The presentation covers details about World Bank, the institutions that form the world bank group their objective and their performance.

1. World Bank
International Business Management
Presented to
Prof. Kaushal Kishore
Presented by
Darshit Paun 20131010
Monik Gandhi 20131023
Rachit Shah 20131035
Sandip Goldar 20131047
Vishal Nadgir 20131059

2. INTRODUCTION
The World Bank was created at the 1944 Bretton Woods Conference, along with three other institutions, including
the International Monetary Fund (IMF). The World Bank and the IMF are both based in Washington, D.C., and work closely
with each other.
The Bank focuses on six areas:
•Overcome poverty by spurring growth in the poorest countries, focusing on Africa.
•Offer reconstruction to poor countries emerging from war, a major contributing factor to extreme poverty.
•Provide a customized development solution to help those middle-income countries overcome problems that could throw
them back into poverty.
•Spur governments to act on preventing climate change, controlling communicable diseases, (especially HIV/AIDS and
malaria), managing international financial crises, and promoting free trade.
•Work with the League of Arab States to improve education, build infrastructure and provide micro-loans to small
businesses in the Arab world.
•Share its expertise with developing countries, and its knowledge with anyone via reports and its interactive online
database.

3. Voting power
• In 2010, voting powers at the World Bank were revised to increase the voice of developing
countries, notably China.
• The countries with most voting power are now the United States (15.85%), Japan
(6.84%), China (4.42%), Germany (4.00%), the United Kingdom (3.75%), France
(3.75%), India (2.91%), Russia (2.77%), Saudi Arabia (2.77%) and Italy (2.64%).
• Most developed countries' voting power was reduced, along with a few poor countries
such as Nigeria.
• The changes were brought about with the goal of making voting more universal in regards
to standards, rule-based with objective indicators, and transparent among other things.
• Now, developing countries have an increased voice in the "Pool Model," backed especially
by Europe.

4. World Bank and Business environment
• The World Bank Entrepreneurship Survey (WBGES) was conceived to answer the demand of
scholars and government for a reliable and internationally comparable indicator to measure
entrepreneurial activity.
• The WBGES data continue to show that a good regulatory environment can boost
entrepreneurial activity in developing countries.
• The WBGES aims to understand the dynamics of private enterprises around the world
through the collection of data on business creation at the international level that can be
compared across heterogeneous legal, economic, and political systems.
• As its spring meetings approach — they will be held jointly with the International Monetary
Fund in mid-April — the bank said it would increase its annual lending to middle-income
countries to as much as $28 billion, up from $15 billion.

5. • Over the next decade, the lending capacity for those countries through the International Bank
for Reconstruction and Development, a part of the World Bank, will total about $300 billion.
• Through a system called the Doing Business (DB) rankings, the World Bank uses its considerable
financial and political power to make it as easy as possible for these visible and tradable assets
to exchange hands.
• The DB rankings encourage this kind of economic activity by awarding points to countries when
they act in favour of the “ease of doing business”, which are published in an annual report.
• Forty-five countries pledged US$25.1 billion in "aid for the world's poorest countries", aid that
goes to the World Bank International Development Association (IDA) which distributes the
loans to eighty poorer countries.
World Bank and Business environment

6. • We shall focus on three
major trends at the World
Bank: (1) changes in
lending, including amount
of lending, type of
lending, and recipient
countries; (2) changes in
income sources; and (3)
the growth of trust funds.
World Bank –
Group at a
Glance

7. WORLD BANK LENDING
• In 1950s and 1960s, investments in industry and infrastructure dominated
the Bank’s portfolio.
• Later 1970s,Bank veered into more direct approaches to poverty
reduction, pioneering strategies like ‘basic human needs’ and ‘integrated
rural development.
• 1980s, the Bank focused on structural adjustment, macroeconomic
policies, debt, and efforts to increase private capital flows
• 1990s and 2000s, the Bank focused on sustainable development and
continued to strengthen its brand as a ‘knowledge bank’ helping solve
Development Issues.
• Recently, the Bank expanded its footprint to address global public goods
problems, like climate change

8. AMOUNT OF LENDING
• World Bank’s cumulative lending now
stands in excess of $1 trillion.
• World Bank Group committed $52.6
billion in total loans, grants, equity
investments and guarantees IN 2013
• World Bank (IBRD and IDA)
committed $31.5 billion in loans,
credits, grants, and guarantees
$15.2 billion – IBRD (92 operations –
35 Countries)
$16.3 billion from IDA (184 operations
– 59 Countries)

