WORLD BANK REPORT

Ms. Intia last Friday already discussed about the International Monetary Fund this afternoon we
will proceed to another International institution delving also in Finanace.. The World Bank
Regarding my topic. A lot of people are really confused between the World bank and IMF. So
before I proceed with my discussion I will first play a video about the difference between the
World Bank and the IMF so we can already put a barrier between the two.
So that is the difference but not that much right?

( Discusses about the World Bank)

Organization

The World Bank is related to the UN, though it is not accountable either to the General
Assembly or to the Security Council. Each of the bank’s more than 180 member states
are represented on the board of governors, which meets once a year. The governors
are usually their countries’ finance ministers or central bank governors. Although the
board of governors has some influence on IBRD policies, actual decision-making power
is wielded largely by the bank’s 25 executive directors. Five major countries—the United
States, Japan, Germany, the United Kingdom, and France—appoint their own executive
directors. The other countries are grouped into regions, each of which elects one
executive director. Throughout the World Bank’s history, the bank president, who serves
as chairman of the Executive Board, has been an American citizen.
Voting power is based on a country’s capital subscription, which is based in turn on its
economic resources. The wealthier and more developed countries constitute the bank’s
major shareholders and thus exercise greater power and influence. For example, at the
beginning of the 21st century the United States exercised more than one-sixth of the
votes, more than double that of Japan, the second largest contributor. Because
developing countries hold only a small number of votes—e.g., in the late 1990s
approximately 2 percent of the votes were held by 25 African countries combined—the
system does not provide a significant voice for these countries, which are the primary
recipients of World Bank loans and policy advice.
The bank obtains its funds from the capital subscriptions of member countries, bond
flotations on the world’s capital markets, and net earnings accrued from interest
payments on IBRD and IFC loans. Approximately one-tenth of the subscribed capital is
paid directly to the bank, with the remainder subject to call if required to meet
obligations.

Debt And Policy Reform

The debt crisis of the early 1980s—during which many developing countries were unable to
service their external debt to multilateral lending institutions, because of a slowdown in the
world economy, high interest rates, a decline in commodity prices, and wide fluctuations in oil
prices, among other factors—played a crucial role in the evolution of World Bank operations.
The bank had become increasingly involved in shaping economic and social policies in indebted
developing countries. As a condition of receiving loans, borrowing countries were required
to implement stringent “structural adjustment programs,” which typically included severe cuts in
spending for health and education, the elimination of price controls, the liberalization of trade,
the deregulation of the financial sector, and the privatization of state-run enterprises. Although
intended to restore economic stability, these programs, which were applied in a large number of
countries throughout the developing world, frequently resulted in increased levels of poverty,
mounting unemployment, and a spiraling external debt. In the wake of the debt crisis, the World
Bank focused its efforts on providing financial assistance in the form of balance-of-payments
support and loans for infrastructural projects such as roads, port facilities, schools, and hospitals.
Although emphasizing poverty alleviation and debt relief for the world’s least developed
countries, the bank has retained its commitment to economic stabilization policies that require
the implementation of austerity measures by recipient countries.
The World Bank and the IMF played central roles in overseeing free-market reforms in eastern
and central Europe after the fall of communism there in the 1980s and ’90s. The reforms, which
included the creation of bankruptcy and privatization programs, were controversial because they
frequently led to the closure of state-run industrial enterprises. “Exit mechanisms” to allow for
the liquidation of so-called “problem enterprises” were put into place, and labour laws were
modified to enable enterprises to lay off unneeded workers. The larger state enterprises often
were sold to foreign investors or divided into smaller, privately owned companies. In Hungary,
for example, some 17,000 businesses were liquidated and 5,000 reorganized in 1992–93, leading
to a substantial increase in unemployment. The World Bank also provided reconstruction loans
to countries that suffered internal conflicts or other crises (e.g., the successor republics of former
Yugoslavia in the late 1990s). This financial assistance did not succeed in rehabilitating
productive infrastructure, however. In several countries the macroeconomic reforms resulted in
increased inflation and a marked decline in the standard of living.
The World Bank is the world’s largest multilateral creditor institution, and as such many of the
world’s poorest countries owe it large sums of money. Indeed, for dozens of the most heavily
indebted poor countries, the largest part of their external debt—in some cases constituting more
than 50 percent—is owed to the World Bank and the multilateral regional development banks.
According to some analysts, the burden of these debts—which according to the bank’s statutes
cannot be canceled or rescheduled—has perpetuated economic stagnation throughout the
developing world.

