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Contributions from
the Column
Facts and trends
World Bank Board endorses
management response
A parliament for Somalia
Common Code for the
Coffee Community
Corruption: World Bank sanctions Acres Ltd.
Development policy
and terrorism
Peaceworkers wanted
Lending guidelines overhauled
Wieczorek-Zeul pledges
German assistance
Bad marks for the IMF
10/2004
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[ World Bank ]
Lending guidelines overhauled
The World Bank will not be issuing any more structural adjustment loans. As the Bank announced in August, lending in support of policy programmes (as opposed to investment lending) will be entitled “Development Policy Lending” in the future. However, the name change does not signal an abrupt break with the past. Rather, the Bank sees it as a conceptual update, reflecting the way the instrument has been transformed in the past ten years. According to the press release, “there is no one blueprint for reform that will work in all countries.” Programmes must be developed individually according to countries' specific needs.
The Bank concedes that in the past it paid too little attention to the social and environmental impact of the policy measures it promoted. Clearer guidelines will ensure that, in the future, information will be systematically collated and assessed by staff issuing loans. The Bank promises to publish relevant studies. Other key questions on the checklist for new loans will be whether reform plans are designed to reduce poverty, whether government and authorities have the capacities required, whether the policy is locally driven (ownership) and whether the underlying macroeconomic conditions are adequate.
The concept of ownership presents certain problems, as a World Bank insider confirms. After all, borrowers in need of fresh money know what kind of “own” policies are expected of them. The Bank has announced it will review previous experience with client countries, verify the level of commitment and check the readiness of governments to let stakeholders participate in the policy measures supported. The World Bank expert concedes, however, that where ownership is thus interpreted, the fundamental dilemma is not resolved: after all the donor side decides what the recipient side should want.
Investment lending – lending linked to specific projects – will remain the World Bank's principal instrument. Development policy lending in the coming three years is to account for 25-30 percent of the Bank's total lending volume. Responsibility for ensuring that funding will not become too generous rests with the Executive Board which has to endorse development policy loans. (dem)
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