9. TRENDS IN
LENDING
The exceptions to this trend are two spikes in lending, in response to the 1997
Asian financial crisis and the 2008 global financial crisis.
IBRD’s set a statutory lending limit of a 1:1 gearing ratio, meaning outstanding
loans may not exceed the sum of subscribed capital, reserves, and surplus.
Outstanding loans and guarantees of $141 billion are 57% of the $250 billion
lending limit
IBRD currently targets an equity-to-loan ratio of between 23% and 27%
This ratio decreased since 2010, due to an increase in lending and decrease in
useable equity, but remains at the upper end of the target risk coverage range, at
26.8%
There is reduced demand for IBRD loans stemming increased competition from
other funding sources and low global interest rates
To counter the trends, President Kim announced recently that the maximum
loan book IBRD can support will increase by $100 billion, reaching $300 billion in a
decade
Increase supported by changes to minimum equity-to-loan ration, allowing the
World Bank to take on more loans relative to its total capital.

10. TRENDS IN
LENDING
 Lending from the four regional development
banks has been increasing significantly,
especially in the aftermath of the financial crisis.
 At the same time, middle income countries are
increasingly financing their own development.
 The China Development Bank had about $886
billion in loans outstanding in 2011, compared
to only $136 billion in outstanding IBRD loans in
FY2012
 During the financial crisis, Chinese lending
surpassed World Bank lending: the China
Development Bank and the China Export-Import
Bank committed more than $110 billion to
developing countries from 2008 to 2010, while
IBRD and IFC together committed only $100
billion

11. TYPES OF LENDING
World Bank lending can be differentiated into three categories:
1.Investment lending (Goods and services needed for development over the longer term)
2.Development policy lending (Development policy operations)
3.Results-based lending (P4R – Funding governments programs that support government
projects, but the disbursement of funds is linked to the achievement of measureable and
verifiable development results)

12. Top Recipients of IBRA and IDA
Development Policy Lending, 2013

13. WORLD BANK SOURCES OF FUNDING
• The World Bank’s lending, investments, and general operations are
funded by:
i)equity (paid-in capital and retained earnings)
ii)borrowing (debt issuance).

14. Funding by Equity
• Each World Bank Group institution is owned by
member countries—its shareholders.
• Ownership and therefore voting rights are
proportional to each shareholder’s capital
contributions.
• The World Bank is governed by a Board of Governors
(one from each country) and a Board of 25 Executive
Directors.
• By convention, the Executive Directors of IBRD, IDA,
IFC, and MIGA are the same.

15. Source: IBRD (2013)

17. • IBRD members purchase shares of the bank, but pay
in only 6% of the cost of shares purchased.
• The rest of the capital remains “on call.” If the IBRD
suffers large losses—for example, if several large
borrowers defaulted on their loans at the same time
—the Bank could collect “on call” capital from its
shareholders in order to pay its creditors, although
the Bank has never needed to make a call on capital.

18. • IDA raises funds through “replenishments” that occur
every three years. The level of funding it receives
depends on how much its donors commit.
• The sixteenth IDA replenishment, finalized in
December 2010, netted SDR 32.8 billion ($49.3
billion) for FY2012-2014.
• The seventeenth IDA replenishment, recently
completed, brought in $52 billion. (SDR, or special
drawing rights, are a kind of foreign exchange asset
created by the IMF; at current rates, 1SDR = $1.53;
see IMF 2012.) This amount includes transfers from
the IBRD and IFC of $3 billion.

20. Funding by Borrowing
• The World Bank raises the majority of its capital by
issuing debt to both institutional and retail investors.
• Since 1947, the Bank has issued bonds in 54 different
currencies, and in FY2012 it issued bonds in 23
currencies.
• Funding levels depend on lending activity as well as
broader macroeconomic conditions.
• Bond maturities generally range from 2 to 10 years,
and the issue size is typically USD$1-3 billion.
• Moody’s rates the World Bank AAA, the highest
possible rating. It cites the Bank’s strong capital base,
status as a preferred creditor, and sound financial
management.

21. Operating Income of World
Bank• The World Bank’s operating income depends
primarily on the margin it makes on the loans it issues
(net of funding costs), the return on its investments,
and its noninterest expenses, of which the largest is
staff costs.
• Operating income has been positive every year since
Moody’s began evaluating the Bank, and it has
averaged around $1.1 billion over the past five years.
Operating income was $876 million in 2013.

24. INTERNATIONAL FINANCE
CORPORATION (IFC)
The International Finance Corporation focuses on private sector investment in
emerging markets. Its three main lines of business include investment services,
advisory services, and asset management.

