Conditionality: two steps forward, two steps back

26 July 2004

The World Bank’s forum on conditionality was held at the World Bank Conference Centre in Paris in early July. The majority of participants were representatives of bilateral and multilateral aid agencies. The two NGO representatives in attendance (ActionAid and SAPRIN) reported that no significant outcomes were noted or decisions taken.

At an ActionAid seminar on conditionality in late June in London, Harold Bedoya of the Operations Policies and Country Services team at the Bank made a presentation analysing trends in adjustment lending and conditionality. He argued that the focus of Bank conditionality has shifted from industry and infrastructure to a more pro-poor policy agenda. Less emphasis is being placed on public enterprise restructuring and privatisation conditionality and more on reform of legislatures.

In his view, the focus of Bank and Fund conditionality in low-income countries has shifted over the past few years with the average number of structural policy conditions under IMF-PRGF arrangements and reviews decreasing sharply. In parallel, the Bank has expanded structural conditionality beyond its core areas – governance, regulatory reforms and poverty reduction strategies – to civil service reform and financial, social and rural sectors.

The UK’s Department for International Development (DFID) are still working on their policy paper on conditionality aimed at the IFI annual meetings early October. At the same time, DFID will release the final version of its institutional strategy paper on the World Bank. During consultations, DFID was urged to put pressure on the Bank to streamline conditionalities in line with the recent Fund exercise.