The World Bank is one of the most powerful financial institutions in the world. Together with the International Monetary Fund (IMF) it formulates and enforces major economic policy decisions for over 75 mostly poor countries. Why the Bank and IMF are able to exercise such unrivalled power is due to other lending institutions and governments generally denying credit to countries that have not complied with the Bank and IMF's demands. This is because many of the countries subject to World Bank and IMF supervision are desperate for the funds that these institutions provide.4
The Bank provides both loans and grants to poor and middle-income countries that have no access to international capital markets. These loans offer interests below market-value rates. 5 Funding these ventures, however, is not an easy task. The Bank needs to channel concessional and non-concessional loans in a counter-cyclical way to these countries in times of crises or private flow drought.6 Developing countries greatly value the contribution that the World Bank group gives them for growth. However, they, and others see a need for reforms in the Bank in terms of responding to global challenges
Functions and role. The World Bank is dedicated to providing financing, advice and research to developing nations to aid their economic advancement.8 The World Bank today consists of four financing arms, the largest of which is the International Bank for Reconstruction and Development (IBRD). ...
Since the early 1980's the IBRD and the International Development Association, the Bank's concessional no-interest lending arm, have accelerated so-called structural adjustment lending.9
Significance. Created out of the Bretton Woods agreement of 1944, the Bank was successful in providing financing for devastated countries following WWII. Today, the Bank attempts to fight poverty by offering developmental assistance to middle and poor-income countries. By giving loans, and offering advice and training in both the private and public sectors, the World Bank aims to eliminate poverty by helping people help themselves.10
Since the 1970s the bank has provided an increasing number of loans for agricultural, educational, and population programs. These loan programs have the goal of raising the standard of living and increasing self-sufficiency of these countries.11 The bank then has moved away from financing large-scale infrastructure projects, such as roads, railways, and power facilities. Along with the IMF, the World Bank has refused to cancel unpayable debts owed by poor countries, even though it has the resources to easily do so.12
DEFECTS IN RESPONDING TO GLOBAL CHALLENGES
A. Debatable effectiveness. The effectiveness of the performance of the World Bank has been a highly contested debate. More than half of the World Bank programs overall and more than two thirds of projects in the poorest countries failed to achieve both satisfactory and sustainable results. Although the Bank claims 75-80% success rates, the Meltzer Commission that reviewed the Bank's own data, found this out. 13 The Bank has also been criticized for its role in financing projects that