[PEN-L:11634] FT: World Bank SAPs "Fail" The Poor

[Robert Naiman <naimanr@xxxxxxxxxxxx>]

Fire Department admits it has no plans to fight fires; spends more time setting them
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Friday September 24 1999

WORLD BANK: Projects 'fail' the poor

By Nancy Dunne in Washington

The World Bank has failed to consider sufficiently the impact of some of its
largest loans on both the poor and the environment, according to an internal
Bank review obtained by the Financial Times.

The study, which reviewed structural adjustment and sectoral loans made
between July 1997 and December 1998, found "a disconnect between Bank policy
and practice".

It concluded that, in making loans to encourage borrowing nations to change
their economic policies, the consequences on the environment and the poor
have received short shrift. Of 54 project reports reviewed, only nine made
any substantial mention of environmental consequences.

"The majority of loans do not address poverty directly, the likely economic
impact of proposed operations on the poor or ways to mitigate negative
effects of reform," the report said.

Adjustment loans promote policy changes, which are designed to reduce
inflation and current account deficits, liberalise trade, promote market
economies and reduce government intervention.

Economists assume that these policies will promote economic growth and
provide a basis for poverty reduction. Although the report did not cite
specific examples of harm done to the environment and the poor, Bank critics
have long complained that the impact of structural adjustment falls most
heavily on both.

In Ghana, for example, they say policy lending to bolster exports has
promoted logging at the expense of forest preservation. The review's
findings are particularly significant because adjustment lending has soared
as the Bank has been called on to help alleviate the fallout of the Asia
economic crisis.

In fiscal 1999, policy loans exceeded lending for projects for the first
time in the Bank's history. Of the record $29bn (£18bn) in loans passed by
the Bank's board, $15.3bn was targeted at policy lending. Asia and Latin
America accounted for $10.2bn in adjustment loans.

"Greater efforts should be made to keep the poverty focus as a central
mission of the Bank's work," the report said.

"Although the Bank in recent years tried to consult local 'civil society'
when designing loans, this has not been the case with adjustment lending,"
it found. "As a result, there has been little analysis of potential negative
impacts of reform."

A Bank spokesman said staff members had been studying the report and would
prepare clear guidelines for the economists who design the loans both for
the Bank and the International Monetary Fund."



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Robert Naiman <naimanr@xxxxxxxxxxxx>
Preamble Center
1737 21st NW
Washington, DC 20009
phone: 202-265-3263 x277
fax:   202-265-3647
http://www.preamble.org/
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