As you notice the word poverty/eradicating poverty is being repeated in every paragraph. It is because
of this mandate. ( Reads mandate)

In its plight against poverty the World Band was able to identify six main focuses that shall aid them (
Reads…)

(Insert Animation)
In fulfilling this very goal, The World Bank cannot work on its own because no man is an island right?

For the information of everybody

The World Bank Group consists of five organizations:

 The International Bank for Reconstruction and Development

 The International Development Association
 The International Finance Corporation
 The Multilateral Investment Guarantee Agency
 The International Centre for Settlement of Investment Disputes

1st Organization:

Above all, we help ensure that progress in reducing poverty and broadening prosperity
can be sustained. We place special emphasis on supporting lower-middle-income
countries as they move up the economic chain, graduating from IDA to become clients
of IBRD. We are also expanding capacity to help countries dealing with fragility and
conflict situations. And as a long-term partner, we step up our support to all MICs in
times of crisis.

Through our partnership with MICs and creditworthy poorer countries, IBRD offers
innovative financial solutions, including financial products (loans, guarantees, and risk
management products) and knowledge and advisory services (including on a
reimbursable basis) to governments at the national and subnational levels.

IBRD finances investments across all sectors and provides technical support and
expertise at each stage of a project. IBRD’s resources not only supply borrowing
countries with needed financing, but also serve as a vehicle for global knowledge
transfer and technical assistance.

In addition to concessional loans and grants, IDA provides significant levels of debt relief
through the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief
Initiative (MDRI).

Some if its work are:

And also

Improving Skills Development for Rural Migrants in China

A partnership between China and the World Bank helped provided skills training for some
522,000 young people in rural areas and provided employment services for over 4.2 million job
seekers.

2nd Organization
The International Development Association (IDA) is a multi-issue institution, supporting a range
of development activities, such as primary education, basic health services, clean water and
sanitation, agriculture, business climate improvements, infrastructure, and institutional reforms.
These interventions pave the way toward equality, economic growth, job creation, higher
incomes, and better living conditions. Many of the issues developing countries face do not
respect borders. By helping address these problems, IDA works to mitigate security,
environmental and health concerns, and prevents these threats from becoming global issues.
For contributing partners, IDA provides an efficient channel for directing development
assistance to the poorest countries. Because contributions to IDA are pooled together with
repayments from former and current IDA recipients, IDA provides a substantial and stable
source of funding that IDA countries can rely on to fund their development priorities.
IDA is also a key partner during crises and emergencies through tools like its Crisis Response
Window (CRW). The CRW supported countries undergoing severe crises, such as Haiti in the
aftermath of the 2010 earthquake, West African countries affected by the Ebola outbreak, and
Nepal after the 2015 earthquake. Since its introduction in IDA16, the CRW has provided $1.8
billion to respond to crises and emergencies in 18 IDA countries across five regions.
IDA’s operational work is complemented by analytical studies that support the design of policies
to reduce poverty. IDA advises governments on ways to broaden the base of economic growth
and protect the poor from economic shocks.
IDA also coordinates donor assistance to provide relief for poor countries that cannot manage
their debt-service burden, and has a system for allocating grants based on countries’ risk of
debt distress, designed to help countries ensure debt sustainability.
IDA places a premium on development impact and is regarded as a transparent, cost-effective
platform for achieving results. For example, from fiscal years 2011- 17, IDA financing
immunized 1/4 billion children; provided access to better water services for 72 million people;
and recruited and/or trained more than 8 million teachers
There are a lot of countries more like:
 Congo

 Bolivia

 Mongolia

 Rwanda

 Nairobi in Kenya and many more.

3rd Organization
What are these specific needs?

These are the fields like:

 Equity
 Trade and Supply
 Venture Capital
 ETC

4th Organization
As a multilateral development agency, MIGA only supports investments that are
developmentally sound and meet high social and environmental standards. MIGA applies a
comprehensive set of social and environmental performance standards to all projects and
offers extensive expertise in working with investors to ensure compliance to these standards .

2.The wind farms will help diversify the country's energy mix, and directly benefit local communities," s

5th Organization
ICSID also promotes greater awareness of international law on foreign investment and the
ICSID process. It has an extensive program of publications, including the leading ICSID Review-
Foreign Investment Law Journal and it regularly publishes information about its activities and
cases. ICSID staff organize events, give numerous presentations and participate in conferences
on international investment dispute settlement worldwide.

