Latin America & Caribbean | World Bank

Project Information Document (Appraisal Stage) - OSE Sustainable and Efficient - P118064

2012-05-16T04:00:00.000Z

Latin America - Building the Inter-American Biodiversity Information Network (IABIN) Project

2012-05-16T04:00:00.000Z

Ratings for the Building the Inter-American Biodiversity Information Network (IABIN) Project for Latin America were as follows: outcomes were moderately satisfactory; risk to development outcome was moderate; Bank performance was moderately satisfactory and borrower performance was also moderately satisfactory. Some lessons learned includes: The flexibility of the Project design was especially critical-for it allowed IABIN to adapt to the rapidly changing information technology over the last decade. The governance of regional projects has inherent challenges. Therefore, institutional roles and responsibilities of such Project which involves multiple institutions in multiple countries should be clearly laid out and understood by all the key players prior to project effectiveness. Country ownership is critical to success. Building the IABIN was an ambitious undertaking, relying on the commitment of 34 governments and the involvement of numerous institutions across the region. Emphasis on capacity building helps sustainability. Clarification of appropriate implementation arrangements for activities can help identify possible incompatibilities in fiduciary processes among agencies. Identify the users of the products.

The project Sao Paolo Transport, Climate Change and Disaster Risk Management is now in the pipeline.

2012-05-16T04:00:00.000Z

The project Sao Paolo Transport, Climate Change and Disaster Risk Management is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Development Policy Loan has changed to Closed

2012-05-16T04:00:00.000Z

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

The First Programmatic Fiscal Management and Efficiency of Expenditures Development Policy Loan (DPL) Project for Panama supports the Government's overall objectives of increasing fiscal space, strengthening fiscal management, enhancing transparency, improving the efficiency of public spending and strengthening social programs. The restructuring is to extend both the closing date and the effectiveness deadline of the project to the Republic of Panama by two months to June 30, 2012. The extensions are necessary to allow sufficient time for the effectiveness and disbursement of the loan. The following changes are: The closing date for the project will be extended from April 30, 2012 to June 30, 2012; and this will be the first extension of the project.

As Prepared for Delivery, IFC’s 14th Annual Global Private Equity Conference

2012-05-15T14:00:00.000Z

As Prepared for Delivery

IFC’s 14^th Annual Global Private Equity Conference:

Prevailing in a New Financial Landscape

Robert B. Zoellick

President, World Bank Group

Tuesday, May 15,2012

Introduction

It’s a great pleasure to join you today for IFC’s 14^th Annual Global Private Equity Conference in association with the Emerging Markets Private Equity Association, or EMPEA.

The story of this conference is emblematic of how the world economy has changed: Fourteen years ago, a small group met in the basement of IFC to discuss the prospect of private equity in developing countries.

Today, there are more than 800 people here, from nearly 60 countries: institutional investors; public and pension funds; private investors; endowments and family offices; senior investment professionals; chief investment officers, and directors from leading fund managers around the world, as well as representatives from development institutions and government agencies.

Plenary sessions and roundtable discussions cover a range of issues over three days – the global economic outlook and regulatory trends, of course – but also non-financial risks, infrastructure, SMEs, mezzanine…and intriguing markets beyond the BRICs to Turkey, Palestine, Africa, and frontier markets.

The success of this conference is in large part because of the enormous potential of emerging markets: over the past five years, developing countries have provided two-thirds of global growth.

This conference also reflects the terrific partnership between Lars Thunell and the Private Equity Funds group at IFC, and Sarah Alexander and her team at EMPEA. Together, they’ve made this conference one of the leading global forums for private equity. So I want to thank them for their hard work and their leadership.

I also want to thank an impressive set of participants: sponsors; panelists; speakers –and all of you.

Yet I want to add a special word of thanks for Lars.

When I came to the Bank in July 2007, it was a time of trouble.

Frankly, meeting Lars was like having a breath of fresh air: He was steady, sensible, constructive – clearly an excellent executive, committed to the private sector’s role in development, and doing interesting things.

Together, we came up with some innovative ventures both to help developing countries during tough times, and to move IFC even closer to the cutting edge of private sector development in these exciting markets.

He always offered good counsel, fine judgment, common sense, and friendship – for which I’m grateful.

Keeping the Focus on Growth and Structural Reform

Last month, at the Spring Meetings of the World Bank Group and IMF shareholders, much of the focus was – understandably – on macroeconomic stability.

This attention to the macroeconomic picture is necessary – but it’s not sufficient. Extraordinary monetary policies buy time – but they don’t solve the fundamental problems.

As my friend, Deputy Prime Minister and Finance Minister Tharman of Singapore said at our Spring Meetings, investors will accept short-term costs if they perceive good returns over time. All countries – developed and developing – need to focus on the structural reforms – the microeconomic policies – that will drive future growth.

Structural changes are essential to enhance productivity, competition, and innovation for developed and developing countries – whether it’s so that Europe can restore its economic performance, or China can avoid the so-called “middle income trap” and meet its challenges in the coming decades. Structural reforms are important for the United States, too.

In practical terms – and for investors like you – what does structural reform mean?

It means strengthening the fundamentals of productive supply-side growth in all sectors – agriculture, manufacturing, services.

It means investing in infrastructure – especially through public private partnerships.

It means private sector development – the engine of innovation and job growth: markets; investment; small and medium-sized businesses; as well as focusing on jobs training and skills.

It means expanding markets – through both the hardware and software of trade: regional integration; ports and infrastructure; lowering the costs of formal, informal, or logistics barriers.

At the same time, structural reform means investing in green growth and energy efficiency – because “growing dirty, cleaning up later” is not a viable option. Environmental degradation cannot be the price for short-term growth.

Structural reform also means investing in human capital:

- Efficient and affordable safety nets – because only 1 out of every 5 people in the poorest countries has any form of social protection;

- Basic financial services – because more than half the world’s poor, almost 2.4 billion people, are “unbanked”;

- Basic nutrition and health – because without these essentials, people cannot begin to achieve their potential; and

- Quality education, connected to training, which leads to better jobs, more innovation, and greater gains for all.

Investing in people means tapping the energies and genius of all: young people, the elderly, and not least girls and women – an under-realized source of growth everywhere.

Importance of Partnerships

You can play an important role in making all this happen.

Countries need private equity more than ever to push forward the structural agenda. But to be most effective, the right partnerships are critical – to seize opportunities, open up new markets, share market knowledge and learning.

We’ve seen this at the World Bank Group with IFC’s Asset Management Company, or AMC, which Lars and I created in 2010 to supplement IFC’s traditional model of raising money in bond markets and then investing it. The idea was for the AMC to tap sovereign wealth funds, pension funds, and other institutional investors that are looking to increase their exposure to emerging markets, and that are interested in accessing IFC’s transaction pipeline, investment approach, and track record of superior returns.

Now ably led by Gavin Wilson and a fine team, the AMC considers investments in spaces where IFC-supported private equity fund managers are not active, either because of the size of the investment or the riskiness of the sector. As the AMC makes profitable returns for its institutional investors, these investors are likely to feel more comfortable investing in smaller private equity funds and frontier markets.

The AMC now totals over $4 billion – almost $3 billion of which had little previous exposure to Africa and other less recognized emerging markets. Building on the success of its $1 billion African, Latin American, and Caribbean Fund, last year, the AMC established an African Capitalization Fund that invests in commercial banking institutions in northern and Sub-Saharan Africa. This Fund has already made investments in Ghana and Malawi.

AMC offers a great model for a win-win partnership between capital, experience, and expertise.

When I asked one pension fund manager what attracted him to AMC, he told me: We now know developed markets are risky, too; we see growth potential in developing markets – but we don’t know where to invest. IFC does. And we can learn through this partnership.

Opportunities: Doing Well and Doing Good

We have seen the positive impact private equity can have.

IFC has private equity investments of about $3 billion across 180 funds in emerging markets. We estimate that these investments alone have helped create about 300,000 new jobs over the last 10 years, many of them for women. We see much more potential for the future.

Private equity also increases the wealth – the savings – of pension funds and other institutional investors who assist many millions of savers, small and big.

Increasingly, institutional investors want their investment capital not only to do well, but to do good. Private equity can help companies grow, hire more workers, raise productivity. But at the same time, private equity can also be a powerful driver of change: raising standards; fostering growth; promoting new opportunities for businesses and individuals; helping to overcome poverty; bringing hope.

Let me give you some examples.

China Environment Fund

Tsing Capital’s China Environment Fund: Founded by Don Ye in 2000 to focus on clean tech investments, the Fund adopted a triple bottom line, balancing social, environmental, and financial returns.

At first, portfolio companies were resistant to the Fund’s focus and approach. After all, government regulations were weak. Investors would say, “We give you the money, and you give us a return. Why are you talking to us about welfare, child labor, the environment, and insurance?” Deal flow was slow for the first fund: it only raised $13 million from socially responsible investors.

Now, Tsing Capital’s investors are telling a different story. The company has become a market leader, generating three digit financial returns. The latest China Environmental Fund, in which IFC invested $20 million, had a target size of $350 million.

What’s the secret of Tsing Capital’s success? Certainly persistence on the part of Don and his team. But they also chose the right partners.

From the outset, Tsing Capital performed social and environmental risk screening on companies during due diligence before it invested. The company checked standards against national laws and regulations, but they also made thorough use of IFC’s performance standards which provide guidance on how to identify – and avoid – risks and impacts.

If Tsing Capital identified any excluded activity – potential deals were dropped. If they found risks, they were corrected. Tsing Capital worked hand-in-hand with companies to improve corporate governance and upgrade management capability and strategies.

Their hard work has paid off. Today, Tsing Capital is raising environmental and social standards across the industry, and transmitting those standards into multiple start-up companies. It has twice been honored as a corporate citizen in China, and Don Ye has been recognized by Business Week as one of China’s 40 most powerful people – alongside President Hu Jintao and Yao Ming of the Houston Rockets!

It’s a great success story. It shows how commercial concerns linked to environmental and social standards offer win-win opportunities. It demonstrates how private equity can be a powerful driver of growth and change.

Pragati India Fund

One of IFC’s recent investments, the Pragati India Fund, offers another good example of doing well and doing good.

The fund is a pioneering investment vehicle that will focus on economically under-developed states in India. These are areas where it has traditionally been a challenge to attract private investments – but where the changing political, social, and economic development dynamics offer new opportunities that are largely untapped. Sixty percent of Pragati’s investments target the country’s 8 poorest states.

IFC is investing up to $20 million in the new fund. The idea is to help Pragati provide growth capital to start-ups outside of major urban centers – adapting successful business concepts to small- and medium-sized enterprises in low-income states and rural regions. In India, small- and medium-sized businesses typically receive only 5 percent of all private equity capital, forcing them to rely on high-cost informal borrowing. The Pragati Fund is designed to fill that funding gap and support the development of India’s financial infrastructure.

As a co-investor, IFC can help increase the impact of the project – bringing not only capital but management expertise, which can help strengthen operations as well as environmental and social governance.

Just last month, Pragati India Fund made its first investment – in Jash Engineering Limited, a manufacturer of customized engineering goods for the water and waste water infrastructure sector. Jash is now expanding into manufacturing equipment for water treatment plants, and even generating clean power from residual water of the plants. The company is looking to move into municipalities across India.

With India’s government pushing for world class water treatment facilities, investing in a company like Jash offers real opportunities – to help these enterprises access finance, create jobs, promote inclusive growth, and contribute to cleaner, healthier water and energy for hundreds of thousands.

Supporting the Poorest

I hope more fund managers and investors will look for these types of opportunities – and look for them beyond BRICs and within frontier regions.

IFC is increasingly shifting its focus in this direction. Since 2007, over half the funds supported by IFC have been in the poorest countries supported by the World Bank’s International Development Association, or IDA. IFC's equity returns over the last 10 years in low-income countries, compared with IFC as a whole, provide a compelling case for investment.

Africa has been IFC's top performing region over the last 10 years, with a real rate of return of 25 percent compared to 18 percent for IFC worldwide.

Sub-Saharan Africa is also the region where IFC’s investments in private equity funds have grown the most, and where we have more private equity partners – a total of 38 – than anywhere else. In FY11, IFC committed new investments in 5 funds in Africa, and so far in FY12 we’ve invested $70 million in 3 funds.

We already have plans for 2 or 3 more funds this fiscal year – including 8 Miles Fund, a pan-African private equity fund backed by Bob Geldof.

8 Miles plans to make investments in growth areas across Africa such as agribusiness, consumer and retail health, telecommunications, banking and financial services. The target fund size is $450 million, with $15 to $40 million investments in 10 to 12 African companies with above-average potential for revenue growth and job creation. Investors partnering with IFC include the United Kingdom’s CDC, the African Development Bank, and Vital Capital Fund. J.P. Morgan will provide fund administration services.

Private equity is already changing the face of Africa – and funds such as 8 Miles recognize that there’s huge potential to do more. The fund’s name refers to the fact that, at their nearest points, Africa and Europe are only eight miles apart.

For much of Africa, however, the distance is far greater. Countries dealing with fragility and a history of conflict are home to the world’s poorest – the Bottom Billion, as Paul Collier pointed out in his 2007 book, though today, it’s more on the order of 1.5 billion.

In 2010, the World Bank focused on these countries in our World Development Report on Conflict, Development, and Security. One of the conclusions of that report was that private sector development is a key factor in infrastructure and logistics, local banking, service delivery, and job creation – to show early results as well as longer-term growth. Access to capital and finance is vital for putting these countries on the path to economic stability. But, of course, most fund managers aren’t ready to provide the risk capital and strategic advice that private equity provides.

That’s why IFC conceived of SME Ventures, an initiative to support local private equity fund managers and raise equity and advisory services funds in low income – and particularly post-conflict – countries. Today, we’re putting private equity to work is some of the most underdeveloped areas of the world.

Take Central Africa – a region rich in minerals, but with a history of fragility and instability. Private equity groups have traditionally focused on larger investments in the extractive industries. Yet it’s small- and medium-sized businesses that create the most jobs in any economy.

So two years ago, IFC committed up to $12.5 million to the Central Africa SME Fund. Managed by XSML, a Dutch SME fund manager, and Cenainvest, its partner based in Cameroon, the fund aims to mobilize a total of$25 million from other development finance institutions and the private sector. With offices and a team on the ground in the Democratic Republic of the Congo and the Central African Republic, the fund’s focus is on making investments and providing advisory services to the local business community, to help African entrepreneurs build sustainable businesses that create jobs and income.

The funds’ first investments in the DRC have been in a healthcare clinic, including new medical training for staff; a call center; and a food processing company for baby cereal, where the fund is also helping improve the company’s financial management and developing audited financial statements. In the Central African Republic, the fund is preparing to invest in an internet service provider.

The Central Africa SME Fund is also looking ahead. So, for example, it’s conducting a market study on fresh fruits for a fruit producer in Kinshasa, and helping prepare a business plan and financial projections for a cassava mill run by smallholders.

Through the SME Ventures initiative, IFC has also committed equity to funds for Liberia and Sierra Leone; Bangladesh; Nepal; and we are currently working on a fund for Bhutan.

And just last month, IFC made its first private equity investment in Haiti.

When Haiti was hit by a major earthquake in 2010, we knew that the Bank Group’s support to help the country recover, rebuild, and break its dependence on aid must include bringing in the private sector.

IFC has already committed five investments and significantly scaled up its advisory operations in Haiti. These projects are helping create 5,000 new jobs – as well as safeguard 5,000 existing jobs.

Now, IFC is committing up to $10 million to the Leopard Capital Haiti Fund to support small and medium-sized businesses.

With a team already on the ground in Port-au-Prince, the fund is raising $75 million in equity to invest in four main sectors: renewable energy; low- and medium-income housing; agribusiness; and hospitality. It’s also raising $4 million in donor money to provide technical and managerial assistance to companies that were thriving before the earthquake, but now want to upgrade their operational capacity and grow. At the same time, this Haiti Fund will work with its portfolio companies to enhance corporate governance, and environmental and social standards and practices.

It’s an exciting new partnership for IFC. Our Private Equity Funds team has already catalyzed an additional $10 million from investors – and will continue to support the Leopard Capital team in raising more.

We hope this will encourage more investors to invest in Haiti’s potential.

Importance of Openness

Over the past five years, I’ve seen this private equity conference grow in size, scale, and quality. I’ve also seen, from my discussion with our clients in developing countries around the world, just how important they consider the capital and expertise that private equity brings in helping their countries grow and raise standards.

Yet the role of private equity has come under increasing scrutiny and political focus in the developed world – not least here in the United States. For some, the very term is synonymous with corporate raiders, asset strippers, and secretive back room deals.

The private equity industry needs to respond to the demand for higher standards of openness, transparency, and integrity. Private Equity should be a major part of the new investment climate in emerging markets. It should increase overall investor confidence.

I recognize that some investment professionals aren’t used to being in the public eye. But you are now. And transparency is the best antidote to conspiracy theories.

At the World Bank Group, we can see the transformative power of openness. Our new information and knowledge-sharing initiatives may turn out to be the most important legacy of my tenure at the Bank Group.

Our Access to Information policy releases to the public vast numbers of documents about the Bank’s projects, analytic and advisory activities, and proceedings of the Board. It’s now viewed as the “gold standard” for financial institutions.

