ReliefWeb

Executive summary

At the beginning of the Covid-19 pandemic, the World Bank (WB) made it clear that it was going to use the crisis to promote its development vision and implement far-reaching structural reforms, especially those aligned with the promotion of ‘private sector solutions’. It also made clear that it would rely on Development Policy Financing (DPF) to carry out its Covid-19 response.

DPF provides budget support to developing country governments with conditions attached which specify the adoption of specific policy and regulatory reforms. In each programme document this translates into ‘prior actions’ which are often closely aligned to policy conditionality included in IMF loans. The volume of the DPF portfolio reached US$17.4 billion in FY20 and US$17.8 billion in FY21 (respectively 30 per cent and 27 per cent of total lending), from US$11 billion in 2019.

This raised alarm bells across civil society, which has long contested DPF for the type of policy reforms pushed onto countries, and the use of conditionality as a way of exerting undue influence over national policy making. At the same time, the WB has published the findings of external investigations that expose extensive use of data manipulation, ethical misconduct and conflict of interest in the production of its flagship Doing Business Report, which ranked countries on how easy it is for the private sector to operate in them.
This included the technical assistance provided to developing countries ahead of the DBR’s publication.

This report investigates the use of DPF in the WB’s Covid-19 response. It analyses a database of 90 Development Policy Operations (DPOs) and their prior actions approved between January 2020 and April 2021 in 64 countries. It also reviews civil society concerns about the WB’s use of DPF in light of this emerging evidence, and contributes to an informed debate about the WB’s use of budget support in the context of the Covid-19 recovery and beyond.