By Nihal Amerasinghe and Melvie Espejo

Summarized by Tina Velasco

AIM MDM, May 17, 2010
 UNDER PRESSURE BIGGEST CHALLENGE

An EFFECTIVE & An EFFICIENT

Inside WB:
low morale
RESPONSIBLE and
NGOs and poor Global RESPONSIVE
Media management DEVELOPMENT Public
General Public
Institution Institution
Shareholder
Countries
 The World Bank/ The
The World Bank Group
Bank
• 1944 – IBRD (International Bank • IBRD and IDA Plus:
for Reconstruction & Development) • 1956 – IFC (International Finance
•Middle income & credit-worthy poorer countries Corporation)
•186 members
•Private enterprises in developing countries
•178 members
• 1960 – IDA (International
Development Association) • 1988 MIGA (The Multilateral
•Poorest developing countries (79), interest-free Investment Guarantee Agency)
loans on basic social services
•Foreign investment in developing countries
•Funded by contributions fro richer members
•167 members
•164 members

• 1966 ICSID (The International

• From 26 staff in 1946 to 8,700 Centre for Settlement of
(Washington DC and 109 country Investment Disputes)
offices worldwide) •International facilities for conciliation & arbitration
• (vs IMF’s 2360 from 146 of investment disputes
•139 members, 134 cases registered (as of 2005)
countries)*

See reading’s Appendix 2 for more details about WB’s 5

*Prof Nihal’s “IMF at a glance”
 Supreme decision-making authority
Ultimate policy makers
Board of Governors
Finance Minister/Central Bank
Governor (alternating) (186)
Meets 1x a year, joins IMF

Day-to-day operations
2x a week – policies & operations Board of Executive Directors
5 represent the top 5 shareholders – (24=5 appointed, 19 elected)
US, Japan, Germany, UK and France

WB President
Head of the Exec Board and WB
5-year renewable term (11 Presidents in the last 60 years)

*Similar to IMF
 IBRD*
•Paid up capital of 6% of voting rights from member-countries
•Short of capital, participates in int’l capital markets or issues bonds
•Uses the strength of their member shareholder equity to borrow from int’l markets
•Triple A rating, best credit terms

IDA •Direct contributions from donor countries

• Own resources (borrowers’ repayments from earlier IDA credits)
• IBRD net income contribution

No. of Employees 8700

EEs based in Dev Countries 3000

% of Employees Staff Managerial/Technical
LDCs 61% 37%
Sub-Saharan/Caribbean 16% 8%
Women 52% 26%

*Difference with IMF

 1940’s-1960’s
1960’s
1940s Infrastructure Developing
Rebuilding (Steel, Energy, Countries
Europe Transportation,
(Agriculture)
Communication)

