Definition
The International Bank for Reconstruction and Development (IBRD) is one of five institutions that make up the World Bank Group. Established in 1944, its primary purpose is to advance economic development by providing loans, expertise, and coordination among other nations for developmental projects. Essentially, it aims to reduce poverty in middle-income and creditworthy low-income countries by promoting sustainable economic growth.
Phonetic
International Bank of Reconstruction and Development (IBRD): In-tur-na-shuh-nuhl Bank uhv Ree-con-struc-shuhn and De-vel-up-muhnt (ahy-bee-ar-dee)
Key Takeaways
- The International Bank of Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries. The main aim of the organization is to alleviate poverty and support sustainable development by providing financial products and policy advice to its member countries.
- IBRD is part of the World Bank Group, along with four other institutions. As one of the key bodies within this group, it provides loans and development assistance to middle-income and low-income countries with the goal of reducing poverty and bolstering economic prosperity.
- The resources of the IBRD come primarily from the world’s wealthier countries, who contribute to the Bank based on their economic capabilities. Additional resources are leveraged through the financial markets via IBRD’s AAA credit rating.
Importance
The International Bank for Reconstruction and Development (IBRD) plays a crucial role in the global economy by providing loans and offering financial products and advisory services to middle-income and creditworthy low-income countries. It is one of the five institutions under the World Bank Group and is vital in bridging economic disparities in the global scene. The importance of the IBRD extends to supporting long-term economic development and poverty reduction strategies in borrowing countries and helping to build infrastructure, bolstering private sector growth, promoting human development, and assisting in financial and private sector development. Through their commitment and actions, the IBRD significantly contributes to achieving sustainable economic progress worldwide.
Explanation
The International Bank for Reconstruction and Development (IBRD), a part of the World Bank Group, serves a significant purpose when it comes to global economic recovery and advancement. Established in 1944 to rebuild Europe after World War II, its long-standing mission has been to reduce poverty and improve the standard of living for people in the developing world. It functions as a platform that allows prosperous nations to contribute to less-fortunate economies, ultimately driving economic development at a global scale.The IBRD achieves its mission by providing loans and offering policy advice and technical assistance to its member nations for developmental projects. These projects might pertain to a diverse range of sectors, including education, healthcare, agriculture, environmental protection, infrastructural improvements, and more. The aim of these transactions is not to obtain short-term gains but to drive long-term economic sustainability and growth. Through their initiatives, the IBRD helps countries develop the capacity to manage development effectively on their own and grow economically, creating a robust global economy overall.
Examples
1. India Water Project: In 2018, IBRD approved funding of $120 million for a water supply and sewerage project in the Indian state of Uttarakhand. The project was aimed to increase access to improved water supply services in various peri-Urban areas and to improve the efficiency of selected urban water supply and sewerage services.2. Egyptian Solar Power: IBRD approved a $3 billion loan to Egypt in 2016 to support the Egyptian government’s program to enhance the availability of sustainable energy through supporting the Egyptian Solar Power Plant Project. The project was part of a larger effort called the Egypt Renewable Energy Development Project.3. Brazil Sustainable Urbanization: In 2012, the IBRD approved a $500 million loan for the Pernambuco Sustainable Rural and Urban Development Project in Brazil. The project aimed to improve access to quality public services and infrastructure for both urban and rural residents in some of the state’s poorest areas. These projects revolved around infrastructure, regional integration, and rural and human development.
Frequently Asked Questions(FAQ)
What is the International Bank for Reconstruction and Development (IBRD)?
The International Bank for Reconstruction and Development (IBRD) is an organization that focuses on providing loans and economic advice to middle and low-income countries to reduce poverty and support economic development.
When was the IBRD established?
The International Bank for Reconstruction and Development was established in 1944 at the Bretton Woods Conference.
What is the main goal of the IBRD?
The main goal of the IBRD is to reduce poverty in middle-income and creditworthy low-income countries by promoting sustainable economic growth.
How does the IBRD fund its loans?
The IBRD funds its loans by pooling capital market borrowings, its own paid-in funds, and repayments from its previous loans.
Who runs the IBRD?
The IBRD is run by its member countries. The Board of Governors, consisting of representatives usually at the finance ministerial level, makes top decisions such as admission of new members.
How many countries are members of the IBRD?
As of July 2021, the IBRD has 189 member countries.
What is the relationship between the IBRD and World Bank?
The IBRD is one of the five institutions that form the World Bank Group. The five institutions work collectively to achieve the World Bank Group’s mission to end extreme poverty and promote shared prosperity.
How does the IBRD differ from traditional banks?
Unlike traditional banks, the IBRD provides loans and developmental assistance to countries, not individuals or corporations. The aim is to reduce poverty and support economic development.
Related Finance Terms
- World Bank Group
- Development Economics
- Low-Income Countries
- International Monetary Fund (IMF)
- International Development Association (IDA)
Sources for More Information
