i

News &Notices

#11 November 1995

for World Bank Watchers

TABLE OF CONTENTS Quotes p. 1 I. 1995 Bank/Fund Annual Meetings. p. 2

A. IDA-11 Negotiations in a Tailspin p. 2 B. Reinvention of the Development Committee p. 4 C. Are Ministers of the Group of 24 (G-24) Developing Countries Smiling? p. 5 D. Where's the Beef? Progress Report of the MDB Task Force of the Development Committee p. 6 E. The International Monetary Fund (IMF) Gets More Clout p. 7 F. Role of the Bank/Fund in Post-war Reconstruction p. 8 G. The Group of Seven (G-7): Talks and Chews Gum at the Same Time p. 9

II. Wolfensohn Debut: At "Sunrise" or "Sunset" for the World Bank? p. 11 III. Congress Butchers Foreign Aid Program p. 16

A. Development Banks — especially IDA — Take a Big Hit p. 16 B. A New Development Bank for the Middle East and North Africa p. 18 C. Bill Undercuts United Nations p. 18

IV. Donors Engage Organizations of Civil Society, including NGOs p. 19

A. NGOs Advise the Consultative Group to Assist the Poorest (CGAP) — the New Microfinance Mechanism p. 19 B. Other Bank Channels for Funding NGOs p. 22 C. Interagency Group on Participation (IGP) p. 23

Attachment A: Schedule for Upcoming Country Assistance Strategies (CASs) and p. 24 Tips for Getting Involved in Your Country’s CAS p. 25 Publications p. 29

Contact: Globalization Challenge Initiative 7000-B Carroll Avenue Suite 101 Takoma Park, MD 20912 (301) 270-1000 FAX (301) 270-3600 E-mail: ncalexander@igc.org Bread for the World Institute 50 F Street, NW Suite 500 Washington, DC 20001 Phone: (202) 639-9400 FAX: (202) 639-9401

Note: This publication is prepared collaboratively by Nancy Alexander of the Globalization Challenge Initiative and the Bank Watchers’ Project at Bread for the World Institute with assistance from Ford Foundation and John D. & Catherine T. MacArthur Foundation.

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Quotes Definitions: "Poverty empowerment": The opportunity to live in poverty without federal assistance. "Plight of the second homeless": Concern for those lacking a vacation home. "Family values": The net worth of families. "Green movement": Riding a golf cart. "No interest loans": Government loans to big businesses that have no interest in paying them back. —Robert Hirschfeld, "A New Dictionary for Newt Times," The Washington Post “Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that frightens us.” — Nelson Mandela, Inaugural Speech, 1994 “There must be something sacred about the environment. If there wasn't, we would have ripped the place apart years ago.” —Prince Charles at Madingley Hall, Cambridge “Globalization of production and trade liberalization were mostly of benefit to manufactured goods, often high-tech products, but has very little impact on commodities. Yet three-quarters of Africa's work force depends on commodity production.” —Rubens Ricupero, head of UNCTAD, former Brazilian Finance Minister "The global economy of the 1950's was like the old train from Heliopolis [a Cairo suburb] to Cairo. That train stopped at every station, and if you missed one, you could always catch another. It was so slow that if you missed the fast one, you could ride your bike and catch up at the next station. If you couldn't afford a ticket, you could always ride on the roof. The global economy of the 1990's, by contrast, is like the bullet train from Tokyo to Osaka. If you miss it, it's gone — goodbye — and you can't catch up." — John Page, Chief Economist for Middle East, World Bank from Friedman, T.L., "Egypt Runs for the Train," New York Times The years pass quickly but only frighten by their speed in the backward view. These times are times for holding on, speaking out, stepping carefully between the broken crystal of a culture swept from a table filled with too much for too few. There are no excuses now and the places left to hide are visible to all... —From David Whyte, "Millennium," Fire in the Earth

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I. 1995 Bank/Fund Annual Meetings

There were three "rings" of activity under the Annual Meeting "Big Top" show: Ring #1 for ecologists was the Third Annual Conference on Environmentally Sustainable Development attended by about 1400 people engaged in some 26 different seminars. Ring #2 was for investors and corporate and government officials who were engaged in exploring the investment climate in selected countries and identifying ways government could catalyze rather than interfere with business. Ring #3 was the official Annual Meeting regalia hosted primarily by and for the government members of the institutions. The ecologists in Ring #1 were not generally included in the activities in Rings #2 and #3. In fact, Rings #2 and #3 were pretty homogenous. Some women participating in the investment seminars reported feeling like Alice in Wonderland stumbling through the looking glass. Actually, it wasn't like passing through a "looking glass" at all, but rather passing through a "glass ceiling."* [Definition: A "glass ceiling" is a barrier to higher levels of decision-making, power and remuneration above which women are generally not permitted.] The Annual Meeting resulted in a set of official responses to the Mexican crisis — namely vesting the IMF with more power and resources. Below, we question the wisdom of focusing so narrowly on managing rather than preventing liquidity crises. Official proceedings of the Annual Meeting always involve meetings of the Bank and Fund policy committees. The "Interim Committee" helps govern the IMF; the "Development Committee" helps govern both the IMF and The World Bank.

A. IDA-11 Negotiations in a Tailspin This month, negotiators are scheduled to meet in Luxembourg for the sixth (and possibly last) round of talks about the size, terms and conditions for the next three-year IDA-11 funding cycle. Talks have been thrown into a tailspin because of the uncertainty over whether the U.S. will participate in IDA-11 at all. There is no budget allocation for U.S. contributions. For the next three years, the U.S. share of IDA-11 should be roughly $2.75 billion, or $920 million per year. Furthermore, US arrears to IDA now top a billion dollars. Negotiators are discussing whether IDA-11 should have both a core fund (including the U.S.) and an Interim Special Fund (excluding the U.S.). There are difficulties associated with fragmenting IDA programs in this way. The Bank is determining the magnitude of possible transfers to IDA from IBRD net income. It needs information on the size of IDA-11 soon, so that decisions can be made about whether current lending levels can be sustained. During the IDA negotiations at the Annual Meetings, Stanley Fischer, First Deputy Managing Director of the IMF, noted that constrained IDA resources would result in tighter "resource envelopes" for countries

