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