World Bank

Role

The World Bank (or more formally - the International Bank for Reconstruction and Development (IBRD))) was established to promote economic and social progress in developing countries by funding projects, and providing technical assistance to developing countries on a number of issues, such as infrastructure development, public sector and financial sector reforms.

The World Bank lends only to developing countries. Most of the money it lends to developing countries comes from contributions from bonds issued in world financial markets. New lending commitments from the World Bank to client countries reached US$24.7 billion in Fiscal Year 2008.

In its early years, most of the World Bank's assistance to developing countries was devoted to specific development projects, such as installing electric power lines, or building roads, bridges and railroads. Later, the number of large industrial projects declined, while projects that raised the productivity and living standards of the rural and urban poor gained importance. In recent years the Bank has also begun to make loans to facilitate general improvements in economic policies. Key aims of these structural adjustments loans have been to channel resources into the most cost-effective investments, to reduce budget deficits, and to stem inflation, thereby helping developing country economies become better able to secure long-term growth.

The World Bank Group comprises the IBRD, the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). New Zealand is now a member of all the Bank's entities, having joined as a member of MIGA in 2008. 185 countries are members of the World Bank Group.

Organisation Structure

Board of Governors

The highest authority in the World Bank is the Board of Governors. A Governor (and an Alternate) is appointed by each of the World Bank's member countries. New Zealand's Governor of the World Bank is the Minister of Finance, while the Alternate is the Secretary to the Treasury.

Board of Executive Directors

The Board of Governors has delegated many of its powers to the Executive Board which conducts the World Bank's daily business at its headquarters in Washington DC. The Executive Directors are responsible for conducting the business of the World Bank, seeking comments or advice from their governments when appropriate, and advising the Governors on matters of policy. The Directors also approve all the Bank's loans, guarantees, equity investments and borrowings. Substantive or policy matters are transmitted in the form of a report and draft Resolution to the Governors for their vote when one is required.

The Executive Directors elect a President who is not a Governor, Executive Director, or an Alternate Director. The President conducts the ordinary business of the World Bank. James Wolfensohn, an Australian by birth, is the President of the World Bank.

There are 24 Executive Directors, appointed by the five members having the largest number of shares of capital stock. The remaining 19 Executive Directors represent groupings of countries and are each elected by the Government representing the constituency member countries. Each Executive Director appoints an Alternate Director.

Constituency Membership and Voting Power at the World Bank

The World Bank has 182 member countries divided into 24 constituencies. New Zealand is in a constituency with 12 other members at the World Bank. These groups are usually regionally or geographically grouped. The members of New Zealand's constituency are:

Voting Power

Each member country has two hundred and fifty votes plus one additional vote for each share of stock held. Unless specifically provided for, all matters are decided on by a majority of the votes cast.

New Zealand Funding for the World Bank

The Treasury and the New Zealand Agency for International Development (NZAID) are responsible for funding New Zealand's involvement in the World Bank. Broadly, the Treasury is responsible for the purchase of shares or quotas which arise out of New Zealand's membership of the institution, while (NZAID) is responsible for contributions towards concessional or development assistance facilities. New Zealand considers contributions with a concessional element to be development assistance. These include contributions to IDA that are paid from Vote Official Development Assistance (ODA).