Why is it in News?
David Robert Malpass, an American economic analyst and former government official has been appointed as the World Bank President. He was nominated by the President of USA, Donald Trump.
About the World Bank:
- The World Bank is an international financial institution that provides loans to countries of the world for capital projects.
- It is the outcome of Bretton Woods Conference (1944). Even International Monetary Fund (IMF) is the outcome of Bretton Woods Conference; hence World Bank & IMF are commonly referred to as the ‘Bretton Woods Twin’.
- As of November 2018, the largest recipients of the World Bank loans were India ($859 million in 2018) and China ($370 million in 2018).
- There is a tacit agreement between US & the European countries that President of the World Bank will be an American and the President of IMF will be a European.
Structure of the World Bank:
1. Board of Governors- All the 189 member countries are represented by their Finance Ministers and it meets once in a year. The broad policy decisions of the World Bank are taken by the Board of Governors.
2. Executive Directors- There are 25 Executive Directors, out of which five executive directors are appointed by five largest share holders of the World Bank (US, Japan, China, Germany & UK) and remaining 20 executive directors are elected by other member countries.
It looks into the day to day affairs of the World Bank.
3. President of World Bank- He is selected by the executive directors. He has tenure of 5 years and is responsible for the overall working of World Bank.
What is the Difference between the World Bank Group and the World Bank?
World Bank group consists of the following organizations:
- International Bank for Reconstruction and Development (IBRD) - It gives loans to middle income countries and poor countries.
- International Development Association (IDA) - It assists the poorest countries of the world.
- International Finance Corporation (IFC) - It supports private enterprise in developing countries by giving them loans.
- Multilateral Investment Guarantee Agency (MIGA) - It encourages investment in developing countries by assuring them that their investment will not go bad due to political issues or crisis.
- International Centre for the Settlement of Investment Disputes (ICSID) - It handles the dispute related to investment in foreign territory.
The IBRD & IDA are collectively called as the World Bank, while all the five organizations are called as the World Bank Group.
Note: India is a member of all the above institutions of the World Bank Group except ICSID.
Why is India not a member of ICSID?
- The Indian Government believes that companies/organizations shall exhaust all the options available in the territory of India to deal with the matters of dispute.
- Involvement of other organizations will amount to breach of the sovereignty of India.