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Global Crisis Hits Home in Emerging Europe and Central Asia

Sat, 03 Oct 2009 07:40:09 GMT

Contacts:

Kristyn Schrader (90) 530-929-45-35

kschrader@worldbank.org

Tunya Celasin (90) 533-285-18-21

tcelasin@worldbank.org

ISTANBUL, October 3, 2009—The global economic crisis has reversed the impressive economic growth of recent years in Emerging Europe and Central Asia, hitting families hard with higher unemployment and lost wages. Financially weaker governments will need to protect poor people while strengthening institutions and infrastructure to attract investors, the World Bank said today at a press briefing at the World Bank/IMF Annual Meetings.

“The global financial and economic crisis has literally hit home in many parts of Emerging Europe and Central Asia,” said Philippe Le Houérou, World Bank Vice-President for Europe and Central Asia. “What started as a financial crisis has become a social and human crisis. The global crisis has come on the heels of the food and fuel crises, which had already weakened people in the region by reducing their purchasing power. Today, rising poverty and joblessness are pushing households into poverty and making things even harder for those already poor.”

For the past decade, many countries of Emerging Europe and Central Asia notched up impressive growth, moving them closer to the living standards of Western Europe and other advanced economies. But the crisis has hit them hardest and stopped that convergence. Growth has plummeted from a fast clip of 7.6 percent in 2007 to 4.7 percent in 2008, and is projected at negative 5.6 percent in 2009.

“For years now, Emerging Europe and Central Asia has roared along in high gear,” said Le Houérou. “But the global crisis and the drying up of external private financial flows are stalling the engine of growth, prompting many to downshift and some to even slip into reverse. The job now for the governments in the region is to speed up reforms. The role of the international community is to help countries get back in gear. For us at the World Bank, that means essentially focusing our support to governments in their efforts to clean up the banking sector so that banks can provide a lifeline for firms and businesses to grow and create jobs, improve the business climate to attract private capital flows, make public spending more efficient so that the benefits reach working families, and continue to finance key public investments in infrastructure.”

Unemployment and deficits on the rise

The global crisis has hit some countries worse than others but today there is a danger that the region faces a weak and jobless recovery. Some countries, such as Poland, have fared better than others. Still, the number of jobless in the region has jumped from 8.3 million in 2008 to 11.4 million in 2009. It has doubled in the Baltic countries, grown by 60 percent in Turkey, and by one-third in other countries in the region.

“Instead of the number of poor falling by 15 million in 2009, we now project poverty to increase by about 15 million,” said Indermit Gill, World Bank Chief Economist for the Europe and Central Asia Region. “There are already 145 million poor people in the region – or almost one-third of the total population. For them, the crisis has made an already tough existence even tougher. Much of the world is getting good economic news this autumn. But for workers and their families in Emerging Europe and Central Asia the news is not encouraging. To them, the talk of recovery may seem premature.”

In the face of the unprecedented crisis, governments in Emerging Europe and Central Asia will have many hard choices to make, given that government deficits will increase from 1.5 percent of GDP in 2008 to 5.5 percent in 2009, said Gill. This will put more pressure on governments to make spending more efficient.

“Social spending makes up more than half of government expenditures so governments will need to make education, health care and social security more efficient,” Gill said. “School systems need to be resized to fit shrinking enrollment numbers due to falling fertility. Health care has to be restructured because many countries now have the health problems of high-income countries with the fiscal resources of middle-income economies. And social security has to be restructured to recognize that many countries in the region have aged before they have become wealthy. Reforms will help make governments fiscally healthy, economies robust, and societies more fair. Every responsible policymaker should take a hard look at these reforms.”

Also, governments must continue to improve their business environment to attract investment. During the last decade, countries in Emerging Europe and Central Asia have made progress in improving the climate for doing business. The region has been the top performer in the World Bank’s Doing Business ratings for the last six years—led first by countries in central and southern Europe and more recently by those in the Caucasus and Central Asia. This year, five of the top ten reformers were from the region: Krygyz Republic, FYR Macedonia, Belarus, Tajikistan, and Moldova.

World Bank supporting reforms through lending and advice

While governments are in the lead, the World Bank is helping countries navigate their way through the crisis, Le Houérou said. For its part, the World Bank is providing budget support to countries to support promising reform efforts. During the past year, the World Bank has increased financial support to the region by 60 percent, from $8 billion last year to $12.5 billion this year with the aim of mitigating the impact of the crisis on the poor, stabilizing banks, and positioning countries for post-crisis recovery. In September 2009 alone, the Bank approved $2 billion in budget support to Hungary, Latvia, and Ukraine.

Along with funding, the Bank is offering analytical support and encouraging governments to expand selected social safety net programs. Currently, most countries in the region have good programs that could be expanded during the crisis, such as those in the Kyrgyz Republic, Albania and Georgia where benefits are most likely to reach the neediest people. At the same time, the Bank is advising governments on how to fix less efficient programs to ensure benefits are reaching the right target audiences. Although many countries in the region have excelled on improving the business environment, many countries have not improved social service delivery.

The World Bank’s client countries in Emerging Europe and Central Asia are currently using Bank funds for 53 projects spanning institutional reform, infrastructure and interventions to help the neediest. Also, through the World Bank’s private sector arm, the International Finance Corporation (IFC), the Bank has teamed up with the EBRD and EIB on a $31 billion fund to support the banking sector and to fund lending to businesses hit by the global economic crisis through equity and debt finance, credit lines, and political risk insurance. And the Bank’s political risk insurance arm, MIGA, has made up to $3 billion available for investments in the heavily hit economies of the region. Guarantees worth nearly half of a $1 billion were issued in support of shareholder loans made by parent banks to their subsidiaries in Ukraine and Russia.

For more information, please visit www.worldbank.org/eca

World Bank Group Directs US$12.5 Billion in Fiscal 2009 to Mitigate Impact of Global Economic Crisis in Europe and Central Asia

Fri, 24 Jul 2009 20:57:29 GMT

Europe and Central Asia Facing Significant Climate Change Threats, But Is In ‘Adaptation Deficit’

Tue, 02 Jun 2009 14:25:40 GMT

Contacts:
In Brussels: Alexander Rowland +32-478-319939
Arowland@worldbank.org

In Washington: Kristyn Schrader +1-202-458-2736
Kschrader@worldbank.org

BONN, June 2, 2009—The World Bank today warned that the impact of climate change in the Europe and Central Asia Region* will be more significant than expected due to a lingering post-Soviet legacy of environmental mismanagement and the poor state of much of the Region’s infrastructure, leaving the countries poorly prepared to adapt.

“Europe and Central Asia suffers from an ‘adaptation deficit’ that is already challenged by recent climate variability,” said Marianne Fay, Director of the World Bank’s World Development Report 2010, and author of the new report ‘Adapting to Climate Change in Europe and Central Asia’, “which will only worsen with the consequences of projected trends in climate in the coming decades.”

Fay added that “While almost two decades have passed since the breakup of the Soviet Union and its partner countries in Central and Eastern Europe, the legacy of environmental mismanagement and oversized infrastructure in countries outside the European Union still remains a dangerous holdover from the past. It greatly worsens the countries’ vulnerability to even modest changes in the climate.”

Launched today during the UNFCCC Bonn Climate Change Talks and on the eve of ‘World Environment Day’ (June 5^th), the report says that, contrary to popular perception, the Region is significantly threatened by climate change and is already experiencing the consequences: increasing variability, warmer temperatures, changing hydrology, and more extremes – droughts, floods, heat waves, as well as windstorms and forest fires.

Average temperatures across ECA have already increased by 0.5ºC in the south to 1.6ºC in the north (Siberia) since the early 1900s and overall increases of 1.6 to 2.6ºC above are expected by the middle of the century, with the greater changes occurring in the more northern latitudes. The north is projected to see greater temperature changes in winter, with the number of frost days declining by 14 to 30 days over the next 20 to 40 years. Southern parts of the region are expected to see the greatest changes in the summer, with the number of hot days increasing by 22 to 37 days over the same period. This warming trend is significant: by mid-century, countries such as Poland or Hungary are expected to experience the same number of hot days (>30^oC) as today’s Spain or Sicily.

According to Fay, “Increases in temperature are affecting hydrology, with a rapid melting of the region’s glaciers and a decrease in winter snows. Many countries are already suffering from winter floods and summer droughts – with both Southeastern Europe and Central Asia at risk for severe water shortages. Summer heat waves are expected to claim more lives than will be saved by warmer winters.”

