World Bank Assistance: Results of Operations

World Bank Assistance:A Business in Change

Looking Ahead

Overview

In fiscal 2000, the World Bank took important steps, together with its clients, to pave the way for solid progress in the fight against poverty. Every step involved partners, some old, some new, many at the country level, some at the global level.

Global Context: Recovering Economies, Persistent Challenges

Economic and financial conditions recovered sharply in 1999 from the trials of the prior two years. At an estimated 3.3 percent, world economic growth exceeded expectations, led by a strong United States economy and policy reforms in emerging market countries. Global trade recovered strongly, and commodity prices firmed. These elements will permit more "self-financing" of development by countries. The present challenge is to sustain and strengthen this economic turnaround. Global Development Finance 2000 suggests that those countries that rely more heavily on trade, are more diversified, attract more foreign direct investment, and have become more competitive are the most likely to sustain growth.

In all regions, progress is evident but obstacles remain. Africa’s advances cannot keep pace with poverty, as conflict persists and HIV/AIDS continues its ravage of the continent’s working-age people as well as of its children. Recovery in crisis-hit East Asia was better than expected, and the crisis’ social impact less than feared, but an overhang of domestic bad debt clouds the picture. South Asia continued to lead the developing world in growth but poverty remains entrenched, and conflict situations are diverting public resources. Eastern Europe is facing challenges of poverty and inequality that were unknown a decade ago. Inequality also mars Latin American and Caribbean nations’ economic and social landscape; in addition, these countries fell victim to natural disasters during the year. The numbers of poor are also rising in the Middle East and North Africa region, where, despite economic advances, high unemployment persists.

The international goal of halving the proportion of the world’s population living in absolute poverty by 2015 is attainable but difficult, according to World Development Indicators 2000 (WDI 2000; see Box 1.1; see also "The Poverty Challenge" at the beginning of this report). The report finds that the goal can be reached if economic growth resumes (and indeed accelerates) and if inequality does not increase. Progress has been uneven: While the poverty rate has fallen in some large countries, especially in China, other parts of the world have seen an increase in the proportion of people living in extreme poverty. Social indicators have generally improved over three decades but progress in many areas has been too slow to allow achievement of the international goals. And inequalities across income level and gender are often evident. In India, for example, the majority of 15- to 19-year-olds from the bottom 40 percent of households has not completed even one year of schooling, whereas the same age group from the richest 20 percent of households has completed 10 years of school. Similar patterns exist in many developing countries.

The Bank’s contribution to poverty reduction in fiscal 2000 is the subject of this overview. This section presents fiscal 2000 operational results and then outlines the wide-ranging steps taken this past year that mark the changes in the Bank’s work and set the strategic directions for the next several years. (For fiscal 2000 financial results, see Section VI.)

World Bank Assistance: Results of Operations

Fiscal 2000 was a year of lower lending volumes, sustained improvement in the quality of lending, and expanded nonlending support.

Total lending in fiscal 2000 amounted to $15.3 billion for the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) combined, significantly below the record levels of the last two years (see Table 1.1, on page 33). Having reached peak levels in the wake of the 1997—98 financial crises that hit three continents, demand for IBRD funds subsided in fiscal 2000 as global financial markets recovered and emerging market economies regained access to private capital flows. Lending to IBRD "crisis" borrowers–Argentina, Brazil, Indonesia, Republic of Korea, the Russian Federation, and Thailand–which accounted for $13 billion in fiscal 1999, was down to $1.8 billion in fiscal 2000. IDA lending also declined, although by less, which reflects the confluence of country-specific factors, largely in Asia (Bangladesh, Pakistan, and Vietnam) and in Africa (Côte d’Ivoire, Eritrea, Ethiopia, and Zimbabwe), where several countries faced conflict situations.

