Spring Meetings: Walk in the park or progress for the poor?

World Bank / IMF Spring Meetings must drive progress on debt and aid

April 18, 2006, Washington, DC – As the Spring Meetings at the World Bank and International Monetary Fund approach, things are eerily quiet at the international financial institutions. The Bank, Fund and rich country shareholders are hoping for a relaxed and noncommittal meeting compared with last year’s historic drive for debt cancellation and increased foreign aid. But international aid agencies and anti-poverty campaigners will not allow a return to business as usual.

“We’re keeping up the pressure on the Bank, Fund and rich country donors,” said Max Lawson, policy advisor for Oxfam. “The story of 2005 was promises from rich countries to increase their aid. The story of 2006 is whether these promises will result in real money to fight poverty and not aid increases based on clever accounting, politics and naked self interest.”

Despite the global focus on ending poverty, aid increases in 2005 did not reach the poorest people in the world. In fact, more aid ended up in Iraq than in Africa. Aid rose by $27 billion last year, but $23 billion of this increase was made up of export credit and other write-offs. Iraq received the majority of this money, scoring a debt write-off of $12 billion. Meanwhile key financing mechanisms such as the Education for All Fast Track Initiative remain under-funded meaning 100 million children in poor countries are denied an education.

To make matters worse, aid does not always reach the poorest people. Increases in recent years have often been wasted on expensive technical assistance like consultants. World Bank figures show that the same amount of money needed to hire a consultant for 100 days would pay 100 teachers for a year. On average, donor governments spend a third of their aid on technical assistance and this proportion is rising.

Flexible, long-term aid is vital to financing poverty reduction. One major problem facing poor countries is a desperate shortage of trained teachers and health workers. Two million teachers and four million health workers are needed immediately. Predictability of aid is key – poor countries cannot plan effectively for workers’ salaries and training without knowing that aid flows will be secure and support recurrent costs.

“Rich country leaders stood up and said they wanted to put children in school and save people from preventable diseases,” said Lawson. “What is the World Bank going to do to systematically embarrass donor governments that do not improve the quality of their aid in coming years?”

Corruption and governance must also be addressed to effectively fight poverty. World Bank President Paul Wolfowitz has recently come out with a plan on corruption and Oxfam welcomes his focus on this critical issue. Of particular importance is Wolfowitz’s spotlight on the bribe-givers and tackling the massive incentives to corruption represented by multi-national companies.

“Though the World Bank is the only development bank that publicizes its blacklist of corrupt companies, we hope that Wolfowitz’s new plan results in even more aggressive efforts to expose the bribe-givers who grease the wheels of corruption and rob the poorest people,” said Bernice Romero, advocacy director for Oxfam. “If Wolfowitz and the World Bank are truly committed to reducing corruption, there must be mutual accountability between rich and poor countries, donors and developing nations, the Bank and those who receive their aid.”