Historic decision: Norway reduces its support to the World Bank

”The decision to reduce Norwegian financial support to the World Bank is historic”, says Atle Sommerfeldt, general secretary of Norwegian Church Aid. “This can only be read as a critique of the conditions the World Bank imposes on poor countries, and as such, it will be noted worldwide.”

The Norwegian government announced today that it will be withholding NOK 23 million (roughly $4.2 million) of a planned NOK 80 million in increased financial support to the Bank. This amounts to 25% of the originally planned increase by the government and is explicitly based on the government believing that the World Bank has failed to sufficiently reduce the conditions it attaches to its lending. This announcement was made at the replenishment meeting of the International Development Association (IDA), which is being currently held in Berlin.

“We are not completely satisfied with the progress the World Bank has made in living up to its principles on conditionality. Because of this we have chosen to reduce the increase in support” says Håkon Arald Gundersen, Norway’s deputy minister of development.

Norwegian Church Aid launched a campaign in early autumn 2007, asking the Norwegian government to withhold its support to the World Bank for as long as the Bank continues to pressure poor countries into privatizing basic public services against their own wishes. The World Bank claims that it no longer attaches such conditions to its loans, a report released by the European Network on Debt and Development (EURODAD) in November 2007 revealed that seven out of every ten World Bank loans are granted with financial strings attached.

”Despite the fact that the sum withheld is a relatively small one, this is a significant decision to make, as very few countries have ever done anything similar,” says Atle Sommerfeldt, general secretary of Norwegian Church Aid.

“According to the planned increase in the national budget, this is a clear reduction in the Norwegian contribution. We now expect the government to clearly communicate the reasoning behind this decision to the World Bank and other donors” concludes Atle Sommerfeldt, general secretary of Norwegian Church Aid. 

• Ahh how quickly things change. Just last month, Norway gave $150 million in grant funding to the Bank to explore initiatives that improve health care for women and babies in developing countries.