Rebooting the World Bank
The main multilateral lender to low- and middle-income countries is in dire need of reform. To become the extraordinarily powerful vehicle for sustainable development and disaster response that it can be, it must leverage its considerable financial firepower more efficiently and rethink the way it engages with borrower countries.
LONDON – The World Bank is on the cusp of a major transformation. Led by the United States, G20 governments have pushed it to increase support for the fight against climate change. Following recommendations by a G20-created independent panel on how to update the Bank’s financial policies to respond faster to global crises, shareholders have given it until Christmas to produce a roadmap for operational reform.
The World Bank is in dire need of a shakeup. It must leverage its considerable financial firepower more efficiently to mobilize private investors and redirect its own resources toward achieving sustainable development and other global priorities. But the reforms will be effective only if the Bank’s shareholders address the reasons why low- and middle-income countries are reluctant to work with it.
One reason, emblematic of how the Bank’s governance problems hinder its ability to respond to borrower country needs, is the slow loan approval and disbursement process. The most recent available data indicate that, on average, the World Bank takes more than two years to process a loan, from conception to the first disbursement of funds. The waiting period can be considerably longer for complex infrastructure projects.