World Bank Lending Programs

World Bank, an international financial institution

, aims at reducing global poverty by providing leveraged loans to member developing and under developed countries. Read on to know more about World Bank, its objectives, its institutions etc.

World Bank was formed in the year 1944 along with four other institutions at the Bretton Woods Conference. It was established with the official name of the International Bank for Reconstruction and Development and with the endeavor to reconstruct Europe and Japan after the devastation caused by the World War II. It began its operations in 1946 with 38 members and France was the first country to receive its aid.

World Bank comprises of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Both institutions provide low cost and long term funds to developing and underdeveloped nations for their improvement in infrastructure, education, health care sectors. Funds by the Bank are obtained by sale of IBRD's AAA bonds in various financial markets and through contributions from wealthier member countries.

Today almost all the countries of the world are the members of the Bank, which began with only 38 members. IBRD has 186 member countries whereas IDA has 168 members. United States is the largest share holder, followed by Japan, China, Germany, the United Kingdom and France.

World Bank seeks to obtain economic growth by laying its focus on infrastructure creation, strengthening of financial systems, containing corruption, building capacity of governments and research and consultancy. To achieve the same, the Bank lends funds at lower interest rates to middle income countries and at no interest to poor and underdeveloped countries. Further, such loans have a very long tenure with an extended moratorium period.

Lending by the Bank usually is in the form of:

Investment lending for various infrastructural projects

Adaptable program loan phased support for long-term development programs.

Learning and innovation loan for small investment and capacity-building projects.

Technical assistance loan to build institutional capacity in the borrowing country.

Financial intermediary loan long term resources to financial institutions in borrowing country.

Emergency recovery loan for restoration of assets in the event of any extraordinary events.

Rehabilitation loan to support government reform programs.

Debt reduction loan to help highly indebted countries reduce their commercial debt.

by: kellyprice1225

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