The World Banks Independent Evaluation Group (IEG) has issued high marks for the Banks early response to the global financial crisis, rebutting claims that the Bank took a back seat.
Vinod Thomas, IEG Director-General, noted the significant positive impact of Bank financing, particularly for middle income countries.
While OECD countries have posted post-crisis growth of approximately 4%, middle income countries are closer to 8%, and developing countries as a whole approach 6%, Thomas pointed out.
He attributed the middle income countries strong performance to their having been great beneficiaries of IFI assistance and while all IFIs sharply increased their financing in response to the crisis, the World Bank disbursed a record $80 billion between fiscal years 2009 and 2010. This was more than any other IFI in that time period.
The increased lending by a dramatic amount by the World Bank in this context of recession reflects a role it has now played in helping to stabilize world economic growth, Thomas told Emerging Markets.
One leading independent development think tank agreed that the World Bank had performed well during the crisis, but said there was room for improvement in its work with low income countries. Ben Leo, Research Fellow at the Center for Economic Development in Washington, said there was a broad consensus that the Bank had responded well to the crisis.
I agree that the Bank responded very vigorously in the middle-income countries, Leo told Emerging Markets. Its institutional and capital structure allowed it to be much more agile.
The record disbursement by the World Bank was due in part to the happenstance of low pre-crisis demand for funding from its middle-income country financing arm, the International Bank for Reconstruction and Development (IBRD). This left the institution with significant leeway to increase its middle-income lending by nearly three times, according to official figures.
The International Development Association (IDA), the Banks funding arm for low-income countries, also made a positive response. Leo noted that the Bank moved swiftly to get resources to low income countries at the outset of the crisis but the fact that IDAs resources were limited to a fixed pot of money that it receives every three years meant it was constrained in what it could do.
The IEGs analysis also addressed concerns that low income countries may have lost out to increased lending to middle income countries. In a way there is no clear substitution, Thomas noted. The former does not take away from the latter. Without the former, the latter would get worse.
While acknowledging the increases over the past two years, Thomas noted that there is no doubt that additional funding [to low income countries] will be critical.
The positive effect of the crisis-responsive funding bodes well for the World Banks future role, Thomas said.
This kind of support from the multilaterals, the World Bank plus the others, is a major force in supporting and shoring up the stabilization of growth. This is a different role, a new role. Its something to be reckoned with, he said.