The year’s results attest to an increasing emphasis, in Bank assistance, on demand-driven services and aid effectiveness. In fiscal 1998—99, the Bank had responded rapidly to IBRD borrowers’ changing needs, in the face of difficult market conditions, while the recovery of financial markets explains the significant decline in lending in fiscal 2000. But the results also reflect two underlying trends characterizing the 1990s: a leveling of overall demand compared with the steady growth in the two previous decades, and within that band, greater volatility (see Figure 1.1)–both the result of increased reliance by IBRD borrowers on private capital markets. Meanwhile, in line with IDA’s increasing focus on aid effectiveness, new IDA commitments declined in fiscal 2000 in response to a deterioration in country policy performance (including governance), and other conditions that dimmed prospects for effective use of financial aid. For both IBRD and IDA countries, lower lending also reflects a trend toward smaller operations, as countries have sought more support for the social sectors, public sector management, and institution building–rather than large-scale physical infrastructure investment, where the private sector is assuming a growing role. New lending instruments that provide phased support and that promote learning and innovation–both aimed at reducing risk and building institutions to increase aid effectiveness–also imply smaller operations. Average loan size in fiscal 2000 was $69 million, compared with $93 million for fiscal 1990. Finally, the year’s lending results also reflect a strengthened emphasis on quality, in recognition of the greater complexity of operations as well as heightened concern for fiduciary frameworks–corruption-free procurement, for example–and social and environmental safeguards.

In fiscal 2000, the Bank increased its emphasis on nonlending services to enhance aid effectiveness. A wide range of advisory, analytical, training, and knowledge-related services sought to nurture improved policies, strengthen coordination among partners, and build domestic capacity to manage development programs. Bank assistance increasingly recognizes that the quality of lending is enhanced when it is accompanied or preceded by nonlending services that provide advice and knowledge. But nonlending services also have development impact when used without lending to inform the policy dialogue and to underpin the development of Country Assistance Strategies (CASs). A significant example of this relationship was the Bank’s support in fiscal 2000 to countries in the preparation of Poverty Reduction Strategy Papers, which set out country priorities and policies providing the context for debt relief or IDA lending through the CAS process.

Major themes of assistance in fiscal 2000 were anchored in the central objective of poverty reduction, with the role of the IDA–the Bank Group’s concessional lending arm–highlighted in Box 1.2 (an illustrative set of IDA-12 projects in fiscal 2000) and Box 1.3 (a retrospective of IDA-11 covering fiscal 1997—99):

• Key focal points of Bank assistance in fiscal 2000 were economic management and private and financial sector development, fundamental drivers of economic growth and poverty reduction. Aimed at attracting private investment, assistance was broad in scope and included institutional and governance reviews; financial sector assessments and other efforts to strengthen banks and capital markets; and support for stronger, more efficient public institutions, including anticorrupt judicial systems and regulatory frameworks. A sizable share of investment lending was focused on the poorest countries as well as on sectors that significantly affect poor people (for example, water supply and sanitation) but where private investment is scarce. Nonlending assistance has been important; substantial advisory services and some technical assistance were provided jointly with the International Finance Corporation (IFC) following some merging of functions in fiscal 2000 to maximize synergy across the Bank Group.

• Attention to human development remained a priority. Assistance included: multisectoral strategies to fight such killers as HIV/AIDS and malaria that disproportionately affect poor people; sustained efforts to strengthen basic health services; nontraditional approaches to delivering education services to poor people (involving the private sector or directly through scholarships); and continued emphasis on social protection through social funds and social expenditure reforms. A strategy paper on reproductive health complemented lending operations; another on social protection is under preparation.

• Environmental management was another important focus of Bank assistance. Analytical studies proposed innovative ways of improving industry environmental performance and are examining environment—health links; lending operations sought to address water supply and usage, protect forests, build institutional and regulatory frameworks, shift environmental management to the community level, and promote disaster forecasting and preparedness.

Development effectiveness has improved, according to the latest data on the quality of operational projects. Out of the projects that closed in fiscal 1998—99, the Bank’s independent Operations Evaluation Department (OED) has found that over 80 percent of dollars lent (or 72 percent of projects) achieved a satisfactory or better outcome, which reflects a steady improvement from the early 1990s (see Figure 1.2). Moreover, only 6 percent of these dollars are unlikely to produce sustainable results. Progress over prior years is notable in light of the increased complexity of today’s projects and the inherent risks of the development business. Other indicators measuring the performance of projects still under implementation show even greater improvement. The share of projects that are at risk of not achieving their development objectives has fallen steadily (see Figure 1.3); it is estimated to have declined further, to 15 percent of the total in fiscal 2000. The quality of projects entering the portfolio has also improved markedly: nine out of 10 new projects in calendar 1999 were rated satisfactory, compared with seven in 10 in calendar 1996. Improvement in the quality of ongoing projects means that billions of dollars are being more effectively used, with greater development impact.

