[Global Corruption Report, 2005] International finance and corruption

Abstract

"In 2002, the MDBs, consisting of the World Bank and the regional development banks, together spent US $16.6 billion on infrastructure, which represented 39 per cent of their overall spending.3 Since 2003 the World Bank has started to re-prioritise infrastructure, and is set to increase its infrastructure lending from US $5.4 billion to US $7 billion by 2005. Despite the fact that their direct funding for infrastructure is small compared with the total estimated global spending of US $250 billion annually on infrastructure,4 the MDBs are highly influential in this field, for three reasons: • MDBs act as a catalyst for further financial support from the private sector. MDBs’ private sector arms, particularly the World Bank’s International Finance Corporation and Multilateral Investment Guarantees Agency, are influential in mobilising private sector support for infrastructure projects. • MDB projects are a major source of contracts for companies. World Bank-financed projects result in 40,000 contracts being awarded annually and account for onethird of total international contracts in developing countries.5 • MDBs help set developing countries’ policy on infrastructure. Privatisation of infrastructure has featured as a condition in many structural adjustment loans to developing countries, and has been a significant factor behind the 58 per cent increase in foreign construction contracts between 1986 and 1998."(pg 56)