Save the children

The World Bank Group and its three regional counterparts support a loan portfolio of $300 billion and each year give a total of $50 billion in loans to developing members. The failure rate of World Bank projects is very high, and it is clear that costless donor participation in the development banks does not exist. It is now time to ensure that incentive, the driving force behind economic behaviour, governs both Bank and client. Hidden transfers must be replaced by explicit grants and subsidies, and all aid must be fully accounted for. Poverty cannot be eliminated without institutional reforms which act as the basis for effective investment and economic growth.