The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States; it is the lending arm of the World Bank Group. The IBRD offers loans to middle-income developing countries. It is the first of five member institutions that compose the World Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of European nations devastated by World War II. The IBRD and the concessional lending institution, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.
Following the reconstruction of Europe, the Bank's mandate expanded to advancing worldwide economic development and eradicating poverty. The IBRD provides commercial-grade or concessional financing to sovereign states to fund projects that seek to improve transportation and infrastructure, education, domestic policy, environmental consciousness, energy investments, healthcare, access to food and potable water, and access to improved sanitation.
The IBRD is owned and governed by its 189 member states, with each country represented on the Board of Governors. The IBRD has its executive leadership and staff which conduct its normal business operations. The Bank's member governments are shareholders which contribute and have the right to vote on its matters. In addition to contributions from its member nations, the IBRD acquires most of its capital by borrowing on international capital markets through bond issues at a preferred rate because of its AAA credit rating.
In 2011, it raised US$29 billion in capital from bond issues made in 26 different currencies. The Bank offers several financial services and products, including flexible loans, grants, risk guarantees, financial derivatives, and catastrophic risk financing. It reported lending commitments of $26.7 billion made to 132 projects in 2011.
Governance
There are five "closely associated institutions" that each have a "distinct role" and together form the World Bank—the IBRD, the International Development Association (IDA), the International Finance Corporation (IFC), that "invests in private firms and promotes entrepreneurship", and is chaired by the President of the World Bank Group. The executive directors collectively represent all 189 member states of the World Bank. The president oversees the IBRD's overall direction and daily operations.
The Bank and IDA operate with a staff of approximately 10,000 employees.
On 9 April 2019, United States President Donald Trump nominated David Malpass as the World Bank Group's president. Malpass had served as one of President Trump's economic advisers and as a senior official in the United States Treasury Department. According to a March 2012 Washington Post article, IBRD was the "original 'world bank'".
IBRD field offices were opened in Paris, France, Copenhagen, Denmark, and Prague in the former Czechoslovakia.
The IBRD was established with the original mission of financing the reconstruction efforts of war-torn European nations following World War II, with goals shared by the later Marshall Plan. The Bank issued its inaugural loan of $250 million ($2.6 billion in 2 dollars) to France in 1947 to finance infrastructure projects.
In 1946, a few months after it became operational, Chile sought financial help from the IBRD—the first of the developing countries to do so.
At the time of its creation, the IBRD was the only Multilateral Development Bank. During the period of decolonization—the mid‐1950s to the mid‐1970s—several MDBs were created—the International Finance Corporation, the International Development Association. They were both WBG members. During this period other MDBs that were similar to the IBRD in their governance and operations, were established by countries that were not member nations of the WBG. This included the Inter‐American Development Bank (IDB), the African Development Bank (AfDB), the Asian Development Bank (ADB), the Development Bank of Latin America and the Caribbean (CAF), and the Islamic Development Bank (IsDB). Both the CAF and IsDB are "primarily owned and controlled by borrower countries."
Since 1959, the IBRD, which is backed by world governments
According to a 2015 article, commissioned by the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development—also known as the Group of 24 (G-24)—multilateral development banks (MDBs)—such as the IBRD—"represent one of the most successful types of international organization created in the post-World War II era." By October 2015, although the WBG—with its lending arms—was the only "global institution, In 2016, the Asian Infrastructure Investment Bank and BRICS New Development Bank began operations. The Bank only finances sovereign governments directly, or projects backed by sovereign governments. The World Bank Treasury is the division of the IBRD that manages the Bank's debt portfolio of over $100 billion and financial derivatives transactions of $20 billion.
The Bank offers flexible loans with maturities as long as 30 years and custom-tailored repayment scheduling. The IBRD also offers loans in local currencies. Through a joint effort between the IBRD and the International Finance Corporation, the Bank offers financing to subnational entities either with or without sovereign guarantees. For borrowers needing quick financing for an unexpected change, the IBRD operates a Deferred Drawdown Option which serves as a line of credit with features similar to the Bank's flexible loan program. Among the World Bank Group's credit enhancement and guarantee products, the IBRD offers policy-based guarantees to cover countries' sovereign default risk, partial credit guarantees to cover the credit risk of a sovereign government or subnational entity, and partial risk guarantees to private projects to cover a government's failure to meet its contractual obligations. The IBRD's Enclave Partial Risk Guarantee covers private projects in member countries of the IDA against sovereign governments' failures to fulfil contractual obligations. The Bank provides an array of financial risk management products including foreign exchange swaps, currency conversions, interest rate swaps, interest rate caps and floors, and commodity swaps. To help borrowers protect against catastrophes and other special risks, the bank offers a Catastrophe Deferred Drawdown Option to provide financing after a natural disaster or declared state of emergency. It also issues catastrophe bonds which transfer catastrophic risks from borrowers to investors. The IBRD reported $23.2 billion in lending commitments for 100 projects in fiscal year 2019.