World Bank Document

ture economies, ease debt-servicing burdens, and investors have confidence in the policies and prorestore
economic growth-are the results projected grams of the recipient countries. Here, the Bank
in the High scenarios. However difficult the policy plays a dual role. In its own lending, the Bank has
reforms may have been to adopt, in due course a unique perspective from which to analyze a
they will create much easier conditions for devel- country's prospects and needed policy reforms
oping countries than would prevail if the reforms and to provide this analysis to policymakers. In its
are diluted or abandoned.
cofinancing efforts, the Bank provides instruments
The High scenarios therefore convey a strong to increase the assurance of investors in projects
sense of encouragement. Policies and policy aspi- and countries' development prospects. In order to
rations are on the right lines; governments are try- carry out these functions, the Bank's ability to
ing to steer their economies in directions that will increase its own lending is crucial.
indeed bear fruit. The achievements of the 1950s Low-income countries that must depend on conand
1960s-strong growth, low inflation, financial cessional capital have experienced relative stagnastability-can
be recaptured. Under these circum- tion in new commitments in recent years. Attenstances,
provided institutional innovations take tion has focused on sub-Saharan Africa, where the
place, normal relationships between private credi- prospect for a dramatic decrease in concessional
tors and debtor countries can be resumed, and flows has been highlighted as an overriding obstaconcessional
aid can be expected to increase. Inter- cle to achieving sustainable development. This
national capital can then resume its productive role underscores the need for a substantial increase in
in economic development.
IDA resources in the medium term to meet the
needs of this region and to provide uninterrupted
The role of the World Bank
support to IDA borrowers in Asia.
In its proposals to respond to the potential
The role of the Bank as a provider of finance and decline in funds for sub-Saharan Africa, the Bank
other services must be seen in the context of the has stressed that increases in the volume of aid to
increased importance of international finance in the region must go hand in hand with improveeconomic
development. The Bank is playing an ments in aid effectiveness. It has also been recogincreasingly
active role in assisting developing nized that ODA flows to Africa could be better
countries with needed policy reforms. It has been utilized with new forms of aid coordination that
flexible in adapting its operations and instruments emphasize targeted support by lenders for reform
to the changing needs of its member countries. It efforts by borrowers. The potential Bank contribucomplements
and-to the extent possible-exer- tion to achieving these dual objectives through
cises a constructive influence on capital flows from enhanced aid coordination has received strong
other sources. In order to carry out these func- support from the aid community. In exercising this
tions, the Bank's own financing must be on a scale function, the Bank is prepared to assist borrowing
that is meaningful both to borrowing countries and governments in strengthening existing mechato
other sources of finance.
nisms for investment review to help ensure that
The Bank is the major channel by which devel- proposed projects are consistent with explicit
oping countries access the international bond mar- development priorities and with the capacity to
ket and other financial markets. This function is effectively implement and operate projects.
critical particularly for countries that rely mainly The Bank also has a long history of collaboration
on commercial capital and are most sensitive to the with export credit agencies and commercial banks.
impact of fluctuations in the world economy. Bank Various cofinancing instruments have been devellending
is an important component in the accept- oped and will continue to evolve in the future as
able balance between official and private sources, the demand increases for resources from the Bank
between short- and long-term maturities, and and other sources of finance. The Bank could,
between fixed and variable rate instruments.
through its assessments of investment programs
Although the worldwide recession has meant and individual projects, support the efforts of both
temporary slowdowns in many investment export credit agencies and commercial banks to
projects in developing countries and reductions in improve the quality of lending, thereby increasing
private and public investment, resumed growth the development benefits of such flows while
will involve increased ability to use external strengthening the portfolios of the lending instituresources
productively. The resumption of growth tions. Beyond specific cofinancing arrangements,
of private capital flows will be more likely if private the Bank's role in regularly reviewing country poli-
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