The World Bank : a financial appraisal : Evaluation financiere de la Banque mondiale

The World Bank, formally known as the International Bank for Reconstruction and Development, is an international organization, owned and controlled by governments that constitute its membership/shareholders. Its function is to finance economic growth and productivity in developing member countries. The World Bank finances its lending operations primarily through the sale of debt obligations to private investors, financial institutions, and governments. The Bank's capital, which is subscribed by member countries, its retained earnings, and the flow of repayments on its loans also contribute to the Bank's resources. From time to time, financial commentators have asked whether there is a conflict between the Bank's role as a development institution and its responsibilities to its creditors and to its shareholders. The point of my remarks is straightforward: Although the Bank has several ‘constituencies,’ there is no conflict between its development efforts and the interests of either its shareholders or bondholders. The fact is that creditors and shareholders insist on prudent financial policies as a condition for the development efforts of the Bank. Sound projects, attention to country creditworthiness, assessment of risk, and adequate levels of liquidity and reserves are required by the management of the Bank and by its creditors and stockholders. Not one of these requirements is inconsistent with the needs or aspirations of the developing world. Thus, underlying the Bank's development activities is a market-based institution that attracts funds from governments and capital markets for projects and programs that make sense in developing member countries. In order to do its job, the Bank maintains financial and lending policies and practices that satisfy the demands of the marketplace.