Donations show World Bank back in action

Donor governments rallied behind Robert Zoellick, the World Bank president, on Friday to overcome divisions among shareholders over the institution’s leadership earlier this year and contribute to a record $41.6bn (€28.8bn, £20.6bn) replenishment for the bank’s concessional loans fund.

Following a donors’ conference in Berlin, the bank said that donor governments had raised a total of $25.1bn (£12.4bn, €17.4bn) for IDA 15, the 15th triennial replenishment of the International Development Association, which starts in July next year.

The total $41.6bn is 30 per cent higher than the IDA 14 replenishment of $32.1bn in February 2005.

Delegates in Berlin acknowledged that such an increase would have been unlikely under Paul Wolfowitz, Mr Zoellick’s predecessor, who resigned following a row over his management style and an ethics scandal.

The IDA 15 negotiations, which started in March, had been boosted by Mr Zoellick’s involvement since July, a European official said. As one delegate put it: “The bank is definitely back in action.”

Britain donated £2.134bn ($4.31bn, €2.99bn) and emerged as the largest donor among the 45 countries gathered in Berlin.

The US, the largest donor in IDA 14, increased its pledge but bank officials declined to give details. Mr Zoellick said it was “substantial”, adding that Washington would retain its strong influence in the bank. Germany increased its donation by 18 per cent to €1.5bn ($2.2bn, £1.1bn).

Mr Zoellick said the $41.6bn figure “exceeds my highest expectations”. He said the figure should be seen as an “endorsement of the bank’s support for poor countries”, rather than a sign of his success as president.

Delegates said it was a clever move by Mr Zoellick in August to announce early in the IDA 15 negotiations that the bank would double its own IDA contribution to $3.5bn. “This signalled that larger donations were on the agenda,” one Asian official said.

The official added that the IDA had shown it was effective in co-ordinating aid delivery, which had become more complex within developing countries.

The donor countries are providing an even larger increase of 42 per cent in their contributions, as part of their donations are earmarked to replace past debt repayments, which were written off in 2005.

IDA’s total $41.6bn budget includes repayments of past loans to IDA for debt that was not cancelled and about $6bn in donor country money replacing the debt that was forgiven.

The funds will allow the IDA to increase substantially its grants and loans to the poorest countries, most of which go as general budget support rather than for specific projects.

About half of the $11.9bn aid flows went to African countries this year.

The increase in funding was facilitated by the rise in European currencies against the dollar, but the commitment to double aid to Africa made by the group of eight leading countries at the 2005 Gleneagles summit and the European Union’s restatement of the target to increase aid budgets to 0.7 per cent of national income has put European governments under particular pressure not to row back on aid spending.

Poverty campaigners in Britain were pleased with the financial aspects of the settlement. Cafod, the Catholic Agency for Overseas Development, said it was “delighted to see donors honour their promises”. But Phil Bloomer of Oxfam said the bank should relax some of its stringent conditions that were attached to aid.

“The UK should have held back some of its funding until the World Bank changes its spots,” he said.