Washington, Oct. 25 (Bloomberg) -- The World Bank is halting its decade-old practice of encouraging borrowing governments to charge the poor for school and health services, acknowledging that those fees deprive many people of basic needs, an official said.
The move comes as the bank is under pressure by the U.S. Congress, anti-poverty groups and others to make its policies more sensitive to the poor. The Congress last night agreed to compel the Clinton administration to oppose the fees, which the bank has promoted as a way to help governments balance their budgets.
``The bank has learned that barriers to access for health and education must be eliminated,'' said Eduardo Doryan, a World Bank vice president. ``We are moving in the direction'' of eliminating the imposition of fees for basic services from all lending programs, he said.
The bank will also help countries find other sources of health funding after they dismantle the fees, he said.
This change marks the latest policy reversal for the Washington, D.C.-based lender, as critics have complained that its advice has often ended up hurting the poor.
It no longer pushes all countries to open their capital markets, and it has steadily cut back lending for mining and oil production projects, under pressure from environmentalists.
The bank and its sister organization, the International Monetary Fund, have lent tens of billions of dollars to about half the world's nations. The borrowers, financially troubled developing nations, must agree to a set of conditions to balance their budgets to receive the assistance.
Fiscal Targets
In 1987, the World Bank recommended that borrowing governments start recovering part of the cost of financing public health services, according to a bank report. As a result, developing countries began imposing the user fees to raise more revenue for health services and meet the fiscal deficit targets set by the bank and IMF.
In previous years the World Bank imposed the fees as a condition to lending, although in recent years the bank says it has only allowed their use.
Education fees -- even those as low as $7 a year for schools in countries such as Tanzania -- discourage poor children, particularly girls, from attending school, while fees at health clinics keep sick people away, according to World Bank and outside research.
``All we know from experience is that user fees are a deterrent to universal education and universal health,'' said Stephen Browne, director of poverty programs at the United Nations Development Program in New York.
In Uganda, where the average person earns less than $1 a day, the number of children attending school doubled immediately after $8 annual school fees were dropped in 1997, according to a bank study. Nearby Malawi, which is even poorer, had a similar result two years earlier.
``We acted with the best information available at the time,'' Doryan said.
Blanket Solutions
For its part, the IMF says it's not considering a ban.
``When you get into the fiscal mix, a lot of things are necessary,'' said IMF spokesman William Murray.
The Clinton administration is against fees in general, although congressional advocates for last night's bill said the administration tried to block an earlier, stiffer provision.
World Bank Chief Economist Nicholas Stern also says he doesn't advocate an outright ban on the charges.
``Blanket solutions are unwise,'' Stern said at a conference this week.
Although the bank says it doesn't require countries to adopt the fees, the evidence from a number of loan agreements is that it at least approves of them. And in earlier projects, it compelled the fees.
A 1998 internal review of the World Bank's health lending, found that three-quarters of projects in sub-Saharan Africa included the establishment or expansion of user fees.
As part of its document approved by the boards of the IMF and World Bank in March, Tanzania pledged to charge for services at health clinics and dispensaries, allowing for exemptions for the poorest people.
Exemptions
Those exemptions divide World Bank and U.S. policy-makers from outside advocacy groups. Officials say that exemptions serve to make sure that the poor continue to get free services, while those who can pay, do.
Groups opposed to the fees say that exemptions rarely work, since poor and uneducated people don't know how to maneuver through complicated systems.
``The intent of these fees was sustainability of funding, but the outcome has been exclusion,'' said Joanne Carter, who has tracked the imposition of these fees for Results, an anti-poverty group.
While advocacy groups acknowledge that removing the fees won't solve the entrenched problems of poor health and low educational attainment in the world's poorest countries, they say the elimination of fees will end one high hurdle.
``What we are starting to say now is that access to basic social services is fundamental to development, and a basic human right,'' said the UN's Browne.
--Mark Drajem in Washington (202) 624-1964 or mdrajem at bloomberg.net with reporting by Emily Schwartz