World Bank Divided on Disclosure of Country Performance Ratings

10 February 2004

The World Bank is considering making a small step toward disclosing more information about its “country performance ratings” for the 81 poorest borrowing countries, but a minority of executive directors appears to have successfully resisted full disclosure.

Derived by the Bank staff from a multi-component scoring system, these ratings influence funding levels. They are discussed with governments, but the specific numerical ratings are rarely disclosed. Borrowing countries fear poor ratings will negatively influence private lenders.

In a decision not yet announced, the Bank apparently will provide slightly more information on the ratings of individual countries, has learned. But the board appears to have blocked the Bank management’s goal of moving to full disclosure by the summer of 2005.

A meeting on the topic was held Jan. 20 but no public announcement has been made. The disclosure issue was one element in a wider mid-term review of the International Development Association’s use of the system.

Under a compromise, however, the Bank is leaning toward an evolutionary step. Under a 2000 disclosure policy, countries are lumped into quintiles. The potential would be slightly more precise by putting ratings in groupings every 0.5 points along the ratings scale. The change, however, will be slight. The ratings scale runs from one to six, meaning that a country could fall in one of 10 groupings. A bell curve distribution of the scores, however, means that most countries’ scores fall between three and four, according to a Bank official.

Debate on Issue Lively, Summary Reveals

The primary concern of those opposing more disclosure is the potential “negative effect on foreign investment and other financial flows to come countries,” according to a nonpublic summary of an Oct. 28, 2003, board meeting obtained by The meeting also highlighted concerns about the methodology and accuracy of the system. Other questions surfaced about the degree to which developing countries had input on the ratings, and how well governments understood the system.

The six-page summary of the meeting states, “Several speakers stressed that full disclosure would ensure a transparent public debate on the accuracy of the methodology.” Speakers also said transparency “would enhance staff’s accountability in their assessment of country situations.” One speaker said more disclosure “would be an important element in the global monitoring of development policy.”

Some critics of disclosure, however, argued that “further disclosure of the ratings would involve the Bank in the political dimensions of domestic discussions and that could thus be harmful for the quality of dialogue between the Bank and member countries.”

Expert Panel May Review the Rating System

Also, the Bank will likely convene a panel of independent experts to review the factual basis for the rating system.

A section called “Ratings Methodology” in the summary of the Oct. 28 meeting begins: “A large number of speakers argued that further disclosure of country ratings should be delayed until the rating methodology had been improved. Many of them pointed out that the current methodology was based on staff judgment rather than clear, objective and measurable indicators.”

The rating system is based on 20 performance criteria, grouped around four areas, economic management, structural policies, policies for social inclusion/equity, and public sector management and institutions.

One speaker, the summary says, “felt that greater disclosure of a judgment-based system for resource allocation could open the Bank to criticism that this was being done on the basis of political, ideological or other non-economic considerations, which contradicted IDA’s Articles of Agreement.”

Staff replied to these and related criticisms by saying the system had improved since its inception in 1997 and this was an ongoing process. Staff defended the use of the professional judgment of the staff, noting a variety of institutional checks and controls in the process. “Staff did not accept the implication that the ratings were in any sense arbitrary,” the summary notes, but agreed to the idea of bringing in outside experts to conduct a review.

By Toby McIntosh

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Filed under: IFTI Watch


In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
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