World Bank Establishes Trust Fund for World’s Poorest Countries

Washington, January 15 , 2004--The World Bank created today a $25 million Trust Fund to strengthen institutions, support early efforts at policy reform and build capacity for social service delivery in the world’s poorest countries.

These countries, collectively known as Low Income Countries Under Stress (LICUS), are characterized by very weak institutions and governance, and constitute the most difficult environments in which to use aid effectively. The Bank's LICUS initiative aims to support selective basic governance reforms and innovative mechanisms for social service delivery.  The Trust Fund will target those LICUS countries that are not eligible to receive International Development Association (IDA) funding due to their arrears with the Bank. 

“This new Trust Fund will jumpstart the basic capacity-building and policy reforms necessary to help these countries get back on track to sustainable poverty reduction,” said James Wolfensohn, President of the World Bank. “Since they are home to many of the world’s most disadvantaged people, reaching out to these countries and their citizens is critical for achieving the Millennium Development Goals. Neglecting these countries only perpetuates and aggravates poverty, possibly leading to instability and ‘state failure.’ It also creates potential for negative regional and global spillovers, since epidemic diseases, conflict, and organized crime easily move across national borders.”

Capacity building to support governance reform. This will include supporting dialogue between national stakeholders on economic, social and governance issues; dialogue between national stakeholders and the donor community; technical assistance to design and implement basic civil service, public finance or judicial reforms; training for leadership and technical counterparts; data collection and analysis to support key reforms, and; information dissemination on key reform areas.

Strengthening social service delivery, including the fight against HIV/AIDS.  Basic service delivery is often an area that can attract domestic political consensus for action despite ongoing conflict or impasse at the political or electoral levels. Effective institutions for service delivery can deliver visible benefits to the population, acting to recreate hope in accountable and collective public action. Well-designed service delivery programs can also be resilient to fluctuations in the political situation, and they provide a more cost-effective option for social protection than repeated waves of humanitarian aid.

The Trust Fund will be financed by transferring funds from the Bank’s surplus for FY03 and will operate until the end of 2007.  It will be administered by the International Development Association (IDA), drawing on the approval system, documentation and procedures of the existing Post Conflict Fund.

Keeping in mind the harsh conditions in these countries, the World Bank realizes that not all of the most severe LICUS countries will make satisfactory progress over the lifetime of the Trust Fund. But the Bank will work closely will all countries involved to ensure that each attains the best possible results.

The Trust Fund will work closely with the support available from other donor agencies, ensuring close collaboration with our partners, in particular the UN system.  

"Close coordination is particularly crucial in these countries, where capacity is low and resources scarce,” said Sarah Cliffe, coordinator of the Bank’s LICUS initiative. “Many donors are showing interest in supporting a common approach. This Trust Fund will enable the World Bank to contribute to a concerted effort by donors to help these countries find a sustainable exit from crisis.”

To learn more about the LICUS initiative, go to

http://www1.worldbank.org/operations/licus/