Our Open Data initiative has unlocked our world-class knowledge and development data. We now provide free access to more than 7,000 indicators, including GDP data and development statistics, meaning that anyone – from a PhD student, to an NGO, to a farmer, or even a private equity investor – can download our data, analyze it, and come up with solutions.

Our Mapping for Results website shares geo-spatial information on more than 2,500 Bank-funded projects.

Now we are beginning to work with communities to map their own infrastructure – clinics, wells and schools. The next step is to allow people to use hand-held devices to let the Bank know, from wherever there are in the world, what is really going on with our projects and investments.

These initiatives are making the World Bank Group more open, transparent, and accountable; helping us fight corruption and build better governance; and getting us ready for a new era of democratized development.

The investment community can benefit from greater openness as well.

Conclusion

I have always enjoyed taking part in this conference. I have spoken at it every year during my time at the World Bank Group.

I wanted to come here again, for the fifth time, because I am convinced that private equity investments can be one of the most powerful and important agents of change for developing countries: boosting local economies and creating jobs; improving governance and sustainability standards in private industry and capital markets; transforming thinking about growth; reducing poverty and creating hope.

That Change agenda is the core of our mission at the World Bank Group. It’s what we strive to do every day. It’s why private equity – and this conference – is important to me.

The success of this event demonstrates that I’m by no means alone in this conviction.

So I want to thank you again for joining us today. I hope your time at this conference opens new insights and creates new partnerships for all of you – and for the World Bank Group.

But most of all, I hope that it affirms your commitment to doing well and doing good – to using the power of private equity to support people in developing markets who want to create, build, and seize new opportunities.

That can be a lasting legacy for all of us.

Thank you.

Project Information Document (Concept Stage) - Sao Paolo Transport, Climate Change and Disaster Risk Management - P127723

2012-05-15T04:00:00.000Z

The project Improving Vital and Health Statistics in The Americas for Socio-Economic Monitoring is now in the pipeline.

2012-05-15T04:00:00.000Z

The project Improving Vital and Health Statistics in The Americas for Socio-Economic Monitoring is now in the pipeline. To see more information, see the project information in the World Bank project database

Paraguay - PY Sustainable Agriculture & Rural Development Project : P088799 - Implementation Status Results Report : Sequence 11

2012-05-14T04:00:00.000Z

OECS Countries - Electronic Government for Regional Integration Project : procurement plan

2012-05-14T04:00:00.000Z

Uruguay - Family agriculture development

2012-05-14T04:00:00.000Z

The bank has a long relationship with Uruguay's agricultural sector, expanding over a period of more than 60 years in which several projects and various analytical and advisory assistance initiatives have been implemented. The main purposes of the present report are: a) to analyze the main characteristics of family agriculture as well as its development potential and constraints; b) to examine Uruguay's current agricultural policy and institutional framework; c) present a set of measures aimed at reducing vulnerabilities and increasing development opportunities for family producers; and d) contribute to Ministry of Livestock, Agriculture and Fishery's (MGAP's) preparation of an agricultural and rural development plan 2010-15, by presenting a set of policy recommendations and measures to support an economic and environmentally sustainable family agriculture development within the Government's overall strategy to promote more equitable rural development. Uruguay's agricultural and food sector has successfully mastered past crises and retained its role as an important sector of the national economy, which saw its contribution to Gross Domestic product (GDP) increased from 6.0 percent during the economic crisis in 2000-2001 to 9.1 percent of national GDP, or 13.7 percent including agro-food processing, in 2008.

Mexico - Mexico (CRL) Integrated Energy Services : P088996 - Implementation Status Results Report : Sequence 10

2012-05-13T04:00:00.000Z

Haiti - Haiti Transport and Territorial Development Project : P095523 - Implementation Status Results Report : Sequence 15

2012-05-13T04:00:00.000Z

Brazil - Second Family Health Extension Adaptable Lending : P095626 - Implementation Status Results Report : Sequence 08

2012-05-12T04:00:00.000Z

Paraguay - Paraguay Water : P095235 - Implementation Status Results Report : Sequence 06

2012-05-11T04:00:00.000Z

Haiti - Infrastructure : P120895 - Implementation Status Results Report : Sequence 04

2012-05-11T04:00:00.000Z

Mexico - Mexico Savings : P087152 - Implementation Status Results Report : Sequence 15

2012-05-11T04:00:00.000Z

Peru - Third Programmatic Fiscal Management : P106720 - Implementation Status Results Report : Sequence 03

2012-05-11T04:00:00.000Z

Power Sector Technical Assistance Project

2012-05-10T20:35:25.000Z

Overview

The activities financed by this World Bank project allowed the Government of Dominican Republic to take important measures to re-launch reforms in the electricity sector. The project provided important studies and activities that helped to improve the capabilities and performance of key institutions in this sector, including the fostering of a whole area of expertise on renewable energy and energy efficiency.

More Results

US$11.0 million

was the originally value of the project

Learn More

Challenge

The project sought to address the institutional capacity weakness of the power sector entities in the Dominican Republic. Institutional strengthening of the electricity sector was recognized as a key factor to achieve the required sector reforms. The Loan focused on strengthening various key sectoral institutions accordingly. The inefficiencies of the sector resulted in a service of very low quality and high cost. The Project was effective in accomplishing many of the proposed capacity building and institutional strengthening activities. The power sector today has significantly increased the number of hours of service and the number of poor people with access to electricity.

Approach

The project document and several other Bank studies pointed out the lack of independence of the power sector regulator to operate efficiently. Activities to strengthen the independence of this institution in the context of the energy framework created by the government, as well as its capacity and that of related institutions to carry out their respective functions, were two of the objectives of this technical assistance loan. The Bank worked consistently with the National Energy Commission and other beneficiary institutions to improve the quality of studies, to perform useful training, and to solve problems that arose.

Results

The Power Sector Technical Assistance Project had several specific objectives and was designed to provide expert assistance to contribute towards:

Improved power sector development strategy, foster private sector participation in distribution, and agreed policy on achieving power sector structure. The project helped the Dominican Republic government to improve policy formulation and implementation by: (i) promoting a national dialogue to achieve a consensus on required reforms and the participation of the private sector; (ii) strengthening the National Energy Commission; (iii) funding the public consultation processes; and (iv) improving the management of government interests as shareholder in power sector enterprises. All activities were completed. It also resulted in an improved sector development strategy, and the National Energy Commission has achieved a new level of capacity in terms of policy formulation, despite shortcomings in two indicators.
Reduced blackouts and system collapses, while encouraging stable or falling tariffs. The project sought to help address the design of the transmission grid and the wholesale power market, to improve system reliability and increase competition in the wholesale power market. While blackouts were reduced, they continue to affect the sector.
Improve urban supply quality and higher rural coverage. The aim was to increase the quantity and quality of electricity for the poor, through rural electrification programs and by improving the Blackout Reduction Program (Programa Nacional de Reducción de Apagones, or PRA) in urban barrios (low-income neighborhoods). The rural electrification activity under the project had its shortcomings, however, on the positive side, the PRA scheme was no longer required from 2009-2010, which indicated improved urban supply quality.
Absence of environmental damage caused by power activities. There has been increased environmental awareness and a stronger interest in developing renewable energy. However, there was no evidence indicating that the power sector is polluting less than before.

Bank Contribution

This five-year Power Sector Technical Assistance Project was an element of an overall assistance package to the Dominican Republic power sector. The total project was originally valued at US$11.0 million, of which the IBRD would provide US$7.3 million and the government would provide US$3.7 million. The Bank provided its full allocation under the project while the counterpart funds reached US$3.0 million (81 percent). Financing of the project totaled US$10.3 million of which a total of US$8.9 million was invested in project activities, representing 81.2 percent of the planned amount.

Partners

In addition to close collaboration with the government, particularly through the ministries of Finance, and Economy and Planning, the project worked in partnership with the Inter-American Development Bank (IADB) and the International Monetary Fund (IMF).

Moving Forward

The project formed a platform for the development of the Dominican Republic Electricity Distribution Rehabilitation Project that was approved by the World Bank on April 18, 2008. The total amount was for US$142 million, with US$42 million provided by IBRD, while the IADB agreed to co-finance US$42 million and OPEC Fund for International Development (OFID) US$39 million.

For more information, please visit the Projects website.

Strengthening the Justice Sector in Honduras

2012-05-10T20:31:18.000Z

Overview

A World Bank project in Honduras has helped make justice accessible to many people who previously struggled with an inefficient, outdated, opaque judicial system. Through a range of activities – from training judicial and administrative staff to modernizing financial systems and refurbishing facilities – the project has helped to open the judicial branch to more than 1.9 million Hondurans in the project areas.

More Results

The project has helped to open the judicial branch to more than

1.9 million

Hondurans in the project areas

US$16.7 million

was the IDA contributation for the project

Learn More

More information about the Honduras Judicial Branch Modernization Project

Challenge

At the time the World Bank designed this project, the Honduran judicial system was hampered by a range of constraints that curbed its ability to operate effectively and with the necessary transparency and accountability. As a result, many Hondurans had inadequate access to justice. Specifically, the main challenges for the justice branch in Honduras that were identified as part of the project preparation included weak institutional capacities, reflected in poor budgeting and inadequate planning implementation, the courts’ inability to resolve cases in a timely manner, and dilapidated infrastructure and overall lack of information. Weak transparency and accountability gave rise to perceptions of corruption, and a lack of inter-institutional coordination, and Hondurans faced limited access to the justice of peace courts and to alternative dispute resolution mechanisms, among many other barriers to justice.

Approach

An investment credit from the International Development Association (IDA) underpinned the Judicial Branch Modernization Plan 2004-2009 as well as the development of a five-year strategic plan for the judicial sector out to 2016. IDA pursued an integrated approach, encompassing both the demand and supply sides of the justice sector, and helped complement the work of other donors who were focusing on one or the other of these dimensions, but not on both. Selecting the Judicial Branch as the single target of the operation was also a strategic decision as well as to directly support the non-criminal jurisdictions (civil, commercial, labor and family).

Results

The IDA project led to a number of positive outcomes in all three target areas. On institutional strengthening:

Average length-of-case resolution in non-criminal cases dropped to 612 days in 2011 from 1,251 days in 2004. Quality of service in targeted courts rated as satisfactory by 96 percent of users (comprising 70 percent very good and 26 percent good).
New, integrated financial management systems and planning, monitoring and evaluation systems were developed and implemented. Six human resources management processes were redesigned for both judicial and administrative staff, including classification of positions, selection of personnel, performance evaluation, and personnel audit.
Eighty-two Judges and 470 administrative staff were trained in new management models, strategic and operational planning filing systems, and total quality management (motivation, quality service to judicial users, etc.)
Additionally, 535 out of 753 of judges (71 percent), and 1467 of 1765 of staff members (83 percent) were trained in the frontier judicial topics selected by the project. Training in the new Civil Procedures Code was also provided to 81 percent of public defenders. Altogether, the project provided 61,515 hours of training to 6,708 participants.
Nine Unified Trial Courts in the Judicial Centers of Tegucigalpa and San Pedro Sula were remodeled, and the Multi-purpose Justice Services Center in Tegucigalpa refurbished, including office equipment, hardware, and software for the remodeled or refurbished offices.

On transparency and accountability:

Business and citizen users of the courts targeted by the project had better perceptions of the judicial branch as evidenced by a survey conducted in partnership with the Honduran Council of Private Enterprise, COHEP and the Tegucigalpa Chamber of Commerce and Industry in 2010. Less than 50 percent considered the judicial branch to not be fair or did not trust the institution.
Twenty-five percent of all judges were selected, retained, or promoted on the basis of transparent merit-based competition.
Forty percent of administrative staff were evaluated and classified.
Twelve information kiosks were established to provide information such as case status, how to access the judicial system, steps to present a claim, relevant laws, and court locations, providing services to approximately 200 users per day.
Thirty-six procurement processes were published in newspapers and disseminated through the judicial branch’s information kiosks in a way that could be monitored by non-governmental organizations. No complaints were received.
Twenty-one public meetings were undertaken in both urban and rural settings, with the participation of 4,911 civil society representatives

On access to justice:

Access to the courts covered by the project increased, with 40 percent of the population having contact with justices of the peace courts in the so called Poverty Corridor (against a project target of 20 percent).
Six justice of the peace courts tested a new management model in the provision of justice services located in the Honduras Poverty Corridor to improve access to rural poor, and Afro-Honduran and indigenous communities. Additionally, 233,712 vulnerable individuals received justice services from the targeted courts, an average of 58,428 a year.
Three mobile justices of peace courts were established and provided services to low-income neighborhoods in Tegucigalpa, San Pedro Sula, and Choluteca. Sixty percent of their users are women and 63 percent were illiterate or with only primary education.
The Public Defense Directorate was strengthened to provide free legal aid to 59,354 low-income adults, including at-risk youth.
Awareness-raising campaigns on domestic violence issues reached 3,938 community leaders, of whom 2,110 (54 percent) were women. Another 246 Afro-Honduran community leaders were trained in access to justice and gender awareness, and 149 indigenous peoples’ leaders received training in access to justice for indigenous women.

Bank Contribution

IDA contributed US$16.7 million to the project.

Partners

The project was financed by the World Bank and implemented by the Supreme Court of Justice of Honduras.

Moving Forward

While there will not be a direct follow-up operation financed by the World Bank, the priorities for continued judicial branch modernization are included in the government’s Judicial Sector Strategy for 2011-16. Suggestions for areas for future support are also included in the project’s Implementation Completion and Results Report.

Beneficiaries

The main beneficiaries of the institutional strengthening and access to justice components of the project were the population served by the courts in the project areas – approximately 1.94 million citizens. A total of 18 courts were targeted by the project. The beneficiaries of the transparency and accountability component were all Honduran citizens as the activities were designed to strengthen the capacity of the Supreme Court of Justice at the national level.

“The project helped to design a new Judicial Branch Strategic Plan 2011-2016, with a view to ensuring that, based on the progress made, the judicial branch will continue the process of innovation, and institutional modernization, as well as consolidating its efficiency, effectiveness and transparency, so as to deserve public confidence based on the ongoing pursuit of excellence,” said Jorge Rivera Aviles, the Chief of Justice of Honduras, at the closing of the project “The Supreme Court of Justice considers that the project laid the foundation of an internal change process of the judicial branch, aimed at increasing institutional capacity, improving the judicial management, and promoting equitable access of the public to justice services.”.

For more information, please visit the Projects website.

Project Information Document (Appraisal Stage) - Parana Multi-Sector Development Project - P126343

2012-05-10T04:00:00.000Z

Brazil - Quarterly knowledge report

2012-05-10T04:00:00.000Z

This newsletter includes the following headings: a knowledge legacy, by Makhtar Diop; Sao Paulo city study, by Kenyon, Thomas; impact of shocks and social protection: some reflections from the analysis of Brazil 2008-2009, by Anna Fruttero; turning Rio around, by Mauro Azeredo; the impact of the IOF tax on capital flows, by Fabio Bittar; early child education: making programs work for Brazil's most important generation, by David Evans and ; and in the loop: some of the quarter's noteworthy events.

Colombia - Amoya River Environmental Services

2012-05-10T04:00:00.000Z

Living without sanitary sewers in Latin America : the business of collecting fecal sludge in four Latin American cities

2012-05-10T04:00:00.000Z

The present report spotlights the major challenges and the opportunities that lie ahead in fecal sludge management and summarizes the findings from four case studies that describe the current and potential market for sludge removal, collection, and disposal in peri-urban areas. These areas, inhabited by a variety of ethnic, religious, and cultural groups, typically struggle with high population density, insufficient land use planning, high citizen insecurity, and low coverage with basic services. The report demonstrates how technical, financial, environmental, social, regulatory, political, and institutional factors interact to create supply and demand in four markets where coverage with sanitary sewerage services is below the regional average, namely: Santa Cruz (Bolivia), Guatemala City (Guatemala), Tegucigalpa (Honduras), and Managua (Nicaragua).

Nicaragua - Additional Financing for the Rural Telecommunications Project

2012-05-10T04:00:00.000Z

Main report

2012-05-10T04:00:00.000Z

The Disaster Vulnerability Reduction Project aims at measurably reducing vulnerability to natural hazards and climate change impacts in the Eastern Caribbean sub-region. This restructuring will correct the trust fund numbers associated with the Strategic Climate Fund Loan referenced in the legal agreements of the project, and effectiveness memorandum. The project was recently declared effective in October 18, 2011. There are currently no issues that will affect implementation of the project. The originally created Trust Funds, or (TF10205 and TF10207) for the Pilot Program for Climate Resilience, or PPCR concessional resources (strategic climate fund loans) will be changed to new TF numbers (TF011131 and TF011132).

Data sheet

2012-05-10T04:00:00.000Z

Haiti: 1,000 Adolescent Girls to Benefit from Vocational Training to Facilitate their Integration into the Labor Market

2012-05-09T18:53:36.000Z

PORT-AU-PRINCE, May 9, 2012 — Today the World Bank launched the Adolescent Girls Initiative (AGI) in Haiti. The Initiative is a global public-private partnership aimed at fostering economic independence among 12,000 young girls and young women in eight countries. Through the AGI in Haiti, 1,000 adolescent girls between the ages of 17 and 20 will receive non-traditional vocational training to be provided in a number of selected training centers.

