This weekend’s spring meetings of the World Bank and IMF take place in the context of a fragile global recovery and the need to balance the risks of asset bubbles caused by expansive monetary policy with those of slowing growth through hiking interest rates. One bright spot is the sharp decline in oil prices; these have about halved from previous peak levels, providing relief to many countries. Against this looms the deteriorating political picture in the Middle East. According to the United Nations, civil conflicts had forced a staggering 51 million people worldwide to leave home by the end of 2013 and the number has only increased since then.
For the World Bank a pressing concern must be to implement programs that make progress on its two goals — reduced poverty and shared prosperity — even as it settles down after the trauma of reorganization. Another important issue is how to gain momentum on addressing global public goods and bads and on its still-limited mandate in this area. There seems to be movement on at least one front: the experience of the Ebola epidemic has emphasized the need to both strengthen national health systems and provide for coordinated rapid response to emergencies. This could include the creation of a pandemic emergency facility.
On another front, the creation of the Asian Infrastructure Investment Bank (AIIB) has been welcomed by President Kim. It remains to be seen whether it will constitute a rival or a partner. Perhaps its establishment will prompt the World Bank’s shareholders to support a more expansive role in the infrastructure area. It is interesting to note that Justin Lin, the former Chief Economist of the World Bank, has strongly advocated investment in infrastructure to help respark global recovery since at least 2009 and has endorsed the AIIB in the face of constraints on China taking on a larger role in existing institutions. The World Bank itself is taking new approaches toward development, including cluster-based initiatives, sometimes with an infrastructure focus. Continued monitoring of the effectiveness of such approaches is essential.
The signs are that the bank will be looking to better take advantage of technology for development, in particular ICT. The 2016 World Development Report will focus on this area. The World Bank is developing an ambitious program in the area of strengthening national ID systems, an area that has been on the agenda of the Center for Global Development for several years.
Another emerging area of critical interest is the move toward results-based lending. The new Program for Results instrument launched by the Bank in January 2012 three years ago is gathering steam with over 20 operations approved. While the initial phase is promising, it will be necessary to keep a focus on results that matter, such as learning outcomes, rather than simply more traditional indicators such as school enrolments. Yet another area of interest is financial inclusion with the bank set to release its new Global Findex database.
Looking further into the future, as the World Bank approaches its 75th anniversary it faces a rapidly changing global landscape, with developing countries becoming less reliant on official loans. Projections show the number of countries qualifying for concessionary loans through the International Development Association (IDA) arm of the bank will drop from 77 now to 40 in 2019. This and other changes raise the question of how the bank will continue to be an accurate reflection of development needs rather than an institutional model that is declining in relevance.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise.
CGD is a nonpartisan, independent organization and does not take institutional positions.