Case Administration Services

ICSID Cases

The Centre provides full administrative services in ICSID cases, including:

 A dedicated case team consisting of an ICSID legal counsel, paralegal, legal assistant and
hearings organizer, who assist the parties and the Tribunal throughout the process. The legal
counsel serves as the Secretary to the Tribunal, offering a wide range of support and expertise
concerning the ICSID procedure. The Secretary is involved in all aspects of the process and
assists the parties and the Tribunal at hearings.
 A financial team that manages the finances of the case with the assistance of the Tribunal
Secretary. The parties’ advances to cover the costs of the proceeding (including the arbitrators’
fees and hearing expenses) are held in a case-specific income bearing account, and ICSID
handles all payments to arbitrators, service providers and others from this account. Detailed
interim financial statements can be provided to the parties at any time during the proceeding.
At the end of the process, ICSID provides a final financial statement to the parties including a
breakdown of the fees and expenses of the Tribunal and handles any reimbursements to the
parties.
 First class hearing facilities at the World Bank offices in Washington, D.C. and Paris and other
locations around the world. The cost of room rentals for ICSID-administered hearings held at any
World Bank premises is included in ICSID's administrative fee. If the parties wish to hold
hearings at other locations, ICSID has arrangements with institutions around the world to offer
access to facilities at cost-effective rates.
 Logistical support for the organization of hearings, sessions, telephone and video conferences
and meeting rooms for the tribunal and the parties. ICSID has a wide network of experienced
court reporters, translators, interpreters and other service providers and makes the appropriate
arrangements, taking into account the specific requirements of each case after consulting the
parties and the Tribunal.
 Any other services tailored to the specific case at hand (e.g., depository of documents that the
parties wish to make public) depending on the preferences of the parties and the Tribunal.

Criticism of the World Bank and the IMF encompasses a whole range of issues but they
generally centre around concern about the approaches adopted by the World Bank and the IMF
in formulating their policies, and the way they are governed. This includes the social and
economic impact these policies have on the population of countries who avail themselves of
financial assistance from these two institutions, and accountability for these impacts.
Critics of the World Bank and the IMF are concerned about the ‘conditionalities’ imposed on
borrower countries. The World Bank and the IMF often attach loan conditionalities based on
what is termed the ‘Washington Consensus’, focusing on liberalisation—of trade, investment
and the financial sector—, deregulation and privatisation of nationalised industries. Often the
conditionalities are attached without due regard for the borrower countries’ individual
circumstances and the prescriptive recommendations by the World Bank and IMF fail to resolve
the economic problems within the countries.
IMF conditionalities may additionally result in the loss of a state’s authority to govern its own
economy as national economic policies are predetermined under IMF packages. Issues of
representation are raised as a consequence of the shift in the regulation of national economies
from state governments to a Washington-based financial institution in which most developing
countries hold little voting power. IMF packages have also been associated with negative social
outcomes such as reduced investment in public health and education.
With the World Bank, there are concerns about the types of development projects funded. Many
infrastructure projects financed by the World Bank Group have social and environmental
implications for the populations in the affected areas and criticism has centred on the ethical
issues of funding such projects. For example, World Bank-funded construction of hydroelectric
dams in various countries has resulted in the displacement of indigenous peoples of the area.
The World Bank’s role in the global climate change finance architecture has also caused much
controversy. Civil society groups see the Bank as unfit for a role in climate finance because of
the conditionalities and advisory services usually attached to its loans. The Bank’s undemocratic
governance structure – which is dominated by industrialised countries – its privileging of the
private sector and the controversy over the performance of World Bank-housed Climate
Investment Funds have also been subject to criticism in debates around this issue. Moreover,
the Bank’s role as a central player in climate change mitigation and adaptation efforts is in direct
conflict with its carbon-intensive lending portfolio and continuing financial support for heavily
polluting industries, which includes coal power.
There are also concerns that the World Bank working in partnership with the private sector may
undermine the role of the state as the primary provider of essential goods and services, such as
healthcare and education, resulting in the shortfall of such services in countries badly in need of
them. As an increasing shift from public to private funding in development finance has been
observed recently, the Bank’s private sector lending arm – the International Finance Corporation
(IFC) – has also been criticised for its business model, the increasing use of financial
intermediaries such as private equity funds and funding of companies associated with tax
havens.
Critics of the World Bank and the IMF are also apprehensive about the role of the Bretton
Woods institutions in shaping the development discourse through their research, training and
publishing activities. As the World Bank and the IMF are regarded as experts in the field of
financial regulation and economic development, their views and prescriptions may undermine or
eliminate alternative perspectives on development.
There are also criticisms against the World Bank and IMF governance structures which are
dominated by industrialised countries. Decisions are made and policies implemented by leading
industrialised countries—the G7—because they represent the largest donors without much
consultation with poor and developing countries.