World Bank Assistance:A Business in Change

Progress to date

The improvements in operational quality noted above stem largely from the Strategic Compact between the Bank and its shareholders to transform itself into a client-focused organization. In fiscal 2000, the Compact’s final year, progress was further consolidated. While the impact of the Compact is measurable in many areas (see Box 1.4), equally notable is its effect in moving the Bank toward a culture of listening, learning, partnership, flexibility, and innovation, in order to adapt its services to better meet member countries’ needs. A noteworthy innovation in fiscal 2000 was the policy-based guarantee offered to Argentina, which allowed the country to put forward a $1.5 billion note issued at a time of investor coolness to emerging market debt. Innovation in meeting investors’ needs, which translates into benefits for the borrowers, has also been an important objective (see Box 1.5).

Building blocks of a new vision

With a more strongly client-focused culture in fiscal 2000, the Bank embarked on new long-term efforts that could significantly improve the prospects for poverty reduction. These efforts recognize the huge scope of the poverty problem. They go beyond traditional solutions and aim at mobilizing people and institutions everywhere. Forging partnerships, fostering consensus, building awareness, and sharing knowledge, at country as well as global levels, are key themes underlying these efforts. The central challenge is to increase development impact.

In fiscal 2000, the Bank began to work closely with countries interested in piloting the Comprehensive Development Framework (CDF) approach introduced last year. This approach recognizes the multidimensional nature of the challenges in poverty reduction and the need for extensive partnership. Country pilots have made progress, but the pace and depth have been uneven due to country circumstances (see Box 1.6). Realizing the promise of the CDF will be challenging, not only for countries but also for their external partners, and it will require fundamental changes in culture and working practices. Effective and cost-efficient partnership with governments, other development agencies, and civil society will be crucial for the Bank; also important is progress on harmonization of donor policies, procedures, and practices.

As an outcome of the joint World Bank—Inter-national Monetary Fund Annual Meetings in September 1999, which followed extensive worldwide consultations, debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, launched by the Bank and the Fund in 1996, was enhanced to be made deeper, broader, and faster. These enhancements double the assistance provided by the original framework, accelerate delivery of relief, and strengthen the link between debt relief and poverty reduction. Fiscal 2000 was a year of active implementation of the enhanced HIPC Initiative framework; debt relief commitments were agreed for seven countries (Bolivia, Burkina Faso, Mauritania, Mozambique, Senegal, Tanzania, and Uganda), which will amount to $8.4 billion in nominal terms over time from all creditors. Including relief already committed to Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, Mali, Mozambique, and Uganda under the original HIPC framework, total relief from all creditors under the Initiative amounts to about $14 billion. Of this total, IDA relief is projected to provide approximately $4 billion. When completed, debt relief from all participating creditors under the HIPC Initiative could amount to more than $50 billion over time, with the Bank projected (as of June 30, 2000) to contribute nearly $11 billion of this total. When combined with traditional debt relief mechanisms, the Initiative will reduce, by more than one-half, the outstanding debt of 32 eligible countries. Only the poorest countries with unsustainable levels of debt are eligible for debt relief; delivery of complete debt relief provided under the enhanced framework follows the development of country-owned, participatory poverty reduction strategies.

At the joint Bank—Fund Annual Meetings in September 1999, ministers also endorsed a framework to strengthen the link between Bank and Fund programs in low-income countries–including debt relief and poverty reduction. Under this framework, countries receiving debt relief or concessional lending from the Bank and the Fund would produce Poverty Reduction Strategy Papers (PRSPs) before they receive such resources. This new framework is designed to strengthen country ownership of policies and programs to reduce poverty; ensure broad stakeholder participation in formulating strategies; improve coordination among development partners; and focus the combined resources of the international community to achieve results. By the end of 1999, the Bank and the Fund had agreed on an operational approach to jointly support country efforts to prepare PRSPs. To elicit broad partner support for PRSPs, they are reaching out to government officials, bilateral donors, the U.N., multilateral agencies, nongovernmental organizations (NGOs), and other stakeholders. Two PRSPs were presented in fiscal 2000 by Burkina Faso and Uganda, along with eight "interim" PRSPs, road-maps to forthcoming PRSPs that help avoid delays in debt relief and concessional lending (Albania, Bolivia, Mauritania, Mozambique, São Tomé and Principe, Senegal, Tanzania, and Uganda). A large body of new poverty-focused research undertaken for the World Development Report 2000/2001 (which updates the landmark 1990 issue on poverty) is aimed at strengthening the analytical basis for poverty reduction strategies.

