What Now for the World Bank?

In the wake of the Wolfowtiz debacle, media are now taking a closer look at the big international financial institutions.

The World Bank’s cumulative lending to China, for example, is $40 billion for 274 projects. But China is now an export superpower, sitting on more than $1 trillion in reserves, and is so wealthy that it recently announced its own $20 billion program of loans and credits to Africa. Many question whether the bank should be lending to China at all.

  NYT

Given that rundown, I might ask that same question. I wonder if it has anything to do with the sizeable U.S. debt held by the Chinese.

Allan H. Meltzer, professor of political economy and public policy at Carnegie Mellon, wants the World Bank to quit loaning money altogether and provide grants to impoverished countries. I think Professor Meltzer can go sit down.

World Bank figures show, for example, that the bank’s own contribution to the poorest countries amounts to only about 7 percent of the government-backed aid they get from 230 international aid agencies, including regional development banks and special funds in Europe for disease, education, maternal health and other programs.

[...]

During the crisis surrounding Mr. Wolfowitz, European countries threatened to channel money for the poorest countries through other agencies. Now that he is leaving, many experts said, that is bound to happen anyway.

We'll see.

(P.S. I don't know why, but I would expect the New York Times to do better in their reporting than to say "many experts said". How many? Who? For instance. The NYT isn't a blog, you know.)

And let's not forget the International Monetary Fund that's been sucking Latin American and other poor countries dry and which has been nose-thumbed by Hugo Chavez, and other South American leaders, with Ecuador going so far as to kick the World Bank rep out of the country.

Criticism of the monetary fund has also erupted from leaders in Asia and Latin America whose countries staggered under austerity programs imposed by the fund in return for the bailouts of the 1990s. These leaders have begun discussing plans for regional funds to compete with the International Monetary Fund.

[...]

“In the past I have called for the abolition of the I.M.F.,” said former Secretary of State George P. Shultz, who is also a former Treasury secretary. “If it disappeared tomorrow, I don’t think people would miss it very much.”

Maybe in a good way.