World Bank’s Impact on Poor Nations to Be Examined

The World Bank and some of its harshest critics on Monday joined together to examine whether the economic medicine that the lending organization prescribes for poor countries helps or hurts them.

The bank, seven governments and a coalition of more than 500 citizens groups will try in the 18-month pilot project to identify what works and what doesn’t so that leaders of developing nations can do a better job of improving daily life in their countries.

The meeting brought World Bank President James Wolfensohn face to face with many nongovernmental, nonprofit organizations, such as Oxfam International and Friends of the Earth, which have sharply criticized his two-year performance as head of the 180-nation organization.

Wolfensohn said he and the bank’s 10,000 employees work daily to alleviate poverty and are “not sitting on the mountain giving lessons.”

In meetings in the United States and the seven countries, participants will examine the impact of “structural adjustment programs” that the bank requires governments to initiate before it grants low-interest loans.

These programs sometimes require governments to end food or fuel subsidies, drop trade barriers and deregulate labor markets. The bank, which lends more than $20 billion a year, says the programs lead to economic growth that benefits everyone.

But citizens groups say the policies can undermine fledgling reform governments, which are forced to implement changes in order to qualify for World Bank funds, hurt the poor and reduce the capacity of local economies.

The seven countries involved are Ghana, Mali, Uganda and Zimbabwe in Africa, Ecuador in Latin America, Hungary in Eastern Europe and Bangladesh in Asia.