The young girls will be trained in areas such as work ethics, self-confidence, and professional conduct. They will also receive a stipend to be paid via a mobile banking system to cover the cost of transport and other costs associated with participation in the training program. After the training they will be offered an internship which will be considered as the first phase of employment. The internship will take into account the needs of the partner employers involved in the initiative.

Sheyla Durandisse, Chief of Staff in the Ministry for Women’s Affairs and Women’s Rights, said: “the Haiti Adolescent Girls Initiative contains community, educational, and professional components to address the challenges young girls are facing in Haiti and thus to improve their social and economic conditions.”

The training will be carried out in poor neighborhoods in Port-au-Prince. 500 young girls will be trained in 2012 and 500 in 2013.

In Haiti, where people under the age of 30 account for roughly 70 percent of the population, adolescent girls and young women from poor homes have greater difficulties to find a first employment than boys with the same educational level. This is the case in many developing countries. The latest World Development Report indicates that investing in adolescent girls can break the poverty cycle from one generation to the next. In Argentina, for example, income increased significantly and employment rates rose by 9 to 12 percentage points for young girls participating in the Progama Joven. In Peru, the income of young girls participating in the Projoven project rose by 92 percent after 18 months of training.

“Vocational training is a key factor for the development of human capital in Haiti. It is crucial to the employment challenges and the country’s growth over the next five years and beyond,” said Alexandre V. Abrantes, the World Bank’s Special Envoy to Haiti.

The Adolescent Girls Initiative

The AGI was launched in Liberia in 2008 as part of the World Bank Group’s Gender Action Plan—Gender Equality as Smart Economics— which is aimed at helping adolescent girls make the transition to productive employment.

The US$22 million initiative is already under way in Afghanistan, Jordan, Liberia, Nepal, the Lao People’s Democratic Republic, Rwanda, and South Sudan. The Bank is working with partners including the Nike Foundation and the governments of the following countries: Afghanistan, Australia, Denmark, Jordan, Liberia, Nepal, Norway, the Lao People’s Democratic Republic, the United Kingdom, Rwanda, South Sudan, and Sweden. The World Bank is also establishing partnerships with other interested public and private sector organizations.

World Bank Assistance to Haiti

The World Bank Group committed US$479 million over the first 24 months to Haiti’s reconstruction. This support was provided through new funding, disbursements, private sector support, and debt relief.

IDA Donors have allocated US$530 million to Haiti from IDA 16’s Crisis Window for reconstruction. The Interim Strategy Note programmed half of these resources for 2012. With about 10% of pledged aid flows, IDA is one of Haiti’s 5 largest donors.

Contacts:

In Washington: Melanie Zipperer: +1 (202) 468-9841, mzipperer@worldbank.org

In Port-au-Prince: Olivier Puech: +1 (202) 549-0790, opuech@worldbank.org

For more information on the Adolescent Girls Initiative, visit the gender and development website (http://go.worldbank.org/D1PR18DHX0)

For more information on World Bank activities in Haiti, visit the website

http://www.banquemondiale.org/haiti

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World Bank Urges Governments to Think Green for Inclusive Growth

2012-05-09T10:00:00.000Z

South Korea Pledges $40 million to Promote Green Growth for All

SEOUL May 9, 2012 –The World Bank today released a report urging governments to think green when pursing growth policies, which can be inclusive, efficient, affordable and above all necessary to sustain economic expansion in years ahead.

Launched at the Global Green Growth Summit in Seoul, Inclusive Green Growth: The Pathway to Sustainable Development, lays out an analytical framework that factors atmospheric, land and marine system limitations into plans for economic growth needed to further reduce poverty. The report debunks the myth that a green growth approach is a luxury most countries cannot afford – pointing instead to political barriers, entrenched behaviors and a lack of appropriate financing instruments as the chief obstacles.

“Truly remarkable gains have been made in health and social welfare since the 1992 Earth Summit in Rio de Janeiro, Brazil, yet too often progress has resulted in environmental degradation and resource depletion,” said Rachel Kyte, World Bank Vice President for Sustainable Development. “Decisions made today will commit countries to growth patterns that may or may not be sustainable in the future. Great care must be taken to ensure that cities and roads, factories and farms are designed and regulated in a way that raises standards of living while efficiently harnessing natural, human and financial capital.”

The report challenges governments to change their approach to growth policies, better measuring not only what is being produced, but what is being used up and polluted in the process. It asserts that assigning value to farmland, minerals, rivers, oceans, forests and biodiversity, and awarding property rights, will offer governments, industry and individuals sufficient incentive to manage them in an efficient, inclusive and sustainable manner. The World Bank strongly supports incorporating natural capital into national accounts and will be seeking country commitments at the United Nations Rio+20 Summit in Brazil next month.

The Government of Korea pledged $40 million to strengthen and expand the Bank Group's global green growth portfolio by tapping into and leveraging Korea's successful experience.

“We are delighted to partner with the World Bank Group and to share Korea’s experiences and expertise since making green growth our national strategy in 2008,” said Jaewan Bahk, Minister of Strategy and Finance. “The transition to green growth paths is not easy. Sharing know how and capacity is imperative if developing countries are to leapfrog inefficient and outdated growth and production patterns.”

At a high-level event held on the sidelines of the World Bank/International Monetary Fund Spring Meetings, other finance ministers expressed growing support for the concept of inclusive green growth.

The new World Bank Inclusive Green Growth report emphasizes five main points:

Greening growth is necessary, efficient and affordable – it is critical to achieving sustainable development.
Political barriers, entrenched behaviors and norms, and a lack of financing instruments are the chief obstacles to greening growth. Green growth must focus on the policies and investments that need to be made within the next 5-10 years – to avoid getting locked into unsustainable paths, damaging policy reversals and costly public health consequences.
Progress requires multi-disciplinary solutions, blending economics, political science, and social psychology – to tackle political economy constraints, overcome deeply entrenched behaviours and social norms and develop the needed financing tools.
Green growth is neither monolithic nor static – strategies will vary across countries, reflecting local contexts, preferences and resource bases. All countries, rich and poor, have opportunities to green their growth without slowing it.
Green growth is not inherently inclusive, but can be designed to be so. While better environmental performance will generally benefit the poorest and most vulnerable, green growth policies must be carefully designed to maximize benefits and minimize costs for them, particularly during the transition.

“There is a frequent misconception that poor countries cannot stimulate growth without degrading the environment and burning the cheapest and dirtiest sources of energy: coal, biomass and at times oil and gas,” said Kandeh Yumkella, Director General, United Nations Industrial Development Organization. “This simply isn’t true. Developing countries won’t replicate growth patterns of previous centuries, nor should they try. They need to grow smarter, greener and quicker. The natural environment, minerals and raw materials are the principal sources of capital in poor countries, and therefore must be rigorously protected while being responsibly harnessed.”

“This report makes a compelling case that boosting economic growth and improving social and environmental welfare are neither mutually exclusive nor cost-prohibitive,” Yumkella added. “Developing countries must overcome policy obstacles and institute investment incentives now as they make infrastructure and production decisions that will carry consequences for generations.”

An overview and the complete report can be found at www.worldbank.org/inclusivegreengrowth.

For more information please contact:

In Seoul: Fionna Douglas, +1 202.375.3172, fdouglas@worldbank.org

In Washington: Robert Bisset, +1 202.458.5191, rbisset@worldbank.org

In London: Derek Warren + 44 207 592 8402, dwarren@worldbank.org

For Broadcast Requests: Natalia Cieslik, +1 202. 458.9369, ncieslik@worldbank.org

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Improving Competitiveness Across Sectors in Honduras

2012-05-08T20:36:28.000Z

Overview

The project is responsible for advancing various reforms that have improved the Honduras business climate and competitiveness and directly benefitted over 1,400 micro, small, and medium enterprises (MSMEs).

More Results

1,400

micro, small, and medium enterprises (MSMEs) were directly benefitted

200%

increase in sales by 2010

US$34.3 million

was the total cost of the project

Learn More

World Bank (2003-2010) Enhancing Competitiveness: Trade Facilitation and Productivity Project

Challenge

In 2003, Honduras had a gross national product (GNP) per capita of US$860, a high incidence of poverty, and poor social indicators. Economic growth had been low and variable for over 30 years, and between 1997 and 2000, gross domestic product per capita (GDP) contracted 1.6 percent, largely due to the effects of Hurricane Mitch. The overriding challenge for reducing the country’s poverty and inequality rates in the long-term was to break the cycle of low and narrowly-based economic growth. Achievement of sustainable and equitable growth required not only macroeconomic stability but also an approach that addressed productivity constraints – such as low private investment.

Approach

The World Bank employed a cross-sector approach that addressed a broad range of obstacles to private sector development, from burdensome business registration procedures to lack of adequate training options to inefficient logistics. The project was designed specifically to advance the Central America Free Trade Agreement’s complementary agenda. More specifically, project activities aimed to respond to identified weaknesses that might prevent Honduras from taking full advantage of the new trade agreement. The Bank relied on a multifaceted design, reflecting expectations that it would address a wide variety of issues. Examples of activities included, among others, establishment and strengthening of a competition commission and a consumer protection directorate, the implementation of one-stop-shops to facilitate business registration, the establishment of a technology innovation center for crafts and tourism, provision of matching grants to firms to obtain international certifications, and the strengthening of public and private training institutes.

Results

The “Enhancing Competitiveness” project had several important results, including:

In the first year after the first reforms, business registrations jumped 60 percent from 4,201 to 6,705 firms in 2006 following the establishment of business portals in Tegucigalpa and San Pedro Sula.
By providing Puerto Cortes with new equipment and technical assistance, the port was able to obtain international certification from the International Maritime Organization. The certification helped the port become a reliable and secure international trading hub, with cargo managed by the port climbing from 7 million tons of cargo in 2004 to 8 million tons in 2009.
Sector-specific Foreign Direct Investment campaigns led to 33 new investments, US$60 million in new foreign investment, and 5,815 new jobs by 2009.
The establishment of national quality institutions – the Office of Accreditation, the Honduran Metrology Center, and the Honduran Standards Organization – resulted in the accreditation of 11 laboratories, 2,000 equipment calibrations, and the publication of 69 standards.
Matching grants helped 110 firms (including 87 MSMEs) obtain quality certifications, creating a multiplier effect that saw 324 firms with certification in 2010, compared with only 25 in 2004.
Training activities for 394 SMEs in the bean, coffee, and shrimp sectors led to a 150 percent increase in productivity, and a 200 percent increase in sales by 2010.
Training provided to 150 small producers of mango and oriental vegetables resulted in a 30 percent increase (or higher) in income, and mango producers became first-time exporters by 2009.

Bank Contribution

The total cost of the project was US$34.3 million. The Bank contributed US$28.8 million through a loan from the International Development Association (IDA). The Government of Honduras contributed US$5.5 million.

Partners

The project implementation agency, the Foundation for Investment and Exports (Fundación de Inversión y Exportaciones - FIDE), was the Bank’s main counterpart and principally responsible for most of the project’s impacts. The project benefitted from strategic relationships with several partners, such as the Ministry of Finance, the Ministry of Natural Resources and the Environment, the National Quality Council, the Commission for the Defense and Protection of Competition, the Consumer Protection Directorate, the National Port Protection Commission, and municipal governments. Other project partners included the Multilateral Investment Guarantee Agency, International Finance Corporation, the Honduran Council on Private Enterprise, and private training institutions.

Moving Forward

The vast majority of reforms and impacts from project activities will continue after the close of the project. In some cases, the government has already taken ownership of project activities, such as the reforms in the competition and consumer protection agencies. In other cases, the private beneficiaries, such as matching grant recipients or local competitiveness participants, are leveraging the project’s investments to continue to improve their businesses or to obtain other financing.

Beneficiaries

The beneficiaries for the project were three broad groups. The first was the private sector in general that benefitted from reduced costs of doing business, improved technology and skills, and increased export opportunities. The second group was more specifically MSMEs and firms operating in high-growth potential sectors (maquila, tourism, forestry, and agricultural industries). The third group was selected government institutions, such as the National Quality Council. Beneficiaries also included lower-income segments of the population, particularly with the local competitiveness activities that targeted and assisted small producers in vegetables, shrimp, cashews, and mangos. Also, artisans that benefitted from the technology innovation center for crafts and tourism were primarily lower-income indigenous women.

For more information, please visit the Projects website.

Reducing Financial Vulnerability to Natural Disasters – The Caribbean Experience

2012-05-08T20:30:20.000Z

Overview

A series of World Bank projects helped create the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and also fund the initial membership of several countries from the region. The facility ensures these countries have rapid access to emergency financing after severe weather events, and several have already done so. Haiti, Dominica, St. Lucia, and St. Vincent and the Grenadines suffered earthquakes or hurricanes sufficient to trigger payouts totaling US$13 million. These rapid cash infusions reduced each government’s financial vulnerability to the disasters, helping them to make ends meet while waiting for larger-scale financing.

More Results

US$7.8 million

payout after the devastating January 2010 earthquake to Haiti

100%

of the countries’ membership fee and premiums for the first two years were paid by IDA funds

Learn More

Project Details:
Haiti Catastrophe Insurance Project (P104690)
Four Catastrophe Insurance Projects for the Organization of Eastern Caribbean States (P094539)

The CCRIF website

Challenge

In 2004, Hurricane Ivan inflicted losses on Grenada estimated at 200 percent of its gross domestic product (GDP). The government’s fiscal revenues plummeted. It was financially unable even to keep civil servants at work to mount immediate relief efforts to address the human dimensions of the tragedy.

Latin American and Caribbean countries are among the most exposed to natural disasters in the world. The Caribbean states have particularly limited capacity to respond as their domestic revenue bases are small and they lack timely and affordable access to external finance, including insurance. Without financial instruments to enable the governments to buffer the impact of natural disasters, the social and economic gains from years of development can be quickly wiped out, particularly for the poor.

For these reasons, after Hurricane Ivan, the Caribbean Community (CARICOM) asked the World Bank to help develop a mechanism to reduce its members’ financial vulnerability to future hurricanes and earthquakes.

Approach

The Bank’s disaster risk management experts worked closely with external risk management specialists to design and establish the Caribbean Catastrophe Risk Insurance Facility (CCRIF). Aggregating individual country risk into a diversified portfolio, CCRIF can offer members hurricane and earthquake insurance at a price 45-50 percent lower than what they might be able to obtain directly from insurance markets. Claims payment follows the occurrence of a pre-defined event (e.g., wind speed or ground motion of a certain magnitude) rather than an assessment of actual losses after the fact. This enables CCRIF to make a rapid payout to the insured government (so far, within three weeks) to help meet its immediate financial needs. Financial risk transfer must be complemented by policy reforms and physical investments to strengthen the disaster resilience of public and private assets. The Bank also provides technical and financial assistance to Haiti and OECS countries on these matters.

Results

The Bank’s development objective was to reduce the countries’ financial vulnerability to natural disasters, and success was measured by claims-paying capacity of the fund, as well as its actual support for member countries:

IDA funding enabled the beneficiary countries to join CCRIF and purchase financial protection against catastrophic hurricane and earthquake events. As a result, IDA funding also contributed to the diversification of CCRIF’s risk portfolio, its premium income, the growth of its claims paying capacity, and its ability to offer affordably-priced insurance to its members. The beneficiary countries have continued to purchase insurance after their IDA funding was exhausted.
Dominica and St. Lucia received payouts of US$528,000 and US$419,000, respectively, after a November 2007 earthquake.
Haiti received a US$7.8 million payout after the devastating January 2010 earthquake.
St. Lucia and St. Vincent and the Grenadines received payouts of US$3.2 million and US$1.1 million, respectively, following Hurricane Tomas in October 2010.
CCRIF’s claims-paying capacity is robust. With its 2010-2011 reinsurance, CCRIF will remain financially viable even after paying claims resulting from a highly unusual series of events – claims that would far exceed its modeled average annual loss – without needing recapitalization in order to continue operations.

Bank Contribution

IDA funds paid for 100 percent of the countries’ membership fee and premiums for the first two years, broken down as follows: Haiti US$9.0 million; Dominica US$4.5 million; Grenada US$4.5 million; St. Lucia US$4.5 million, and: St. Vincent and the Grenadines US$700,000. The World Bank projects covered 50 percent of the countries’ premiums for the third year and, for Dominica and St. Lucia, also for the fourth.

Partners

Grant funding from the Government of Japan and support from the Jamaican Social Investment Fund supported preparation of the projects. Grant contributions to a multi-donor trust fund from the governments of Bermuda, Canada, France, Ireland, and the United Kingdom, as well as from the European Union, the Caribbean Development Bank, and the IBRD played an essential role by financing certain of CCRIF’s administrative, reinsurance, and research and development costs during its first four years of operations (2007-2011). This permitted CCRIF to build its reserves and risk-bearing capacity quickly and, as it did so, to progressively lower the cost of its products.

Moving Forward

The Bank continued to supervise CCRIF until the multi-donor trust fund closed in January 2012. CCRIF is expected to be able to sustain its operations. As described above, its risk-bearing capacity is strong, comparing favorably with other natural disaster insurance providers, such as the California State Earthquake Authority. As the first multi-country natural disaster risk pool and parametric insurance facility in the world, CCRIF is being closely studied by governments with a view to replicating it in other regions of the world.