The report says that changes in sea level, another impact of climate change, will affect the Region’s four basins – the Baltic Sea, the East Adriatic and Mediterranean coast of Turkey, the Black Sea, and the Caspian – and the Russian Arctic Ocean. On the Baltic, Poland, with its heavily populated low-lying coast, is the most vulnerable. Along the Adriatic and the Mediterranean, storm surge and saltwater intrusion into aquifers threaten parts of the Croatian, Albanian, and Turkish coasts. Sea level rise in the Black Sea is already threatening numerous ports and towns along the Russian, Ukrainian, and Georgian coasts. In the Caspian Sea, increased surface evaporation is projected to decrease water levels by as much as 6 meters by the end of the 21st century, imperiling

fish stocks and affecting coastal infrastructure.

However, according to the report, legacy issues make the Region even more vulnerable. Under the Soviet system, economic growth was pursued in blatant disregard to natural conditions. When water was needed for irrigation, the rivers feeding the Aral Sea were diverted to the desert to produce rice, fruit, and cotton. Uzbekistan became one of the world’s largest exporters of cotton, but at the cost of destroying the Aral Sea in the process.

The historic poor environmental management across the Region has its consequences. Even countries and sectors that stand to benefit from climate change are currently poorly positioned to do so. According to Fay, “Much has been made of the fact that warmer climate and abundant precipitation in the northeastern part of Europe and Central Asia – Kazakhstan, Russia, and Ukraine – will open up a new agricultural frontier. However, any local potential benefit pales in comparison to the costs of the region’s relative inefficiency and low productivity. While world grain yields have been growing on average by about 1.5 percent per year, they have been falling or stagnant in these three countries.”

But over the next ten to twenty years, Europe and Central Asia’s resilience to climate shocks can be strengthened with improved infrastructure and environmental management systems, all of which will have positive consequences for sustainable development. Regardless of climate change, Europe and Central Asia will gain from improving its water resource management, tackling its environmental pollution problems, upgrading neglected infrastructure and housing, and strengthening disaster management. These steps will also greatly strengthen the Region’s ability to cope with the current climate.

Adapting to the changing climate will also require specific climate-related actions: investments in weather and water monitoring; the capacity to interpret and disseminate climate information; institutions to support adaptation efforts, whether by large firms or small farmers; and policies to foster incentives for informed, proactive responses to the challenges of climate change.

The Europe and Central Asian countries will need to develop strategies to reduce vulnerability to future changes. Jane Ebinger, World Bank Senior Energy Specialist, emphasized the need for stakeholder involvement in adaption. “Adaptation strategies will require steps to bring together policy makers, planners, asset owners, academics, and civil society to discuss and assess the risks a country may face from current weather and projected climate change, and identify possible adaptation measures, their costs and benefits. In addition, the experience of countries, regions, or cities currently developing and implementing adaptation plans offers valuable lessons and methodologies.”

*Europe and Central Asia Region economies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania FYR Macedonia, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan,

For more information, please visit: www.worldbank.org/eca

###

EBRD, EIB and World Bank Group join forces to support Eastern Europe

Fri, 27 Feb 2009 09:00:00 GMT

For EBRD:

Anthony Williams

Tel: +44 20 7338 6997

Email: WilliamA@ebrd.com

For EIB:

Gill Tudor

Tel: +352 43 79 8 31 53

Email: g.tudor@eib.org

For World Bank Group:

Lotte Pang

Tel: +12027584290

Email: LPang@ifc.org

Washington, 27 February 2009 - The largest multilateral investors and lenders in Eastern Europe - the EBRD, the EIB Group, and the World Bank Group - have pledged to provide up to €24.5 billion to support the banking sectors in the region and to fund lending to businesses hit by the global economic crisis.

This initiative complements national crisis responses and will deploy rapid, large-scale and coordinated financial assistance from the International Financial Institutions to support lending to the real economy through private banking groups, in particular to small and medium-sized enterprises. The financial support will include equity and debt finance, credit lines, and political risk insurance.

The response takes into account the different macroeconomic circumstances in and financial pressures on countries in Eastern Europe, acknowledging the diversity of challenges stemming from the global financial retrenchment.

EBRD President Thomas Mirow said: "The institutions are working together to find practical, efficient and timely solutions to the crisis in eastern Europe. We are acting because we have a special responsibility for the region and because it makes economic sense. For many years the growing integration of Europe has been a source of prosperity and mutual benefit and we must not allow this process to be reversed.”

“This joint action plan will help speed up the delivery of vital finance through the banks to support the real economy of hard-hit countries in Central, Eastern and Southern Europe, and particularly to help small businesses survive in these turbulent times,” said EIB President Philippe Maystadt.

“This is a time for Europe to come together to ensure that the achievements of the last 20 years are not lost because of an economic crisis that is rapidly turning into a human crisis,” said World Bank Group President Robert B. Zoellick. “I welcome the close cooperation among the EBRD, the EIB and the World Bank Group, and am committed to making this partnership work as we move forward to address the risk of a crisis of the banking sector in Eastern Europe.”

Under the two-year plan:

The EBRD will provide up to €6 billion for the financial sector in 2009-10 in the form of equity and debt finance, to banks and directly to SMEs, and trade finance.
The EIB will provide some €11 billion in SME lending facilities in Central, Eastern, and Southern Europe, of which €5.7 billion is already available for rapid disbursement, with a further €2.8 billion set for approval by end-April and further tranches expected to follow. The EIF, the EIB Group's venture capital and SME guarantee arm, is also aiming to increase its activity in the region over the next two years.
The World Bank Group will provide support of about €7.5 billion:
- IFC, through its crisis response initiatives in sectors including banking, infrastructure, and trade as well as through its traditional investment and advisory services, is expected to contribute up to €2 billion;
- IBRD intends to increased lending in Europe and Central Asia up to €16 billion in 2009-10 out of which up to €3.5 billion is envisaged for addressing banking sector issues in emerging Europe;
- MIGA will provide political risk insurance capacity of up to €2 billion for bank lending, subject to Board approval.

The response to Europe’s integrated financial markets requires fast and coordinated action; from parent banks, which own a large part of the region’s financial sectors; from systemically important local banks; from home and host country authorities of cross-border banking groups and from the European institutions and the IFIs.

By jointly addressing urgent financing needs, the three institutions in this initiative are drawing on their own mandates and specific capabilities to provide financial support.

The initiative goes beyond the pure provision of finance by engaging all parties concerned to seek appropriate solutions to the problems caused by the global economic crisis.

The IFI initiative has been developed in the broader context of the support that is being provided by parent banks to their subsidiaries in Eastern Europe, to provide capital where needed and maintaining adequate funding levels.

The IFIs welcome the support that that has already been provided to some countries by IMF programmes that have had a clear stabilizing impact and have helped to raise confidence.

The IFIs believe firmly that coordinated action among the IFIs, the bank groups, governments across Europe and the European institutions will help the financial sector in the region emerge robustly from the current crisis.

For the communique by The European Bank For Reconstruction And Development, The European Investment Bank Group, and The World Bank Group please click here

World Bank Urges Europe to Protect Eastern European Gains in Economic Growth and Poverty Reduction

Fri, 20 Feb 2009 11:29:14 GMT

Contact:
In Warsaw: Anna Kowalczyk (+48) 605 282-998
akowalczyk@worldbank.org
In Washington: Michael Jones (+1-202) 473-2588
E-mail: mjones2@worldbank.org

WARSAW, February 20, 2009 — The World Bank urged European countries today to protect the hard-earned gains in boosting economic growth and fighting poverty that were made in Eastern Europe during the past two decades, gains that now are at risk during the global economic downturn.

Consultations on the Bank Web Site

Tue, 09 Dec 2008 15:37:38 GMT

Dear reader,

A few years ago, the World Bank’s Web site was noted as a leader among development organizations’ websites. As technology has rapidly advanced and user expectations evolved, our Web site too needs to change and adapt.

You come to our Web site because you are looking for the latest information on development. Our project information, data and research assist you in tackling your challenges or keeping up on the Bank’s activities.

Now we’re catching up. We are revamping our Web site and expanding our online capabilities to better satisfy our business needs and meet audience demands.

