-- Related Links -- Middle-Income Countries Board Announces Simplification and Reduction in Loan Costs for Middle-Income Countries. Financial Services for Members Strengthening the World Bank’s Engagement with IBRD Partner Countries (pdf) Development Committee communiqué (pdf)

At a Glance

• The global financial crisis has added a new dimension to the MIC agenda, compelling the Bank to rethink its relationship with its MIC clients, and respond to their particular needs.
• The Bank is learning from MICs’ experience to help shape its work in other countries and inform its work to develop innovative financial instruments and new partnership approaches. The Bank is undertaking a series of initiatives to work faster, be more responsive to client needs, and become more externally—rather than internally—focused.
• The Bank is creating a dynamic organization, bringing together the best of its public and private sector arms (IBRD, IFC, and MIGA) to help solve development problems at the regional, national, and subnational levels,

Overview

Middle-income countries (MICs)[1] are increasingly emerging as critical drivers of the world economy, with knowledge and resources to share with each other and with developing and developed countries. Sustaining MICs’ growth and development in a sustainable and inclusive way provides positive spillovers across the world in terms of poverty reduction and global issues such as climate change; energy, food, and water security; international trade and financial architecture.

At the same time, these countries still have a large unfinished development agenda and risk being trapped in “middle-income” status if they do not launch additional reforms to continue their economic, social, and structural transformation.

This mix of the unfinished agendas and the new roles and responsibilities of this heterogeneous group provides the backdrop against which the World Bank will engage with MICs in the years ahead.

The Bank’s Engagement with MICs and Response to the Financial Crisis

Before the financial crisis, the Bank had made considerable progress in revamping its services to be more relevant, flexible, and responsive to MIC-specific needs and challenges. The global crisis highlighted the Bank’s crucial ability to shift rapidly to a more countercyclical approach to mitigate social and economic impacts. The support to private sector and non-sovereign entities has also been substantial. Since July 2008, when the full force of the financial crisis began to hit, IBRD has committed almost $106 billion and disbursed more than $73 billion in support of MIC clients.

To help address the challenges and opportunities of the post-crisis world, the Bank has embarked on a comprehensive modernization agenda with a range of actions to enhance its financial capacity, transform its governance, reform its organization, and refresh and refine its priorities.

Drawing on MIC Capacity.  The Bank is drawing on MICs’ experience to shape its work in other countries and inform its efforts to develop innovative financial instruments and new partnership approaches. For example:

·         In March 2010 the Board endorsed the World Bank’s new framework for managing knowledge, which aims to ensure that it continues to be a center of knowledge and technical excellence on the issues and challenges that MICs are facing in the 21^st century. Increasingly, cutting-edge knowledge is generated in the “South” through countries’ own development experiences. And as policy analysis and development research are increasingly conducted by think-tanks in countries themselves, the World Bank has shifted its emphasis from being a knowledge generator to a knowledge connector by developing an open culture, based on learning, participation, and transparency.  

·         The Bank is also working on several internal reforms that will nurture its “knowledge culture”: linking internal and external expertise through practice groups; improving its global reach and mobility; modernizing its IT infrastructure; strengthening its knowledge products and research; revising its incentive structure; and strengthening the World Bank Institute. 

·         The World Bank Group (WBG) is also working with the MICs as responsible stakeholders that will play an increasing role in a range of global issues, from climate change and energy security to trade and food production.

Becoming More Agile and Demonstrating Best Practice.  Reflecting clients’ changing needs, the WBG continues to adjust its business model to be more responsive, flexible, and innovative.  For example, it is streamlining investment lending procedures; increasing the extent to which it depends on countries’ own financial management, procurement, and social and environmental systems; and working to develop new instruments. 

·         In response to borrowers needs and a changing global environment, the Bank is involved in a major effort to reform its investment lending model.

·         It is also working to improve its guarantees—which complement its lending operations by encouraging large private sector investment—to make them more useful to client governments.

·         The Bank has also developed new technical assistance options for MICs—including analytic and advisory activities, trust funds, free technical assistance, and fee-based services—to meet MICs’ growing demand for tailored, cutting-edge knowledge. 

·         Finally, the Bank is continuing to produce higher-quality, more focused, and flexible Country Partnership Strategies (CPSs), that reflect an up-to-date portfolio of best practices and financing.

Making the Most of Bank Group Cooperation.  The Bank is increasingly bringing together the best of its public and private sector arms (IBRD, IFC, and MIGA) in a more pragmatic approach to addressing development problems at the regional, national, and subnational levels. Significant collaboration among the three institutions has led to regular formal planning and coordination at the strategic level, with joint sector strategies and joint CPSs as appropriate.  The Bank is working with IFC to enhance the compatibility of Bank safeguard policies and IFC performance standards, particularly in joint projects. Furthermore, the Bank is continuing its efforts to integrate knowledge service activities across the WBG.

Progress Status and Next Steps.  Given the WBG’s long-standing focus on MICs, it expects to continue to make progress in expanding the range and flexibility of the services it offers as the effects of the global financial crisis dissipate. Further synergies are being developed by expanding links between the Bank’s work in MICs at the country level and the work on global public goods, particularly climate change. A continuing sharp focus on knowledge and learning and on broadening the use of the available financial and risk management products and services will deepen the WBG’s contribution to development in MICs.

Media Contact: Geetanjali Chopra, (202) 473-0243, Gchopra@worldbank.org 

Updated September 2011