World Bank:

U.S. Interests Supported, but Oversight Needed to Help Ensure Improved Performance

NSIAD-96-212: Published: Sep 26, 1996. Publicly Released: Sep 26, 1996.

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Pursuant to a congressional request, GAO evaluated the World Bank, focusing on the: (1) Bank's role in enhancing the flow of private investment capital into developing countries; (2) extent to which Bank projects achieve their development objectives; (3) Bank's progress in reforming its operations to improve effectiveness; and (4) extent to which the Bank supports U.S. foreign policy goals.

GAO found that: (1) although there is evidence that the World Bank has displaced private sources of capital in a limited number of markets, nearly 90 percent of private-sector representatives surveyed said that the Bank enhances the environment for private investment in developing countries by reducing risk; (2) Bank projects have had their greatest rate of success in building physical infrastructure, but have had significant difficulty in achieving other objectives, such as policy and market reform; (3) the Bank's reform efforts to improve project performance have had mixed results thus far; (4) promising steps have been taken, such as directing lending to countries that adopt Bank-recommended policy and market reforms, but clear improvements in project design and portfolio management are not yet evident; and (5) the United States has played a leading role in shaping the Bank's agenda, and Bank projects often support U.S. foreign policy goals.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Bank has developed indicators of project and country portfolio performance and appears to be employing these indicators for decisionmaking purposes. However, the Treasury has not yet reported to Congress as GAO recommended. The Treasury has indicated that the Department's next annual report to Congress on the activities of the U.S. National Advisory Council on International Monetary and Financial Policies will include information that responds to this recommendation.

    Recommendation: To ensure that the World Bank reforms have the desired impact, the Secretary of the Treasury should monitor and periodically report to Congress measurable indicators of progress, such as the extent to which: (1) the Bank allocates financing to those countries that make Bank-advocated policy and market reforms; (2) projects substantially achieve policy and market reform objectives; (3) project design problems decrease; and (4) implementation problems are identified and resolved early in the project cycle. If the indicators do not show satisfactory progress, the Secretary should report on the actions being taken by the Department to improve progress.

    Agency Affected: Department of the Treasury


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