The World Bank

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Updated May 26, 2020
The World Bank
The World Bank, the oldest and largest multilateral
States. David Malpass, previously the Under Secretary for
development bank, provides financial assistance to
International Affairs at the Treasury Department, was
developing countries to promote economic development.
selected as the 13th World Bank president in April 2019.
Established in 1945, the Bank initially focused on providing
Headquartered in Washington, DC, the World Bank has
financing for large infrastructure projects. During the past
more than 120 offices and 10,000 employees worldwide.
75 years, its role has broadened to include poverty
Projects and Financing
reduction efforts through social projects (such as education
The IBRD and IDA fund development projects around the
and health) and policy-based loans. The World Bank is
world and in a variety of sectors (Figure 1). In terms of the
currently focused on helping developing countries respond
World Bank’s active portfolio by region, Africa, South
to the health and economic consequences of the COVID-19
Asia, and East Asia and the Pacific are the top recipients.
pandemic.
By sector, the World Bank has projects focused on
Structure and Governance
transportation, energy, and water and sanitation, among
The World Bank has two major lending “windows” or
others. The IBRD and IDA disbursed $20.2 billion and
“facilities.” The International Bank for Reconstruction
$17.5 billion, respectively, to developing countries in
and Development (IBRD), created in 1945, provides loans,
FY2019.
guarantees, risk management products, and advisory
services to middle-income countries and some creditworthy
Figure 1. World Bank Active Portfolio, FY2019
low-income countries. The IBRD currently has 189 member
countries. In 1960, at the suggestion of the United States,
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.
Source: World Bank Annual Report 2019.
Note: MENA = Middle East and North Africa.
Board decisions are reached through voting. Each member
country’s voting share is weighted on the basis of its
In April 2020, World Bank President Malpass committed
financial contributions to the World Bank. U.S. voting
$160 billion over the next 15 months to support developing-
power at the IBRD is 15.98% and at IDA is 10.20%. The
country responses to COVID-19, more than double the
United States has unique veto power over amendments to
amount committed by the World Bank overall in FY2019.
the IBRD Articles of Agreement, but the U.S. cannot
By May 19, 2020, the World Bank had approved or was in
unilaterally veto day-to-day decisions, such as the approval
the process of approving 144 COVID-related projects in 97
of individual projects.
countries totaling $14 billion.
The president of the World Bank is selected by the Board of
The World Bank is able to extend financial assistance to
Directors for a five-year, renewable term. Traditionally, the
developing countries due to the financial commitments of
Bank president has always been nominated by the United
its more prosperous member countries. The IBRD borrows
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The World Bank
money from international capital markets and then relends
Current Debates
the money to developing countries. The IBRD is able to
As the World Bank mobilizes its resources in response to
borrow from international capital markets because it is
the COVID-19 pandemic, there are questions about whether
backed by the guarantees of member governments. The
additional resources should be made available by donor
IBRD’s total capital is $280 billion. Most of the capital
countries, as well as whether IBRD can stretch its current
($263 billion) are guarantees from donor countries
lending capacity by tapping callable capital. There may also
(“callable” capital) and a small portion ($17 billion, about
be questions about whether the World Bank has sufficient
6%) has been paid to the IBRD by donor countries (“paid-
staffing to process unprecedented volumes of lending,
in” capital). The United States has the largest financial
potential tensions between the quick disbursement of funds
commitment to the IBRD, accounting for 16.57% of total
and adequate safeguards to protect donor contributions, and
IBRD resources. U.S. paid-in capital is $2.9 billion and
how to prioritize projects.
U.S. callable capital is $43.5 billion. To date, the IBRD has
There may also be questions about how the World Bank
never drawn on its callable capital. The IBRD earns income
will coordinate its assistance with other multilateral and
on its equity investments and the interest it charges on
bilateral donors. The World Bank was created to address
loans, which it uses to pay for World Bank operating
shortages of capital for post-WWII Europe and developing
expenses. The IBRD also annually transfers a portion of its
countries, but in subsequent decades international capital
net income to IDA.
markets developed and donor countries created new
IDA is able to provide low-cost loans and grants based on
multilateral aid organizations. Today, the World Bank is a
direct contributions by donor countries, in addition to the
relatively small source of capital to developing countries
annual transfer from IBRD. IDA also started issuing its own
(Figure 2).
bonds in 2018 as a new way to raise resources. As IDA
Figure 2. Select Capital Flows to Developing
extends concessional loans and grants to low-income
Countries
countries, the window’s resources become depleted. Donor
countries meet every three years, to replenish resources.
Across the 18 replenishments of resources since IDA’s
creation, donor countries have contributed $258 billion to
IDA. The United States has contributed $53.2 billion, about
21% of the total. U.S. commitments to IDA have fallen in
recent replenishment cycles, from $3.9 billion in the 17th
IDA replenishment (IDA-17) to $3.3 billion in IDA-18 to
$3.0 billion in IDA-19.
U.S. Policy
The United States has traditionally played a leadership role
at the World Bank. Within the U.S. government, the
Treasury Department is the lead agency in the executive
branch managing U.S. participation in the World Bank.
Congress also shapes U.S. policy at the World Bank.
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
Sources: OECD International Development Statistics, World Bank
World Development Indicators.
also passed legislation directing U.S. representatives at the
World Bank and other international financial institutions
Notes: 2017 data for net disbursements of official flows and net
(IFIs) to advocate and vote for specific policies, as well as
inflows of private capital. Bilateral development assistance is total
legislation requiring reports from the Treasury Department
bilateral aid from OECD Development Assistance Committee (DAC)
on World Bank and other IFI issues. In addition,
governments.
presidential appointments for the U.S. representatives at the
In recent years, debate has also focused on China’s role at
World Bank (the governor, the executive director, and their
the World Bank, which may be amplified by policymaker
alternates) require Senate confirmation.
concerns about China’s handling of its early COVID-19
For FY2021, the Administration requested authorization to
outbreak (H.R. 907). China is taking a greater leadership
vote in favor of a capital increase at the International
role at the World Bank, even while it continues to borrow
Financial Corporation (IFC), a lending facility at the World
from the World Bank. Legislation has been introduced that
would push for China’s graduation from its eligibility for
Bank focused on private sector development, as well as
World Bank assistance (H.R. 5051, S. 3017, S. 3018).
authorization for $3.0 billion for the U.S. contribution to
IDA-19. In response to the overwhelming demand for
For more information, see CRS Report R41170,
World Bank assistance in response to COVID-19, Congress
Multilateral Development Banks: Overview and Issues for
accelerated these authorizations in the CARES Act (P.L.
Congress, by Rebecca M. Nelson and CRS Report R46342,
116-136). The Administration has also requested for
COVID-19: Role of the International Financial Institutions,
FY2021 $206.5 million as the second of six installments for
by Rebecca M. Nelson and Martin A. Weiss.
a capital increase at the IBRD, as well as $1.0 billion for the
first of three installments to IDA-19.
Rebecca M. Nelson, Specialist in International Trade and
Finance
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The World Bank

IF11361


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