IBRD

International Bank for Reconstruction and

Development
 Bhavesh Joliya
INTRODUCTION
The International Bank for Reconstruction
and Development (IBRD) is an international
financial institution which offers loans to
middle-income developing countries.

The IBRD is the first of five member institutions which compose the World
Bank Group and is its headquarter is in Washington, D.C., United States.

It was established in 1944 with the mission of financing the reconstruction of

European nations devastated by World War II.

Together, the International Bank for Reconstruction and Development and its
concessional lending arm, the International Development Association, are
collectively known as the World Bank as they share the same leadership and
staff.
HISTORY
The IBRD and IMF were established by delegates at the
Bretton Woods conference in 1944 and became
operational in 1946
The IBRD was established with the original mission of
financing the reconstruction efforts of war-torn European
nations following World War II
The Bank issued its inaugural loan of $250 to France in
1947 to finance infrastructure projects.
The institution also established its first field offices in:
Paris, France.
Copenhagen, Denmark.
Prague, Czechoslovakia.
 All the way till 1950s, the Bank financed projects seeking
to dam rivers, generate electricity, and improve access to
water and sanitation.
Following the reconstruction of Europe, the Bank's
mandate has transitioned to eradicating poverty around
the world.
In 1960, the International Development Association (IDA)
was established to serve as the Bank's concessional
lending arm and provide low and no-cost finance and
grants to the poorest of the developing countries as
measured by gross national income per capita.
FUNCTIONS OF IBRD
Granting reconstruction loans to war devastated countries.

Granting developmental loans to underdeveloped countries.

Providing loans to governments for agriculture, irrigation, power, transport, water

supply, educations, health, etc.

Providing loans to private concerns for specified projects.

Promoting foreign investment by guaranteeing loans provided by other organizations.

Providing technical, economic and monetary advice to member countries for specific
projects

Encouraging industrial development of underdeveloped countries by promoting eco

nomic reforms.
CAPITAL RESOURCES OF IBRD:

The initial authorized capital of the World Bank was

$10,000 million, which was divided in 100,000 shares of
$100,000 each. The authorized capital of the Bank has
been increased from time to time with the approval of
member countries.

On 30th June, 1996, the authorized capital of the Bank

was $188 billion out of which $180.6 billion (96% of total
authorized capital) was issued to member countries in the
form of shares.
Member countries repay the share amount
to the World Bank in the following ways:

2% of allotted share are repaid in gold, US dollar or

Special Drawing Rights (SDR).

Every member country is free to repay 18% of its capital

share in its own currency.

The remaining 80% share deposited by the member

country only on demand by the World Bank.

GENERAL PROGRESS
The Bank's membership has increased from the initial number of
30 countries to 68 countries in 1960 and to 151 countries in 1988.

In 1960, the Bank approved loans worth $ 659 million which went
up to $ 14,762 million in 1988.

In 1960, 31 operations were approved for financial assistance. In

1988, the number of operations approved increased to 118.

Cumulatively, up to June 1988, the IBRD has provided loans worth

$155049 million.
LENDING OPERATIONS

In 1988, the IBRD has granted loans worth

$155049 million. About 22% of the Banks
aggregate lending is for energy, 21% for
agriculture and rural development, 18% for
transportation and communications and
10% for industry and small scale
enterprises.
LOANS FOR RECONSTRUCTION

In the initial years of its establishment, the World

Bank's loans were mainly directed to the European
countries (whose economies were shattered
during the World War II) for financing their
programmes of reconstruction. The Bank provided
loans worth about $ 5, 00 million for reconstruction
purpose.
ASSISTANCE TO UNDERDEVELOPED
COUNTRIES
The World Bank has a special role in accelerating the process of economic
and welfare schemes in these countries. The following are the main aspects
of Bank's assistance to the underdeveloped countries :

Bulk of the Bank's financial assistance has been given to the

underdeveloped countries for the promotion of development.

Through its 'third window", the Bank has made available loans to the
underdeveloped countries at tower interest rates.

The Bank organizes meetings of creditor countries for extending assistance

to the developing countries. Aid India Club is one such example.

The Bank also provides technical assistance to the developing countries by

making available training facilities through its various institutions.
CONCLUSION
Conclusion leads us to the final verdict which is very well
accepted all over the world, that for whatever mission
The World Bank Group was established, it is very well
able in completing its work in a very efficient manner,
providing proper financial help to the countries in need in
time.

Another important aspect to be considered is that, the

interest rates and the repay time for every country varies
according to its ability, hence countries already under
stress are not brought under any more of it.