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supported by IMF-financed programs, with a likely result being fewer successful programs and more instability. Bank Vice President Joe Wood illustrated the kinds of trade-offs which South Asian countries would face as a result of cut-backs. Bank Vice President Jaycox emphasized that this is a bad time to cut IDA since African countries need sustained assistance now. IDA provided nearly a fifth ($2.8 billion) of the 1994 level of total, $15 billion, of official aid to sub-Saharan Africa. If IDA shrinks by one-half, then sub-Saharan Africa's share could drop precipitously. Official aid to sub-Saharan Africa has fallen by 10% since 1990, adjusted for changes in import prices and excluding aid in the form of technical assistance. Of the $4 billion in official aid to South Asia, about 40% ($1.6 billion) is from IDA. Discussions about what policies should guide IDA are proceeding despite the looming cut-back in donor funding. The negotiators are reaffirming that "reduction of poverty continues to be IDA's overarching objective...This main objective is complemented by two supporting objectives, namely economic growth, led by private sector investment, and environmental sustainability." Some Bank proposals placed before the 1995 IDA-11 negotiations have been ill-conceived. Negotiators have shot down a proposal by Bank management to shift scarce IDA resources to the fast-growing International Finance Corporation (IFC) in order to expand support for small enterprises. The IFC will be using its own resources for these purposes. Negotiators have debated the idea of using diminishing IDA resources to guarantee large private sector (primarily infrastructure) investments in borrowing countries. Unfortunately, they are leaning toward a limited use of resources for this purpose. Negotiators are reaffirming the use of the Country Assistance Strategy (CAS) as IDA's "main tool for planning its assistance programs and ensuring that they are tailored to each country's needs." Poverty Assessments, Public Expenditure Reviews, National Environmental Action Plans and other economic and sector studies are the "building blocks" for the CAS. The final IDA agreement needs stronger language calling for the active participation of organizations of civil society, including NGOs, in discussions that determine country and sector-wide policies. Such participation is especially critical in formulating Country Assistance Strategies (CAS), which establish the framework and priorities of Bank lending in each country. The CAS is a Bank document and the Bank — as well as the borrowing government — should take responsibility to engage the public in formulation of the CAS. To this end, the draft CAS should be published, widely-disseminated and discussed as is being done in Bangladesh. It is important that the negotiators are emphasizing the centrality of poverty reduction goals and benchmarks in the CAS. In the last two years, poverty reduction strategies have not been featured in the CAS. It is critical that participatory monitoring determine the costs and benefits of poverty reduction strategies for poor and indigenous people and women.

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The negotiators are proposing circumstances in which IDA would extend grants rather than loans. They are also articulating principles to shape multilateral debt reduction options.

B. Reinvention of The Development Committee The Chair of the Committee, Moroccan finance and investment minister Mohammed Kabbaj described the crossroads that his committee has reached:

While the interim committee has become a controlling body — a surveillance committee

for the IMF — the development committee has lost its influence over time...the World Bank refused to submit itself to any controlling or watchdog body...That's rather human — no one likes that.

Now Kabbaj is leading the process of reinventing the 24-member Bank/Fund Committee in order to provide policy guidance to the institutions. At their meeting on December 9, the Development Committee was addressed by the UN Secretary-General, Boutrous Boutrous-Ghali. This was a precedent. (See "F. Role of the Bank/Fund with UN in post-war reconstruction," below.) Development Committee messages. The Development Committee urged donors not to abandon IDA and discussed the risks of a diminished IDA. It also discussed the persistent problems of the "approval culture" at the World Bank. The "approval culture" has created a dynamic wherein the Bank over-invests in achieving Board approval of project proposals and under-invests in the competent implementation and supervision of the projects. The Development Committee wants to see much more attention to country-wide policies, development strategies, and implementation issues. The Communiqué calls for: • "World Bank and IMF efforts to reduce poverty...through enhanced policy dialogue with

governments, based in part on results of poverty assessments. Ministers agreed that multilateral development institutions should accelerate their investments in social sectors and poverty reduction programs."

• "...the Bank to strengthen its efforts to promote broad-based, labor-intensive growth through increasing access of the poor to land, credit and basic infrastructure."

• "...the Bank and Fund to work closely with member governments to help them improve their public finances, especially by increasing attention to funding social and economic development programs and reducing non-productive spending (including excessive military expenditures) within a framework of sustainable economic growth."

• consideration of "appropriate approaches" for a small group of heavily indebted poor countries for which debt and debt service cannot be brought down to manageable levels with the existing instruments.

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At the Development Committee's next meeting on April 23, 1996, it will consider Bank and Fund findings and recommendations on debt reduction; it will also consider the Report of the Task Force on the Role of Multilateral Development Banks which is chaired by former Bank Vice President Willi Wapenhans. (See "D" below, "Where's the Beef?") The U.S. Under Fire. U.S. Treasury Secretary Robert Rubin did his best to demonstrate commitment to IDA notwithstanding the nation's abrogation of multilateral commitments and skyrocketing arrears. The U.S. came under considerable fire for its withdrawal for multilateral cooperation. Rubin's speech to the Committee called for governments and donors to remain on the cutting edge of efforts to increase the impact of

programs on the poor, safeguard and promote internationally recognized workers' rights, and ensure economic opportunities for women. South environment policies are also an important long-term investment in people.

both institutions to work closely in developing accurate, transparent data on government

expenditures, including that for military purposes...The United States supports efforts to concentrate donor resources on those countries committed to the goal of poverty alleviation. The composition of public expenditure is a good measure of this commitment, as is good governance — i.e., accountability, the rule of law, and public participation.

C. Are the Ministers of the Group of 24 (G-24) developing countries smiling?

For the first time, the G-24 made a strong appeal to the United States to live up to its commitments to IDA. 1. Borrowers want an inspection panel, too. Some borrowers object to the Bank's establishment, in 1994, of an inspection unit to investigate Bank compliance with its own policies. Maybe they are jealous. The G-24 Ministers want independent assessments and mediation, too. There is a good chance that the Bank will, in fact, create a "client satisfaction unit." 2. How much intrusion is enough? There were mixed feelings about some recommendations of the Development Committee. The G-24 discussed how much intrusion by the international financial institutions (IFIs) is appropriate and whether the institutions have the mandate or the capacity to judge whether public expenditures are properly allocated. Some of the ministers claim that the World Bank and IMF have always wanted to control their budgets and now they are using the Social Summit Declaration as a pretext to realize this ambition. Developing countries especially resent IFI interference with their militaries. Defense spending is

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declining in all regions except for the Pacific Rim, where the Bank has little leverage or influence. According to a survey by the International Institute for Strategic Studies (IISS), military spending in East Asia rose 9% between 1992 and 1994 after inflation was taken into account. An increase is also expected this year. Defense budgets of Latin America/Caribbean and Africa total $18 billion and $8 billion, respectively. We think that the donors should "take their own medicine." The International Monetary Fund (IMF), in its surveillance of donor country policies, should underscore the need for key donors to down-size military budgets, such as those of the U.S. ($263 billion), Japan ($56 billion), France ($37 billion), or the UK ($34 billion). 3. Ownership. Many of the G-24 see a strong contradiction in the Bank's professed desire for countries to take responsibilities for sustainable development and the increasing number of economic, social and political conditionalities. Two quotes heard at the Annual Meeting follow: We must be mindful that the projects we finance are not World Bank projects — that are

Chinese, or Haitian or Malawian projects. — J.D. Wolfensohn, Financial Times, 10/11/95

We have to force them [Tanzanians] to take ownership [of their country program]. —

Senior World Bank official at meeting of the G-24 4. Explosion of Social Sector Lending...A Good Thing? LDCs want grants, not loans, for social sector investments. Or, if not grants, then concessional (low interest, extended payback) loans. Some G-24 ministers see the Bank dismantling government capacity to administer social programs with its "right hand" and reinstating social programs with its "left hand." The net result should not be increased indebtedness.

D. Where's the Beef? Progress Report of the MDB Task Force of the Development Committee

NGOs have had a series of outstanding exchanges with Willi Wapenhans and his Task Force Secretariat that reports to The Kuwaiti Finance Minister Al-Hamad and representatives of eighteen other countries. The Task Force will issue a 30 to 40 page final report at the Spring meetings of the World Bank and IMF. They characterize their recommendations as somewhere "between incrementalist and reformist" — definitely not revolutionary. It is not clear what kind of reception the report will receive from Wolfensohn, who has said that he's not waiting for someone else to tell him how to run the institution. Wolfensohn is reported as more concerned with the Bank Group's relationship to the private sector than its relationship to other official lending agencies.

