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Background Products and Services How IBRD is Financed IBRD Results Frequently Asked Questions

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Founded in 1944 to help Europe recover from World War II, the International Bank for Reconstruction and Development (IBRD) is one of five institutions that make up the World Bank Group. IBRD is the part of the World Bank (IBRD/IDA) that works with middle-income and creditworthy poorer countries to promote sustainable, equitable and job-creating growth, reduce poverty and address issues of regional and global importance. Structured something like a cooperative, IBRD is owned and operated for the benefit of its 187 member countries. Delivering flexible, timely and tailored financial products, knowledge and technical services, and strategic advice helps its members achieve results. Through the World Bank Treasury, IBRD clients also have access to capital on favorable terms in larger volumes, with longer maturities, and in a more sustainable manner than world financial markets typically provide. Specifically, the IBRD:

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supports long-term human and social development needs that private creditors do not finance; preserves borrowers' financial strength by providing support in crisis periods, which is when poor people are most adversely affected; uses the leverage of financing to promote key policy and institutional reforms (such as safety net or anticorruption reforms); creates a favorable investment climate in order to catalyze the provision of private capital; provides financial support (in the form of grants made available from the IBRD's net income) in areas that are critical to the well-being of poor people in all countries.

Middle-income countries, where 70 percent of the world's poor live, have made profound improvements in economic management and governance over the past two decades and are rapidly increasing their demand for the strategic, intellectual and financial resources the World Bank has to offer. The challenge facing the IBRD is to better manage and deliver its resources to best meet the needs of these countries. To increase its impact in middle-income countries, IBRD is working closely with the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), the International Monetary Fund (IMF) and other multilateral development banks. In the course of its work, IBRD is also striving to capitalize on middle-income countries' own accumulated knowledge and development experiences and

collaborates with foundations, civil society partners and donors in the development community. For more information about this effort, see Strengthening Middle Income Countries Engagement.

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Background Products and Services How IBRD is Financed IBRD Results Frequently Asked Questions

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IBRD aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and (non-lending) analytical and advisory services. IBRD has three main business lines:

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Strategy and Coordination Services Financial Services Knowledge Services

Poverty Assessments Social and Structural Reviews Public Expenditure Reviews Sector Reports Country Economic Memoranda Knowledge Sharing

At its Annual Meeting in September 2006, the World Bank with the encouragement of its shareholder governments committed to make further improvements to these services within a year. The World Bank originally began a program to upgrade its services for middle-income countries overhauling financial and risk management products, broadening the provision of free-standing knowledge services and making it easier for clients to deal with the Bank in 2002. The latest commitment to take further steps was an acknowledgment by the Bank that more needs to be done to meet the increasingly sophisticated demands of middle-income countries.

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Background Products and Services How IBRD is Financed

How IBRD is Financed


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IBRD Results Frequently Asked Questions Related Information

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World Bank Group Announces Simplification and Reduction in Loan Costs for Middle-Income Countries World Bank Debt Securities IBRD Financial Information Statement (pdf) IBRD Financial Strength Information for Socially Responsible Investors

IBRD raises most of its funds on the world's financial markets. It has become one of the most established borrowers since issuing its first bond in 1947 to finance the reconstruction of Europe after World War Two. Investors see IBRD bonds as a safe and profitable place to put their money and their cash finances projects in middle-income countries. IBRD became a major player on the international capital markets by developing modern debt products, opening new markets for debt issuance, and by building up a broad investor base around the world of pension funds, insurance companies, central banks, and individuals. The World Bank's borrowing requirements are primarily determined by its lending activities for development projects. As World Bank lending has changed over time, so has its annual borrowing program. In 1998 for example, IBRD borrowing peaked at $28 billion with the Asian financial crisis. It is now projected to borrow between $10 to 15 billion a year. IBRD borrows at attractive rates on the capital markets thanks to its triple-A status that it has had with credit rating agencies since 1959. This has enabled it to borrow in U.S. dollars, for example, at an overall funding cost that comes close to that of the U.S. Treasury. IBRD enjoys its high credit rating because it is backed by the capital commitments of its 186 shareholder governments. It is also the result of IBRD's strong balance sheet, prudent financial policies, and its expected treatment as a preferred creditor when a country has difficulty in repaying its loans. IBRD has also profited from anticipating shifts in investor preferences and investing in the risk management and systems to take advantage of those trends. IBRD has to its credit a string of firsts in its borrowing program. These include the first currency swap in international markets in 1981, through to the introduction of the first global bond in 1989, to the first fully integrated electronic bond offering via the Internet in 2000. In 2003, the World Bank executed the first fully electronic swap auction. Innovations by IBRD have also supported its goal of promoting development. Although much of its borrowing is in U.S. dollars, IBRD has over the years offered bonds in more than 40 different currencies. Its issues in nascent capital markets have often been a catalyst for improving market infrastructure and efficiency. IBRD's earns an income every year from the return on its equity and from the small margin it makes on lending. This pays for IBRD's operating expenses, goes into reserves to strengthen the balance sheet and also provides an annual transfer to the International Development Association (IDA). IBRD has raised the bulk of the money loaned by the World Bank to alleviate poverty around the world. This has been done at a relatively low cost to taxpayers, with governments paying in $11 billion in capital since 1946 to generate more than $400 billion in loans.

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