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Collaboration between the European Commission and the World Bank

Summary: Collaboration between the European Commission and the World Bank (Brussels, 21 April 2006)

Collaboration between the European Commission and the World Bank

Overview

Development is a global effort and donors can deliver aid much more effectively if they work together. The European Commission attributes significant importance to the good relations which currently exist between the Commission and the World Bank, and the collaboration between the two institutions has developed considerably in recent years. Since the arrival of the former World Bank President, Mr Wolfensohn, in 1995, the World Bank has undergone an important process of change, putting poverty and Africa at the centre of its activities. The new (since June 2005) World Bank president, Mr. Paul Wolfowitz is committed to maintaining a focus on poverty reduction in Africa.

Not only do the European Commission and the World Bank share the objective of growth and poverty eradication in Africa, but agree on how best to achieve this. The World Bank's Africa Action Plan and the European Union's Strategy for Africa share five themes: good governance and capacity building, shared economic growth, basic needs and services, aid effectiveness and effective partnerships, and results.

Collaboration between the Bank and Commission is based on:

The Bank and Commission also often work together under broader initiatives, such as multi-donor groups that provide budget support to a developing country government.

Sharing policy

The European Commission and World Bank work closely on policy issues in both headquarters and the field. This takes place in several ways, which include:

The relationship in practice

In individual countries, the Bank and Commission often work together to support a country's poverty reduction strategy, to provide budget support directly to a country's government, and to work together in specific sectors. This involves sharing analytical work, best practice and other documents, pooled funding and co-financing of programmes. Collaboration is particularly close in the following areas:

Poverty Reduction Strategies

The Commission and the Bank base their country programmes on a common document - a country's national development plan, most commonly known as a Poverty Reduction Strategy Paper (PRSP). This document is developed by a national government in consultation with its population, and sets out the country's priorities and plans for reducing poverty over the next three to five years. PRSPs were introduced to accompany the World Banks Heavily Indebted Poor Country Initiative (HIPC), and have since become the main planning tool for most bilateral donors, the Commission (since 2001), the IMF and the World Bank.

Each year the Commission and the Bank meet and agree how to align the assistance they provide to PRSPs in individual countries (this is part of the Limelette Process).

The World Bank finances PRSPs primarily through their Poverty Reduction Support Credits, which the Commission co-finances in Mongolia and Vietnam.

Trust Funds

In each of the past three years, the Commission has delivered €500 million of aid through trust funds managed by the World Bank. These have been in areas where the Bank offers a significant comparative advantage. Trust funds help to rationalise the plethora of projects and donors in a country, and means the Commission's funds benefit from the Bank's technical expertise and knowledge of local environments (especially for countries 'under stress' or in post disaster reconstruction situations). Examples include:

Debt Relief

One of the Bank's best known initiatives is the Heavily Indebted Poor Country Initiative (HIPC), under which many countries announced they would cancel all the debts of very poor countries.

This initiative, proposed by the World Bank and IMF in 1996 and enhanced in 1999 had given debt relief to 28 poor countries by December 2005. The Commission has supported HIPC in the following ways:

Please see the World Bank website (http://www.worldbank.org/hipc/about/hipcbr/hipcbr.htm) and IMF website (http://www.imf.org/external/np/exr/facts/hipc.htm) for more information.

  • Ref: EC06-153EN
  • EU source: European Commission
  • UN forum: 
  • Date: 21/4/2006


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See also
 

European Union Member States