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Reforming World Bank Conditionality. Conditionality Aimed at US Congressperson. – US should exert influence to make conditionality universally binding,

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Presentation on theme: "Reforming World Bank Conditionality. Conditionality Aimed at US Congressperson. – US should exert influence to make conditionality universally binding,"— Presentation transcript:

1 Reforming World Bank Conditionality

2 Conditionality Aimed at US Congressperson. – US should exert influence to make conditionality universally binding, whilst improving the quality of conditions and curtailing its own power. – Revisions can be legitimate and voluntary, as they serve the interests of all parties. Conditionality is necessary. Main problem: Lax enforcement. Loans often renegotiated or extended. Due to: – Structural incentives. – Donor pressure.

3 Reforming Conditionality 1)Reforming structural incentives Stimuli to meet lending targets (mandate, defaults). -Solutions: Tie career advancement to ‘profitable’ lending. Accelerate trend of empowering borrowers. More clarity: decrease their overall number. Positive effect: addresses result inconsistency criticism, making conditionality more acceptable.

4 2) Reforming donor pressure US influence Conditionality used as a tool for political leverage: US allies more likely to obtain further aid irrespective of macroeconomic performance. Solutions: – Bind all borrowers. In conjunction with structural reforms. – Reduce US influence: no emergence of unilateral agenda. Voting power shift to reflect current power patterns. Find alternative funding sources to lower dependence. Fill presidential post on rotational (regional) basis. E.g. UN SG.

5 How to convince the US? Voluntary curtailment of authority seems self- damaging. But global balance of power is shifting: US must find new ways to lead the world while it retains position of strength. Aid conditionality is an essential component of the Bank. – Successful reform can set important precedents with spillover effects for global governance.

6 Any Questions?


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