“After a decade of impressive growth and poverty reduction, the Region has now been severely hit by the global economic crisis,” said World Bank Europe and Central Asia Vice President Shigeo Katsu. “Risks have materialized into a full-blown crisis, faster and deeper than expected. A human crisis is looming in Europe and Central Asia, and countries are already losing the poverty gains made in recent years. We will continue supporting ECA countries by focusing on preserving jobs, protecting people, and stabilizing the financial sector. Through these measures, countries can cushion the impact of the crisis and ensure they are in a better position to rebound afterward.”
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 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 $31 billion to support the banking sectors in the region and to fund assistance to businesses hit by the global economic crisis. Support included equity and debt finance, credit lines, and political risk insurance.
In some countries, and in particular in Russia, the Bank forged partnerships at the subnational level to strengthen capacity in areas such as public administration, social service delivery, education, and public-private partnerships for infrastructure finance.
An important element of the Bank’s services in ECA is knowledge generation and dissemination through extensive analytical work as well as capacity building. Flagship reports published in FY09 include Adapting to Climate Change in Europe and Central Asia, which warns that the impact of climate change in ECA will be more significant than expected due to a lingering post-Soviet legacy of environmental mismanagement and the poor state of much of the Region’s infrastructure, leaving countries poorly prepared to adapt. The ‘adaptation deficit’ is already challenged by climate variability, which will only worsen the consequences of projected trends in climate in the coming decades. In this context it is noteworthy that Turkey was the first country that benefited from the Clean Technology Fund (CTF) with the approval in FY09 of the US$ 600 million Private Sector Renewable Energy and Energy Efficiency Credit Line, which includes US$ 500 million IBRD financing and US$ 100 million CTF resources. The global community is the beneficiary of this program and the program reflects Turkey’s commitment to reduce Greenhouse Gas emissions.
