Government officials met the World Bank in March to discuss new criteria for allocating its IDA (soft loan) resources among countries. The 20 criteria, covering macroeconomic, structural, governance and poverty related policies, define what the Bank describes as a “good policy environment”.
The new “selectivity” approach builds on analysis by Bank economists Dollar and Burnside, which argues that aid only stimulates growth in countries with liberalised trade, tight fiscal policies and good institutions. The Bank plans to increase policy-based lending to countries with good economic environments, while countries which do not match up will receive only project and technical assistance. The Bank hopes to persuade all donors to allocate aid using the same criteria, but there is opposition both because the Bank’s analysis appears simplistic and because this approach would currently freeze large loans to African countries where over half of Africa’s poor live.
Commenting on the criteria, participants were concerned that:
- the selectivity criteria are tantamount to upfront conditionality and not compatible with Bank initiatives to foster ownership, eg the Comprehensive Development Framework;
- there are too many indicators
- countries can only make a certain number of reforms each year;
- there are too few poverty indicators;
- macroeconomic indicators should not dominate the analysis and should also be aimed at poverty reduction;
- governance indicators do not pay sufficient attention to democracy, civil liberties and participation;
- data problems can prohibit sound judgements;
- consistency of assessments between countries may be difficult to achieve – the Bank should provide a clear checklist for assessing each criteria.
Contact Angela Wood at Bretton Woods Project for copies of:
- Country Assessments and IDA Allocations;
- Country Policy and Institutional Assessment Criteria;
- Draft Indicators for Assessing Post Conflict Countries; and
- meeting notes.
A critique of the Bank’s Assessing Aid report is available from Bretton Woods Project.
The Bretton Woods Project and Christian Aid are about to publish a discussion document: The Perestroika of Aid? New Perspectives on Conditionality.
An analysis of the IDA 12 Agreement is available from BIC, email@example.com