NCPA - National Center for Policy Analysis

Bush's Proposal For World Bank Grants

July 31, 2001

President Bush has proposed that the World Bank furnish poorer countries outright grants tied to performance, rather than loan them money. The World Bank -- which critics say has a dismal record of collecting on its loans -- is opposed to the idea.

The bank argues that grants will deplete its resources unless there is an immense infusion of new funding -- $800 million more each year from the U.S. alone.

  • Some $500 billion in aid has flowed through the World Bank over the past 50 years.
  • By the bank's own reckoning, less than one in three of its sponsored projects in the poorest countries yields satisfactory and sustainable results.
  • Forty-two needy countries now carry a load of $175 billion in official debt they are clearly unable to repay -- and have nothing to show for it but a 25 percent decline in their standards of living since 1980.

Critics surmise that the bank harbors a well-founded fear that, with grants, it will have to account for the effectiveness of programs.

That responsibility could transform it from being an elegant banker dispensing large volumes of largesse to being a gritty development agency with a demanding workload, observers point out.

Source: Adam Lerrick and Allen H. Meltzer (Gailliot Center for Public Policy at Carnegie Mellon University), "The World Bank Is Wrong to Oppose Grants," Wall Street Journal, July 26, 2001.


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