Debra Ryono
04/01/2004
In an effort to help the world’s weakest nations maintain a foothold in the global economy, the World Bank has launched a trust fund for what it calls Low Income Countries Under Stress (LICUS).
The bank will use money from its own surplus to aid countries that are in arrears with World Bank loans and therefore ineligible for help through the International Development Association. Such nations often are in turmoil because of civil war and internal corruption. The trust fund also will enable the World Bank to work in concert with other donors.
A World Bank Task Force report states that countries abandoned by the international development community show few signs of autonomous recovery; meanwhile their populations suffer severe hardship. Sarah Cliffe, the World Bank coordinator of the LICUS initiative, points out that such conditions can spread. “We can’t afford to allow some countries to drop out of networks of aid, trade and investment—this increases the gap between rich and poor worlds and risks breeding insecurity, through regional or global spillovers of conflict, organized crime and epidemic diseases,” she says.
The trust fund will give a short-term mechanism to help the countries in the most dire need. “Staying engaged means that we can keep our country analysis up to date and be ready to move in quickly to assist when opportunities arise,” Cliffe says. “We cannot do this on our own, but the trust fund will help us to remain part of international assistance efforts in the most marginalized countries. We all realize that aid is used more effectively in countries with stronger policies and institutions. But it is important not to leave behind the weaker countries.”
While the World Bank will not keep a fixed list of LICUS candidates because nations can move in or out of a stress situation, the bank’s task force report estimates that more than 500 million people are in such countries, among which are Sudan, Haiti, Sierra Leone, Somalia and the Central African Republic. The task force recommends that the fund distribute aid with a heavier emphasis on knowledge than on finance, which is why only $25 million is initially going into the trust fund.
However, that money will make a difference says, World Bank President James Wolfensohn. “This new Trust Fund will jumpstart the basic capacity-building and policy reforms necessary to help these countries get back on track to sustainable poverty reductions,” he says.