Bosnia and Herzegovina | World Bank

Bosnia and Herzegovina - Municipal Development Project

Bosnia and Herzegovina - Social Safety Nets and Employment Support Project

Bosnia and Herzegovina - Enhancing Small and Medium Enterprise (SME) Access to Finance Project

Status of projects in execution (SOPE) - FY09 : Europe and Central Asia region - Bosnia and Herzegovina

The Status of Projects in Execution (SOPE) report for FY09 provides information on all International Bank and Rural Development (IBRD)/International Development Association (IDA) projects that were active on June 30, 2009. The report is intended to bridge the gap in information available to the public between the project appraisal document, disclosed after the Bank approves a project, and the implementation completion report, disclosed after the project closes. In addition to the project progress description, the FY09 SOPE report contains project level comparisons of disbursement estimates and actual disbursements, and a table showing the loan/credit/grant amount and disbursements to date for all active projects.

Bosnia and Herzegovina - Municipal Development Project : environmental assessment and environmental management plan

The objective of the Municipal Development Project for Bosnia and Herzegovina is to improve service delivery outcomes at the local level by supporting increased performance in the delivery of public services provided under the responsibility of participating municipalities and their utilities. Negative measures include: noise emission, air quality, flora and fauna, soil and water contamination control, and waste management. Mitigation measures include: a) waste material from screens and sand trap will be collected in closed tanks and transported daily to a sanitary landfill; b) sand and grease will be washed and transported to a sanitary landfill; c) special sludge accumulation areas will be provided in accordance with the applicable safety standards; d) on-site pollution control measures applied to prevent contamination of soils, surface water, groundwater etc; e) dust suppression techniques will be used when working in dry soils or where activities create airborne dust; f) the majority of reconstruction activities will be limited to normal daylight working hours; and g) exposed soil stockpiles will be covered or watered to prevent dust and wind erosion.

Bosnia and Herzegovina - Second Employment Support Project

Ratings for the Second Employment Support Project for Bosnia and Herzegovina were as follows: outcomes were moderately satisfactory, the risk to development outcome was moderate, the Bank performance was moderately satisfactory, and the Borrower performance was satisfactory. Some lessons learned included: job creation and employment projects must be opportunistic and flexible in their selection of target groups and approach to job brokerage services in order to be able to take advantage of the changing realities of a country's labor market context. Assistance and advice in connecting employees to employers and matching skills to opportunities is often more effective than providing a grant. Partnerships between public sector employment services and private sector job brokerage firms can be cost effective. Monitoring and following up with employees and employers who have been matched contributes to sustainability of employment and job placements. Proactive and intensive supervision by the Bank's team is crucial for the project success. Through the provision of timely technical assistance during implementation, the Bank's team can constructively and substantively engages with the Government in policy reform dialogue. Investment lending operations provide an opportunity to understand sector policy issues and forge a close relationship with the Government if supervision during implementation is frequent and if project design reflects Government ownership.

Bosnia and Herzegovina - Social Safety Nets and Employment Support Project

Bosnia and Herzegovina - Enhancing Access to Finance for Small and Medium Enterprises (SME) Project : environmental assessment

The project development objective of the Enhancing Access to Finance for Small and medium Enterprises (SME) is to maintain or improve access to finance for small and medium enterprises in Bosnia and Herzegovina in the context of global financial crisis. The environmental impact assessment process is carried out to determine the possible positive or negative impacts of proposed subprojects; to evaluate precautions to be taken to prevent or minimize these negative impacts. For all other projects, for which an environmental permit is not required or is issued without additional documents, or for which the ministry requires a partial Environmental Impact Assessment (EIA), The Participating Financial Intermediaries (PFIs) must demonstrate that all Federation of Bosnia Herzegovina and Republika Srpska (FBiH/RS) environmental assessment (EA) requirements have been met. The sub-borrowers will be responsible for meeting FBiH/RS EA requirements and confirming that any and all environmental clearances, permits, licenses etc. necessary for the subproject have been obtained from the relevant authorities as prescribed in FBiH/RS legislation. This provision includes all potential changes in the FBiH/RS environmental legislation that may occur during any of the phases of the project. The PFIs should verify that they have in its subproject files: (a) all the FBiH/RS EA documentation; (b) official approvals for the documentation from responsible authorities for protection of environment, and (c) copies of the environmental permit. If any of this documentation is not in the files, the PFIs should collect missing documentation from the sub-borrower.

Bosnia and Herzegovina - Enhancing Small and Medium Enterprise (SME) Access to Finance Project

Bosnia and Herzegovina newsletter

Some of the headings included in this issue of the World Bank office in Bosnia and Herzegovina (BIH) newsletter are: microeconomic update; macroeconomic indicators; social transfers in Bosnia and Herzegovina : moving towards a more sustainable and better targeted safety net; over 10,000 people employed under the employment support project; and 2009 projects pipeline.

Bosnia and Herzegovina - Third Electric Power Reconstruction Project

Ratings for the Third Electric Power Reconstruction Project for Bosnia and Herzegovina were as follows: outcomes were satisfactory, the risk to development outcome was moderate, Bank performance was satisfactory, and Borrower performance was also satisfactory. Some lessons learned included: 1) need for high quality feasibility studies for preparation of investments within an overall plan that is agreed by the stakeholders, and a transparent criteria for selection of schemes; 2) sector reforms and restructuring should be based on high quality analytical work, meaningful consultation and participation of stakeholders, and should be backed by political commitment; 3) design of sector restructuring and the pace of its implementation should be owned and endorsed by the major stakeholders; and 4) the success of Financial Management Information System (FMIS) indicates that pilots for demonstration, and familiarization of the staff with new technologies, should be carried out before introducing a major change in business processes and sophisticated information technology (IT) tools.

Bosnia and Herzegovina - Education Restructuring Project

Ratings for the Education Restructuring Project (ERP) for Bosnia and Herzegovina (BiH) were as follows: the Bank performance was satisfactory, the Borrower performance was rated unsatisfactory, and all other ratings are not applicable since the operation is cancelled. During the first half of the 1990s (1992-95), BiH experienced the most devastating violent conflict and collapse of its economy altering the social and economic landscape of the country and causing widespread economic damage. In an effort to provide yet another opportunity to the Borrower to finalize the restructuring process, on July 18, 2008, the Bank sent a letter to the Borrower requesting confirmation of the project implementation arrangements by September 15, 2008. However, the latest implementation arrangements presented by the Government in September 2008, proposing to have a project team that would move physically between the two entities every six months, were judged as inappropriate by the Bank and a sign of lack of ownership and commitment to reform the project. Taking into account lack of progress since project approval in June, 2005 and the diminished support for ERP from government authorities, the decision to cancel the credit was made by the Bank on October 29, 2008. As no activities were implemented under the project and no disbursements had taken place, the entire credit was cancelled. Some lessons learned are as follows: 1) excellence in technical analysis is not sufficient to counterbalance the political cost of implementing unpopular reforms, unless there is a strong local ownership of the reform agenda; 2) linking conditionality to board presentation under investment operations may not be the best vehicles for triggering reforms, such as the adoption of the controversial higher education law, something which can be more effectively accomplished under development policy lending's (DPLs); and 3) implementation arrangements need to be more tailored to the country environment to be more conducive to sound implementation, particularly in countries such as BiH with its internal institutional complexities.

Bosnia and Herzegovina - Social Safety Nets and Employment Support Project

Entrepreneurship in post-conflict transition : the role of informality and access to finance

The authors examine the factors affecting the transition to self-employment in Bosnia and Herzegovina, using the World Bank Living Standard Measurement Survey panel household survey for the years 2001-2004. In the beginning of the sample, the country changed its legal framework, with the primary aim to promote labor market flexibility and to encourage entrepreneurial activity. The analysis identifies individuals that switched to self-employment (employers and own account) during the sample period and the viability of this transition, in terms of business survival for more than one year. The results suggest an important role for financing constraints. Specifically, wealthier households are more likely to become entrepreneurs and survive in self-employment. After controlling for household wealth, having an existing bank relationship increases the likelihood of starting a business with hired employees and increases the chances of survival for the new entrepreneur. By contrast, overseas - and in some cases domestic - remittances decrease the likelihood of becoming an entrepreneur.

Bosnia and Herzegovina - Social assistance transfers in Bosnia and Herzegovina : moving toward a more sustainable and better-targeted safety net

Public expenditures on non-insurance social protection cash transfers absorb a huge share of the entities' respective budgets. This level of spending requires buoyant public revenues. However, public revenues will be under continuing pressure in view of the impending economic crisis. Moreover, devoting a large proportion of public funds to social transfers has the effect of crowding out resources that could be devoted to public investments which will be increasingly needed to stimulate growth as the economy begins to sag under the impact of the world economic crisis. In addition, there is evidence that some rights based programs create disincentives for employment. This situation is fiscally unsustainable, economically inefficient, and socially inequitable. Bosnia and Herzegovina (BH) needs to completely overhaul it s non-insurance social protection cash transfer programs. There are many ways in which BH could reform these programs and put in place measures aimed at developing a social safety net that is: (a) less of a burden on public resources, (b) more efficient, and (c) better targeted to the poor. Specifically, it is recommended that the governments in BH consider a three pronged approach with measures to: 1) improve and introduce targeting mechanisms to better channel resources to the poor; 2) strengthen benefits administration and beneficiary registry systems; and, 3) rationalize disability-related benefit schemes. An increasingly widespread recognition of the need for rationalization of the non-insurance social protection cash benefits is discernible in both the decision-making circles and in the public discourse in BH.

Bosnia and Herzegovina - Country partnership strategy progress report for the period FYO8-FY11

This Country Partnership Strategy Progress Report (CPSPR) assesses progress in implementing the FY08-FY11 Country Partnership Strategy (CPS) for Bosnia and Herzegovina (BH). The CPSPR confirms the overall direction of the World Bank Group program while introducing adjustments for the remainder of the CPS period that reflect the country's unique governance structure and challenges from the external economic environment. As expected in a small open economy, the global economic crisis spread quickly in BH over recent months, reversing some of the effects of strong growth and putting at risk macroeconomic stability and important economic reforms. Though there was no serious crisis in the financial sector, the real sector and private consumption slowed substantially since the end of October 2008. These two factors and lower commodity prices have taken a toll on indirect taxes (the main source of public revenue), which dropped 5 percent in January 2009 and 17 percent in February compared to the same months in 2008. During the first two months of 2009, year-on-year exports and imports also dropped 22 percent and 23 percent, respectively. External financing requirements are moderating, as the Current Account Deficit (CAD) is expected to fall by around 4 percentage points to about 10 percent in 2009. However, financing the CAD is becoming more challenging, and a reduction in foreign exchange reserves held by the Central Bank is expected in 2009. Furthermore, if central and local governments fail to enact plans to cut expenditures, the aggregate fiscal deficit could rise to 3 to 5 percent of Gross Domestic Product (GDP), which will be unsustainable in the medium term under the currency board.

