Wolfowitz passing the hat for IDA
8 December 2006
The World Bank President is trying to calm critics and raise money for the next round of International Development Association replenishment.
The December 9 Economist details some of the challenges Wolfowitz faces.
The Bank's Independent Evaluation Group's recent report Annual Review of Development Effectiveness 2006: Getting Results notes the institution's continuing difficulty reducing poverty and inequality.
The Bank's recent writing off of some Highly-Indebted Poor Country (HIPC) debt poses additional challenges. "One of Mr. Wolfowitz's early triumphs was to persuade donor countries to compensate the bank for the money it would no longer collect from its debtors," the magazine writes. "He was also assured that this compensation would come on top of, not instead of, their other donations to his institution. Next year will be the first real test of this commitment. Already, some donors have shown "a lackadaisical attitude" towards relieving the costs of debt relief."
Concerns about Wolfowitz's handling of the Bank's new anticorruption drive might furthermore dissuade donations. "At the bank's annual meetings in September, his overseers stressed the need for "predictability, transparency, and consistent and equal treatment across member countries". They will be reluctant to proffer lots more money until they are sure it will be handed out in that spirit," the Economist writes.
Funding appeals and negotiations will last through 2007.
What is Multilateral Development Bank (MDB) Replenishment?
With annual lending portfolios totaling over $22 billion, the World Bank and other multilateral development banks require assistance from their member governments to help continue financing their operations. Because many of these Bank loans to impoverished countries are low- or interest-free, have long grace periods and even longer repayment periods- sometimes up to 40 years, these banks continually need to have money injected into their coffers to fund projects that promote their institutional visions for sustainable development and poverty alleviation. This periodic allocation of funds by donor governments to the MDBs, known as replenishment, varies among the development banks and their member countries. Find out more on BIC's website.