as the third and last payment of the 18th
World Development Indicators.
replenishment of IDA. H.R. 2740, passed by the House in
Notes: Data for net disbursements of official flows and net inflows of
June 2019, and S. 2583, introduced in the Senate in
private capital. Bilateral development assistance is total bilateral aid
September 2019, match the Administration’s request.
from OECD Development Assistance Committee (DAC)
governments.
Current Debates
The IBRD was established to address shortages of capital
For more information, see CRS Report R41170,
for post-WWII Europe and developing countries. In
Multilateral Development Banks: Overview and Issues for
subsequent decades, international capital markets developed
Congress, by Rebecca M. Nelson and CRS In Focus
and donor countries created new multilateral aid
IF10895, 2018 World Bank Capital Increase Proposal, by
organizations. Today, the World Bank is a relatively small
Martin A. Weiss.
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The World Bank
Jennifer M. Roscoe, Technical Information Specialist
Rebecca M. Nelson, Specialist in International Trade and
IF11361
Finance
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