Functions and resources of the world bank, Microeconomics

Functions and Resources of the Bank 

The main functions of the Bank are as follows:

•  to assist in reconstruction and development of the territories of it member-governments by facilitating investment of capital for productive purposes; 

•  to promote foreign private investment by guarantees or through participations in loans and other investments of capital for productive purposes; 

•  where private capital is not available on reasonable terms, to make loans for productive purposes out of its owned resources or out of the funds borrowed by it; and 

•  to promote the long-range growth of international trade and the maintenance of equilibrium in the balance of payments of members by encouraging international investment for the productive resources of members.  

Resources of the Bank consist of the capital and borrowings. The capital of the Bank is contributed by its 184  member-countries.

The five largest shareholders of the Bank are: (i) USA, (ii) Japan, (iii) Germany, (iv) Great Britain and (v) France. India is the sixth largest contributor. The management of the Bank is on the same lines as that of the IMF. Before granting or guaranteeing a loan, the Bank considers the following matters: 

•  The project for which the loan is asked has been carefully examined by a competent committee as regards the merit of the proposal; 

•  The borrower has reasonable prospect for repayment; 

•  The loan is meant for productive purposes; and 

•  The loan is meant to finance foreign exchange requirements of specific projects of reconstruction and development. 

The rate of interest on Bank loans is determined by adding a spread of ½ of 1 per cent atop the "pool rate" of outstanding borrowing of the Bank. 

Posted Date: 11/15/2012 1:10:41 AM | Location : United States

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