Multilateral Development:

Status of World Bank Reforms

NSIAD-94-190BR: Published: Jun 6, 1994. Publicly Released: Jun 6, 1994.

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Pursuant to a congressional request, GAO reviewed the World Bank's portfolio management, focusing on the: (1) status of the Bank's reform efforts; (2) extent to which the United States has influenced the reforms; and (3) process the United States uses to evaluate the Bank's loan proposals.

GAO found that: (1) in 1993, the Bank's Board of Executive Directors rejected its initial reform plan because it was not sufficiently action-oriented; (2) the revised plan was approved by the Board and identified 86 specific actions intended to encourage sustainable and continuous Bank-financed projects; (3) the action plan is expected to improve Bank operations and the Bank expects to have at least three more annual action plans to continue portfolio management improvements; (4) although the Bank has implemented many of the plan's specific actions, some initial target dates have been missed due to the unexpected complexity of and time required for designing some of the critical actions; (5) many of the Bank's reform actions are continuous processes; (6) it is too early to assess the reforms' impact on the quality of the Bank's loan portfolio management; (7) many officials have indicated that continued Bank commitment is needed to implement changes in the Bank's culture; (8) the United States has played a major role in influencing the Bank's reforms; (9) U.S. support for Bank loan proposals is based on an interagency staff review process; (10) although the United States generally supports most Bank proposals, its opposition to other proposals is based on legislatively imposed requirements and does not affect the loans' eventual approval; and (11) the Bank's reforms and the growing volume and complexity of development bank loans may require a reexamination of the current interagency review process to focus on country development strategies and country portfolio performance.

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