The World Bank's big gamble

As the World Bank nears its deadline to implement reforms and be “fit for purpose” by July 1, the bank’s spring meetings last week provided an opportunity for all stakeholders to address the state of efforts made so far. Finance ministers from around the world who met over the weekend at the institution’s headquarters in Washington, D.C., gave the bank’s management lukewarm support in its official statements. As the implementation date for reforms approaches, it has become clear the real work is still ahead. President Jim Kim continues to enjoy the strong support of the bank’s Development Committee, which oversees the general direction of the reform, according to Marek Belka, the chairman of the committee, who said that during an informal lunch of the ministers “one had an impression of resounding support” for the president. “What was stressed was determination and courage that Jim showed during this process, and this is something that helps him and all of us to continue with this process,” he said. But the G-24, composed of finance ministers from select nations in Africa, Asia and Latin America and the Caribbean that coordinate developing countries’ position on international monetary and development finance issues, was less enthusiastic, and called for “an effective, timely approach to implementing this shift,” giving the impression that it had been neither effective nor timely so far. The ministers also emphasized the need for the bank’s approach to country engagement to “reinforce country ownership.” The G-20 finance ministers or those representing the 20 largest economies around the world, meanwhile, didn’t even address the reforms in their statement, likely a sign of dissatisfaction on the progress from some members of that club. State of uncertainty Meanwhile, the urgency of improving the World Bank’s performance has become even more clear. A forthcoming report from the Internal Evaluation Group obtained by the Bretton Woods Project shows that the quality of bank lending has continued to decline. The number of projects found by the institution itself to have been “moderately successful” or better has fallen below 70 percent. In other words, 30 percent of loans are wasted on projects that do not achieve their goals. Bank management did not respond to a request for comment on the report and how the current reforms would address project performance. Despite the enthusiasm felt in the public events surrounding the meetings last week, the World Bank still seems to be operating in a state of uncertainty, and questions about how exactly the bank will operate moving forward remain unanswered. Most staff members are relieved to know who their new bosses are, but the lack of clarity about how the global practices will operate persists. Keith Hansen, one of two vice presidents of the new “global practices,” previously said that on July 2, “we're not going to see any radical new way of working, so we think over that transition, the first year or so, people will begin to spread their wings.” Although the global practices have gotten much of the attention during the reforms, other important changes will also influence the bank’s ability to deliver development results. ‘Restructuring hell’ During the panel discussions on the sidelines of the meetings, World Bank officials revealed few details about the new country engagement model and ongoing efforts to reform the bank’s procurement policies. Those changes — while much lower-profile than the global practices — hold a lot of potential to impact how the bank aligns its work on the ground to its new goals and improves its performance. But it’s clear that those reforms, like the global practices, will be in test drive this year. Last week, the president got a high-profile drubbing from the Financial Times, which published a feature on the reforms, followed by an editorial that harshly criticized his efforts, calling Kim’s changes a “restructuring hell.” Kim seems certain that the World Bank is moving on from what he admitted last week as a “difficult” period, while staff continue to grit their teeth for the changes to come. July 1 will still be a big day for the reforms, but it has become clear that the institution has much more to do before stakeholders, clients and owners see anything approaching results. The argument for change has never been greater, and the rhetoric has continued to build, but come next spring, Kim will likely need to show more. For the most comprehensive coverage of the World Bank’s spring meetings, check out daily updates via Storify, and be sure to follow Devex on Twitter and Facebook. You may tweet questions and comments to our reporters Paul Stephens @pauldstephens, Michael Igoe @twigoe, Rolf Rosenkranz @devexrolf and Adva Saldinger @deveximpact. Read more: New high-level support for universal health coverage Who will lead the data revolution? World Bank procurement reform to rationalize prior review of contracts Can the World Bank promote more open governance? Jim Kim: Addressing inequality, investing in people critical to sustainable growth CSOs seek culture change at IFC Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.