World Bank Ali Ijaz

8/3/2019 World Bank Ali Ijaz

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PROJECT OF INTERNATIONAL FINANCE

UMPING WORLD BANK WORLD TRADE

ORGANIZATIONSAFTA

UNIVERSITY OF

SARGODHA

BMITED TO:

MISS MEHWISH

BMITED BY:

LI IJAZ

ASEEM ASHRAF

AFFI ULLAH

AROON

D E P A R T N M E N T O F B U S I N E S S A D M I N I S R T R A R T I O N



1. ACKNOWLEDGEMENTS

2. WORLD BANK

3. WHAT IS WORLD BANK

4. HISTORY OF WORLD BANK

5. PURPOSE OF WORLD BANK

6. Function Of World Bank

7. OBJECTIVE OF WORLD

8. GROUPS OF WORLD BANK



ACKNOWLEDGEMENTS:

I have no words to express my deepest sense of gratitude to ALLAH who blessed and enabled me to

complete this project.

Firstly, I feel my proud privilege to mention the feelings of obligationstowards our affectionate parents and friends, who prayed, encouraged and inspired me for higher education and are supporting financially and morally throughout my studies.

Lastly I find it very difficult to select the words of appropriate dimensions to express my gratitude to mySME instructor MISS MEHWISH for his useful encouragement and dynamic supervision

In writing these acknowledgements, we look back on several importance of this course

INTERNAIONAL FINANCE.



What Is The World Bank?

The World Bank Provides Financial And Technical Assistance To Emerging Market Countries.The World Bank Is Not Actually A Bank In The Common Sense. Instead, It Consists Of TwoDevelopment Institutions -- The International Bank For Reconstruction And Development (Ibrd)And The International Development Association (Ida) -- Owned By 186 Member Countries.

The Bank Is Closely Affiliated With Three Other Organizations --The International Finance

Corporation (If), The Multilateral Guarantee Agency (Miga), And The International Centre For The Settlement Of Investment Disputes (Icsid) -- That Support Its Goal Of Reducing WorldwidePoverty. The Five Organizations Make Up The World Bank Group.

World Bank History:

The World Bank Was Created At Bretton Woods In 1944 To Lend To European Countries To

Help Them Rebuild After World War Ii. It Was The World's First Multilateral DevelopmentBank, And Was Funded Through The Sale Of World Bonds. Its First Loans Were To France AndOther European Countries, But Soon Lent Money To Chile, Mexico And India To Build Power Plants And Railways. By 1975, The Bank Also Lent Money To Countries To Help With Family

Planning, Pollution Control And Environmentalism. The World Bank Is an International

Financial Intuition That Provides Loans to Devolving Countries for Capital Programmers .The

World Bank's Official Goal Is the Reduction of POVERTY. By Law, All Of Its Decisions Must Be

Guided By A Commitment To Promote Foreign Investment, International Trade And Facilitate

Capital Investment. The World Bank Differs From The World Bank Group, In That The World

Bank Comprises Only Two Institutions: The International Bank For Reconstruction And

Development (Ibrd) And The International Development Association (Ida), Whereas The Latter

Incorporates These Two In Addition To Three More: International Finance Corporation (Ifc),

Multilateral Investment Guarantee Agency (Miga), And International Centre For Settlement Of

Investment Disputes (Icsid).



What Is The Purpose Of The World Bank?

The World Bank Provides Low-Interest Loans, Interest-Free Credits And Grants To DevelopingCountries. In The Past, This Usually Occurred When They Were In Danger Of Sovereign DebtDefault, Itself Often A Result Of Overspending And Extensive Borrowing. Many Countries

Then Devalued Their Currencies, Which Resulted In Hyperinflation. To Combat This, The Bank Often Required Austerity Measures, Where The Country Must Agree To Cut Back On SpendingAnd Support Its Currency.

The World Bank Loans Are Usually To Invest In Education, Health, And Infrastructure. TheLoans Can Also Be Used To Modernize A Country's Financial Sector, Agriculture, And NaturalResources Management. The Bank's Goal Is To "Bridge The Economic Divide Between Poor And Rich Countries, To Turn Rich Country Resources Into Poor Country Growth And ToAchieve Sustainable Poverty Reduction."

To Achieve This Goal, The Bank Focuses On Six Areas:

1. Overcome Poverty By Spurring Growth In The Poorest Countries, Focusing On Africa.2. Offer Reconstruction to Poor Countries Emerging From War, A Major Contributing

Factor To Extreme Poverty.3. Provide A Customized Development Solution To Help Those Middle-Income Countries

Overcome Problems That Could Throw Them Back Into Poverty.4. Spur Governments to Act on Preventing Climate Change, Controlling Communicable

Diseases, (Especially Hiv/Aids and Malaria), Managing International Financial Crises,And Promoting free Trade.