We’re examining all aspects of the site—content, technology, business needs and audience demands—to figure out what needs to stay, be improved or be removed.

This is a complex undertaking. We are currently gathering information to determine requirements for our future site.

Through our open online consultation, we are looking for comments from anyone who wishes to discuss their information needs and any difficulties they encounter with the site. The online consultation period ends on December 31, 2008.

All feedback we receive will inform the future design and functionality of the Web site by informing Bank management on audience needs.

Our ultimate goal is to make the Web site better support the institution’s mission of fighting global poverty and helping countries develop.

Your feedback will bring us closer to this goal.

Thank you,

Angie Gentile
Managing Editor, www.worldbank.org

The Slovak Republic Graduates from the World Bank

Thu, 20 Nov 2008 10:15:00 GMT

The World Bank

Europe and Central Asia Region

News Release No. 2008/ECA

Contacts: Washington: Andrew Kircher +1-202-458-2736
akircher1@worldbank.org
Michael Andrew Jones (202) 473 2588
mjones2@worldbank.org

WASHINGTON, November 20, 2008—The Government of the Slovak Republic and the World Bank have exchanged letters to mark the formal graduation of the Slovak Republic from borrower status. Mr. Ján Počiatek, Minister of Finance of the Slovak Republic hosted a graduation ceremony to celebrate the occasion, which was attended by senior Government officials and Ms. Orsalia Kalantzopoulos, World Bank Director for Central Europe and the Baltic Countries.

“The pace of transformation in Slovakia during the past 20 years has been extraordinary and the gains remarkable,” said Kalantzopoulos. “Graduation from World Bank financing and becoming a donor country is a special transition for Slovakia. The country is now set to play an important role in advancing global priorities such as fighting poverty, protecting the environment, and sharing lessons of experience and good practices with other countries that still face large development challenges.”

“Over the past 15 years, the World Bank has assisted us with complex reforms by providing financial, technical and know-how assistance, which was very important to us,” said Mr. Počiatek, Minister of Finance of the Slovak Republic. “Going forward, we would be interested in continuing technical co-operation with the World Bank, especially in human resources and institutional strengthening.”

Gino Alzetta, Alternate Executive Director added “I am particularly happy to see the Slovak Republic join the group of three other countries of our Constituency that have already graduated: Slovenia, the Czech Republic and Hungary. This comes as recognition of the many efforts deployed on the difficult road leading to a market economy.”

Since the Slovak Republic joined the World Bank in 1993, it has availed itself of analytical and advisory services and loans from the Bank to help achieve its objective of transitioning to a well-functioning market economy with strong institutions. Since the Slovak Republic became a member of the European Union in 2004, the partnership with the World Bank has focused on measures to implement Slovak’s convergence program.

- # # # -

For more information about the World Bank Group; please visit www.worldbank.org

Analytical and advisory support from the World Bank, and loans totaling US$574.52 million for 10 operations have supported Slovak Government actions to implement structural reforms, improve public finance management, develop the telecommunications sector, and modernize the health system and social services. Following Slovakia’s graduation, future cooperation with the World Bank will be based on knowledge sharing and partnership.

World Bank Welcomes Hungary’s Agreement With The International Monetary Fund

Wed, 29 Oct 2008 00:41:19 GMT

The World Bank

Europe and Central Asia Region

Contacts:
In Washington: Kristyn Schrader, (202) 458-2736
kschrader@worldbank.org

Washington DC, October 28, 2008 - The World Bank welcomes the agreement reached between Hungary and the International Monetary Fund on a policy package to address economic and financial vulnerabilities in the wake of the global economic crisis, and is ready to provide one billion euros as part of a program supported by the European Union and International Monetary Fund.

“As part of the international effort, the World Bank stands ready to do its part to provide financing and help tackle long-term structural problems,” said Shigeo Katsu, Vice President of the World Bank for Europe and Central Asia.

Orsalia Kalantzopoulos, World Bank Director for Central Europe and the Baltic Countries said, "We are working with the Hungarian authorities to see how we can best support a faster economic recovery. Proposed World Bank assistance would support the design and implementation of reforms in key areas, such as the financial sector, fiscal management, and social sector reforms. These measures would support the country’s longer-term stabilization and economic restructuring.”

- ### -

Global food and fuel crisis will increase malnourished by 44 million

Wed, 08 Oct 2008 17:30:00 GMT

Contacts:
In Washington :Carl Hanlon 202-473-8087; chanlon@worldbank.org;
Philip Hay 202-473-1796
phay@worldbank.org

WASHINGTON, October 8, 2008 – High food and fuel prices will increase the number of malnourished people around the world in 2008 by 44 million to reach a total of 967 million, a report from the World Bank says.

While food and fuel price increases may have moderated in recent months, prices remain much higher than previous years and show few signs of declining significantly, according to the report entitled “Rising food and fuel prices: addressing the risks to future generations”. Poor families around the world are being pushed to the brink of survival, causing irreparable damage to the health of millions of children. As families cut back on spending, there are also grave risks for the educational performance of poor children.

“While people in the developed world are focused on the financial crisis, many forget that a human crisis is rapidly unfolding in developing countries. It is pushing poor people to the brink of survival,” said World Bank Group President Robert B. Zoellick. “The financial crisis will only make it more difficult for developing countries to protect their most vulnerable people from the impact of rising food and fuel costs.”

The report, due to be presented on Sunday to the Development Committee at the Annual Meetings of the World Bank and IMF, says the food and fuel crisis could have long term effects on poor people and countries. Malnourished children cannot develop into healthy adults and become productive members of society who can contribute to the growth needed to lift themselves and their country out of poverty.

The report says priority should be given to a series of targeted measures. These include:

Making existing targeted cash (or near cash) transfer programs more generous;
Getting nutrition to infants and pregnant women;
expanding so-called ”in-kind” food distribution programs including school feeding and the distribution of fortified calorically dense food;
using fee waivers, lifeline-pricing and other forms of targeted subsidies for poor users/consumers; and
introducing additional measures to prevent children from dropping out of school, such as fee waivers, subsidies for school inputs, or cash transfers.

The report also argues that allocating the necessary amount of budget to finance an expansion of safety net programs may require pruning less-priority spending in other areas. But it notes that well-designed safety net programs do not have to be prohibitively expensive to be effective. Some of the most successful programs in the world cost well under 1 percent of Gross Domestic Product. Moreover, investing in safety net programs now will give governments new tools to address not just the current crisis, but future ones as well.

In May, the World Bank launched a $1.2 billion rapid financing facility to help poor countries cope with the food crisis. Since then, around US$850 million has been committed to finance seeds, plantings, and feeding programs. In April, Zoellick called for a New Deal for Global Food Policy that included short, medium and long-term measures to provide immediate help to poor people and farmers while increasing food production.

###

For more information on the Bank's work in nutrition, please visit: www.worldbank.org/nutrition

and for more on social safety nets, click here: www.worldbank.org/safetynets

World Bank Group Directs US$8 Billion in Fiscal 2008 to Improve the Lives of People in Europe and Central Asia

Wed, 17 Sep 2008 14:37:01 GMT

Contacts: In Washington: Kristyn Schrader +1-202-458-2736

kschrader@worldbank.org

Michael Jones +1-202-473-2588

mjones2@worldbank.org

WASHINGTON, September 17, 2008 — During Fiscal Year 2008, the World Bank Group committed US$8 billion in loans, credits, equity investments and guarantees 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 2008 (ending June 30) by 33 percent as finance was rapidly approved to help the poor in the food price crisis and support grew for private sector development.

“In the past year, the Region as a whole grew by a robust 7.6 percent,” said World Bank Europe and Central Asia Vice President Shigeo Katsu. “However, rising food and energy prices, along with it inflation, have made people’s lives tougher and complicated the conduct of macroeconomic management, particularly in the Commonwealth of Independent States. We will continue to support ECA countries to overcome these challenges and deepen our engagement in the management of risks associated with price pressures, energy security, and global financial markets to improve the lives of people in Europe and Central Asia.”

