Nearly one dollar in every four the World Bank lends to Third World governments is given on condition that they change their policies, following the urging of the United States.
It's not a new kind of lending, but the report released this week reflects the importance the United States and other wealthy countries now give to influencing governments of poorer nations.In 1979 the proportion of this kind of loan was less than one dollar in $300. The rest of the bank's money was used, as now, for the traditional kinds of World Bank loans: building schools, roads and hospitals, dredging harbors and helping farmers, without regard to how the government is run.
The bank the biggest source of aid for poor countries authorized more than $17.5 billion in loans in the year that ended last June 30, compared with $10 billion in 1979. In 1979 policy-based lending amounted to only $31 million compared with almost $3.5 billion in 1987.
The new proportions appeared in a special report issued as part of this week's semi-annual meetings of the bank and its sister organization, the International Monetary Fund. They are owned by the same 151 countries, with the United States as the largest single contributor to both.
At a 1985 meeting in Seoul, South Korea, Treasury Secretary James A. Baker III said the bank should take the lead in policy-based lending. The bank had already been making such loans on a smaller scale, but Baker's speech and the advent of a new bank president Barber Conable gave the process a push.
It's called "conditionality" and the International Monetary Fund has been using it on almost all loans for years. The IMF, however, does not claim to be a development agency; its job is to keep currencies stable, and it rarely lends money for more than three years.
The bank's mission is to raise living standards over the long term, and it has lent for periods as long as 50 years.