5. Work With The League Of Arab States To Improve Education, Build Infrastructure AndProvide Micro-Loans To Small Businesses In The Arab World.

6. Share Its Expertise With Developing Countries, And Its Knowledge With Anyone ViaReports And Its Interactive Online Database.

What Is Function Of World bank

The main function of the World Bank Group is the provision of low interest loans, credit that isinterest free as well as aids to the least developed countries for the development in the field of education health and infrastructure.

The functions of the International Bank for Reconstruction and Development are:

1. The assistance and development of territories of its members2. The promotion of a balanced growth in international trade



These are provided in the Articles of Agreement of the International Bank for Reconstructionand Development, Art. I.

The International Development Association seeks to:

1. Promote world development, increase productivity and standards of leaving in the lessdeveloped countries of its membership2. Assist the International Bank for Reconstruction and Development

(Articles of Agreement of the International Development Association, Art. I).

The main purpose of the International Finance Corporation is to promote economic developmentthrough increased productivity of the private sector in member countries.

The primary objective of the Multilateral Investment Agency is to increase the volume of privateinvestments, especially investments which aim at the increase of productivity in the developing

parts of the world.

Finally, the purpose of the International Centre for the Settlement of Investment Disputes provides the particular dispute mechanisms for the resolution of investment conflicts betweenContracting States and persons of Contracting States.

Some other f unctions are as follows

Expand & evolved over the years

Main focus ±reconstruction &development in situation like-natural disasters

Need affecting developing countries

Post conflict rehabilitation

Need addicting a rationing economy

Expanded focus

Creating infrastructure

Developing financial system

Protect individual and property right

Implement legal system that encourage business



Improving living standards

Poverty reduction strategies

Clean technology fund management

Clean air initiative

United nation development business

OBJECTIVE OFWORLD BANK

The term "World Bank" generally refers to the IBRD and IDA, whereas the World Bank Group

is used to refer to the institutions collectively.The World Bank's (i.e. the IBRD and IDA's) activities are focused on developing countries, in

fields such as human development (e.g. education, health), agriculture and rural development

(e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing

and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and

governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide

loans at preferential rates to member countries, as well as grants to the poorest countries. Loans

or grants for specific projects are often linked to wider policy changes in the sector or the

economy. For example, a loan to improve coastal environmental management may be linked to

development of new environmental institutions at national and local levels and the

implementation of new regulations to limit pollution..

Groups of world bank

1. IBRD

The International Bank For Reconstruction And Development (Ibrd) Is One Of FiveInstitutions That Compose The World Bank Group. The Ibrd Is An International OrganizationWhose Original Mission Was To Finance The Reconstruction Of Nations Devastated By WorldWar Ii. Now, Its Mission Has Expanded To Fight Poverty By Means Of Financing States. ItsOperation Is Maintained Through Payments As Regulated By Member States. It Came IntoExistence On December 27, 1945 Following International Ratification Of The Agreements



Reached At The United Nations Monetary And Financial Conference Of July 1 To July 22, 1944In Bretton Woods, United States.

The Ibrd Provides Loans To Governments, And Public Enterprises, Always With A Government(Or "Sovereign") Guarantee Of Repayment Subject To General Conditions.

[1]The Funds For

This Lending Come Primarily From The Issuing Of World Bank Bonds On The Global CapitalMarkets²Typically $12±15 Billion Per Year. These Bonds Are Rated Aaa (The HighestPossible) Because They Are Backed By Member States' Share Capital, As Well As ByBorrowers' Sovereign Guarantees. (In Addition, Loans That Are Repaid Are Recycled, Or Relent.) Because Of The Ibrd's Credit Rating, It Is Able To Borrow At Relatively Low InterestRates. As Most Developing Countries Have Considerably Lower Credit Ratings, The Ibrd CanLend To Countries At Interest Rates That Are Usually Quite Attractive To Them, Even After Adding A Small Margin (About 1%) To Cover Administrative Overheads.

2. IDA

The International Development Association (Ida), Is The Part Of The World Bank That HelpsThe World¶s Poorest Countries. It Complements The World Bank's Other Lending Arm ² TheInternational Bank For Reconstruction And Development (Ibrd) ² Which Serves Middle-Income Countries With Capital Investment And Advisory Services.

