News Highlights:
President of World Bank: Recently, US President Joe Biden announced that the US is nominating Ajay Banga, an Indian-American businessman, to lead the World Bank.
Key Takeaway:
If confirmed by the World Bank board of directors, Banga would be the first Indian-American to head either of the two top international financial institutions: the International Monetary Fund and the World Bank.
About Ajay Banga:
- Banga currently serves as vice chairman at General Atlantic and was awarded the Padma Shri in 2016.
- Banga is the honorary chairman of the International Chamber of Commerce, serving as chairman from 2020-2022.
- He is a member of the Trilateral Commission, a founding trustee of the US-India Strategic Partnership Forum, etc.
- Previously, he was president and CEO of Mastercard, leading the company through a strategic, technological and cultural transformation.
World Bank Group:
- About:
- The WB is an international financial institution that provides loans and grants to the governments of low and middle-income/developing countries for the purpose of pursuing capital projects.
- The World Bank Group is an international partnership comprising 189 countries.
- Â History:
- The United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference, held in 1944, led to the formation of the International Monetary Fund (IMF in 1945) and the International Bank for Reconstruction and Development (IBRD in 1944).
- The original focus of the IBRD was the reconstruction of countries ravaged by the Second World War through loans.
- Gradually, there was a shift from reconstruction to development with a particular emphasis on infrastructure, power grids, roads and transportation, dams, etc.
- The other institutions, such as the IDA, IFC, etc., were formed over the years, and all five institutions (IBRD, IDA, IFC, MIGA, and ICSID) came to be called the World Bank Group.
- The World Bank(WB) is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organisations owned by the WB Group.
- Currently, the group engages in multifarious activities through its institutions and funds.
- There is a special focus on developing and underdeveloped countries.
- Membership:
- To join the World Bank Group, a country must first become a member of the IMF.
- To become members of the IDA, IFC, and MIGA, the countries must first become members of IBRD.
- Membership of the ICSID is subject to all the following conditions:
- IBRD membership
- Party to the Statute of the International Court of Justice (ICJ)
- Invitation of the ICSID Administrative Council by a vote of two-thirds of its members
Institutions under the World Bank Group
- International Bank for Reconstruction and Development (IBRD):
- It is the world’s largest development bank.
- It provides loans, guarantees, advisory services, and risk management products to middle-income and creditworthy low-income countries.
- IBRD sources most of its funds from the world’s financial markets
- International Development Association (IDA):
- The main objective of the IDA is to provide grants and concessional loans to the world’s poorest countries.
- International Finance Corporation (IFC):
- It functions as the private sector arm of the WBG.
- The IFC provides investment, advice, and asset management offerings to private companies and governments.
- The IFC works with the private sector to boost entrepreneurship and create sustainable businesses.
- Multilateral Investment Guarantee Agency (MIGA):
- The agency guarantees to protect investments against non-commercial risks.
- It ensures lenders and investors are against political risks such as war.
- India became a member of the MIGA in 1994.
- International Centre for Settlement of Investment Disputes (ICSID):
- It settles investment disputes between investors and countries.
- It also settles state-state disputes under investment treaties and free trade agreements and acts as an administrative registry.
The leadership of the WB:
- The President of the WB, who is the President of the entire WB Group, is responsible for chairing meetings of the boards of directors and for the overall management of the Bank.
- Traditionally, the President of the Bank has always been a U.S. citizen nominated by the US, the largest shareholder in the bank.
- The nominee is subject to confirmation by the board of executive directors to serve a five-year, renewable term.
- The boards of directors consist of the WB Group President and 25 executive directors. The President is the presiding officer and ordinarily has no vote except to break a tie.
- The executive directors as individuals cannot exercise any power or commit or represent the Bank unless the boards specifically authorised them to do so.
Pic Courtesy: Freepik
Content Source: The Indian Express