The IBRD and IDA make loans to borrower governments for projects and programs that promote economic and social progress by helping raise productivity so that people may live better lives. Along with these loans, the World Bank provides advice and technical assistance. The International Finance Corporation (IFC)--which works closely with private investors and invests in commercial enterprises in developing countriesand the Multilateral Investment Guarantee Agency (MIGA)--which encourages direct foreign investment in developing countries by offering insurance against noncommercial riskshare the same overall goals. The International Centre for Settlement of Investment Disputes (ICSID) shares the World Bank's objective of promoting increased flows of international investment by providing facilities for settling disputes between foreign investors and their host countries. Collectively, these five institutions are known as the World Bank Group.

The IBRD, established in 1945, is now owned by the governments of 181 countries. To join the IBRD, countries must first be members of the International Monetary Fund (IMF). Upon joining the IBRD members subscribe to its capital stock. The amount of shares each member is allocated reflects its quota in the IMF, which in turn reflects the country's relative economic strength in the world economy. Members pay in a small portion of the value of their shares; the remainder is "callable capital" and would only be paid should the IBRD be unable to meet its obligations--a situation that has never arisen.

The IBRD lends only to credit worthy borrowers and only for projects that promise high real rates of economic return to the country. As a matter of policy, the IBRD does not reschedule payments, and it has suffered no losses on the loans it has made. While it does not aim to maximize profits, but rather to intermediate development funds at the lowest cost, the IBRD has earned a net income every year since 1948.

The IBRD borrows most of the money it lends through medium- and long-term borrowings in capital markets across the globe. It also borrows funds at market-based rates from central banks and other government institutions. Conservative lending policies, strong financial backing from members, and prudent financial management give the IBRD strong standing in the markets. As well as borrowings, the IBRD is funded by the capital its members have paid in, its retained earnings, and repayments on its loans.

IDA was established in 1960 to provide assistance to poorer developing countries that cannot meet the ibrd's near-commercial terms. IDA provides credits to the poorest countries--mainly those with an annual per capita gross national product in 1997 of $925 or less. By this criterion, about seventy countries are eligible (see appendix 6).

All members of the IBRD are eligible to join IDA, and 160 have done so. Unlike the IBRD, most of IDA's funds are contributed by its richer members, although some developing countries contribute to IDA as well. In addition, IDA receives transfers from the net earnings of the IBRD and repayments on its credits.

IDA credits are made only to governments. The repayment period is thirty-five to forty years. Credits carry no interest, but there is a small service charge, currently 0.75 percent. There is also a commitment charge, which is set annually, within a range of 0-0.5 percent of the undisbursed balance; the commitment charge is currently set at zero percent. Although IDA is legally and financially distinct from the IBRD, it shares the same staff, and the projects it supports have to meet the same criteria as do projects supported by the IBRD.

Under its Articles of Agreement, the World Bank cannot allow itself to be influenced by the political character of a member country: Only economic considerations are relevant. To ensure that its borrowers get the best value for the money they borrow, Bank assistance is untied and may be used to purchase goods and services from any member country.

The IFC, established in 1956, helps promote private sector growth in developing countries and helps mobilize domestic and foreign capital for this purpose. It has 174 members. Legally and financially the IFC and the World Bank are separate entities, and the IFC has its own operating and legal staff. It draws upon the World Bank for administrative and other services, however.

The IFC provides loans and makes equity investments in support of projects. Unlike most multilateral institutions, the IFC does not accept government guarantees for its financing. Like a private financial institution, the IFC seeks profitable returns and prices its finance and service, to the extent possible, in line with the market while taking into account the cost of its funds. The IFC shares full project risks with its private-sector partners. The IFC issues its own annual report.

ICSID was established in 1966 to help promote international investment. It does this by providing facilities for the settlement, by conciliation and arbitration, of disputes between foreign investors and their host countries. Provisions referring to arbitration under the auspices of ICSID are a common feature of international investment contracts, investment laws, and bilateral and multilateral investment treaties. ICSID has 129 members. In addition to its dispute-settlement activities, ICSID undertakes research, advisory services and publishing in the fields of arbitration and investment law. Its publications include multivolume collections of "Investment Laws of the World" and "Investment Treaties" and the semi-annual "ICSID ReviewForeign Investment Law Journal." ICSID issues its own annual report, which may be obtained from the ICSID Secretariat.

MIGA was established in 1988 to promote the flow of foreign direct investment in member countries. It does this by providing guarantees to private investors against major political risks and offering investment marketing services to host governments to help them attract foreign investment.

MIGA is an independent self-supporting agency of the World Bank Group. Like the IFC, it has its own capital base and country membership, but it shares the World Bank's development mandate to promote the economic growth of its developing member countries.

MIGA has 145 members. MIGA issues its own annual report, which may be obtained from its Office of Central Administration.