Beneficiaries

Direct beneficiaries are the insured governments and people of the CCRIF member countries as they rely on governments which are well positioned to provide services in the aftermaths of emergencies. Government’s financial capacity to begin the recovery process is strengthened by the payout which becomes part of their general fiscal revenues. The poor are important indirect beneficiaries. They are disproportionally affected by natural disasters and are most dependent upon Government relief and recovery operations.

For more information, please visit the Projects website.

Fiscal and Institutional Development and Protecting the Poor

2012-05-08T19:56:43.000Z

Overview

A series of loans from the International Bank for Reconstruction and Development supported Guatemala's development agenda. Through stronger fiscal and institutional management – and a better performing social safety net – the Bank project helped improve governance and encouraged families to keep their children in school and attend regular health checks. Project results include tax modernization measures that generated extra revenues in a period of fiscal crisis, increased access to public information which was formalized across most central government agencies, and an improved business environment.

More Results

900,000

families were reached by the program

100%

of beneficiaries are sending their children to school and attending required health check-ups

Learn More

Project Details:
Programmatic Fiscal and Institutional Development Policy Loan Series to Guatemala.
Signature date:
First DPL: March 6, 2009; Second DPL: December 7, 2009.
Closing date:
First DPL: December 31, 2009; Second DPL: December 31, 2010.

Project documents:

Other links:

Challenge

Since the signing of the 1996 Peace Accords, the country has made headway in addressing social needs and building democratic institutions. Nevertheless, serious challenges remained. The series of Programmatic Fiscal and Institutional Development Policy Loans was initiated in 2008 during a period of political transition, but also at a time of great economic uncertainty with the emergence of the global financial crisis and subsequent slow-down in growth. Despite considerable progress across the policy spectrum and positive real per capita growth rates, institutional and development outcomes in Guatemala signaled the need for further reform. In 2008, the new Colom administration's program stressed reducing poverty and inequality. The fundamental challenges for policy makers were to maintain macroeconomic stability, foster growth and create the needed fiscal space to accelerate poverty reduction, but in an environment of increased transparency and stronger institutions.

Approach

The Programmatic Fiscal and Institutional Development Policy Loan Series is aligned with Guatemala's Country Partnership Strategy and the government's four-pronged development strategy. The first loan was signed on March 6, 2009, and a second on December 7, 2009. The loan series focused financial and technical support around four key areas: Macroeconomic stability and financial sector deepening; Governance and transparency; the Mi Familia Progresa Conditional Cash Transfer (CCT) Program; and Sustainable growth and productivity. The policy measures to address key development challenges include fiscal and tax administration reforms to raise tax revenues above their low base, extending banking supervision, and creating a moveable assets registry to improve credit to firms that lack fixed capital. With respect to governance and transparency, measures were taken to increase scrutiny and control over public trust funds and strengthen public financial management and procurement systems for central and local governments. These steps included creating institutional structures to promote public accountability and reduce corruption, and passage and implementation of an Access to Public Information Law. The rapid roll-out of Mi Familia Progresa had raised questions of targeting and compliance with eligibility criteria, and so, to enhance the program's poverty reducing impact, the IBRD loan program supported the introduction of proxy means testing to identify eligible beneficiaries, and improved procedures for verifying beneficiaries' co-responsibilities (i.e., confirming school and health check attendance). Sustained growth and productivity gains also require a conducive business environment, and the project supported measures focused on accelerating customs clearance and reducing tax reporting requirements through more efficient electronic processes.

Results

Fiscal modernization efforts to improve the tax administration system resulted in mandatory electronic submission of business withholding taxes, which improved both accuracy and efficiency. According to the Superintendencia de Administración Tributaria, the combined impact of these measures added about US$12 million to fiscal revenues in 2010. The implementation of the transitional gross revenues tax helped the Government to meet the targeted tax revenue outcome indicator for 2010.

With respect to promoting financial sector stability and deepening, consolidated supervision has been implemented in nine of the 11 financial companies operating in Guatemala, and all four key profiles for risk-based supervision have been completed and applied to all financial groups. Early evidence suggests that the registry of movable assets increased the amount of credit in the economy, such that the share of credit guaranteed by movable collateral reached 4 percent of total credit as of December 2010.

The adoption of the Access to Public Information Law, which empowers citizens to hold the government accountable for its use of public resources, led to the creation of specialized public information offices in 85 percent of central government agencies.

Targeting and transparency of the Mi Familia Progresa program have improved greatly. The program was extended into more than 270 municipalities to reach over 900,000 families in a very short period of time. The program’s simple design and likely modest leakages (due to very high poverty rates in rural areas) mitigates concerns about the program’s execution. The government confirmed that, through a large verification network of local representatives, 100 percent of beneficiaries are sending their children to school and attending required health check-ups; this result is double the 50 percent verification rate targeted in the outcome indicator.

The share of firms submitting tax declarations electronically has risen from 34 percent in 2007 to 42 percent in 2010, reducing the amount of time required to make tax declarations and at the same time improving accuracy. Exporting and importing firms’ productivity has also been stimulated by the new Customs Management System SAQB’E implemented in 15 ports (out of 18 in total). By digitizing customs clearance documentation, clearance times for imports fell from 19 to 17 days and from 18 to 17 days for exports (according to World Bank Doing Business Indicators).

Bank Contribution

Under the Country Partnership Strategy, IBRD afforded Guatemala a borrowing window worth US$970 million for the fiscal years 2009-2011, of which US$500 million was designated for this programmatic loan series (subsequently increased to US$550 million). This series of loans was prepared in close consultation with the government and stakeholders, such as civil society groups and international donors. The policy measures were identified on the basis of extensive analytical work including: the Guatemala Poverty Assessment (2008), Investment Climate Assessment (2008), Country Economic Memorandum (2005), Public Expenditure Review (2007), Financial Sector Assessment Program Update (2007) and the Country Fiduciary Assessment (2007)

Moving Forward

The Bank will continue to support Guatemala’s reform program. The forthcoming Public Expenditure Review will be a useful tool to help the government further deepen and institutionalize public financial management reform, tax reform, and the effectiveness of social spending, particularly through the CCT program. With respect to the latter, disseminating Bank and other donor-prepared evaluations of Mi Familia Progresa in terms of its costs and benefits could provide the impetus for improving the program (e.g., through better targeting), generating broad political support and securing adequate dedicated public resources to finance it in the future.

Beneficiaries

Petrona Díaz Sicay, a mother of four, lives with her family in an adobe house in Barrio Chutinamit, San Antonio Palopo, Sololá. Overlooking gorgeous views of the Atitlan Lake, San Antonio Palopo is one of the poorest municipalities in Guatemala, with four out of 10 people living in extreme poverty. Petrona is a beneficiary of the CCT program Mi Familia Progresa, receiving 300 quetzales a month (US$38.40 dollars). “I am grateful for this support", says Petrona. "Our children are studying and we are sending them to school. I use this money to buy products that are needed in the house. I buy maize, beans, noodles, incaparina and oatmeal. I am also grateful because we are getting help at the health post; I take my kids there to check on their health.”

Maria Xol Lopez and her five children used to live in a one-room house in San Bartolome Jocotenango, Quiche. A bed, the kitchen, and a table occupied the small space. The smoke from the firewood used by Maria for cooking made her children ill. However, with the first payments of Mi Familia Progresa, Maria was able to save enough to lay cement beside her adobe house and build a new room, where the children now do their homework and sleep, away from the fumes. Maria does not let her children miss school and, with the cash transfers from Mi Familia Progresa, she is saving to buy a new mattress for her children’s bed.

For more information, please visit the Projects website.

The project Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan has changed to Closed

2012-05-05T04:00:00.000Z

The project Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan has changed to Closed. To see more information, see the project information in the World Bank project database

The objective of the Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan Project for Brazil is to strengthen public policies that expand economic opportunities and enhance equity of access to quality services for the people of Pernambuco. The proposed operation will support critical reforms towards more inclusive development and growth under three broad policy areas: (i) improving the quality of life for Pernambucanos by contributing to improvements in the quality of education, particularly at the secondary level, increased water security and reliability of water supply, and improvements in disaster and risk management; (ii) expanding economic and social opportunities for Pernambucanos through the development of human capital for the local job market, greater gender equity, and support for the integration of micro, small and medium size enterprises and rural producers into local supply chains; and (iii) increasing public administration capacity for generating results by improving tax administration, planning and budgeting, and the institutionalization of the state's management model.

Innovative Surveys Offer Precise, Timely View of Poverty

2012-05-03T15:30:00.000Z

Traditional household surveys used to measure poverty are time-consuming and costly
Infrequent surveys make it difficult to target the poor in a timely and effective manner
Economists are developing ways to collect or predict poverty data in real time

WASHINGTON, May 4, 2012 – Measuring poverty in the developing world is no easy task, as the perennial debate over the World Bank’s release of poverty statistics can attest.

One challenge is the lag in household data. The most recent and comprehensive global poverty statistics end in 2008, which was four years ago and before the financial crisis shook the world economy.

There is a reason for such delays: Many countries lack the resources or capacity to conduct and publish results of surveys – the collection of data the World Bank depends on to compile poverty statistics.

This, in turn, means that governments and their partners may not be able to target responses to food or economic crises where the help is most needed.

Enter high-frequency surveys, a new and emerging breed of income and consumption surveys that use economic modeling or wireless technology to capture the poverty picture in real time.

“High-frequency data is doing to economics what genetics did to medicine,” said Marcelo Guigale, the World Bank’s director of economic policy and policy reduction programs in Africa. “We always had economics before which allowed us to do policy and try to solve people’s problems, but with high-frequency data we’re able to do things we couldn't do before. Watch video.

Mobile Phone Surveys Give Instant Answers

In 2009, as the global financial crisis took hold, phones started ringing at the World Bank in Washington. Government officials were calling to ask how the economic downturn was affecting the poor in their countries, and how they could best respond.

Amparo Ballivian, a lead economist focusing on the Latin American and Caribbean region, and her team were asked by their director to come up with some answers.

“We had to tell him the truth: We didn’t have any data,” Ballivian recalled.

A discussion began in her group about how to get data more frequently, Ballivian said, so they would “be able to answer similar requests in the future when we have similar crises.”

We always had economics before which allowed us to do policy and try to solve people’s problems, but with high-frequency data we’re able to do things we couldn't do before.

The idea was hatched to distribute mobile phones that surveyors could call or text on a regular basis to ask questions, 10 during each interview, about employment, violence, hunger, illness and access to social services. Cell phone coverage in Latin America is almost ubiquitous, which made the region a promising experimental ground.

After initial on-the-ground tests in Nicaragua and Peru in 2010, Ballivian’s team contracted with the Gallup organization to conduct a six-month pilot study in Peru and Honduras that began in October 2011 and January 2012, respectively. Brightstar, a distributor for the wireless phone industry, donated 1,000 phones that were given to families that needed a phone to participate.

Gallup is running monthly surveys of 1,500 households and so far, the project has yielded some interesting findings.

While incentives such as free airtime appear to boost public interest in the mobile phone surveys, for example, the level of incentive (more versus less free airtime) has not. Participation can also vary significantly from one country to the next.
Results from the survey will be analyzed during summer 2012.

The plan is to scale up the mobile survey project to additional countries in Latin America and the Caribbean later in the year. Watch video.

Mobile phone surveys will never replace comprehensive household surveys, but they can offer valuable information about what's happening at that moment in people's lives. How many meals did they have today? Has anybody in the family been sick. Were the kids able to attend school in the last week?

There is a definite need for new and inexpensive technology and methodology - especially in countries with significant poor populations, said Jaime Saavedra, director of the World Bank's Poverty Reduction & Equity group. While a typical Latin American country conducted eight annual household surveys in the past decade, he noted, African countries managed two.

An alternative to mobile phones: New methods for estimating poverty

As the push grows to get more timely information about human conditions, World Bank teams are also developing a new methodology to help them estimate consumption levels for years when no regular household surveys are conducted. The model, which uses complex formulas to predict data, is adjusted each time a new household survey is conducted to make sure the margin of error remains acceptable. Watch video.

This high-frequency, or “proxy,” survey methodology was tested in Bangladesh in 2011. The country was chosen for the project because it conducts regular household surveys only every five years, and because the World Bank economist spearheading the methodology, Nobuo Yoshida, already had a good working relationship with officials in Bangladesh.

Yoshida said he’s comfortable with the results from the Bangladesh pilot project, and that he will share them with government officials in Dhaka in June. If the meeting goes well, the the government of Bangladesh will incorporate the new methodology in its National Strategy of Developing Statistics, making it part of its regular country monitoring process.

“Our method may not be perfect, but there are other methods out there that also have shortcomings, including the fact that they are more expensive and time-consuming,” Yoshida said. “We’re using existing data so in that sense, this is very cost-effective.”

Yoshida’s hope is that the proxy survey methodology, as well as surveys using mobile phones and other innovative technology, will benefit nations as they seek to measure poverty in a timely manner. The ultimate goal for poverty economists such as Giugale, Ballivian and Yoshida is to help governments improve human conditions for their citizens in a world where nearly 1.3 billion people still live in desperate poverty.

The project Rio Grande do Sul SWAp has changed to Active

2012-05-03T04:00:00.000Z

The project Rio Grande do Sul SWAp has changed to Active. To see more information, see the project information in the World Bank project database

The objective of the Sector Wide Approach (SWAp) to Strengthen Public Investment Project is to support and improve the planning and implementation of public investments by strengthening the capacity of the Borrower's planning agency and selected sector secretariats of the Borrower. There are four components to the project, the first component being transport. This component will support state paved highway rehabilitation and maintenance and Autonomous Department of Highways (DAER) modernization. The project will finance the implementation of Maintenance and Repair Contracts (CREMA) on up to 1,600 km of the state highway network considered a priority for economic growth and regional integration. The second component is the education. This component will support technological modernization, school construction and refurbishment and a participatory evaluation of the state education system. The third component is the private sector development. This component will support economic cluster programs, industrial extension services and the expansion of science parks and innovation networks. Finally, the fourth component is the public sector management. This component will support the development of systems for managing and disposing of public real and non-real estate assets (US$ 9.2 million).

The project Bolivia Climate Resilience - Integrated Basin Management is now in the pipeline.

2012-05-01T04:00:00.000Z

The project Bolivia Climate Resilience - Integrated Basin Management is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Ensuring Health Nutrition and Social Services for the Vulnerable is now in the pipeline.

2012-04-28T04:00:00.000Z

The project Ensuring Health Nutrition and Social Services for the Vulnerable is now in the pipeline. To see more information, see the project information in the World Bank project database

Global Partners Confront Impacts of Climate Extremes on Development

2012-04-27T14:38:48.000Z

Joint action needed to link disaster risk management, climate adaptation

WASHINGTON, April 27, 2012—On the heels of a sobering UN report on dramatic climate extremes expected to occur around the world, officials from donor and developing countries, along with international organizations have reaffirmed their commitments to making disaster resilience a priority in development planning. The officials, meeting during the World Bank/IMF Spring Meetings, also recognized that linking disaster risk reduction and climate change adaptation, and integrating them into the development agenda, is critical to building resilience in communities and countries.

Mahmoud Mohieldin, World Bank Managing Director, said, "We have too often witnessed how disasters can roll back years of development progress. On top of that, we now need to prepare for a changing world—rapid urbanization and a changing climate are reshaping and exacerbating disaster risks. But geography need not be destiny, and the future—however uncertain and unpredictable when we factor in the impact of climate change—need not be feared if correct preventive policies are taken today.”

Convened by the European Union, the Government of Japan, and the World Bank/GFDRR (Global Facility for Disaster Reduction and Recovery), the meeting was informed by last month’s report from the UN Intergovernmental Panel on Climate Change (IPCC)—Special Report on Managing the Risk of Extreme Events and Disasters to Advance Climate Change Adaptation. The report documents that current extreme weather events are projected to become more common in the future, and a changing climate is the cause.

According to Christopher Field, Co-Chair of the IPCC Working Group ll, “The risk profiles are changing—several kinds of climate and weather extremes are increasing and are projected to increase in the future. In the second half of the century, we are looking at a ten-fold increase in the frequency of severe heat events. The most extreme heat waves that we currently experience only once a decade will become annual events.”

The report warns that extreme events will have greater impacts on sectors with closer links to climate, such as water, agriculture and food security, forestry, health, and tourism. Dr. Field pointed out that many places are already seeing increases in extremes in heavy precipitation and in the length and severity of droughts. The people most impacted are those most vulnerable in the developing world—in 2010, the Pakistan floods alone left six million people homeless.

Floods are the most frequent of natural disasters. Unprecedented―and often unregulated and unplanned―urbanization in the developing world, a large part of which is in fertile floodplains and/or coastal regions, is a key cause of increased exposure to flooding. Globally, it is projected that 600 million people will occupy coastal floodplain land below flood level by 2100.

The key message from the IPCC report is the need for climate change adaptation, disaster risk management, and sustainable development to be integrated in order to help build resilience. But the numbers tell us that we’re not there yet. The world is still spending more on humanitarian aid after a disaster than on prevention before it. According to Andris Piebalgs, Commissioner for Development, European Union, global disaster losses amounted to US$264 billion in 2011. That was twice the level of official development aid that year. The participants in the Resilience Dialogue talked about how they would meet that challenge―through coordination, bridging humanitarian and development efforts, integrated approaches, and by working together to turn the reaction versus prevention paradigm on its head.