Poverty-focused country assistance increasingly centers on those policies and institutional reforms that support private sector-led growth, empowerment of poor communities, and security against shocks for the most vulnerable. Reflecting these trends, CASs, the governing instrument for Bank support to a country, are evolving. For fiscal 2000, 100 percent of full CASs and CAS Progress Reports for IDA-eligible countries were disclosed to the public or are in the process of being disclosed. For IBRD-only countries, 64 percent of full CASs and CAS Progress Reports were disclosed or are in the process of being disclosed. All full CASs (for both IDA- and IBRD-eligible countries) were prepared with civil society consultation in the countries, continuing the trend of the last few years of increasing stakeholder participation in the CAS process. According to a fiscal 2000 review, CASs’ coverage of governance issues and the social and political underpinnings of reform has improved; and IDA CASs are even more focused on poverty reduction and human development. Complementing CASs are sector strategy papers, which help to identify areas of relatively weak country performance. The Board reviewed six sector strategy and related papers in fiscal 2000: Fuel for Thought: An Environmental Strategy for the Energy Sector; A Strategic View of Urban and Local Government Issues: Implications for the Bank; a Population Note (in a follow-up to the 1997 Health, Nutrition, and Population Strategy Paper); the World Bank Group Private Sector Development (PSD) Strategy; a PSD Subsector Strategy on Small and Medium Enterprises; and Corporate Governance: A Framework for Implementation.

Support from the International Development Association continues to emphasize basic social services; social sector lending is expected to be sustained at about 40 percent of total IDA investment lending in fiscal 2000—02. Governance, client participation, and partnerships are also priorities. An IDA donors meeting in June 2000 endorsed an aggressive approach to attack HIV/AIDS and other communicable diseases that account for 80 percent of the mortality gap between rich and poor countries. Donors also emphasized the development challenges in Africa as a central mission for IDA in the new century. Additional challenges for IDA-12 relate to girls’ education, rural growth, recovery from natural disasters, child labor issues, and post-conflict needs in countries whose (often) low performance ratings may not justify the level of resource allocation needed for speedy recovery. Also a priority are new approaches to governance, such as partnerships to spur knowledge sharing and dialogue; citizen surveys on corruption and service delivery; and national anticorruption strategies. Interaction with partners is crucial, especially following such new initiatives as the Memorandum of Understanding with the African Development Bank and growing interaction with U.N. agencies. Other principles underpinning IDA support are country participation and ownership; emphasis on poverty diagnosis as a first step to poverty reduction; and a strengthened allocation process that links policy performance and the adaptation of effective poverty reduction strategies to the size and nature of IDA assistance to borrowers.

In fiscal 2000, the Bank addressed global challenges that have a profound impact on poverty. Responding to requests from clients and partners, the Bank has joined many regional and global partners to help address issues that cross national borders. Support has, for the most part, taken the form of research and knowledge management, advocacy and advisory services, capacity building, global standards setting, donor coordination, and resource mobilization.

Among such global challenges, HIV/AIDS is of grave concern. HIV/AIDS is wiping out decades of progress in improving the quality of life of the poorest people, and it is worsening the prospects for economic development and poverty alleviation. Out of more than 33 million people infected, 90 percent are in the developing world, and two-thirds are in Sub-Saharan Africa (see Figure 1.4). In fiscal 2000, the Bank committed to substantially expanding the financial resources it makes available to programs, specifically to combat HIV/AIDS and other communicable diseases. To that end, it will initially make $1 billion in IDA resources available and is prepared to move well beyond that level in the future as national and regional programs are developed. In parallel, the Bank will aim to mobilize large financial sums from partners. Collaborative efforts include launching the Partnership against HIV/AIDS in Africa, and continuing to work with and support UNAIDS and other partners. In addition, the Bank is an active partner in a number of partnerships, including the Global Alliance for Vaccines and Immunization (GAVI). GAVI is a public-private partnership that aims to ensure that all children have access to existing priority vaccines and to stimulate the rapid development of critical new vaccines against diseases such as HIV/AIDS and malaria.

Regarding education, after 10 years of international commitment to Education for All (EFA), enrollment grew globally, but more than 113 million children still have no access to primary education, and 880 million adults are illiterate, most of them girls and women. In April 2000, the Bank and UNDP, UNESCO, UNFPA, and UNICEF convened the World Education Forum in Dakar, Senegal, to review the progress and renew the commitment to EFA. With 181 governments participating, developing countries agreed to prepare a national EFA plan in the wider context of poverty reduction and development strategies. The Bank and other partners stand ready to support them in implementing the plan.