World Bank Group Commitments in Europe and Central Asia Fiscal Years 2008 and 2007 (year ends June 30)
World Bank Group	FY08*	FY07*
IBRD	$3.71b	$3.34b
IDA	$457m	$422m
IFC	$2.68b*	$1.79b*
MIGA	$1.2b	$430m
TOTAL	$8b	$6b
^**Own accounts

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; 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 47 projects designed to overcome poverty and enhance growth – for example, by improving education and health services, building infrastructure, and strengthening governance and institutions. IDA commitments in ECA were US$457 million, and IBRD commitments totaled US$3.71 billion in fiscal 2008. IDA/IBRD lending increased in response to the food price crisis, and four ECA projects were approved in record time for the Global Food Crisis Response Program – two in the Kyrgyz Republic and two in Tajikistan. The Bank also completed 80 economic and sector studies and delivered 90 technical assistance activities focusing on building country capacity in Europe and Central Asia. Lending was provided across all sectors, including governance, infrastructure, roads and highways, trade, and railways. The top borrowers in FY08 by volume were Azerbaijan (US$1,267 million); Turkey (US$1,203 million); and Ukraine (US$690 million).

In a rapidly changing economic landscape, the Region responded to strong demand for economic support across IDA countries, where the Bank continues to be a vital development partner. The Bank has supported poor countries and fragile states in a number of ways, including by decentralizing more staff to locations where capacity constraints are severe and by helping with donor coordination, harmonization, and alignment. Examples of IDA assistance in FY08 include credits for Uzbekistan (US$68 million); Georgia (US$58 million); Kyrgyz Republic (US$31 million); and Moldova (US$30 million).

In middle-income countries, given their diversity in ECA, the Bank continued to provide integrated product lines based on client demand. The Bank extended several loans for infrastructure in the Region’s middle-income states. Among these were US$200 million to improve housing in the Russian Federation, and US$200 million to improve power transmission and US$140 million to improve urban infrastructure in Ukraine. The Bank also continued strengthening the institutional framework and social services in ECA: A US$400 million Public Sector Development Policy Loan to Turkey has supported a sustained medium-term process of legal, institutional, and structural development; and the Health Sector Technology Transfer and Institutional Reform Project to Kazakhstan has helped introduce international standards in health sector. In EU-candidate countries, the Bank has supported the EU accession agenda; in new EU member states, the Bank has assisted countries in their aim to achieve convergence with EU averages.

The Bank’s analytical work in ECA continued to increase knowledge and spark debate in FY08 on high-priority development topics through in-depth studies and advisory activities. Flagship reports published in FY08 include Unleashing Prosperity: Productivity Growth in Eastern Europe and the Former Soviet Union, which emphasizes micro level reforms to accelerate growth; and Innovation, Inclusion, and Integration: From Transition to Convergence in Eastern Europe and the Former Soviet Union , which shows that key elements of the business environment for firms in the transition countries are converging towards those in the developed market economies of Western Europe. The new member states of the European Union are leading the way, with the Commonwealth of Independent States countries following, but at some distance behind.

Fiscal year 2008 saw strong growth in IFC's new investment commitments with corresponding expansion in advisory work. IFC committed US$2.68 billion for its own account (a 50 percent increase over FY07) and mobilized an additional US$1.09 billion in financing for its clients. IFC supported 86 projects of which 42 percent are in IDA countries and in frontier regions of middle-income countries. IFC also increased advisory operations by 34 percent to US$30 million in expenditures and launched 40 new projects. As of June 2008, IFC’s portfolio in the region’s financial institutions was US$3.5 billion, of which US$2.2 billion is in 86 institutions focusing in micro, small, and medium enterprises (MSMEs). This represented 37 percent of IFC’s total global investments in the sector.

“We are doing more in IDA and post conflict-affected countries, where the number of investments has risen 81 percent compared to last year and where we have provided 85 percent of our advisory services. Our new financing represents more business with new clients and local companies. Compared to fiscal 2005, investment in Central Asia and the Caucasus increased by ten fold while investments in infrastructure grew by 80 percent,” said Jyrki Koskelo, IFC’s Vice President for Europe and Central Asia. “Also, since early 2000s, IFC advisory services helped remove red tape, saving US$301 million in potential cost for businesses; released US$72 million through successful mediation; enabled more than US$3 billion in investment by local and foreign companies; and assisted governments to adopt 170 laws that improved the business environment."

IFC’s priorities in the region include more investment in infrastructure and agribusiness, increase access to finance for MSMEs, efforts to mitigate climate change, promote sustainable development and encourage intraregional investments.

During the fiscal year 2008, ending June 30, MIGA supported nine projects with US$1.2 billion in political risk insurance or guarantee coverage in the region. Among them was the agency’s support for a bank in Kazakhstan that is expected to help strengthen the leasing sector and facilitate medium- and longer-term financing in the country.

“MIGA’s support for the project in Kazakhstan will allow the project sponsor to fund its subsidiary at a critical time when financial institutions are facing difficulties in raising external capital due to the global credit crisis,” said MIGA’s Acting Executive Vice President, James Bond. “This project is very much in line with the trend in MIGA’s support for the region, where we have worked with banks and financial institutions in many countries, including those emerging from conflict, to develop the local financial sector and help create innovative ways to finance projects.”

The agency’s support for these projects is critical not just for encouraging the growth of financial markets, but also for building market confidence in these emerging economies.

# # #

For more information about the World Bank Group; please visit www.worldbank.org

World Bank Urges Pan-European Approach to Roma

Tue, 16 Sep 2008 19:46:55 GMT

The World Bank

Europe and Central Asia Region

News Release No. 2008/ECA

Contacts: In Brussels: Alexander Rowland +32-2-504-0992
Arowland@worldbank.org
In Washington: Kristyn Schrader +1-202-458-2736
Kschrader@worldbank.org

BRUSSELS, September 16, 2008— The World Bank today urged policymakers in Europe to focus attention on one of the trickiest issues across the continent – the widespread and deep economic and social exclusion of its Roma population – and to commit Europe’s governments and institutions to do more, and more systematically, to overcome it.

Commending the European Commission and the French Presidency for having taken the initiative to convene the European Commission’s first ‘EU Roma Summit’, held today in Brussels, Shigeo Katsu, Vice President for the Europe and Central Asia Region of the World Bank and keynote speaker at the Summit, said in his statement that, “It is in Europe’s self-interest that Roma fully take part in Europe’s society and future. This is not just for moral reasons, though these are important, too. But it is important to stress that, in times of negative demographic trends, tolerating the exclusion of Roma is also bad economics: Europe is deprived of a workforce in its midst that could meet the demand for jobs that will be increasingly difficult to fill given the demographic transition.”

He argued that systematic policies to integrate Roma will be more effective if they are placed in a broader EU framework with clear targets and a coordination mechanism that builds on the Decade of Roma Inclusion, the joint initiative of twelve countries in Europe launched in 2005.

According to Katsu, “This Summit is another milestone towards building momentum and political commitment for change for the Roma – following the 2003 high-level conference in Budapest that gave the impetus to launch the Decade of Roma Inclusion and the Roma Education Fund in 2005. It allows participating countries to take stock of how far we have come since 2003 and where more needs to be done. We all know that the picture is mixed, with more progress in some areas than in others and more ambitious action in some countries than in others. However, despite the efforts made so far, it is evident that the challenge of overcoming the marginalization of the Roma in Europe in 2008 remains as formidable as ever.”

Katsu explained how countries have benefited in recent years from building a critical mass of knowledge of interventions that work to promote equal opportunities for Roma in education, in particular through the work of the Roma Education Fund, as well as in health, employment, and housing. But, taken individually and given the magnitude of the challenges of Roma exclusion, pilot projects have often been effective only at the margin.

“We at the World Bank believe,” said Katsu, “therefore, that real change for Roma will only materialize once the issue of their exclusion moves from the margins to the center of policy-making and the experiences from successful pilot projects are scaled up. Unless we view broader education, health and employment policies also through the lens of Roma exclusion, projects at the margin will, well, be only effective at the margin.”

In his statement, Katsu stressed that Roma exclusion is a pan-European challenge, and making a difference for Roma requires a concerted effort at the European, national and local level. “The European Union is a union of common values. The principle of equal opportunities for all is at the core of these values, and we are proud that Europe has gone further than most parts of the world in providing equal opportunities to its citizens. Yet we know that many Roma in Europe remain left out. The World Bank stands ready to support all initiatives decided upon at the Summit to making the common value of equal opportunities a reality.”

