International financial institutions and multilateral banks should commit to and implement internal reforms before they are granted new funds, U.S. Sen. Richard Lugar (R-Ind.) argues in a commentary on the Washington Times.
The U.S. and other donor countries should use the call for additional funding that these institutions - especially the World Bank and International Monetary Fund - are expected to make, to forward “overdue changes,” the senior Republican member of the U.S. Senate Foreign Relations Committee said.
Lugar says the global economic crisis is not reason enough for a capital increase and suggests that all additional funds requested specifically to help institutions deal with the persisting effects of the crisis should only be temporary. All requests for additional funding should be carefully reviewed and judged on merits, the senator adds.
Reforms needed within the IFIs can be classified into several broad categories. First, Lugar says the World Bank and its regional partners should restructure their priorities from simply approving loans to achieving concrete results given a definite period of time. Second, the senator notes that the banks should do away with some of what he says are the bank’s secretive ways. IFIs, he adds, should make their processes and projects more transparent.
Corruption is also one area that IFIs should focus on, Lugar writes.
“The report recommends stronger internal anti-corruption controls and allocating more funds for preventing, monitoring and investigating possibly corrupt activities,” he says, referring to a study done by his team at the Senate committee.