Avoiding financial crisis is no longer just a national goal but one of international concern, and it has become a top priority in the Bank’s antipoverty strategy. In fiscal 2000, the Bank and the Fund worked together to strengthen financial systems and identify vulnerabilities; they completed assessments for 10 developing countries on a pilot basis, with another 24 slated for fiscal 2001. In addition, the Bank and the Fund continued to help crisis countries stem increases in poverty, and they supported noncrisis countries in diagnostic work (toward developing a long-term debt market in India, for example) and capacity building in such areas as financial supervision and securities regulation. Both institutions also collaborated with other international bodies to strengthen international standards for accounting, corporate governance, and insolvency regimes.

New global initiatives with partners are focusing on climate change and natural disasters. In January 2000, the Bank launched the Prototype Carbon Fund, the world’s first attempt to create a market in emissions reductions that would promote transfer of climate-friendly technology to developing countries. A month later, the Bank launched another effort, with international agencies, donor governments, regional development banks, and private organizations, to help developing countries better cope with natural disasters, which hurt poor people the most. The ProVention Consortium will help countries better anticipate natural catastrophes as well as assess and reduce associated risks (for example, adopting improved building codes). The consortium complements the Bank’s Disaster Management Facility, which is charged with strengthening attention to prevention and mitigation practices in Bank operations. Meanwhile, support for the world’s forests continued under the World Bank/WWF Forest Alliance, which is active in over 22 countries in partnerships with other NGOs and governments. Recognizing the urgent need for progress on environmental issues, the Bank has launched a comprehensive effort to develop an environmental strategy via a wide consultative process involving client countries and a range of partners. The strategy will build on lessons learned and explore the links between the public, private, and institutional sectors (water, forestry, urban transport, rural) and the environment.

Capacity building through knowledge sharing is key to achieving poverty reduction. Knowledge sharing increases the potential reach of the Bank’s expertise and the potential for people in the poorest countries to help themselves. The Bank is advancing this agenda through efforts on several fronts.

• Communities of practice. A central vehicle for sharing the Bank’s expertise is through communities of practice: Practitioners inside and outside the Bank come together through technology, which provides access to knowledge for large numbers of clients, partners, and users around the world. Over 100 such communities cover virtually all areas of Bank activity and serve as engines of informal learning, across clients and partners as well as Bank staff. These communities of practice also build country capacity by helping to form and strengthen local communities. In February 2000, the American Productivity and Quality Center ranked the World Bank as one of five "best-practice partners" (out of some 80 organizations worldwide) in the implementation of knowledge management.

• The World Bank Institute (WBI). The World Bank Institute (WBI) now reaches 30,000 participants annually, in nearly 150 countries, through nearly 500 training activities. In fiscal 2000, WBI scaled up its programs through distance learning, global knowledge networks, and extended partnerships, and by harnessing the newest learning technologies. A new initiative, Global Development Learning Network (GDLN), gives clients access to learning opportunities drawing on information and knowledge existing in the Bank and partner organizations. Using the Internet, videoconferences, and peer exchange, 13 GDLN centers are operational, and over 50 countries have expressed interest. Demand for assistance in developing knowledge strategies is also expanding, as countries seek to use global and domestic knowledge more effectively in support of economic and social development. Vietnam and China are among the countries that have requested such assistance, following a report jointly produced by the World Bank and the Organisation for Economic Co-operation and Development (OECD) on the Republic of Korea’s Transition to a Knowledge-Based Economy. WBI’s outreach, which contributes to the success of lending programs, is further leveraged through programs for "gatekeepers" such as journalists, mayors, parliamentarians, civil society, and the private sector, especially in such policy areas as governance and anticorruption.