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The Task Force highlights issues, such as: • The entangled jurisdictions of the multilateral development banks, the European Investment Bank

(claiming to lend three times more than the World Bank), the Lome Convention, the Arab Fund, UN agencies and major (Japanese, German and U.S.) bilateral aid agencies.

• The question of whether the manner in which the Bank invests in projects which the Bank, itself, identifies and designs represents a conflict of interest.

• Private sector development is not an end in itself. Two tests re the private sector: Is it truly additional? What is the public interest? Does it distribute benefits widely? Are negative externalities internalized? Is the regulatory framework strong and honest?

• The role of governance. Some Committee members underscore the importance of government commitment to poverty reduction. Some advise that the Bank shouldn't invest where there is corruption or a gross violation of human rights.

E. The International Monetary Fund (IMF) Gets More Clout. The Annual Meeting recommended doubling both member quotas and the Fund's General Arrangements to Borrow — a credit line on which the IMF can draw from richer members. The Fund's new size — $498 billion — will give it greater capacity to cope with liquidity crises. 1. An "ounce" of crisis prevention is worth a "pound" of the cure. Some critics claim that if the problem is Mexico-style crises, then the solution is not necessarily a bigger IMF. Instead, the solution should work towards preventing such crises rather than simply providing bail-outs. Stephanie Griffith-Jones wrote: Senior financial authorities meeting in Washington should also consider the option of

greater disclosure and/or some additional regulatory restrictions on investors, so as to help avoid very large and easily reversible surges of capital inflows to emerging markets...Though discouragement of excessive flows may pose some problems it seems far superior to either a world of frequent and costly currency crises and/or to a world where ex-post restrictions on capital outflows are imposed, as the bankruptcy code ideas suggest. In international capital flows — as in medicine — prevention is far more desirable, efficient and cheaper than curing avoidable illnesses! — October 7/8 letter to the Editor of the Financial Times

Once you've got a full-blown crisis, what to do? Who's in charge... 2. Who's in charge of crisis management? Tempers flare. Many countries deplored the unilateral approach of the U.S. to the Mexican crisis, so the Interim Committee set procedures for provision of emergency finance by the IMF. The emergency finance is intended as a "safety net" for countries with liquidity crises.

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The proposal which was rammed through over the objections of developing countries established a two-tier emergency fund. One tier is composed of the G-7, plus three other European nations and Saudi Arabia); the other tier is composed of the G-10 and surplus emerging market countries, like Korea and Taiwan. The Brazilian Finance Minister, Pedro Malan, protested the G-10 "aristocracy" and exclusion of emerging market nations. Developing countries felt that it added "insult to injury" for the "aristocracy" to be seeking the financial support of excluded countries. "Taxation without representation" is always a recipe for conflict. Some experts recommend that the special facility constitute a sort of international bankruptcy court in which countries could negotiate debt workouts with their creditors. This idea will be pursued in the months to come. 3. Extended Structural Adjustment Facility (ESAF)) to become permanent. The ESAF provides balance of payments assistance to highly indebted poor countries on concessional terms. NGOs have questioned the strict ESAF conditionality and its punitive approach to dealing with countries in arrears. NGOs have also questioned extension of the Fund's mandate into development terrain that is more appropriately the jurisdiction of the Bank. The Congress has not provided resources for ESAF and, in order to make it permanent, the Fund will need to identify bridge financing until the ESAF's repayments begin to make it self-sustaining. The U.S., among other countries, favor the proceeds from the sale of IMF gold for this purpose. 4. Information as power. The Fund's clout will also be enhanced by the new data standards set by its Board. Countries would need to provide 12 categories of economic and financial data to the Fund on a regular basis, including: foreign exchange reserves, banks' cash ratios and central bank balance sheets. Also requested will be: industrial production, wages and domestic credit data. Countries seeking access to international capital markets will be expected to publish data, such as: interest rate spreads on public sector debt and its currency composition and maturity.

F. Role of the Bank/Fund with UN in post-war reconstruction The IMF's Interim Committee accepted a proposal to extend access to its compensatory and contingency financing facility to countries, such as Bosnia, emerging from conflict. In related discussions about how the Bank and the UN should work together, Wolfensohn and Boutrous-Ghali agreed that post-conflict reconstruction will be an area for increased collaboration between the Bank, UNDP, and UNHCR. The Bank is already providing technical support for at least twelve post-conflict countries. It will issue a draft paper on post-war reconstruction shortly. Since the U.S. is financially strangling the UN, perhaps we will see the international financial institutions taking on peacekeeping next. Peacekeeping would not need to be considered a "political" activity, but rather an "economic" activity which insures the creation of an "enabling environment" for development.

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As bilateral and multilateral resources shrink, we see shifts toward financing development activities with loans, rather than grants. This shift is particularly evident in the social sectors. The implications for such shifts for debt burdens and debt servicing should be closely watched.

G. The Group of Seven (G-7): Talks and Chews Gum at the Same Time In the recent issue of The International Economy, it was noted that the currency intervention this year by key Western central banks prove that "for once the G7 can talk and chew gum at the same time." Economist Paul Krugman was less flattering: If you want a verdict on the G7 process that began at the Plaza 10 years ago, check out

The Hitchhiker's Guide to the Galaxy. Readers of the novel will recall that the Guide's entry on the planet Earth consisted of only two words: `Mostly harmless'...But Plaza did produce some great head-of-state vacation spots. —Paul Krugman, "Harmless Shmoozing," The International Economy, September/October 1995.

But U.S. Treasury Secretary Robert Rubin claims: The G7 in unique in the sense that it provides a valuable forum for a vigorous exchange

of views that can influence policies, and that can help provide direction to the world economy. No other comparable forum exists that can play this role.

In eight years, the economic output of developing countries will be greater than that of industrial nations, but the G-7 shows no signs of opening its doors to wider participation. Some observers found their October communiqué, which called for the "orderly reversal in the movement of major currencies," confounding in light of exchange rates trends. The G-7 did not venture far from the matter of exchange rate cooperation...they did not even mention IDA. At the June 1995 summit, the G-7 focused on the problems of Mexico and presented important ideas for overhauling the architecture of the international governance system. This fall, they neglected the theme of overhauling the international institutions. They have pushed toward the solutions adopted at the Annual Meeting this fall: a bigger and more powerful IMF which can provide an early warning and management of financial crises. Peter Sutherland, chair of Goldman, Sachs International (and former head of GATT and the WTO) voiced concern about the G-7 dragging their heels on its governance agenda. On October 10, he said: The G-7 was supposed to address the question of what becomes of the Bretton Woods

institutions at its Halifax summit in June, but nothing much seems to have happened. (Emerging Markets, 10/11/95, p. 12)

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Sutherland remarked that people aren't thinking enough about the need for more participatory forums for analysis and decision-making and underscored the importance of recommendation of the World Economic Council to establish a G-7-plus forum, which would include permanent and rotational members of the developing world. Shortly, each G-7 country's financial mogul, or "sherpa," will begin rounds of meetings in preparation for next summer's G-7 summit in Lyons, France. France's Chirac is reportedly keen on following up the promising recommendations of the Halifax Summit with regard to reforming the Bretton Woods Institutions.

