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IBRD OR WORLD BANK

The international Bank for Reconstruction and Development (IBRD) or the World Bank, one of the Bretton Woods Twin, was established in 1945.  The IBRD has two affiliates the International Development Association (IDA) and International Finance Corporation (IFC).

The IBRD whose capital is subscribed by its member countries, finance its lending operation primarily from its own borrowings in the world capital market. A substantial contribution to the bank’s resources also comes from its retained earnings and the flow of repayments on its loan.  IBRD loans generally have a grace period of five years and are repayable over twenty years, or less.  They are directed towards developing countries at more advanced stages of economic and social growth.  The interest rate that IBRD charges on its loan is calculated in accordance with a guideline to its cost borrowing.

Purpose : The purpose of banks as laid down in its articles of agreement, are as under :

Policy :   The bank is guided by certain policies which have been formulated on the basis of the article of Agreement :

(a)     The bank should properly assess the repayment prospects of the loans.  For this purpose it should consider the availability of natural resources and existing productive plant capacity to exploit the resources and operate the countries past debt record.

(b)     The bank should lend only for specific projects, that are economically and technically sound and of a high priority nature.  As a matter of general policy, it should concentrate on lending for projects which are designed to contribute directly to productive capacity, normally does not finance projects that are primarily of social character such as education, housing etc.

(c)     The bank lends only to enable a country to meet the foreign exchange content of any project cost, it normally expects the borrowing country to moblise its domestic resources.

(d)     The bank does not expect the borrowing country to spend the loan in a particular country, in fact it encourages the borrowers to procure machinery and goods for bank finance in the cheapest possible market consistent with satisfactory performance.

http://govindam.org/

(e)     It is the banks policy to maintain continuing relations with borrowers with a view to check the progress of projects and keep in touch with financial and economic developments in borrowing countries.  This also helps in the solution of any problem that might arise in the technical and administrative fields.

(f)      The bank indirectly attaches special importance to the promotion of local private enterprises.

Source: http://www.articlesbase.com/finance-articles/ibrd-or-world-bank-5763261.html

U.S. and European stocks fell, extending losses from the first weekly decline for global equities in more than a month, as the World Bank said the recession will be deeper than previously forecast. Treasuries rose, while a drop in commodities sent oil below $68 a barrel.

Equities and commodities retreated after the World Bank forecast today the global economy will contract 2.9 percent this year. That compares with a prior estimate of a 1.7 percent decline. Growth is expected to return next year with a 2 percent expansion, lower than the 2.3 percent prediction about three months ago.

Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. This is a clue that the stock market is already expensive. Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.