THE WORLD BANK IN THE WORLD OF BANKS: CHALLENGE FOR DEVELOPMENT

'By 2025, 37 of 68 currently IDA-eligible countries will graduated out', Center for Global Development predicts. Decreasing demand for long-term debts raises the necessity of Bank's structure review.

Proposing 'soft lending' tool, Todd Moss strongly recommends to adapt the current structure of IDA to the changing environment. CGD's expert advises World Bank to focus its mission on 'poor people' rather than 'poor countries'. In words, it is reasonable to reduce loans to governments and increase those to individuals. More than 2.5 billion people are without bank accounts and insurance. Focusing on the safety of people and their properties, the programs such as IFC Microinsurance aim to diminish the scale of these issues. Expanding insurance and private lending rather than funding some 'suspicious' unstable regimes, the World Bank will encourage small business' growth in the poorest countries. Simon Maxwell stresses the increasing role of International Finance Corporation (IFC) since it targets private sector development. While investigating, I found out that the expansion of IFC programs in the low-income countries have the following benefits:

1. World Bank will retain the status quo in the financial world. Displacement of IDA projects beyond IFC will enable focus on perspective and high-demanding sectors such as small business, insurance and financial services. Reforming the client base and tools might be compulsory in the future since the Bank will:

• recover the balance sheet that has been skewed by heavy IDA and IBRD debts 
• be able to restructure the governance gradually. 
• obtain competitiveness against private banks. 

2. The major benefit for developing countries will be the implementation of the economical strategies on the 'bottom' or on an individual level. Empirical evidence has illustrated the efforts to realize policies and strategies on state level. It can be suggested that an 'individual approach' is the least risky for both banks and governments. Moreover, it creates opportunities for entrepreneurs to be familiar with financial services and benefits. Consequently, domestic markets will:

• be more competitive. Low-interest loans provided by IFC will stop the outrage of foreign banks on domestic markets. It also creates opportunities for local banking to improve performance through partnership with World Bank branches. As a result, governments will be able to establish a robust financial system, and thus, maintain a balance in internal economies deriving maximum benefit. 
• improve efficiency. Unlike state borrowing that obligates to comply with fixed policies, individual borrowing encourages innovation and promotion of the wide range of independent business ideas. 
• be more secure. Nowadays, the most poor countries are those that suffer from civil wars. Insuring properties and businesses, the World Bank will be more motivated in political stability. It will likely prevent the lawlessness pushing on governments or military regimes in these countries. 
• be more transparent. It is obviously easier to detect/prevent event of corruption on the individual level than on state level.