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II. Wolfensohn's Debut:

At "Sunrise" or "Sunset" for the World Bank One senior World Bank manager reports that last spring, the Bank was about to make a 180 degree shift in its rhetoric to claim the central goal of catalyzing private sector investment. Some observers still feel that this is the only way that the Bank will become a "relevant," "sunrise" institution. Can the Bank make itself globally relevant in the long-term or does its emphasis on the

central missions of poverty alleviation and environmentally sustainable development mean its significance will dwindle, as fewer and fewer developing countries need it? Is this, in fact, a sunrise or a sunset institution? Mr. Wolfensohn will surely choose the former vision. —Martin Wolf, 10/6 Financial Times

Someday the Bank may offer a new line of products to treat the delusion that sustainable development is an automatic by-product of growth. In the meantime, Wolfensohn, has arrived at an amazingly pivotal point in the Bank's life and appears to embrace both the "sunrise" and "sunset" visions of the Bank. All eyes are watching to see whether and how he can bring them together. The segregation of visions during the Annual Meeting seminars is a stark reminder of the different forces driving the constituencies of each vision. One constituency attended the Conference on Environmentally Sustainable Development (ESD); a more powerful constituency attended the country-specific investment seminars that preceded the formal Annual Meetings. The languages, priorities and worldviews of the two constituencies are, in many senses, light years apart. Consider the challenge placed before the ESD Conference by Bank V.P. Ismail Serageldin: The pattern of existing finance to promote ESD should be changed by creating a new

regulatory framework and the right incentives to ensure that `the calculus of investment appraisal' takes account of environmentally sustainable development. This can be achieved by implementing user- and polluter-pays principles; ensuring full-cost accounting, including environmental externalities; the use of emissions permits, and ensuring that Finance Ministers see their role as not just one of raising revenues, but as sending signals to private actors to promote environmentally sustainable development.

If, at next year's Annual Meeting, investment seminars take up these kinds of challenges, then the Bank will make headway in overcoming its schizophrenia. Certainly Bank publication of Sustainability and the Wealth of Nations: First Steps in an Ongoing Journey is a step in the direction of theoretical integration of economic principles with sustainable development principles. A subsequent step should integrate the implications of the earth's finite carrying capacity for the model of growth and structural adjustment to which global economic leaders stubbornly adhere. The outcome of upcoming decisions about the International Finance Corporation's information

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policy will signal whether the actions of the World Bank Group will become more integrated and accountable or not. The World Bank Board will assess the information policy of the International Finance Corporation (IFC) on or about December 12. The IFC is the arm of the World Bank Group that lends directly to the private sector. Its portfolio is estimated to reach $8 billion in some 940 companies in about 95 countries in fiscal year 1995. The IFC has indicated that the assessment will provide an opportunity for the Board to improve — not just review — the information policy. We are counting on that being the case. Before the 12/12 Board meeting on IFC information policy, a draft report will be released which compares the IFC information policies with the more open policies of the Inter-American Development Bank (IDB) and Asian Development Bank (AsDB) and which provides case studies. It does not appear that the work of the IDB or the AsDB with private sector clients has been impeded by a reasonably open information policy. We are not aware of corporate claims that the policies of these banks have diminished their competitiveness. It is important that Mr. Wolfensohn and U.S. Treasury Deputy Secretary Summers have independently expressed their hopes that "best practice," which goes as far as "what is successful at other development banks" will prevail. We hope that this means that the IFC information disclosure policy will be amended to, at a minimum, conform with the higher standards of the Asian and Inter-American Development Banks. Wolfensohn has said that if development bank operations — including those of the IFC — don't reduce poverty, they could be part of Citicorp. But he emphasizes that when the private sector finances power, water and sanitation and other infrastructure, it saves IDA money and borrower money. Wolfensohn cautions that the role of the private sector has been overestimated and that even though private sector flows are three times the official flows, 90% of private sector flows are concentrated in commercial activities in 12 countries. There has been little central supervision of the Bank's private sector work, but Wolfensohn says that those days are over. We are told that, henceforth, someone managing the private sector work (perhaps Jemal-ud-in Kassum) will be in Wolfensohn's inner cabinet and convene monthly meeting to insure that the private sector programs are integrated with the overall country strategies. Reportedly this "kitchen cabinet" — which would replace the Managing Directors — would also include an individual to mainstream gender perspectives in Bank operations. Although many on the Bank's Board have great antipathy for the inspection panel, Wolfensohn emphasizes that he is a friend of the panel and "loves them to tell me how I can get things better." Perhaps Wolfensohn will be able to rein in the high- level Bank officials which are brazenly lobbying governments to abolish the panel. The inspection panel should be independent of management and its jurisdiction should be broadened to include the IFC and MIGA. The U.S. reportedly supports such a move and we look to it for leadership towards this end. Careful study is preceding Wolfensohn's shake-up of the World Bank. He has had one team discerning how to build partnerships to achieve sustainable development RESULTS on the ground; another has

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focused on defining the institutional framework and culture required to achieve results. A couple of years ago, the Bank decided that a borrowing country (rather than individual projects and programs) should be the primary unit for achieving development results. As a result, reviews of the performance of individual country portfolios (country portfolio performance reviews, or CPPRs) began. The one CPPR we have studied focused on whether the borrower was sufficiently competent to permit timely disbursement and procurement. We hope it was atypical. The CPPRs should review government commitment and capacity to achieve sustainable development...not just to move money. Since CPPRs are the property of the Bank, we urge the Bank to make these valuable documents public. Reportedly, Wolfensohn will up-grade the quality of the CPPR appraisal process and maintain management continuity relative to countries and lending operations. This is intended to foster individual and team accountability for project and portfolio failures and successes. The co-Deans of the Bank's Board (from the Netherlands and India) have resolved that the Board will focus more time on country assistance strategies, which provide the framework and rationale for external assistance and less time on evaluating individual credits. This should be a favorable development. [See Attachment "A" for a list of upcoming country assistance strategies (CASs).] Wolfensohn stresses that countries need an economic plan. Not chaos. He feels that it is unfair for critics of structural adjustment to put out "turgid" material, which assumes that the Bank is "totally at fault" for development failures and which gives members of Congress an excuse to cut funding for IDA. He objects to groups that take the position that, because there have been unfortunate plans, we need to throw out plans altogether. We are pleased that Wolfensohn will be taking another look at structural adjustment processes in a few countries. Transforming economic reforms need not involve throwing out economic planning. Quite the contrary, economic planning should involve and take into account the views of a broader array of actors — particularly poor and indigenous people and women. Given that building partnerships has become a key theme of Wolfensohn's presidency, it is peculiar that his advisors have not yet briefed him on the Board-approved plan to mainstream participation in Bank-supported operations. NGOs informed Wolfensohn that the Bank has six plans for mainstreaming participation — one in each region. We are delighted that he has asked his staff to select twelve flagship participation projects to closely monitor and evaluate over the course of two years. We recommend that a significant factor in determining borrower access to project preparation funds should be whether, or the extent to which, the borrowing government is committed to incorporating popular participation into project identification and planning. Currently, expenses associated with participatory approaches are not monitored relative to the project preparation funds or the core budget! Yet the Bank aspires to ascertain the cost effectiveness of participatory approaches. We also recommend that the Fund for Innovative Approaches to Social and Humanitarian