Naoko Ishii, Deputy Vice Minister of Finance for International Affairs, Japan, also announced that the next high level meeting of the officials will be held during the October 2012 IMF-World Bank Annual Meetings. The meeting will be held in Sendai, a city in Tohoku prefecture that bore the brunt of the 2011 tsunami. The objective will be to develop a global consensus among the international community to advance the mainstreaming of disaster risk reduction and climate change adaptation as a development priority.

On Working Together and Next Steps

Armida Alisjahbana

Minister of National Development Planning, Indonesia

“Indonesia faces more than 100 disasters a year. In 2004, the Tsunami cost about 45 percent of Aceh’s regional economy. We have tried since to prepare for disasters in a more systematic way—early warning systems in disaster-prone areas, more coordinated efforts, money in our budget to anticipate disasters, a five-year blueprint to prepare for disasters. The key to make coordination work, the key thing is to have a single institution dealing with these issues. We don’t have institutions duplicating work.”

Valerie Amos

United Nations Under-Secretary General for Humanitarian Affairs and Emergency Relief Coordinator

"We have learned lessons from the Horn of Africa and we've heeded early warning signs―and have moved much more quickly to respond in the Sahel. We're bridging development and humanitarian efforts to build resilience and support governments in the region in their response to this."

Helen Clark

Administrator, United Nations Development Programme

“Without a basic level of resilience, you can't hang on to the gains you've made when adversity and shocks come along. Dialogue about resilience has come light years. With everyone reflecting on the cost of major disasters, the message is very clear: Don’t wait for the next one—we know that at some time there will be another earthquake, another tsunami, a cyclone, a drought, so what can we do as development partners? Resilience must be at the very heart of our development activities. Active, effective, honest, fair and responsive and representative governance promotes resilience, in every country. As the recent financial crisis showed, not all developed countries have retained systemic resilience to economic shocks. Unless developed countries are prepared to see years of human development and progress wiped away when adversity strikes, their systemic resilience to shocks is critical as well.”

Naoko Ishii

Deputy Vice Minister of Finance for International Affairs, Japan

“The very timely IPCC Report makes clear that disaster risk management and climate change adaptation measures are essentially two sides of the same coin. These measures need to be incorporated across various sectors as a key component of development policy. In doing so, a multi-layered approach is necessary to avoid relying on just one measure. Maintaining infrastructure and cutting-edge technology is not sufficient in itself. In order to empower individuals to act when they face natural disasters, hard infrastructure needs to be complemented by disaster education, risk communication, evacuation training, and other measures. Japan has been a steadfast champion of the disaster risk management agenda. The Great East Japan Earthquake of last year has only made Japan reaffirm its increased commitment to help reduce disaster risk throughout the world.”

Rachel Kyte

Vice President, Sustainable Development, World Bank

“Over the last three years, two-thirds of our country assistance strategies have started to build in disaster risk management. The aim is to get to 100 percent. We have to change the way we think about infrastructure, agriculture, transportation, water, energy, how communities become resilient, what kind of information we share. We have to help people make infrastructure decisions that will prove resilient far into the future. But we know too that we are in an “adaptation” institution. Climate change adaptation has to be integrated in all we do.

Dario Luna

Head of Unit, Insurance, Pensions and Social Security, Ministry of Finance, Mexico

“We in Mexico give a lot of importance to disaster risk management because we are a country that is prone to disasters. As presidency of the G20, we wanted to put this topic on the agenda―emphasizing the reduction of both human and economic costs. One of the key aspects of our changing world is the increased exposure to natural disasters. We believe that this effort will help disaster risk management gain more prominence in G20 countries and with finance ministers.”

Andrew Mitchell

Secretary of State for International Development, United Kingdom and Co-chair of the Political Champions Group for Resilience

“I hope our Political Champions Group will be a good servant of the international efforts engaged in these issues. In addition, by 2015, DFID will imbed resilience in all of our work. We particularly want to harness the role of the private sector for insurance.”

Mahmoud Mohieldin

Managing Director, World Bank

“There is much we can do together to build resilience in communities and nations. We can—and should—build international consensus and country ownership to continue investing in measuring risk and informing decision making for increased resilience. We can—and should—complete work on a globally accepted metric to assess urban disaster risk that could be applied to cities around the world. Such a metric will let us analyze cities according to their level of risk, and define a baseline against which to measure progress towards building greater resilience; and we can—and should—continue the dialogue on how to better measure our progress towards building greater resilience.”

Andris Piebalgs

Commissioner for Development, European Union

“The EU is deeply involved in putting its resilience commitments into practice on a number of fronts. We are coordinating, planning and programming among humanitarian and development actors to deliver common analyses and joint definition of priorities (as in the Horn of Africa and Sahel); we are developing new, more flexible EU financial instruments; we are increasing our focus on resilience and capacity-building at the central and community level; and we are allocating more to prevention preparedness and resilience in humanitarian aid and development budgets, while also advocating the inclusion of disaster risk reduction on government agendas.”

Rajiv Shah

Administrator, United States Agency for International Development

“The question we should ask ourselves is what is happening in the most vulnerable areas on the ground? It is clear we are not doing enough. We have to reverse the way things work now—we are still spending more on humanitarian aid than prevention. That has to reverse. Since 2002, the U.S. spent $11.2 billion on humanitarian aid in the Horn of Africa―chasing the problem after the fact. We want to reverse that, put it into prevention. We need to reverse the equation from reaction to prevention and make sure that whatever we do drives results.”

About the Global Facility for Disaster Reduction and Recovery (GFDRR)

Established in 2006, the Global Facility for Disaster Reduction and Recovery (GFDRR) is a partnership of 41 countries and eight international organizations committed to helping developing countries reduce their vulnerability to natural hazards and adapt to climate change. The partnership’s mission is to mainstream disaster risk reduction and climate change adaptation in country development strategies by supporting a country-led and managed implementation of the Hyogo Framework for Action. www.gfdrr.org

Contacts:

In Washington: Anita Gordon, (202) 473-1799, (c) (202) 436-4791, agordon@worldbank.org;

Roger Morier, (202) 473-5675, (c) (202) 369-1852, rmorier@worldbank.org;

For Broadcast Requests: Natalia Cieslik, (202) 458-9369, ncieslik@worldbank.org

For more information, please visit: www.gfdrr.org

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Food Prices Rise Again on Higher Oil Prices and Adverse Weather

2012-04-25T14:00:00.000Z

Increases reverse downward trend that began in October 2011

WASHINGTON, April 25, 2012—Global food prices increased by 8 percent from December 2011 to March 2012 due to higher oil prices, adverse weather conditions, and Asia’s strong demand for food imports, according to the World Bank Group’s latest Food Price Watch.

The World Bank’s Global Food Price Index was only 1 percent below a year ago and 6 percent below the February 2011 historic peak. If the current forecasts for increased food production do not materialize, global food prices could reach higher levels, underscoring the need to remain very vigilant.

“After four months of consecutive price declines, food prices are on the rise again threatening the food security of millions of people,” said Otaviano Canuto, World Bank Vice President for Poverty Reduction and Economic Management (PREM). “Putting food first must remain a priority for the international community and in our work in developing countries.”

According to the quarterly Food Price Watch report, prices of all key staples increased between last December and March of this year, except for rice, due to both abundant supply and strong competition among exporters. Maize prices increased by 9 percent, soybean oil by 7 percent, wheat by 6 percent, and sugar by 5 percent. Crude oil prices rose by 13 percent.

In addition, domestic food prices remain high, especially in Africa as the result of a combination of large food imports and local factors, such as trade restrictions between neighbors, hoarding, civil unrest, high fuel transportation costs and bad weather conditions.

In a global context, domestic food price increases have been larger than price declines across countries. Wheat prices from March 2011 to March 2012 rose 92 percent in Belarus, while the price of maize increased by 82 percent in Malawi, 80 percent in Ethiopia, and 71 percent in Mexico.

Production outlooks remain strong for 2012/13 and a number of factors have kept pressures on prices at bay. Record prices in late 2010 and early 2011 led to increased production of major crops worldwide, and are a key factor in the strong projections for the 2012/13 season. The slowdown in maize use for ethanol production in the U.S. and weak global demand due to the euro crisis are contributing to keeping upward price pressures on check.

How the World Bank Group (WBG) is helping to put food first

In response to drought in the Horn of Africa, the WBG is providing $1.8 billion to save lives, improve social protection, and foster economic recovery and drought resilience.
A first-of-its-kind risk management product, provided by the International Finance Corporation (IFC), will enable protection from volatile food prices for farmers, food producers, and consumers in developing countries.
The Global Food Crisis Response Program is helping 40 million people in 47 countries through $1.5 billion in support.
The WBG is boosting spending on agriculture to some $6 to $8 billion a year from $4 billion in 2008.
Supporting the Global Agriculture and Food Security Program (GAFSP), set up by the WBG in April 2010 at G20’s request. Seven countries and the Gates Foundation have pledged about $1.1 billion over 3 years, with $612 million received.
The WBG is coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations.
Advocacy for more investment in agriculture research -- including through the Consultative Group on International Agriculture Research (CGIAR) – and monitoring agricultural trade to identify potential food shortages.
Supporting improved nutrition among vulnerable groups through community nutrition programs aimed at increasing use of health services and improving care giving. As part of its response to the food crisis, the Bank has supported the provision of some 2.3 million school meals every day to children in low income countries.
IFC will invest up to $1 billion in the Critical Commodities Finance Program, aimed to support trade in key agricultural and energy-related goods, to help reduce the risk of food and energy shortages, as well as improve food security for the world’s poorest.

Contacts:

In Washington: Alejandra Viveros, (202) 473-4306, aviveros@worldbank.org

Michael Christopher Jelenic, (202) 473-2075, mjelenic@worldbank.org

For Broadcast Requests: Mehreen Sheikh, (202) 458-7336, msheikh1@worldbank.org

To access Food Price Watch, please click here.

Q&A: Why are Food Prices on the Rise Again?

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The project Integrated Management of Aquatic Resources in the Amazon (AquaBio) has changed to Closed

2012-04-25T04:00:00.000Z

The project Integrated Management of Aquatic Resources in the Amazon (AquaBio) has changed to Closed. To see more information, see the project information in the World Bank project database

The Brazil Integrated Management of Aquatic Resources in the Amazon Region Project aims to support the mainstreaming of a multi-stakeholder, integrated management approach to the conservation and sustainable use of freshwater biodiversity in public policies and programs in the Brazilian Amazon River Basin. There are project components. Component 1, Planning and Public Policy, aims to ensure the institutional and financial sustainability of Action Programs integrated management of aquatic resources in three sub-basins of the Brazilian Amazon. Component 2, Demonstration Activities, aims to develop demonstration activities targeting various productive sectors, providing inputs for the development of action plans for the integrated management of aquatic resources. Component 3, Building Capacity, aims to prepare stakeholders, especially local ones, to be able to actively participate in the forming, implementing, and monitoring strategies and action plans aimed at the conserving and sustainably using aquatic resources in the Amazon Basin. Component 4: Project Management, Monitoring and Evaluation (M&E), and Information the scope of the project, and to foster integration among the various components, as well as with other related projects and programs, to indicate the possible need for changes in project development, and to disseminate results at local, state, regional (Brazilian Amazon), national and international levels.

Transcript: Development Committee Press Conference

2012-04-22T15:19:04.000Z

2012 Spring Meetings

April 21, 2012

MR. MILLS: Well, thank you very much for joining us for this closing press conference.

Our participants will each make an opening statement and then we'll take your questions.

If I can ask everyone to please turn off your mobile devices or put them to vibrate, we would appreciate it.

Chairman Belka.

MR. BELKA: Thank you. As we are late, I am not going to be very descriptive about the meeting of the Development Committee. You know the agenda. The discussion was very rich, centering around the social safety nets, the private sector involvement in growth initiatives, as well we discussed modernization of the World Bank.

However, one thing that is obvious, it took so long because all the delegates took the opportunity of this Development Committee meeting to express gratitude and admiration for the achievements of the outgoing President of the World Bank, Robert Zoellick. So, I give you the time to ask questions both to him and Christine Lagarde.

Please.

MR. MILLS: Very good, thank you.

President Zoellick.

MR. ZOELLICK: Okay. Well, I'd like to welcome Marek Belka as the new Chair of the Development Committee. I have great respect for what Poland has achieved over the past 20 years and also respect for Marek's service to his country and to Europe. So, I'm delighted that he can share his country's and his own experience with the Development Committee.

And I want to thank Christine for a fine stewardship of the IMF at what's clearly a critical time for the world economy.

The next meeting of the Development Committee will be in Japan with a new President: Jim Yong Kim. I'm sure he'll do a great job.

And I also want to extend my thanks to the members of the Development Committee.

I am pleased our shareholders have endorsed the World Bank Group's efforts to boost support for efficient and fiscally sound social safety nets, including conditional cash transfers, public works and school feeding.

At international meetings, we hear a lot about global financial safety nets, and we need to focus equal attention on the human safety net. As we know, there are dangers that, when institutions are too big to fail. But let's remember that beyond the talk of financial systems and of regulations and of firewalls, it's people who are too important to fail.

The shareholders also want us to continue to assist developing countries with multi-pronged approaches to deal with higher and volatile food prices.

I’m pleased our shareholders have support for the moves for more innovative and stronger partnership with middle-income countries – home to 70 percent of the world's poor.

A key element of this is the development of infrastructure to boost future growth, including through Public-Private partnerships.

Shareholders endorsed the Bank's knowledge agenda, whether it be on safety nets or global public goods or the South-South agenda.

The global recovery depends on proper incentives for private financing, and the World Bank Group has been a leader in developing public policies to encourage private sector innovation, investment, and job creation.

And our private sector arm, IFC, has done a particularly good job in innovative financing, technical assistance, investments, and mobilizing others.

At the end of the day, the best safety net is a job.

So, finally, I'm pleased that Ministers endorsed our modernization agenda with its focus on results and openness and accountability. They commended the work to date and called for the momentum to continue.

It's more vital than ever that support be continued to help developing countries to navigate the tricky road ahead.

So, I'd like to just close with a special word of thanks to the World Bank Group staff, including our talented and diverse Senior Management team. They're superb people who bring ideas and energy and commitment from around the world to our service to our clients and shareholders. It's been a privilege to serve with them and I wish them the very best.

Thank you.

MR. MILLS: Thank you.

Managing Director.

MS. LAGARDE: Thank you very much.

Very briefly, because this is late in the day and it's a day for Bob, not for me. I will just begin by saying how privileged I have been in the last nine months to work across the road from Bob and I thank him for the learning experience that this has been, including to this very last moment when he was congratulated and highly supported by his constituencies.

Just very briefly, what the IMF focuses on in terms of low-income countries, and in particular developing countries in general is, number one, making sure that we have the right tools and the right analysis specific to the low-income countries and this is something that we will continue to work on going forward, because the low-income countries are facing specific risks, if they have done reasonably well, including in the post-crisis period, much more so, actually, than the advanced economies. They have the share of risks, as well, and they have clearly the risk of the external shock coming out of the advanced economies in crisis. They have less room to maneuver because they have used much of the buffers that they had before entering into the crisis. They have less scope to use policies, and they have the longer-term challenges that Bob has been dealing with and addressing during his tenure in the last five years: Make inroads in reducing poverty, generating more inclusive growth, developing infrastructure, and all the rest of it.

Now, what are the priority actions for the IMF and the international community? It is moving forward on three priorities.

First of all, helping countries manage global uncertainty and volatility more effectively, and to do that we need to have the right tools. We will be this summer looking at all the tools that we use for low-income countries, making sure that they are rightly adjusted to very specific needs.

We also need to have the right resources on the right terms, that is, concessional terms, and we've received a boost to that effort this week, but more is going to be needed.

Second, we need to push the quality of growth. It needs to be inclusive, it needs to be associated with strong social safety nets, and it needs to be creating jobs and reducing poverty. This topic was discussed yesterday at the Rio+20 breakfast, as well.

And third, clearly, we need--and that's more of an internal matter, but it really means quite a lot to the low-income countries, as well. We need to push our governance reform at the IMF and make sure that the quota reform of 2010 and the governance reform actually delivers on the credibility of the institution, it's representativeness, so that it secures the voices of not only the low-income countries but more generally all countries appropriately in accordance with an appropriate share of the global economy.

So, those are the directions in which we are working to make sure that we serve our constituencies in that particular respect.

MR. MILLS: Thank you very much.

Yes, right here in the first row.

QUESTION: Thank you. Daniel Jiang with China's Xinhua News Agency.

I have a question for President Zoellick and one question for Madam Lagarde.

President Zoellick, what is your insight on the process of modernizing multilateralism in a multipolar world you propounded on several years ago, as well as evolving of the Bretton Woods system, and how can the Bank facilitate the process.

And for Madam Lagarde, what do you hope to achieve at the Tokyo meeting?

Thank you.

MR. ZOELLICK: Well, as for your question to me, I think the heart of it is to focus on clients and recognize that the diversity in the developing world requires customizing approaches, but increasingly, we're able to draw from across the developing world and bring experience and insight from some developing countries to other ones.

And as an institution, it's important that we recognize that good intentions are not sufficient. So, we have to be rigorous in focusing on results. We also have to be accountable, and to be accountable, it helps to be open.

So, I think one of the key aspects of the modernization agenda are the initiatives we've taken in terms of open information, open data, open research.

