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Last Updated: Monday, 18 September 2006, 18:04 GMT 19:04 UK
World Bank cash row rumbles on
Woman and child in Chad refugee camp
The World Bank's tough loan conditions have drawn criticism
The World Bank has moved to assuage the UK's concerns over conditions it attaches to aid for poor countries but a dispute over funding continues.

Britain has said it might withhold 50m ($94m) from the World Bank in protest at its tough policy of withdrawing loans to nations deemed to be corrupt.

It believes the rule unfairly hurts the poorest people in developing nations.

The World Bank will reveal in November how changes to its policy on aid conditions are being adopted.

'Privatisation'

Only then will British Ministers decide whether to release the funding, part of its 1.4bn contribution to the World Bank's development fund.

The UK government says it wants significant progress to be made on enacting reforms to aid conditions agreed last year.

Key areas include removing the requirement on countries to liberalise their economies and to privatise key industries.

Despite his support for the World Bank's policy of tackling corruption, UK International Development Secretary Hilary Benn has said it is too rigid in its economic solutions for countries receiving aid.

We cannot abandon the poor because their governments or institutions are weak
World Bank boss Paul Wolfowitz

The Department of International Development welcomed the World Bank's decision to publish its progress on the issue but said this did not mean it would automatically release the money.

Other World Bank member states such as India and South Africa have also criticised the strong anti-corruption drive instigated by World Bank boss Paul Wolfowitz.

"If we are to reach the poor, we must find ways of providing support for development in challenging environments," South African Finance Minister Trevor Manuel told the World Bank's Development Committee.

"The Bank's new enhanced framework on governance and anti-corruption should not compromise the Bank's core mission of poverty reduction."

'Unfairly penalising'

Mr Wolfowitz appeared to soften his stance at Monday's annual meeting of World Bank member states in Singapore, saying poor people should not be penalised for the abuses of their leaders.

"We cannot abandon the poor because their governments or institutions are weak," he said in an address to the World Bank's Development Committee.

"That would mean they would be penalised twice."

He had earlier told the meeting that despite his anti-corruption drive, lending to developing countries was up 9% this year to $9.5bn.

The World Bank's board, which comprises finance ministers from member states, will now have more say in the anti-corruption drive and therefore which, if any, countries have their aid suspended as a result of poor practice.


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