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World Bank welcomes $13 bn boost for poor nations

The World Bank on Tuesday welcomed a deal to provide $13 billion in new cash for projects involving 79 of the world's poorest countries, struck after months of bickering by donors on how the money should be used.

Including this new money, funds available to the bank's lowest cost financing arm, the International Development Association, will total $23 billion over the next three years, up 18 per cent over previous levels.

The agreement is "an important step forward in addressing the goals highlighted at the recent development conference in Monterrey," said Sven Sandstrom, World Bank managing director, who chaired the lengthy negotiations. The IDA "performs a critical role in balancing the responsibilities of poor countries for their own futures with support from donors and international institutions."

The agreement came just in time, as the previous three-year deal expired at the end of June.

Talks between donors were delayed by heated debate over a controversial US proposal to increase from less than 1 per cent to around 50 per cent the amount of money dished out by IDA in the form of grants.

The plan met with stiff opposition in Europe, and delayed by more than half a year an agreement on the increased funding. The donors eventually agreed that 18 to 21 per cent of should be given out in grants.

The 39 donor countries also urged the bank's management to establish a results-based measurement system to link funding to a country's development progress.

Poor countries should be rewarded for policies promoting gender equality, education and strengthening the fight against diseases, including HIV/AIDS, the donors also stipulated.

IDA was created in 1960 and is the world's largest source of cheap financing for the poorest countries. The agreement represents the 13th replenishment of the fund.

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