And the more we can expand that not only to the governments around the world but take it all away to communities with the use of different technologies that now enable us to engage social accountability.

And one of the initiatives that we took this week in starting an effort for a Global Partnership for Social Accountability, I think is a good example of that.

I think on the notion of customizing, one of the topics that came up in today's discussions was the key need for the Bank to continue to adjust to the special needs of middle-income countries. These are the countries where you still find 70 to 75 percent of those living under $2 a day. They have special challenges.

And as in the case of China, as you know, we made that adjustment by working with DRC and China on a report to examine the possibilities of future structural reforms as part of China's changing growth model.

In other countries, we'll use a combination of knowledge and financing. But I think that will be an ongoing dynamic for the institution.

MS. LAGARDE: All right. You asked me what are my expectations or my goals for the Tokyo Annual Meetings. I have four objectives.

The first one is to make sure that we have programs in place for some of the Arab transition countries.

Second objective is to enhance and tailor to low-income countries our surveillance tools.

Third is to get as close as possible, and if possible, the finishing light of the quota and governance reform.

And fourth, I want to replenish the Poverty Reduction and Growth coffers.

Thank you.

MR. MILLS: Yes, Sandrine.

QUESTION: Sandrine Rastello, Bloomberg.

Mr. Zoellick, I'd like to follow up on the comments you made about China and working together with China, especially in the light of the contribution that China just--or that we expect China to make for IMF resources. As you know, China has become a lender of its own in Africa. I was wondering whether we see the future of the World Bank lending alongside China, and because I don't think we've seen many cases or examples of that so far, and what it would take, especially in terms of safeguards for lending.

MR. ZOELLICK: So, Sandrine, you mean lending with China in third countries, or investing in third countries? Yes.

Well, I think you're going to see an increase of outward investment, not only from China, but if we're looking over the medium and long term from other emerging market economies. And that's an area where IFC, our private sector arm, is already working to develop partnerships.

I think there is also a key aspect in terms of the knowledge and experience transfer. Just to give you an interesting one, Indonesia was bringing some of its experience with community development after difficult situations to Haiti. So, this is much more than a Chinese issue.

Brazil--I was here this past week with the head of the Brazilian Development Bank and we're talking about cooperation with the African Development Bank and areas of agriculture development. So, I think it's much broader than the Chinese side.

I will say, though, that one other aspect that my colleague Justin Lin has encouraged, and I think has got very interesting prospects is that as China has a population that, over the next five years, there will be more people leaving the labor force than coming in. So, there's a need to move up the value chain, and that means increases in productivity that will warrant additional wages which warrants a higher living standard.

Justin estimated the share of about 85 million workers in low-wage manufacturing in China. In all of Africa, South and North, there's about 8 to 10 million.

So, some of those jobs--and one of the Party secretaries in Guangdong, Guang Yang has emphasized this. Some of these jobs are likely to move out of China.

Now, some of them will move elsewhere in Asia, Southeast Asia, but Justin actually visited a recent operation in Ethiopia where there are plans for substantial numbers, even by the end of this year and over a few years probably manufacturing employment of about 25,000, which would be the same as the number they have in China.

Now, to create this, we have to create an environment of ports and infrastructure and roads and energy and other things that China has had as part of its growth model.

So, one of the reasons that I've been so adamant about the need to connect with the middle-income countries is that not only do they face development challenges, but I don't want the Bank to be hollowed out. I think that those countries will be very important in the future of the Bank in helping a lot of the poorer countries, because you can already see with trade and investment and even foreign assistance flows.

As I noted in one of my recent remarks, last year, a conservative estimate of the traditional foreign assistance from new donors was about 15 billion. That's about 15 percent of the 100 billion that developed donors make.

For our IDA process, we not only got contributions but a number of developing countries, including China, prepaid their IDA credit. So, that's one reason we're able to get a record number of 49 billion.

So, there are huge opportunities. And what it just underscores is if you think about the issues that Christine was dealing with in terms of growth and macroeconomic stability, if you think about the Rio+20 issues and environment, frankly, it's going to be true in the security area, we want to draw more to bring these countries--not only China, but all the middle-income countries--as effective beneficiaries and contributors to the international multilateral system that the United States and Europe and Japan created in the first 20 years after World War II.

MR. MILLS: Thank you.

To the gentleman right over there, in the fourth row.

QUESTION: This is Asit Mishra from Mint Newspaper, India. This is to Mr. Zoellick.

The G-24 countries have expressed concern over falling development finance in the World Bank. So, this is happening at a time when your sister organization is able to garner some 430 billion for a fund.

So, how do you see it? Do you see that it's lack of interest in development finance and poverty reduction among the member countries?

MR. ZOELLICK: Well, I'll let Christine explain, I think, the benefits of the additional funding or backstop for the IMF, but I think they're designed for the global economy, and that would certainly include developing countries, and obviously this is part of an overall effort that's also done by the Europeans on their own behalf, but the World Bank also had a capital increase, the first one in 22 years.

Our equity-to-loan ratio is about 28 percent. So, we've got some significant ability to expand, even with our current equity.

I did suggest in the meetings that I think we need to continue to be creative about other ways we could support countries such as India.

For example, when I was in India, we talked about a public-private partnerships infrastructure facility. It might draw some government money from the Indian government, from the World Bank Group, but also from other private partners. But to do so, we'll need perhaps to use the IFC approach to those projects as opposed to some of the things with the traditional IBRD approach.

As you may know, we increased the single borrowing limit for India, made an exception. I personally think that India's credit should allow us to expand that more.

Another tool that we could use and is used in the case of India is that if some of the reserves that countries hold are in the form of IBRD bonds, which actually have better returns than some of the things that they invest in, that allows us to expand the lending. So, that's another tool.

And one of the things I briefed the Development Committee about is when, in the autumn of last year where financial markets were particularly in a risky situation, a number of emerging markets came to us and said, "What's most important to us is have access to large amounts of credit, regardless of whether you have to adjust the price or maturity.

And we--with our current capital account we could expand that considerably if we do some flexibility and maturity in pricing.

So, there's a lot of tools that one can use either from the IFC or the IBRD side. India is also in a transition stage with IDA, and some of the types of things that--where countries made contributions to the Fund are similarly the type of things one might be able to do in an IDA account where you have long-term credits at very modest interest rates.

But again, I think they're slightly different. I mean, you want to be careful with the apples and oranges, because they're a backstop facility often done by central banks in the case of the Fund. And so, the idea is to have them there but not necessarily to draw on them. And what we're talking about here are ways that you can actually put investment funds to work on growth strategies.

MR. MILLS: Is that fair?

Okay. Yes.

Lesley. This is the last question.

QUESTION: Lesley Wroughton at Reuters.

Bob, I wanted to find out from your discussions over the last few days what are the biggest concerns for the low-income countries as far as the spillover effects.

I mean, we know the IMF is saying they're not seeing a slowdown in the low-income--in Sub-Saharan Africa, but what are you hearing? From the Finance Ministers' meeting, they were saying that they're pretty afraid of how this could really set itself into the economies.

And then, for Ms. Lagarde, as the negotiations get underway for the next governance reforms, including the formula and then moving into--I think it's the 15th review--what do you think are the issues at stake here? I mean, the emerging markets want more say. The Europeans don't want to lose further power. They want to obviously hold onto something.

What are the issues that you think that the membership needs to focus on to get the deal done?

MR. ZOELLICK: Well, Lesley, as for your question to me, just realize this is a slight difference from your focus, but I think what we've been trying to stress is growth is one of those things that's not a zero sum; and so if you have the emerging markets in developing countries growing, that benefits developed countries and other developing countries. So, two-thirds of global growth has come from developing countries. So, it's in everybody's interest to continue their growth.

I shortened my initial remarks, but what I've tried to emphasize in these meetings is that, in addition to the macroeconomic stability, which is very important, it is important for developed and developing countries alike to focus on the structural reforms, the microeconomic reforms that will drive future growth. And indeed, the Chair of the IMFC, Tharman of Singapore, made this point very well, how the fiscal adjustment needs to focus on the foundations for future growth.

Now, more particularly, and I think Christine and the IMF staff have made this point: Some of the emerging markets have less space and so they have less fiscal movement and, in some cases, depending on their monetary policy, they have less flexibility if things turn down.

A point that Pascal Lamy of the WTO and I have emphasized is we have some worries in the trade finance area, driven in part by the deleveraging of European banks, many of which were very active in trade finance, combined with some of the Basel rules, which have been changed but, in my view, still use as their examples more consumer finance and mortgage than the evidentiary basis for trade finance, but we will help develop the evidentiary basis for that, and that's particularly because for when you have a credit squeeze, it tends to hurt the smaller countries and the smaller banks and the smaller businesses, and those are ones that are obviously important for some of the future development.

And particularly, if you're trying to build future growth models, it would probably be the intra-African trade as opposed to the African commodity trade with others. So, that's a second area.

Third, it depends on the clients. The fragile states are obviously, by definition, fragile. So, they're worried about anything that could shock the system.

There's a worry about oil prices, if you're an oil consumer as opposed to oil producer.

And if you're a middle-income country or low-income country, I pick up a very strong interest in the infrastructure agenda, which is why I just touched on it briefly, but I think there's things that we started to do at the Bank, not only with our own investments but with public-private partnerships and really to try to make that a bigger deal flow, and what would be appealing is if we could then combine it with the private capital markets, as we're starting to do with a fund that IFC and Singapore are putting together. So, it varies a lot by market.

MS. LAGARDE: Okay. On your question about governance, quota, formula, I take reforms one step at a time. So, my focus at the moment is make sure that we implement the 2010 reform, for the Tokyo Annual Meetings. Then, we have the January 2013 deadline.

We've begun the discussions about the formula review of the quota. That will take its course, its time, its discussions. Everybody wants to have a bigger share of the same pie, so there will have to be gives and takes.

And the 15th review will be in January 2014. So, we have a little bit of time.

MR. MILLS: Very good.

Thank you very much.

[Whereupon, the press briefing was concluded.]

Developing World Lags on Global Targets Related to Food and Nutrition, Says IMF-World Bank Report

2012-04-20T16:45:00.000Z

Washington D.C., April 20, 2012 – The developing world’s progress is seriously lagging on global targets related to food and nutrition, with rates of child and maternal mortality still unacceptably high, says the Global Monitoring Report (GMR) 2012, released today by the World Bank and the International Monetary Fund (IMF).

Recent spikes in international food prices have stalled progress across several of the Millennium Development Goals (MDGs), the report says.

GMR 2012: Food Prices, Nutrition and the Millennium Development Goals reports good progress across some MDGs, with targets related to reducing extreme poverty and providing access to safe drinking water already achieved, several years ahead of the 2015 deadline to achieve the MDGs. Also, targets on education and ratio of girls to boys in schools are within reach.

In contrast, the world is significantly off-track on the MDGs to reduce mortality rates of children under five and mothers. As a result, these goals will not be met in any developing region by 2015. Progress is slowest on maternal mortality, with only one-third of the targeted reduction achieved thus far. Progress on reducing infant and child mortality is similarly dismal, with only 50 per cent of the targeted decline achieved.

“High and volatile food prices do not bode well for attainment of many MDGs, as they erode consumer purchasing power and prevent millions of people from escaping poverty and hunger, besides having long-term adverse impacts on health and education,” said Justin Yifu Lin, the World Bank’s Chief Economist and Senior Vice President for Development Economics. “Dealing with food price volatility must be a high priority, especially as nutrition has been one of the forgotten MDGs,” he added.

GMR 2012 details solutions for making countries and communities more resilient in the face of food price spikes. Countries should deploy agricultural policies to encourage farmers to increase production; use social safety nets to improve resilience; strengthen nutritional policies to improve early childhood development; and design trade policies that enhance access to food markets, reduce food price volatility and induce productivity gains. However, the challenges countries face in responding to high food prices have been made more difficult as a result of the global recession.

“The fragile global economy could very well slow developing countries’ progress on human development goals, since the fiscal, debt, and current account positions, particularly of low income countries, have been weakened by the global financial crisis,” said Hugh Bredenkamp, Deputy Director of the IMF’s Strategy, Policy and Review Department.

Regional progress towards the MDGs is uneven. While upper middle income countries are on track to achieve most targets, low-income or fragile countries are lagging, with only two goals achieved or on-track. While food prices have declined from their 2011 peaks, commodity prices remain volatile.

“To help deal with volatility, more developing countries are complementing their fiscal and monetary policy responses with insurance or hedging operations, such as selling crops in forward markets. This can be part of a broader strategy for managing risks like natural disasters and swings in commodity prices,” said Lynge Nielsen, Senior Economist at the IMF.

Jos Verbeek, Lead Economist at the World Bank and lead author of GMR 2012, cautioned that declining development assistance, population growth and high food prices will make the need to focus on nutrition programs for the poor even more challenging.

“According to our projections, an estimated 1.02 billion people will still be living in extreme poverty in 2015. Clearly, assistance must be leveraged in new ways if we are to improve food security and nutrition, particularly for the poor and vulnerable,” said Verbeek.

The full report, progress charts, and country information are available at www.worldbank.org/gmr2012

Contacts

In Washington:

Merrell Tuck-Primdahl +1 (202) 473-9516, +1 (202) 476-9897, mtuckprimdahl@worldbank.org;

Indira Chand +1 (202) 458-0434, +1 (703) 376-7491, ichand@worldbank.org

For TV/Broadcast:

Mehreen A. Sheikh +1 (202) 458-7336, msheikh1@worldbank.org

Regional Highlights

In East Asia and Pacific, the targets on extreme poverty, gender parity and access to water and sanitation have been reached. Progress is substantial with regards to primary completion and the goal should be achieved in the years remaining to 2015. Child and maternal mortality are the targets lagging the most.

In Europe and Central Asia, the targets on poverty and access to water have been reached. Universal primary education and gender goals are currently on track. Increased efforts must be undertaken with regards to improving maternal health and access to basic sanitation.

Latin America and the Caribbean has already reached extreme poverty, primary school completion, gender equality and access to safe water targets. The region is performing well in terms of child mortality, but progress on maternal mortality is lagging.

Middle East and North Africa has reached the targets on poverty and provision of improved sanitation facilities. The region is making fast progress towards achieving universal primary education and gender equality. However, progress towards ensuring safe drinking water and reducing maternal mortality is lagging.

South Asia has reached the target on access to safe drinking water and will most probably eliminate gender disparity in primary and secondary education by 2015. Progress has also been made on primary school completion and, to a lesser extent, extreme poverty reduction. However, progress on reducing child and maternal mortality and improving access to sanitation facilities is off-track.

Sub-Saharan Africa is lagging on most MDGs. Although the region has achieved more than 60 per cent of the progress required on goals such as gender parity, primary school completion, access to safe water and extreme poverty, health-related MDGs, particularly maternal mortality, require urgent attention.

Governments moved to prevent job loss, boost skills in response to global financial and economic crisis

2012-04-20T13:00:00.000Z

ILO and World Bank partner to release new data, report on government actions

WASHINGTON, April 20, 2012 – Today the International Labour Organization (ILO) and the World Bank (WB) released a joint report and new online data tool with the first comprehensive stocktaking of countries’ jobs-related policy responses to the recent global financial and economic crisis.

A follow-up to a request from leaders at the 2009 G20 Pittsburgh Summit, the report, Inventory of Policy Responses to the Financial and Economic Crisis, demonstrates how governments across the globe and of all income levels used labor market interventions to limit the economic and social impacts of the crisis and spur employment, household income, and economic growth, and reduce poverty. This new online data tool provides a detailed track record of policies enacted during the height of the financial crisis (2008-2010), and implications for the design of policies to address future economic downturns.

“For the first time, policymakers now have access to data on what other countries did during these turbulent times, in order to better understand what works best to create jobs and reduce poverty in the wake of crises,” said Tamar Manuelyan Atinc, World Bank Vice President for Human Development. “These findings affirm the Bank’s new Social Protection and Labor Strategy’s focus on promoting resilience, equity, and opportunity for the world's poorest and most vulnerable people.”

“The ILO has joined forces with the World Bank to create a database unprecedented in its scope and size on crisis response measures taken by both developed and developing countries following the framework of the ILO's Global Jobs Pact,” said Jose Manuel Salazar-Xirinachs, International Labour Organization Executive Director for Employment. “Policy makers and researchers worldwide will be able to use this database to analyze policies and draw further lessons which continue to be highly relevant today as the jobs crisis persists.”

The report reveals that in most of the 55 low-income and middle-income and 22 high-income countries surveyed, unlike previous crises, there was considerable government intervention to mitigate the impacts of the downturn. Not only did a majority of effected countries use expansionary fiscal and monetary policies to stimulate the economy, they also directly intervened to protect or create employment, preserve skills and facilitate the matching between job-seekers and employers, and protect the incomes of the unemployed and vulnerable groups. In many cases, social dialogue helped guide the policy response. This was critical, for instance, when implementing work-sharing arrangements.