Bosnia and Herzegovina - Solid Waste Management Project : procurement plan

Macroeconomic update

Some of the headings included in this issue of the World Bank office in Bosnia and Herzegovina (BIH) newsletter are: microeconomic update; macroeconomic indicators; global financial and economic crisis : effects on the BIH economy, mitigation, and adaptation, measures; short term policy measures to mitigate the impact of the crisis; medium and long-term measures; first International Bank for Reconstruction and Development (IBRD) loan approved in BIH - second solid waste management; and doing business reform memo identifies steps that need to be taken to improve business environment.

World Bank and Partners Award $4.8 Million to 26 Innovative Ideas to Save the Planet

2009-11-18T09:48:54.000Z

2009 Global Development Marketplace on Climate Change highlights innovative ideas on how to adapt

Contacts:

In Washington:

Edith Wilson, +1-202-473-1104

ewilson1@worldbank.org

Jonathan Daly, +1-202-458-2624

jdaly1@worldbank.org

WASHINGTON, November 13, 2009—Close to $5 million in grant money has been awarded to 26 innovative climate adaptation projects, through the 2009 Global Development Marketplace, a global competitive grant program to fund innovation in development.

This year’s contest—‘100 Ideas to Save the Planet’— set a simple challenge: come up with one idea from your own community to help save the planet and its people from the effects of climate change. This ninth annual Development Marketplace was co-sponsored by the Global Environment Facility (GEF), the International Fund for Agricultural Development (IFAD), the Danish Ministry of Foreign Affairs, and the World Bank.

This year’s event, which ran from November 10-13, featured 100 finalists from 47 countries selected from over 1,700 project proposals. The winning concepts announced today will be implemented in East Asia and the Pacific (5), Europe and Central Asia (2), Latin America (13), the Middle East, North and Sub-Saharan Africa (4) and South Asia (2).

“The Development Marketplace is an important part of our mission to break down funding barriers and promote innovative entrepreneurial ideas at the grass-roots level." said Monique Barbut, CEO and Chairperson of the Global Environment Facility (GEF).

Winning ideas receive up to $200,000 in seed money, as well as guidance, and technical support as projects move into implementation. More than this though, all participants benefit from being able to hone their project design skills; by participating in knowledge and skills development sessions designed to help make them better development practitioners on their return home—win or lose.

"Managing risks from climate change will require not only one hundred, but thousands of ideas from communities all over the world," said Katherine Sierra, Vice President of Sustainable Development at the World Bank. "This year’s contest was an opportunity to showcase the kind of creative thinking that can deliver tangible results in our work on climate adaptation. We will be watching how this year’s winners put their ideas into action."

Stand-out ideas from this year’s contest included:

· From Serbia: SZTR Sunce’s initiative to mitigate the effects of climate change induced bacterial blooms on commercial fishponds;

· From the Philippines: The University of the Philippines’ (Los Baños) ‘Bell and Bottle’ initiative – providing a low cost, high efficacy flood and landslide warning system;

· From Ecuador: International Network for Bamboo and Rattan’s idea to build elevated bamboo houses, essentially lifting communities in flood zones out of harm’s way

This year’s contest took place amid a wider pre-Copenhagen international discussion around climate change and its effects on developing countries. Many ideas combined traditional knowledge with 21^st-century technology, as participants found creative ways to innovate, taking cues from both the ancient and the modern. Ideas included painting rocks around glaciers white to slow melting, to leveraging mobile telephony and SMS technology to strengthen disaster preparedness.

“Agriculture is where climate change, food security and poverty reduction intersect.” said Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD). “The Development Marketplace is an excellent platform for scouting and collecting new ideas from diverse sources, fostering innovative solutions, and developing partnerships in support of climate change adaptation.”

Past winners have gone on to address pressing needs in their home communities. Many have seen their project concepts replicated elsewhere. The Kanchan Arsenic Filter project, a 2003 winner sponsored by the Massachusetts Institute of Technology, has been scaled up with compelling results. The project, first implemented in Nepal, has been expanded to Cambodia, Vietnam and Bangladesh. To date, over 7, 000 filter units have been distributed, serving 30,000 people in the region. Pump Aid, a 2006 winner of a $120,000 grant, went on to secure an additional $25 million to expand water and sanitation services to reach eight million people in Zimbabwe and Malawi over five years.

“I believe that Development Marketplace is a very good example of how to facilitate innovation – giving us tangible solutions on complex development issues like climate change adaptation,” said Ulla Toernaes, Danish Minister for Development Cooperation. “We have through our own experience seen how innovation has helped transform Denmark’s energy consumption patterns and created new business opportunities like wind energy.”

Speaking at the Development Marketplace award ceremony, Sanjay Pradhan, Vice President of the World Bank noted, “Among the World Bank's most important roles is scanning the horizon for innovative emerging ideas. Then our job is to identify, select and help scale up those innovative solutions. Development Marketplace winners over the years have proved the value of bringing fresh voices and ideas to the development discussion, and that it is possible to turn good ideas into tangible results.”

About the Development Marketplace

The Development Marketplace is a competitive grant program that identifies and funds innovative, early-stage development projects with high potential for impact and replication. The program is supported by a consortium of partners including the World Bank.

This year’s contest gathered ideas around climate adaptation in developing countries, placing special focus on indigenous communities dealing with climate risks, climate adaptation and disaster risk management, and managing climate risks in ways that provide multiple benefits—eliciting ideas to help people deal with the effects of climate change, especially those living in some of the earth’s most vulnerable ecosystems.

A rigorous assessment by 200 specialists from within and outside the World Bank Group narrowed the list of 1,700 proposals to 100 finalists who were invited to present their ideas in Washington, D.C. this week. Since 1998, the Development Marketplace has awarded more than $61 million to initiatives identified through global, regional, and country competitions.

For more information about the Development Marketplace

visit: http://www.developmentmarketplace.org

Visit our blog: http://blogs.worldbank.org/dmblog

Follow us on Twitter at: http://twitter.com/WorldBankDM

Roma education to get crucial boost in funding

2009-11-12T20:18:19.000Z

Roma education to get crucial boost in funding

BRUSSELS, November 12, 2009―At an international donor conference hosted by the Open Society Institute, the World Bank and the European Economic and Social Coimmittee, donors swung their financial support behind education for the Roma, Europe ’s largest minority population. The €25.5 million in funding commitments announced by donors today is targeted for the Roma Education Fund (REF) and will provide the essential ingredients needed for children to succeed in school: scholarships, school meals, teacher training and academic support. The added financial support will also help governments develop stronger national policies for Roma inclusion.

“Roma want to contribute to society. They want to improve the lives of their children and give them a better life than they had. The most important factor that keeps so many Roma trapped in poverty is a lack of education; with increased political will and improved cooperation we can tackle this problem head-on,” said George Soros, chairman of the Open Society Institute and one of the founders of the Roma Education Fund.

The REF is a grant-making and policy analysis foundation established in 2005 that designs and supports programmes and projects to improve Roma education outcomes in Europe . With help from the Fund, last year alone over 30,000 students, from pre-school to university, showed improved test scores while more than 800 Roma students attended and graduated from university.
Roma continue to face discrimination and exclusion from opportunities available to most citizens. They often lack access to good quality education or other social services, holding low quality and low-paying jobs.

“The primary school completion rate among young Roma is similar to that prevailing in some countries in Sub-Saharan Africa. This strikes me as something that does not belong in the Europe of the 21 st century”, said the World Bank Managing Director Ngozi Okonjo-Iweala.

The amount committed today will enable the REF to continue closing the gap in educational outcomes between Roma and non-Roma children by supporting quality education for Roma, desegregation of education systems, and improvement of Roma’s social inclusion. “The REF has identified what works in Roma education. The time has come to move to large scale interventions,” said Costel Bercus, chair of the REF governing board.

www.romaeducationfund.hu
www.refdonorconference.org

Contacts:
Luis Montero
luis.montero@osf-eu.org
Alexander Rowland
arowland@worldbank.org

Reforms are Necessary with or without the IMF and the World Bank

2009-10-05T12:00:26.000Z

Contact in BH:

Jasmina Hadžić (+ 387 33) 251-502
jhadzic@worldbank.org

ISTANBUL, October 5, 2009 – World Bank management from Europe and Central Asia department (ECA), met with the delegation of Bosnia and Herzegovina (BH) led by Prime Minister Špirić in Istanbul on October 3-4 on the occasion of the Annual Meetings of the World Bank and the International Monetary Fund (IMF), to discuss the status of the economy and of the World Bank supported programs in BH.

The world is dealing with the effects of the worst recession since World War II. Its impact has been felt no more severely than in the Eastern and Central Europe, where talks of any recovery are still very premature. And BH is no exception. In Istanbul, the World Bank management commended the BH authorities for designing measures to stabilize budgets and cope with the impact of the global economic crisis. These measures, described in the letter of intent (LOI) sent to the IMF, allowed BH to obtain financial commitments from the IMF and other international financial organizations, including the World Bank.

“It is of paramount importance that BH fully implements the measures it has committed to pursue under the Stand-By-Arrangement with the IMF. Failure to do so would give a serious blow to the country’s credibility, the chances of a fast recovery, and would seriously endanger public finances, including transfers for the most vulnerable categories”, said Jane Armitage, the Country Director for the Southeast Europe group of countries.

The projected budget deficit in 2009 would amount to about 2 billion KM if no measures had been introduced to reduce it, and the World Bank delegation stressed the fact that - like in almost every other country of the world in these days – BH has some hard choices to make to balance expenditures with available resources, promote economic growth and protect the most vulnerable. In the LOI the authorities committed also to work to improve the equity of public spending in cash-transfers for social and veterans programs – following the principle that more funds should be provided to beneficiaries who are most in need - in a transparent and sustainable manner.

“These reforms are necessary, now more than ever in a country with one of the highest levels of expenditure on these benefits as percentage of GDP in Europe and Central Asia region. Reforms are necessary with or without the IMF and the World Bank – said Jane Armitage. Leaving things as they currently are, is not only unsustainable, but, also, unfair. A larger share of funds spent on social and veteran programs benefits the richest fifth of the population than the poorest fifth”.

The WB delegation confirmed its commitment to work on these reforms with the authorities for the successful negotiation of a Development Policy Loan of about US$100 million and related technical assistance. However it reiterated that approval of this financing is subject to the prior adoption of legislation in support of these reforms in both Entity parliaments.

