World Bank Reports Sour Projects

The World Bank, which has lent more than $300 billion to developing countries over the last half a century, acknowledges in an internal report that it has seen a dramatic rise in the number of projects gone sour.

The number of bank-financed projects with “major problems” doubled over the last decade, reaching a high of one out of five, or 374 out of the 1,870 programs it backed in 1991.

“Deterioration has accelerated over the past three years,” said the report, which covered the bank’s performance through 1991. The internal audit was made public recently.

The report’s authors cited several reasons for failures.

In some instances, they blamed countries for unwillingness to try new methods. In others, they faulted the design of particular programs or the bank’s failure to make periodic follow-up visits.

Mostly, though, they blamed bad economic conditions in the 1980s throughout Africa, Latin America and part of Asia that made it harder for the borrowing governments to pay their share of the projects’ costs.

The bank says there was a modest improvement in 1992, mostly because some of the worst-performing projects were closed.

The World Bank is owned by 175 countries, both borrowers and lenders, with the U.S. government holding the largest bloc of shares. The United States contributes about $1 billion a year for loans.

Michael Granoff, an international economic adviser to President Clinton’s transition team, said there is a problem with officers of any bank being more eager to make loans than to check on their progress afterward.

He said he found evidence the World Bank is making progress on weeding out troubled projects and predicted strong support from the Clinton Administration.