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AFRO-NETS> Africa - World Bank - International Development Association 13


  • Subject: AFRO-NETS> Africa - World Bank - International Development Association 13
  • From: "Friends of Africa" <africa@bread.org>
  • Date: Fri, 17 Aug 2001 03:02:09 -0400 (EDT)

Africa - World Bank - International Development Association 13
---------------------------------------------------------------


Dear Friends of Africa,

If you or your organization monitors World Bank and the politics of
IDA lending activities in Sub-Saharan Africa please read the
following. If you do not follow these issues please ignore and
delete.
Thanks. Ray Almeida

***
As you may be aware, negotiations for the thirteenth replenishment of
the World Bank's concessional loan facility, the International Devel-
opment Association (IDA), are currently underway and scheduled to
conclude at the end of this year. In fiscal year 2000, Sub-Saharan
Africa received 47 percent of all IDA funding - in other words,
nearly as much as all the other regions combined. It is therefore
clear that the outcomes of the IDA replenishment negotiations will
affect Africa disproportionately.

We are writing to ask your opinion as to whether an increased replen-
ishment is desirable.

We also would like to focus on two issues that Bread for the World is
tracking, among the several that relate to this replenishment, and to
hear your opinions on them. Whether Bread for the World supports an
increase in the IDA-13 replenishment may depend in part on how the
World Bank responds on these issues.

We thank you in advance for your attention, and for taking the time
to send us your response.

1. Grants vs. Loans

This is perhaps the most controversial and most salient issue right
now. The new administration in the United States is seeking a number
of changes in the way that the international financial institutions
operate, and the shift toward grants is one of them.

With regard to the World Bank, President Bush recently called for 50
percent of IDA funding to be in the form of grants rather than loans.
This proposal was rejected by the other members of the Group of Seven
at their recent summit in Genoa. For Bread for the World and for sev-
eral of our coalition partners, the switch to increased grants as op-
posed to loans is desirable if and only if it does not result in a
depletion of IDA funds over time. The U.S. Treasury is convinced that
it need not, but European donors and World Bank officials have their
doubts.

In sum, our concerns surrounding the issue are as follows:

a.Financing: under the current system, IDA lending is partly fi-
nanced through repayment of old IDA loans. What would be the source
of funding for grants? Will donors make up the difference by increas-
ing the amounts of assistance?

b.Conditionality: Would the conditions placed on IDA-loan recipi-
ents remain the same in a grant framework? We are concerned that a
change in policy would result in the imposition of additional and/or
more stringent conditions or preconditions. We would like instead to
see a streamlining of conditions. Any conditions ought to be negoti-
ated in good faith with grant recipients to ensure ownership and the
setting of realistic goals.

c. Development partners: What provisions are anticipated within
the grants framework to articulate and ensure the participation of
all development partners, recipient and donor governments, interna-
tional organizations, and civil society in the planning, implementa-
tion and assessment of grants? Development partners should be con-
sulted at appropriate points in the loan process.

2. Social and Environmental Impact Assessments

Because the impacts of IDA loans on borrowing countries have some-
times been detrimental to poor and vulnerable groups, and to the en-
vironment, BFW maintains that social and environmental impact analy-
ses should be required for all policy lending through IDA (just as
environmental assessments are now required for some project lending).
We and other coalition partners are working with the World Bank (and
the IMF) to weigh in on the process for developing these analyses.
Some of our key concerns are:

a.Impact analysis should be executed in a dynamic process - that
is, not only before and after, but also during loan implementation. A
corrective mechanism would allow for mid- course adjustments.

b.Impact analysis should be required for policy as well as pro-
ject- related components of hybrid loan instruments.

c.The process for producing impact analysis must be open and par-
ticipatory, and involve an informed civil society. Currently, par-
ticipation in the formulation and analysis of adjustment loans is a
rarity.

d.The process should also present options and tradeoffs, not only
one proposed policy and not only mitigating measures put in place to
accompany a single policy.

In light of the above two issues - grant vs. loans, and so-
cial/environmental impact analysis - our questions to you are:

a)Do you support an increase in the IDA-13 replenishment?

b)If so, do you think such an increase should be made conditional
on the World Bank meeting a certain set of conditions, and if so,
which ones? How would this be operationalized?

c) Do you think the proportion of IDA funding provided via grants
(currently at 10 percent CK) instead of loans, should increase, and
if so, how much? Up to 15 percent? 20 percent? 50 percent?

d) Do you think that an increase in the proportion of loans should
depend on certain conditions (e.g., donor pledges of increased assis-
tance in future years), and if so, which ones? Please feel free to
answer as many of the above questions as you wish, as briefly or ex-
tensively as you wish, and to add further ideas you think important.
Feel free also to write to us if you would like further information
on the above issues or on other issues related to IDA-13.

We kindly ask that you reply by August 31, 2001, after which date we
will compile the results and gladly disseminate them back to you. We
will also keep you apprised as to the policy position we develop.

Finally, receive our heartfelt thanks for taking your valuable time
to respond to this inquiry. Balancing the potential trade-offs in-
volved in seeking what is best for the peoples of Africa is not easy.
Your collaboration is extremely important to us as we deliberate on
what position to take vis-a-vis the IDA-13 replenishment.

Sincerely,
Ray Almeida
Senior International Policy Analyst
Bread for the World

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