The World Bank and the International Monetary Fund (IMF) were both created at the 1944 Bretton Woods Conference. The World Bank’s mandate is to lend to developing countries to fund capital programs to alleviate poverty. The IMF, an organisation of almost 200 countries, helps alleviate problems among member countries. Since the onset of the global financial crisis in 2008, the IMF has taken part in rescues of countries such as Greece.
World Bank cuts US$400m off budget amid sweeping revamp
The World Bank plans to cut US$400 million from its budget as part of a sweeping reorganisation to make it more efficient and responsive.
The savings are part of the bank's first major strategic realignment in 17 years. The figure will be presented to the World Bank's member countries later this week during its annual meetings, along with a new strategy to focus the institution on its poverty-fighting goals.
The savings will be phased in over three years and mark an 8 per cent cut from annual expenses of US$5 billion, chief financial officer Bertrand Badre said.
He said the ultimate goal of the cuts, along with planned increases in revenue, was to help the bank grow and better serve governments.
Long criticised for a slow process for approving lending, the World Bank has also had to contend with greater competition for development funds. Many middle-income countries now rely on private funding and bilateral loans as they grow.
In response, World Bank president Jim Yong-kim has launched the first new strategy for the lender since 1996. That should make it easier for the bank to meet its twin goals of eliminating extreme poverty by 2030 and boosting the incomes of the poorest 40 per cent of people in each country.
The bank said it was looking at ways to trim its budget while putting more funds into priority areas, including "transformational" projects such as large-scale energy investments.
"The point is, if we are serious about our mission, if we are serious about meeting our client expectations, we need to be able to do more," Badre said. "By increasing our financial strength, we're in a better position to answer our clients."
He said every US$100 million reinvested into the bank's operations could help mobilise another US$1 billion to spend on development.
The bank has not yet outlined exactly where it will find the savings, although Badre suggested travel policies, information technology and real estate would be good places to start. Many World Bank employees were already sending him suggestions.
"Nobody likes to cut costs," he said. "That's pretty human. But the reality is that everybody is aware that we could do things better."