Global Crisis Hits Home in Emerging Europe and Central Asia

2009-10-03T07:40:09.000Z

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

"Climate Smart" World within Reach, says World Bank

2009-09-16T12:06:42.000Z

Contacts:

Merrell Tuck: +1-202- 473-9516

mtuckprimdahl@worldbank.org

Kavita Watsa + 1-202-458-8810

kwatsa@worldbank.org

WASHINGTON, September 15, 2009 – Developing countries can shift to lower-carbon paths while promoting development and reducing poverty, but this depends on financial and technical assistance from high-income countries, says a new World Bank report released today. High-income countries also need to act quickly to reduce their carbon footprints and boost development of alternative energy sources to help tackle the problem of climate change.

World Development Report 2010: Development and Climate Change, released in advance of the December meetings on climate change in Copenhagen, says that advanced countries, which produced most of the greenhouse gas emissions of the past, must act to shape our climate future. If developed countries act now, a ‘climate-smart’ world is feasible, and the costs for getting there will be high but still manageable. A key way to do this is by ramping up funding for mitigation in developing countries, where most future growth in emissions will occur.

“The countries of the world must act now, act together and act differently on climate change,” said World Bank President Robert B. Zoellick. "Developing countries are disproportionately affected by climate change – a crisis that is not of their making and for which they are the least prepared. For that reason, an equitable deal in Copenhagen is vitally important.”

Countries need to act now because today’s decisions determine both the climate of tomorrow and the choices that shape the future. Countries need to act together because no one nation can take on the interconnected challenges posed by climate change, and global cooperation is needed to improve energy efficiencies and develop new technologies. Countries need to act differently, because we cannot plan for the future based on the climate of the past.

Developing countries will bear most of the costs of the damage from climate change. Many people in developing countries live in physically exposed locations and economically precarious conditions, and their financial and institutional capacity to adapt is limited, says the report. Already, policymakers in some developing countries note that an increasing amount of their development budget is being diverted to cope with weather-related emergencies.

At the same time, 1.6 billion people in the developing world lack access to electricity, the report notes. These developing countries—whose average per capita emissions are a fraction of those of high-income countries—need massive expansions in energy, transport, urban systems, and agricultural production. Increasing access to energy and other services using high-carbon technologies will produce more greenhouse gases, hence more climate change.

The report finds, however, that existing low-carbon technologies and best practices could reduce energy consumption significantly, saving money. For example, the report notes that it is possible to cut energy consumption in industry and the power sector by 20–30 percent, helping reduce carbon footprints without sacrificing growth. In addition, many changes to reduce emissions of greenhouse gases also deliver significant benefits in environmental sustainability, public health, energy security, and financial savings. Avoided deforestation, for instance, preserves watersheds and protects biodiversity, while forests can effectively serve as a carbon sink.

Solving the climate problem requires a transformation of the world’s energy systems in the coming decades. Research and Development investments on the order of US$100 - $700 billion annually will be needed—a major increase from the modest $13 billion a year of public funds and $40 billion to $60 billion a year of private funds currently invested.

Developing countries, particularly the poorest and most exposed, will need assistance in adapting to the changing climate. Climate finance must be greatly expanded, since current funding levels fall far short of foreseeable needs. Climate Investment Funds (CIFs), managed by the World Bank and implemented jointly with regional developing banks, offer one opportunity for leveraging support from advanced countries, since these funds can buy-down the costs of low-carbon technologies in developing countries.

“Developing countries face 75-80 percent of the potential damage from climate change. They urgently need help to prepare for drought, floods, and rising sea levels. They also need to intensify agricultural productivity, contain malnutrition and disease, and build climate-resilient infrastructure,” said Justin Lin, World Bank Chief Economist and Senior Vice-President, Development Economics.

The current financial crisis cannot be an excuse to put climate on the back burner, the report warns. While financial crises may cause serious hardship and reduce growth over the short- to medium-term, they rarely last more than a few years. The threat of a warming climate is far more severe and long-lasting.

The earth’s warming climate is making the challenge of development more complicated, even as one in four people still live on less than $1.25 a day, and over a billion people do not have sufficient food to meet their daily basic nutritional needs.

“Grappling with climate shocks that are already hampering development will not be easy. But promising new energy technologies can vastly reduce future greenhouse gas emissions and prevent catastrophic climate change. We also need to manage our farms, forests, and water resources to ensure a sustainable future,” said Rosina Bierbaum, WDR co-director and Dean of the University of Michigan’s School of Natural Resources and Environment.

“The good news is that a climate-smart world is within reach if we work together now to overcome inertia, keep costs down, and modify our energy, food, and risk management systems to ensure a safer future for everybody,” said Marianne Fay, WDR co-director and Chief Economist for Sustainable Development at the World Bank.

“There are real opportunities to shape our climate future for an inclusive and sustainable globalization, but we need a new momentum for concerted action on climate issues before it is too late,” said Robert B. Zoellick, World Bank Group President.

The World Bank Group’s "Strategic Framework for Development and Climate Change" puts emphasis on including mitigation and adaptation initiatives in its lending, while recognizing that developing countries need to encourage economic growth and reduce poverty.

The number of World Bank-financed studies that help client countries plan and implement low-carbon growth strategies are also growing, and the Bank Group’s energy financing is increasingly turning towards renewable energies and energy efficiency. Over the past three years, approximately two-thirds of the Bank Group’s total energy financing was in the area of non-fossil fuels whereas around one-third was for fossil fuels, of which half was for natural gas.

The World Development Report 2010 is available on the web:

http://www.worldbank.org/wdr2010

The World Bank’s climate change blog is at:

http://blogs.worldbank.org/climatechange

Doing Business 2010: Eastern Europe and Central Asia Region Leads the World in Business Regulatory Reform

2009-09-09T13:52:23.000Z

Contacts:
Washington: Nadine Ghannam

Phone: (+1-202) 473 3011
nsghannam@ifc.org

Sarajevo: Jasmina Hadžić

Phone: (+387-33) 251 502
jhadzic@worldbank.org

Washington, D.C./Sarajevo, September 9, 2009 — In a record year for regulatory reform worldwide, Eastern Europe and Central Asia led all regions in the pace of reforms. Doing Business 2010: Reforming through Difficult Times finds that 26 of 27 economies in the region reformed regulations to create more opportunity for domestic firms.

Globally, a record 131 of the 183 economies surveyed reformed business regulations between June 2008 and May 2009, according to the report, the seventh in a series of annual reports published by IFC and the World Bank.

Doing Business analyzes regulations that apply to an economy’s businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and closing a business. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems.

This year Rwanda was the top global reformer. There were 4 new reformers among the global top 10: Liberia, the United Arab Emirates, Tajikistan and Moldova. Others, aside from Rwanda, include Egypt, Belarus, the Former Yugoslav Republic of Macedonia, the Kyrgyz Republic, and Colombia.

In the Doing Business 2010 report, Bosnia and Herzegovina ranked 116 on the list that shows the ease of doing business in 183 economies in the world. Bosnia and Herzegovina ranking improved for the first time since Doing Business started publishing overall country rankings back in 2006. Although the improvement is slight relative to last year (3 places, from 119 to 116), this is an important break from a worsening trend.

“Even during an economic crisis, Southeast Europe countries continued to improve their business environment. This year’s ranking for Bosnia and Herzegovina is an encouraging sign for both reformers and investors, but the country should continue to focus more on the reforms of its regulatory environment, both to assist the enterprise sector through the current difficulties and to facilitate its recovery,” said Marco Mantovanelli, World Bank Country Manager for Bosnia and Herzegovina.

For more information about the Doing Business report series, please visit:

www.doingbusiness.org

Bosnia and Herzegovina: Managing Waste for Better Living

2009-09-04T21:42:02.000Z

Last Updated: Sept 2009

Links:
- What is IDA?
- Our Work in Bosnia and Herzegovina

More on Bosnia and Herzegovina:
- Borrowing History
- Data & Statistics
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In 2000, solid-waste collection services in Bosnia and Herzegovina covered only about 60 percent of the larger municipalities and a much lower share in rural towns. Institutional and enforcement capacity was weak, and equipment for waste collection and disposal were obsolete and poorly maintained. As a result, significant amounts of waste were improperly discarded in wild dumps, roadsides, rivers, and mines—posing a direct risk to public health and causing serious environmental problems.

The IDA-financed Solid Waste Management Project was launched in 2002 to improve solid waste services in priority areas. Project objectives included increasing administrative and technical capacity for solid waste management at the local and entity level, improving cost recovery, encouraging private sector involvement, addressing environmental problems, and reducing health hazards caused by inadequate waste collection and disposal systems.

Six regional sanitary landfills have been established, benefitting almost half of the country’s population.

Highlights:
- Widespread impact. Nearly 50 percent of solid waste is now disposed in a sanitary landfill or in another environmentally sound manner. There were no functioning regional sanitary landfills before the project.

- Wild dumpsites closed. A total of 145 wild dumpsites were cleaned and closed, greatly reducing environmental and health hazards. This represents more than a 10 percent reduction of wild dumpsites. By the end of the project, 15 percent will be closed.

- Recycling established. Sarajevo and Banja Luka have recycling arrangements with private recycling factories for paper, plastic, metal, and tires. The Sarajevo landfill is now a model for the rest of the country and the region.

- Collection rates increased. The collection rate in the project region has increased by about 75 percent—from 40 to 70 percent, in a period of 6 years.

- Management districts established. Seven multi-municipal waste management districts were established through the cooperation of multiple municipalities during a period of five years. Implementation progress has been particularly impressive in Sarajevo, Banja Luka, Zenica, and Bijeljina

The Solid Waste Management Project was launched in 2002 at a total cost of US$21, of which IDA financed US$18 million. A supplement in 2005 added US$9.3 million, of which IDA financed US8 million. The Second Solid Waste Management Project is set to run from 2008 through 2014. Its cost is US$43.5 million, of which IDA is financing US$15 million and IBRD US$25 million. In all cases, the government provided the rest.

In addition to its financial contributions, IDA played a coordinating role in helping the government raise additional resources from other donors.

In 2009, the Swedish International Development Cooperation Agency (SIDA) and the European Union (EU) decided to provide additional support to the sector. SIDA has allocated Euro 10 million to facilitate well-functioning solid waste systems in municipalities and will finance public awareness campaigns, recycling activities, hazardous waste treatment, and staff training. Close cooperation with the EU started in 2000, when the European Commission funded the preparation of the solid waste strategy, which is guiding sector investments. Additional donors have provided substantial technical assistance (EU, SIDA, JICA, and USAID).

