Born at Bretton Woods to rebuild a shattered Europe, the World Bank now lends across the developing world and argues over its own purpose. Its shareholders want it bigger, faster and greener, all at once.
Published 14 October 2026 · 06:00 GMT
In the summer of 1944, while war still raged, delegates from 44 countries met at Bretton Woods, New Hampshire, to design the economic order that would follow it. Two institutions emerged: the International Monetary Fund, to steady currencies, and the International Bank for Reconstruction and Development, to rebuild what the war had destroyed. The second of those is the institution we now call the World Bank. Its first loan went to France in 1947, for postwar reconstruction. Eight decades later, the rebuilding is done, the institution remains, and the argument over what it is for has never been louder.
The World Bank of today is really a family. The core is two arms. The International Bank for Reconstruction and Development, the IBRD, lends to middle-income governments at rates close to the Bank's own low borrowing costs. The International Development Association, IDA, offers concessional finance, long maturities, low or zero interest, and in many cases grants, to the poorest countries, about 75 of them. Around those two sits the wider World Bank Group: the International Finance Corporation, which invests in private companies in developing countries; the Multilateral Investment Guarantee Agency, which insures investors against political risk; and ICSID, which settles investment disputes between governments and foreign investors. The whole Group is headquartered in Washington, DC, and its members now number 189 for the IBRD.
The money matters because of its terms. A poor country that borrows on commercial markets pays high interest in hard currency, and a currency shock can turn a manageable debt into a crisis. IDA finance stretches repayment over decades at minimal interest, and the Bank's AAA credit rating, backed by its shareholders' capital, lets it borrow cheaply and pass the savings on. The Bank also brings something commercial lenders do not: engineers, agronomists, health specialists and procurement rules, bundled with the loan. Governments that resent the conditions attached to Bank money often discover that the alternative, borrowing from markets or from bilateral lenders with fewer questions, is more expensive or more secretive, or both.
Ajay Banga, who became President in June 2023, arrived with a mandate to reform. The Bank's own evolution agenda, shaped under his predecessor and accelerated under him, aims to make the institution bigger, faster and more effective, and to add a livable planet to a mission long defined by ending extreme poverty and boosting shared prosperity. The new formulation, ending poverty on a livable planet, is more than a slogan: it means climate, pandemics, fragility, food security and digital access are now treated as core development challenges rather than side projects, and that the Bank's lending is increasingly judged against them.
Bigger means stretching the balance sheet. The Bank has moved to squeeze more lending from its existing capital, to use guarantees and hybrid instruments to draw in private money, and to ask shareholders for more. IDA's replenishment, concluded in December 2024 with a package of about 93 billion dollars, was presented as the largest in the fund's history, and the Bank's management has argued that each dollar of donor money can be leveraged into several dollars of lending. The numbers are contested, as such leverage claims always are, but the direction is clear: the shareholders want more lending without proportionally more capital, and the Bank is engineering its way there.
Faster means changing how the Bank works. Borrowers have long complained that a Bank project can take years from idea to first disbursement, by which time the minister who requested it has moved on and the crisis it was meant to address has changed shape. Banga's reforms have pushed for shorter preparation times, simpler approval, and more authority for country directors on the ground. The Bank's staff, steeped in a culture of safeguards and review, has had to balance speed against the duty not to finance a dam that displaces a village or a road that destroys a forest. That tension, between moving fast and moving carefully, is the daily reality of development lending.
The oldest criticism is about voice. The Bank's governance gives voting shares roughly in line with economic weight, which means the United States, as the largest shareholder, holds a veto over major decisions, and Europe and Japan hold far more weight than their share of the world's poor. The Bank's president has by convention always been an American, nominated by Washington, just as the IMF's managing director has by convention been a European. Reformers have demanded a rebalancing for decades. Defenders reply that the shareholders who put up the capital get the say, and that the Bank's AAA rating depends on the confidence of those shareholders. Both arguments are true, and they point in opposite directions.
The second criticism is about conditions. Bank loans come with requirements: on procurement, on environmental and social safeguards, on governance and sometimes on economic policy. Borrowers argue, with reason, that conditions can reflect the fashions of Washington rather than the needs of the borrowing country, and that they slow down money meant for urgent needs. The Bank replies, also with reason, that its money is public money from many countries, and that safeguards exist because past projects, built without them, did real harm. The argument has softened over the years as the Bank moved from rigid policy prescriptions to country-owned programs, but it has not gone away.
The third criticism is about climate. The Bank remains one of the largest sources of climate finance for developing countries, funding solar parks, flood defences, drought-resistant agriculture and grid upgrades. But its critics, including many of the countries most exposed to warming, argue that it still finances fossil fuels indirectly, that its climate money moves too slowly, and that much of it arrives as loans rather than grants, adding debt to the countries least responsible for the problem. The Bank has tightened its fossil-fuel policies and expanded climate lending, and the debate has shifted from whether the Bank should be green to whether green is happening fast enough. On that question, the countries waiting for the money are the judges, and their verdict is impatient.
Western coverage tends to treat the Bank as an instrument of an order the West built and still runs. In this telling, the evolution agenda is a bid to keep the institution relevant: bigger balance sheet, faster disbursement, more private capital crowded in, all to prove that multilateral lending can still compete with bilateral offers from China. The governance complaint is acknowledged in the West, but usually as a problem to be managed rather than a wrong to be righted, because the capital, and therefore the rating, comes from the West.
The Western lens is also the most attentive to the Bank's role in Ukraine and in fragile states, where it has channelled large sums and coordinated donors. In this telling, the Bank is the plumbing of the international response, unglamorous and indispensable, and its reform is a technical challenge, not a moral one.
From the East, the Bank looks like an institution that the rising powers have outgrown. In this telling, the creation of the New Development Bank by the BRICS and the Asian Infrastructure Investment Bank led by China were direct responses to a World Bank that would not reform its governance fast enough. The Eastern lens reads the evolution agenda with scepticism: welcome as far as it goes, but still a Western-managed institution asking the rest of the world to trust it with more money.
The Eastern reading also stresses that borrowing countries now have choices. A government seeking a road or a port can compare the Bank's terms, safeguards and timelines with bilateral offers, and the Bank's reform is therefore driven as much by competition as by conscience. In this telling, the Bank's best argument is its standards, and its worst enemy is its own slowness.
From the Global South, the Bank is the lender you cannot avoid and cannot love. In this telling, IDA is the lifeline: the only source of long, cheap finance for the poorest countries, and the replenishment of 2024 was watched in capitals from Dakar to Dhaka with the attention usually reserved for elections. The Bank's safeguards are read here in two ways at once: as protections against bad projects, and as hurdles that rich countries impose on the poor while funding their own infrastructure with far less scrutiny.
The Southern lens carries the sharpest version of the climate argument. The countries that did least to warm the planet are being asked to borrow, at interest, to adapt to a crisis they did not cause, while the Bank's shareholders debate leverage ratios in Washington. In this telling, the reform that matters is not speed or size but justice: grants, not loans, for the damage already done, and a real voice in the institution that decides.