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Development be replenished with $5 million for the next year. Country Department expenses for participatory approaches to development are inordinately dependent on the Fund. Yet with great regularity, management changes its mind about whether to replenish the Fund. At press time, the tiny $1 million Fund for 1996 is expended and management is undecided the need to replenish it. NGOs are engaged in broad-based education on and advocacy for multilateral debt reduction that includes stock treatment, innovative and additional funding and non-orthodox conditionality. Wolfensohn has emphasized that the Bank is a bank and needs to be repaid. On the other hand, he sees that there are countries where "...the debt overhang remains just too great. And as it grows, new lending becomes less effective." The 40 countries which are poorest and most heavily indebted pay 48% of their debt service to multilateral creditors. Wolfensohn has taken note of the fact that some Bank publications (World Development Report and Mainstreaming the Environment) have no gender analysis while others (Investing in People) do. He is looking into the composition of the editorial board and acknowledges that many people treat gender as simply a human investment issue. Wolfensohn has been a quick study. Although some believe that he overestimates his own power and underestimates the power of governments, many staff are stunned with the extent of his grasp of the Bank's internal operations. On this front, many observers are anxious that improvements be made in quality control. Since the 1987 reorganization, the regional technical departments have been responsible for quality control in lending operations. Wolfensohn has quickly mastered an understanding of why the technical departments (TDs) have no incentive to "blow the whistle" on quality control issues. The Technical Departments contract their services "on demand" to the country departments and lose budget if they become troublesome. Meanwhile, the inspection panel, which is intended to assess the Bank's compliance with its own policy, is becoming a de facto quality control mechanism. When (as in the Planofloro case) aggrieved parties make a complaint to the panel, the Bank management has hastened to "clean up its act" in the relevant instance. On the whole, Wolfensohn seems to be moving in new and hopeful directions to create a more accountable institution. These directions are undercut by forces inside the institution; Bank management is promoting ill-conceived proposals with the IDA negotiators, or Deputies. (See "IDA Negotiations in a Tailspin," p. 7.) Hopeful developments are in very stark contrast to forces outside the institution, especially U.S. abandonment of institutional reform agendas and butchering of foreign aid.(See III. below.) Negotiations for the eleventh funding cycle, or replenishment of the IDA (IDA-11) may conclude this month at talks in Luxembourg. If IDA-11 begins next year, as scheduled, it could be half its current size. The U.S. retreat from multilateralism is creating confusion and alarm among borrowers and other donors. The abnegation by the U.S. of its international commitment will have negative repercussions throughout foreign policy and international cooperation arenas. Things could get worse though. In addition to butchering the soft loan arms of the development banks,

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the U.S. Congress could force an acceleration of grant and loan operations aimed at U.S.-style structural adjustment. U.S.-style policies are attempting to foster growth without equity or safety nets. The Bank needs "sunrise" policies that build a better world. Whatever the size of the hard and soft loan facilities of the development banks, policies which exacerbate the burdens of poor countries and of poor and indigenous people and women should not be tolerated.

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III. Congress Butchers Foreign Aid Program

For the U.S. government, fiscal year 1996 began on October 1. Congressional action on foreign aid was delayed until mid-October when, as anticipated, deep cuts were made in development programs. In contrast, programs to boost U.S. exports, control narcotics and provide military aid were protected. The Clinton Administration requested $14.8 billion in foreign aid for fiscal year 1996; Congress has passed legislation totaling $12.1 billion, which eliminated the separate allocation for Africa in the budget of the Agency for International Development and cuts assistance to Africa by about 20%. Other bilateral development aid programs were cut by about 25%, and UN programs by 24%. Spending for military assistance and narcotics control are up by 5% and 10%, respectively. Development assistance is widely considered the most irrelevant part of the most unpopular legislation on Capital Hill — the foreign aid bill. Recently, it has barely been on the radar screen as major battles rage over ideological "litmus test" issues: abortion, drug trafficking, illegal immigration, nuclear proliferation, funding for Israel, Egypt and Palestine, the merits of the UN (especially peacekeeping forces), the size and role of the State Department, support for various insurgencies around the world and so on. This year, the turf and ideological battles within Congress and between Congress and the administration are even more vicious than usual. Senator Jesse Helms is holding ambassadorial nominations and hostage until the administration capitulates to his demands that it collapse, merge and reorganize foreign policy agencies. Major power shifts have occurred during the Republican ascension in Congress. Power previously vested in Committee Chairs has shifted to the leadership of the House and Senate (Gingrich and Dole). House Republican freshmen have formed a power bloc in a way that is unprecedented. For instance, a caucus of 34 Republican freshmen sought to over-rule the Appropriations Committee Chair and include provisions in the foreign aid bill that would dismantle and reorganize foreign policy agencies. Republicans are hoping to win as many as 30 more House seats in the next election.

A. Development Banks — including IDA — Take A Big Hit President Clinton told the IMF/World Bank Annual Meeting: Restoring funding for IDA is one of our administration's top priorities because it is the

right thing to do. Of course it serves our interests, but it is also the right thing to do. It is not necessary — not necessary — for the United States to walk away from its commitment to balance the national budget. Don't let anybody tell you that it is.

Lots of people in Congress disagreed. Contributions to IDA dropped from the requested level of

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$1.368 billion to $700 million, or 48%, for fiscal year 1996 — the last year of IDA's tenth three-year funding cycle (IDA-10). Clinton is personally responsible for achieving the higher-than-expected level of $700 million. Apparently without very much coordination with the State Department or the Congress, Wolfensohn and Treasury Secretary Rubin appealed to President Clinton to intervene on behalf of IDA. During a break in the arduous, round-the-clock, House/Senate conference committee, Clinton cut a deal to increase the overall foreign aid spending bill by $125 million in order to increase contributions to IDA and the UN by that amount. The Democrats were angry that the President had settled for a mere $125 million increase, thereby undercutting their struggle for a higher overall increase in development assistance. Current (fiscal year 1995) U.S. contributions and final (fiscal year 1996) contributions to development bank facilities are as follows:

Current Level(millions of $)

Final Level (millions of $)

World Bank (hard loan) 23.0 23.0 IDA-Soft loan window 1,175.0 700.0 Int'l Finance Corp. 68.7 60.9 Global Env't Facility 90.0 35.0 Inter-American Dev. Bank Hard loan window 28.1 25.9 FSO-Soft loan window 21.3 10.0 Multilat'l Investment Fund 75.0 53.7 Asian Development Bank Hard loan window 0 13.2 Soft loan window 168.0 100.0 African Development Bank Hard loan window 0.3 0 Soft loan window 62.2 0 European Development Bank 69.1 70.0 North American Dev. Bank 0 56.2 IMF: Ext'd Structural Adjustment Facility (ESAF)

25.0 0

Although it is possible that the President will not sign the legislation (abortion-related issues remain unresolved), the negotiated foreign aid levels are expected to prevail.

