Will the emerging powers give to the poorest?
The World Bank is now in the final throes of its triennial campaign to replenish its fund for the world’s poorest countries, the International Development Association (IDA). In an era of austerity, the Bank is scrambling to make sure that its donations don’t decline, and one of the key questions this year is whether the ...
The World Bank is now in the final throes of its triennial campaign to replenish its fund for the world's poorest countries, the International Development Association (IDA). In an era of austerity, the Bank is scrambling to make sure that its donations don't decline, and one of the key questions this year is whether the big emerging economies will begin making contributions commensurate with their economic power and enhanced voting share at the Bank.
The World Bank is now in the final throes of its triennial campaign to replenish its fund for the world’s poorest countries, the International Development Association (IDA). In an era of austerity, the Bank is scrambling to make sure that its donations don’t decline, and one of the key questions this year is whether the big emerging economies will begin making contributions commensurate with their economic power and enhanced voting share at the Bank.
At the moment, Brazil, Russia, and China combined contribute less than one percent to IDA’s operations. China, which stopped being eligible for IDA loans in 1999, gave its first, very modest contribution in 2007. (For its part, India is usually the largest recipient of IDA funds and hasn’t become a regular donor yet.) A senior Obama administration official told me that the leading donors have worked hard to persuade emerging countries to increase their committments.
It’s not yet clear what effect these remonstrations have had. Several of the emerging economies can point to their own domestic needs and argue that their most effective contribution to the fight against poverty is to continue growing. But even judged in terms of GDP/per capita or share of the world economy, most of the big emerging economies contribute far less than the industrialized world. Aside from China, G20 members that contribute fairly paltry sums include:
Mexico, which gives 0.08 of the IDA total;
South Africa, at 0.08;
Russia, at 0.17; and
Turkey, at 0.08.
Diminutive Belgium and Norway, by contrast, contribute 1.4 and 1.66 percent respectively.
There are issues beyond raw contributions at play in the negotiations. Several of the emerging economies, including China, themselves "graduated" from the IDA program in recent years and are still repaying existing loans (IDA loans typically have extended repayment programs). In an effort to shore up finances, World Bank officials are asking many of these countries to accelerate their repayments. It may well be that China’s ultimate contribution will come mostly in the form of quick repayments.
Bank officials and national representatives meet in Brussels on December 14-15 to hash out the final numbers.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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