• Development research. In fiscal 2000, the Bank developed a new strategy for knowledge generation through research. The strategy reflects consultations with numerous partners, including, in one survey, policymakers in 36 countries who indicated that they used Bank analytical reports more than those of any other institution, national or international. This development research strategy aims to: improve understanding of the dynamics of poverty and the factors underlying successful antipoverty strategies; increase the effectiveness of development assistance; identify newly emerging trends and problems with a view to helping countries plan appropriate responses; and help countries expand their research capacity. Four principles underpin the Bank’s research strategy: increased client orientation; enhanced building of research capacity; expanded dissemination; and a stronger poverty focus. Such a focus aims to support evaluation of public policy and preparation of PRSPs, with particular attention to the role of institutions and means by which countries can benefit from globalization. The 2000/2001 issue of the Bank’s flagship publication, the World Development Report (WDR), is devoted to poverty (see "The Poverty Challenge" at the beginning of this report). The WDR 1999/2000 on globalization and urbanization underscored the importance of strong institutions at the global, national, and local levels, while the WDR 2001/2002 will examine a range of institutional market-related arrangements, to develop concrete proposals on competition strategies and corporate governance. To build capacity and promote informed debate, the Global Development Network supports a growing worldwide network of research and policy institutes, while the Development Forum, a moderated Internet discussion that has reached over 10,000 subscribers in 175 countries, fosters dialogue between the Bank and its partners.

• Harnessing technologies. Internally and externally, the role of technology in Bank assistance is growing. State-of-the-art global connectivity has brought staff closer to clients; internal information systems have grown more efficient; and electronic knowledge sharing and collaboration, within the Bank and with partners, are thriving. Over 1,000 projects in the portfolio, many in Africa and Latin America, have information technology components, ranging from investments in communications infrastructure to technical assistance to set up management systems in various sectors. Other support is provided by InfoDev, a public-private program helping countries build information and communication technology capability. One application of technology that could advance knowledge sharing by leaps and bounds is the Global Development Gateway, currently in concept stage. The Gateway is being conceived as an Internet-based vehicle to enable a wide array of stakeholders to access ideas and good practice, information about development activities and trends, funding, and commercial opportunities. The initiative would thrive on partnership; the Bank’s role has been a catalytic one.

Partnerships: listening, learning, and collaborating

The Bank’s heightened commitment to listening and learning is perhaps best embodied in the Voices of the Poor, a series of studies that build on participatory research with about 60,000 poor men and women from over 60 countries around the world. The findings, which were used to inform the WDR 2000/2001, are striking and similar across countries. Many poor people find themselves worse off, with fewer economic opportunities and greater insecurity than in the past. Their experience with public institutions is largely negative, and corruption and poor quality services are seen to be all too common. Yet, many believe that governments have an important role to play in their lives.

The Bank’s work increasingly recognizes that progress in poverty reduction requires broad coalitions: individuals, groups, and institutions working together with a common purpose. The pages of this Annual Report attest to the vital roles of client governments, the private sector, other donor and development agencies, and local and global civil society (see Box 1.7). Extensive collaboration on the CDF pilots and on PRSPs over the past year is testimony to the centrality, within Bank assistance, of country partnership. Knowledge initiatives offer another example of partnership: WBI works with over 200 partner training institutes and 100 bilateral, international, charitable, and private sector organizations to design and implement knowledge-sharing programs worldwide. The diversity of the Bank’s partnerships in fiscal 2000 is evident from the following examples:

• The Bank and the European Union (EU) coordinated a comprehensive regional approach for economic and social development in South East Europe.

• IDA and UNICEF embarked on a new partnership to help the Republic of Yemen, where human development indicators are among the poorest in the world, to improve children’s health and nutritional status and to raise the education status of primary school-aged girls.

• The Bank and an outside panel co-hosted over 4,000 civil society leaders in Buenos Aires to help develop the Bank’s Country Assistance Strategy for Argentina.

• The Bank and the Commonwealth Secretariat joined with the IMF, World Trade Organization (WTO), EU, U.N. agencies, and regional development banks to address development issues of importance to small states, as presented in the final report of the Bank—Secretariat Task Force, Small States: Meeting Challenges in the Global Economy.

• More than 500 participants, including 200 local government officials from 77 cities, came together for the World Competitive Cities Congress hosted by the Bank, to discuss the challenges of explosive city growth. If current trends continue, a third of the world’s urban people could be living in poverty by 2025.

• A governance partnership was launched in Indonesia between the government, civil society, private sector, bilateral donors, the Asian Development Bank, UNDP, and the World Bank.

• Eminent thinkers, business people, social activists, academics, politicians, writers, and economists from Latin America came together with senior staff from the Bank, IMF, and Inter-American Development Bank (IADB) to exchange views on the region’s growth, inequality, and poverty, in the first-ever distance meeting of the region’s external advisors.

• Members of the International Task Force on Commodity Risk Management in Developing Countries (international institutions, producer and consumer organizations, major commodity exchanges, and commodity trading firms) worked with stakeholders to help countries better manage their vulnerability to commodity price fluctuations through new, market-based approaches.

