Organization: The World Bank

Event: AISMUN 2003
Student: Yousef Dashti

 

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The World Bank Song
"Go Down Gambler"



 

Organization Profile
The World Bank

 

 

Function

The World Bank Group was found in 1944 and is one of the world's largest sources of development assistance. The Bank, which provided $19.5 billion in loans to its client countries in 2002, is now working in more than 100 developing economies, bringing a mix of finance and ideas to improve living standards and eliminate the worst forms of poverty. For each of its clients, the Bank works with government agencies, nongovernmental organizations, and the private sector to plan assistance strategies. Its country offices worldwide deliver the Bank's program in various countries, communicate with government and civil society, and work to increase understanding of development issues.

The World Bank is owned by more than 184 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.

The World Bank Group consists of five closely associated institutions, all owned by member countries that carry ultimate decision-making power.  Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world.  The term "World Bank Group" includes all five institutions that are:

(1) The International Bank for Reconstruction and Development
(2) The International Development Association
(3) The International Finance Corporation
(4) The Multilateral Investment Guarantee Agency
(5) The International Centre for Settlement of Investment Disputes

 

 

 

History of Organization

The World Bank was conceived during World War II as a response to the devastation in Europe caused by the war. The organization was founded in 1944, and its first mission was to rebuild Europe after the war by giving European nations various loans. As Europe slowly got back on its feet, reconstruction was still a main priority for the World Bank given the rise in natural disasters, humanitarian emergencies, and other postwar rehabilitations that would affect the economies of these nations.

Since its beginning in 1944, the World Bank expanded from a single institution to an associated group of coordinated development institutions. The Bank's mission grew from a method of post-war reconstruction and development to its present day issue of worldwide poverty improvement.  Whereas, once, heavy investment projects once dominated the Bank's portfolio, a wider focus now includes social sector lending projects, poverty alleviation, and the Comprehensive Development Framework.

 

 

Budget Considerations

The World Bank mainly focuses on two sub-organizations for its Budget, The International Bank for Reconstruction and Development, and The International Development Association.

The International Bank for Reconstruction and Development (IBRD) is the most organization that lends the World Bank with a cumulative of $360 billion, $11.5 billion in 2002 for 96 new operations in 40 countries. The IBRD raises almost all its money in financial markets and is one of the world's most cautious and conservatively managed financial institution. The IBRD sells bonds and other debt securities to insurance companies, corporations, other banks, and individuals around the globe. IBRD charges interest to 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.

Less than 5 percent of the IBRD's funds are paid in by countries when they join the Bank. Member governments purchase shares, the number of which is based on their relative economic strength, but pay in only a small portion of the value of those shares. The unpaid balance is waited on should the Bank suffer losses too serious that it can no longer pay its creditors.

The International Development Association (IDA), on the other hand, has a cumulative lending of $135 billion, $8.18 billion in 2002 for 133 new operations in 62 countries. The IDA was established in 1960 to provide assistance to countries that are too poor to borrow at commercial rates. IDA helped to promote growth and reduce poverty in the same ways as did the IBRD, but IDA uses interest-free loans, technical assistance, and policy advice. IDA credits account for about 1/4 of all Bank lending. Borrowers pay a fee of less than 1 percent of the loan to cover administrative costs. Repayment is required in 35 or 40 years with a 10-year grace period. Nearly 40 countries contribute to IDA's funding, which is replenished every three years.

Donor nations include not only industrial member countries such as France, Germany, Japan, the United Kingdom, and the United States, but also developing countries such as Argentina, Botswana, Brazil, Hungary, Korea, the Russian Federation, and Turkey, some of which were once IDA borrowers themselves. IDA's funding is managed in the same prudent, conservative, and cautious way as is the IBRD's. As with the IBRD, there has never been a default on an IDA credit.

