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The mission statement of the IBRD states that it “aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development, through loans, guarantees, and non-lending-including analytical and advisory-services.” The World Bank aims at issues such at building infrastructure (roads, dams, power plants), natural disaster relief, humanitarian emergencies, poverty reduction, infant mortality, gender equality, education, and long-term development issues. Furthermore, the World Bank tries to foster social reforms in order to promote economic development, such the empowerment of women, building schools and health centers, provision of clean water and electricity, fighting disease, and protecting the environment.
Since 2000, the World Bank has been devoted to helping implement the Millennium Development Goals (MDGs), drafted by the United Nations at the Millennium World Summit. The goals are as follows:
- Eradicate extreme poverty and hunger.
- Achieve universal primary education.
- Promote gender equality and empower women.
- Reduce child mortality.
- Improve maternal health.
- Combat HIV/AIDS, malaria, and other diseases.
- Ensure environmental sustainability.
- Develop a global partnership for development.
The goals also have 18 specific targets and 48 performance indicators and are considered a step forward over previous development efforts because they set specific targets and timetables for achievement, with 2015 as the major deadline.
The World Bank operates by providing loans in two different ways.
First, investment loans are granted for projects that will produce goods or services or public works to help economic and social development.
Second, adjustment loans are granted for programs to support reforms to government policies.
Like IMF loans, World Bank loans are conditioned on the World Bank’s approval of the investment plans and schedule for the project and repayment of the loans. The World Bank funds its loans by raising money on the international bond market, issuing bonds in its name to large institutional international investors, such as banks and pension funds.
As a non-profit institution, however, the World Bank does not take any profit on the results of its fundraising. Instead, it uses its profits to subsidize its lending back to the countries whose projects its finances. Only about half of the World Bank’s funding comes from grants by members, and the rest comes from the World Bank’s own operations.
Examples of the programs the World Bank funds include:
- In Bangladesh, the World Bank provided a $59.8 million credit to provide medical services and nutritional supplements to children and their mothers.
- In Bosnia, the World Bank helps offer “ microcredit” loans, typically less than $1,000, to individuals who wish to start small businesses and otherwise would not have access to bank credit.
- In Peru, the World Bank helped finance the Peru Rural Roads Program, which increased the connection of rural areas to each other and to urban centers as a way to increase economic activity.
- In Brazil, the World Bank has provided funds to the government to run the Rain Forest Pilot Program to reduce deforestation in the state of Mato Grasso.
- In China, the World Bank supported the Chinese government’s National Iodine Deficiency Elimination Program by providing aid for upgrading physical plants for iodized salt production, packaging, and distribution, by establishing effective quality control in the salt industry, and funding the training of laboratory staff and the improvement of laboratory facilities.