Sometimes, the government cannot generate enough revenue from taxes to meet its expenditure. So, it takes loans from banks, international financial institutions and other countries.
The World Bank is an international development organization owned by 187 countries. Its role is to reduce poverty by lending money to the governments of its poorer members to improve their economies and to improve the standard of living of their people.
The Bank is also one of the world's largest research centers in development. It has specialized departments that use this knowledge to advise countries in areas like health, education, nutrition, finance, justice, law and the environment.
Another part of the Bank, the World Bank Institute, offers training to government and other officials in the world through local research and teaching institutions.
How the World Bank was established
The World Bank was established in 1944 to help rebuild Europe and Japan after World War II. Its official name was the International Bank for Reconstruction and Development (IBRD). When it first began operations in 1946, it had 38 members. Today, most of the countries in the world are members.
Do we need a World Bank
Without a place like the World Bank from which to borrow money, the world’s poorest countries would have few, if any, ways to finance much-needed development projects. The projects are essential to helping people become educated, live healthy lives, get jobs, and contribute as active citizens.
How the World Bank is organized
The World Bank has created new organizations within itself that specialize in different activities. All these organizations together are called the World Bank Group. It consists of:
• IBRD lends to low- and middle-income countries;
• International Development Association (IDA) lends to low-income countries;
• International Finance Corporation (IFC) lends to the private sector;
• Multilateral Investment Guarantee Agency (MIGA) encourages private companies to invest in foreign countries; and
• International Centre for Settlement of Investment Disputes (ICSID) helps private investors and foreign countries work out differences when they don't agree.
How decisions are made
The Bank is run like a giant cooperative, where its members are shareholders and is operated for the benefit of those using its services. The number of shares a country has is based roughly on the size of its economy. The United States is the largest single shareholder, followed by Japan, Germany, the United Kingdom, and France. The rest of the shares are divided among the other member countries