Published Apr 29, 2024 The International Bank for Reconstruction and Development (IBRD) is one of five member institutions that compose the World Bank Group. IBRD is a global development cooperative owned by 189 member countries. Its primary focus is on reducing poverty in middle-income and creditworthy lower-income countries by providing loans, credits, and grants for investments in areas such as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. The IBRD was established in 1944 during the Bretton Woods Conference with the initial aim of financing the reconstruction of nations devastated by World War II. Today, its goals have evolved to emphasize poverty reduction and sustainable development. By offering debt financing on reasonable terms, it helps countries to build the infrastructure they need to support growth and to compete effectively in the global economy. It also provides analytical and policy advice to help governments implement their growth and poverty reduction strategies. The IBRD raises most of its funds on the world’s financial markets by issuing bonds to investors. Its strong credit rating allows it to borrow at low cost. This in turn enables it to provide funding to its member countries at rates that are generally more favorable than those these countries could obtain by borrowing directly in the financial markets. The funds raised through bond issuance are then used to finance development projects and programs in member countries. Consider a developing country that needs to improve its transportation infrastructure to enhance trade capabilities and economic growth. This country, a member of the IBRD, can apply for loan funding to construct new roads, bridges, and ports. With the financial and advisory support from the IBRD, the project not only boosts the local economy but also has a positive impact on social welfare by creating jobs and improving access to markets for local producers. The work of the IBRD is critical in the global fight against poverty. By providing financial resources and expertise, it helps countries to implement the necessary foundations for sustainable growth. The investments supported by the IBRD in various sectors lead to more than just economic growth—they also contribute to human capital development, environmental sustainability, and the building of more resilient societies that can better withstand global shocks and stresses. The International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) are two distinct entities that were both created at the Bretton Woods Conference in 1944. While the IBRD focuses on poverty reduction and economic development by providing loans and grants for projects, the IMF aims to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries to transact with each other. The IMF provides monetary cooperation and financial assistance to countries struggling with balance of payments problems. Membership in the IBRD is open to all countries that subscribe to its basic goals and are members of the International Monetary Fund (IMF). Once a country joins the IMF, it may apply to become a member of the IBRD. Joining the IBRD comes with certain financial obligations, including purchasing shares of the bank’s capital stock. IBRD loans, also known as IBRD lending products, come with various terms and conditions, designed to provide flexibility to suit the development needs of different countries. These terms include variable or fixed interest rates, varying maturities that can extend up to 30 years, and grace periods during which the borrower is not required to make principal payments. The specific terms of each loan are negotiated between the IBRD and the borrowing country. The IBRD supports sustainable development by financing projects that have long-term economic, environmental, and social benefits. It prioritizes projects that aim to build resilience to climate change, promote gender equality, support job creation, and ensure the sustainable use of natural resources. Furthermore, the IBRD works closely with countries to develop strategies that integrate sustainable development principles into their national development plans and policies.Definition of the International Bank for Reconstruction and Development (IBRD)
Purpose and Goals
How IBRD is Funded
Example of IBRD in Action
Why the IBRD Matters
Frequently Asked Questions (FAQ)
What is the difference between IBRD and IMF?
Can any country become a member of the IBRD?
What are the terms of IBRD loans?
How does the IBRD support sustainable development?
Economics