Although progress under the first project was impressive, wild dumping remains a challenge—and illegal dumpsites can still be found in many municipalities. What’s more, these wild dumpsites still pose significant health and environmental risks. To meet this challenge, the Second Solid Waste Management Project is establishing an additional six sanitary landfills by the end of 2014, and finalizing the rehabilitation of existing landfills. It aims to improve the disposal management system, enhance coverage, improve groundwater quality at disposal sites, increase customer satisfaction, and smooth the transition as advanced regional landfills introduce advanced separation and recycling facilities.

Solid Waste Management Project (2002-2008)

Solid Waste Management Supplement 2005

Second Solid Waste Management Project (2008-2014)

For more information, please visit the Projects website.

Bosnia and Herzegovina: Communities Foster Healing

2009-09-04T21:35:40.000Z

Last Updated: August 2009

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- What is IDA?
- Our Work in Bosnia and Herzegovina

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Warfare and its immediate aftermath seriously impacted the basic fiber of Bosnia and Herzegovina’s society—its local communities. During the three-and-a-half-year war that ended in late 1995, at least 100,000 people were killed or went missing, some two million people were displaced, land mines riddled the landscape, the infrastructure and economy were almost completely destroyed, and services were devastated. Urgent action was needed to restore economic life and mend the torn social fabric.

The IDA-financed Community Development Project was launched in 2001 to promote reconciliation, reconstruction and development in postwar Bosnia and Herzegovina. It aimed to do this with the participation of local citizens, and introduced community-driven development in the country for the first time. Partnerships were nurtured between local governments and communities through training, town hall meetings and general public discussions that enabled participants to identify problems and prioritize solutions. The project worked to improve basic services for low-income communities through investments that they planned and implemented themselves.

Infrastructure and basic services were restored, while the country and its people have made substantial progress in their overall economic and social development. A total of 481 subprojects were implemented in the 80 poorest municipalities, reaching more than 1.5 million beneficiaries—or 30 percent of the country’s population.

Highlights:
- Widespread reconstruction. Projects supported construction or repair of 99 water and sewage systems, 100 local roads, 23 schools, 71 sports or cultural centers and three bridges, purchase or repair of 13 ambulances and rehabilitation of various other small-scale infrastructure.

- Community openness. The project introduced sound practices for participatory decision making and budgeting. Local mayors pointed to enhanced citizen participation and transparency in financial decisions as the key to project success. Improved accountability of local policy makers and greater local engagement went hand in hand. Interviews and quantitative survey data showed that 30–50 percent of project communities improved their budget planning and used their resources more efficiently.

- Balanced development. A total of 281 subprojects were carried out in the Federation of Bosnia Herzegovina and 200 in Republika Srpska.

- Skyrocketing community investment. As more community members got involved, local investment poured in, with community counterpart contributions more than tripling to US$6.75 million.

- Community satisfaction. A quantitative survey conducted with 671 direct beneficiaries across the country showed that 52 percent of respondents from the Republika Srpska and 62 percent of respondents from Federation of Bosnia Herzegovina felt their living conditions had improved.

- A framework for future action. The implementing agency, Odraz, has established itself as a viable facilitator for participatory community projects.

The Community Development Project was launched in 2001 and received additional financing in 2007. Total project cost was US$30.4 million, with IDA financing US$20 million and the remainder coming from entity governments (US$3.65 million) and local communities (US$6.75 million). IDA’s involvement in other policy sectors played a complementary role in project success. While this project was supporting priority investments and capacity building in the country’s poorest municipalities, another IDA-supported project provided a framework for the development of local governments across Bosnia and Herzegovina by, among other things, helping them participate in the municipal credit market.

In partnership with the Ministry of Culture and Sports, a number of sport and cultural-heritage sites have been rehabilitated in the poorest areas of Bosnia and Herzegovina. In cooperation with the International Fund for Agricultural Development, and in line with IDA’s special focus on minorities in the country, the project co-financed provision of basic services to a Roma settlement. In cooperation with World Vision International, the project supported a recycling plant that opened employment opportunities for Roma people.

A follow-up municipal development project financed by IDA is being prepared to introduce sustainable institutional mechanisms for investments in local infrastructure and to improve project operations to raise beneficiary satisfaction beyond 52 percent in Republika Srpska and 62 percent in the Federation of Bosnia Herzegovina.

Community Development Project (2001–09)
Project documents

For more information, please visit the Projects website.

Bosnia and Herzegovina: Creating Jobs through Microfinance

2009-09-03T04:00:00.000Z

Last Updated: Sept 2009

Links:
- What is IDA?
- Our Work in Bosnia and Herzegovina

More on Bosnia and Herzegovina:
- Borrowing History
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Before war erupted in Bosnia and Herzegovina in 1992, the country’s economy was based on heavy and military industry, and dominated by several large state-owned conglomerates. A major part of this economy was destroyed during the conflict. As a result, the country was left without the most basic infrastructure and services, and suffered from significant unemployment. People had a hard time launching new businesses since the commercial banking sector was embryonic. The emerging private sector found it extremely arduous to access capital, while micro-enterprises and low-income clientele found it downright impossible.

The IDA-financed Local Initiatives Microfinance Project was launched in 1997 shortly after the war to address the urgent need to raise incomes, develop businesses, and create jobs in Bosnia and Herzegovina. IDA’s approach was an innovative one since microfinance was unheard of in Bosnia and Herzegovina at the time. IDA provided financing to eight micro-credit organizations, invested in building local capacity in this new field, and developed a legal and regulatory framework so the micro-credit organizations could diversify their financing sources and services. The project provided financial services to low-income clients and micro-entrepreneurs to launch or expand businesses. In the immediate post-war period, the project gave priority to demobilized soldiers, women entrepreneurs, and those displaced or disabled by the conflict. This jumpstarted the development of the micro-credit sector, whereupon a second project was launched in 2002 to increase the sector’s scale, financial sustainability, and social impact.

About 380,000 micro-credits for more than EUR 600 million were disbursed over 10 years from the revolving micro-credit fund. When the project closed in 2005, eight partner organizations were serving about 100,000 active borrowers.

Highlights:
- Jobs created. More than 200,000 jobs were created or sustained. An independent impact assessment showed that client businesses on average employ 2.1 persons, and that there was a very positive impact of micro-credits on businesses, household income and even registration (formalization) of businesses.

- Gender parity achieved. 50 percent of borrowers were women. This strengthened women’s role in the family and helped support female-headed households. This was an important contribution, since the war left many households without male heads of families.

- Formal sector expanded. 60 percent of new clients formalized their businesses, compared to less than 40 percent of non-clients surveyed.

- Loan terms and conditions improved over time. For example: the average loan term of micro-credit in 2000 was 10 months, whereas in 2005 it was more than 15 months. Interest rates significantly declined, from close to 30 percent APR to about 15 percent APR (inflation was constant and did not affect the decline).

- Strong repayment rates. Performance indicators of partner micro-credit organizations were strong throughout project implementation, including a portfolio-at-risk of less than 1 percent.

- Sector framework established. An appropriate legal and regulatory framework was established, which allowed micro-credit organizations to attract equity investments in addition to the initial options—donor grants, subsidized donor loans, and commercial loans. The project also strengthened supervision of the sector in accordance with international best practices.

- Overall, the two projects helped create a sustainable and well performing microcredit industry that can meet the needs of microenterprises and low income clients in Bosnia and Herzegovina.

The total cost of the two Local Initiatives Microfinance Projects was US$44.3 million, of which IDA contributed US$27 million. IDA used its global expertise in microfinance to pioneer the micro-credit approach in Bosnia and Herzegovina.

The Governments of Italy, Japan, the Netherlands, Switzerland as well as the UN High Commissioner for Refugees provided co-financing for the first project.

Although the project closed, the revolving funds of the partner micro-credit organizations continue providing funds for micro-entrepreneurs—which is spurring new employment and businesses. Interest from private equity funds, local and international banks, as well as the International Finance Corporation and the European Bank for Reconstruction and Development suggest that the micro-credit industry will remain sustainable in Bosnia and Herzegovina long into the future.

Local Initiatives (Microfinance) Project I, (1996-2001)
Project documents
Local Initiatives (Microfinance) Project II (2001-2005)
Project documents

For more information, please visit the Projects website.

The project COMMUNITY DEV ADDT'L FIN has changed to Closed

2009-09-01T04:00:00.000Z

The project COMMUNITY DEV ADDT'L FIN has changed to Closed. To see more information, see the project information in the World Bank project database

The proposed additional financing credit for Bosnia and Herzegovina is to help finance a subset of the pipeline of proposals received from the poorest municipalities in the country which were unable to be financed under the existing Community Development Project (CDP) credit. No changes are proposed to the design or implementation arrangements of the ongoing project. The additional financing is expected to further strengthen the results and outcomes achieved under the CDP by a continued focus on financing investments which strengthen local government abilities to leverage and mobilize resources while increasing the participation of citizens in budget planning and decision making. The project will directly affect an additional 200,000 citizens in the poorest communities in Bosnia and Herzegovina and continue to strengthen the capacity of participating municipalities to deliver quality services to citizens while increasing citizens access to municipal services. The project also allows for the Bank to have a presence and a visibly positive involvement at the local community and municipal level.

The project Community Development Project has changed to Closed

2009-09-01T04:00:00.000Z

The project Community Development Project has changed to Closed. To see more information, see the project information in the World Bank project database

The Community Development Project will improve basic services, and facilities for low-income, and poor communities in under-served municipalities, as well as improve the governance, and capacity of local governments, in the delivery of services, through better partnerships in investment identification, and decisions. The three components include: 1) provision of performance-based grants, as a mechanism to target non-revenue generating investments to low-income municipalities, and their poor communities, and improve service delivery, cost recovery, financial management capacity of local governments, and public accountability/community participation. Social, and institutional assessment of municipal areas will be conducted, including a financial, and operational assessment of local governments, and, a financial, and operational action plan will be developed; 2) institutional capacity building support, through increased partnerships with communities in identifying, implementing, and maintaining non-revenue generating investments, as a means of strengthening social capital, and governance; and, 3) responsibility for project implementation, between the project implementation units, municipalities, citizen associations, and nongovernmental organizations, while the financial, and procurement management will be institutionally centralized, to better administer common functions.

Bosnia and Herzegovina: Bridges for Peace

2009-08-29T19:31:58.000Z

Last Updated: August 2009

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- What is IDA?
- Our Work in Bosnia and Herzegovina

More on Bosnia and Herzegovina:
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In 1566, Ottoman architect Mimar Hajrudin built a stone bridge that spanned the waters of the Neretva River and came to be known as “Stari Most,” or Old Bridge. Initially a small Turkish outpost, this city continued to grow, and was eventually named Mostar, or “keeper of the bridge.” The bridge became a symbol of Bosnia and Herzegovina’s tolerance in a region known for its ethnic and religious diversity–until war overwhelmed the former Yugoslavia. On November 9 1993, artillery and tanks destroyed this cultural treasure. Following the conclusion of the war, the Government tried for several years to rebuild the bridge. However, due to lack of financing and technical capacity, as well as prevailing political and ethnic sensitivities, all efforts were unsuccessful.

