Who can borrow from the World Bank?

10 December 2020 | FAQ

The World Bank Group (WBG) primarily lends money to developing countries and private enterprises that undertake activities in developing countries.


Countries that are eligible to lend from the International Development Association (IDA) must have a per capita income of less than $1,085 and cannot already be in arrears already to the IMF or World Bank. IDA lends at varying concessional interest rates and provides grants which are interest-free and without a repayment schedule, though recipients are required to pay a fee of less than one percent of the loan to cover administrative costs.

Upper-middle-income countries (defined as those with per capita incomes of between $4,046 and $12,535) can borrow from the International Bank for Reconstruction and Development (IBRD) at interest rates that are lower than those from commercial banks. Lower middle-income countries (defined as those with per capita incomes of between $1,036 and $4,045) can borrow from a ‘blend’ of IDA and IBRD financing – depending on their creditworthiness. IDA and IBRD provide both project and policy loans. Project loans, as the name implies, are intended to finance specific projects such as roads and ports. Development policy loans provide budget support linked to prior actions (conditions), i.e. “a program of policy and institutional actions to help achieve sustainable, shared growth and poverty reduction.”


The International Finance Corporation (IFC) provides financing to private enterprises for projects in developing countries through loans and equity finance. It also provides trade and commodity finance through guarantees of “trade-related payment obligations of approved financial institutions.” From 2001 to 2016, 36 per cent of IFC commitments were in the financial sector to financial lenders such as hedge funds and commodity traders, that act as financial intermediaries to private companies to carry out development projects (see briefing Follow the Money). IFC is heavily involved in supporting the use of blended finance, “the use of relatively small amounts of concessional donor funds to mitigate specific investment risks and help rebalance risk-reward profiles of pioneering investments that are unable to proceed on strictly commercial terms.”


The Multilateral Investment Guarantee Agency (MIGA) provides political risk insurance or guarantees to private investors and lenders to encourage foreign direct investment (FDI) into developing countries. This is often serves to de-risk the commercial finance for wider project initiatives supported by the World Bank Group; to cite just one example, in the case of the Sankofa offshore gas project in Ghana (see Observer Spring 2020), MIGA provided a political risk guarantee to cover commercial banks who invested in this flagship WBG project.

Trust funds and financial intermediary funds

In addition to these four lending institutions, a number of trust funds and financial intermediary funds are hosted and/or managed by the Bank. These additional sources of funding help finance the Bank’s advisory services and analytics and are lent to the Bank’s public and private clients for specific purposes, like women-led or -owned businesses in developing countries through the Women’s Entrepreneurs Finance Initiative (see Observer Autumn 2018). World Bank managed trust funds also play a significant role in efforts to address fragility and violence. In 2019, the World Bank Group held 976 active trust funds and 27 active financial intermediary funds. These include, the Climate Investment Funds (see Observer Summer 2019), the Global Risk Financing Facility, the Global Financing Facility related to health and nutrition of women, children and adolescents, and the now-discontinued Pandemic Emergency Financing Facility (see Observer Autumn 2020).