WASHINGTON, Aug 13: The World Bank is expected to publish new guidelines next week to fight corruption and promote ``good governance'' which is honest, better and a more focused government, as a condition for its loans.The International Monetary Fund (IMF) has already done so.

Under the old interpretation of the charter, the two Bretton Woods institutions were supposed to be thoroughly non-political and to concern themselves only with economic issues.

The IMF was to concern itself with such issues as reducing inflation, government spending, promoting ``macro-economic stability'' and exchange rates, particularly during the period of fixed rates.

The World Bank was to ensure that each project it financed, earned a certain minimum economic return.

However, under the new interpretation, the World Bank and IMF managements have decided that such a narrow interpretation makes no sense any more.

This conclusion is backed by new studies which have shown that there is a distinct link between corruption and the quality of governance on one side and the rate of growth on the other.

World Bank President James Wolfensohn said the bank will disqualify companies it considers corrupt and will require those bidding for World Bank or World Bank-aided contracts to open their books to the bank's auditors.

To ensure that the bank's auditors will be up to their job, it will recruit more qualified procurement specialists to oversee the awarding of contracts at an annual cost of $ 13 million.

It will ``encourage'' developing countries to include a pledge in projects the bank finances to take steps to prevent bribery. It also plans to step up assistance to governments developing anti-corruption strategies.

According to The New York Times, the bank plans a more selective approach to delinquent countries, making decisions on its lending on a project-by-project basis until it is satisfied with the way they are run.

The public campaign against corruption began at the World Bank and IMF meeting last year and is expected to be intensified at this year's conference in Hong Kong.

The disclosure of corruption or suspected corruption in the media in countries where there is democracy and free speech is respected is viewed as adding urgency to the formulation of new guidelines by the World Bank, which disburses about $ 19 billion a year to the developing countries.y

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.