For more information, please visit:
www.worldbank.org/eca

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Thomas Laursen Takes Over As the New World Bank Country Manager For Poland And the Baltic States

Mon, 08 Sep 2008 04:59:59 GMT

Contacts:
Warsaw: Malgorzata Dworzynska (+48 22) 520 8000
mdworzynska@worldbank.org

Warsaw, September 8, 2008—Today Mr. Thomas Laursen takes over as the new World Bank Country Manager for Poland and the Baltic States. He will be located at the World Bank’s office in Warsaw. Mr. Laursen replaces Mr. Oscar de Bruyn Kops, who held this position for the past year and who is moving on to a new assignment at the Bank’s Headquarters in Washington, D.C.

Mr. Laursen, a Danish national, joined the World Bank in 2002 and has since 2004 been the Lead Economist for Central Europe and the Baltic States working out of the Warsaw Office. From 1992-2002, he worked for the International Monetary Fund on emerging markets in Latin America, Central Europe and Russia, including a three-year stint as IMF Resident Representative in Jamaica. His first professional assignment from 1988-1992 was with the Danish Central Bank.

Mr. Laursen holds a PhD in Economics from the Aarhus University in Denmark, where he specialized in international finance and development economics.

He will be responsible for the management of the Word Bank’s activities in Poland and the Baltic States and the management of the Warsaw office with about 20 staff. After assuming his new responsibilities, Mr. Laursen said: “I am very grateful for the opportunity to extend my stay in Poland where I am come to truly appreciate the country and its people, including my colleagues in the Warsaw Office. I look very much forward to managing the Bank’s continued policy dialogue and collaboration with the Polish government and other key partners as Poland moves further forward to address its challenges of convergence and sustainable development.”

Mr. Laursen speaks several languages including English, Spanish, French, German and basic Polish. He is married and has three boys. In his free time he enjoys playing tennis, golf, and soccer as well as outdoor adventures such as sailing, skiing, and hiking in the mountains.

A detailed resume of Mr. Laursen can be obtained upon request.

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For more information on the World Bank in Poland, please visit:
http://www.worldbank.org.pl

Urgent action is needed to prevent the spread of HIV/AIDS and other infectious diseases in Central Asia through tainted blood transfusions

Thu, 12 Jun 2008 19:00:20 GMT

Contacts:

In Almaty: Elena Karaban (7-3272) 980-580

ekaraban@worldbank.org

In Washington: Dilya Zoirova (+1-202) 473 9277

dzoirova@worldbank.org

WASHINGTON, June 12, 2008—Unsafe blood transfusions and medical practices in Central Asia may contribute, and in some cases have already contributed, to the spread of communicable diseases in the region, particularly HIV, according to the new World Bank report entitled Blood Services in Central Asian Health Systems: A Clear and Present Danger of Spreading HIV/AIDS and Other Infectious Diseases.

According to the report, of the 33-36 million people estimated to be HIV positive worldwide, 5 – 10 percent were infected by a contaminated blood transfusion. Direct blood stream exposure to HIV is the most efficient means of transmission – more than 92 percent of HIV-contaminated transfusions result in infection, while less than 1 percent of intravenous drug injections with a contaminated syringe do.

Blood transfusion services, coupled with safe medical procedures, are vital to health systems, helping to save people’s lives every day. Until recently, according to the study, little was known about blood transfusion systems in Central Asia and their contribution to disease transmission. The report found that the current screening of donated blood in Central Asian health systems may not be fully effective, and leaves some real risk of transfusion of infected blood by unsuspecting doctors to unsuspecting patients. Even more alarming is the finding that some health facilities in Central Asia do not test blood donations at all.

Countries covered by the study were Kazakhstan, Kyrgyz Republic, Tajikistan, and Uzbekistan, in which blood samples from 7,500 blood donors were re-tested at national reference laboratories. The re-screened blood samples were screened for HIV, syphilis, and hepatitis B and C. The blood sample re-testing identified cases of HIV that had been undetected by the blood center laboratories that originally tested the samples. These cases included HIV-infected blood unitsthat reached health facilities. The re-testing found a prevalence of communicable diseases in the blood samples to be 0.20 percent for HIV, 2.7 percent for hepatitis B, 3.0 percent for hepatitis C, and 3.6 percent for syphilis. The restesting also found a prevalence of 8.6 percent for ALT elevation, signaling the potential residual risk of transmission of viral diseases during the "window" period “when markers for these diseases are still not detectable in blood donations.

“Indeed patchy testing of donated blood is creating a false sense of security in the Central Asian health systems,” said Patricio Marquez, World Bank Lead Health Specialist and author of the report. “These findings underscore the need to strengthen screening of blood donors for each donation and strengthen other prevention and control measures to guarantee the safety of the blood supply in the health systems of the Central Asia countries. Such improvements would reduce the potential risk of involuntary infection to the unsuspecting population.”

Although blood transfusions are a small contributor to infectious disease transmission compared to other well-reported modes, the report emphasizes that national governments have a responsibility to their populations to ensure the safety of the blood supply in their countries’ health systems.

“Numerous parts of these countries’ blood transfusion systems,” said Marquez, “are in serious need of restructuring, of new investments, and of increased budgetary support for operation and maintenance. And the low level of blood supplies in Central Asia is driven by a culture that places little value on donating blood, fear by people of getting infected by donating blood, and the near non-existence of campaigns to promote blood donations among low-risk populations. These trends need to be reversed.”

The report recommends measures to Central Asian governments to improve blood services, including optimizing the laws and regulations, putting in place nationally coordinated blood transfusion systems, universal unpaid blood donor systems, and regular donor promotion campaigns. Special attention is also placed on effective donor screening strategies, training of medical personnel, and promoting justified and rational use of blood and blood products, among others.

Ensuring blood supply safety, however, is a difficult challenge for poor countries with weak and underfunded health care systems. Therefore, the support of the international community is critical to helping countries in the region block this source of communicable disease transmission as part of the broader efforts to restructure health systems.

The report draws on results of assessments carried out in collaboration with the US Centers for Disease Control and Prevention and the World Health Organization Regional Office for Europe, and with the Central Asian countries’ Ministries of Health.

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To get more information and download the full report in English and in Russian, please go here.

For more information on the World Bank’s work in Europe and Central Asia, please visit:www.worldbank.org/eca

New report on economic growth offers lessons on achieving sustained, high economic growth

Wed, 21 May 2008 17:11:32 GMT

Contacts:

In Washington:

Maya Brahmam at +1-202-473-6231 or email at mbrahmam@worldbank.org

WASHINGTON, May 20, 2008 – The World Bank Group welcomes a new report by the independent Commission on Growth and Development, a global panel of eminent experts, which reveals important lessons from countries that have achieved high, long-term economic growth. The experts say the lessons learned could help policy makers in developing countries as they seek to set their countries on a steady growth path.

The Growth Report: Strategies for Sustained Growth and Inclusive Development says integration into the world economy, maintaining high rates of savings and investment, and committed, capable governments are among the key features of countries that have sustained growth rates above 7 percent for 25 uninterrupted years since World War II.

"This report underscores to the development community that one size doesn’t fit all." said World Bank Group President Robert B. Zoellick. I am especially pleased that it draws on input from first class practitioners and leaders who have hands-on pragmatic and practical experience of making inclusive development a success. This will help enrich the thinking and practice of the World Bank Group as well as others in the development field.” “

High, long-lasting growth is not easily achieved, but the report by some of the world’s top policy-makers and thinkers, believes it can be reproduced in developing countries, giving them a chance to reduce poverty and improve opportunity and quality of life for their citizens.

“We are acutely aware that there are no silver bullets to create long-running, inclusive growth, and that no single paradigm exists,” says Commission Vice Chair Danny Leipziger, who is also Vice President for Poverty Reduction and Economic Management at the World Bank. “While seeking to identify those key elements that can lead to long running and inclusive growth, the report is clear that policy makers will need to customize and experiment with polices rather than follow any rigid set of guidelines.”

Commission Chairman Michael Spence said: " What makes the report so unique is that it was prepared by policymakers, many from developing countries, who have been in the trenches themselves and have learned what works and why. It is these commissioners who are now providing their insights to the next generation of policymakers on ways to improve growth prospects and the quality of life in the poor parts of the globe."

Spence is one of two Nobel Laureates on the 21-member commission comprising leaders from business, government and academia. The Commissioners come from 18 countries that include a broad mix of developing, emerging and developed economies, as well as small island states and populous, large countries.