The IDA-financed Cultural Heritage Pilot Project launched in 1999. The Government had approached IDA, hoping that its technical expertise, reputation as an honest broker, and capacity to assemble diverse stakeholders, could accelerate reconstruction of the bridge and its towers. This was not a typical IDA infrastructure-reconstruction or economic development project. Because of the symbolism inherent in the reconstruction of the Old Bridge, the project was meant to promote a climate of reconciliation—the main pre-requisite for economic revitalization and social cohesion.

The re-opening of the Old Bridge has contributed to the reconciliation of war-divided people living on the banks of the Neretva River.

Highlights:
- Widespread reconstruction. In addition to rebuilding the graceful arch of the bridge and its towers, the project restored other damaged monuments, which helped preserve the character of Mostar’s historic cobble-stoned Old Town.
- Reconciliation achieved. Mostar residents from both banks now meet again in the Old Town to attend concerts, exhibitions, and other cultural events.
- Skyrocketing tourism brought income. Tourism picked up, boosting the local economy. Even before the bridge’s reconstruction, the war-shattered and ethnically divided town of Mostar was visited by up to 25,000 tourists every year. But that skyrocketed. Approximately 300,000 tourist visits were registered in 2004; 450,000 in 2005; 750,000 in 2006; and more than 1 million in 2008.
- Business perked up. Tourism has triggered new construction, the opening of new hotels, restaurants, and pubs, and other businesses in Mostar and its surroundings.
- Historical recognition achieved. In July 2005, Mostar’s Old Bridge and surrounding Old Town were registered on UNESCO’s list of historic monuments.

The total project cost was US$12.5 million, of which IDA provided US$4 million. IDA also assembled a unique partnership to carry out the project, which included local communities, as well as national and regional Governments, and multiple donors. IDA’s convening power was as valuable as its direct financial and technical support.

The Government provided US$2 million, with other donors, including Italy, the Netherlands, Croatia, and the Council of Europe Development Bank, providing the rest. Also contributing were UNESCO, the World Monuments Fund, and the Aga Khan Trust for Culture.

Although IDA financing ended several years ago, project activities go on, since local authorities are continuing to work on the restoration and maintenance of the Old Town. The project implementation unit has been transformed into an agency responsible for managing and maintaining the restored Old Town, and further developing Mostar’s tourism potential.

Cultural Heritage Pilot Project, 1999-2004
Project documents

Social Spending in Bosnia and Herzegovina

2009-07-11T12:30:00.000Z

An Op Ed by Jane Armitage

World Bank Country Director and Regional Coordinator for Southeast Europe

Published in Dnevni Avaz, July 11, 2009

The world is in the middle of the worst recession since World War II. Its impact has been felt no more severely than in Eastern and Central Europe. Bosnia and Herzegovina is no exception: Bosnia’s GDP is expected to shrink 3 percent in 2009, and its fiscal deficit will amount to around 2 billion KM if no measures have been taken to reduce it. The authorities have worked hard to design measures to establish macroeconomic stability and obtain financial commitments from the IMF and other international financial organizations. These resources will be crucial to not only weather the crisis but to prepare for the future once the external environment improves.

Countries throughout the world are responding to the crisis in different ways, depending on their particular circumstances. In almost every country, however, policymakers and citizens are coming to terms with the reality that hard choices have to be made. The most successful of these choices balance expenditures with available resources, promote economic growth, and most important protect the most vulnerable.

Bosnia and Herzegovina has its own difficult choices to make. The main challenge is to reform Bosnia’s system of social benefits, which is almost entirely based on legal rights related to military service and war damage and not on need. All countries have social benefit systems, and they strive to make them equitable, sustainable, and efficient. BH’s is none of the three.

The current system in BH is not socially just. Less than 30 percent of all—civilian and war-related alike—social benefit programs reach the poorest in BH. The distribution of these payments largely explains Bosnia’s stubbornly high rate of relative poverty, which remains at around 18 percent of the population. Indeed, the World Bank estimates that the sum of these programs—which amount to 41 percent of public spending in the Federation only—reduce poverty by a negligible 1.2 percent.

Bosnia’s system is also not fiscally sustainable; even before the crisis, the country ended 2008 with a large fiscal deficit. With the global economic crisis now hitting Bosnia with full force, the very survival of its socio-economic system is at stake. With a projected budget deficit of 8.0 percent of GDP in 2009 (or 2 billion KM)—Bosnia is running out of money. One of the main causes of this deficit has been an uncontrolled increase - in the Federation in particular- in social benefits, which now consume an unsustainable 4 percent of the country's GDP. By comparison, Bosnia’s neighbors in the region spend 1.6 percent of GDP; for wealthy OECD countries it’s 2.5 percent.

Finally, the scale of these payments is undermining BH’s long term competitiveness. The share of GDP Bosnia spends on public investment, including in basic infrastructure, is about half of what new EU member states spend. BH, for example, is ranked in the lowest decile worldwide when it comes to perceptions of the quality of air, road, and port infrastructure. This not only undermines competitiveness, it has resulted in a lost opportunity to generate jobs during the crisis as the Government has too few resources to start or scale-up large capital projects.

Reform will not be easy, but there is broad agreement on what needs to be done. Fraud and lack of transparency in eligibility criteria need to be eliminated. Furthermore, targeting systems have to be introduced to ensure that social benefits are going to those who really need them. This will require the introduction of some formula to make the benefits contingent on income and other indicators of wealth. To do this, Bosnia needs to strengthen the institutional systems which administer these benefits. Specifically, by introducing integrated databases to determine if individuals are getting more than their fare share, and undertaking eligibility audits to ensure that only those with real disabilities receive benefits.

The purpose of this is not to deny people benefits, but to ensure that there is money left to pay the benefits to those who really need them. The time for action is now. With reduced financial resources due to the crisis, and in the absence of reforms, the disproportionate size of these benefits is very likely to leave the Federation unable to meet public sector payrolls, including teachers, policemen, and other providers of essential public services.

Every government has a duty to help provide for the comfort, health, and dignity of its citizens, including its veterans; part of this responsibility is making sure that whatever benefits it provides are sustainable. Bosnia’s system will reflect its own history and values. The World Bank, which has been a close and committed partner to Bosnia since before the war ended in 1995, stands ready to provide ideas from other countries’ experience. More generally, we look forward to delivering continued support to help meet Bosnia’s broader development challenges, today and in the future.

A Different Sort of Social Assistance for Veterans and Invalids: Job instead of handouts – the Story of FIS Vitez

2009-07-10T12:00:00.000Z

An Op Ed by Jane Armitage

World Bank Country Director and Regional Coordinator for Southeast Europe

Published in Oslobođenje, July 10, 2009

During my recent visit to Bosnia and Herzegovina, I held meetings with many BH leaders from the state and entity governments and institutions. General message which I have received at most of those meetings was that the country is facing serious economic, financial and social challenges.

In the country where 18 percent of the population lives under the relative poverty line and where additional 30 percent live just above that line, economic earthquakes of the magnitude we have been witnessing over the past months, can have devastating effects.

Spreading poverty affects mostly those who depend on social protection, but that system too seems to have major flaws and problems. While in relative terms BH spends more than most other countries on social payments, these payments are ill-targeted and miss to really protest those who need the protection most.

As a matter of fact, ill-targeted social system partially explains BH’s high poverty rate. Less than 30 percent of all social benefit programs reach the poorest. Some 27 percent of social benefits for veterans go to the wealthiest 20 percent of the population while less than 15 percent go to the poorest 20 percent.

While the focus of the public attention is now focused on the benefits to war veterans and invalids, I was happy to witness a different sort of program which showed huge success in assisting many of those who, in the absence of job, depended on social handouts.

In order to mitigate potential social risks through better employment services, the World Bank supported implementation of the Second Employment Support Project (SESP). This project, worth USD 12 million, was implemented through the Employment offices and Employment Institutes and in partnership with entities’ Labor Ministries.

SESP financed incentives for companies to train and/or employ the most vulnerable among the unemployed, including invalids, those over 45 years of age and those who were actively seeking job for more than two years. It also provided funds for self-employment in agriculture and small businesses, counseling services, small scale public works and other programs to assist active job seekers.

Between 2005 and 2009 this project alone helped employment of 10,692 people across the country. In three months of effective implementation in 2008 alone, the project helped employment of 169 invalids.

On my way from Sarajevo to Banja Luka, we made a brief stop in the small but blooming central Bosnian town of Vitez, in order to visit one of the companies which employed 6 invalids and few scores of other workers with the support of the SESP project.

“Financial success is not the only thing that matters. It is also important to help these people,” Fis Vitez General Director Pero Gudelj told me during the quick but extensive tour through his highly diversified and ever-growing company.

During the tour, as every proud parent or manager, Pero Gudelj told me a story of his company which grew from the first private video store in 1980’s into one of the biggest local chains of shopping centers in early 2000’s.

Yet the story of development, employment and social care for his workers did not end there. Thanks to multi-million commercial loans, FIS Vitez continued spreading to the current 16,000 square meters of highly diversified business center, which includes various production and trade lines, but also kitchen and other services for his workers.

“I don’t want my workers to eat sandwiches. We have a proper kitchen that cooks good, hot meals,” Pero said proudly.

Despite the worsening economic situation in the country and abroad, as well as sharp decline in demand for many of FIS products, the company was forced to let go only some 100 workers and maintains more than 2,600 workers on its payroll.

During my brief stay in Fis Vitez, I had a pleasure of meeting few members of this company who were employed through the SESP project.

On the furniture production line I met 30-year old Franjo Peric, who got his first job thanks to Fis Vitez and SESP project despite his invalidity.

The same cooperation helped 50-year old Ankica Kuna, a mother of three, to find a job behind a sewing machine, sewing together upholstery for the furniture produced here.

“I am really grateful for this new chance. I was looking for a job for full 16 years,” she told me.

Pero Gudelj, Franjo Peric, and all other employees whom I met during my visit to FIS Vitez, agreed that more development and employment projects, such as SESP, could significantly improve living standard of many social beneficiaries.

Yet the current social security system in BH does not allow for more such useful projects. Excessive spending on a large number of beneficiaries, as well as multiple dipping into the budget purse by different social categories, do not leave much room in the budget for those pro-active employment programs.

I hope that this too will eventually be changed in the long-needed reform of BH’s social sector. This would enable many “social cases” to work and live a richer and more dignified life, while social benefits would be focused on those who really need that sort of assistance.