 

 

Key Political Allies (nation or Nations)

As is the mission of the World Bank, its fight against poverty includes uniting with many partners and working together to reach the World Bank’s goal. The World Bank coordinates with international organizations, affiliates, or associates, NGO’s (Non-Governmental Organizations), Civil Society, business and private sectors, donors, and student and academic communities.








STRENGTHS AND WEAKNESSES

 

The World Bank faces many problems in its internal and external structure. The internal structure, which includes the management and the institutions that the bank is made up of, and the external structure, which includes the mainframe of work and aid provided to countries.

The internal structure of the World Bank has been hardly criticized by many people. "When that institution is the World Bank, also beset by allegations of low morale and poor management, the problems are multiplied." The president of the World Bank, James Wolfensohn, ever since he held office, has been under considerable pressure in his vision of reforming the World Bank. In his vision, he is making the Bank concentrate on only poverty in the world, making it the priority of the bank and its aim. His attempts to reach that have not only hurt the bank, but also the countries that the bank loans money to. The management is in desperate need of aid and help from other institutions to help stabilize the bank. "There is a deep and growing cynicism and to some extent even a sense of resignation among staff."

Other than that, the external structure of the bank also has negativity in its performance. The World Bank these days, is considered to be the last resort for loans, in which desperate countries come to beg for money, and then beg for merci when the loans are overdue. This method of routine that the bank is working on DOES NOT help countries, but in fact, destroys them. If the bank were to turn its attention towards poverty, how would it be assured that it would not use the same routine on poor countries and lead these countries to extreme downfalls or corruption? The external structure of the bank is clearly fraudulent and this is what causes the critics from shareholding countries and NGO’s to condemn the bank.

 

 

 

RESOLUTION

 

Student: Yousef Dashti

Organization: The World Bank

Question: World Bank Reform

Bearing in mind that the World Bank is beset by allegations of low morale and poor management,

Realizing that the structure of the World Bank is corrupt and in need of immediate stability,

Keeping in mind that the World Bank currently is working on prioritizing the fight against poverty,

Taking note that the country with most shares from the bank is the USA,

Taking note that the World Bank’s budget is $33 billion, which is not enough for its fight against poverty,

1. Calls upon all shareholding countries to help in providing a plan to improve the bank’s performance and maintain its stability;

2. Encourages the World Bank to provide a sensible loan to countries that CAN in fact work on repaying the loan;

3. Resolves, due to the overburdened growth rate of the bank, the bank to cut back on its loans and projects with countries;

4. Resolves the establishment of the World Bank Revision Committee in which shareholding countries, under the management of the most shareholding country, would do the following:
A. Review all previous loans given out by the World Bank and reveal the setbacks of these loans,
B. Set up a Register that would provide the bank with knowledge of various countries’ maintenance of loan repay and with that, act on giving out loans,
C. Be responsible for providing a clear plan, under the supervision of the president of the bank, that would lead the bank to concentrate with poverty and make it its priority in the near future;

5. Resolves the selling of bonds to all countries and individuals in order to increase the bank’s budget and provide more joint projects with countries,

6. Hopes that the World Bank would revise its current structure and work to improve it and provide what is necessary to fight poverty,

 

 

 

 

Opening Speech


Poverty, scarcity, deficiency, and hope, a weird mix, the world as we see it is occupied with the problem of poverty, but what is this hope that is included? It is The World Bank, a bank that provides the means necessary to loan countries in need of assistance and aid. The World Bank has been a primary source of aid and has helped many countries with projects and support in fighting poverty.

The World Bank, being one of the world’s largest sources of development assistance, has recently been working on prioritizing aid to countries with poverty, and in the near future, dedicate the whole bank to its cause. This shift in loaning and project building has caused the bank to face some conflicts and internal corruption. The bank, having its poor internal and external structure being a disease in its shift, led to many condemnations from critics of both shareholding countries and NGO’s. This conflict has not only affected the bank, but also the countries that take the loans from the bank. An immediate and effective act has to be taken in order to restore the stability of the bank and return it to its duty of fighting poverty.