WB Group commitments in ECA grew in fiscal year 2009 by 58%

PanARMENIAN.Net - During Fiscal Year 2009, a period marked by the sudden onset of the global financial crisis, the World Bank Group committed US$12.5 billion in support to its members and to private business in the Europe and Central Asia (ECA) Region. The World Bank Group commitments in ECA grew in fiscal year 2009 by 58 percent, as financing was rapidly approved to help cushion the impact of the global economic crisis on the poor and to position countries for post-crisis recovery.

 

Many countries in Europe and Central Asia entered the crisis in a vulnerable position. Relatively high current account deficits, elevated external debt levels, very rapid credit growth, and a consumption boom financed by foreign currency borrowing created vulnerabilities in Central and Eastern Europe (CEE), the Baltics, and some Commonwealth of Independent States (CIS), leaving several of them particularly exposed to the crisis. On the other hand, sharp drops in commodity prices brought growth in economic powerhouses of the eastern part of the Region (Russia and Kazakhstan) to an abrupt halt and hit the less well-off parts of the CIS very hard. 



The World Bank Group consists of the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to members as well as analytical services, capacity building and technical services; the International Development Association (IDA), which provides interest-free loans and grants to the poorest countries; the International Finance Corporation (IFC), which makes equity investments and provides loans, guarantees and advisory services to private-sector business in developing countries; and the Bank Group's political risk insurance agency, the Multilateral Investment Guarantee Investment Agency (MIGA). 



The IBRD/IDA recipients are using these funds for 53 projects across all sectors, designed to overcome challenges of the crisis and be better positioned  for the post-crisis period by focusing on productivity and innovation in the enterprise sector; establishing a healthy business/investment climate; creating a qualified and skilled workforce, through projects targeting health and education; improving public administration; creating legal and judicial systems; and implementing economic infrastructure programs, particularly transboundary programs. IDA commitments in ECA were US$383 million, and IBRD commitments totaled US$8.9 billion in fiscal 2009, more than doubling the $4.2 billion of FY08. The top borrowers in ECA in FY09 by volume were Poland (US$2,550 million); Kazakhstan (US$2,125 million); and Turkey (US$2,075 million). 



In a rapidly changing economic landscape, the World Bank continues to be a vital development partner and responded to strong demand for economic support across the poorest countries. To help create jobs, the Bank financed labor-intensive infrastructure projects across the Region, including a package of three projects for Armenia in the amount of US$35 million designed under the Fast-Track Facility as an immediate response to the global economic crisis, US$20 million to help Tajikistan protect social spending and continue its development agenda despite a shrinking budget, US$11 million to increase power and heat generation in Kyrgyz power plants, and US$10 million to continue to foster post-privatization growth in Moldova's agricultural and rural sectors. Immediately following the August 2008 conflict in the South Caucasus, the Bank and the United Nations led a group of donors in preparing a Joint Needs Assessment for Georgia that examined financing needs for post-conflict recovery and reconstruction.  The Bank and the European Commission subsequently chaired a donor conference for Georgia in October 2008 that raised $4.5 billion in assistance over three years. 



In middle-income countries, the Bank continued to provide a broad range of product lines addressing the diverse needs of this group in ECA. Among these were the US$800 million to support implementation of Turkey's updated national electricity strategy and its ongoing program to reform the electricity sector, US$2.125 billion in Kazakhstan to help upgrade a 1,062 km stretch of the international trade corridor linking China to Russia and Western Europe, US$1.250 billion to support reforms in public finance management in Poland, US$400 million to improve the condition and quality of roads and increase traffic safety along Ukraine's main road network, US$200 million to enhance social protection in Bulgaria, and USD$122.5 million to improve the competitiveness of Croatia's Rijeka port as a Pan-European transport route.  The Bank also supported a US$78 million Partial Risk Guarantee for the privatization of Albania's Energy Distribution System Operator.   



The Bank also played a crucial role in stabilizing the financial sector by providing budget support for reforms in almost half the Region's countries, conducting diagnostic work on the banking sector, and helping client countries restructure and recapitalize their banking sector. In a joint initiative, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the World Bank Group pledged to provide up to $31 billion to support the banking sectors in the region and to fund assistance to businesses hit by the global economic crisis. Support included equity and debt finance, credit lines, and political risk insurance.