Report | Date: 2006-08-26 | Ministry of Foreign Affairs
The World Bank Group
Updated August 2006
Paul Wolfowitz, President since 1 June 2005, US national
Boards of Executive Directors:
Total of 24 Directors: 8 for individual countries, the rest organised in constituencies. They meet several times a week.
Norway forms part of the Nordic-Baltic constituency
Between 30 and 40
Minister of International Development Erik Solheim
The World Bank Group consists of the following organisations:
The International Bank for Reconstruction and Development (IBRD)
- Established: 1944, operative from 1946
- Provides loans and technical assistance to middle-income and poor countries
- Share capital: NOK 1327 billion, 6 per cent of which is paid in, the remainder is guaranteed
- Number of member countries: 184, largest shareholders: USA, Japan, UK
- Norway’s interest/voting power: 0.63 per cent
- Lending volume 2005: NOK 88.5 billion (USD 13.6 billion) to 118 new projects in 37 countries
- Largest borrowers: Brazil, China, Colombia, India, Turkey,
The International Development Association (IDA)
- Established: 1960
- Provides loans on very favourable terms, grants and technical assistance to the poorest countries.
- Latest replenishment: IDA 14 in 2005, result: NOK 220 billion funding increase
- Number of member countries: 165
- Number of donor countries: 40, largest contributors: UK, USA, Japan, Germany
- Norway’s interest: 1.68 per cent, payment in 2005: NOK 730 million
- Lending volume 2005: NOK 58.3 billion (USD 8.7 billion) for 160 new projects in 66 countries
- Largest borrowers: India, Bangladesh, Congo, Uganda
The International Finance Corporation (IFC)
- Established: 1956
- Provides loans and technical assistance for private sector investment in developing countries.
- Share capital: NOK 17.15 billion
- Number of member countries: 178, largest shareholders: USA, Japan, Germany
- Norway’s interest: 0.74 per cent
- Lending volume 2005: NOK 35.1 billion (USD 5.4 billion) for 236 projects in 67 countries
The Multilateral Investment Guarantee Agency (MIGA)
- Established: 1988
- Provides guarantees to foreign investors in developing countries against losses caused by non-commercial risks.
- Share capital: NOK 15.6 billion, largest shareholders: USA, Japan, Germany
- Number of member countries: 165, largest clients: Brazil, Argentina, Peru
- Norway’s interest: 0.76 per cent
- Guarantees issued 2005: NOK 7.8 billion (USD 1.2 billion)
2. World Bank’s Mission
The World Bank Group’s mission is to reduce poverty through promoting sustainable economic growth in developing countries. As the most significant source of financing for the poorest countries, the Group is an important player in international development efforts. The World Bank is also an important knowledge centre and has to an increasing degree become a proactive contributor to the development debate. This is shown by initiatives such as Poverty Reduction Strategy Papers (PRSPs) and the debt relief initiative for Highly Indebted Poor Countries (HIPCs). The World Bank is committed to the UN Millennium Development Goals (MDGs), which are at the focus of the Bank’s development programmes and harmonisation agenda.
Among the World Bank’s strengths are its considerable financial resources and the expertise of its staff. One of its weaknesses is its tendency to assume an overly dominating role, which means it is not always good at working in partnership with recipient countries and other donors.
3. Norwegian World Bank Policy
In accordance with Report no. 35 to the Storting (2003-2004) Fighting Poverty Together, Norway’s policy with regard to the World Bank Group emphasises:
- that the Bank should put poverty reduction on top of its agenda and that poverty reduction should be acknowledged as a target in itself and not just as a tool for economic growth;
- that the Bank’s activities should be in accordance with the MDGs;
- that the Bank should continue to assist countries with PRSPs and facilitate real national ownership, and that these strategies should be the basis for the Bank’s activities in a particular country;
- promoting deeper and broader co-operation between the World Bank and the IMF, and their co-operation with the regional development banks and the UN system;
- promoting further development of the analytical tools used in Poverty and Social Impact Analyses (PSIAs) in order to achieve a balance between the macro-economic, structural and social dimensions of a country’s development that will result in maximum poverty reduction;
- that the World Bank should promote harmonisation between bilateral and multilateral donors;
- further improving the co-ordination between the Bank’s activities and Norwegian bilateral assistance;
- further enhancing co-operation with Norwegian embassies in order to establish an optimal basis for participation in decision-making processes in the Bank’s governing bodies;
- continuing the efforts to ensure that important cross-cutting issues like environmental protection, gender equality and good governance are taken into account, among other things through the fund for environment and social development established on Norway’s initiative;
- supporting the Bank’s efforts to promote private sector and infrastructure development in poor countries, among other things through a Norwegian-initiated fund for this purpose;
- supporting the Bank’s efforts in the education and health sectors;
- supporting measures to make the Bank more effective, for example by supporting the Bank’s decentralisation process and by encouraging closer co-operation across departments and regions;
- promoting efforts to strengthen the position of the recipient countries in the international financial institutions;
- promoting efforts to make the human rights perspective more visible in the Bank’s activities;
- continuing the efforts to ensure that the Bank’s staff is recruited from a broader range of fields and reduce the predominance of economists;
- continuing to make use of Nordic co-operation and other alliances to actively influence the Bank’s policy and activities.
