Multilateral Development:

World Bank Reforms on Schedule But Difficult Work Remains

NSIAD-95-131BR: Published: Apr 5, 1995. Publicly Released: Apr 5, 1995.

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Pursuant to a congressional request, GAO reviewed the World Bank's efforts to carry out a plan of action to remedy the growing number of unsatisfactory projects the Bank finances and reorient it to the core mission of reducing poverty through sustainable development, focusing on the plan's 12 key tasks related to: (1) country assistance strategies and portfolio reviews; (2) the independent inspection panel; and (3) project completion reviews.

GAO found that: (1) the World Bank is generally on schedule in carrying out its action plan for reform; (2) it is too early to assess the action plan's impact on improving project quality; (3) country assistance strategies are becoming an important tool for portfolio management; (4) the Bank prepared 62 country assistance strategies in fiscal year (FY) 1994; (5) GAO's review of 10 strategies written between May 1993 and May 1994 found that the strategies: (a) generally included most of the key information, but some gaps were identified; (b) examined the country's economic performance and development agenda, external factors affecting financing, and the Bank's strategy for achieving development objectives; and (c) summarized portfolio performance; (6) however, two strategy papers had no information on creditworthiness or country risk, and none of the strategies contained data on nondevelopment expenditures, as required by Bank guidance; (7) according to Bank officials, country portfolio performance reviews are used to assess the overall performance of a country's portfolio and resolve issues based on project-specific deficiencies; (8) according to a Bank report, the Bank conducted 38 country portfolio performance reviews during FY 1994; (9) country assistance strategies are to take into account the results of these portfolio reviews; (9) because the Bank did not provide GAO with portfolio performance reviews since it considers this proprietary information, GAO could not confirm the extent of any links among the strategies, the portfolio reviews, and new lending; (10) the Inspection Panel was established in 1993 as an independent forum to investigate allegations that the Bank has not complied with its own policies and procedures on particular projects; (11) nongovernmental organization officials welcome the Panel's establishment, but have expressed concern about some operating procedures; (12) the Bank has taken steps to encourage openness in its operations; (13) during the course of GAO's review, officials from nongovernmental organizations, reports by the Bank, and other reports identified concerns about the Bank's reform effort; and (14) GAO did not conduct a full review of these concerns, but based on its collective work on Bank issues to date, GAO believes two concerns warrant further study of the extent to which the action plan addresses: (a) poverty reduction and sustainable development; and (b) participation in planning and executing Bank projects by borrowers and affected populations.

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