International Development Committee Announcement

NEW PUBLICATION: DFID AND THE WORLD BANK

POVERTY MUST BE WORLD BANK’S TOP PRIORITY, SAYS COMMONS INTERNATIONAL DEVELOPMENT COMMITTEE.

The UK Government must ensure that the World Bank, a vital component in the international development system, is not diverted from its primary poverty-related objectives, says the Commons International Development Committee in its Report, published today, “DFID and the World Bank”.

Multilateral institutions, such as the UN, EU and the World Bank now receive over 40% of the Department for International Development’s total budget, amounting to billions of pounds annually. The UK contribution to the World Bank has doubled in the last two financial years and looks set to continue to rise. DFID’s overall objective is the eradication of poverty and the attainment of the Millennium Development Goals. The Report says that it is vital that all the channels DFID uses for its funding support this objective. The Bank’s core mandate is also related to poverty reduction making it a natural partner for DFID. But witnesses in the inquiry raised concerns about whether DFID and World Bank priorities were truly aligned around poverty. The Committee recommends that DFID push the Bank to assess more systematically  the impact that its policies and actions have in developing countries .

The Chairman of the International Development Committee, Malcolm Bruce says,

“As a major contributor to the World Bank, the UK is well-placed to ensure the Bank assesses the impact on development of all of its lending in a more systematic and rigorous way than at present. This would safeguard against bad spending decisions and would mean that the end result of the Bank’s activity is always linked to poverty and development.”

The Committee believes strongly that this is the single most important change in Bank practice that DFID should be pursuing if it is to justify increasing contributions to the Bank. In December 2007, DFID announced a commitment of £2.1 billion over three years to the arm of the World Bank that focuses on the world’s poorest countries.  This is the largest single UK contribution to the World Bank and is up by 49% on the UK commitment of £1.4 billion in the previous period. Given this increased commitment, the Committee urged and welcomed the decision to replace the part-time UK Executive Director of the World Bank with a full-time one. The Chairman of the International Development Committee, Malcolm Bruce says,

“If the UK is to be effective in influencing the direction of World Bank policy, it is vital that DFID has in place a full-time Executive Director and takes up other staff slots available to it in Washington-the UK cannot afford to be under-resourced at a time when its oversight of the World Bank must be as strong as possible.”

Climate change is a particularly acute challenge for developing countries. The Committee says that funding for climate change work must be both increased and streamlined and that the World Bank has a role to play in achieving both these objectives. However, the Chairman says,

“We would caution against too literal an interpretation of the Prime Minister’s assertion that the Bank should become an 'environment bank' as this could compromise its overriding poverty reduction objectives. The urgency of climate change does not lessen the blight of poverty."

The Committee is critical of the selection process for the Bank’s President. It believes that the selection of one of the most influential figures in international development should be transparent and on merit, rather than in the gift of the United States. The Report acknowledges that the UK made some effort to change the system during the selection of current President, Robert Zoellick. But the Committee says that the UK should begin work now, using its leverage as the largest national contributor to the International Development Association and to Bank Trust Funds, to change the selection process for his successor.

The Committee points out that, while the Bank has improved its record on attaching policy reform conditions to its lending, further improvements could be made to ensure developing country ownership of their own development. Malcolm Bruce MP says,

“There are no short-cuts in development.  Only thorough debate and engagement of national stakeholders by developing country governments will achieve a resilient development programme with broad domestic support. World Bank diktat is no substitute for this.”

FURTHER INFORMATION:

Committee Membership is as follows: Malcolm Bruce MP (Chairman, Lib Dem), John Battle MP (Lab), Hugh Bayley MP (Lab), John Bercow MP (Con), Richard Burden MP (Lab), Stephen Crabb MP (Con), James Duddridge MP (Con), Ann McKechin MP (Lab), Jim Sheridan MP (Lab), Mr Marsha Singh MP (Lab), Sir Robert Smith MP (Lib Dem).

Media Enquiries: Alex Paterson, 020 7219 1589, or [email protected]

Committee website: www.parliament.uk/indcom

Watch committees and parliamentary debates online: www.parliamentlive.tv

Publications/Reports/Reference Material: Copies of all select committee reports are available from the Parliamentary Bookshop (12 Bridge Street, Westminster, 020 7219 3890) or the Stationery Office (0845 7023474)