World Bank struggles to meet $39bn aid target
Saturday, 11 August 2007
David Pilling from Tokyo and Richard McGregor from Beijing, FT Syndication Service
The World Bank faces "an uphill task" persuading donor countries to meet its fundraising target of $39bn for the International Development Association, the bank's concessionary lending arm that provides funds to the world's poorest countries, Robert Zoellick, its president, said yesterday.
In a briefing in Tokyo, Mr Zoellick said factors including budget constraints, taxpayer resistance and a weak US dollar and Japanese yen made the current three-year round, which closes in December, very difficult.
"Part of my job is to explain why IDA is important. What tends to sell aid is if you can show it has a direct connection for the country or a particular problem or a disease. But IDA is the general fund," he said.
Japan had cut its IDA pledges sharply, from 18.7 per cent of the total six years ago to 12.28 per cent now, pushing it into third place behind the UK. Mr Zoellick said he was trying to persuade Tokyo not to cut further.
Overall, Japan's overseas development aid had shrunk 38 per cent in six years. By some calculations Germany and France could overtake Japan as aid donors by next year, pushing the world's second-biggest economy into fifth place, a World Bank official said.
Apart from budgetary constraints and currency depreciation in the US and Japan, which make buying each "special drawing right" more expensive, the round is complicated by previous debt forgiveness pledges. Poor countries have been allowed to skip about $6bn (£3bn, €4.4bn) in IDA repayments, which would normally have been reinvested.
One positive, if largely symbolic, development was that China for the first time had indicated it might be willing to pledge funds, Mr Zoellick said. Jin Renqing, China's finance minister, had said he wanted to attend an IDA donors' meeting in November in Dublin.
"This is China being a responsible stakeholder in the world of IDA support," Mr Zoellick said.
The Ministry of Finance in Beijing declined to comment yesterday, but an official familiar with the issue said the State Council had not yet approved participation in the IDA round.
China received $1.67bn of aid in 2004, according to the OECD, making it the seventh largest recipient, although that will decline as aid from Tokyo ends. As it has become richer and its global interests more important, China has begun using aid as a diplomacy tool, especially in resource-rich Africa but also in Asia.
China has given direct grant aid, provided infrastructure, and also offered large concessionary loans to many countries, sometimes directly tied to resource projects.
The total amount of Chinese aid has not been quantified, but an official familiar with its policies said yesterday "there's more going out than coming in".
The World Bank faces "an uphill task" persuading donor countries to meet its fundraising target of $39bn for the International Development Association, the bank's concessionary lending arm that provides funds to the world's poorest countries, Robert Zoellick, its president, said yesterday.
In a briefing in Tokyo, Mr Zoellick said factors including budget constraints, taxpayer resistance and a weak US dollar and Japanese yen made the current three-year round, which closes in December, very difficult.
"Part of my job is to explain why IDA is important. What tends to sell aid is if you can show it has a direct connection for the country or a particular problem or a disease. But IDA is the general fund," he said.
Japan had cut its IDA pledges sharply, from 18.7 per cent of the total six years ago to 12.28 per cent now, pushing it into third place behind the UK. Mr Zoellick said he was trying to persuade Tokyo not to cut further.
Overall, Japan's overseas development aid had shrunk 38 per cent in six years. By some calculations Germany and France could overtake Japan as aid donors by next year, pushing the world's second-biggest economy into fifth place, a World Bank official said.
Apart from budgetary constraints and currency depreciation in the US and Japan, which make buying each "special drawing right" more expensive, the round is complicated by previous debt forgiveness pledges. Poor countries have been allowed to skip about $6bn (£3bn, €4.4bn) in IDA repayments, which would normally have been reinvested.
One positive, if largely symbolic, development was that China for the first time had indicated it might be willing to pledge funds, Mr Zoellick said. Jin Renqing, China's finance minister, had said he wanted to attend an IDA donors' meeting in November in Dublin.
"This is China being a responsible stakeholder in the world of IDA support," Mr Zoellick said.
The Ministry of Finance in Beijing declined to comment yesterday, but an official familiar with the issue said the State Council had not yet approved participation in the IDA round.
China received $1.67bn of aid in 2004, according to the OECD, making it the seventh largest recipient, although that will decline as aid from Tokyo ends. As it has become richer and its global interests more important, China has begun using aid as a diplomacy tool, especially in resource-rich Africa but also in Asia.
China has given direct grant aid, provided infrastructure, and also offered large concessionary loans to many countries, sometimes directly tied to resource projects.
The total amount of Chinese aid has not been quantified, but an official familiar with its policies said yesterday "there's more going out than coming in".