Fostering Impunity or Accountability? Sweeping Changes at the World Bank-IDA

By Nancy Alexander

January 2010

Summary 

This paper describes:

1) the World Bank’s financial response to the global economic crisis, particularly the fact that, from fiscal 2008 to fiscal 2009, disbursements to middle-income countries doubled, while assistance to low-income countries remained flat.  Although low-income countries are innocent victims of multiple crises -- food, fuel, financial, and climate -- most of them cannot afford stimulus packages and risk losing another decade of development.  Despite their growing debt burdens, the World Bank offers them more loans than grants.

2)  how the World Bank is providing much higher levels of financing for many member countries while taking less responsibility for environmental and social outcomes.  In launching its operations, the Bank is required to take responsibility for the impacts of operations by complying with its own environmental and social “safeguard” policies.  However, the safeguards only apply to project investments, not to development policy operations (successors to structural adjustment programs). 

The problem is that the Bank is ramping up financing for development policy operations to which environmental and social safeguard policies do not apply.  Meanwhile, it is diminishing the level of project investments to which these policies do apply.  The Bank also plans to revise and/or retire environmental and social safeguard policies that have been developed over decades. 

3) how the International Development Association (IDA) is moving higher levels of assistance to needy countries relative to countries that are “good” performers, as defined by a World Bank’s scorecard.   The shift of IDA resources to needy countries is being facilitated by the creation of a new “crisis response window” (CRW) and by new ways of calculating each country’s level of indebtedness.

4) the findings of the IDA’s recent Mid-Term Review (MTR) with regard to the institution’s track record on its gender action plan (GAP) and climate change programs. There are significant problems with the GAP.  For instance, it focuses on promoting policies that often disempower women (e.g., through deregulation of labor and private provision of services).  Also, the GAP shows a strong preference for financing gender-related studies and assessments rather than operations in client countries, which could (ideally) empower women.  Regarding climate, the MTR found that the institution is making satisfactory progress toward financing adaptation and mitigation programs in low-income countries.  However, the proliferation of well-endowed, World Bank-managed climate facilities undermines the funds of the UN Framework Convention on Climate Change (UNFCCC), which are more democratically managed.

The IBRD is seeking a general capital increase (GCI) and IDA is seeking funds for its 16th replenishment.   As governments and citizens’ groups consider these requests, they should take the above issues into account.

Please click here for the full report (pdf).