THE WORLD BANK GROUP A World Free of Poverty

Helping Countries Combat Corruption: The Role of the World Bank

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Global concerns about corruption have intensified in recent years. There is increasing evidence that corruption undermines development. It also hampers the effectiveness with which domestic savings and external aid are used in many developing countries, and this in turn threatens to undermine grassroots support for foreign assistance. Corruption is of growing concern to donors, nongovernmental organizations, and governments and citizens in developing and industrial countries alike. Fortunately, the opportunities to address corruption are also greater than they have ever been. New global standards of behavior are emerging, driven partly by changing attitudes toward transnational bribery in industrial countries and partly by heightened awareness in developing countries of the costs of corruption. Developments in information technology in both developing and industrial countries have also played a role.

The success of national anticorruption efforts depends primarily on the resolve with which they are pursued and on the economic policies and institutions that underpin them. External agencies can also play an important supportive role. With its cross-country expertise and broad development mandate, the Bank can help countries design anticorruption strategies and can also be an active participant in international efforts to deal with the issue. At the Annual Meetings of the World Bank and the International Monetary Fund in October 1996, I offered the World Bank's assistance to member governments implementing national programs to discourage corrupt practices and I pledged the Bank's support for similar efforts at the international level.

The Bank has long been concerned with controlling fraud and corruption in its projects, and its procurement and disbursement procedures have been progressively refined to minimize the risks for both lenders and borrowers. More broadly, corruption as an issue of development was highlighted in the Bank's two governance reports, "Governance and Development" in 1992 and "Governance: The World Bank's Experience" in 1994, and in World Development Report 1997: The State in a Changing World. In some countries the Bank has registered its concern about corruption in high-level meetings with government leadersÑfor example, when governments have persisted with nonviable and costly public investment projects. The Bank has curtailed lending, sometimes drastically, where poor governance, including systemic corruption, has affected Bank projects. And the structural adjustment programs it has supported in many countries, as well as improving economic performance, have reduced economic rents that are the source of much corruption.

However, until now the Bank has not had a systematic framework for addressing corruption as a development issue in the assistance it provides to countries and in its operational work more generally. This report provides such a framework. It identifies ways in which the Bank might help countries implement national anticorruption measures, suggests how the Bank should mainstream consideration of the issue in its work, discusses how the Bank can contribute to international efforts to control corruption, and examines the control of fraud and corruption within Bank-financed projects.

The international community simply must deal with the cancer of corruption, because it is a major barrier to sustainable and equitable development. This report clearly signals that the World Bank Group stands ready to do all that we can to help our member countries and partners to increase their efforts in the fight against corruption. The time for action is now.

James D. Wolfensohn

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