India & world bank Dr. C S Shaijumon

India & World Bank (IBRD)

1Dr. C S Shaijumon, Department of Humanities, Indian Institute of Space science & Technology, Dept.

of Space, Govt. of India

Five Institutions, One Group

1. International Bank for Reconstruction and

Development (IBRD) - 1945

2. International Development Association (IDA) - 1960

3. International Finance Corporation (IFC) - 1956

4. The Multilateral Investment Guarantee Agency

(MIGA) - 1988

5. The International Centre for Settlement of Investment

Disputes (ICSID) - 1966

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Dr. C S Shaijumon, Department of Humanities, Indian Institute of Space

science & Technology, Dept. of Space, Govt. of India

IBRD• The International Bank for Reconstruction and

Development (IBRD) lends to governments of middle-income and creditworthy low-income countries.

• The International Bank for Reconstruction andDevelopment (IBRD) aims to reduce poverty inmiddle-income countries and creditworthy poorercountries by promoting sustainable developmentthrough loans, guarantees, risk management products,and analytical and advisory services.

• Established in 1944 as the original institution of theWorld Bank Group, IBRD is structured like acooperative that is owned and operated for the benefitof its 188 member countries.

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IBRD raises most of its funds on the world's financialmarkets and has become one of the most establishedborrowers since issuing its first bond in 1947. The incomethat IBRD has generated over the years has allowed it tofund development activities and to ensure its financialstrength, which enables it to borrow at low cost and offerclients good borrowing terms.

• IBRD borrows at attractive rates on the capital marketsthanks to its triple-A status that it has had with credit ratingagencies since 1959. This has enabled it to borrow in U.S.dollars, for example, at an overall funding cost that comesclose to that of the U.S. Treasury. IBRD enjoys its highcredit rating because of the support of its 188 shareholdergovernments. It is also the result of IBRD's strong capitaland reserves on its balance sheet, prudent financial policies,and its expected treatment as a preferred creditor when acountry has difficulty in repaying its loans.

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World Bank Green Bonds• In 2008, the World Bank launched the "Strategic Framework for

Development and Climate Change” to help stimulate and coordinate public

and private sector activity to combat climate change.

• The World Bank Green Bonds is an example of the kind of innovation the

World Bank is trying to encourage within this framework.

• The World Bank Green Bond raises funds from fixed income investors to

support World Bank lending for eligible projects that seek to mitigate climate

change or help affected people adapt to it.

• The product was designed in partnership with Skandinaviska Enskilda Banken

(SEB) to respond to specific investor demand for a triple-A rated fixed income

product that supports projects that address the climate challenge.

• Since 2008, the World Bank has now raised USD 6.7 billion equivalent in

Green Bonds through 72 transactions and 17 currencies.5



Specifically, the IBRD:

• supports long-term human and social developmentneeds that private creditors do not finance;

• preserves borrowers' financial strength by providingsupport in crisis periods, which is when poor people aremost adversely affected;

• uses the leverage of financing to promote key policyand institutional reforms (such as safety net oranticorruption reforms);

• creates a favorable investment climate in order tocatalyze the provision of private capital;

• provides financial support (in the form of grants madeavailable from the IBRD's net income) in areas that arecritical to the well-being of poor people in all countries.

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IBRD has three main business lines

• Strategy and Coordination Services

• Financial Services

• Knowledge Services

– Poverty Assessments

– Social and Structural Reviews

– Public Expenditure Reviews

– Sector Reports

– Country Economic Memoranda

– Knowledge Sharing

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IDA• The International Development Association (IDA) is the part of the

World Bank that helps the world’s poorest countries. Established in1960, IDA aims to reduce poverty by providing loans (called “credits”)and grants for programs that boost economic growth, reduceinequalities, and improve people’s living conditions.

