World Bank anti-corruption rules accepted

18-09-2006

Global finance ministers have given their approval to revised World Bank reforms to tackle corruption, after warning that the organisation was being too stringent with plans to withhold aid funds from developing countries which did not meet its new standards.

During the bank's annual meeting in Singapore, finance ministers negotiated an alternative plan under which representatives of member governments on the bank's board will oversee the implementation of the anti-corruption reforms, marking a shift away from earlier proposals for the World Bank's managers to monitor the new rules.

The agreement comes after a number of developed countries warned that the determination of new World Bank president Paul Wolfowitz to tackle corruption in developing countries could cause aid lending to poorer nations to slow.

Britain last week threatened to withhold £50 million it had promised for World Bank funds in protest at the new conditions attached to aid, which the government claimed were placing too much pressure on developing countries to comply with the bank's wishes on internal economic matters.

Welcoming today's agreement made between finance ministers to ensure that anti-corruption measures are not too punitive, Britain's international development secretary Hilary Benn told reporters that while it was important to tackle corruption where it existed, it was also important to ensure a continuing flow of aid to developing countries to help alleviate poverty.

Making his views clear earlier during a meeting of the World Bank's development committee, Mr Benn said: "None of us should walk away from assisting poor people, even where the situations are difficult."

Addressing the committee, Mr Wolfowitz insisted that despite criticisms of his anti-corruption drive, lending to developing countries was up nine per cent this year to $9.5 billion (£5 billion).

"I believe that good governance policies and practice cannot be ends unto themselves. Rather they are means to achieve better development results," the World Bank chief told finance ministers.

"If we waste our assistance on projects or institutions where money is not used properly, it comes at the expense of many other countries or ministries or organisations that have demonstrated [the] need and capability to use more than what is available to them," he added.

But India's finance minister Palaniappan Chidambaram told World Bank members that Mr Wolfowitz's anti-corruption drive risked impeding economic development in poorer nations.

"Development cannot wait for improved governance and a corruption-free world. Both must go hand in hand," he said.


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