UK could reject World Bank funding plea

05/10/2009 | Phil Thornton

The UK, the World Bank’s largest donor country, yesterday threatened to boycott the bank’s appeal for extra capital unless its management reforms the way it distributes aid.

Douglas Alexander, the UK Development Secretary, said in Istanbul yesterday that he wants to strike a “broad deal” at the Spring 2010 meetings that linked extra resources with improved representation for poor countries at the Bank.

His comments echo the warning from senior US politician Barney Frank who has threatened to withhold funding from the bank.

Speaking on the sidelines of the Annual Meetings, Alexander said he wanted to “close the gap” between the bank’s commitments to provide money and its actual disbursements.

“We have an open mind on the resource requirements of the bank, and the need to be sure that new resources would be matched by fundamental reform,” he said. “These will be the discussions I will be having with [bank president] Bob Zoellick to try to establish common ground.”

Alexander said that there were still issues around conditions that the bank attached to its programmes, and contrasted these with the speed and absence of conditions attached to IMF programmes. “If you look at the success that the IMF has enjoyed in getting money out of the door recently, then there are opportunities for a better understanding,” he said.

Earlier this week Axel van Rustenburg, a World Bank vice president, told Emerging Markets that the bank would push for an “ambitious” new three-year round of funding to help tackle problems in the world’s poorest countries, and may even call for a short-term cash injection this year.

Meanwhile Vinod Thomas, who is in charge of evaluating the World Bank’s activities, said he had embarked on a “real time” assessment of the institution’s post-crisis activity.

Thomas, director general of the Independent Evaluation Group (IEG), said its response to this crisis compared well with previous events, but said the IEG was monitoring progress closely.

“The speed and volume of the World Bank group response really is much bigger than ever,” Thomas told Emerging Markets, citing figures showing total commitments had risen to $59 billion in the year to June from $38 billion the previous year.

He also said the bank has learned from mistakes made in previous crises, of leaving social and anti-poverty programmes towards the end of its anti-crisis interventions.

But he said he was concerned that the bank should include considerations of climate change – what he called the third leg of the current crisis – in the way it responded to appeals for help from low- and medium-income countries.

“The three are connected,” he said. “But the third one is the most dangerous. It is seen as a long term but if you have people on the ground they will tell that [climate change] is something they have seen before.”

Thomas said the IEG would publish a memorandum in December outlining its conclusions on the bank’s activities over the previous six months. It will follow this up with in-depth reports by June 2011.

“This is a prospective evaluation,” he said. “You might have an idea of what results a programme should produce and then look at what is actually going and put up, red, yellow or green flags.”

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