WBG directs US$6bn in 2007 to boost growth, increase living standards in Europe and Central Asia
During Fiscal Year 2007, the World Bank Group committed some US$6 billion in loans, credits, equity investments and guarantees to its members and to private business in the
“We are pleased to look back on a year of solid economic growth for most countries in our region,” said World Bank Europe and Central Asia Vice President Shigeo Katsu. “Structural reforms in most countries have driven ECA’s ongoing success. However, many challenges remain, including in the area of continuing institutional reforms, large subnational disparities, rapidly aging and declining populations, and persistent unemployment, especially among youth. We will continue to support our member countries to overcome these challenges and deepen our engagement in the management of the risks associated with climate change, HIV/AIDS and global financial markets .”
The entire World Bank Group contributed to this outcome, including 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).
IDA commitments in ECA were USUS$422 million, and IBRD commitments totaled US$3.34 billion. IDA/IBRD lending was down slightly from fiscal 2006 levels due to political uncertainty in a number of countries. 59 projects were delivered, along with 100 economic and sector policy reports and notes, and a further 84 technical assistance activities. Lending was provided across all sectors, with the largest areas of assistance in law, justice, and public administration (22%); water, sanitation, and flood protection (22%); and transportation (19%). The top borrowers in FY07 by volume were
In a rapidly changing economic landscape, the Region responded to continuing strong demand for both traditional and innovative product lines across a very diverse set of countries. In IDA countries, the Bank continues to be a vital development partner. Examples of IDA support in FY07, ending June 30, include a US$17 million credit to
In middle-income countries, the Bank continued to provide integrated product lines based on client demand, along with traditional lending. A Joint Economic Research Program with
The Bank’s analytical work continued to increase knowledge and spark debate in FY07 on high-priority development topics through in-depth studies and advisory activities on such crucial issues as employment, trade, regional labor migration, and corruption. Flagship reports published in FY07 included Migration and Remittances: Eastern Europe and the Former Soviet Union; Anti-Corruption in Transition 3: Who Is Succeeding... and Why?; From Red to Gray: The "Third Transition" of Aging Populations in Eastern Europe and the Former Soviet Union; and Fiscal Policy and Economic Growth: Lessons for Eastern Europe and
IFC continued to assist countries in the region in their transition toward greater market orientation by supporting investments that diversify their economies, modernize their industries and infrastructure, promote a sound financial sector, and encourage intraregional investments. IFC’s commitments in FY07 reached US$1.79 billion for 67 projects in FY07, and an additional US$1.55 billion was mobilized through syndications and structured finance. Excluding projects classified as regional projects, 20% are in low income, high risk countries. IFC has increased commitments in these countries in recent years and they remain a priority. In addition to investments, IFC pays particular attention to designing advisory programs in these countries that aim to address constraints to private sector growth, particularly in financial markets, agribusiness, and infrastructure.
"As IFC continued to increase its investments in the private sector across the region in FY07, I am pleased to note that the development impact results from earlier investments are strong, especially in the manufacturing, services, and financial markets sectors," said Edward Nassim, IFC’s Vice President for Europe, Africa and the Middle East . "Also, IFC’s advisory services have helped cut red tape for private businesses across the region and contributed to generating US$3 billion in investments by local and foreign companies since 2000."
During the fiscal year ending June 30, 2007, MIGA supported four projects with US$430 million in guarantee coverage and undertook eight technical assistance projects in the region. At year-end, MIGA’s gross guarantee exposure stood at US$1.9 billion, 36.6% of the agency’s outstanding portfolio.
In recent years, MIGA has played a growing role in increasing the availability of residential mortgages and in financial sector development as a whole. In FY06 and FY07, for example, MIGA provided guarantees in support of an innovative capital markets transaction designed to increase the availability of housing finance in