Financial Times: World Bank boosts lending to poor

By Alan Beattie in London

Published: December 15 2010 19:11 | Last updated: December 15 2010 19:11

The World Bank said it had expanded by about 18 per cent its capacity to give grants and loans to the world’s poorest
countries over the next three years.

The $49.3bn funding package for the International Development Association, the bank’s grant and soft-loan arm, will
increase the bank’s support to low-income countries despite worldwide pressure on aid budgets as the result of shaky
government finances.

Robert Zoellick, the bank’s president, hailed the three-year deal, which was agreed on Wednesday in Brussels by
representatives of the bank’s shareholder governments. “This strong level of support is a testimony to IDA’s focus on
results that bring improvements on the ground for poor people,” he said.

But while ministers have piled pressure on the bank to show that its lending and grants are effective in reducing
problems such as poverty and infant mortality, those same governments have declined to issue details at this stage
of where the money will come from.

IDA is funded partly by fresh contributions from donor governments and partly by transfers from surpluses generated
by other parts of the bank, which lend to middle- income countries and fund private sector projects. The proportion
generated by the bank’s own resources has been rising over the years, but the bank said on Wednesday that its
donor countries had not yet agreed to give a breakdown of what money was coming from where.

The UK, which did reveal its own donation, said it would be contributing £888m a year for the next three years.

Britain was IDA’s largest single contributor in the previous funding round. But, partly because of the effects of
exchange rate movements, Britain will come second to the US in donations over the next period.

The UK’s decision follows a review of multilateral aid commitments by its government. Andrew Mitchell, UK
development secretary, said Britain was a strong supporter of the bank and was encouraged by its reforms. “The
British government has pushed the World Bank to put a greater focus on results, which will deliver a greater impact
on the ground and better value for money for the UK taxpayer,” Mr Mitchell said. “In embracing this, the bank has
taken a positive step forward.”

The breakdown of donor money will have to be released in February, but campaigners said it was disturbing that
shareholder governments were not volunteering information now.

John Ruthrauff, director of international advocacy at the umbrella campaigning group Interaction, said: “It is certainly
a matter of concern if the shareholders do not want to reveal the pledges that they have made. The shareholders
need to be promoting transparency within the bank.”

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