Summary Table of Contents Introduction MDB Assistance Proposals - By Region & Country Acronyms Wednesday, 20-Mar-2002 14:22:54 EST

In Title XIII of the International Financial Institutions Act, Congress has directed the U.S. Agency for International Development to ensure that multilateral development bank (MDB) assistance proposals are reviewed by USAID and other U.S. government agencies to determine whether the proposals will contribute to the sustainable development of the borrowing country. The reviews address the economic viability and potential adverse effects on the environment, natural resources, public health, and indigenous peoples. USAID and its partner reviewing agencies are to recommend measures, including alternatives, that could eliminate or mitigate adverse impacts. After evaluating MDB proposals, USAID investigates those that may have substantial adverse effects, ensures that the resulting information is made available to the public, and reports regularly to Congress on loans likely to have such effects. USAID works with other executive branch agencies and the public to promote mechanisms to improve the environmental and related performance of the MDBs. Finally, it helps the Treasury and State Departments establish a system to share information on proposed MDB loans with other interested governments.

USAID reviews MDB proposals internally and compares its findings with those of other agencies. In addition, USAID cochairs a regular meeting with representatives of 25 nongovernmental organizations (NGOs) and several agencies, called the Tuesday Group, to review MDB actions and proposals and solicit their views. Minutes from the Tuesday Group are sent to another 165 interested NGOs around the world. USAID also considers the operational systems in place at the banks so it can identify options for improving the review process and strengthening MDB policies. Throughout this process, the Agency communicates with the banks through the Treasury Department and through those representing the U.S. government on each bank's board of directors to encourage improvements.

In this report USAID reviews a sampling of loans posing potential risks. It identifies issues raised during the review and suggests ways to improve both the individual proposals and aspects of the loan selection process brought to light by the project at hand.

The World Bank's Inspections Panel, the International Finance Corporation's Compliance Adviser and Ombudsman, and the similar bodies of regional development banks have been created largely since USAID began reviewing proposals of the MDBs. These institutions can help make possible more effective accountability and improved institutional governance. They complement the work of such bodies as the Quality Assurance Group and the Operations Evaluation Department.

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