Funding increase for the World Bank means more loans and debt
The arm of the World Bank which lends money to the poorest countries is to receive an 18 per cent increase in funding over the next three years. Donor countries have pledged to give almost $50 billion. It is likely that this will include an increase in funding from the UK's Department for International Development, which was the largest single donor three years ago.
Tim Jones, policy officer at Jubilee Debt Campaign, said:
"Most money given to the World Bank is passed on to developing countries as loans, increasing debt. Loans are given even for projects which cannot create economic returns to pay the debt, such as helping countries adapt to climate change. Furthermore, if the projects the World Bank supports fail to achieve what was intended, the country concerned is still expected to foot the bill.
"World Bank funding also comes with conditions attached, often in sensitive economic areas which have had damaging consequences for the poor, and undermined decision-making processes in developing countries. Conservative party policy is 'as far as possible, to give aid as grants not loans'. Increasing UK funding to the World Bank undermines this policy."
The funding is being given to the International Development Association, part of the World Bank Group. The International Development Association gives low interest loans and occasional grants to the poorest developing countries; those with an average income per person of £750 a year.
Money is pledged to the International Development Association for three years. The latest announcement is for 2011-2013. The specific contributions of individual countries have not yet been announced.
Nora Honkaniemi, Advocacy Officer at Eurodad said:
“Donors have failed to use the momentum of the replenishment to leverage overdue changes in the World Bank. Poor countries definitely need more support, but pushing aid through the Bank will not deliver the results they need.”
ENDS
Contact: Tim Jones, Jubilee Debt Campaign, +44 (0)20 7324 4725