If World Bank is giving loans to all the nations, where does it get those money from?

Every country in the world is under loan from IMF and World Bank. If that is so, from where does IMF and World Bank get so much of money?

Money from investments and subsequent returns cannot probably match the trillions it has given out to the nations. The US alone has loans to the tune of several trillions.

Where does so much money come from?

It might be a real stupid question but it filled my mind with curiosity and thought someone on CE could enlighten me on this 😛

The US is about to default on a huge deficit bill ($14.3 trillion). They have got very little time and havent reached an agreement as to how to overcome it. If they default, it will cause another market catastrophe sending markets crashing around the world as US enters another recession.

Dont know why the news is not making any headlines here in India. It is there all over the American websites.

For people investing in the markets, play safe for a while.

Check this out:


  • PraveenKumar Purushothaman
    PraveenKumar Purushothaman
    Re: If World Bank is giving loans to all the nations, where does it get those money f

    Almost 75% of a country's tax amount go to the World Bank. And also the value is considered to be the amount of Gold present in that country. 😀
  • Kaustubh Katdare
    Kaustubh Katdare
    Re: If World Bank is giving loans to all the nations, where does it get those money f

    Got the answer from World Bank's official website -

    Where does the Bank get its money?We raise money in several different ways to support the low-interest and no-interest loans (credits) and grants that the #-Link-Snipped-# (IBRD and IDA) offers to developing and poor countries.
    IBRD lending to developing countries is primarily financed by selling AAA-rated bonds in the world's financial markets. IBRD bonds are purchased by a wide range of private and institutional investors in North America, Europe, and Asia. While IBRD earns a small margin on this lending, the greater proportion of income comes from lending out our own capital. This capital consists of reserves built up over the years and money paid in from the bank's 187 member country shareholders. IBRD income also pays for World Bank operating expenses and has contributed to IDA and debt relief. We maintain strict financial discipline to maintain the AAA status of our bonds and continue to extend financing to developing countries.
    Shareholder support is also very important for the Bank. This is reflected in the capital backing we have received from shareholders in meeting their debt service obligations to IBRD. We also have US$178 billion in what is known as "callable capital," which could be drawn from our shareholders as backing, should it ever be needed to meet IBRD obligations for borrowings (bonds) or guarantees. We have never had to call on this resource. For more information on the Bank's bonds and notes, go to the #-Link-Snipped-#.
    #-Link-Snipped-#, the world's largest source of interest-free loans and grant assistance to the poorest countries, is replenished every three years by 40 donor countries. Additional funds are regenerated through repayments of loan principal on 35-to-40-year, no-interest loans, which are then available for re-lending. IDA accounts for nearly 40 percent of our lending.
  • spb2200
    Re: If World Bank is giving loans to all the nations, where does it get those money f

    Donor countries, principally the US, lend money to the world bank. This is done in the form of guarantees from reserve banks. The World Bank funds development projects such as hydroelectric power plants, roads and other infrastructure projects in developing countries. The initial projectes in the 1940s were to help rebuild war-torn countries in Europe and Japan and may have been successful. Subsequent projects are overwhelmingly tremendous failures in terms of citizens of recipient countries as the projects fail in many ways including lack of sufficient economic base to benefit from the project, high taxes on poor people to try to pay off the loan, use of the loan itself or the final project for the benefit of the ruling elite, devaluation of currency through the large infusion of paper funds and in numerous other ways. It is also harmful to donor countries through inflation as a certain amount of the new money makes it back into the economy, diluting currency and causing inflation/devaluation of the value of money.

    When loans are not paid back, and they rarely are, more is lent from the World Bank and from the US and other countries, further diluting the value of money. Countries that were economically independent but poor are now deeply in debt and even poorer, now unable to feed themselves without continuous infusions of funds, eroding their economies and making the dictators more powerful and wealthy. The goal of equalizing wealth throughout the world may eventually work by causing everyone to be deeply in debt to the World Bank and to other large banks who participate in the so called development loans due the "guarantees" by congress that the loans will be repaid. All will be poor except the bankers and government leaders.

    A country, notably China, can benefit from the loans when it has massive cash reserves by diverting money for aid to other countries and for capital investments in other countries' private resources or giving loans that pay higher interest.

    The entire process of giving loans for projects that sound great to wealthy socialist bankers in the West to dictators of countries with more basic economies is doomed to fail or at least it always has so far.

    If you read analyses of development projects that succeed, tho one project said to be successful is the Grameen Bank in Bangladesh where small loans are given to small groups of people for small investment projcets in local villages. The loans are guaranteed by family and friends of the borrower and are paid back instead of squandered by political elites. Such small projects have little interest for big donors or lenders so these big players continue to harm the economies of the world despite what are said to be good intentions.

    Loans that are guarenteed are doomed to fail as the lenders are not careful about the suitability of the investment. The recipients need not repay, productivity decreases as those receiving the loans have no need to be productive, the banks do well due to the guarantees so the taxpayers pay off the banks and the value of money decreases as more money has been "created." Poor are poorer and govenment leaders become wealthy.

    The crisis of unpaid loans is devaluing the Euro and dollar to the degree that even World Bank and IMF representatives are talking about returning to a gold standard, though an artificial gold standard whereby people are required by law to accept their paper money as though it were gold.

    Read The Creature from Jekyll Island by G Edward Griffin for reminders of the effects of overly powerful banks including the World Bank, the Federal reserve, etc. Read The Making of Modern Economics . . by Mark Skousen for economic history, mostly before banks became so powerful, to see effects and causes of inflation and much more.

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