Ida Was Created On September 24, 1960 And Is Responsible For Providing Long-Term,Interest-Free Loans To The World's 80 Poorest Countries, 39 Of Which Are In Africa. IdaProvides Grants And Credits (Subject To General Conditions (Pdf)), With Repayment PeriodsOf 35 To 40 Years. Since Its Inception, Ida Credits And Grants Have Totaled $161 Billion,

Averaging $7±$9 Billion A Year In Recent Years And Directing The Largest Share, About 50%,To Africa. While The Ibrd Raises Most Of Its Funds On The World's Financial Markets, Ida IsFunded Largely By Contributions From The Governments Of The Richer Member Countries.Additional Funds Come From Ibrd Income And Repayment Of Ida Credits.

Ida Loans Address Primary Education, Basic Health Services, Clean Water Supply AndSanitation, Environmental Safeguards, Business-Climate Improvements, Infrastructure AndInstitutional Reforms. These Projects Are Intended To Pave The Way Toward EconomicGrowth, Job Creation, Higher Incomes And Better Living Conditions.

3. IFC

The International Finance Corporation (Ifc) Promotes Sustainable Private Sector InvestmentIn Developing Countries.

Ifc Is A Member Of The World Bank Group And Is Headquartered In Washington, D.C., UnitedStates. [1]



Established In 1956, Ifc Is The Largest Multilateral Source Of Loan And Equity Financing For Private Sector Projects In The Developing World. It Promotes Sustainable Private Sector Development Primarily By:

1. Financing Private Sector Projects And Companies Located In The Developing World.

2. Helping Private Companies In The Developing World Mobilize Financing InInternational Financial Markets.3. Providing Advice And Technical Assistance To Businesses And Governments.

4. MIGA

TheMultilateral Investment Guarantee Agency (Miga) Is A Member Organization Of TheWorld Bank Group That Offers Political Risk Insurance. It Was Established To Promote ForeignDirect Investment Into Developing Countries. Miga Was Founded In 1988 With A Capital BaseOf $1 Billion And Is Headquartered In Washington, Dc. 175 Member Countries CompriseMiga's Shareholders.[1]

Miga Promotes Foreign Direct Investment Into Developing Countries By Insuring InvestorsAgainst Political Risk, Advising Governments On Attracting Investment, Sharing InformationThrough On-Line Investment Information Services, And Mediating Disputes Between InvestorsAnd Governments. Miga's Membership In The World Bank Group Enables The Organization ToIntervene With Host Governments To Resolve Claims Before They Are Filed.[2]

5. ICS

ID

The International Centre For Settlement Of Investment Disputes (Icsid), An Institution Of The World Bank Group Based In Washington, D.C., Was Established In 1966 Pursuant To TheConvention On The Settlement Of Investment Disputes Between States And Nationals Of Other States (The Icsid Convention Or Washington Convention). As Of May 2011, 157 Countries HadSigned The Icsid Convention.



Icsid Has An Administrative Council, Chaired By The World Bank's President, And ASecretariat. It Provides Facilities For The Conciliation And Arbitration Of Investment DisputesBetween Member Countries And Individual Investors.

During The First Decade Of The 21st Century, With The Proliferation Of Bilateral Investment

Treaties (Bits), Most Of Which Refer Present And Future Investment Disputes To The Icsid, TheCaseload Of The Icsid Substantially Increased. As Of 30 March 2007, Icsid Had Registered 263Cases, More Than 30 Of Which Were Pending Against Argentina, Most Resulting FromArgentine Government Actions Precipitated By Argentina's Economic Crisis. Icsid CaseloadMay Be Reduced By Announcements From Nicaragua And Venezuela That They Intend ToWithdraw From The Icsid.

Considering the social and political situation in south Asia, what is the f uture of SAFTA(south Asia free trade area)?

Introduction of SAFTA:

South Asian Countries have started to move towards regional trade agreements during 2004. The

agreement on the South Asian Free Trade Area (SAFTA) is such an agreement aimed at to

increase free trade among South Asian Association for Regional Cooperation (SAARC). This

agreement was agreed upon on 12th

SAARC Summit at Islamabad, on January 6, 2004. the

purpose of this agreement to provide a platform for the creation of a free trade zone covering 1.4

billion people in SAARC countries. SAARC countries include Pakistan, India, Bangladesh,

Nepal, Sri Lanka, the Maldives and Bhutan. Foreign ministers of the SAARC countries signed

on SAFTA declaring zero custom duty on the trade of practically all products in the region by

the end of 2012. This agreement came into being on January 1, 2006 and is expected to be

operational following the ratification of the agreement by the seven governments. The SAFTA

demands the member countries i.e. India, Pakistan and Sri Lanka to reduce their duties by 20

percent at the first instance of two year period ending in 2007. In the final five years phase

coming to an end in 2012, the 20 percent duty will be reduced to zero in a series of annual cuts.

