Sections:
The World Bank
The
World
Bank is a cornerstone of the international development system. The UK government plays a key role in contributing to the
Bank’s funds, monitoring its effectiveness and influencing its policies.
The World Bank is one of the two so-called Bretton Woods institutions, named after
the village in New Hampshire, USA, where they were founded in 1944. The
other Bretton Woods institution is theInternational
Monetary Fund (IMF).
UK government work with the IMF is managed primarily byHM
Treasury.
World Bank structure
The organisation commonly referred to as the World Bank is actually made up
of two bodies - theInternational Bank for Reconstruction and Development
(IBRD)
and theInternational Development Association
(IDA). The IBRD focuses on middle
income and creditworthy poor countries, while IDA focuses on the poorest
countries in the world.
Together these two bodies provide low-interest loans, interest-free credit,
grants and technical expertise to developing countries. This money is used for education, health,
infrastructure, communications and many other purposes.
In 2007/8 the World Bank disbursed $24.7 billion of funds of which $11 billion was
provided by IDA to the world’s poorest countries. Africa received the largest
amount of support with $7.2 billion in loans, grants, equity investments, and
guarantees. For many of the poorest countries the World Bank is the
sole available source of funding.
DFID's involvement
DFID’s involvement with the Bank takes four main forms:
1. as a shareholder of the International Bank for Reconstruction and Development (IBRD)
2. in financial support to the International Development Association (IDA)
3. through Trust Funds managed by the Bank
4. and in debt relief.
In 2007/8 the UK channelled some £800 million to the World Bank through IDA and trust funds.
1. The International Bank for Reconstruction and Development (IBRD)
The
International Bank for Reconstruction and Development is the part of the World
Bank that works with middle-income countries and creditworthy poorer countries.
The IBRD aims to promote sustainable, equitable and job-creating growth, reduce
poverty and address issues of regional and global importance. The UK provided
substantial funding when the IBRD was created. Our shareholding is currently
just over 4%, making us the joint fourth largest shareholder.
Seventy per cent of the world's poor live in the middle-income countries that the IBRD deals with. Many of these countries have seen profound improvements in economic management and governance over the past two decades. As a result they are rapidly increasing their demand for the strategic, intellectual and financial resources the World Bank has to offer.
2. The International Development Association (IDA)
The
International Development Association helps the world’s poorest people by
providing interest-free loans and grants for programmes that boost economic
growth, reduce inequality and improve people’s living conditions. IDA is one
of the largest sources of assistance to 80 of the world’s poorest countries, half of which are in Africa.
IDA’s largest source of income comes from donor contributions. Every three
years donors agree how much funding to provide to IDA through a process called
‘replenishment’.
The UK's contribution to the 15th replenishment of IDA will be £2.134 billion
for the three years 2008/09-2010/11. This is a 49% increase compared to IDA 14,
and the UK’s biggest ever contribution, making the UK for the first time the
largest contributor to IDA.
Secretary of State Douglas Alexander said the contribution underlined the UK’s commitment to using effective multilateral channels in the fight against global poverty.
DFID Press release: UK to give record level of support to fight global poverty.
3. World Bank Trust Funds
With its global reach and expertise the World Bank is an obvious choice to manage trust funds set up by donor countries for specific aid and development purposes. The number of trust funds has grown dramatically over the past 30 years. In 2007 the World Bank administered 1,015 trust funds totalling $21.4 billion. The UK is currently the largest single contributor to World Bank Trust Funds, giving some $1.19 billion in 2007.
The four largest funds are:
- theGlobal Fund to Fight
AIDS, Tuberculosis and Malaria which received $2.06 billion in
2007
(28% of all 2007 contributions)
- theGlobal Environment Facility
received $831 million (11% of all 2007 contributions)
- theGlobal Alliance for Vaccines
and Immunization received $758 million (10% of 2007
contributions)
- theAfghanistan Reconstruction Trust Fund
received $463 million (6%
of 2007 contributions).
Together, these four programmes received some $4.1 billion, or around 60% of all 2007 cash contributions.
For an overview of the Bank's Trust Fund activities
see theWorld
Bank 2007 Trust Funds Annual Report.
4. Debt relief
It
is internationally recognised that the debt burden of the world's most indebted
poor countries has to be lifted if they are to set themselves on a path of
sustainable growth and poverty reduction.
In 1996 the World Bank and IMF launched theHeavily
Indebted Poor Countries Initiative (HIPC) with a view to providing debt relief to
poor countries committed to eradicating poverty.
In collaboration with other multilateral agencies, donors and funds (notably the
G8’sMultilateral Debt Relief Initiative) the objective is to provide a permanent
exit from unsustainable debt burdens for the world’s poorest nations.
Read more about DFID and the HIPC
Influence and accountability
The UK has considerable influence in the World Bank thanks to our seat on the board, the substantial financing we provide, and our joint working in-country and at headquarters level.
The secretary of state for International Development is the
UK’s governor to the Bank and represents the UK on the development Committee.
This committee is the main ministerial forum for discussing World Bank policies and
meets twice a year, in the Spring and Autumn.
The UK has used its influence to push for substantial reforms of the World Bank. At
the most recent meeting (October 2008) DFID successfully lobbied for real reform
of the Bank’s procedures and structures which will make it more representative
and accountable.Summary of October 2008 World Bank meeting.
DFID is accountable to parliament for our relations with the World Bank. We have
to supply a regular report summarising the government’s engagement with the
Bank. The report also provides an overview of institutional and policy developments at the
Bank over a given reporting period.
The most recent report is
Working in Partnership with World Bank
(767 kb)
(October
2005 June 2007).
Links
The World Bank
World Bank Report 2008
World Bank Meetings
Autumn 2008 World Bank meeting: UK minister statement
IBRD
International Bank for Reconstruction and Development
- focuses on middle income and creditworthy poor countries
IDA
International Development Association - focuses on the poorest countries
in the world
What are IDA replenishments?
DFID press release - details of UK’s 2007 commitment to IDA
World Bank Trust Funds
World Bank Trust Fund
Afghanistan Reconstruction Trust Fund
Global Alliance for Vaccines and Immunization
Global Environment Facility
Global Fund to Fight AIDS, Tuberculosis and Malaria
Debt Relief
Heavily Indebted Poor Countries
Initiative - World Bank fund for debt
reliefMultilateral Debt Relief Initiative – G8 fund for debt relief
IMF
The
International Monetary Fund
HM
Treasury Annual Report on the IMF
Last updated: 3 November 2008