Export Credit

World Bank press backgrounders

January 1, 1995

World Bank Backgrounder #57 September 19, 1996
World Bank misleading U.S. Congress and taxpayers, says new report

The world’s largest development institution, the World Bank, is misleading U.S. Congress and taxpayers, according to a new study released by the Canadian environmental group, Probe International. The report, The World Bank’s Procurement Myth [PDFver here] , takes the Bank to task for claims that its loans to Third World nations are good for the American economy because they provide billions of dollars in jobs and contracts for U.S. firms.

The Bank began making the claims last year after the U.S. Congress proposed slashing U.S. funding for the Bank’s soft-loan window, the International Development Association (IDA). To counter the Congressional threat, the Bank launched an expensive public relations campaign to portray investments in IDA as the “deal of the century” for the United States.

But according to the new study, the U.S. contributes more than three times as much money to IDA as it receives back in contracts for American businesses. With American firms getting approximately 23 cents in procurement contracts for every dollar U.S. taxpayers contribute, IDA provides few net economic benefits for the American economy, says the report.

Moreover, says the report, the Bank’s public relations campaign was a dismal failure. After a year of tense negotiations, the U.S. has decided not to commit any new money to IDA in 1997, and may not even clear the almost US$1 billion in arrears it owes the beleaguered aid institution.

The world’s largest development institution, the World Bank, is misleading U.S. Congress and taxpayers, according to a new study released by the Canadian environmental group, Probe International. The report, The World Bank’s Procurement Myth, takes the Bank to task for claims that its loans to Third World nations are good for the American economy because they provide billions of dollars in jobs and contracts for U.S. firms.

The Bank began making the claims last year after the U.S. Congress proposed slashing U.S. funding for the Bank’s soft-loan window, the International Development Association (IDA). To counter the Congressional threat, the Bank launched an expensive public relations campaign to portray investments in IDA as the “deal of the century” for the United States.

But according to the new study, the U.S. contributes more than three times as much money to IDA as it receives back in contracts for American businesses. With American firms getting approximately 23 cents in procurement contracts for every dollar U.S. taxpayers contribute, IDA provides few net economic benefits for the American economy, says the report.

Moreover, says the report, the Bank’s public relations campaign was a dismal failure. After a year of tense negotiations, the U.S. has decided not to commit any new money to IDA in 1997, and may not even clear the almost US$1 billion in arrears it owes the beleaguered aid institution.

In recent years, IDA has come under fire from environmental groups and lawmakers who argue that its loans often do more harm than good to Third World environments and economies. These criticisms have been confirmed by internal World Bank reports, like the recent Operations Evaluation Department review which found that one-third of Bank projects do not make “an acceptable contribution to development.”

The Probe study concludes that because of the World Bank’s record of failed projects and its risky loan portfolio, “donor countries should reject the public relations pitches that accompany the World Bank’s increasingly desperate search for new funds and refuse to commit their constituents’ tax dollars to IDA in 1997 and beyond.”

-30-

World Bank Backgrounder #56 February 12, 1996

Canada’s Export Development Corporation and World Bank Made Accident Prone Guyanese Gold Mine Possible:
Do the Third World’s Environment a Favour, says Probe Intern

Categories: Export Credit

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