Objectives of World Bank
The objectives of World Bank indicate how this international financial institution intends to promote long-term investment loans globally on reasonable conditions. The World Bank refers to an international financial institution whose primary role is to offer loans to the developing nations for their capital programs. Also known as the International Bank for Reconstruction and Development (IBRD), its objectives have been evolving and expanding since they were set during its establishment in 1945 in Breton Woods, New Hampshire during a United Nations’ Monetary and Financial Conference.
Why the objectives of World Bank were set
World Bank’s objectives are very important in enabling it to perform its functions effectively. Initially, the World Bank was established to facilitate reconstruction as well as development after the World War. However, this objective has been expanded to enable it to alleviate global poverty. The organization works with its affiliates closely in order to accomplish its mission. However, the original focus of the World Bank has not been altered yet. Reconstruction function remains entrenched in its objectives. This can be seen from the role that the institution plays in situations of natural disasters, post-conflict rehabilitation and meeting the needs of developing economies and those with transitioning economies. Thus, the objectives of this financial institution to remain focused on its purpose.
The main objectives of this financial institution are as follows:
- To provide member countries capital on long-run basis for economic development and reconstruction.
- To induce capital investment on long-run basis for assuring BoP or Balance of Payments equilibrium as well as balanced international trade development.
- To provide loans granted guarantee to large and small units as well as the projects of the member countries.
- To ensure that development projects are implemented in order to ensure a smooth transition from the time of war to the time of peace in the economy.
- To promote investment of capital in the member countries by providing guarantee for capital investment or private loans. If there is no private capital even when guarantee is provided, the World Bank offers productive activities’ loans on conditions that are considerate.
The World Bank plays a vital role of offering loans that fund development works in the member countries, more so, the underdeveloped countries. It offers long term loans that are used to fund different development projects that last between 5 and 20 years.
How the objectives of World Bank are accomplished
In its efforts to accomplish these objectives, the World Bank engages in different ventures including lending to the social sector. This has enabled the institution to provide debt relief while alleviating poverty. Poverty reduction is an overarching goal of this institution. It encourages the poor to participate in the development of their countries. It also offers incentives like educating the officials of the government and strengthening governments. Additionally, the organization strives to fight corruption in the developing countries to ensure that the economic progress realized in these countries remains effective.
The World Bank adopted the Comprehensive Development Framework in 1998. This directs its strategies for poverty reduction and it aims at enabling the institution to achieve its objectives. So far, the World Bank has funded many projects globally that are governed by procedures and guidelines that ensure that financial aids reach the poor. The activities of the projects are coordinated by donors who also synchronize procedures in order to strengthen and improve capacity among the developing countries. This has enabled the World Bank to remain an important financial source globally since its establishment.
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