The International Bank for Reconstruction and Development (IBRD) is an international financial institution that offers loans to middle-income developing countries. The IBRD is the first of five member institutions that compose the World Bank Group and is headquartered in Washington, D.C., United States. It was established in 1944 with the mission of financing the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association, are collectively known as the World Bank as they share the same leadership and staff.
Established : 1945
Type : Development finance institution
Legal status : Treaty
Purpose : Development assistance, Poverty reduction
Headquarters : Washington, D.C., United States
Membership : 189 countries
President of the World Bank: Jim Yong Kim
Parent organization: World Bank Group
The International Bank for Reconstruction and Development was created in 1944 to help Europe rebuild after World War II. Today, IBRD provides loans and other assistance primarily to middle income countries.
IBRD is the original World Bank institution. It works closely with the rest of the World Bank Group to help developing countries reduce poverty, promote economic growth, and build prosperity.
IBRD is owned by the governments of its 188 member countries, which are represented by a 25-member board of 5 appointed and 20 elected Executive Directors.
The institution provides a combination of financial resources, knowledge and technical services, and strategic advice to developing countries, including middle income and credit-worthy lower income countries. Specifically, IBRD:
Supports long-term human and social development that private creditors do not finance
Preserves borrowers’ financial strength by providing support in times of crisis, when poor people are most adversely affected
Promotes key policy and institutional reforms (such as safety net or anti-corruption reforms)
Creates a favorable investment climate to catalyze the provision of private capital
Facilitates access to financial markets often at more favorable terms than members can achieve on their own
The World Bank Group works with middle income countries simultaneously as clients, shareholders, and global actors. As this partnership evolves, IBRD is providing 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 both the national and subnational levels.
IBRD finances projects across all sectors and provides technical support and expertise at various stages of a project.
IBRD’s financial products and services help countries build resilience to shocks by facilitating access to products that mitigate the negative impact of currency, interest rate, and commodity price volatility, natural disasters and extreme weather.
Unlike commercial lending, IBRD’s financing not only supplies borrowing countries with needed financing, but also serves as a vehicle for global knowledge transfer and technical assistance.
Advisory services in public debt and asset management help governments, official sector institutions, and development organizations build institutional capacity to protect and expand financial resources.
IBRD supports government efforts to strengthen not only public financial management, but to also improve the investment climate, address service delivery bottlenecks, and other policy and institutional actions.
How IBRD Is Financed
IBRD raises most of its funds in the world’s financial markets. In fact, in these markets, IBRD is known simply as the World Bank. This practice has allowed IBRD to provide more than $500 billion in loans to alleviate poverty around the world since 1946, with its shareholder governments paying in about $14 billion in capital.
IBRD has maintained a triple-A rating since 1959. Its high credit rating allows it to borrow at low cost and offer middle-income developing countries access to capital on favorable terms — in larger volumes, with longer maturities, and in a more sustainable manner than world financial markets typically provide.
IBRD earns income every year from the return on its equity and from the small margin it makes on lending. This pays for IBRD’s operating expenses, goes into reserves to strengthen the balance sheet, and provides an annual transfer of funds to IDA, the fund for the poorest countries.