Alphabet Soup of International Financial Institutions

Constance L. Danner

There are risks and costs to a program of action. But they are far less than the long-range risks and

costs of comfortable inaction.

John F. KennedyUS Democratic politician

(1917 - 1963)

Comparison of US vs. China from the UN Website

World Bank

Established July 1, 1944

– After the onset of WWII at Bretton Woods, New Hampshire to help rebuild Europe.

– The first loan of $250 million was to France in 1947 for post-war reconstruction

Norwegian Delegation,Bretton Woods,

July 1944

The World Bank Group

http://siteresources.worldbank.org/EXTABOUTUS/Resources/wbgroupbrochureen.pdf

World Bank Group Membership

Percentage of Votes for Member Countries

16%

8%

4%4%

4%64%

United States Japan

Germany United Kingdom

France The Remaining 179 Countries

Total member countries in each institution:– IBRD - 184– IDA – 165– IFC – 178– MIGA – 167– ICSID – 142

http://siteresources.worldbank.org/EXTABOUTUS/Resources/wbgroupbrochureen.pdf

Bolivia and Lesotho

World Bank Voting Power: 0.24%

Middle Income: 2003 GNI per capita was between $766 and $9,385.

Moderate Indebted – Scale of Severe,

Moderate, Less

World Bank Voting Power: 0.19%

Low Income: 2003 GNI per capita less than $765

Less Indebted – Scale of Severe,

Moderate, Less

Global Development Finance: Mobilizing Finance and Managing Vulnerability (2005)

Why does the World Bank need a new Water Resources Policy?

Three Problem Areasaddressed by World Bank

Fragmented public investment programming and sector management.

Excessive reliance on overextended government agencies.

Public investments and regulations that have neglected water quality, health, and environmental concerns.

http://siteresources.worldbank.org/OPPORTUNITIES/Images/projectcycle-ar03_big.gif

1993 Policy Recommendations

Project planners should assess water resources within a comprehensive framework prior to design and implementation.

More detailed guidelines, training, and information should be provided to borrowers.

Water agencies need to establish and follow arrangements for coordinating their activities.

Do not attempt to use cost-benefit analysis to justify projects that fail to consider environmental damage.

Poverty relief should be a project goal at the design stage. Adequate databases should be put in place to monitor and evaluate the

impact of Bank’s lending on the physical environment and on the populations affected.

Water users should be given more responsibilities for managing water.

Water Resources Sector Strategy

Released in 2004 Strategic Directions for World Bank

Engagement Why?

– Water-Related Services account for 16% of all lending over the last decade.

1st Challenge

Water Resources Management Pay closer attention to:

– Water Quality– Conservation– Groundwater Management– Watershed Management– Institutional Reform

2nd Challenge

Rules of Engagement Establish a consistent set of rules. Currently not performing as a predictable,

timely and effective partner.

Messages of the Strategy

Water resources management and development are central to sustainable growth and poverty reduction.

Messages of the Strategy (cont)

Most developing countries need to be active in both management and development of water resources infrastructure.

The main management challenge is not a vision of integrated water resources management by a “pragmatic but principled” approach.

Assist countries in developing and maintaining appropriate stocks of well-performing hydraulic infrastructure and in mobilizing public and private financing, while meeting environmental and social standards.

Messages of the Strategy (cont)

Re-engage with high-reward-high-risk hydraulic infrastructure, using a more effective business model.

Perceived to have a major comparative advantage in the water sectors, and there is, accordingly, a strong demand for services and a strong demand to engage.

Water assistance must be tailored to country circumstances and be consistent with the overarching Country Assistance Strategies and Poverty Reduction Strategy Papers.

Water Services and Water Resources

Scope of Strategy

Water Portfolio

New Strategy Example – Brazil

Background of Brazil

8th Largest Economy Strong domestic capacity in water service

and water resources management. Middle Income Voting Power: 1.53%

Importance of New Strategy

Developing sequenced, prioritized approaches to dealing with the daunting set of water-related service and resource management challenges.

Giving priority to acting where there is a strong demand for change, and supporting political reformers willing to implement the change.

Starting with the low-hanging fruit and then, with credibility and experience, moving on to bigger challenges.

Requirement to stay engaged in the twin challenges of management and development.

Questions for Discussion

Do we as engineers need to understand how funding is obtained for projects in our respective areas?

Are the financial institutions are only means of enforcing global policy? Should this be there responsibility?