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April 20, 2006—A new report, by the World Bank and the International Monetary Fund (IMF), calls for greater investment to help developing countries tackle corruption and improve governance – the way governments manage to deliver public services to their people.
The report comes just a week after World Bank President Paul Wolfowitz laid out a broad strategy to tackle corruption, a force he said was often at the very root of why governments failed to work.
The third annual Global Monitoring Report (GMR) says improved monitoring of the way in which governments deliver public services is vital to cutting poverty in many countries, especially in Africa and Latin America.
The 2006 GMR report also calls on donors to deliver on their pledges to boost aid to developing countries. But it says aid needs to be more flexible and better targeted, so developing countries can use the aid dollars to pay recurrent expenses, such as teachers’ and doctors’ salaries.
Progress in Reducing Poverty
The 2006 report measures progress toward meeting the millennium development goals – the international set of agreed targets to cut poverty and improve health and education in the developing world.
Lead author of the report, Mark Sundberg, says favorable economic growth over the past five years has resulted in what he calls “remarkable progress in reducing poverty.”
“Although survey data is still lacking, on the basis of aggregate income growth it is estimated that between 2000 and 2005, poverty may have declined by as much as 10 percent,” Sundberg says. “But performance across regions varies quite distinctly – East Asia and South Asia have benefited the most, Africa by less.”
The report says in Latin America, growth is up over the past two years, but is still too low to make strong inroads into poverty reduction. And it says African growth has also improved, but on current trends few African countries will reach the millennium goal to halve the number of people living on less than a US$1 a day.
A Sobering Picture
Sundberg says while there has been progress in cutting poverty, the picture is “far more sobering” for countries meeting the goals on reducing child and maternal mortality, improving access to education and halting the spread of HIV/AIDS.
“There are regions – Africa in particular, but also in South Asia – where very few of the goals, if any, are on track to being met. On the other hand, within each region, some countries are achieving quite remarkable progress,” Sundberg says.
“Sub-Saharan Africa is currently not on track to meet any of these goals. However within that region, recent survey evidence from the late 90s to 2003-2004 shows considerable progress in cutting child mortality rates in Madagascar and boosting immunization rates in Mozambique for example.”
It’s a finding which illustrates one of the central themes of the report – strong progress can be achieved in countries if they have sound policies, coherent and coordinated programs and better targeted aid funding.
The report presents a framework for monitoring governance, but stops short of advocating that aid only be given to countries with good governance.
“Governance is complex and there is no single path or recipe for building better governance,” Sundberg says. “It’s a very large and encompassing area. It means executive authority – presidential powers – and checks and balance institutions, like legislative councils, supreme audit institutions or a free press, as well as administrative systems. It also means accountability mechanisms and voice of public and citizens groups. Monitoring and tracking performance across these core elements is needed.”
Sundberg says the report looks at how country performance can be monitored across these different dimensions and recommends 14 different indicators be used to measure governance in developing countries.
Need to Deliver Aid
The report points out developing countries will be stymied in making further inroads into cutting poverty and improving health and education, unless there’s more flexible aid.
It says the main need in many countries is to meet recurrent expenses, such as salaries for health workers and teachers. But at present, only about one-third of bilateral aid to low income countries is flexible and can be used to pay for recurrent and investment costs in health and education.
The report also calls on donors to deliver on their commitments for increased aid, including an additional US$25 billion a year in aid for Africa by 2010 and US$50 billion more a year for all developing countries.
“There’s a risk that these funds won’t appear,” Sundberg says. “Rich countries themselves face fiscal stress. There’s also a danger that debt relief will substitute for aid, rather than be additional, as it’s intended to be. Careful benchmarking and monitoring of donor commitments is also needed to generate greater accountability and transparency.”
The report will be presented to the Development Committee on April 23. The committee’s mandate is to advise the Boards of Governors of the Bank and the Fund on critical development issues and on the financial resources required to promote economic development in developing countries.