The Marcos debt

Another compelling argument against the “hero’s burial” for Ferdinand Marcos was his corruption-
ridden mismanagement of the country’s debt. At the height of martial law in 1977, he issued
Presidential Decree 1177 mandating the automatic appropriation for debt service, thus starting the
process that continues to this day of prioritizing debt repayments before budget allocations for
social and economic services and other government expenditures. The Philippines is the only
country in the world with such an automatic debt appropriation law, Walden Bello says.

In the 1970s Marcos took out huge amounts of foreign currency loans that by the 1980s his regime
could not repay. He tried to hide the dire financial situation by overstating the figures for foreign
reserves. By then the economy was in a free fall: GDP growth dropped 5.3 percent, prices of
primary export commodities fell by 50 percent, workers’ wages were reduced, and unemployment
hit one-fourth of the labor force. The crisis worsened with the assassination of Ninoy Aquino in
August 1983. As foreign banks withheld their credit facilities, Marcos declared bankruptcy in
October 1983 and sought a 90-day moratorium on principal debt payments. The World Bank
provided bailout loans to avert a default but with painful conditions like cutting the government
budget, peso devaluation, tariff dismantling, and ending subsidies. Marcos had become the
proverbial debt addict wholly dependent on foreign aid.

Cronyism became more rampant as Marcos prioritized the bailout of companies owned by his
friends and close business associates. The Freedom from Debt Coalition cited the proliferation of
behest loans with government guaranteeing the procurement of borrowed capital without
complying with banking rules and procedures. The most notorious case was the $2-billion Bataan
Nuclear Power Plant, which was completed in 1985. Total repayments, which ended only in 2007,
reached $22 billion, with a debt service of $140 million a year, $12 million a month, and $388,000
a day. Marcos, through a crony, was reported to have received an $80-million payoff.

Ibon Databank reported that the Philippine debt in 1983 comprised 91 percent of GNP
and 509 percent of export earnings. In addition, the loans became costlier as creditors
imposed higher and floating interest rates. When Marcos became president in 1965,
the total debt was $600 million; by the time he was ousted in 1986, it had ballooned to
$26 billion—a 4300-percent rise.
Mamoru Tsuda and Gus Yokoyama wrote in 1986 that hearings by the US House
subcommittee on Asia-Pacific affairs revealed that “Japanese corporations had paid
rebates to Marcos and his cronies, as well as to financial groups allied with the former
President, in connection with Japanese yen loans to the Philippines.” Total
commissions—in reality, bribes—allegedly paid by five Japanese corporations
amounted to $1.03 million.
In April 1986, the Commission on Audit accused Marcos of diverting US aid funds,
particularly the interest earnings of P236 million from the Economic Support Fund
(ESF) which were illegally disbursed and classified as “confidential fund” via a
Malacañang memorandum. The COA also reported the “irregular and illegal”
diversion of P35 million to the “confidential fund” of the ESF Council headed by
Imelda Marcos.
A May 1986 report by the UP School of Economics said: “The foreign debt incurred
by the old regime is one of the biggest obstacles to Philippine economic recovery. The
Philippines is one of the most heavily indebted countries in the world: seventh in size
of debt, sixth in debt to exports ratio, fourth in debt to GDP ratio, and ninth in debt
service ratio.”
The UP report also said that “most of the projects financed by the foreign loans were
unproductive; … not well chosen or were probably chosen precisely to finance capital
flight through the overpricing of projects.” Furthermore, projects were found to be
“overpriced, mismanaged, not viable to begin with, or made unviable by changes in
exchange rate and the international environment.”
As a result, the government had “to squeeze basic services and maintenance
expenditures, reduce investment in infrastructure, incur huge deficits, and raise taxes
and user fees to service the debt,” the UP report said.
Eduardo C. Tadem, PhD, is professorial lecturer of Asian studies at UP Diliman and
president of the Freedom from Debt Coalitio