IFI governance


Bank reform: what’s new?

15 April 1998

In April the Bank’s Board discussed a progress report on the Strategic Compact: Wolfensohn’s reform package agreed one year ago. The report shows some improvements, but still includes many vague promises of future action and contentions that the Bank needs to be active in new areas.

Globalization challenges

The report commits the Bank to do more on the challenges and risks of globalisation: “vulnerability to volatile international financial flows, risks of exclusion … increasing inequality and need for social protection, and heightened interest in problems of the global commons and urban pollution.”


The document promises “increased Bank leadership and solid analytical work on institutional capacity building and good governance at all levels of government.”

Performance-based Selectivity

Recognising “widespread perceptions that the Bank has too many priorities and tries to do too many things” the report says “seal of approval” lending to low-risk countries like Costa Rica should not be continued as publishing the Bank’s analysis of the economy would achieve the same effect.

The Bank also promises: “closer linkages between resource allocation and measures of performance and development effectiveness”. This supposedly objective system will require caution so as not to clash with ground-level perceptions and with the Bank’s supposedly cooperative approach to its allocation of funds. As the report states, “assessing the strength of economic policies and institutions is not an exact science.”

The Environment

The report claims that “decisions made at the institutional level helped to make the environment a successful corporate priority.”

Internal Matters

On staff accountability, and moving from the culture of approval to one of results, the report promises vaguely to “make matrix management work by further sharpening accountability and delineating the role of regions and networks”: an area of tension within the Bank at present. “Scorecard initiatives” and “a compensation system which links pay and performance” are also promised alongside Activity Completion reports for Economic and Sector Work tasks costing more than $100,000.

Future Changes

Nonlending services are expected to increase by 3 per cent annually.

Unit costs for lending and economic and sector work are expected to decline more than the targets in the CER.

A Discussion Paper on Partnerships will be discussed by the Board soon.

Sector strategy papers will be prepared in education and social protection.

Strategic Directions for FY 99-01: Implementing the Compact in a Changing Environment , March, 1998, available from the Bretton Woods Project.