abhishreshthaa
Abhijeet S
FINANCIAL ASSISTANCE
The World Bank raises money for its development programs by tapping the world's capital markets, and, in the case of the IDA,through contributions from wealthier member governments.
The International Bank for Reconstruction and Development, which accounts for about more than half of the Bank's annual lending, raises almost all its money in financial markets.
One of the world's most prudent and conservatively managed financial institutions,the IBRD sells AAA-rated bonds and other debt securities to pension funds, insurance companies, corporations, other banks, a individuals around the globe. IBRD charges interest to its borrowers at rates which reflect its cost of borrowing. Loans must be repaid in 15 to20 years; there is a three-to-five-year grace period before repayment of principal begins.
Less than 5 percent of the IBRD's funds are paid in by countries when they join the Bank. Member governments purchase shares, the number of which is based on their related economic strength, but pay in only a small portion of the value of those shares.
The unpaid balance is "on-call" should the Bank suffer losses so grave that it can no longer pay its creditors — something that has never happened. This guarantee capital can only be used to pay bond holders, not to cover administrative cost or to make loans. The IBRD's rules require that loans outstanding and disbursed may not exceed the combined total of capital and reserves.
The International Development Association was established in 1960 to provide concessional assistance to countries that are too poor to borrow at commercial rates. IDA helps to promote growth and reduce poverty in the same ways as does the IBRD, but IDA uses interest-free loans (which are known as IDA) "credits", technical assistance, and policy advice.
IDA credits account for about one-foot of all Bank lending. Borrowers pay a fee of less than 1 percent of the loan to cover administrative costs. Repayment is required in 35 or 40 years with a 10-year grace period.
Nearly 40 countries contribute to IDA's funding,which is replenished every three years. Donor nations include not only industrial member countries such as France, Germany, Japan, the United Kingdom, and the United States, but also developing countries such as Argentina, Botswana, Brazil, Hungary, Korea, the Russian Federation, and Turkey, some of which were once IDA borrowers themselves.
IDA's funding is managed in the same prudent, conservative, and cautious way as is the IBRD's. As with the IBRD, there has never been a default on an IDA credit.
The World Bank raises money for its development programs by tapping the world's capital markets, and, in the case of the IDA,through contributions from wealthier member governments.
The International Bank for Reconstruction and Development, which accounts for about more than half of the Bank's annual lending, raises almost all its money in financial markets.
One of the world's most prudent and conservatively managed financial institutions,the IBRD sells AAA-rated bonds and other debt securities to pension funds, insurance companies, corporations, other banks, a individuals around the globe. IBRD charges interest to its borrowers at rates which reflect its cost of borrowing. Loans must be repaid in 15 to20 years; there is a three-to-five-year grace period before repayment of principal begins.
Less than 5 percent of the IBRD's funds are paid in by countries when they join the Bank. Member governments purchase shares, the number of which is based on their related economic strength, but pay in only a small portion of the value of those shares.
The unpaid balance is "on-call" should the Bank suffer losses so grave that it can no longer pay its creditors — something that has never happened. This guarantee capital can only be used to pay bond holders, not to cover administrative cost or to make loans. The IBRD's rules require that loans outstanding and disbursed may not exceed the combined total of capital and reserves.
The International Development Association was established in 1960 to provide concessional assistance to countries that are too poor to borrow at commercial rates. IDA helps to promote growth and reduce poverty in the same ways as does the IBRD, but IDA uses interest-free loans (which are known as IDA) "credits", technical assistance, and policy advice.
IDA credits account for about one-foot of all Bank lending. Borrowers pay a fee of less than 1 percent of the loan to cover administrative costs. Repayment is required in 35 or 40 years with a 10-year grace period.
Nearly 40 countries contribute to IDA's funding,which is replenished every three years. Donor nations include not only industrial member countries such as France, Germany, Japan, the United Kingdom, and the United States, but also developing countries such as Argentina, Botswana, Brazil, Hungary, Korea, the Russian Federation, and Turkey, some of which were once IDA borrowers themselves.
IDA's funding is managed in the same prudent, conservative, and cautious way as is the IBRD's. As with the IBRD, there has never been a default on an IDA credit.