###

To download full report click here:

http://www.growthcommission.org/

World Bank Broadens Transport Agenda

Wed, 21 May 2008 17:00:00 GMT

Contacts
In Washington:
Roger Morier (202) 473 5675, rmorier@worldbank.org
Anna Piasecka (202) 458 7027, apiasecka@worldbank.org

WASHINGTON, D.C., May 21, 2008 – The World Bank Group today launched a new transport business strategy for 2008-2012 that will help partner countries establish the governance, strategies, policies and services to deliver transport for development in a way that is economically, financially, environmentally and socially sustainable.

Called Safe, Clean, and Affordable… Transport for Development, the business strategy strengthens the alignment of the transport sector approach with the Millennium Development Goals adopted by the United Nations in 2000. At the same time, it widens the directions and deepens the routes that will be taken to meet the evolving development agenda. It gives more attention to emerging trends, such as trade globalization, urbanization of populations; rising concerns about climate change, the increase in traffic congestion; and the recognition of access as a key to both economic opportunity and good governance.

“In striving to achieve its development objectives—and foremost to eradicate poverty—the World Bank Group is mobilizing the transport sector to the fullest possible extent,” said Katherine Sierra, World Bank Vice President for Sustainable Development. ”To that end, the transport business strategy aligns Bank Group instruments along a few key strategic directions that will pave the way to truly sustainable development, one where transport plays a crucial role.”

“In a world with rising levels of greenhouse gases, poor road safety, and the too-frequent spread of communicable diseases along international routes, transport must be looked at anew. A coherent way forward requires innovative thinking and cooperation among sectors to optimize the role of transport without jeopardizing personal and commercial mobility.”

The Bank Group consulted widely in preparing its new business strategy, seeking contributions from over 75 transport development partners, governments, professional institutions, civil society organizations, multilateral and bilateral donors, and putting an early draft on its external website for four months to elicit public comments.

Safe Transport
Acknowledging the importance of transport for achieving public health outcomes within the Millennium Development Goals, the strategy stresses the need to mitigate the spread of HIV/AIDS, and to address safety in all transport modes, especially road transport. It also addresses the safety issue in air transport which, although globally much safer, still shows a safety record significantly affecting growth and investment prospects in some regions, in particular Sub-Saharan Africa. Transport and supply-chain security has also become a major issue in ensuring fair access of developing country exports to developed markets, and needs to be addressed as a new global public good.

“Road crashes kill an estimated 1.2 million people a year and injure 50 million more, disproportionately affecting the poor,” said Anthony Bliss, Lead Road Safety Specialist, Program Coordinator for the World Bank’s Global Road Safety Facility. “We are placing special emphasis on road safety, extending our support to include not only road safety components embedded in road infrastructure projects, but also larger stand-alone projects to formulate national policies and strategies that would improve road safety across the board. We will also pursue cross-sectoral approaches, such as including pre-hospital components in road programs and road safety components in health programs.”

Clean Transport
Urban air pollution, 90 percent of it generated by motor vehicles, kills an estimated 800,000 people each year. Transport now produces approximately 15 percent of global greenhouse gas emissions. Reflecting the contribution of transport to the wider environmental aims of the Millennium Development Goals, the strategy encompasses the transport-energy-environment nexus, from the energy consumption to the emissions and climate change impact perspectives. Going forward, the World Bank Group will be working to help restrain transport energy consumption. It will be assessing and controlling transport projects emissions, favoring shifts to low carbon modes.

“We are setting guidelines for environmentally effective transport planning and decision making,” said Jamal Saghir, Director, Energy, Transport and Water Department and Chair of the Transport Sector Board. “We are seeking ways to mitigate the effects of transport on the climate—and the effects of climate change on transport asset. We intend to build climate change issues into transport project appraisals where appropriate.”

Affordable Transport
An estimated 1 billion people in low-income countries lack access to an all-weather road. Affordable transport can enhance mobility and inclusion. It can promote social, economic, and political integration, by keeping a country together despite geographic disparities, by overcoming potential disputes over access to resources, and by defusing the seeds of conflict that sometimes arise from feelings of isolation.

Marc Juhel, Sector Manager for Transport stressed the fact that affordability concerns not only the rural and urban poor, but also the whole freight economy, aiming at improving competitiveness to foster stronger economic growth:

“The strategy stresses the need for better knowledge and control of transport costs, for both passengers and freight, on domestic and regional, urban and rural settings. The implementation of an effective urban transport strategy, reaching out to the growing urban poor population, is a key element of this approach. On the freight side, the cooperative work on trade and transport facilitation—in particular on customs and transit issues—will be strengthened.”

World Bank contribution to transport over previous decade
Since the Bank’s 1996 transport strategy, Sustainable Transport, was endorsed by the World Bank’s Board of Directors, the Bank Group has committed around US$42 billion for more than 530 dedicated transport operations and transport components in over 500 non-transport specific projects in more than 100 client countries. Lending in fiscal year 2007 (July 1, 2006 – June 30, 2007) reached over US$5 billion, amounting to 20 percent of World Bank Group new annual commitments.

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View the transport business strategy—Safe, Clean, and Affordable… Transport for Development at: http://www.worldbank.org/transport

Productivity Surge Boosts Growth and Living Standards in Eastern Europe and the former Soviet Union

Wed, 14 May 2008 20:29:17 GMT

Contacts: In Brussels: Alexander Rowland +32-2-504-0992

Arowland@worldbank.org

In Washington,DC: Kristyn Schrader +1-202-458-2736

Kschrader@worldbank.org

BRUSSELS, May 14, 2008 — Big gains in the productivity of workers in Eastern Europe and the former Soviet Union during the past decade have helped boost growth and living standards, but more must be done to eliminate red tape and barriers to enable firms to become more productive in a rapidly globalizing world, says a new World Bank report.

The rapid surge in the Region’s productivity – the amount each worker produces in a period of time – has boosted economic growth, raising income per capita by more than 50 percent between 1999 and 2007, while lifting about 50 million people out of poverty, says the new report, Unleashing Prosperity – Productivity Growth in Eastern Europe and the former Soviet Union.

“The transition from centrally planned to market economies has freed up an entrepreneurial energy that always existed, but rarely had the chance to make itself felt,” said Shigeo Katsu, Vice-President for the World Bank’s Europe and Central Asia Region. “The rise in productivity in the region has brought higher sales and more profits to businesses so they can pay more in wages and invest in new technologies. At the same time, it is critical that the countries of the region do not relax, but rather, build on this success and become even more productive, thus competitive, so that they can achieve their aspiration of catching up with Western European living standards.”

In the 1990s, the countries of the Region, particularly in the Commonwealth of Independent States (CIS), saw their output and productivity plummet during the early phase of transition to market economies. But since 1999, output per capita recovered strongly in many countries, especially in the countries of the former Soviet Union. In most countries of the Region, improved domestic polices and greater trade and global integration have played a big role in stimulating investment, spurring innovation, and promoting productivity and growth.

Still, the study says more must be done to improve the productivity of the Region’s workers. It points to the large differences in annual incomes of people in the region, ranging from about purchasing power parity (PPP) $950 per year in Tajikistan to PPP $17,991 in Slovenia. Even the EU10 new member states such as Hungary and the Czech Republic have a long way to go to catch up with the incomes of the EU-15 member countries.

“Productivity growth is the only lasting route to prosperity,” said Pradeep Mitra, Chief Economist of the World Bank’s Europe and Central Asia Region. “As such, productivity growth is important for poverty reduction in the low income countries in the South Caucusus, Central Asia, and the Western Balkans. It is also urgently needed in the new member states of the European Union as well as Belarus, Russia, and Ukraine where populations are aging rapidly. This is because a shrinking share of individuals of working age in the population requires each worker to be more productive.”

The Unleashing Prosperity study calls for countries to pursue reforms in five areas to enable workers to become more productive:

· Promoting good governance and macro stability

· Strengthening competition

· Investing in labor and technology

· Investing in infrastructure

· Deepening the financial sector

The study’s main author, Paloma Anós Casero, says the types of reforms needed depend on where the countries are in their stage of transition, which falls broadly into two groups.

In those countries that are more advanced in economic reforms, such as the EU10 and Turkey, most of the gains in productivity have been made through big changes in the economy and workers moving from unproductive manufacturing positions to underserved service jobs. In those countries, further improvements must now be done by individual firms becoming more efficient.