Nepal, Bhutan, Bangladesh and the Maldives are provided additional three years to reach zero

duty compared to other SAARC member countries (Wikipedia, 2007).SAFTA requires the

developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down to

20 percent in the first phase of the two year period ending in 2007. In the final five year phase

ending 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The least



developed nations in South Asia (Nepal, Bhutan, Bangladesh, Afghanistan and Maldives) have

an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009,

whereas Afghanistan as the 8th member state of the SAARC ratified the SAFTA protocol on the

4th of May 2011.

Future of SAFTA:

Many researcher conducted many researches on the current and future of SAFTA. In the possibleoutcomes of free trade among the member countries of SAARC and SAFTA. Results concludethat

1. Free trade would not provide benefits to the region economically and that it is not possibleto achieve a regional cooperation in economic and social matters among SAARC member countries. The possibility of free trade will not be operational without resolving politicalissues between member countries e.g. Kashmir conflict is the major hindrance betweenPakistan and India to go into free trade.

2. SAFTA has the possibility of providing long run benefits on the expense of short-termcosts and there exist great potential for free trade among the SAARC member countries.Making the SAFTA a success would lead towards economic development in the region.The reasons for success include problems in global market access and the higher transportation costs of producing for the world markets. Therefore, regional tradeexpansion, efficiency and improved quality of exports are expected to benefit the

participant countries while taking into account regional cooperation.3. Economic performance of the South Asian countries would improve by the fast

implementation of SAFTA. The process of liberalization under SAFTA needs to becredible and the stipulated time frame of implementation should be followed to benefit theSAARC member countries



4. The natural trading partner¶s hypothesis determines the potential success of a South Asiantrading bloc. It was found that unilateral trade liberalization efforts have contributed a lot inincreasing both intra and extra-regional trade between the countries. Regional integrationalong with continuous progress in unilateral trade could help the South Asian countries tocontinue to diversify their narrow export bases and potentially result in new comparative

advantages facilitating the successful implementation of SAFTA.5. Another study conducted reveals that the SAFTA would be more successful in the sense if it is expanded to other neighboring countries, namely China and the member nations of theAssociation of South East Asian Nations (ASEAN). An Asian bloc could act as a potentialinstrument of changing incentives for the trade blocs in the America and Europe. Thiswould result in multilateral free trade in the world.

6. SAFTA will result in horizontal specialization across the member countries. Sri Lankawould act as a center for rubber industry. Similarly, other countries could specialize in the production of tradable commodities having comparative advantage in the production of these commodities. It was also found that the SAFTA¶s scope could be expanded by thecreation of a SAARC Investment Area, reducing period of implementation of the program,

and improving physical infrastructure in the member countries. South Asian InvestmentBand should be established to facilitate the funding needed for infrastructure developmentand other regional projects

7. Hossain (2006) was of the view that the relationships between India and Pakistan are major hindrance for the success of any regional or unilateral trade agreements and conflicts between India and Pakistan threaten the future of SAFTA in South Asia.

The New Nation (2006) pointed out uncertain future of SAFTA for the prospects of the growthof trade among the seven countries of SAFTA, especially from least developed member countries in the region.

ConclusionThe studies mentioned above contribute some valuable inputs about the future of SAFTA. Most

of the studies indicate an optimistic view with a hidden pessimistic. Optimistic view can beunderstood in term of wishful thinking of ever one for the success of SAFTA. Pessimistic views

can be explained in term of existing conflicts between member countries. Such conflicts arecreating difficulties in the progress of SAFTA. Many studies reveal that regional trade agreement

such as SAFTA is the need of the time to boost trade and thus economic development betweenmember countries. South Asian countries are facing difficulties in exporting their commodities to

developed countries on the ground of intensive competition and higher quality standards in theworld market. One of the benefits of SAFTA is that efficiency and reduction in transportation

cost of producing products for export purpose will benefit the member countries substantially.However, the success of SAFTA depends on the relationship between India and Pakistan beingthe larger economies in the region. Therefore, SAFTA would be merely a dream unless conflicts

between South Asian countries especially between Pakistan and India are settled. Free trade between these two countries will not be possible without resolving disputes.

Documents

World Bank Ali Ijaz