- promoting democratisation of the World Bank and the IMF
- promoting increased transparency about Norway’s role in the World Bank and the IMF.
4. Opportunities for advancing Norway’s policy regarding the World Bank
a) Representation on the Board of Executive Directors
The Executive Directors are responsible for conducting the Bank’s operations. Norway is part of the Nordic-Baltic constituency, which appoints one of the 24 Directors. Co-operation in the constituency is very close. Weekly telephone conferences are held between the Nordic countries, during which joint instructions are agreed on. This active Nordic co-operation gives Norway a better opportunity for obtaining recognition for its views. One of the strengths of this system is that it provides opportunities for Norway and the other countries to draw on each other’s sector and country expertise. It provides valuable access to the knowledge and expertise of the embassies and country offices in all of the Nordic countries, and this is actively exploited in dealings with the Bank on policy issues.
b) Meetings in the Development Committee and annual
The biannual meetings in the Development Committee and the annual meetings are important arenas, where the governors (in Norway’s case the Minister for International Development) can discuss important issues and adopt central guidelines for the Bank’s activities. The fact that development and finance ministers from donor and recipient countries are gathered here makes these meetings important decision-making arenas.
The International Development Association (IDA) is the World Bank’s development fund for the poorest countries. It mobilises resources by holding replenishment negotiations between donor countries every third year. The negotiations on the IDA 14 Replenishment for the period 2005-2008 were concluded in April 2005. A total of more than NOK 220 billion will be made available for the next three years in the form of loans and grants to the 81 poorest countries in the world. This is an increase of more than 25 per cent compared with the IDA 13 Replenishment. These replenishment negotiations are not only concerned with financial contributions. They are also an important arena for policy development and discussions on guidelines for IDA’s use of the funds.
Through its earmarked contributions to the World Bank Group, Norway seeks to ensure that the Group’s activities are in line with Norwegian development policy. Among the most important goals here are promoting environmentally sustainable economic growth, social development and poverty reduction. Norway’s contributions help to finance studies and operations where the country can play a catalytic role in connection with the Group’s policy and activities. This form of support also enables Norway to experience how the decisions made in the governing bodies are actually put into practice. The support is mainly pooled in thematic funds for the environment and sustainable development, private sector and infrastructure for the poor, education and gender equality.
e) Bilateral contacts
During visits to Norway by World Bank representatives, meetings are arranged with the relevant departments and sections of the Ministry of Foreign Affairs and NORAD, and with consultancy firms, research institutions and NGOs. In connection with the current reorganisation of the co-financing arrangements, Norway is making active efforts to expand and deepen the contact between World Bank Group staff and Norwegian experts. The Foreign Ministry also has regular contact and meetings with Bank staff. The co-operation on co-financing also provides an opportunity for an active dialogue between Bank staff and Norwegian authorities and experts.
Priority tasks in 2005-2006
- follow up the results of the IDA 14 replenishment negotiations
- follow up the HIPC initiative in accordance with the revised debt relief plan and participate in the review of the Debt Sustainability Framework
- implement the new guidelines for budget support loans and ensure integration of PSIAs
- follow up the work of the Board of Executive Directors
- ensure that the Bank’s increased focus on Africa is followed up by additional assistance for the region and implementation of the Bank’s new plan for Africa
- ensure that the increased focus on infrastructure takes account of concerns for the environment and social development
- prepare for taking over responsibility for co-ordination in the Nordic-Baltic constituency from the summer of 2006
- strengthen the dialogue with the Bank on human rights
- follow up the discussions on conditionality and PRS
- ensure that the implementation of the G8 proposal for debt cancellation leads to maximum possible increase in resources available to poor countries
- establish a close working relationship with the Bank’s new President Paul Wolfowitz
- follow up the World Development Report 2006 on equity and seek to ensure that the recommendations in the report has an effect on the Bank’s activities