World Bank Study: Large Cash Transfers in BH do not Reach the Poor

2009-06-15T11:09:26.000Z

“Policy Note: Social Transfers in Bosnia and Herzegovina: Moving Towards a More Sustainable and Better Targeted Safety Net" (PDF)

SARAJEVO, June 15, 2009 – A new report of the World Bank entitled: Social Transfers in Bosnia and Herzegovina (BH): moving towards a more sustainable and better targeted safety net finds that cash transfers to finance social programs in BH fail to reach the majority of the poor and the most vulnerable.

The research has discovered that BH spends about 4% of its GDP on non-insurance cash transfers such as war related benefits, non-war invalids’ benefit, civil victims of war benefits, child protection benefits, etc. This level of spending is among the highest in Eastern Europe (only Croatia spends more “4.3%”) and benefits absorb over 40% of the entity budget in the Federation BH and about 14% in the RS. In contrast, the much richer countries of OECD, on average, spend only 2.5% of GDP.

While hundreds of millions of KM are spent on these benefits every year, there is hardly any evidence of impact on poverty reduction. Indeed, the poorest fifth of the population receives only 18% of the non-insurance benefits. The study shows that if all non-insurance social benefits were eliminated, poverty would increase by only 1.2%. By way of contrast, if pensions were to be eliminated, poverty would increase by 25.8%. This means that the expenditure on cash transfers that go out of the public budgets is not well targeted on the poor.

War-related benefits absorb about 3/4 of the total spending for non-insurance cash transfers. But the problem is that the current benefits system does not meet the needs of the most vulnerable among veteran population either. 27% of veteran-related benefits go to the richest fifth of the population and those in the poorest fifth receive less than 15%.

This high level of spending also has a negative impact on the country’s future. By devoting a significant proportion of its resources on benefits that equal consumption today, BH society is, implicitly, putting a very low price on the wealth and welfare of the coming generations. This is because less money is spent now on investments that can increase the wealth and competitiveness of BH economy in the future.

“What is the solution? The current system is socially inequitable, has negative impact on the labor market, and is also fiscally unsustainable. Resources need to be much better targeted to reach those in need versus those who meet different right-based criteria”, stated Marco Mantovanelli, World Bank Country Manager in BH.

“Once better targeted and well administered system is in place, savings that could be made should be used for productive purposes. For example, to strengthen employment services and increase capital investment to generate jobs and economic growth”, concluded Mantovanelli.

The World Bank’s role is to help the country make an informed decision on this complex issue based on hard evidence and data. That is why the World Bank prepared this Policy Note. Therefore, if the decision is to go ahead with reforms – the World Bank will stand ready to support BH governments in that endeavor.

The project Social Safety Nets & Employment Support Project is now in the pipeline.

2009-06-13T04:00:00.000Z

The project Social Safety Nets & Employment Support Project is now in the pipeline. To see more information, see the project information in the World Bank project database

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

2009-06-02T14:25:40.000Z

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

###

World Bank Workshop on Carbon Trading Opportunities for Bosnia and Herzegovina

2009-04-16T11:21:13.000Z

Contact in Bosnia and Herzegovina:

Jasmina Hadžić (+387-33) 251-502
jhadzic@worldbank.org

SARAJEVO, April 16, 2009 – Today the World Bank hosted a half-day workshop on carbon finance to help create awareness regarding Kyoto Protocol, Clean Development Mechanism (CDM), clean energy technologies, and the World Bank carbon finance initiatives.

The World Bank carbon finance initiatives are part of the larger global effort to combat climate change. Climate change mitigation and adaptation measures are inevitable to protect the planet for ourselves and our children, but they do not have to come at the cost of development. Recognizing the need to balance climate change measures with development imperatives, the World Bank developed a range of tools- financing mechanisms and analytical work, including introducing climate change adaptation and mitigation measures in the World Bank operations.

Global efforts to stabilize concentration of Green House Gas emissions started in 1992 with United Nations Framework Convention on Climate Change (UNFCC). Kyoto protocol signed in 1997, and brought into force in 2005, established the obligations of developed countries for an initial period until 2012. The protocol also opened opportunities for developing and under-developed countries to invest in projects that would help reduce emission, or increase absorption, of greenhouse gases and sell these global environmental benefits to industrialized countries so they can meet their Kyoto standards. In 2008, the market for Carbon trading had grown to US$120 billion.

“BH has ratified Kyoto protocol in July 2007 and can potentially benefit from carbon finance initiative. This means that BH could earn money by selling globally its own national reduction and absorption in carbon emissions, while at the same contributing to the process of sustainable development at the national level. It is a win-win situation”, stated Marco Mantovanelli, World Bank Country Manager for BH.

“However, it needs to take a few more steps, such as, establishing a Designated National Authority and establishing a national system of assessment, registration, and monitoring of emission reduction. United Nations Development Program (UNDP) and European Commission (EC) have been helping BH in this regard and we hope BH will very soon take necessary steps to fulfill the remaining requirements so that it does not miss the opportunities for earning substantial financial benefits”, Mantovanelli added.

The World Bank is ready to help BH prepare projects that would be eligible for earning revenue from reduction of emission of Green House Gases. It is hoped that this workshop is the beginning of a constructive process to identify and implement CDM projects in BH. The workshop was attended by about 30 participants from government departments, public and private sector companies, and financial institutions.

The World Bank Launches Two Competitions on Fighting Corruption Through Collective Action

2009-04-07T12:10:24.000Z

SARAJEVO, 7. april 2009. – The World Bank, sponsored by the Belgian Government, is launching two competitions on fighting corruption through collective action.

The World Bank Institute and partners are inviting students, young professionals and practitioners to participate in a competition on private sector anti-corruption efforts. One of the competitions is intended for students and young professionals, while the other is intended for practitioners. Students and professionals may participate by submitting an essay or business model on the topic and practitioners may participate by submitting their experiences on fighting corruption.

Main prizes cover participation and travel expenses to the World Bank Institute’s Executive Development Program: "Fighting Corruption through Collective Action in Today’s Competitive Marketplaces" that will be held in Washington D.C., June 8 to 11.

Winners will also be given the opportunity to present their work at this program and will have their case study published on the World Bank Institute’s portal. The deadline for submitting work is April 30, 2009.

For additional information and registration, please visit www.fightingcorruption.org

or e-mail acedp@worldbank.org

Development Marketplace Grant Competition Launched for Innovative Climate Adaptation Solutions

2009-04-02T12:30:14.000Z

Contact in BH:

Jasmina Hadžić (+ 387 33) 251-502
jhadzic@worldbank.org

Development Marketplace 2009 (PowerPoint presentation)

SARAJEVO, April 2, 2009 – The 2009 Global Development Marketplace (DM2009) launched its annual global search for innovative local projects and project ideas, with the focus this year on how to help poor and vulnerable communities disproportionately affected by current and predicted climate threats. Innovating organizations from civil society, governments, and the private sector are invited to submit project proposals online at www.developmentmarketplace.org from today to May 18, to enter the competition for grants provided by the World Bank Group, the Global Environment Facility (GEF) and other partners.

The 2009 competition focuses on three themes:

· Climate adaptation and disaster risk management

· Climate risk management with multiple benefits

· Resilience of indigenous peoples communities to climate risks

An award pool of more than US$5 million will support 20-25 projects. Typically, DM competitions attract nearly 3,000 applicants, from which about 100 finalists are selected. Finalists competing for grants will be invited to the Development Marketplace to be held November 3-5, 2009, in Washington, D.C.

Development Marketplace is a competitive grant program that identifies and funds innovative, early-stage projects with high potential for development impact. Since its inception in 1998, DM has awarded roughly US$54 million to more than 1,000 projects through global, regional and country-level competitions. Using DM funding as a launching pad, many projects scale up or replicate elsewhere winning prestigious awards for social entrepreneurship.

“The main criteria in this competition is innovative thinking“, said the World Bank Country Manager in Bosnia and Herzegovina, Marco Mantovanelli. “Several non governmental organizations, associations and firms from Bosnia and Herzegovina won these competitions in the past years and I hope that BiH civil and business society will once again apply in numbers and maintain its winning streak.”

DM2009 competition is open to applications from non-governmental organizations, civil society groups, foundations, governments, private businesses and development agencies based in the country of implementation. Other applicants can apply only with the participation of a local partner.

For more information, please visit www.developmentmarketplace.org

BH MOZAIK FOUNDATION, THE OPEN SOCIETY FUND AND THE WORLD BANK LAUNCH 2009 CIVIL SOCIETY FUND FOR NON-GOVERNMENTAL ORGANIZATIONS IN BOSNIA AND HERZEGOVINA

2009-04-01T13:53:18.000Z

Contact in BH:

Jasmina Hadžić (+ 387 33) 251-502
jhadzic@worldbank.org

SARAJEVO, March 30, 2009 – BH Foundation Mozaik, the Open Society Fund and the World Bank in Bosnia and Herzegovina are launching the Civil Society Fund for 2009 and invite all interested local civil society organizations in Bosnia and Herzegovinato send their applications for this program. The Civil Society Fund is especially aimed at vulnerable groups (people with special needs, minorities, youth, etc.) in order to assist them in strengthening their position in BH society. This competition is open until April 17, 2009.

The total amount of grant funding which will be disbursed under the program this year is US$ 51,500. Winners will be selected by a commission which will include representatives of the non-governmental sector. Foundation Mozaik, the Open Society Fund and the World Bank will closely monitor implementation of these projects.

As global economy deteriorates, World Bank predicts sharply slower growth in developing world in 2009; weak recovery in 2010

2009-04-01T13:09:28.000Z

Contacts:

In Washington:

Merrell Tuck (+1-202)473-9516

mtuckprimdahl@worldbank.org
Kavita Watsa (+1-202) 458-8810

kwatsa@worldbank.org
TV/Broadcast: Cynthia Case
(+1-202) 473-6287

ccase@worldbank.org

Washington, DC, March 31--- GDP growth in the developing world will slow to a projected 2.1 percent in 2009 from 5.8 percent in 2008, according to World Bank estimates released today. The Bank has more than halved its November 2008 projection of 4.4 percent growth in developing countries in 2009, reflecting the rapid deterioration of global financial and economic conditions.

The new Global Economic Prospects update also notes that global growth is expected to contract by 1.7 percent this year. This would be the first decline in world output since World War II. GDP is projected to decline by 3 percent in OECD countries and by 2 percent in other high-income economies.

The World Bank’s baseline forecast predicts growth momentum to turn weakly positive in 2010 as financial-sector consolidation, lost wealth and knock-on effects from the financial crisis continue to dampen economic activity. However, the pace and timing of the recovery is still highly uncertain.

“Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks—but also reducing opportunities available to them, and frustrating their hopes,” said Justin Yifu Lin, World Bank Chief Economist and Senior Vice President, Development Economics "This could reverse years of progress, and is nothing less than an emergency for development.”

In theupdate, the Bank emphasized that even though growth should rebound—albeit slowly—economic activity will remain depressed, with unemployment and significant sectoral adjustment persisting for the next two years.

“Even if global growth turns positive again in 2010, output levels will remain depressed, fiscal pressures will mount, and unemployment levels will rise further in virtually every country well into 2011,” explained Hans Timmer, Manager, Global Trends, in the World Bank’s Development Prospects Group.

World trade in goods and services is expected to fall 6.1 percent in 2009, a historic decline. At $47/bbl in 2009, oil prices are projected to be more than 50 percent below their 2008 levels. Non-oil prices are also expected to remain low, some 30 percent lower than in 2008.

Fiscal balances are projected to deteriorate sharply in developing countries in response to weaker revenues, higher borrowing costs, and larger transfers to maintain social safety nets. This could be particularly worrisome in developing Europe and Central Asia, where trade and production have severely contracted, the private sector is highly vulnerable, and social safety nets have broad coverage.

The developing world’s need for external financing is likely to increase to $1.3 trillion in 2009, including current account deficits and principal repayments on private debt coming due. With declining capital flows, this would generate a financing gap of between $270 and$700 billion. The largest funding gaps are in Europe and Central Asia, Latin America, and Sub-Saharan Africa.

World GDP growth is expected to increase to a modest 2.3 percent in 2010, but if a balance of payments crisis were to emerge within a developing region, it would prove difficult to contain and would hamper global recovery. Another risk is that the recovery in credit markets may proceed more slowly due to continued financial sector problems, which would prolong the period of capacity adjustment in the real sector and extend the global downturn.

Regional growth forecasts

Europe and Central Asia has been worst affected by recent developments. GDP in the region is expected to fall by 2 percent in 2009, compared with a 4.2 percent increase in 2008. The markdown in growth for the region as compared with the Bank’s November forecast is 4.8 percentage points, the sharpest revision among developing regions.

Latin America and the Caribbean will also likely see GDP contract in 2009, although at the country level outturns may be diverse. Overall, GDP is projected to decline 0.6 percent following gains of 4.3 percent in 2008.

East Asia and the Pacific is likely to be most affected by the falloff in global investment and trade. Already this has cut sharply into industrial production and capital spending. GDP growth is expected to ease to 5.3 percent in 2009, as growth in China slumps to 6.5 percent, and several smaller economies in the region, including Thailand fall into recession.

Prospects for South Asia have been marked down to 3.7 percent growth for 2009 from earlier forecasts of 5.4 percent for 2009—and down from 5.6 percent growth in 2008. Though terms of trade have moved in the region’s favor with lower oil prices, weaker export demand is being felt sharply.

Growth in the Middle East and North Africa appears least affected among developing regions, dropping just 0.3 points from earlier projections to 3.3 percent. Reduced oil revenues and cuts in oil output will restrain GDP among oil exporters to 2.9 percent from 4.5 percent in 2008.

In Sub-Saharan Africa, GDP growth in 2009 is expected to halve from 4.9 percent in 2008 to 2.4 percent, dropping 1.8 points below earlier projections. The dramatic shift in commodity prices will have strong effects across countries.

The BH economy is not immune to the impact of the global financial and economic crisis, even if financial stability has been maintained. The consequences of the global crisis have begun infecting the BH economy through three main transmission mechanisms: the credit crunch, fall in export prices and demand, and a drop in remittances. Like the rest of transition economies, BH is almost certain to experience a drastic reduction in the rate of growth. In 2009, real GDP growth is likely to drop by seventy percent, or even more, and the recovery is expected to be slow even after 2009.

The project Employment Support 2 Project has changed to Closed

2009-04-01T04:00:00.000Z

The project Employment Support 2 Project has changed to Closed. To see more information, see the project information in the World Bank project database

The project development objective aims to provide employment services for an estimated 10,000 people who are either recently retrenched and above 45 years of age and/or those who are actively seeking jobs for two or more years in Republika Srpska (RS) and Federation of Bosnia and Herzegovina (FBH); and Further reform agenda to bring behavioral change and business change in the employment services by focusing the PES on providing effective job brokerage services; employment assistance programs including counseling services; programs to assist the unemployed; analytical and information services including disseminating labor market information. The project has the following three components: Component 1) will focus the employment services on matching employers with job vacancies to appropriately skilled active job seekers; and on providing, through private sector service providers, income earning opportunities to active job seekers and to the hardcore unemployed based on the experience of the Pilot Emergency Labor Redeployment Project (PELRP). Component 2) will upgrade and strengthen the Public Employment Services (PES) capacity to provide and outsource job brokerage and employment services programs through the development of effective procedures, clear guidelines and regulations, staff training and the piloting of analytical labor market information systems including introducing labor market research units in the Ministries of Labor. Component 3) will support the project implementation and coordination between all partners in the Second Employment Support Project (SESP). The project would be managed by the Project Implementation Units (PIUs) and would include the supervision and monitoring of all components under the project as well as the knowledge transfer to and training of participating agencies (PES).

Time for Hard Decisions

2009-02-28T12:00:00.000Z

An Op Ed by Marco Mantovanelli,

World Bank Country Manager in Bosnia and Herzegovina

Published in Dnevni Avaz daily, February 28, 2009

A couple of weeks ago the Economic-Social Council of the Federation adopted an Operational Plan against the worsening global economic crisis for 2009-2010. Among other crucial elements, this plan provides some directions for reform of the social sector, which should include rationalization of spending and better targeting of benefits on those who truly need them.

This plan has come just in time, as the fast-approaching global recession already knocks on the BH doors. From the Atlantic Ocean to the Baltic Sea a wave of unemployment is sweeping across Europe. In January last year there were 800,000 people claiming unemployment benefits in Britain. By the end of this year it is estimated that British unemployment will double to 1.8 million people. Meanwhile, in France, there are over 2 million unemployed already. Even in the once dynamic Baltic economies, riots have erupted over the pain caused by the government retrenchment required as a result of the banking and economic crises.

Several BH companies have already announced that they have to lay off workers because reduced demand on global and regional markets have forced them to reduce their production. Just in last December some, 5,000 people have registered as unemployed and have requested social assistance in BH. More than 1,000 new unemployed have registered in January.

In BH throughout the past decade official unemployment rate was exceeding 40 percent. While we can question the accuracy of this official data, such frightening statistics in light of the approaching hardship is cause for a major concern. An additional concern is the fact that these dire unemployment statistics are inflated by those who register as unemployed even when they have a job, sometimes even two.

Many seem to believe it is perfectly normal to cheat public finances by registering as unemployed to receive health insurance and other social benefits, even when they hold a job. And some employers seem to think that that is a good idea because they will not have to pay social contributions for that particular worker. This cheating of the system deteriorates public finances and deprives those truly in need of state assistance.

Yet while we may think that this is contrary to the law, there are instances where legislation has actually encouraged such behavior.

An example of how this plays out in practice is provided by the FBH demobilized soldiers’ benefit that was introduced in October 2006. In the period 2004-2006, prior to the introduction of the aforementioned benefit, the number of unemployed demobilized soldiers registered with the Employment Bureau in FBH had been around 60,000. Between September 2006 and December 2007, the Employment Bureau in FBH had recorded a 46% increase in the number of people registered as unemployed demobilized soldiers – form 60,000 to nearly 90,000. It is truly hard to believe that 30,000 demobilized soldiers lost their job during that period, when other official statistics were showing the economy was actually creating jobs.

Moreover, parallel information from private employers indicated that many of these 90,000 people actually continued to work at their firms and had no intention being ‘really’ unemployed. This suited employers just fine because, in this case, both employers and employees profit jointly as the former don’t have to pay payroll contributions and the latter keep receiving unemployment benefits on top of their salaries.

Since they are awarded regardless of the claimant’s economic means, these kind of right-based benefits are not generally so high as to enrich the individual recipient, but provide enough incentives to either substitute work with leisure, or, enable the person to register as unemployed and continue working in the ‘grey’ economy. At the same time, the economy and public budgets are struggling to fund the various benefit transfers even though there is no evidence that these transfers are making society better off as a result.

On the contrary, this makes BH society worse off since paying out hundreds of millions in benefits now implies foregoing of either other social payments, such as better child allowance, or public investment opportunities that could increase the overall wealth and welfare of BH citizens in years to come. We estimate that social expenditure in BH, one of the highest in Europe as percentage of GDP, reaches only 30 percent of those most in need in BH, one of the lowest rates in Europe.

In other words, those people who cheat the system to get even a meagre extra income actually cheat themselves and their dears. This is why the World Bank recommends that the authorities start targeting social benefits to need.

The global economic crisis is probably going to lead to a genuine increase in the number of unemployed in BH. In light of that real threat, it is important to reform the current system so that the people in genuine need can be identified easily and helped quickly.

As things now stand, there is no way of telling who on the BH unemployment roll has been really laid off and who, though registered as unemployed, is in fact a businessman who may or may not be laying off people himself.

The project Municipal Development Project is now in the pipeline.

2008-12-04T05:00:00.000Z

The project Municipal Development Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Second Solid Waste Management Project has changed to Active

2008-12-03T05:00:00.000Z

The project Second Solid Waste Management Project has changed to Active. To see more information, see the project information in the World Bank project database

The overall development objective of the Second Solid Waste Management Project for Bosnia and Herzegovina is to improve the availability, quality, environmental soundness, and financial viability of solid waste management services in participating utilities/regions. There are three components to the project. Component A: waste management. This component invests in rehabilitating existing disposal sites, closing wild dumps, improving collection infrastructure, supporting equipment purchases, and to a limited extent, converting existing small dump sites to transfer stations. At more advanced regional landfills the component will also support upgrading processes such as sorting, recycling, and gas capturing; and prior treatment of waste. It will also cover operational cost of regional Project Implementing Teams (PITs). The component includes 10 percent co-financing from the entity governments. Component B: capacity building. This component provides technical assistance and engineering services to participating regions and will finance institutional strengthening and capacity-building activities benefiting the entity-level institutions involved in solid waste management. It supports the preparation of feasibility studies, financial, environmental and social assessments of landfill sites, and provides support for bidding procedures for the investments and services provided under Component A. The component will also finance a public communication program and environmental monitoring. In addition it may support strategic studies for hazardous waste management and inter-state cooperation in solid waste management. Component C: project management and operating cost. This component supports Project Management Unit (PMU) operation in both entities and assists project implementation.

The project Sava Waterway Rehabilitation Project is now in the pipeline.