• Universities, U.N. agencies, and private foundations worked with the WBI on a new course offering in population and reproductive health, to be "wholesaled" through a network of universities and training institutes in Africa.

Partnership: Mobilizing resources

Cofinancing and trust funds constitute powerful and flexible mechanisms to advance and implement the strategic agenda shared by the Bank, clients, and development partners. These mechanisms help at the country level to implement programs, and at the global level to agree on policies and mobilize financing in support of challenges ranging from prevention of infectious diseases to sound corporate governance. New program and sector-wide approaches to lending, moreover, will facilitate donor coordination in country-owned programs.

Cofinancing refers to funding committed by external official bilateral partners, multilateral partners, export credit agencies, or private sources in the context of specific Bank-funded projects (see Figures 1.5 and 1.6. Cofinancing data in this section are as presented to the Board at the time of approval; figures could be higher than reported). Official bilateral and multilateral partners continued to be the largest sources of cofinancing in fiscal 2000, providing 59 percent (see Box 1.8). Major partners included the Inter-American Development Bank ($2,576 million); private sponsors ($2,206 million); Andean Development Corporation ($900 million); Montreal Protocol Investment Fund ($230 million); Global Environment Facility ($197 million); and EU institutions ($165 million).

The Bank’s trust funds program is also an important form of collaboration and coordination with numerous partners (see Figure 1.7). Official bilateral donor agencies still finance most trust fund partnerships with the Bank; at the same time, the Bank is increasingly reaching out to new partners–private sector, foundations, and NGOs–as a way of leveraging its own financial and staff resources (see Box 1.9). The strategic agenda for trust funds has grown, and now includes new global and post-conflict collaborations that respond to urgent needs. While Japan, the Netherlands, and Canada provided the largest share of external contributions during fiscal 2000, the Bank Group’s own contributions totaled $414 million, mainly for HIPC and post-conflict operations. Support for global and regional trust funds increased through additional contributions for existing funds as well as the creation of new trust funds such as the Prototype Carbon Fund (about $140 million mobilized).

Looking Ahead

The Bank has come far in transforming itself to be more responsive to the needs of people in the developing world; but the task ahead is daunting. The fight against poverty entails a host of formidable challenges, including: combating HIV/AIDS; finding ways to ensure that debt relief reduces poverty; ensuring that the poorest countries have the opportunity to benefit from globalization; narrowing the "digital divide" to make technology work for poor people; ensuring them opportunity rather than charity; meeting the international goals for education and especially girls’ education; and breaking the disturbing trend of rising inequality across and within nations. Africa will require particular attention within IDA’s program to address post-conflict issues and arrest the spread of HIV/AIDS.

The activities described in this overview, and generally in the Annual Report, reflect the evolving strategy of the Bank to help countries fight poverty. The core of Bank assistance will continue to be implemented at the country level, with increasing emphasis on the principles of country ownership, long-term and comprehensive development, wide partnerships, and a focus on outcomes. Private sector-led economic growth–necessary for increased opportunities for poor people–will remain a central theme of Bank assistance. This economic growth must be complemented by greater empowerment of poor people through community-driven development efforts, to increase their voice in decisionmaking and to reduce inequality. The poorest countries, with weak access to other capital, will receive IDA, and in some cases HIPC, assistance, which will focus especially on human capital and on attracting private investment. In middle-income countries, home to over 2 billion people who live on or under $2 a day, the emphasis will be on promoting private sector development, supporting key public investments or social programs that would otherwise be unfunded by private or public sources, and meeting crisis needs. Wherever poverty challenges require action at the global level, the Bank will capitalize on its advantage as a global institution to play the role of advocate, advisor, catalyst, coordinator, or financier as needed.

The vision embodied in the Comprehensive Development Framework (CDF) offers the chance for solid progress in this first decade of the 21st century. For the Bank, it will mean an intense focus on listening, learning, and partnerships. It will also mean an intense effort to sustain the momentum and spirit of the Strategic Compact, to continuously innovate and improve responsiveness to clients, with an emphasis on results, especially poverty-related outcomes. Finally, the development challenge will have to be tackled by the countries themselves, responding to the call of President Mkapa of Tanzania at a meeting in Stockholm to assess progress on the CDF: "Our people must be encouraged and facilitated to be owners of their development; not just beneficiaries, but doers of development."