The World Bank: How the development bank confronts today's crises

This article was first published in March 2023. It was updated in April 2024.

"The world is facing a set of intertwined challenges," said Ajay Banga, as he opened the World Bank's press conference of the annual Spring Meetings with the International Monetary Fund (IMF).

Banga took over as President of the World Bank in June 2023, and is leading an "evolution agenda", to expand the bank's traditional development and anti-poverty mission to include fighting climate change and other global crises.

"There's the climate crisis, debt, food insecurity, pandemics, fragility, and there's clearly a need to accelerate access to clean air, water and energy," he said.

"But we cannot tackle poverty without this broader view and hence our early step to widen the aperture of the bank with a fit-for-purpose mission and vision - and that is to create a world free from poverty on a liveable planet."

The Spring Meetings of the World Bank Group and International Monetary Fund are being held from 17 to 19 April. They come at a time of heightened geopolitical tension in the Middle East.

Speaking to Klaus Schwab, Founder and Executive Chairman of the World Economic Forum at the Forum's Annual Meeting in Davos in January, Banga said: "fragility and conflict", alongside debt, were the most serious challenges facing the world in the shorter term. In the longer term, we face challenges of "poverty, inequality" and "humanity versus nature".

The bank was established 80 years ago to support the reconstruction of global economies after World War II. Here's what you need to know about the World Bank in 2024.

The World Bank was set up in 1944 to help support the rebuilding of Europe and Japan after the war. Its official name was the International Bank for Reconstruction and Development.

It emerged as part of the Bretton Woods Agreement, which was negotiated at a United Nations Monetary and Financial Conference to create a new system of economic order and international cooperation. Bretton Woods also led to the creation of the IMF.

The Washington DC-based bank’s main aim is to reduce levels of poverty around the world. It does this by lending money to the governments of its poorer members at lower interest rates than commercial banks would charge or, in the case of the poorest developing countries, with no interest rate.

“Without a place like the World Bank from which to borrow money, the world’s poorest countries would have few, if any, ways to finance much-needed development projects,” the bank’s website says. “The projects are essential to helping people become educated, live healthy lives, get jobs, and contribute as active citizens.”

The World Bank, IMF and regional development banks cover parts of government budgets in many countries, and can help to create a more inclusive and social global economy, the World Economic Forum says in its report Unlocking the Social Economy.

Examples of its work include helping Bangladesh set up an Income Support Program for the Poorest, which has provided cash to 600,000 poor pregnant women and mothers with children under five, to help them improve their children’s nutrition and cognitive development. It has also provided loans to Morocco to support its Integrated Disaster Risk Management and Resilience Program, which is strengthening the country’s climate change adaptation and resilience to natural disasters.

The bank aims to reduce the percentage of people living on less than $1.90 a day to no more than 3% by 2030.

It initially had 38 countries as members, but now has 189. The few states that are not members include North Korea, Andorra, Cuba, Monaco and Liechtenstein.

The bank is run like a cooperative, with its members as shareholders. The number of shares a country has is based on the size of its economy. The US is the largest shareholder, followed by Japan, Germany, the United Kingdom and France.

As shareholders, member countries are represented on a board of governors, usually by their finance ministers. This board has annual meetings alongside the IMF’s governors to decide how it can work best to reduce global poverty and help with international development.

The policy decisions made at this meeting are then enacted by 24 executive directors, who approve loans, country assistance strategies, and make borrowing and financial decisions. As the five largest shareholders the US, UK, France, Germany and Japan have an executive director each, while the other member countries are represented by 19 executive directors.

The World Bank is headed by a president, who is selected by the executive directors. Banga's predecessor, David Malpass, resigned from the post in February 2023, a year before his five-year term was due to end in April 2024.

The Bank says its financial reserves come from a variety of sources. These include:

The bank loans countries only part of the money they need for certain projects, meaning they have to get the rest from other sources or use their own funds.

The World Bank doesn’t only provide money. It also provides advice to member countries, and uses the experience and knowledge of its staff in areas such as environmental best-practice or social standards to help ensure projects will be successful.

It also “lends money to hire industry experts to help countries to reshape their economies to make them more efficient and productive”, the bank’s website says.

The World Bank is also a major publisher of reports and working papers, with over 30,000 publications covering areas such as poverty, global debt and food security.