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B. A Middle East and North Africa Development Bank

At the recent regional economic summit in Amman, Jordan a proposal for a new development bank for the Middle East and North Africa was approved. The bank will be capitalized at $5 billion and extend about $1 billion per year, primarily in non-concessional loans. The World Bank loaned about $1 billion to the region last year; the European Investment Bank loaned more. Most Europeans opposed the proposal. They noted that the region is served by the World Bank, the African Development Bank, the European Investment Bank, the Arab Fund for Economic and Social Development and the Islamic Development Bank. At the Amman Summit, the UNDP also launched a $2.5 million technical assistance program to help Arab States and the Palestinian Authority enter into investment and trade agreements with neighboring countries. Donor assistance is being sought for the program.

C. Bill Undercuts the United Nations The Senate has proposed cutting more than $600 million — a whopping 45 percent —

from our country's annual contributions to international organizations, including the United Nations, the World Trade Organization and the International Atomic Energy Agency. Other proposed cuts under consideration by the Senate would slash the State Department's operating budget, forcing us to close dozens of embassies and consulates around the world...Why is all this happening?

— Deputy Secretary of State Strobe Talbott at the Foreign Policy Council The U.S. may pull out of the UN Industrial Development Organization (UNIDO). Cuts are slated for the Food and Agricultural Organization and the International Labor Organization. Most of the $1.3 billion that the U.S. owes to the UN is for peacekeeping. The UN has stopped reimbursing countries which contribute troops to peacekeeping operations. UK foreign secretary Malcolm Rifkind is calling for application of the rule under which UN members which fall into arrears by more than two years lose their General Assembly vote. Mr. Rifkind suggests that the rule should be extended to the peacekeeping account as well so that there will be "no representation without taxation."

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IV. Donors Engage Organizations of Civil Society, including NGOs

The Consultative Group to Assist the Poorest (CGAP), which is discussed below, is one of several models for direct provision of resources to NGOs by donors. At its Conference on Hunger and Poverty taking place in Brussels this month, the International Fund for Agricultural Development (IFAD) is expected to launch another donor mechanism which will directly fund NGO capacity-building. Donors generally view NGOs as low-cost service providers. Many NGOs resent providing more and more "band aid" services once provided by their government. [In the U.S., social "safety nets" are being shredded or abandoned and a staggering level of social service provision is being shifted to NGOs.] Rather than being relegated to crisis management, many NGOs want to help shape the policies of their countries in ways that prevent social, environmental, and political crises. NGOs need open and democratic environments which invite participation in country-wide policy and priority-setting. The CGAP has the potential to influence Bank and donor policies as well as expanding the effective provision of microfinance.

A. NGOs Advise the Consultative Group to Assist the Poorest (CGAP) The (CGAP) was launched in June in order to expand the availability of microcredit to very poor people and to catalyze change in large-scale donor (especially World Bank) operations in ways that benefit poor people. The Bank reports that it will evaluate the functioning of the CGAP mechanism to determine whether it should expand and, if so, what other services it might provide. CGAP operations will begin in February. Negotiations among the World Bank management and Board and among donors to launch the CGAP were difficult and protracted — 18 months. Some donors resisted the idea of the World Bank — as a lender to governments — offering grants to non-governmental entities. Now sixteen donors have joined the governance body, or Consultative Group, which will have its second meeting in Rome in early February. At this date, the CGAP donors are bilateral or multilateral agencies. At last check, Japan, Spain and Switzerland were still considering joining CGAP; Germany and Italy have ruled out membership. We understand that foundations and individuals able to ante up $250,000 for the Secretariat and $2 million in microfinancing programming will also be permitted to join. The Consultative Group and the three-person Secretariat (housed at the World Bank with a Bank CEO, Ira Lieberman) are advised by an 11-person Policy Advisory Group (PAG) comprised primarily of NGOs and chaired by Dr. M. Yunus of the Grameen Bank. The Policy Advisory Group met for the first time on October 30-31. The meeting began as a joint donor-PAG meeting, but NGOs asked the donors to leave early-on. The PAG held a public meeting at the Washington Hilton Hotel on November 1, which was

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attended by approximately 150 people. The seven Northern-based members of the Policy Advisory Group are: Nancy Barry, Women's World Banking; Renee Chao-Beroff, Centre International de Developpment et de Recherche; Martin Connell, Calmeadow; Klaas Kuiper, International Agency for Economic Development; Maria Nowak, Caisse Francaise de Developpment; Maria Otero, ACCION International and Lawrence Yanovitch, Foundation for International Community Assistance. The three Southern-based groups include: Muhammad Yunus, Grameen Bank; Kamardy Arief, Bank Dagan Nasional Indonesia; and Ela Bhatt, Self-Employed Women's Association. These individuals were invited by the donors to serve as individuals, rather than as representatives of their institutions. NGOs on two committees — the World Bank-NGO Committee and the NGO-World Bank Hunger Steering Committee — have given input to the CGAP. The current Chair of the World Bank-NGO Committee called CGAP an "important breakthrough." Members of the NGO-World Bank Hunger Steering Committee have noted the "potential" of the CGAP. At the same time, members of both Committees have objected to the lack of Southern-based NGO representation. They have expressed interest in an improved selection process; procedures to prevent NGO conflicts of interest; and a slower rotational schedule for members of the PAG. There has been some concern that only the PAG chair is permitted to attend the formal CG meetings. Otherwise, the CG will conduct discussions with the PAG and other NGOs on the day prior to their formal meetings. The CG did not invite the PAG to Rome for their 5-7 February meeting, but the PAG has invited itself. At the November 1 public meeting, Dr. Yunus shared his feeling of momentousness that people, such as himself, who ally with poor people and take a "worm's eye view" of development were joining with the World Bank, which takes a "bird's eye view" of development, in order to help CGAP succeed. Those with a "bird's eye view" impose development "blueprints" from above, he said. He jokingly referred to CGAP as an organization where one can "See the gap." Dr. Yunus and other PAG members expressed their complete enthusiasm and backing for the Bank-based Secretariat, which is administered by the Bank's Private Sector Development Department and managed by Ira Lieberman, CEO and Mohini Malhotra, Operations Manager. Nancy Barry of Women's World Banking emphasized that the microfinance experts on the PAG have been invited to help mold the "clay" of CGAP. Although the PAG has an advisory, not a decision-making, function, Ira Lieberman stressed that the donors would be crazy to assemble such terrific experts and not listen to them. The PAG envisions the CGAP as having three "concentric circles" of activity: (1) the innermost "circle" ($30 million plus, provided by the World Bank) which will be administered by the CGAP in order to build the capacity of established microcredit institutions; (2) the "circle" which represents some $200 million in "parallel" donor funding, which is administered by donors independently of the CGAP; and (3) the outermost "circle" of learning and institutional change activities. Since the actual funds administered by the CGAP are a "drop in the bucket," the PAG is placing "monumental" importance on the CGAP's catalytic possibilities.

