Three years after blasting the World Bank for squandering money in the developing world, the Bush administration yesterday declared itself satisfied with a report showing that poor countries receiving aid are making "measurable" progress in areas such as education and children's immunization rates.
The report, prepared by the consulting firm Booz Allen Hamilton Inc., is "as far as we know the first time ever an outside performance audit has been undertaken at the World Bank," said John B. Taylor, undersecretary of the Treasury for international affairs, at a news briefing. "It's a very important step in giving greater comfort to those who want the [development] institutions to be more effective."
The report, and Taylor's upbeat assessment of the findings, cleared the way for the administration to request a $200 million increase in the U.S. contribution to the International Development Association, the World Bank program that gives grants and very low-interest loans to the world's poorest nations. The Treasury said it will ask Congress to approve $1.05 billion for IDA in the fiscal year that starts Oct. 1, compared with $850 million that would have been requested if the report's findings had been unfavorable.
More broadly, the report capped a long-running conflict between the bank and the administration that had settled into an uneasy truce.
When the Bush team came to office, Treasury Secretary Paul H. O'Neill fiercely criticized the bank, asserting that "we have too little to show" for the $470 billion the institution had lent since its creation in the 1940s. The administration complained that the bank needed to ensure that its aid achieved "measurable results" in terms of the impact on growth and poverty, and it insisted that the bank establish a monitoring system for evaluating its performance.
The Treasury's demands were resisted by the bank's management and staff, as well as officials of other countries, who contended that the bank's internal evaluations already provided adequate assessment of whether projects were achieving poverty-reduction goals. But the United States is the bank's largest shareholder, and the administration got the monitoring system it wanted, with the Booz Allen report as the first fruit of that initiative.
The report showed that, among countries receiving IDA aid, the number of children immunized against measles rose from an average of 61 percent in 2001 to 65 percent in 2002; the time required to start a business fell an average of 12 percent from the end of 2001 to the end of 2003; and during roughly the same period, the percentage of children finishing primary school rose from 68 percent to 70 percent.
Acknowledging that the time frame was short and the improvements were modest, Taylor said, "We should be gratified that [the results are] better than the targets" that the bank set. "And remember, this is the first time," he said, adding that the administration is pressing the bank to expand auditing and performance targets to other areas.
Damian Milverton, a bank spokesman, said, "The report speaks for itself." Bank employees said privately that the report simply validates what their own evaluations showed.
The employees also said they believe the administration will use the report to push for IDA to provide more aid in the form of grants rather than loans, to help reduce the debt load of poor countries. That has been one of the administration's key goals, but it has been resisted by officials of other countries who fear that Bush wants to undermine the World Bank's finances. The administration, which sought in 2002 to convert 50 percent of IDA loans to grants, succeeded in converting about 20 percent, and U.S. officials could argue that the positive results of the Booz Allen report show that grants are working well.
Taylor said that in negotiations next month among rich countries concerning IDA funding over the three-year period starting next June, the administration will seek to raise the grant proportion even higher, but he declined to specify the percentage Washington wants.