Reaching the marginalized: EFA global monitoring report, 2010; 2010

EDUCATION AT RISK: THE IMPACT OF THE FINANCIAL CRISISThe international response: missing a human dimensionFigure 1.5: The World Bank has front-loaded concessionalInternational Development Association loansEarly disbursement as a share of planned allocation underthe International Development Association (IDA)LiberiaCôte d’IvoireBurkina FasoSenegalEthiopiaBeninGhanaMaliC. A. RTogoNigeriaGuinea-BissauBurundiLesothoGambiaKenyaNiger100 110 120 130 140 150 160 170 180% front-loadedSource: World Bank (2009b).wholly successful. Before the G20 summit,World Bank President Robert Zoellick called ondeveloped countries to put aside the equivalentof 0.7% of their stimulus package for a newVulnerability Fund (World Bank, 2009l). This wasan innovative attempt to create a financing basefor new and additional aid to countries lackingthe fiscal space to respond to the crisis, enablingthem to create the conditions for recovery andstrengthen social protection. Mr Zoellick notedthat the real issue at stake was a choice betweenan ‘age of responsibility or an age of reversal’(Zoellick, 2009). That formulation captures theoptions rich countries face with respect to theinternational development goals in educationand other areas. Evidence to date suggeststhat the ‘age of reversal’ is the default choice.There are wider problems in the G20 response tothe crisis related to the respective roles of the IMFand World Bank. The latter would have been theobvious institution to lead the response to thespecial challenges facing low-income countries.It has a far stronger capacity than the IMF forrapid assessment of the budgetary implicationsof the economic downturn on financing for theMillennium Development Goals. It has also playeda leading role in supporting and developing socialprotection programmes. Moreover, theInternational Development Association, the WorldBank’s main source of financing for low-incomecountries, provides loans on more concessionalterms than the IMF’s Poverty Reduction and GrowthFacility. 15 For all of these reasons, the World Bankand the IDA should have been the first line ofdefence in the response to the crisis.The IMF’s track record in poverty reduction effortshas prompted further questions about its enhancedrole. In 2004, the IMF Independent Evaluation Officeconcluded: ‘Success in embedding the PRGF in theoverall strategy for growth and poverty reductionhas been limited in most cases’ (IMF, 2004).Several commentators have identified an inflexibleapproach to targets, enshrined in loan conditionsfor inflation, fiscal deficits and public spending,as a source of tension between the IMF approachto macroeconomic stabilization and the financingstrategies aimed at achieving the MillenniumDevelopment Goals. That tension has been evidentin debates over financing for education. Forexample, the Global Campaign for Educationconcludes a review of twenty-three IMFprogrammes by warning of a potential conflictbetween spending targets set in loan conditionsand financing requirements for teacher recruitment(Global Campaign for Education, 2009).In the wake of the financial crisis, the IMF’s seniormanagement has pledged to adopt more flexibleapproaches to fiscal deficits and inflation (IMF,2009d; Sayeh, 2009). This is vital, because fiscalpolicy should counteract the crisis, not createdeflationary pressures. There is some evidenceof greater flexibility being applied at the countrylevel in sub-Saharan Africa. Even before the crisis,inflation targets had been loosened to reflect theimpact of higher food prices. In mid-2009, the IMFreported that fiscal targets had been relaxed ineighteen of the twenty-three countries with activeprogrammes (IMF, 2009d). 16 However, questionsremain over the degree to which the recentdeclarations reflect a new approach tomacroeconomic management. Loan conditions inseveral countries examined in the United Nations’2009 Trade and Development Report – includingCôte d’Ivoire, Ethiopia, Pakistan and Senegal –15. PRGF loans are provided at 0.5% interest and are repayable overten years with a five-year grace period. The PRGF has a grant elementof around 30%. IDA provides interest-free credits repayable overthirty-five to forty years with a ten-year grace period. The grantcomponent of IDA is roughly double that of the PRGF.16. A preliminary review of programmes for thirty-three low-incomecountries indicates that the deficit is being allowed to widen in aroundtwenty cases (though in some instances just for 2009) and is stayingthe same or falling in the other countries (Martin and Kyrili, 2009).The World Bankand the IDA shouldhave been the firstline of defencein the responseto the crisis35