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The PAG thinks that it would not be feasible or desirable for CGAP to use the $30 million (or more) which the Bank will provide as "core" funding to administer lots of tiny projects. It thinks that the Secretariat, funded at $3 million, should not be overburdened with start-up efforts. They see CGAP as empowering more appropriate agencies (UNDP, CIDA, the Dutch) to mobilize the will and the resources for effective start-up efforts. The PAG recommends that the CGAP focus on the goal of supporting intermediate range ($500,000 per annum lending) microfinance institutions which need an "extra push" to operate on a fully commercial basis. Proposals for support of such institutions would be presented by the CGAP Secretariat to a World Bank committee for vetting and approval. The point was stressed that it would be a conflict of interest for the CGAP to both propose and approve of projects. Over the years, it has been observed that, for the most part, the World Bank Board has allowed management to do just that — propose and approve its projects. The Bank Board stalls, but doesn't reject, lending operations proposed by management. While one PAG member recommended very narrow eligibility criteria, another stressed that capacity-building needs vary between institutions, locales, nations, and regions. He emphasized that there are areas in which microfinance institutions are lacking altogether. Ultimately, PAG members see the CGAP as a small step toward the goal of the 1996 Microcredit Summit — namely, providing $100 million in credit to the poorest families, preferably women, by the year 2005. In moving toward this goal, the PAG is likely to encourage the creation of national microfinance funds which would support start-ups and networks with local currencies. The PAG sees the learning and institutional change agenda directed at governments, financial institutions and donors, but especially at the World Bank. The PAG sees the CGAP's comparative advantage in catalyzing the development of financial systems, especially those which are locally-controlled, in ways that reach very poor people. It does not see a comparative advantage for CGAP in pushing the microfinance learning frontier. PAG spokespeople expressed the need to create a counter-culture within CGAP, the CGAP Secretariat, the World Bank and the donor community, which is biased toward poor people. Dr. Yunus said that CGAP should be entrepreneurial; it should not require people to come and justify their existence and their programs. He advised the CGAP against doing a lot of slick P.R. or trying to teach the world what microenterprise is, but rather facilitating the dissemination and diffusion of ideas. What is important, he stressed, is not just the liberation of funds, but the liberation of ideas and institutions. He made the point that there is "wild rice" growing in staid institutions that needs cultivation. Members of the PAG want the Bank help transform financial systems in ways that work for the poor majority by: inviting the "know-how" of the CGAP to "infiltrate" the mainstream operations of the Bank; supporting "exposure trips" on which financial leaders can interact with low income women and

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participating institutions; and by wielding its power and influence among bankers, donors and governments to leverage changes to benefit very poor people. One person expressed interest in having a serious "blow out" on issues raised by microfinance practitioners at the normally stuffy IMF/World Bank Annual Meeting. The PAG members advise the CGAP to issue one-page applications which will determine an applicant's eligibility. Eligible applicants would then be invited to submit proposals. The CGAP Secretariat invites any and all questions about CGAP. Phone: 202/473-9594; Fax: 202/522-3744; Email: CProject@Worldbank.org

B. Other Bank Channels for Funding NGOs Currently, the World Bank channels significant funding to NGOs through Social Action Programs or Social Investment Funds (SIFs) administered by governments. Twenty-eight countries administer some 30 Social funds which total $1.13 billion. The Asociacion Latinoamericana de Organizaciones de Promocion (ALOP) has studied SIFs and concluded that SIFs often alleviate symptoms of poverty. ALOP has asked the World Bank to develop a participation strategy regarding SIFs which would guarantee involvement of NGOs and Peoples' Organizations from SIF inception onwards. ALOP urges that steps be taken to ensure that SIFs address the structural causes of poverty, including inequity; build the capacity of grassroots organizations; and give priority to projects that provide employment opportunities for the poor and which strengthen local bargaining power. They also point to the need to improve competitive bidding systems and to rely on progressive taxation for financing SIF projects. ALOP emphasizes that SIFs must not weaken universal social programs. The Bank also channels funding to NGOs through state-run disbursement agencies, such as the AGETIP (Agence Senegalaise des Travaus d'interest Publics) in Senegal. The AGETIP system is being replicated elsewhere. World Bank expenses for preparing participatory projects rely heavily on a tiny Fund for Innovative Approaches in Human and Social Development (FIAHS). In 1995, FIAHS provided $1 million for operational support for projects — many of which involve NGOs. It also funds short-term consultants with expertise in the social sciences. We understand that the FIAHS for fiscal year 1996 was drawn down in the first few weeks of operation. It is unclear whether its replenishment is a management priority! In fiscal year 1995, the Small Grants Program funded 40 grants to NGOs in 33 borrowing countries at a cost of $.5 million. Grants support activities, such as conferences, publications, and networking. Does NGO participation in Bank-supported projects enhance their effectiveness? The Agriculture and Human Development Division of The World Bank's Operations Evaluation Department will assess

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how NGOs are contributing to the development effectiveness of Bank-supported projects. The Bank invites participation in designing and conducting the study during 1996. For further information, contact Christopher Gibbs, OED. Phone: 202/473-1725; Fax: 202/522-3123; Email: cgibbs2@worldbank.org.

C. Interagency Group on Participation (IGP) The IGP was launched at a meeting at World Bank headquarters on September 18-19 which was attended by 8 multilateral agencies (IFAD, FAO, UNDP, IDB, UNICEF, AsDB, EBRD, and World Bank), 3 bilateral agencies (CIDA, USAID, ODA) and 4 NGOs (GTZ, Grupo de Estudios Ambientales, World Neighbors and the Society for Participatory Research in Asia (PRIA). Four NGOs were invited as resource persons (InterAction, FAVDO, Save the Children UK, and Bread for the World Institute). The goals of the IGP are to (a) provide a forum for sharing information and supporting efforts to mainstream participatory approaches; (b) deepen analysis and learning about participatory approaches — both at country level through joint action research, as well as sharing information on advances in research; and (c) support capacity-building at the country level. At the September kick-off meeting, the IGP decided to base its activities around five areas of potential collaboration and exchange. Each of these areas would be coordinated by a member of the IGP: • Institutional Change/Mainstreaming (lead agency: CIDA); • Project Preparation and Implementation (lead agency: GTZ); • Training/Capacity Building (lead agencies: USAID with Asian Development Bank and Society for

Participatory Research in Asia (PRIA)); • Information and Dissemination (lead agency: UNICEF); • Monitoring and Evaluation (lead agencies: UN Capital Development Fund, with World Bank and

Bread for the World Institute); and • Country-Level Capacity Building (lead agencies: USAID, with World Bank and World Neighbors.

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Attachment "A"

Schedule for Upcoming Country Assistance Strategies (CASs) and Tips for Getting Involved

The CAS will affect your future. The Country Assistance Strategy (CAS) provides the framework for World Bank lending operations in each borrowing country. It articulates priorities, benchmarks for progress, and strategies for achieving them. To date, the CAS has been developed by the World Bank with input from the borrower. Now that is changing. The World Bank is also trying to coordinate with other donors so that the CAS represents a government's framework for all donor assistance. Most importantly, the World Bank wants borrowing countries to develop the capacity and the sense of ownership involved in designing their own development plans. Public Participation: A Key to Success. The international negotiators who set the policies for the World Bank's soft loan arm, the International Development Association (IDA), underscore the importance not only of the CAS, but also of public participation in its formulation. Bank President Jim Wolfensohn has expressed his belief that citizens of borrowing countries should be involved in the CAS decisions which will, in some measure, shape their destiny. The Chief Economist for Africa said that he would be checking to see who has had input to CAS development. Participation in decision-making strengthens the democratic character of governments and improves the quality and sustainability of development activities. For equitable development to occur, it is especially important that poor and indigenous people and women participate actively in shaping policies that can improve their lives. The importance of women's involvement in economic decision-making was a key point in the platform of the UN's Fourth World Conference on Women in Beijing. The central goal of the CAS should be poverty reduction. It is essential that the CAS address: (a) ways that country-wide and sector-wide economic policies benefit poor and indigenous people and women through increased employment, improved incomes, school enrollment rates, availability of affordable credit, quality and availability of health care, etc.; (b) which populations — especially those which are remote, poor and vulnerable — will benefit from projects and programs identified in the CAS; and (c) how the CAS will strengthen basic services for poor people and women. Take the first step. Ask your government Finance Ministry or the World Bank Resident Mission when the next Country Assistance Strategy (CAS) review is scheduled for your country. Ask what kind of process is envisioned for garnering input from organizations of civil society, including NGOs and peoples' organizations.

