The World Bank loaned two billion dollars more to developing countries in the last year in response to a slowing world economy and the Sept 11 attacks on New York and Washington, but anti-poverty activists say the money has not been effective.

In statements released Wednesday and Thursday, the Washington-based Bank said it loaned US$19.5 billion worldwide, of which a record US$5.5 billion went to 52 projects in Europe and Central Asia. Last year's total lending for the fiscal year ending in June 2001 was US$17.3 billion.

"In the months after the horrific events of Sept 11, the World Bank moved quickly to help developing countries cope with the aftershocks," said Bank President James Wolfensohn.

The institution said the considerable increase in its lending in Europe and Central Asia was due in part to significant loans to crisis-stricken Turkey, worth US$3.55 billion.

Interest-free loans to Sub Saharan Africa through the Bank's soft-loan arm, the International Development Association (IDA), reached a record US$3.8 billion, or 47 percent of the US$8.1-billion IDA loan total. In the previous year, IDA loaned US$3.4 billion to Africa out of a total of US$6.8 billion.

Geopolitical reasons

Despite the large figures, anti-poverty activists — long critical of the Bank's operations in the Third World — charge that more money does not mean better results, especially when the Bank continues to attach counter-productive conditions to its loans.

They also say the increase in loans, in places like Pakistan, Afghanistan and the West Bank and Gaza, are due to geopolitical reasons rather than to the Bank's commitment to its raison d'etre, namely fighting poverty and aiding development.

"When you are talking about lending for education for example, you have to realize it is an education reform that results into more people paying for basic education," said Njoki Njehu of the 50 Years Is Enough Network , referring to the Bank's record of encouraging user-fees at schools.

She said the threat of famine now facing southern Africa is partly to blame on agricultural policies adopted at the behest of World Bank and its sister institution, the International Monetary Fund (IMF).

Most of the Bank's money destined to the agriculture sector in that part of the world is used to restructure the industry in favour of cash crops and large farms rather than for subsistence food, smaller farms and women farmers, added Njehu.

Big gaps to fill

"Money has been going out of the institution for a long time," she said. "But it hasn't delivered on food security, illiteracy rates, better health systems and on all sorts of other needs. There are still big gaps that need to be filled in. Don't look at the numbers, look at the results and the details."

The Bank said that lending in the past fiscal year supported a broad range of activities, including programmes to support reconstruction in Afghanistan and Pakistan and the fight against the HIV/AIDS pandemic in Africa and the Caribbean.

Money went to providing safety nets in different parts of the world affected by the aftermath of the Sept 11 attacks on US landmarks, including to the Caribbean tourism industry and reconstruction in Afghanistan, it said.

Loans at market interest rates from the International Bank for Reconstruction and Development (IBRD), the Bank's commercial loans branch, amounted to US$11.5 billion , up from US$10.5 billion in 2001.

The institution said it increased lending for agricultural, fishing and forestry projects by a whopping 79 percent, to US$1.2 billion, while lending for education rose 26 percent to US$1.4 billion dollars.

Loans to the health sector remained steady at US$1.2 billion dollars while lending for transportation projects in the developing world dropped 23 percent to US$2.4 billion.

But the Bank should not be judged by its loans total, said Steve Hellinger of the group Development Gap. "The amount of money is really unrelated to the quality of the impact," he said. "The Bank makes progress based on how much goes out of the door and the rate of return, not on the social and environmental impact."

Cuts to subsidies

Hellinger, a veteran activist, said the Bank supports systems that do not sift through to the poor.

"You have government agencies, to which most of the money goes, and which are simply not geared towards working for the majority of population. The money goes through and winds up in the banking system and the loans are made to large producers, often with connections to governments, who are producing most likely to foreign markets, and not to their own people," he said.

For the past 20 years, bank policies have promoted cuts to subsidies for farmers, the elimination of barriers to the inflow of agricultural goods and transforming land into a tradable commodity, he said.

"Small farmers producing for the domestic market have been squeezed so badly by the increased cost of their inputs and the competition they have to go up against with all these cheap imports coming from the outside, that thousands upon thousands have been put out of business," said Hellinger. "This is one of the reasons for food insecurity."

Satisfactory rating

The Bank's operations evaluation department (OED) shrugs off the accusations, saying that that more 80 percent of Bank projects in the past year received a satisfactory rating, and that more than 70 percent of them will likely be resilient to future risks — a high success rate.

But that is disputed not only by anti-debt, anti-globalisation campaigners, but also by some members of the US Congress.

In a March study, the joint economic committee, which has often asked for reforms to the Bank and the Fund, said that the Bank's development work needed an urgent independent review that might include an external performance audit.

Committee chairman Jim Saxton described the Bank's own evaluations, often done by the OED, as lacking credibility and "worthless". — IPS