“The advanced reformers have already achieved much in integrating their goods, services, and capital markets into the world economy,” said Anós Casero, Senior Economist in the Poverty Reduction and Economic Management Network at the World Bank. “But to compete globally, they need to do more to spur innovation, enable workers to become more mobile, and invest more in research and development.”

Meanwhile, those countries which are less advanced in economic reforms, such as those countries in Southeast Europe and the CIS, show lower levels of productivity, and most of them are still dealing with the legacy of central planning.

“Changes in the less advanced reformers should focus on speeding up reforms to address the legacy of transition. Better investment policies, streamlined regulations, and stronger competition would encourage the entry of new, more productive firms and the exit of obsolete firms, thereby boosting productivity. Along with these reforms, though, it is essential that governments strengthen social safety nets to help ease the transition for workers,” Anós Casero said.

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For the full report and more information, please go to:

www.worldbank.org/eca/productivity

For more information on the World Bank’s work in Europe and Central Asia, please visit:

www.worldbank.org/eca

World Bank Group President Appoints Vice President of Institutional Integrity

Mon, 05 May 2008 18:00:00 GMT

Contacts:
In Washington: Carl Hanlon (202) 473 8087
chanlon@worldbank.org

WASHINGTON, D.C. May 5, 2008 – World Bank Group President Robert B. Zoellick has named South African Leonard McCarthy to head the Bank’s Department of Institutional Integrity (INT). McCarthy has earned international recognition for investigations and prosecutions of individuals engaged in corruption as head of South Africa’s Directorate of Special Operations.

“Leonard McCarthy is recognized worldwide for his integrity, independence, and effectiveness in fighting corruption and strengthening good governance,” says Zoellick. “This is the first time that the Department of Institutional Integrity will be headed at the level of Vice President, and McCarthy brings to the post stature, skill, and tested experience. This post is critical for our work, reputation, and fiduciary duty. I am confident that he will bring effective leadership to our highest obligation to protect the Bank’s assets and hold people, businesses, and governments responsible if they steal from the poor.”

McCarthy’s work with South Africa's National Prosecuting Authority has included investigating and prosecuting high profile cases of financial crime, organized crime, and high-level corruption. He has worked closely with African governments and law enforcement officials across the globe to expose and prosecute transnational financial crime. McCarthy was formerly a Director of Public Prosecutions appointed by President Nelson Mandela.

An experienced trial lawyer, he has held numerous positions in government, including Investigating Director in the Office for Serious Economic Offenses, Deputy Attorney General in Cape Province and Senior Public Prosecutor. He holds a Bachelor of Laws Degree from the University of South Africa in Cape Town.

Following talks with the South African government, President Mbeki has agreed to release McCarthy from service, to take up the position at the World Bank on June 30, 2008.

“I am honored to receive this appointment and to be joining the World Bank, I believe strongly in its vision, said McCarthy. “President Zoellick has made clear to me the strong emphasis he places on INT’s role, its need for strong, highly skilled people who will both pursue investigations and integrate anti-corruption work into Bank projects across the world. I am committed to delivering results and building on INT’s work to strengthen financial due diligence and ensure that precious development resources benefit people who need them most.”

McCarthy was selected from a list of candidates assessed by an internal search committee with the addition of former Federal Reserve Chairman Paul Volcker, who led a review of INT last year. In his report Volcker called for greater attention to protect against corruption in designing and implementing Bank programs.

Mr. Volcker has welcomed the fact that: “the Bank is now implementing the recommendations of the Panel he chaired, importantly including elevating the head of INT to the level of vice president.”

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World Bank Marks World Press Freedom Day with Study on Broadcasting and Development

Fri, 02 May 2008 12:30:00 GMT

Contact:

In Washington: Christopher Neal, (202) 473-2049

Cneal1@worldbank.org

MAPUTO, May 2, 2008—The World Bank marked World Press Freedom Day by launching a study outlining conditions under which radio, television and online broadcasting can fulfil a vital role in development by making governments accountable, and giving voice to the world’s poor.

“Huge numbers of people, including those who can’t read, have access to broadcast media,” said Kreszentia Duer, of the World Bank Institute (WBI), who presented the study, Broadcasting, Voice and Accountability, at a conference here on freedom of expression hosted by UNESCO. “In countries with strong oral traditions, community broadcasting can enable people to share information and raise issues with a large audience, and hold government officials to account. This makes broadcasting a powerful tool for enhancing governance and promoting development.”

The 400-page study, subtitled A Public Interest Approach to Policy, Law and Regulation, is the result of five years of research by six media experts, including Ms. Duer, Steve Buckley, president of the World Association of Community Broadcasters; Toby Mendel, ARTICLE 19, Global Campaign for Free Expression; Seán Ó Siochrú, founder of the Campaign for Communication Rights in the Information Society; Monroe E. Price, of the Annenberg School for Communication at the University of Pennsylvania; and Marc Raboy, of Canada’s McGill University.

The study reviews broadcasting practices and regulations around the world, and identifies those which produce an “enabling environment” for broadcasting that is free, independent and pluralistic. These characteristics are essential, the report says, for broadcasting to perform an effective role in giving people voice, and ensuring government accountability.

Drawing from their research, the authors propose standards on freedom of expression, access to information, use and misuses of defamation law, content rules and limits to free speech, and the regulation of journalists. The study also offers guidelines on best practice for broadcast regulators, as well as the respective roles of public service, community non-profit, and commercial private sector broadcasters, all of which, it argues, should be present in a healthy media environment.

Co-author Steve Buckley notes that increased movement towards democracy in developing countries opens the way to build broadcasting that serves the public interest.

“Countries that are opening their economies, democratizing, and decentralizing public service delivery are looking for guidance on how to involve citizens in decisions that affect them,” he said. “Broadcasting, enabled by the right regulation and conditions, can empower groups through bottom-up participation.”

The book cites countries that have developed systems to enhance the quality and diversity of media content, while fully respecting freedom of expression, and identifies ways in which government regulation can expand access to broadcast media. Community broadcasting, for example, can be encouraged through special licensing arrangements that guarantee fair and equitable access to radio frequencies and financial support.

“This book focuses on useful proactive approaches to setting up, sustaining, and governing broadcasting systems across the world,” said Ruth Teer-Tomaselli, UNESCO Chair in Communication for Southern Africa at the University of KwaZulu-Natal. “It’s based on sound scholarship and provides practical advice for policymakers, media scholars and broadcasters alike.”

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For more information, please visit:

http://web.worldbank.org/WBSITE/EXTERNAL/WBI/0,,contentMDK:21747844~pagePK:209023~piPK:207535~theSitePK:213799,00.html

To order: http://publications.worldbank.org/ecommerce/catalog/product?item_id=8100893

Eastern Europe, Central Asia Face Slower Growth

Thu, 10 Apr 2008 12:33:36 GMT

Contacts:

Andrew Kircher 202-473-6313

Akircher1@worldbank.org

Kristyn Schrader 202-458-2736

Kschrader@worldbank.org

WASHINGTON, April 9, 2008 — World Bank officials today warned that the countries of Eastern Europe, Central Europe, and Central Asia face slower economic growth as a result of the economic downturn in the U.S. and Western Europe, and should step up their efforts to protect poor and vulnerable people from the effect of higher food and energy prices.

“Years of reforms in Europe and Central Asia have given countries in the Region improved economic fundamentals and higher incomes, and this has made them very resilient to downturns in the global economy,” said Shigeo Katsu, World Bank Vice President for Europe and Central Asia. “Still, the increase in food and energy prices that we see spreading across the Region today will lead to inflationary pressures, and combined with increasing liquidity squeezes, will likely result in slower growth, and the poor will be the hardest hit. Because of this, we are urging the governments in the Region to help their most vulnerable groups better cope with these emerging problems.”

With a stable population in the Region, GDP per capita continued to increase at rates of more than 6 percent over 1999 – 2006, which drove up living standards and reduced poverty. The efficiency of labor and capital rose rapidly in the Region, especially in the middle-income countries of the Former Soviet Union. As a result, the Region’s income per capita, in constant PPP dollars, rose from US$5,592 in 1998 to US$8,605 in 2006, lifting 50 million people out of poverty within a population of nearly 460 million. In fact, per capita GDP in the Commonwealth of Independent States (CIS) was about 50 percent higher in 2005 than in 1998, and in the EU10 countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, and Slovenia), it was 15 percent higher than in 1993.