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Tips For Getting Involved in Your Country's CAS Inform yourself. The first step is to learn about your government's development priorities, policies, and major investments and how the past and present choices of your government influence the distribution of costs and benefits. It is especially important to assess the ways in which poor and indigenous people and women are affected by the development process. Do the best you can at gathering information. Some will be difficult to obtain or understand. Start by learning about: • How your government collects and spends money. Ask the Resident Mission for copies

of Public Expenditure Reviews (PERs) that can provide information on how your country sets its budgetary priorities. Look for trends in expenditure choices and how these trends have affected education, health, and other social programs. Also, learn about how poor and indigenous people and women have been affected.

• What projects are externally funded (by the World Bank or other donors)? What is their purpose? Are they achieving their purpose? Are they reducing poverty? Do they involve affected communities?

• What economic policy reforms are externally funded? Are the policies of certain sectors (agriculture, education, energy, etc.) being reformed? Is there a country-wide economic reform ("structural adjustment") program? What is the purpose of the reforms? Are they achieving their purpose? Are they reducing poverty? Do they involve affected parties?

• What World Bank documents on your country are available to the public? Obtain the catalogue of information available from the Public Information Center by mail, fax, or email. Or, ask your Finance Ministry or the World Bank Resident Mission for documents pertaining to environmental, social, economic, and technical studies relative to both projects and programs.

Project Information Documents (PIDs). Be sure to obtain all the PIDs for your area or

country. They describe all the Bank-supported activities which have started up in the last couple of years or which are starting up.

If there are documents that you need that are not publically available, petition your

government. Alternatively, ask your World Bank Resident Mission to ask the government. In one region, the Resident Representative wrote to each government asking for disclosure of information published prior to January 1994 (when the information disclosure policy took effect). That was fairly successful.

Launching Public Information Centers. Only 2% of requests to the Public Information

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Centers are from NGOs. To address this low level of inquiries, the Latin American region has volunteered to help establish a Public Information Center (PIC) in an NGO. Volunteer if you have the site and the capacity to do so. If you are in another region but would like to help open a PIC, it might be worth the try. • What poverty assessments, social assessments, and environmental action plans have

been or are being carried out in your country? Technical and economic assessments are usually given greater priority than poverty, social or environmental assessments. Be sure that this isn’t the case in your country. Check to see which groups have been consulted in the assessment process. Have groups of poor and indigenous people and women been involved? Have assessments taken gender into account?

• How is the World Bank working with your government to insure that "stakeholders" — especially poor people and women — are involved in decision-making in World Bank-supported projects? Ask your Resident Mission for copies of the Bank-wide and region-wide Participation Action Plans. Be sure that your government is involved in design and implementation of the plan.

• How well or poorly does the Bank think that your country is implementing operations which it supports? All the Bank-supported operations in your country constitute its "portfolio." Every country has its portfolio performance reviewed and rated periodically. Learn about your country's strengths and weaknesses from the perspective of the Bank. What is your organization's or your community's perspective? Most countries also have their commitment to reducing poverty rated. How does your country rank? What is your perspective on your country's commitment?

• How much does your country borrow from the World Bank Group? How much does it owe? How much are its annual debt service payments? Portfolio performance rankings and poverty rankings — along with economic management rankings — are used to help make decisions about the loan volume your country is entitled to. Does the amount of money your country borrows square with the soundness of its policies and its performance? How does your country's debt and debt service to the World Bank and the other international financial institutions compare with your country's budget? Its gross national product? Its export earnings? What kind of budgetary trade-offs are required in order to service the debt?

• Who are your allies? Start with the agencies and individuals who are supposed to be acting on your behalf. If you do not already know, identify and learn how to contact your: World Bank Executive Director and Alternate Director (who may or may not be from your country); your government's Finance Minister; the ministry responsible for liaison with organizations of civil society, including NGOs; your World Bank Resident Representative and public liaison officer; staff of the World Bank Country Department, especially the liaison officer for participation in your country or region. Work with other groups in your country to identify sources of information and assistance which will inform your judgment about how to participate in shaping your country's development policies.

• Given your knowledge and experience (especially your operational experience), what priorities might you recommend to your government? In particular, how should the problems of poverty and inequality be tackled?

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For 1996, the following countries are up for detailed or limited reviews: Detailed Limited AFRICA Ethiopia Burkino Faso Kenya Cameroon Tanzania Cape Verde Uganda Central African Rep. Chad Comoros Congo Cote d'Ivoire Ghana Guinea Bissau Lesotho Malawi Nigeria Sao Tome & Principe Zambia Zimbabwe Algeria Morocco Tunisia EAST ASIA Cambodia Lao PDR China Mongolia Indonesia Papua New Guinea Philippines ECA Moldova Azerbaijan Russia Belarus Bulgaria Tajikistan Turkey Turkmenistan Ukraine LATIN AM Brazil Bolivia CARIBBEAN Colombia Equador Costa Rica Jamaica Mexico Peru

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Venezuela SO ASIA Sri Lanka Nepal Pakistan

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Publications: Rosabeth Moss Kanter's World Class: Thriving Locally in the Global Economy by Simon & Schuster. Welcome to the Brave New World...compliments of R.M. Kantor. The Harvard business guru urges people to join the cosmopolitan, or world, class of winners who will opt for choices over loyalty and quality over affiliation. "Locals" who are stuck with roots and loyalities will need to give up these parochial loyalties — as well as unions — to become international hubs. To become truly competitive winners, they need to sacrifice unions. Inner cities, which are increasingly becoming "a kind of new Third World" only need to persevere in the "three `C's": concepts, competence and connections. Development vs. Defense...Aid as a Tool for Peace, Council on Economic Priorities Research Report, March/April 1995. This is a well-done 6 page report available from CEP, 30 Irving Place, New York, NY 10003. Phone: 1-800-729-4CEP. Contact the Center for Economic and Social Rights for their case studies on economic and social rights advocacy which focus on Texas-Mexico and Gaza. Participation and Intermediary NGOs, Environment Department Dissemination Note #22, June, 1995. Available from the Environment Department, World Bank. Fax: 202/522-3247. Korten, Alicia, A Bitter Pill: Structural Adjustment in Costa Rica, Food First (Institute for Food and Development Policy) Development Report, June 1995. To order copies call: 1-800-274-7826. Write or fax: Subterranean Company, Box 160, 265 S. 5th Street, Monroe, OR 97456. Fax: 503/847-6018. Price: $8.00, plus $4.00 shipping and handling. Oxfam Poverty Report Minutes of NGO Discussions with Wapenhans. The NGO Campaign on the Asian Development Bank.