Transcript Lessons from Past World Bank Crises Responses

Lessons from Past World Bank Crisis
Responses
Presentation at the AIPRG Conference
Yerevan, Armenia
July 7-8, 2009
Overview
► Crisis Episodes and Country Cases
Covered
► Characteristics of World Bank Support
during Crises
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Crisis Episodes and Country Cases Covered
► IEG looked at World Bank support in 17
crisis episodes from 1993-2003 – a total of
some $21 billion in financial assistance
► Early-mid 1990s: Mexico, Argentina ($3b), Jamaica
► Late 1990s: Thailand ($2b), Indonesia ($2b), Korea ($7b) +
Russia, Brazil, Bolivia, Bulgaria, Ecuador
► Early 2000s: Argentina, Guatemala, Turkey ($2.5b), Uruguay
► Multiple: Mongolia
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Characteristics of World Bank Support during
Crises
►Support was characterized by:
►
brief surges of budget support (adjustment
lending) some 10% -- of total packages;
►
return to normal lending volumes after 2-3 years
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Factors Associated With Successful Crisis
Responses: Caveats
►these must be interpreted mutatis
mutandis, allowing for differences
today relative to past crisis episodes
►
►
global reach of the current crisis episode
new environmental/climate change imperatives
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Factors Associated With Successful Crisis
Responses: Speed With Quality, Focus, And
Selectivity
► Keep Coverage Selective
• more focused operations performed better (e.g., financial
sector)
► Focus policy dialogue and policy measures supported
by lending (“conditionality”) on areas of comparative
strength, notably
• financial sector (mixed record in past), public finance and
public sector (generally strong)
• corporate restructuring (less successful in past, beware of
interactions with macro – e.g. Thailand)
• trade (less in late 90s, perhaps more need now?)
► Do more on Poverty from the outset
• insufficient historically (e.g., Russia)
• a few good examples (Brazil and, with some delays, Thailand)
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Both Country Knowledge And Technical
Excellence Are Essential For Successful
Interventions
►In responding to past crises, in many cases the
Bank did not possess the requisite country-specific
knowledge, undermining results
►
Preparedness is key, and can be assured through regular
analytic work -- Financial Sector Assessment Programs
(FSAPs, joint with IMF) anticipatory poverty analysis, etc.
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An Effective Crisis Response Also Requires The
Right Instruments For Delivering Support
►Need judicious balance between sustaining
engagement over the medium term and keeping prior
actions modest and realistic
►
Programmatic Development Policy Loans (DPLs, replaced
adjustment lending) appear to fit the bill—they operate within
an indicative medium-term framework which can be updated as
needed
►
but individual operations can be processed against actions
already taken
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Close Coordination With Other Development
Partners Is A Key Factor Behind Effective Crisis
Support
►Within the World Bank Group (i.e., between
the IBRD/IDA, IFC and MIGA)
►With partners outside the World Bank
Group:
• IMF (macroeconomic framework, exchange rate
policy)
• EU (given its experience and major role in
helping new-member countries to cope with the
crisis)
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Internal Organizational Crisis Response
Arrangements Matter A Great Deal
►Internal organizational arrangements seek agility
and timeliness of crisis response, cross-sector
collaboration, access to appropriate instruments,
and accountability
►In late 1990s the World Bank set up a Special
Financial Operations Group -- to respond to the East
Asian crisis. It ensured agility, but needed:
• better cross-sectoral coordination and
• to be anchored in Regions in order to bolster accountability
and to ensure that response planning and execution draws
on country knowledge.
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Things To Watch Going Forward
►Volume with Quality
►Poverty and Social Safety Nets
►Environment and Climate Change
►Leveraging Resources
►Fiduciary Concerns
►Monitoring and Evaluation
►Preparedness and Early Warning
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