2008-11-26T05:00:00.000Z

The project Sava Waterway Rehabilitation Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Education Restructuring Project has changed to Closed

2008-10-31T04:00:00.000Z

The project Education Restructuring Project has changed to Closed. To see more information, see the project information in the World Bank project database

The overall objectives of the Education Restructuring Project in Bosnia-Herzegovina are to: (a) increase participation in general and broad-based secondary education programs; and (b) improve the efficiency of education delivery, especially in secondary education. The project consists of three components. The first, the Secondary Education Grants Program will provide grants to schools to: (a) facilitate the development and implementation of broad based curricular programs and technical and professional curricular families for secondary education, and (b) enable certain schools to expand so that students are able to study revised four year programs or attend general education. The second, education finance and management, will facilitate the design and implementation of more transparent formula-based financing mechanisms for publicly-provided general education. The third, project implementation, will provide consulting services and training to support project implementation.

The project FOREST AND MOUNTAIN PROTECTED AREAS PROJECT has changed to Active

2008-06-05T04:00:00.000Z

The project FOREST AND MOUNTAIN PROTECTED AREAS PROJECT has changed to Active. To see more information, see the project information in the World Bank project database

The objective of the Forests and Mountain Protected Areas Project for Bosnia and Herzegovina (BiH) is to strengthen the institutional and technical capacity for sustainable Protected Areas (PAs) and natural resource management, and expand the BiH network of forest and mountain PAs. There are three components to the project. The first component is the protected area development. This component will support PA management plans, operations, assessments, and facilities development in existing and new PAs. There are two subcomponents to the project. The first subcomponent is the PA management planning. The project will finance development and implementation of new PA plans for the two existing National Parks (NPs) Sutjeska and Kozara, for the existing Janj and Lom forest reserves and for the new National Parks (NPs) in Una River and Igman-Bjelasnica-Treskavica-Visocica mountain complex (IBTV). The second subcomponent is the ecological and PA management assessment. The project will establish a Monitoring and Evaluation (M&E) system for both the PAs and the project. This will include support for the ecological assessments to be used as inputs to the PA management planning and decision-making as well as for subsequent monitoring of biodiversity status including tracking of key habitats and species. The second component is the capacity and support for biodiversity conservation. This component will focus on strengthening the institutions responsible for planning, establishment, and management of PAs. Finally, the third component is the local initiatives in biodiversity conservation. The project will support biodiversity conservation efforts by local stakeholders which promote improved natural resource management and generate economic benefits to local communities involved in protected areas management. To be eligible, subprojects must be able to demonstrate that they will mitigate the significant threats to global biodiversity or contribute to monitoring of such biodiversity, and include arrangements to assess their impacts.

The project Bosnia and Herzegovina - Support to Economic Policy and Planning Unit - Council of Ministers has changed to Closed

2008-02-16T05:00:00.000Z

The project Bosnia and Herzegovina - Support to Economic Policy and Planning Unit - Council of Ministers has changed to Closed. To see more information, see the project information in the World Bank project database

The project Second Solid Waste Management Project is now in the pipeline.

2008-02-09T05:00:00.000Z

The project Second Solid Waste Management Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The project SOC INS TA SUPPLMT has changed to Closed

2008-01-02T05:00:00.000Z

The project SOC INS TA SUPPLMT has changed to Closed. To see more information, see the project information in the World Bank project database

The additional credit for the Social Insurance Technical Assistance Project for Bosnia and Herzegovina will finance scaled-up activities that will enhance the impact of the project. The additional activities will contribute to efforts to contain growing expenditures for the social insurance systems while helping to strengthen governance and institutional capacity to design and implement institutional, policy, and financing reforms in the social insurance systems. In particular, the additional financing will enable the provision of technical assistance needed to: (i) perform external audits of cantonal level health insurance funds, large hospitals and other health providers in both Entities, (ii) develop the legal and institutional framework for the establishment of a unified system of disability assessment for all categories of beneficiaries, and (iii) support the joint inter-entity pension reform working group. These activities will contribute to further strengthening the effectiveness and efficiency of the health and pension insurance systems.

The project Social Insurance Technical Assistance Project has changed to Closed

2008-01-02T05:00:00.000Z

The project Social Insurance Technical Assistance Project has changed to Closed. To see more information, see the project information in the World Bank project database

The objective of the Social Insurance Technical Assistance Project for Bosnia and Herzegovina is to strengthen the effectiveness and efficiency of health and pension insurance systems by provision of high quality technical assistance and training to help implement existing reforms and t o help design options for future social insurance reforms. There are three main components. Component 1 1) helps develops a policy framework for social insurance by supporting the expansion of coverage and portability of health care and pension benefits for farmers and the self-employed; 2) identifies and implements mechanisms to consolidate the social insurance revenue collection and enforcement system in a manner consistent with the broader direction of tax administration reform; 3) helps develop options to address two issues, that is, risk-pooling and rationalization of service provision, and specifically finances technical assistance, training, and office equipment to identify options for mitigating the consequences of low-risk pooling and for developing a master plan to utilize health services; 4) within the framework of developing contracts to purchase health services, it helps develop better performance measures, such as provider output and quality indicators, as well as helps establish a system to better determine and monitor costs of providing various health services; and 5) reviews options for medium-term systemic reforms of the pension system, and assists the government in designing the future system, and assesses the necessary pre-conditions for future introduction of funded privately managed pensions. It also finances consultancy services, limited equipment, and training for activities on the entitlement side of the pension system. The component will support: (a) development and refinement of overall strategic goals, institutional mandates, and business planning in the health and pensions sectors. This will include investments for strengthening the capability of staff within the organizations to carry out their policy and service provision roles, and (b) effective execution of activities under the Policy Framework Component, along with effective implementation of already approved health and pension reforms. In addition, the project will help strengthen the information technology (IT) capacity of the beneficiary institutions to: (I) harmonize data systems across social institutions through the development and establishment of data and technology standards; (ii) strengthen the IT support capacity of the institutions through technology training, and minor upgrading of equipment and data communications networks to enable data sharing and to form the basis for implementing harmonized data systems with increased data information flow among institutions; and (iii) establish key indicator data for all institutions to support policy formulation and monitor program implementation in a timely and effective manner. The component will finance technical assistance and generic training on good management practices. Emphasis would be on communications, information technology, and exposure to good practice through training and study tours, regionally and internationally, in policy and administrative reforms in the pensions and health sectors. This component will also enhance the technical and management skills of staff in the Ministries of Health, Ministries of Labor, Pension and Health Insurance Funds, Tax Administrations, and Ministry of Civil Affairs. Component 3 supports project implementation.

The project Business Enabling Environment Structural Adjustment Credit has changed to Closed

2007-12-17T05:00:00.000Z

The project Business Enabling Environment Structural Adjustment Credit has changed to Closed. To see more information, see the project information in the World Bank project database

The project Bosnia and Herzegovina - Support to Economic Policy and Planning Unit - Council of Ministers is now in the pipeline.

2007-12-03T05:00:00.000Z

The project Bosnia and Herzegovina - Support to Economic Policy and Planning Unit - Council of Ministers is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Accelerating Enterprise Restructuring In Bosnia & Herzegovina through Active Portfolio Management of PIFs is now in the pipeline.

2007-10-27T04:00:00.000Z

The project Accelerating Enterprise Restructuring In Bosnia & Herzegovina through Active Portfolio Management of PIFs is now in the pipeline. To see more information, see the project information in the World Bank project database

The project PRIZMA technical assistance grant is now in the pipeline.

2007-10-27T04:00:00.000Z

The project PRIZMA technical assistance grant is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Local Initiatives (Microfinance) 2 Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Local Initiatives (Microfinance) 2 Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The Second Local Initiatives (Microfinance) Project, will address urgent needs to raise incomes, develop businesses, and create jobs in Bosnia and Herzegovina, through the provision of credit, and financial services to low-income people. The main components are: 1) provision of market-driven financing for selected micro-finance institutions (MFIs), to increase their outreach, and quality of services to low-income clients. MFIs will assess eligibility criteria, and technical services needs, while a long-term financing strategy in Euro-denominated loans with a fifteen year term, to MFIs will build a capital base, and assist them with leverage commercial financing; 2) development of micro-finance legal, and regulatory frameworks, to enable the current Micro Credit Organizations -later on MFIs - expand their sources of capital, and services. Alternative institutional forms will be developed within a financial sector framework, so as to mobilize sustainable sources of financing, such as commercial bank financing, equity investment, and savings, i.e., financial companies, for profit, credit-only institutions, and, membership-based savings, and credit institutions, which would only accept deposits from their members. Legal advisory, and consulting services, and technical assistance will be financed; 3) strengthening the institutional, and financial capacity, and performance of MFIs, through training, and technical consulting services; 4) financing of a longitudinal impact assessment, to build MFIs program management, and local research capacity, supported by advisory services; and, 5) project management, and operating costs, funded as government counterpart contributions to the project.

The project Mostar Water Supply & Sanitation Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Mostar Water Supply & Sanitation Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The Mostar Water Supply and Sanitation Project aims to create a unified water supply and sanitation utility for the city of Mostar, and to improve service. The project consists of six components. 1) The priority investments for water supply rehabilitation and improvement component will finance installation of new water supply equipment, replacement of pipes with leaks, construction of pump stations, rehabilitation of existing resources, and purchase of computers and related equipment in support of the project implementation. 2) The Water Distribution Network Rehabilitation and Improvement Fund will support the improvement for the distribution system. 3) The sewerage network rehabilitation component will finance urgent rehabilitation and repair of selected sewers and sewer maintenance equipment and pipe replacement. 4) The Institutional Strengthening Fund will support the Mostar Water Supply and Sewerage Utility in terms of institutional strengthening and capacity building as well as training for staff. 5) The technical advisor/engineering services component will support activities to assist both project implementation and provide technical assistance for institutional improvement. 6) The operating expenditures component will support critical expenditures for a two-year period immediately following the merger of the two water companies - the Eastern Utility and the Western Utility.

The project Solid Waste Management Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Solid Waste Management Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The main objectives of the Solid Waste Management Project are to: 2) cost effectively improve solid waste services in participating priority areas; b) increase administrative and technical capacity for solid waste management at the local and Entity level; c) improve cost recovery in the sector and encourage private sector involvement; and d) correct environmental problems and reduce health hazards caused by inadequate waste collection and disposal systems. There are three project components beside the project management component. The Waste Management component rehabilitates landfill sites by closing wild dumps, building collection infrastructure and support equipment, and establishingn transfer stations. The Institutional Strengthening component supports a public communication program, environmental monitoring, and the formation of a medium-term business plan. The Engineering Services/Technical Assistance component provides engineering services for design and construction supervision, and technical assistance for waste management and landfill operations.