World Bank Loans Hit Snag Over Consultancy

A Russian consultant to World Bank programs in Russia rakes in $1,700 a month. A Western consultant earns about $6,000. The government has a big problem with the amount of those salaries for technical assistance - such a big problem that it may freeze all World Bank programs, which make technical assistance a mandatory component of its loans. At risk are six approved programs worth about $400 million, including $85 million for heating and $50 million for education reform, as well as other programs in the pipeline. "I think this is a purely terminology issue because historically the word 'consultant' has provoked an allergic reaction in Russia," said Andrei Bugrov, the government's World Bank director for Russia. President Vladimir Putin called the World Bank loans into question this spring when he signed a document on the country's borrowing policy for 2002. The document calls for the government to cut or scrap its policy of borrowing from international lenders that "proved to be inefficient." The paper also states that so-called tied credits and those with a consulting-service component should be refused. The government may have to address another matter as well. Few projects can go forward these days without technical assistance. Also, the government inevitably has to turn to the West for advice and expertise in implementing structural reforms, Saint Petersburg Times wrote.

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