Quora Answer: How Do the World Bank & the IMF Obtain Funding?

The following is my answer to a Quora question: “How do the World Bank, and the IMF, get their money?”

The World Bank is actually two “banks”: International Bank for Reconstruction & Development (IBRD), and the International Development Association (IDA).  The World Bank is, itself, a component of the larger World Bank Group.

The primary source of funding for World Bank loans was banks in North America and Western Europe.  This initially meant that the terms for loans were strict, and the loans themselves were relatively small.  When Robert McNamara became president, this slowly changed, and by 1980, much of the funding for loans was supplemented by the world debt market.  This allowed developing world debt to grow 20% annually from 1976 to 1980.

In contrast, the IMF uses a quota system to raise funds from participating nations, akin to the shareholder system.  Each member nation is assigned a contribution quota, relative to the size of that nation’s economy in relation to the global economy.  This quota also determines relative voting power.  This means that countries that contribute more to the fund have a larger say.