THE World Bank will link loan volume to the strength of a country's efforts to fight poverty, according to an operational directive to staff issued today by Mr Lewis Preston, the bank's president. The link between loans and poverty relief forms part of a new drive to make poverty alleviation the bank's central mission in the 1990s. The shift in priorities is also reflected in a commitment to make comprehensive assessments of the nature and extent of poverty in the third world, allowing the bank to design more effective policies to fight poverty. In the directive, Mr Preston says poverty reduction is 'the benchmark by which our performance as a development institution will be measured'. He adds that the new instructions to staff are intended to 'ensure that these policies are fully reflected in the bank's operations'. The bank is also publishing a handbook containing examples of past best practice on poverty reduction. The bank says poverty assessments should be available for most developing countries within two years. These would form the basis for a 'collaborative approach to poverty reduction by country officials and the bank'. The directive signals an attempt to impose a form of 'social conditionality' on borrowing countries. 'Stronger government commitment to poverty reduction warrants greater support; conversely, weaker commitment to poverty reduction warrants less support,' it says. Mr Preston's emphasis on poverty is a reaction to bank policies in the 1980s, when the aim was to improve economic efficiency in developing countries. The new directive says structural adjustment lending in the past decade 'overshadowed the bank's poverty reduction objectives'. The bank is also reacting to new evidence suggesting that the number of poor in developing countries will rise during the 1990s, rather than stabilise as had been expected. Poverty his judge, Page 34
The World Bank has made poverty alleviation the bank's central mission in the 1990's, according to an operational directive to staff issued today. The bank will link loan volume to the country's efforts to fight poverty. Poverty assessments should be available for most developing countries within two years. The bank, reacting to evidence that poverty will rise during the 1990's, will attempt to impose a form of "social conditionality" on borrowing countries. Governments with stronger commitment to poverty reduction will get greater support. Past bank efforts focused on improving economic efficiency with structural adjustment lending.