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NGOs Want Reforms Tied to New World Bank Funding

Matthew O. Berger

WASHINGTON, Dec 14 2010 (IPS) - With the World Bank expected to announce a new funding package for the world’s poorest countries Wednesday, NGOs are making a last-minute appeal to donor countries to use their leverage to compel reforms at the institution.

The agreement, being finalised in Brussels, will set the resources available to the International Development Association (IDA) for the period between July 2011 and June 2014. This “replenishment” round is held every three years, and Wednesday’s announcement will follow a year’s worth of negotiations between Bank officials and government representatives, all of which have been closely monitored by NGOs.

“We do support an IDA replenishment but we think it would be a missed opportunity if donors did not use their leverage for change,” said Oxfam spokesperson Elizabeth Stuart.

Donor governments are expected to be somewhat stingier this time around due to the economic crisis and waves of austerity measures, but, says Stuart, that bleak economic situation should be all the more reason for thorough tracking and transparency of where IDA funds go and what they accomplish.

“It is the responsibility of donors to ensure the Bank is spending the money effectively during the recession,” she said.

The Bank’s case for replenishing IDA’s coffers rests on what it sees as the fund’s successful track record over the past decade, particularly in helping to spur economic growth in many poor countries before the economic crisis rolled back some of that progress.

A generous replenishment package would allow that work to continue and expand, said Axel van Trotsenburg, vice president of the Bank unit that oversees IDA.

“Assuming current demand patterns continue,” van Trotsenburg said in a statement Sunday, “a robust IDA replenishment could allow IDA to support the immunisation of as many as 116 million more children, training and recruitment of 1.2 million teachers, and provide health services to 18 million more people, including 1 million pregnant women.”

IDA, which turns 50 this year, provides interest-free loans and grants to the world’s poorest 79 countries. India was by far the largest recipient of funds in fiscal year 2010, though about half the 79 countries are in Africa.

Stuart and other NGOs representatives recognise the importance of IDA and its 234 billion dollars of assistance.

“It is often the only source of funding for ‘donor orphans’,” she said, referring to countries that are being overlooked by rich countries’ development aid. “And because IDA is such a large pot of money the Bank is often able to fund sectors other donors ignore – unsexy sectors – as well as regional programmes that span several countries.”

She says that all indications are IDA replenishment will remain at about the same level, in real terms, as was agreed in 2007.

For its part, IDA has scaled up its work in the past 10 years, increasing its lending and grants from 4.4 billion dollars in 2000 to 14.5 billion in 2010.

The Bank also points to reforms that have tried to track the results this lending has had.

But Oxfam’s Stuart says the reforms have not yet gone far enough.

“The Bank talks a lot about tracking results but this tracking is often too technical and doesn’t include the right indicators. People can’t really understand it. We need something very simple that both taxpayers and people in poor recipient countries can understand,” she said.

Not all NGOs are as critical of IDA’s progress on openness, though. InterAction, an alliance of U.S.-based NGOs of which Oxfam is a member, has many other members that are much more positive about the replenishment process, said John Ruthrauff, director of international advocacy at InterAction.

Though there are certain reforms InterAction would like to see implemented, Ruthrauff is hopeful the Bank is starting down that reform path, as indicated by the Bank agreeing to inform InterAction and other civil society organisations, in writing, of the changes made to the draft IDA replenishment report.

“This is a very important step because the Bank never tells civil society whether or not their input had any impact,” said Ruthrauff.

That draft report was released in November and does include some reforms along the lines of what NGOs have sought.

The European Network on Debt and Development, or Eurodad, a coalition of European NGOs, welcomed the draft’s focus on such issues as improving aid effectiveness and the measuring of results.

But it cautions that such commitments might not mean quite what NGOs hope they mean. It notes that the “results” the Bank seeks to focus on include not only poverty reduction but a “reduction of regulatory obstacles to private sector development”.

One significant reform that will certainly take place this year, though, is in who the donors are.

In reforms of World Bank governance that were agreed earlier this year, member states agreed for the first time to tie the number of voting shares a country has on the Bank’s board to that country’s contributions to IDA, as well as other factors.

The U.S., Britain and Japan are currently the largest IDA donors, but the number of donors has increased from the original 17 in 1960 to about 50 this year. Some of those include former IDA recipients who are now willing and able to accelerate repayments on their loans as they approach middle-income status.