INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

(IBRD) byname World Bank organization affiliated with the United Nations and designed to finance productive projects that further the economic development of member nations. The bank had its origins in the negotiations that culminated in the United Nations Monetary and Financial Conference at Bretton Woods, N.H., in July 1944. The bank officially began operations in June 1946. Although its first loans were made for post-World War II reconstruction, by the 1950s the emphasis had shifted to loans for economic development in Africa, Asia, the Middle East, and Latin America. World Bank headquarters are in Washington, D.C. The bank obtains its funds from the paid-in capital subscriptions of member countries, bond flotations on the world's capital markets, and its net earnings. Each member's capital subscription is based on its relative economic resources. Usually only about 10 percent of the subscribed capital is paid in; the remainder is subject to call if required to meet obligations. The bank usually makes loans directly to governments, or to private enterprises with their government's guarantee, for specific projects when private capital is not available on reasonable terms. A large part of the bank's portfolio initially consisted of loans to publicly and privately owned utilities for investment in electric power, roads, ports and inland waterways, pipelines, and airports; but by the late 20th century, agriculture and rural development had become the most important lending sector. Industry, water-supply and sewage systems, and education are also major lending areas. As a matter of general policy, the bank lends only for the cost of imported material, equipment, and services obtained from abroad, and disbursements are usually made directly to the supplier. The interest rate depends mainly on the cost of borrowing to the bank. In addition to financial assistance, the bank also furnishes technical assistance. The bank is administered by a board of governors, executive directors, a president, and a staff. The board of governors, composed of representatives from all the member countries, meets once a year; policy matters are carried out by the 21 executive directors, who approve all loans.