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World Bank IDA begging for more money in Maputo

06 July 2007

Desperately seeking more funds

The World Bank International Development Association (IDA) met last week in Maputo for their second meeting on replenishment of IDA funds.

The WB concessional arm is pleading for a 20% funding increase for the current replenishment (IDA 15) compared to IDA 14. This would mean an increase in IDA funding of 26.3 billion Special Drawing Rights (about 39.8 billion US dollars). This is not an easy task and even harder in the current circumstances when the Bank is not at its strongest. 

With a rather weak dollar – vis-a-vis the Special Drawing Rights – the United Stated do not seem to be willing to make substantial increases in terms of fresh money to IDA's safe-box. The scenario in Europe is not extremely favourable to IDA either. In 2006, the UK government decided to withhold some of its contributions to IDA due to lack of progress in the implementation of the World Bank Conditionality Review which the Bank undertook the previous year. Before the end of the year, in light of new evidence provided by the Bank, the UK released the funds. However, this was a serious warning to the Bank to let them know that donors were closely watching whether they were living up to the promises made in terms of changing their use of conditionality in Development Policy Lending (DPL). Civil society organisations across Europe have also started campaigning for their governments to follow the British strategy. Although no further steps have been taken by other European governments to date, the threat remains. In addition, the latest scandals surrounding the Wolfowitz presidency have not contributed to consolidate the levels of confidence in this institution that might encourage donors to increase their contributions.

Mozambique , new IDA's success story

In the light of these foreseeable funding difficulties, the Bank has staged the second meeting of the current IDA replenishment round against the backdrop of the new "success story" in the development aid scene. In the context of the meeting, the Bank and the government of Mozambique are flattering each other for the achievements made. "Mozambique is on track to meet the Millennium Development Goal of halving poverty by 2015" said Bank officials, to which the Mozambican government responded with grateful recognition of the Bank’s role in this success: “It's not only the money, but it's money associated with knowledge and expertise, and expertise that really draws on IDA's unique feature of being a global multilateral development bank.”

However, not everyone in Mozambique or in Africa share the government statements quoted above. In the run-up to the meeting in Maputo, Afrodad (African Network on Debt and Development), concerned about the still intrusive conditionality attached to IDA grants and loans, told the Bank and main donors that "IDA must continue to give African countries a room to plan their own development agenda without threat of conditionalities. IDA support should thus strengthen the domestic policy making institutions as opposed to imposing conditionalities”. In a joint statement released immediately before last week’s official meetings, Mozambican CSOs claimed that making aid effective was very much “dependant on reducing conditionality" attached to development aid.

The World Bank can do better

In 2007 the Bank will also be reporting on their use of conditionality in partner countries, in particular the implementation of the "Good Practice Principles" agreed as a follow up to the Conditionality Review in 2005. As things stand, it seems that the World Bank prepared report will be rushed, based on inadequate consultation, and heavily biased towards the Bank’s perspective.

Civil society groups will be closely monitoring the preparation of this report, and particularly the consultations taking place over this summer in some 10 IDA-recipient countries. The 2007 report is in principle due to be published before the next IDA 15 meeting, which is to take place in Dublin in the autumn.  Now that the inefficiency and harmful effects of conditionality have been acknowledged, there is no room for complacency. The Bank needs to ensure that things really change, and they do so in practice, on the ground. In this regard, not much has been yet done. And the Bank could certainly do better.

Click here for more information on Mozambique growth.