World Bank

THE WORLD BANK AND International Monetary Fund (IMF), the organizations often referred to as Bret-ton Woods twins, were conceived at the international conference that took place at Bretton Woods, New Hampshire, between July 1 and 22, 1944.

The Bretton Woods agreements were ratified on December 27, 1945, the date considered as the formal beginning of the bank. However, the bank operations commenced on June 25, 1946, and the first loan of $250 million was extended to France for postwar reconstruction on May 9, 1947. This was, in real terms, the most substantial loan ever issued by the bank. The bank's primary focus was reconstruction of European countries after World War II. The initial membership consisted of 45 countries, compared to 184 today.

The World Bank's member countries elect a representative and alternate to the Board of Governors, to [Page 1184]serve a five-year term. The board meets once a year at the bank's annual meetings, where it sets the overall policies of the institution and reviews country membership. A board of 24 executive directors oversees the work of the bank on a daily basis. They meet twice a week in Washington, D.C., to approve new loans and review bank operations and policies. Governments can elect directors every two years. Five of these directors represent the member countries that have the largest number of shares: France, Germany, Japan, the United Kingdom, and the United States.

The remaining 19 executive directors represent constituencies; a country or group of countries elects each every two years. The election rules ensure that a geographical balance is maintained. The executive directors and the president of the World Bank, who serves as chairman of the board, are responsible for the conduct of the bank's general operations and perform their duties under powers delegated by the Board of Governors. The president in 2006 was Paul Wolfowitz, a former U.S. deputy secretary of defense, who was appointed on June 1, 2005. By an informal agreement, the bank president has always been a U.S. citizen, while the managing director of the IMF has been a European.

In the beginning, in the 1950s and 1960s, the bank's financing was directed and limited to infrastructure projects. In the mid-1960s, more than 75 percent of all bank lending was directed to electric power and transportation. The lending heavily rested on the assumption that transportation, communication, and power facilities, ports, and public utilities are necessary conditions for the development of the rest of the economy.

The 1970s oil shock and the appointment of Robert McNamara as the bank's president brought about profound changes to operations. The magnitude of loans jumped from $1 billion per year to $12.4 billion from 1968 to 1981 (more than five times when adjusted for inflation). The number of professionals employed by the bank increased from 767 in 1968 to 2,522 in 1981, and to 3,776 in 1991. In addition to the size, the composition of spending changed.

The lending to the rural sector increased dramatically, and health, population, and nutritional lending projects commenced. In addition, new departments were established and a formal research program started.

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