World Bank and IMF - Mega Projects

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4 Efficiency in the economy can only be achieved through the adoptio n
World Bank test what the Bank regards as the policy of structural adjustment (see bel,
5 Poor countries should strive to compe te with the rich nations on the "
of credibility
World Bank president Lewis Preston
recently replied to eac h of 26
market and embrace the philosophy of a free market. This aims to be
eh".ctedsed by completely dcceguloled trade and a free flow of foreig n
in vestments,
congressmen who signed a letter In recent times there has been an admission by the World Bank and
condemning the Arun mdam in Nepal
project as an example of 'uneconomic, development experts that these economic principles have not worked,
massive, destructive engineering
in vestment.' Mr Preston' has also World Bank projects
lobbied to defuse American opposition Since the ir found ation, the World Bank and the IMF have played a lea d'
to Arun.
in the development of the developing countries. The World Bank has pr
Joseph Wood, the Bank's vice
president for South Asia, spelled out long-term loan facilities to the poor countries in order to finance devel (
what was at stake. If the Bank failed projects such as building dams, road construction, hydro-electric powe r
to win approval of the project he said, schemes and water supply, among many others, Up until 1995, these pr
' We will lack credibility as a financing were usually large scale (called mega-projects) and mostly aimed at brip
partner for controversial power and
infrastructure projects,' about the economic development of the nations concerned.
Bank officials say they ha ve bent Examples of World Bank assistance include US$304 million lent to Br
over backwards to make sure that the 1980 to build an iron mine at Carajas, an 890-km railway to transport I
project is environmentally and and a deep-water port at Ponte de Madeira. In 1985, US$156 million 1\
economically sound, but the Bank will
be tried anew today when the United to Ind on esia for the Kedung Ombo Dam in central Java. In the early 1(
States presents its misgivings to bank India received a loan of nearly US$200 million for social forestry, Ma r
officials , countries ha ve received funds at one stage or another from the World B
Only 155 fa milies are affected by loan facility for development. This has resulted in many countries buil d
the project in Arun, a remote valley
200 kilometres east of Katmandu
considerable debt burdens, which the national economies cannot sUPJ)(I
inhabi ted by endangered species such (Table 2.1).
as the Asiatic black bear, the clouded By 1995 , many large-scale development projects were wholly or pani
leo pard and the Annamese macaque , financ ed by the World Bank and other Western creditors. This has give L
Arun, estimated to cost at least $1 international financial institutions and the rich Wes tern creditors grear ~
billion over eight years, would provide
more than 400 megawatts for a control over the economies of these poor nations.
country in desperate ne ed for
electricity, So far, Nepal has developed Table 2.1 External debts (millions US$) of selected developing countries (Source: Wo
only 241 megawatts of hydro-electric Development Report, 1994, 1998/99).
power, accessible to barely 10 percent Total external Total external Total external Debt as per c~
of the popUlation, debt (1980) debt (1992) debt (1996) of GNP (1996
The Bank would provide a loan of
$1 40,7 million through its soft loan Tanzania 2476 6715 7412 114
arm, the International Development Bangladesh 4053 13189 16083 30
Association, $473 million would come India 20582 76983 89827 22
from countries such as Japan and Kenya 3394 6367 6893 64
France, and Nepal would put up $473 Pakistan 9936 24072 29901 39
million, Ghana 1407 4275 6202 56
Arun has been criticised by a Sudan 5163 16193 17600
coalition of local group s as Philippines 17 417 32498 41214 51
unnecessarily large and expensive, Mexico 573 78 113378 157125 44
diverting resources away from social
programmes like health and education,
The coa lition favours sma ll- and Impacts of World Bank projects
medium-scaLe projects that would not Investments in large-sCale projects fin a nced by World Bank loans are n
gobble up so much of the Nepalese always completely beneficial to the poor nations, In fact, critics of the B
budget. believe that many World Bank sponsored projects in the developing ((
Nepalese groups have accused the
Bank of failing to follow its policies
are unsuccessful. This is because, while such projects may help to in cn:
on environment , iQdigenous people Gross Domestic Product (GDP) through more exports, the majority
and energy and for not honouring people in the developing countries do not receive the benefits of this il'
requests for information, in violation wealth, More often than not, these mega-projects financed by the Wo r
of the Bank's new policy of openness,
result in the displacement of indigenous poor people and can cause se r
damage to the environment (Figs. 2.8-2.11 ).
Figure 2.8 World Bank under question
(Source: Mark Tran, The Guardian,
7 Nov, 1994)

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...... . ... . ..... ....... .
- - -?-
· - EI Gezira: The Sudan's prime cotton-producing area covering 2
4 Study Figures 2.9-2.11 and
million ha, accounting for most of the nation's export earnings.
decide whether each of the mega Project: From 1952-62, over 16000 km of canals were built to
projects was a success or a failure. control the White Nile and supply irrigation for cotton production.
Justify your decisions.…read more

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Structural Adjustment Programmes
Another major criticism of the Bank is the terms and conditions under which
poor countries can benefit from the Bank's credit facilitie s, alongside the
requirem ents for the repayment of loans. These are the Bank's policies of
Structural Adjustment Programmes (SAPs) imposed on the poor countries and
which ha ve been a major issue raised by the Bank's critics.
The World Bank holds the view that the governments of poor countries have
mism a naged their economies.…read more

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Effects of structural adjustment in Uganda
a str uctural adjustment programme started in Some of thi s growth was a direct consequence of the
Fig. 2.12). In pre vious years, a series of authorities taking a less interventionist approach in the
!1 pre sidents adopted economic policies that had market for co ffee, w hich still remains Uganda's main
nn sequences fo r the nation 's econom y. During export cro p (Fig. 2. 13 ).…read more

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Even if economic growth in Uganda has been
2 achieved by the adoption of a SAP, as some suggest, it
g 80
is apparent that not everyone in the country has
benefited. Development efforts need to be geared
2 60 towards alleviating poverty throughout the whole
a country. By the social indicators used by th e World
~ 4 Bank, Uganda still remains one of the poorest countries
Q) in Africa (Table 2.3).…read more


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