• IDA complements the World Bank’s original lending arm—theInternational Bank for Reconstruction and Development (IBRD). IBRDwas established to function as a self-sustaining business and providesloans and advice to middle-income and credit-worthy poor countries.IBRD and IDA share the same staff and headquarters and evaluateprojects with the same rigorous standards.

• IDA is one of the largest sources of assistance for the world’s 77 poorestcountries, 39 of which are in Africa. It is the single largest source ofdonor funds for basic social services in these countries. IDA-financedoperations deliver positive change for 2.8 billion people, the majority ofwhom survive on less than $2 a day.

• IDA lends money on concessional terms. This means that IDA chargeslittle or no interest and repayments are stretched over 25 to 38 years,including a 5- to 10-year grace period. IDA also provides grants tocountries at risk of debt distress.

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• In addition to concessional loans and grants,

IDA provides significant levels of debt relief

through the Heavily Indebted Poor Countries

(HIPC) Initiative and the Multilateral Debt

Relief Initiative (MDRI).

• Since its inception, IDA has supported

activities in 112 countries. In fiscal year 2014

(which ended June 30, 2014), IDA

commitments rose to a record $22.2 billion

from $16.3 billion in the previous fiscal

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IFC• The International Finance Corporation (IFC) is the largest

global development institution focused exclusively on the

private sector.

• Established in 1956, IFC is owned by 184 member countries, a

group that collectively determines our policies. Our work in

more than a 100 developing countries allows companies and

financial institutions in emerging markets to create jobs,

generate tax revenues, improve corporate governance and

environmental performance, and contribute to their local

communities.

• As the largest global development institution focused on the

private sector, IFC works closely with businesses in

developing countries to help them succeed in ways that

promote prosperity for all.10



Since 1956, IFC has invested in 346 companies in India, providing over $10.3 billion in financing for its own account and $2.9 billion in mobilization from external resources.

As of June 30, 2014, IFC's committed portfolio in India stood at $4.7 billion, making India IFC's largest portfolio exposure.

The most acute needs for energy, water, roads, phone connections, healthcare, education, sanitation, waste management, access to financial services, are among those who live in low-income, rural and semi-urban parts of the country.

IFC is working closely with various state governments of low income states such as Rajasthan, Odisha, and Bihar to improve the investment climate for private sector. With solar sector in Rajasthan offering huge potential, IFC has provided debt funding to companies like Mahindra Solar One for setting up a solar project that will help expand access to clean energy. In Odisha, IFC has invested in OCL India Limited, a cement manufacturer, to support expansion of its plant in the state.

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MIGA

• The Multilateral Investment Guarantee Agency (MIGA)was created in 1988 to promote foreign direct investmentinto developing countries to support economic growth,reduce poverty, and improve people’s lives. MIGA fulfillsthis mandate by offering political risk insurance(guarantees) to investors and lenders

• As a multilateral development agency, MIGA only supportsinvestments that are developmentally sound and meethigh social and environmental standards. MIGA applies acomprehensive set of social and environmental performancestandards to all projects and offers extensive expertise inworking with investors to ensure compliance to thesestandards.

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MIGA focus on insuring investments in the areas wherethey can make the greatest difference

• Countries eligible for assistance from the InternationalDevelopment Association (the world’s poorest countries)

• Conflict-affected environments

• Complex deals in infrastructure and extractive industries,especially those involving project finance andenvironmental and social considerations

• Middle Income Countries where MIGA can have impact

MIGA offers comparative advantages in all of these areas—from our unique package of products and ability torestore the business community's confidence, to MIGA’songoing collaboration with the public and privateinsurance market to increase the amount of insuranceavailable to investors.

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• A Council of Governors and a Board of Directorsrepresenting our member countries guide theprograms and activities of MIGA.

• MIGA’s corporate powers are vested in theCouncil of Governors, which delegates most of itspowers to a Board of Directors.

• Voting power is weighted according to the shareof capital each director represents.

