Committee Overview

The World Bank was established in 1944 as the International Bank for Reconstruction and Development (IBRD). Since then, its role has evolved and broadened to become one of the core institutions of international finance. Originally, the Bank was the single post-war institution promoting reconstruction and development. Now, the World Bank is an association of four developmental institutions: the International Development Association (IDA), the Multilateral Guarantee Agency (MIGA), the International Centre for the Settlement of Investment Disputes (ICSID), and the International Bank for Reconstruction and Development (IBRD). IBRD’s main goal is to alleviate global poverty. Given the devastation after World War II, the establishment of the organization and its ultimate objective was hardly controversial. On May 9, 1947, the IBRD approved its first loan for a sum of USD 250 million to France for reconstruction. Loans to Denmark and other European countries soon followed. Rather than resolutions, this committee will develop and approve loan requests concerning how to properly invest in the futures of countries and their citizens.

Topic A: Debt Restructuring in Sri Lanka

In early 2022, the world watched as the people of Sri Lanka flooded the streets in protest, demanding answers for why the country was knee-deep in economic ruin. Sri Lanka’s current crisis is the result of years of economic misgovernance. This has included mismanaged tax cuts, over-printing money, and harmful agricultural policies. The effects of all of these have crushed a major sector of Sri Lanka and its economy by increasing its government debt to GDP ratio. A high debt to GDP ratio suggests that a country cannot produce enough goods to repay the loans it has taken. Later, this has snowballed into a lack of foreign currency exchange and historic rates of inflation, causing Sri Lankans to suffer a series of even greater hardships. The country is now experiencing a political crisis in which dozens of ministers have resigned, and daily protests call for the resignation of the country’s President. In May 2022, following sustained economic pain, the Sri Lankan government announced it would undergo a default (a failure to repay) on USD 51 billion of its debt. This default was the first in Sri Lanka’s sovereign history and the first debt default by an Asian-Pacific country in the 21st century. Sri Lanka is now working with the International Monetary Fund (IMF) to restructure its debts and determine how Sri Lanka’s creditors can be repaid. Sri Lanka desperately needs assistance and bridge loans from the World Bank to form a more structured economic policy framework. This would tackle issues such as their fiscal, monetary, and exchange rate policies. In the meantime, Sri Lanka is in critical need of essential medical supplies, cash transfers for its vulnerable populations, and support for its agriculture industry. The IBRD can meet these needs by approving loan proposals and projects. Only by doing this can the global community provide a foundation to rescue Sri Lanka from arguably the greatest crisis in its independent history, and certainly since the end of its 26-year civil war.

Topic B: Energy Security and Sustainability in Moldova

Moldova is heavily dependent on its neighbors for energy. It imports 80 percent of its energy, including 99 percent of their oil and all their coal. Furthermore, about half of the country’s energy needs are fulfilled by Russian natural gas. The IBRD has encouraged countries to diversify their energy sectors for many years. However, Russia’s invasion of Ukraine has made the situation more pressing. While energy prices rose worldwide following the invasion, prices in Moldova grew four-fold. It also shows that Moldova’s reliance on Russian energy is a national security risk as well. In recent years, Moldova has built strong energy connections to Europe. It also joined the European Union’s REPowerEU plan. The plan’s stated goals are to save energy, produce clean energy, and diversify supplies. However, Moldova needs help to speed up its adoption of all three goals. First, buildings need financing to adopt cleaner practices. Second, only about 20 percent of the country’s energy comes from renewable sources, mostly biofuels. Only 6 percent of its electricity comes from renewable sources such as hydroelectric energy, wind power, and solar panels. Third, half their energy needs are fulfilled by natural gas from one country. The country’s deputy prime minister has called for a partnership with the EU to tackle these and other challenges. Moldova, therefore, seeks a loan from the IBRD to boost domestic energy production, diversify its energy mix, and ensure its energy future is efficient and clean.

Background guide and other resources