BACKGROUND

In recent years the World Bank Group has rethought its role in supporting country development in low- and middle-income countries. For low-income countries with reasonable policies and institutions, the Bank -- in partnership with others -- supports country-owned and -prepared poverty reduction strategies.

In November 2001, World Bank President James Wolfensohn set up a task force to extend this review process to the minority of low-income countries whose policies and institutions offer limited scope for poverty reduction through donor-supported programs and projects.

The Task Force on the Work of the World Bank Group in Low-Income Countries Under Stress (LICUS) was created to respond to concerns about how the development community, including the Bank, can best help chronically weak-performing countries get onto a path leading to sustained growth, development, and poverty reduction.

A summary of findings of the task force was issued and discussed by the Board on March 19, 2002 (the complete version of the report was discussed by the Board on July 30, 2002).

WORLD BANK-UNDP LICUS PILOTS

A partnership with UNDP was established to begin piloting the LICUS approach in a number of African countries, including Somalia, Sudan and the Central African Republic. The pilot strategies completed so far have initiated several innovative approaches to re-engagement and reform in a LICUS environment. See Country Work for more information on these projects.

OECD-DAC LEARNING AND ADVISORY GROUP

The Bank has worked closely with OECD/DAC and other donors to establish a Learning and Advisory Group (LAP) to share ideas, research, and lessons learned.  To help bilateral donors, this early policy research focuses primarily on new models to increase policy coherence among foreign ministries, departments of defense and aid agencies.

LICUS IMPLEMENTATION TRUST FUND

The LICUS implementation trust fund was approved by the Executive Directors of the Bank in March 2004, allocating $25 million from the Bank's net income to provide modest support for LICUS that are undergoing a transition but are in arrears to the Bank and thus unable to obtain regular financing. The trust fund will support these countries in their efforts to introduce basic reforms, strengthen social service delivery, and establish a track record for subsequent access to regular World Bank financing and debt relief.