Financial Strategy

Poverty Challenge

Progress toward the Goal

An Agenda for Action

World Bank Strategy

The Role of IDA

Meeting the Poverty Challenge: The Role of IBRD
…relying on the unique strengths of IBRD…

IBRD provides important support for poverty reduction. How? By providing its middle-income client countries access to capital in larger volumes, on good terms, with longer maturities, and in a more sustainable manner than the market provides. IBRD:

• Supports long-term human and social development needs that private creditors largely find unappealing.
• Preserves borrowers’ financial strength by providing support in crisis periods, when poor people are most adversely affected.
• Uses the leverage of finance to promote key policy and
• institutional reforms (as safety-net or anticorruption reforms).
• Catalyzes private capital by helping create a favorable investment climate.
• Provides financial support (in the form of grants made available from IBRD net income) for global public goods that are critical for the well-being of poor people in all countries.

Elements of IBRD’s Financial Strategy

Preserving AAA-rated financial strength
To maintain income-generating capacity, help manage risk, and support IBRD’s development objectives

• Capital commitments of 183 sovereign shareholders
• Strong record of repayment by borrowers, reflecting priority given to IBRD debt
• Conservative financial management
• Substantial liquidity
• Conservative capital structure
• Risk-minimizing lending policies

Achieving efficient intermediation
To ensure cost-effective funding for development uses

• Wide access to markets
• 50 years of capital market innovation
• Leadership in new products, structured finance, emerging market issuance
• Wide underwriter partnerships
• Diversified global investor base
• Ample Treasury liquidity
• Active asset-liability management

Adapting to borrower needs
To ensure flexibility and innovation in meeting diverse and changing client needs

• Product innovations to help clients manage their financial, debt, and crisis strategies
• Wide borrower choice in loan types
• Increasing currency and interest rate choice
• Flexible guarantees, both to help private sector financing and to support reforms
• Increased choice of lending terms

What Is IBRD?
IBRD is a AAA-rated financial institution–with some unusual characteristics. Its shareholders are sovereign governments. Its member borrowers have a voice in setting its policies. They also usually accord preferred creditor status to IBRD, helping it stay financially strong. IBRD loans are typically accompanied by nonlending services to ensure more effective use of funds. Also, unlike commercial banks, it is driven by a development impact, rather than profit maximization, objective.

Who Are IBRD’s Clients?
Seventy-five percent of people who live on less than $1 per day live in countries that receive IBRD lending, which are typically middle-income and enjoy some access to private capital markets but include countries that also borrow from IDA. Even excluding countries that also borrow from IDA, such as India, Indonesia, Nigeria, and Pakistan, a full 25 percent of the world’s $1-a-day poor live in countries that are IBRD borrowers.