On the demand side, high-income countries focused on facilitating access to credit, while low-and middle-income countries prioritized direct job creation and employment incentives

On the supply side, skills and training measures were a priority for countries of all income levels, but high-income countries had more resources to support for young people during the crisis

Source for charts: based on full sample of 77 countries of ILO/WB inventory of policy responses to crisis

But there are questions about how well prepared countries were to respond to the economic crisis, particularly developing countries. Many countries, for instance, did not have significant social security programs that could be scaled up during the crisis. In addition, across the board, the coverage of social insurance programs was low. Policies such as the increase in the level and duration of unemployment benefits, for example, were helpful, but in some cases, might have only benefited formal sector workers. Active labor market programs such as employment services, training, and wage subsidies, were also commonly used, but there are many lessons as to how their design and implementation can be improved. Finally, many countries lacked surveys or administrative data to track the impacts of the crisis on labor markets and workers.

The report recommends that countries focus on: (i) improving the coordination between macro and sectoral policies; (ii) expanding the coverage of social insurance to all workers; (iii) integrating and strengthening safety nets; iv) rethinking the design of active labor market programs including those used to stimulate labor demand; (v) investing in labor market information systems; (vi) promoting social dialogue; and (vii) increasing vigilance to avoid violations of rights at work.

The online database was enabled by financial support provided by the Swiss State Secretariat for Economic Affairs (SECO) for the ILO, and by the Multi-donor Trust Fund on “Labour Markets, Job Creation, and Economic Growth,” with funding from Austria, Germany, Korea, Norway, and Switzerland for the World Bank. It will allow researchers and policy analysts to conduct case studies or cross-country analysis to better understand which policies were the most effective. The data can also facilitate discussions between government ministries, employers, international development agencies and civil society organizations involved in the design and implementation of social protection and labor programs.

The ILO and WB will launch the database and report on Friday, April 20, 2012, from 12-2 p.m. EST during a special event at the WB-IMF Spring Meetings. To watch the webcast, please go to www.jobsknowledge.org.

About the ILO (www.ilo.org)

In response to the crisis, the ILO constituents, in every country, reprioritized their Decent Work Country Programms (DWCP) to put in place crisis response measures based on lessons from the past, and the policy portfolio of the Global Jobs Pact (GJP). The GJP was adopted in June 2009 as a portfolio of policy measures including macroeconomic, enterprise promotion and SMEs, Active Labour Market Policies, labour intensive investment in infrastructure, skills development, expansion of social protection, social dialogue, and International Labour Standards (ILS).The ILO also stepped up efforts in support of new global strategies for addressing the youth employment crisis and prioritize employment and social protection in global policy rebalancing. The ILO works closely with the other UN agencies and programs in supporting member states facing the challenges brought by the crisis. The ILO has also played an important role in supporting the G20 policy agenda.

About the World Bank (www.worldbank.org/jobsworldeconomy)

In response to the global food, financial, and fuel crises, the World Bank Group (WBG) increased its labor-related financing from an annual average of $477 million in 1998-2008 to an annual average of $634 million for 2009-2011. From 1998-2011, the WBG supported job creation and worker protection activities in 103 developing countries, with total lending reaching $7.14 billion. With WBG financing, technical assistance, and analytical work, countries are protecting workers and investing in programs that help promote job creation. The WBG’s job-creation initiatives coordinate efforts on macroeconomic policy, the investment climate, industrial development, innovation and entrepreneurship, private-sector development, labor regulations, education and skills, and social protection.

Contacts:

ILO: Jim Palmer, (202) 262-9823, jamesv.palmer@verizon.net

World Bank: Melanie Mayhew, (202) 458-7891, mmayhew1@worldbank.org

Database: http://www.ilo.org/crisis-inventory

Report: http://siteresources.worldbank.org/INTLM/Resources/ILO_WB_2012.pdf

Follow the discussion on Twitter at #wbjobs

World Bank President Robert B. Zoellick with CNN's Richard Quest

2012-04-19T18:49:45.000Z

APRIL 19, 2012

MR.QUEST: Mr. President, thank you.

MR. ZOELLICK: Glad to be with you.

MR.QUEST: The situation if not grave is serious. And yes, we have been in worse situations over the last two or three years, and no doubt you'll say that this is no time for complacency. What needs to be done?

MR. ZOELLICK: Well, it's no time for complacency. Well, I think there are a number of aspects. Right now, people are focused on the problems in the euro zone. The European Central Bank's efforts bought time, but people have to use the time. And there continues to be a combination of issues with the banks, the sovereign debt, the fiscal consolidation. And my emphasis is that doing all of this in an environment without growth is very difficult.

MR.QUEST: Are you now saying that the balance at the moment between austerity and growth in the euro zone is wrong?

MR. ZOELLICK: No, I don't--this simple tradeoff of zero-sum does not work for me. So what I believe is that the Germans, for example, are right about countries having to take the fundamental steps in terms of fiscal consolidation and structural reform for growth. My point, however, is that if you don't have some additional demand, it is hard. I have tried to come up with some ideas on the supply side with additional investment and additional use of the single market for services and people that would help with the politics of reform.

MR.QUEST: But at the end of the day, when you look at the unemployment numbers in euro and in the euro zone, they are nothing short of a disgrace at the moment?

MR. ZOELLICK: Well, you can use your terms. I don't find it too helpful to just say--to use language like that. I think we have got to get out of the problem. And I think that we are still in a period of drift, and I think other actions are going to need to be called for, and they are both some of the fundamentals that the Germans have called for, but they are also some of the pro-growth steps that I and others have been suggesting.

MR.QUEST: So, as we take Spain as an example, do we have an opportunity here for Europe to get Spain right--having singularly managed to avoid getting it right on the other countries until bailouts became necessary, now they do have a chance to get ahead of the curve here?

MR. ZOELLICK: Well, let's start with the basics.

The future of Spain depends on the Spanish, so the most important thing about getting Spain right is for the Spanish. But if you are going to keep a euro zone, and you are going to have an effective European Union, they certainly need support; and as somebody who has had some experience with politics as well as economics, what I am suggesting is that as they make these tough economic decisions, as they have 23 percent unemployment, they are going to need some support to continue the process.

But also, let's not just get totally absorbed with Europe. I represent the World Bank and developing countries. Developing countries represent two-thirds of global growth. So one way you help Spain and Europe is to continue to foster the growth in developing countries because that will create some markets for Spain and others.

MR.QUEST: Let's talk of them--we'll skate to the developing countries at the moment. There are maybe not as critical issues, but the wash of the European problems can seriously hamper the developing countries not only for their growth but also for their elimination of poverty.

MR. ZOELLICK: Yes. Well, the big deleveraging that you have seen of European banks, which is partly the need for them to restore their capital levels, is understandable. I wish they could build some capital as opposed to shrink. In places like Asia, it has been substituted with Asian banks, but for example, in Central and Eastern Europe, we launched--the World Bank launched--an initiative with the EBRD, the European Bank for Reconstruction and Development, the EIB, the Investment Bank, EC, to try to make sure that the process of credit contract is at least orderly. North Africa is an effect, and I am particularly concerned about things like trade finance in

MR.QUEST: Argentina's decision to expropriate Repsol’s Argentinean assets has caused a furor, as you might expect, between Argentina, Spain, the companies involved, and you must be concerned that this gets out-of-hand, because one of your own areas that the World Bank has looked at before is claims on these sorts of questions.

MR. ZOELLICK: Well, I think it's a mistake, and I think it is somewhat symptomatic of the dangers that we are going to see in many countries about pressure for populism, nationalism, autarchic policies, protectionism. It is not going to be good for Argentina over the long run, but you are right--it is the sort of thing that you want to resist on all accounts.

MR.QUEST: Argentina has more than 40 claims before the tribunal from previous occasions of this sort of activity. What would you recommend or suggest needs to be done on this occasion?

MR. ZOELLICK: Well, if you are talking about one of the investment tribunals, since it is part of the Bank, I actually--to have it be a fair process, I am not commenting on the tribunal cases. But I think I have made quite clear that I think the step that Argentina took, in the words of President Calderon of Mexico, what investor in his right mind would put money into a country where people are taking away the private property?

MR.QUEST: Isn't the difficulty now how to avoid what has taken place, with Argentina not losing face, with Spain getting back what it believes is its right, with the companies involved getting proper compensation--finding a formula that allows everybody to roll back is what is going to be challenging.

MR. ZOELLICK: I suppose. My view of life is if you make a mistake, you should reverse it.

MR.QUEST: You just think they should change their minds?

MR. ZOELLICK: I think it was a bad policy. I think it's a mistake, and I think it will hurt Argentina over the long run. It may have some short-term political benefit to the government, but this is not the time to be playing with fire, and ultimately, it will leave Argentina behind in the international economy, and that hurts the people of Argentina, and that is who I am concerned about.

MR.QUEST: As you come to the end of your tenure here and the World Bank looks to a new direction or a change, how would you best describe what you think the change will be in the new administration?

MR. ZOELLICK: Well, I think there will obviously be some continuation. What I have tried to do differently is to focus on the clients. So, sometimes you have a lead economist say the Bank should do X or Y or Z. My view is let's listen to the client, and then let's try to get faster, more flexible, and modernize our operations. This moves in the direction of making it a more open institution. We have had a lot of transformation of information, data policies, research policies, to partly democratize the development process.

From the contacts I have had with Dr. Kim, I think he will do a fine job, and I think his science, evidentiary-based model will move in that direction.

I am pleased that I have tried to leave a well-resourced institution. We had the first capital increase in some 20 years, and we raised about $90 billion for our fund for the poorest, so that's a pretty good start. But yes, I believe in change, and that is one reason why I stepped down. I think it is good to bring somebody else in and have fresh ideas. So let's see what he decides.

MR.QUEST: Finally, ten years from now--because let's face it--the time that you have been here at the Bank, so much time has been taken up with crises, whether it is food—

MR. ZOELLICK: Yes. We did about a quarter-trillion dollars of support.

MR.QUEST: --right--and the financial crisis--ten years from now, will we be out of the financial crisis? Will things look a lot better, do you think?

MR. ZOELLICK: I certainly hope so. I am an optimist. But I am also a person who has made policy, and it depends on the decisions that people make, so those are some of the things that I hope to push forward even in my last Spring Meetings.

MR.QUEST: Thank you very much indeed.

MR. ZOELLICK: My pleasure.

World Development Indicators 2012 Released

2012-04-19T17:38:10.000Z

Definitive Reference for Measuring Development Progress

WASHINGTON, April 19, 2012 — The 2012 edition of World Development Indicators (WDI), released today, includes updated data on global development, the quality of people's lives, the environment, the economy, the functioning of states and markets, and global links - how actions in one part o f the world affect people elsewhere.

Alongside the WDI and the latest update to the on-line WDI database, major improvements to the data access, analysis and visualization tools are also now available. These make it easier than ever to use and analyze the full range of datasets available in the Bank’s data catalog (http://data.worldbank.org) – all freely available as part of the Open Data Initiative launched two years ago.

"These new tools and mobile applications take us closer to our vision of getting data into the hands of people everywhere, so that they can be used to inform the decisions of both the policy maker and the individual citizen", said Shaida Badiee, Director, Development Data Group.

WDI 2012 includes data for the first ten years of the Millennium Development Goals (MDGs), providing an important data resource for the Global Monitoring Report (GMR), being released tomorrow. Measured against 1990 benchmarks, progress accelerated in the past decade, lifting millions out of poverty, enrolling millions of children in school, and sharply reducing the loss of life due to preventable causes.

“The World Development Indicators laid the path for the Bank’s expansion into the frontiers of open development and are highly valued as a definitive reference for measuring development progress,” said Justin Yifu Lin, World Bank Chief Economist and Senior Vice President.

The WDI provides relevant and high-quality data on a wide range of development issues. New data in this year’s WDI include more recent data on poverty at international poverty lines, for more countries, including global and regional estimates; measures of malnutrition disaggregated by sex; health indicators disaggregated by income quintile; carbon dioxide emissions by economic sector, and data on climate variability, exposure to impact, and resilience. This year’s WDI illustrates that:

- Fewer people live in extreme poverty, though poverty and hunger persist. The proportion of people living on less than $1.25 a day fell from 43.1 percent in 1990 to 22.2 percent in 2008. And preliminary estimates for 2010 indicate that the extreme poverty rate fell further, reaching the global target of halving world poverty five years early.

- The proportion of people in developing countries with access to an improved water source increased from 71 percent in 1990 to 86 percent in 2008, which means that the MDG target of halving proportion of the population without access has already been met.

- Some goals still remain out of reach. Only one region, Latin America and the Caribbean, will reduce child mortality by two-thirds. In Sub-Saharan Africa, only two countries (Madagascar and Malawi) are on track to reach the target in 2015. And while primary school enrollment rates have reached 87 percent, that leaves 64 million children out of school, mostly in South Asia and Sub-Saharan Africa.

- Women in the Middle East and North Africa have made impressive gains in health and education. The total fertility rate fell from 4.9 births per woman in 1990 to 2.7 in 2010, women’s secondary enrollment rate increased from 46 percent to 69 percent between 1991 and 2009, and tertiary enrollment rate tripled from 9 to 27 percent. But women’s labor force participation remains at about 20 percent – by far the lowest among all regions.

- Africa is urbanizing rapidly. In 2010, only 37 percent of Sub-Saharan Africa’s population lived in urban areas, but between 1990 and 2010 the urban growth rate of 4 percent per year was the highest among developing regions.

- The East Asia and the Pacific region spends more on Research and Development than other regions. And China leads the developing economies of the region, spending about 1.75 percent of GDP in 2010 on R&D.

- People in the developing countries of Europe and Central Asia have greater access to commercial bank branches and automated teller machines than people in other developing regions—about 18 commercial bank branches per 100,000 adults and 45 ATMs per 100,000 adults. The region also ranks highly on access to commercial deposit and loan accounts.

- Latin America and the Caribbean has the greatest share of protected land and marine areas among developing regions, with 20 percent of the land area and 13 percent of the territorial water area designated as protected areas. Even so, Latin America and Caribbean, which has about one quarter of the earth's forest resources, has lost some 93 million hectares -- about 9 percent of its forest area -- between 1990 and 2010.

- High-income economies use nearly four times as much energy per capita as middle-income economies, and more than 13 times as much as low-income economies. Per capita energy use in South Asia remains the lowest among all developing regions even after an increase of 51 percent between 1990 and 2000 - from 340 to 514 kilograms of oil equivalent.

New and improved tools to access, explore, and interact with the WDI 2012 and other datasets include:

- New open data "mash-ups" for over 200 economies, with development indicators, household surveys, data on the World Bank's finances and projects, and data on climate change presented in a single snapshot, available at http://data.worldbank.org/country.

- Free, upgraded mobile applications ("DataFinder 3.0") for iPhone, iPad, Android and Blackberry mobile devices, to access and explore indicators in English, French, Spanish and Chinese.

- A new version of the popular "DataBank" interface to the World Bank's time-series databases: create, save, and share tables, charts and maps – and embed them in blog posts and websites.

- In-depth data portals on poverty, jobs, climate change, and financial inclusion.

Links

WDI and Regional Highlights: http://data.worldbank.org/data-catalog/world-development-indicators

DataFinder 3.0 app: http://data.worldbank.org/products/applications

New DataBank: http://databank.worldbank.org/data/home.aspx

Poverty data portal: http://povertydata.worldbank.org/poverty/home/

Jobs data portal: http://datatopics.worldbank.org/jobs/

Financial inclusion data portal: http://datatopics.worldbank.org/financialinclusion/

Data website: data.worldbank.org

Contacts

In Washington: Azita Amjadi, 202 473-3840, aamjadi@worldbank.org

For Broadcast Requests: Natalia Cieslik, (202) 458-9369,ncieslik@worldbank.org

Transcript of Opening Press Conference with World Bank Group President Robert Zoellick

2012-04-19T17:12:28.000Z

April 19, 2012

MR. MILLS: Good morning, everyone.

Thank you for joining us for our World Bank Group press conference for the 2012 Spring Meetings.

Joining me this morning is the President of the World Bank Group, Robert Zoellick, who will have an opening statement and then take some of your questions.

If I could please ask everyone when they ask a question to identify themselves and your organization; and once again, I am sure you have been asked, but if we could have our mobile devices switched off or to "vibrate."

So, President Zoellick.

MR. ZOELLICK: Thank you, Rich.

Welcome, and thanks to all of you for coming.

This marks my last Spring Meetings as the President of the World Bank Group, so I would like to begin with a few words of thanks to the Ministers who have supported us and worked with us; to our Executive Board, who have labored hard to help our Management team to modernize the important multilateral institution; to the excellent Senior Management team that I have been proud to help build and to lead; and to the World Bank Group staff in Washington and around the world. They are motivated, they are committed, they want to make a difference, they are a tremendous asset, and we have been able to draw the best now from 170 countries.

This has been a pretty busy five years, so I suppose my tenure at the World Bank Group has had three phases--a turnaround from a time of some trouble; quickly moving into faster and more flexible, large-scale support for our client countries across the food, fuel and financial crises--in financial terms alone, about a quarter-of-a-trillion dollars; and the start of the modernization of the World Bank Group for the future.

That ongoing modernization effort will be a large part of my presentation to the Development Committee later this week and my discussions with our Governors.

With the first large recapitalization of the IBRD in over 20 years and two record-breaking IDA replenishments totaling more than $90 billion, I am pleased to turn over a well-resourced Bank with a AAA rating.

Yet we always need to think ahead about how to mobilize resources--for the growing interest in IFC and private sector development, for the poorest, and for the changing needs of our middle-income clients, which are still home to three-quarters of those living on under $2 a day.

