International Bank for Reconstruction and Development IBRD

International Bank for Reconstruction and Development (IBRD)

 

commonly known as the World Bank, a specialized UN institution; an international credit institution established at the same time as the International Monetary Fund (IMF) in accord with a decision of the monetary and financial conference of 44 countries in Bretton Woods (USA, 1944). It began operations in June 1946.

The World Bank is a joint-stock company whose shareholders include only those countries that are members of the IMF. In mid-1973 the World Bank had 122 members. The share of member countries in the capital of the IBRD is proportional to their share in the capital of the IMF. The basic capital of the IBRD on July 1, 1947, was set at $10 billion, and by mid-1973 it had reached $30.4 billion, which included $3 billion of repaid credits. The Soviet Union does not take part in the activity of the bank.

The highest body of the IBRD is the board of governors. Each country has 250 votes in it plus one vote per share of stock ($100,000). This formula gives 25 percent of the votes to the USA, 10 percent to Great Britain, 5 percent to the Federal Republic of Germany, 4 percent to France, and 3 percent each to Canada, India, and Japan. The executive body, the directorate, consists of 20 directors, including permanent representatives of the USA, Great Britain, West Germany, France, Japan, and India and 14 elected directors who represent the other bank members. The president of the bank is R. McNamara (USA). The board of directors is located in Washington.

The official goal of the IBRD is to promote development of the productive forces of member countries, above all the less developed countries, and to export private capital to them by guaranteeing capital investments or participating in them. In actuality, however, the IBRD has turned into a means of promoting the export of capital by imperialist monopolies. A large part, 65-70 percent, of IBRD credit goes to finance development of the infrastructure (transportation, roads, municipal services, and the like); investment in this area creates the basis for subsequent investment of private capital in profit-making sectors. Credit is often granted to economically underdeveloped IBRD countries on the condition that they follow an economic course that is advantageous to the foreign monopolies.

The World Bank finances itself basically by placing its own bonds on the international capital market. The members of the World Bank guarantee repayment to the monopolies that purchase these bonds. IBRD indebtedness for loans floated reached $8.9 billion in mid-1973. The total credit extended by the bank is $20.3 billion, whereas money owed the bank in mid-1973 amounted to $14.6 billion (the bank has the right to resell the obligations of debtor countries, which means that the difference between the sum of credit given and actual indebtedness includes not just the amount repaid but also the credit resold). The World Bank keeps part of its capital ($1.8 billion in mid-1973) in government securities, primarily American.

World Bank credit is granted for terms of five to 25 years; the interest rate is set on the basis of the market rates the World Bank pays for capital plus a commission of about 1 percent. The interest rate has risen several times; since August 1970 it has been 7.25 percent annually. The primary recipients of IBRD credits are state organizations; guarantees from state organizations are required for credit to private companies. In 1973, 39 percent of IBRD credits were granted to the countries of Latin America, 25 percent to Asia and Oceania, 24 percent to Europe, the Middle East, and North Africa, and 12 percent to East and West Africa.

The activity of the IBRD is supplemented by the activity of its two affiliates: the International Development Association and the International Finance Corporation.

E. D. ZOLOTARENKO

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