But while GDP growth remains strong in the Region, it is expected to slow from 7.6 percent in 2007 to 6.1 percent in 2008, or even lower in light of recent developments in global financial markets, Bank officials said. External demand is expected to weaken in the Region overall this year, due to slower growth in the OECD and the Euro Area, and slower domestic demand growth in some countries because of projected lower private consumption and investment growth.

Pradeep Mitra, Chief Economist for the World Bank’s Europe and Central Asia Region, said the risk of slower growth is especially large in economies with fixed exchange rates where booming private sector credit has widened external imbalances, fueled inflation, and raised fears of overheating.

“The financial turmoil arising from the US sub-prime mortgage market has led to tighter and more expensive credit, which raises the risks of a sudden slowdown in economic growth,” said Mitra. “Many economies in the Region rely heavily on foreign capital inflows to finance the growth of their financial sectors and thus enable economic growth. A tightening of those flows would hit them hardest. To meet these growing challenges, governments should be prepared to use tighter fiscal policy where this has been lax, improve banking supervision, and speed up structural reforms.”

Rising Food and Energy Prices

Food and energy prices have surged in recent months, which in turn have driven inflation upwards. Food price inflation has varied across countries, rising between 2006 and 2007 from 5.6 to 13.8 percent in the new EU member states and from 6.5 to 20.3 percent in the middle income CIS countries. The increases were smaller but still large in the low income CIS countries – from 10.7 to 17.1 percent.

Higher food prices are largely due to last summer’s drought throughout the region, stronger cereal demand in other parts of the world as a result of rising incomes, and switching of land to bio-fuel production. The rising food prices will have a larger impact in low-income countries in the Region while higher energy prices will hit middle-income countries harder, the Bank officials said.

The impact may be particularly large for low income countries since spending on food is a larger percentage of their consumption. In the EU10, food accounts for an average of only 21 percent of the Consumer Price Index (CPI) basket; in the poorer countries in Central Asia, it accounts for 50-60 percent of the CPI (50 percent for low-income CIS, on average). Simulations suggest that for some of these countries, even a 5 percent relative increase in food prices can increase poverty rates by 2-3 percentage points.

Meanwhile, while rising food prices pose a challenge to the Region, an upcoming World Bank study shows that big gains in the productivity of workers in the Region during the past decade have helped slash poverty rates and boost living standards.

The rapid surge in the region’s productivity – the amount each worker produces in a period of time – has boosted economic growth, doubling income per capita from 1999 to 2007, says the report, Unleashing Prosperity – Productivity Growth in Eastern Europe and the former Soviet Union, which will be published in May.

“While policy-makers focus on how to meet the short-term challenges of food and energy prices, it is important that they do not lose sight of the medium-term and longer-term measures that drive stronger economic growth such as productivity,” said Paloma Anos Casero, Senior Economist and Lead Author of the report. “Improving the productivity of workers in the region is urgently needed, especially given that many of these countries are ageing and face a shrinking labor force. Because there are fewer workers, each worker must be more productive and it is up to the governments in the region to speed up those reforms that will allow that to happen.”

For more information, please see the websites:

www.worldbank.org/eca

www.worldbank.org/eca/productivity

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World Bank President Calls for Plan to Fight Hunger in Pre-Spring Meetings Address

Wed, 02 Apr 2008 15:53:10 GMT

April 2, 2008—In a speech today, World Bank President Robert B. Zoellick called for a "new deal" to combat world hunger and malnutrition through a combination of emergency aid and long-term efforts to boost agricultural productivity in developing countries.

The "New Deal for a Global Food Policy" is part of a suite of initiatives Zoellick outlined to advance development in the face of skyrocketing food and oil prices. He also called for a global trade deal to be agreed as soon as possible, detailed an initiative to help countries manage their wealth earned from high energy and mineral prices in a more inclusive way, and encouraged sovereign wealth funds to create a "One Percent Solution" for equity investment in Africa.

Agricultural Assistance

The World Bank will nearly double agricultural assistance to US$800 million in Africa. Zoellick also urged wealthy nations to help the UN’s World Food Program meet some $500 million in emergency food needs.

"The United States, the European Union, Japan and other OECD countries must act now to fill this gap – or many more people will suffer and starve," Zoellick said in an address sponsored by the Center for Global Development in Washington.

Zoellick said the "New Deal for a Global Food Policy" is needed to combat the "forgotten" Millennium Development Goal of overcoming malnutrition. Only about a tenth of the resources directed at HIV/AIDS goes to fight malnutrition, which causes 3.5 million deaths a year in children under 5 and has long-lasting impacts on health and achievement.

"Hunger and malnutrition are a cause, not just a result, of poverty," said Zoellick.

The World Bank estimates 33 countries face social unrest because of soaring food and energy prices.

The New Deal requires a shift from traditional food aid to a broader concept of food and nutrition assistance, such as cash or vouchers that can help build local food markets and farm production,.and create a "Green Revolution" for Sub-Saharan Africa, said Zoellick.

"This New Deal should focus not only on hunger and nutrition, access to food and its supply, but also the interconnections with energy, yields, climate change, investment, the marginalization of women and others, and economic resiliency and growth," said Zoellick.

"Food policy needs to gain the attention of the highest political levels, because no one country or group can meet these interconnected challenges."

Zoellick said the World Bank Group can help by:

Backing emergency measures that support the poor while encouraging incentives to produce and harvest food
Offering access to technology and science to boost yields
Helping countries counter weather-related risks, such as drought
Facilitating land-titling, local currency financing, working capital, distribution and logistics, and support for services on which farmers rely

"Income gains in agriculture have three times the power in overcoming poverty than increases in other sectors, and 75 percent of the world’s poor are rural, with most involved in farming," said Zoellick.

Trade Also Key to Lower Food Prices

Zoellick said the time was "now or never" to break the impasse in global trade talks. A "fairer and more open trading system" would encourage developing country farmers to expand production, he said.

"The poor need lower food prices now. But the world’s agricultural trading system is stuck in the past. If ever there was a time to cut distorting agricultural subsidies and open markets for food imports, it must be now."

An accord would give developing countries, big and small, more opportunities to become more productive and lower prices through trade. It would also infuse confidence in an economic system stressed by financial anxiety, he said.

However, "powerful voices across the political spectrum, including in my own country, are calling for, rationalizing, protectionism," Zoellick said. "This economic isolationism signals a defeatism that will reap the losses, not the gains, of globalization."

The trade talks are also a "critical test" for striking a global deal on climate change. "If negotiators of 150 economies cannot manage the political tradeoffs of the Doha Round to reap the clear benefits, it does not auger well for bringing developed and developing countries together on a new accord for climate change."

Sovereign Wealth Funds

Zoellick also outlined a plan to encourage emerging economies such as China, India and Brazil to invest about US$30 billion in African nations through government-sponsored wealth funds.

Such sovereign wealth funds currently hold about US$3 trillion in assets. They have come under scrutiny recently because of investments outside their own countries. Zoellick noted they need transparency and should be guided by best practices to avoid politicization, but "where some see sovereign funds as a source of concern, we see opportunity," said Zoellick.

The World Bank’s "One Percent Solution" involves creating the equity investment platforms and benchmarks to attract these investors, and allocating 1 percent of the assets to African growth, development and opportunity.

"This one percent could be the start of something much bigger, across more types of funds and countries, because the investment of wealth into equity for development offers opportunity, not something to fear."

Extractive Industries Initiative

Zoellick announced a new approach to help ensure that high energy and commodity prices translate into improvements in the lives of the poor.

The EITI++ builds on the transparency and good governance concepts of the existing multi-stakeholder Extractive Industries Transparency Initiative (EITI). EITI publicizes and verifies company payments and government revenues from oil, gas and mining. But many governments are emphasizing that transparent revenue reporting, while important, is not enough. The World Bank is therefore working with developing countries and other partners to frame a "comprehensive approach to supplement the original project."

EITI++ will include providing technical assistance to countries on the awarding of contracts, monitoring operations, collecting taxes, improving resource extraction and economic decisions, better managing price volatility, and investing revenues effectively in sustainable development.

An EITI++ approach will be launched in Guinea. "The successful development of Guinea’s rich resources can strengthen sustainable development for the entire region," Zoellick said.

"The EITI++ can advance inclusive and sustainable globalization by broadening the beneficiaries of resource development."