These countries, collectively known as low-income countries under stress (LICUS), are characterized by very weak institutions and governance, and constitute the most difficult environments in which to use aid effectively. The LICUS initiative aims to support selective basic governance reforms and innovative mechanisms for social service delivery. The fund will target those LICUS countries that are not eligible to receive International Development Association (IDA) funding due to their arrears with the World Bank.
In fiscal year 2003, the LICUS initiative piloted innovative approaches in several non-accrual LICUS countries. Among the countries that benefited are Sudan and Somalia.
"This trust fund will jumpstart the basic capacity-building and policy reforms necessary to help these countries get back on track to sustainable poverty reduction," World Bank president James Wolfensohn, said in a statement.
Since they are home to many of the world’s most disadvantaged people, reaching out to these countries and their citizens is critical for achieving the Millennium Development Goals (MDG). Neglecting these countries only perpetuates and aggravates poverty, possibly leading to instability and state failure.