25. • IFC’s Asset Management Company (AMC) mobilizes
and manages third-party capital from institutional
investors, like sovereign funds and pension funds.
AMC manages seven funds, with $5.5 billion under
management. These are :
(1) the Equity Capitalization Fund
(2) the Sub-Debt Capitalization Fund
(3) the ALAC Fund
(4) the African Capitalization Fund
(5) the Russian Bank Capitalization Fund
(6) the Catalyst Funds
(7) the Global Infrastructure Fund

27. MULTILATERAL INVESTMENT
GUARANTEE AGENCY (MIGA)
• The goal of the Multilateral Investment Guarantee
Agency (MIGA) is to stimulate foreign direct
investment into developing countries.
• It does this by providing political risk insurance
(guarantees) to protect against expropriation, breach
of contract, non-honoring of financial obligations,
currency inconvertibility, terrorism and civil
disturbance, and other non-commercial risks.

28. MULTILATERAL INVESTMENT
GUARANTEE AGENCY (MIGA)
• In 2013, MIGA issued $2.8 billion in guarantees, with
an additional $3.5 million issued under MIGA-
administered trust funds (MIGA 2013). This is double
(in nominal terms) the $1.4 billion in guarantees
issued five years ago, in 2009.
• Over the past five years, MIGA has supported about
27 new projects and 33 total projects per year, and it
supported 30 total projects and 26 new projects in
2013.

29. MULTILATERAL INVESTMENT
GUARANTEE AGENCY (MIGA)
• MIGA’s strategy for 2014-2017 calls for work on
infrastructure, power generation, transportation,
manufacturing, agriculture, and finance.
• MIGA will work to expand its product line and reach a
broader client base. It will continue to prioritize work
in IDA-eligible countries and fragile and conflict-
affected states.

30. TRUST FUNDS
• Trusts funds were initially designed to give bilateral
donors a mechanism for co-financing specific
projects. For example, the first World Bank trust fund,
established in 1960, allowed co-financing of the Indus
Basin Project in Pakistan.
• Since 2007 alone, the total value of World Bank
Group trust funds has increased almost 73%, growing
from $17.3 billion to $29.2 billion

32. IBRD/IBA Trust Funds
• IBRD/IDA trust funds account for 33% of World Bank
Group trust funds by value.
• Since 2008, funds held in trust in IBRD/IDA trust funds
have increased from $8.7 billion to $9.7 billion, cash
contributions have increased from $4.0 billion to $4.4
billion, and disbursements have increased from $3.3
billion to $4.3 billion.
• The IBRD and IDA use two types of trust funds: Bank-
Executed Trust Funds (BETFs) and Recipient-Executed
Trust Funds (RETFs).

33. FIF’s
• The World Bank’s role in financial intermediary funds
is as a trustee: it receives, holds, invests, and transfers
funds, often to multiple implementing agencies. As a
trustee, the World Bank does not supervise the use of
funds, but it may serve as a partner in
implementation.
• FIFs account for 61% of World Bank Group trust funds
by value, and they are also the major source of trust
fund growth at the Bank.

34. FIF’s

35. IFC TF’s
• IFC trust funds account for only about 1% of the total
value of the World Bank Group’s trust funds, but they
are important because they support 80% of IFC’s
advisory services.
• IFC offers these services to businesses and
governments in four categories: access to finance,
investment climate, public-private partnerships, and
sustainable business.
• Over the past five years, the United Kingdom has
been the largest donor to IFC trust funds, providing
25% of all contributions.

36. Trust Fund Reform
• Advantages: Trust funds…
• Help fill gaps in existing development efforts by, for
example, providing funds to post-disaster or post-conflict
countries that are ineligible for IBRD/IDA support or by
catalyzing investment in global public goods like climate
change mitigation
• Promote the coordination/harmonization of bilateral aid
efforts and support the formation of new development
partnerships
• Secure broader support for and complement existing
Bank work
• Allow doors to use the broader capacities of multilateral
institutions
• Reduce transaction and administrative costs and provide
economies of scale

37. Trust Fund Reform
• Disadvantages: Trust funds…
• Are often not well-integrated into other Bank efforts
and activities or into existing country programs
• Often do not allow recipient countries to participate
in their design and use, particularly for global funds
• Reduce the visibility of individual donors and
therefore the credit they receive
• Reallocate existing ODA but do not increase it
• Reduce transparency, especially because data is
difficult to compile and sources conflict
• Are not (or are not as easily) subjected to World Bank
safeguards

38. Thank You