International bank for reconstruction and

DEVELOPMENT

Frequently Asked Questions

Where does IBRD get the money to finance projects in developing

countries?

IBRD gets its money from the capital markets. Investors see IBRD

bonds as a safe and profitable place to put their money and their cash

finances projects in middle-income countries. Annual funding volumes

vary from year to year, and are currently around $10-15 billion. The

World Bank has become one of the most established borrowers on the

world's capital markets since issuing its first bond in 1947 to finance

the reconstruction of Europe after World War Two. It has had a triple

A rating since 1959.

Who pays for IBRD's operating expenses?

IBRD covers its operating expenses primarily out of its income.

IBRD's earns an income every year from the return on its equity and

from the small margin it makes on lending. This pays for IBRD's

operating expenses, goes into reserves to strengthen the balance sheet

and also provides an annual transfer to the International Development

Association (IDA). IBRD has raised the bulk of the money loaned by

the World Bank to alleviate poverty around the world. This has been

done at a relatively low cost to taxpayers, with governments paying in

$11 billion in capital since 1946 to generate more than $400 billion in

loans.

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			timely
administration
	support
management
	commit
improvement
		sustainable

Which countries are eligible to be IBRD clients?

IBRD clients are middle-income and credit-worthy lower income

countries. The Bank classifies a country according to the wealth of its

population. Middle-income countries are defined as having a per capita

income of between around US$1,000 and US$10,000, which may

qualify them to borrow from IBRD. Low-income countries with a per

capita income of less than $1,000 usually do not qualify for IBRD

loans unless they are creditworthy. However, low-income countries are

eligible to receive low or no interest loans and grants from IDA. India,

Indonesia and Pakistan are examples of creditworthy low-income

countries which are eligible for a blend of financial assistance from

both IBRD and IDA.

Why do middle income countries still turn to IBRD?

Middle-income countries that are served by IBRD have made

enormous economic strides in the last few years but they still face

daunting challenges to reduce poverty to meet the Millennium

Development Goals, which set specific targets to be met by 2015.

These countries account for two-thirds of the world's population and

are home to more than 70% of the developing world's poor people who

live on less than $2 a day. . While private capital flows have risen

substantially, this flow has been concentrated in a limited number of

countries. Only a minority of middle-income countries can be regarded

as established bond market borrowers able to access the market

regularly at a stable cost. Other countries within the group have only

sporadic access or none at all. Therefore, the majority of middle-

income countries continue to rely on IBRD to mobilize investments in

infrastructure, health, education, clean energy and the environment.

IBRD helps clients gain access to capital and financial risk

management tools in larger volumes, on better terms, at longer

maturities, and in a more sustainable manner than they could receive

from other sources. Unlike commercial banks, IBRD is driven by

development impact rather than profit maximization. IBRD has also

supported middle-income countries in times of crisis when their access

to capital has dried up.

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How strong is the demand for IBRD services from its clients?

Some middle-income countries no longer see the need for significant

financial support from IBRD, because they have large foreign currency

reserves and are in a good budget position. However, others still have

large investment needs that include funds for public infrastructure

projects and social services. Increasingly, IBRD is meeting the more

sophisticated demands of its middle-income clients by providing

financial services that protect them against exchange and interest rate

risks and the turbulence of the commodity markets. In fiscal 2007, it

carried out $5.4 billion in interest rate and currency risk management

transactions on behalf of its members. In the same period, IBRD

committed $12.8 billion for 112 projects. The Bank assists client

countries not only through its finance but also by providing access to

its development knowledge resources. The Bank's knowledge activities

range from conducting country research, to developing analytic and

conceptual frameworks for country assistance, to building the capacity

for sustainable development within client countries

(from http://go.worldbank.org/YX2261GMX0)

TASKS

Task 1. Transcribe and pronounce:

Conceptual, turbulence, sophisticated, enormous, to daunt, minority,

sporadic, maturities, per capita, eligible, margin, annual, to alleviate,

finance.

Task 2. Read the numerals correctly:

Around $10-15 billion

In 1947

Since 1959

In $11 billion

Around US$1,000 and US$10,000

By 2015

More than 70%

Less than $2 a day

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$5.4 billion

112 projects

In fiscal 2007

Task 3. Give the definition. Use Longman Business English

Dictionary.















Margin

Equity

Bonds

Balance sheet

Creditworthy

Loans

Investments

Task 4. a) Match the word combinations with their translations:

1. to covers its operating expenses

2. to provide an annual transfer

3. to alleviate poverty

4. to borrow from IBRD

5. to face daunting challenges

6. to mobilize investments

a) сталкиваться с большими

трудностями

b) вложить 12.8 миллиардов

долларов

c) покрывать текущие

расходы

d) предоставлять ежегодные

перечисления

e) понизить уровень нищеты

f) увидеть необходимость в

финансовой поддержке

7. to see the need for financial support g) занимать у МБРР

8. to commit $12.8 billion

h) пускать инвестиции в

обращение

b) Make up negative and interrogative sentences in the Passive voice

with the word combinations above.

Task 5. Choose the right variant – adjective or adverb:

1. Annual funding volumes vary from year to year, and are

(current, currently) around $10-15 billion.

2. IBRD covers its operating expenses (primary, primarily) out of

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its income

3.

4.

5.

6.

7.

8.

This has been done at a (relative, relatively) low cost to

taxpayers, with governments paying in $11 billion in capital

since 1946 to generate more than $400 billion in loans.

Middle-income countries that are served by IBRD have made

(enormous, enormously) economic strides in the last few years.

While private capital flows have risen (substantial,

substantially), this flow has been concentrated in a limited

number of countries.

Only a minority of middle-income countries can be regarded as

established bond market borrowers able to access the market

(regular, regularly) at a stable cost.

Some middle-income countries no longer see the need for

(significant, significantly) financial support from IBRD,

because they have large foreign currency reserves and are in a

(good, well) budget position.

Increasingly, IBRD is meeting the more sophisticated demands

of its middle-income clients by providing (financial, financially)

services that protect them against exchange and interest rate risks

and the turbulence of the commodity markets.

Task 6. Prepare to participate in a role-play . The group gets divided