The hope is the budget can be held more or less constant in real terms.Achieving this will involve abolishing three central units covering private sector development, the environment and human resources, and merging their experts with counterparts in the bank’s regional vice-presidencies to form networks at the disposal of country managers. Armed with the latest information technology, the networks will capitalise on the bank’s greatest resource – knowledge to provide a flexible service. More staff will also be redeployed from Washington to developing countries.Management consultants KPMG have been hired to examine cost savings in areas such as office space, technology, and salaries and benefits. The restructuring calls for about 500 redundancies among staff, and the expectation is that within a few years a higher proportion of the staff will be temporary. Under the revised version of the compact designed to appease the US, redundancies will cost about $100m and the compact’s net cost of $250m will be spread over two-and-a-half fiscal years, starting on 1 July 1997.Much of this makes sense It faces formidable obstacles, however. First, demoralised staff have greeted the compact with cynicism.

While the compact is supposed to be between the bank and the shareholders, it is seen by many staff as being between the management and the shareholders. The atmosphere has been soured by Wolfensohn, who is said to have referred to the bank’s “marshmallow middle management”, and by US demands that the often generous pay and conditions of staff be reviewed.Second, many details remain to be clarified. Despite an outpouring of fat documents, most staff have difficulty explaining how the networks will function. The danger of trying to catch up with one mighty bound is that the pieces of the plan do not lock together. The bank is such a complex organism that change in one place can have unpredictable consequences in another.

There is a real danger of the exercise running out of control. There will certainly be turmoil.And third, it is questionable whether bureaucracies, especially international ones, can reform themselves. The bank’s staff, including the president, are civil servants, even if they do not always behave as such. The abiding tragedy of the World Bank is that the owners – the 180 member countries – have never taken a lead. They have failed to explain clearly to the bank and their own publics what they want the bank to do and how they expect it to do it.The result has been an organisation which is too thinly spread. Development no longer concentrates on funding physical infrastructure or even economic reform. Today, development theory and practice embrace virtually every aspect of a society’s advancement.

No single bank, however well-funded and staffed, can cope with development in its entirety. Yet the list of supposed priorities in the compact under the optimistic heading of “Refocusing the Development Agenda” should make even the stoutest flinch.Nobody should mind if the World Bank’s shareholders delay the strategic compact further to grapple with the future of an organisation which will remain vital for the planet’s 1.3 billion desperately poor.Michael Prest was on the staff of the World Bank from 1990 to 1995. The economy will slow down sharply next year after this year’s election- related boom, according to two sets of forecasts published today. The next government is likely to inherit rising inflation and weaker growth in 1998. Chancellor Kenneth Clarke has successfully engineered a pre-election boom whose costs will not be felt until next year, a report from Oxford Economic Forecasting claims.