• The directors meet regularly at the World BankGroup headquarters in Washington, DC, wherethey review and decide on investment projectsand oversee general management policies.

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ICSID• ICSID is an autonomous international institution established

under the Convention on the Settlement of Investment Disputesbetween States and Nationals of Other States (the ICSID or theWashington Convention) with over one hundred and fortymember States.

• The Convention sets forth ICSID's mandate, organization andcore functions. The primary purpose of ICSID is to providefacilities for conciliation and arbitration of internationalinvestment disputes.

• The ICSID Convention is a multilateral treaty formulated by theExecutive Directors of the International Bank for Reconstructionand Development (the World Bank). It was opened for signatureon March 18, 1965 and entered into force on October 14, 1966.

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• ICSID was created by the Convention as animpartial international forum providing facilitiesfor the resolution of legal disputes betweeneligible parties, through conciliation or arbitrationprocedures. Recourse to the ICSID facilities isalways subject to the parties' consent.

• As evidenced by its large membership,considerable caseload, and by the numerousreferences to its arbitration facilities in investmenttreaties and laws, ICSID plays an important rolein the field of international investment andeconomic development.

• Today, ICSID is considered to be the leadinginternational arbitration institution devoted toinvestor-State dispute settlement.

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SUMMARY

• The World Bank has a long relationship with India

• In June 1944, India was one of the 44 countries which signed thefinal agreement that established the World Bank.

• In fact, the name “International Bank for Reconstruction andDevelopment” (IBRD) was suggested by India and later Indiasuggested the establishment of the International DevelopmentAssociation (IDA) - the World Bank’s soft-loan (interest-freeloan) affiliate.

• Recently, India became the 7th largest shareholder in the WorldBank.

• India has played a significant role in the formulation,implementation and monitoring of the Bank’s policies andoperation, particularly from the standpoint of the developingcountries. India also appoints its own Executive Director (ED).The Indian ED is based at the World Bank’s headquarters inWashington DC. India’s ED also represents Bangladesh, SriLanka and Bhutan.

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• India took its first IBRD loan in 1949 for a sum of $34 million to develop the Indian Railways.

• Today, India has the second largest portfolio with the World Bank. Cumulatively, India has been the largest single recipient of World Bank assistance, for around 600 projects across a range of sectors. Today, more than 78 projects worth over $24.1 billion are active in India.

• Even so, the World Bank remains a small player in India’s trillion dollar economy, and finances less than half percent of the country’s GDP.

• The Bank's work in India is closely aligned with the country’s own development agenda as articulated in its Five Year Plans.

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• In 2002, India unveiled its national flagship program, the Elementary EducationProject (Sarva Shiksha Abhiyan, SSA), to enroll all 6–14-year-olds in school.IDA is helping finance the SSA - one of the largest elementary educationprograms in the world.

• The SSA caters to some 200 million children living in over a million habitationsacross the country.

• Since 2001, nearly 20 million children have been brought into elementaryschool. Most of these children are first generation learners from long-deprivedcommunities and children with special needs. As a result, over 98 percent ofIndia’s children now have access to a primary school within 1 km of their home.

• Over the years, IDA has helped India battle the old scourge of tuberculosis (TB).Since 1997, the DOTS strategy has raised TB awareness and improveddetection and cure rates dramatically. Between 1997 and 2008, more than 9.5million people suffering from TB were diagnosed and placed on treatment,saving more than 1.7 million additional lives. At the national level, casedetection rates reached 70 percent, achieving global targets.

• IDA supported livelihood programs are estimated to have mobilized 9.5 million poor people in 55,000 villages across four states. Self help groups established under these programs have cumulatively saved US$400 million, enabling them to access credit amounting to over US$1billion from commercial banks. The Rural producer groups organized by these projects have accessed markets and sold produce worth over US$500 million. 19



THANK YOU

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India & world bank Dr. C S Shaijumon

Economy & Finance

Transcript of India & world bank Dr. C S Shaijumon