1980’s-1990’s
1960’s-1980’s 2000’s
Private Sector
Poverty 1980’s Debt Investment in DCs MDG
Social Dimension Crisis NGOs:
of Development Environment & Governance
Gender Issues
NGOs
 John McCloy Eugene Black 1949-
Eugene Meyers 1947-1949 1963
1946-1947
•Loans for •From Reconstruction to
•Cautious reconstruction a Development
•Fiscal prudence (France $250M) Institution
& sound •Focused on steel •1956 IFC; 1960 IDA
management industry, •Focus: Rise in
•Loan proposals transport, raw productivity levels &
living standards
come with min materials
•Loans to developing
requirements •Entered the countries (transport,
•(Critics) Slow in bond market roads, dams. power
dispensing loans ($250M) plants)
immediately •(Critics) pro-US; •Stronger financial
(Board) not meeting foundation (public
offering of bonds
needs of
outside of US)
European
•(Critics) Not solving
recovery financial ills
George Wood Tom Clausen 1981-
Robert McNamara
1963 to 1968 1986
1968-1980
•“Innovative •Debt crisis
•New Mantra: A World Free
Organization” of Poverty •Rise in international
interest rates
•Economic •Social Dimension of
Development from •Weak macroeconomic
Development
infrastructure-lending to environment
thru Agriculture alleviating poverty & •Debt rescheduling of
& Rural improving distribution of LDCs
Development income
•Shift to non-project-
•Education, birth control,
(Green based Structural
health sanitation &
Revolution) Adjustment Program:
nutrition, water supply,
SAL & SECAL
•16 new environment
•1984, 1st operational
countries from •Divided Asia & Africa Depts,
manual on Environment
merged Europe & Middle
Africa East •(Critics) Capital transfer
•1968 The •(Critics) NGOs and civic approach to market
groups: “Culture of based approach to
Pearson Report
Approval”; “Pushing money” development
to unsound projects and by (Washington
over funding projects Consensus)
Barber Conable Lewis Preston James Wolfensohn
1986-1991 1991-1995 1995-2005
•Re-emergence of • WB’s effectiveness •Renewed dedication to
concern for Poverty was challenged: social development
Project failures 30%- •Learning & Innovation
•Dev agenda to
43% Loans and Adaptable
include
•Review of Bank’s Program Loans
environment &
Portfolio Management: •(Critics) US Senator
gender issues Wapenhans Report McConnell accused WB
•Loans directed to •Increased ownership of systemic corruption
agriculture and among stakeholders & hiding of an internal
thru the Participation investigation
away from energy
Fund • Meltzer Commission:
sector
•The Inspection Panel “overstaffed,
•Global ineffective,
•Simplification of
Environment Budget bureaucratic
Facility (GEF): institution”
•Country by Country
environmental approach •Anti-Corruption
Action Plan, telephone
impact of projects •15 new countries (ex
hotline,
•1988 Private Soviet Union) – 176
decentralization.
members in 1993
Sector •Heightened security
• (Critics) “50 years are
Development - concerns (China’s
enough”. “The less
MIGA staff input, the better
Qinghai Poverty
Reduction Project)
the result.”
Paul Wolfowitz Robert Zoellick
2005-2007 2008 to present
•Focused on •Six Strategic
governance Themes: Poorest
(accountable &
Countries, Post
transparent)
Conflict States,
•MDGs -- Strengthen
Mid-Income
expertise in
education, health, Countries, Global
infrastructure, Public Goods, The
energy & agriculture Arab World and
•IDA grants 21% and Knowledge &
bulk given to HIPCs Learning
•Global Dev Learning
Network and B Span
•Enhanced advisory
services to help in
capacity-building
Finding the Magic Formula
World Bank says...
Lending is the answer. (Guatemala)
A market economy is a precondition
before becoming a member or receiving
any loan.
(Reaction) Wapenhans Report, country-
by-country approach to lending
operations
(Reaction) Wolfensohn’s Comprehensive
Development Framework (CDF).
Critics Say...
The World Bank has this irritating habit of
insisting that things must be done a certain
way – their way.”- Absalom Mutere
WB’s one-size-fits-all formula failed to
consider individual differences across
countries
Reforms have compromised ownerships
Infringed on national sovereignty
No stakeholder participation (Cambodia
PRSP)
 More Harm than Good?
World Bank says...
(Reaction) Maintaining AAA credit rating will
benefit the poorest member countries
through cheap financial assistance.
We offer structural adjustment programs...
Promotion of industries (timber, mining,
fishing) and increased exports is good for
development...
(Reaction) 1.6B people do not have electricity
2.3B depend on fossil fuels, oil and coal
Environment projects represents 11.5% of
bank’s total active portfolio.
Critics Say...
WB --the world’s biggest debt collector.
Developing countries worse off with debt burden
Public debt and debt service payments eat
up the annual expenditure of national
governments
No to debt re-scheduling
Conditions attached to loans have detrimental
effects on the poor
Social sector is most affected when
spending is cut back
WB gets paid by poor country’s debt repayments.
WB has little or no concern for the environmental
effects of its projects...
Hastened destruction of ecosystems
WB should devote its resources to renewable
energy development such as solar and wind
power.
Not Good Enough
World Bank says...
(Reaction) “...weaknesses in design such
as underestimation of capacity &
political support to the implementing
agency, too much complexity, lack of
clarity...weak monitoring & evaluation
systems.”
Critics Say...
2002 84% of WB projects susceptible to
future risks (but improved to 70% in 2003)
2003 Only 72% were rated satisfactory
Most unsatisfactory is in the social sector
WB measures its staff by the number of
loans they make and not by the success of
the projects ...”
Bureaucratic, Inefficient an Unaccountable
World Bank says... Critics Say...

(Wapenhans Report) “less staff input,
the better the results”
(Reaction) Decentralized operations,
reduced manpower in 2000, adopted
measures to improve the effectiveness
of lending operations.
Growing workforce that undermines its
efficiency and responsiveness to member
countries.
Overstaffed, ineffective, bureaucratic
(Meltzer Report)

(Reaction) 1994, Information Disclosure WB should be more accountable...

Policy – release of documents on HIPCs,
PRSPs, summaries of board discussions

Publications are made available in their

official website
 Loan commitments > loan disbursements
 SAL and SECAL growth

 Focus shifted to effectiveness of aid rather than growth in

loan portfolio

 New lending instruments

 Amount of IBRD bad loans trending up 2000-2005

◦ Increase in allowance for bad debt puts a strain on WB’s net
income

 WB’s relevance rests on its ability to balance critics and be

answerable to member countries, while take care of its own
financial & governance affairs...