World Bank : Prevent Improper Lending

Should World Bank assume liability for bad lending?  It is rather difficult and improbable to distinguish before hand that loans asked (and granted) will end up in dislocation (or misuse).  The term moral hazard had been noted for this purpose.  Who should be blamed for such imposition?  It is being abreast to implicit functions and targets where any loan approved will get its marks and be used properly.

How are transactions be identified as corrupt?  Although internal pressures could lead to approval of illegitimate loans, its staff is given its corresponding promotion based on its volume of lending.  The moral debate on approving loans continues to these countries, namely:

1. Congo;
2. Nigeria;
3. Iraq; and
4. Uzbekistan.

What are the valid good measures to prevent World Bank’s improper lending?  It is rather difficult to penalize World Bank for its past improper lending.  However, collecting its loans’ payments is also a difficult task to execute.  There could be some means, such as:

1. Do not approve loans to ‘legally’ recognized dictatorship-led nations;
2. Ban (or stop) future processing of loans to nations under siege; and
3. Ignore loan applications from warring nations (where domestic dispute is at hand).

We come to a point where World Bank somehow attempts to liberalize a nations economy through its approved loan package.  It is good to sustain macroeconomic stability in the concerned region but it has its weakpoints, such as:

1. Adaptability of its human resources;
2. Acceptability by its technological means; and
3. Quality of a nation’s management organization to implement its total loan-approved package.

Note that blaming factor is always wrong while preparations have its own task-related agenda fulfillment.

Image via Wikipedia