Yesterday, the World Bank reported that the US has lost its status as the largest donor to the Bank’s main fund for poor countries, as Britain secured a record amount of aid with a pledge of increased funding.
Britain pledged $4.2 billion for the period from July 2008 through June 2011, after negotiations that began in March in Paris and ended with two rounds of talks in Berlin.
What does it mean to the US? Firstly, losing its position as the top donor could weaken Washington‘s influence over the World Bank, which is the largest provider of development assistance to poor countries, and over policies that determine the cash flow.
The US pledged a very substantial contribution but is now down to second place after Britain,
A total of 45 donor countries, the highest number ever, promised a record total of $25.1bn at the Berlin talks, with a further $16.5bn coming from the bank and previous donor pledges. The total of $41.6bn represents an increase of $9.5bn over the previous funding period and will support around 80 countries, with a focus on African countries.
“The donor community has demonstrated its full commitment to helping countries overcome poverty and achieve sustainable growth, especially in Africa,” World Bank President Robert Zoellick said.
However, contributions by some other countries also appear inflated when calculated in the US currency—which is running currently on a weakening dollar—and the talks were also complicated by slowing economic growth in rich nations. In the meantime, the bank’s mission is widening, with governments demanding more help in developing sophisticated economies and markets.
The US, despite having an economy six times as big as Britain’s, has been keen to hold on to its number one spot as the bank’s largest donor but has also been struggling in recent times with stretched budgets caused by wars in Iraq and Afghanistan.