Our Modernization Agenda is driven by our focus on clients, listening to their priorities, as opposed to an old top-down approach, and modernization involves a rigorous focus on results, openness, and accountability.

So our initiatives for open information, open data, and open access to knowledge may turn out to be the most important legacy of the past five years.

These steps are key to democratizing development, and these steps lay the foundation for expanding social accountability, fighting corruption, and building better governance.

Last year, I proposed that the World Bank and others should recognize that investments in civil society and good governance are as vital as investments in roads, factories, and clinics.

So I will be pleased to announce later today the formation of a new Global Partnership for Social Accountability that will provide support to civil society organizations in their work on social accountability.

Now, much of what you will hear over the next few days will deal with the ongoing shock waves of the financial crisis--issues of macroeconomic stability, fiscal and monetary policies. That is certainly important, but it is not enough.

Countries, both developing and developed, need to focus on the structural reforms that will be the drivers of future growth; otherwise, the world will keep stumbling along.

The World Bank Group will be emphasizing the structural growth agenda.

Structural reforms and changing growth models fit with our recent major reports such as the China 2030 Report and the Golden Growth Report that looked at Europe.

You will also encounter structural growth in our priorities for infrastructure, especially public-private partnerships; social safety nets, to protect human capital in a volatile and uncertain world; gender, so that countries can gain growth opportunities from empowering all of their people; and financial inclusion, including at these Meetings, a first-of-its-kind report on measurement to access financial services that will show that three-quarters of the 2.5 billion people living on less than $2 a day are shut out of access to banking.

Developing countries have provided two-thirds of global growth over the past five years. These are no longer charity cases; they are vital to the world economy.

But of course, they face huge challenges, too.

So it is the World Bank Group's aim to keep focusing the world's economic leaders on growth--not just stability; on human safety nets--not just financial safety nets; and on modernizing multilateralism so that all 188 of our shareholders can work together for their common interest.

Finally, I had an opportunity to talk to Jim Kim after his selection as my successor. We will have a chance to meet shortly after the Spring Meetings on the transition process. I think he will do a great job, and I wish him and all others associated with the World Bank Group every success.

I am pleased to take your questions.

MR. MILLS: Yes, Sudeep?

QUESTION: Sudeep Reddy with the Wall Street Journal.

I was hoping you could address the European crisis from two angles.

One, you previously noted that European countries had bought a lot of time with liquidity measures. I am curious what you think about how they have used that time and what they need to do next; and more broadly with emerging market countries, how are they faring with the shock waves from Europe, and is there anything in particular they should be doing now given the potential for another round with Spain?

MR. ZOELLICK: Well, on the first one, I think the euro zone in particular and the European Union is going to be walking a very fine line.

First, as you noted, with the anxieties late last year, I think the ECB's extraordinary actions were appropriate, but I think some misled themselves because they only bought time, and the time has to be used.

I think that, as the IMF has pointed out, on the one hand, the future of the euro zone depends on actions of individual countries, particularly the steps they take for fiscal consolidation and, as I have emphasized, the steps they need to take for structural reforms and future growth.

It is very difficult to take those steps in a no-growth environment, so it has to be balanced with steps that might be able to support demand and longer-term changes of growth.

So this week, I tried to make some suggestions on the supply side and ways in which the single market could also further deepen integration to support growth.

Now, again, as the Fund has pointed out, the banking system also remains under significant stress, and at the one hand, you need the banks to build their capital; on the other hand, what we have seen is that if the banks build their equity ratios by shrinking, as they by and large have been doing, that is going to put a stress on credit contraction and undermine the basis of growth.

So I think the debate understandably reflects the fact of trying to balance these issues, but I think we are now in a phase where, after the ECB provided very attractive financial resources to a number of the banks to be able to buy government debt, as we have seen in various newspapers--I think your own today, as I saw one story--they are about at the end of that point and limit. So I think further actions are going to be called for, and the point I keep emphasizing, wherever it is around the world, is not just to focus on the austerity and macroeconomic stability measures, but you need to do this in a context of growth, in part because we have to face the political economy issues.

So, as I have emphasized, the real countries that are critical because of size at this point are Italy and Spain. You have governments that are taking strong actions. It would certainly help if they got some support from some of the types of things that I and others have talked about so as to help with growth and the politics of reform.

As for your second question, the deleveraging process in European financial institutions has certainly begun. I tend to agree with I think the IMF report and others that said that there is more to go.

We have seen the effects, differential effects, around the world. I just came from East and South Asia. You have definitely had a pull-back in some of the project lending and sale of some of the assets in East Asia. A number of the Asian banks have stepped in, so it has not really had a significant contractionary effect.

Starting late last year, I again worked by my friends at the EBRD and EIB and EC to try to reactivate the Vienna Agenda because I have been most concerned about the Southeastern European and the Balkan countries. And there, working with the banks, we are seeing the contraction. So far it has been orderly, but it is a good example of trying to get ahead of the curb, Sudeep.

I was talking about this late last year, and people did not yet see the numbers, and as you saw the first quarter with the BIS numbers, you started to see this contraction.

And I was actually pleased--through the IBRD, we were able to expand our commitment over the next couple years by about $4 billion, IFC another $2 billion, so our total, I think, is about $27 billion.

I think that is an example of the types of things you need to do, frankly, even in the months ahead to get ahead of some of these problems.

North Africa has clearly been affected by this, and this is again the political implications, because for a number of the North African countries, Europe is a very important export market, so it is important. I was with the Tunisian Finance Minister yesterday, and I am going to meet them again--as they undertake these difficult reforms, they need to get support from us and others along the way.

And an area that Pascal Lamy of the WTO and I have been watching particularly closely is trade finance. A lot of the European banks were big players in trade finance, particularly the French banks, so you are seeing some shrinkage of that. In the areas, what I am most concerned about--and by the way, this is where the new capital rules from Basel III are going to have to be watched very closely; the Basel Committee took some steps to alleviate some of the changes that they had put in, overly stringent, in my view, but now we are trying to gather some data with the WTO and others to make a stronger case for easing some of the strictures they have--because what I am most worried about is a place like Sub-Saharan Africa, where I suspect that the exporters of major commodities to the U.S. and Europe will still get trade finance, but if you are a small country, if you are a small bank, if you are a small client, if it is intra-African trade--which should be the future of growth--those are likely to get squeezed.

So, again, what I try to do in these meetings, Sudeep, with my G20 colleagues, because we see all these marketplaces, is to try to anticipate some of those issues, and those are some of the ones that I am focusing on.

And then, the last one, of course, which is implicit in your question, is that we are not out of this mess yet, so if you have a more seismic event because of failures of management, that is going to hit everybody hard. It is still a fragile economy, as we and the IMF have pointed out.

MR. MILLS: Yes, the woman in the second row, please.

QUESTION: Yes, Antonella Ciancio from Reuters.

We would like to know how concerned are you with Argentina's move to nationalize the country's leading oil company, and if this somehow threatens to further isolate the country.

Thank you.

MR. ZOELLICK: Well, I think it is a mistake, and I think it is a symptom that we have to watch out for of, under economic pressure, whether countries will move to more national, autarchic policies, respond more to populism, respond more to protectionism. So I think it was the wrong thing to do.

MR. MILLS: Thank you.

Yes, Howard?

QUESTION: Hi, Bob, and thank you. Howard Schneider with The Washington Post.

On the Arab Spring, I was just curious--Madame Lagarde laid out what is basically now a stalemate between the IMF and Egypt over support there, and I was wondering from your perspective, to what degree you think political uncertainty in those countries is holding up the type of support you feel needs to come from the outside to get their economies back on track.

And then, secondly, briefly, what is your advice to Kim on transition? What are the mechanics of that going to look like, and what are you going to be able to do to help him in the door?

MR. ZOELLICK: Well, on the first one, Howard, it varies a lot by country. So let's take Tunisia, which I referenced with Sudeep. You know, Tunisia has gone through an election process. They have an Islamic-based government. The government seems to be stressing the continuation of the policies that the prior interim government focused on, and those are policies we are trying to do everything we can to support--not just basic financing, but policies of inclusion, because you have had sort of a growth model that didn't pay enough attention to people in the west and central part of the country--trying to focus on some of the youth unemployment issue, and--very nicely with the agenda we are setting on openness and social accountability--when we did a Development Policy Loan, they accompanied it with a series of changes to try to open up their process. And I think it is not only good politics, it is good economics, obviously, to have the society feel that they are engaged in the process.

But the Tunisian economy is still under significant stress; it has lost tourism; it has lost some of the effects of exports to Europe. So IFC, our private sector team, has also been doing investments in there.

So, in the case of Tunisia, this is not going to be done overnight. They are going to face a tough year. But I think it is in everybody's interest to try to support them if the government stays on the current path, because again, looking at this from a bit of an economic history point of view, I think the North African transformation is going to take a while, but what I saw happen in East Asia and elsewhere is that countries that undertook the reforms become models for others.

Morocco has had a fast-paced evolution as opposed to revolution. They are making a series of reforms, so we are trying to support them, again, on the openness side, the investment side, the private sector side.

We are trying to support Jordan. Jordan is going through a combination of political and economic reform.

In a country like Libya, they have the resources. There, we have been trying to work with some partners in a difficult security environment to help create the capacity for basic financial management and other activities.

So, the big one obviously is Egypt, which you referred to, and here, as I suspect from what you have said that Christine mentioned, they not only face an economic and financial challenge, but they are in the process of a political transition. And I understand that there will be a need to be able to base the legitimacy of whatever economic relationships they have on the Fund and the Bank with the people who will be exercising power under the new Constitutional arrangement.

So I think that that does slow up the process. Life is full of twists and turns. That is kind of the facts of life and the reality. There are things that I think the interim government can do to create a better environment for this. We have kept doing investment lending, and we have tried to focus some of the investment lending in Egypt on some of the sectors in need, but the bigger policy loans that we would do would depend on the macroeconomic issues that the IMF is addressing; and frankly--at least it has been my guidance--they will also be based on some of the openness and social accountability issues that we have seen in Tunisia and other countries. And that, I think--that is also important because I think you are going to be going through a political transition process, and the more open it is, then, whoever is elected in this year or next year or others I think will have a better sense of engagement with the economic changes in Egypt and the relationships with the World Bank.

So this is one of the things, I think--we have also had to learn lessons from the Arab Spring. Economic growth alone is not enough. It has to be inclusive. And frankly, the more we can emphasize the things I have been talking about, about openness and social accountability, I think that is the future direction of the Bank as well as these countries.

You asked a second one--oh, on Dr. Kim. Well, I have been through a lot of transitions in my life, so I have some experience with them.

We tried to centralize a team to avoid the standard problem of the 500-page briefing book by focusing on some of the issues that will come up first.

I think these Spring Meetings are timely because we will get a sense from the Governors and the Board about some of the issues that would be of nature to be a continuation--some of the things that I have talked about in this Modernization Agenda which has both internal and external aspects.

And beyond that, I always think that as you are turning something over, you have to actually have some degrees of restraint. You know, he will be the person in charge. I happen to believe that change is good for institutions as well as me, and it is good to have a fresh person come in.

So we will try to explain where we think some of the issues are. He certainly has a lot of perspectives, I am certain, from the tour that he took around the world and the discussion with the Board. So I am certain that by the time he takes office, he will have a pretty good feel for the challenges ahead.

MR. MILLS: Yes, right over there, to the gentleman with his hand up--no, to the gentleman.

Thank you.

QUESTION: Larry Elliott, of The Guardian.

In your five years at the Bank, what do you consider to be your biggest success, and what do you consider to be your biggest failure?

MR. ZOELLICK: Can I hold on the second one?

[Laughter.]

MR. ZOELLICK: Well, I tried, Larry, briefly, in the opening, sort of anticipating this question, to say that in my own mind, I have seen these three phases.

So, first, when I came into the Bank, as for those of you who have covered it, it was a tumultuous period. And so I had the challenge of a leader trying to turn around an institution. And to the credit of the institution, the best way to get out of some of the internal strife was to focus people on the mission--that is why people came to the Bank--and we were able to do that relatively quickly. We had some complicated issues to deal with in governance and anti-corruption and others where Paul Volcker and others helped.

Second, before too long, we had the food and fuel crisis start to hit us in late 2007, so I am particularly pleased that sort of a combination of my international experience and kind of reading what was happening in the market, we moved quite quickly, and I think if you talked to people in the food security community, they felt that the Bank was more agile than it might have been in the past, but--and in addition, we start to see this as an opportunity to invest in agriculture going into the future. And then, as I have mentioned, in the financial crisis, doing about a quarter-trillion dollars of support is not only important financially, but it was important to how we designed a lot of it. So the fact that in trade finance, Lars and the IFC team leveraged our financing to keep a lot of banks in the market. I mentioned the Vienna Initiative. In Indonesia, we organized with the Asian Development Bank, the Australians and Japanese, a backstop proposal.

So part of my point here is that it is not just financing; we need to be able to leverage it and kind of innovate it in innovative ways, and I think we were able to do that, including some things that I hope will become seeds of very important future growth, like this Asset Management Company which is a subsidiary of IFC, where we are now tapping the sovereign funds and pension funds, and we already have $4 billion of money that the Bank would have never seen going into African equity markets.

So it is not only the response in financial terms, but it is also the innovation. And then, as part of that, it goes to this modernization phase which I think has just been begun, and there, as I mentioned briefly in my remarks--and here, I credit some of my team, Caroline Anstey, Sanjay Pradhan--together, we decided this focus on really opening up the Bank as an institution was key to not only development, but frankly, having a healthier Bank. And so an Open Information policy, it is the first among multilaterals, based on an Indian and U.S. Freedom of Information Act--this Open Data Initiative is just going to--I have already seen it--it is going to drive a whole new way of doing policy, because we are making this accessible with mobile phone technology in any country around the world, so we are going to have a much more interactive process.

And just to connect this to a little bit of the transition debate, Larry, it was interesting that--and I am not saying this was any of the three candidates--but some others were saying: Oh, the Bank is doing too many things. It must focus on these three things.

In my view, that was a mistake that elitist economists made 20 years ago, where they said "We know what developing countries need." And maybe it is because of my private and policy background--my approach has been fundamentally different. It says let's focus on the client; let's hear what the client needs, and then let's take the innovation from the world and apply it so, and then, in the process, we can learn with the client through an open process about how to do it better.

So I think--I am sure you have encountered this with The Guardian, but I have encountered it at university campuses – is that you know, the Bank is still a big, multilateral, Washington-based institution, but the more you open up an institution, it is the best antidote to conspiracy theories and better policy.

Pardon?

QUESTION: [Inaudible; no microphone.]

MR. ZOELLICK: Well, I'll let you be the judge of the failures; how about that?

[Laughter.]

MR. MILLS: Yes--thank you--to the gentleman right here.

QUESTION: Thank you.

IMF Managing Director Christine Lagarde just said that low-income countries have to deal with lower aid resources. I would like you to elaborate a little bit more specifically on Latin America, if you have figures.

And I would also like to know if the World Bank is concerned about the rise of protest movements and more social demands in different countries, even the Occupy Wall Street movement here in the United States, in Europe, and all this situation.

MR. ZOELLICK: Well, on the first one, I guess the way I would approach the concerns for low-income is not just in certain countries but across countries, because one thing a lot of people have lost sight of is that two-thirds of the people living on under $2 a day are in so-called middle-income countries.

I was just in India, where I met with women with a Self-Employed Women's Association. These are extremely poor women. So one of the challenges for the Bank is getting people to recognize that you are going to need to deal with poor people in a variety of different countries.

Now, foreign assistance is clearly a piece of that, and it’s under stress. By and large, if you look at the OECD numbers, the countries have sort of generally kept up what they were doing. But I guess my suggestion on that goes to some of the things we have said in modernization. Take a country like the United Kingdom, which has maintained its effort to reach the 0.7 percent of GDP under difficult budget circumstances. It is a heroic effort. They, the Australians, Canadians, and others have done good work on this. But they need to show value for money, so this goes right back to the Results Agenda. And this is where some of the things we are trying to do to have evidence-based learning about what works and doesn't work--I think it is something Dr. Kim is interested in--this will be very important for the future.

But another point of it is, one reason that it is important to draw the middle-income countries into the multilateral institutions is about a conservative estimate of the foreign assistance from the emerging borrowers, or the emerging countries, was about $15 billion last year. That's about 15 percent of the total, and it is probably a conservative estimate. And recognize, part of my view is you’ve got different sources of funds. You are also going to have investment funds. So the rise of China and the increase in commodity prices has probably been one of the best things for Latin America. The challenge, however, will be for Latin America to use that--and that is one of the things I will be talking about with the Governors--as a broader basis for more inclusive growth.

So I tend to--I gave a speech last year where I talked about "Moving Beyond Aid," and the idea was not that we can overcome that today, but we need to move beyond kind of a charity model to the notion of investing in human capital, in infrastructure, with developed and developed countries, and in some ways, the best test is Sudeep's opening question--what are people most worried about today--Europe. And if two-thirds of the global growth comes from developing countries, we have to change people's mindsets. These are potential poles of growth.

I just met yesterday with the African Governors. What are they interested in? Energy. Infrastructure. Regional integration.

So those are the elements that we need to focus on. And I guess the last point on the poorest--the world is an unpredictable place. We are not going to change that. So people who believe they can control this price or that price, I wish them--well, I don't wish them good luck--but anyway, it is not going to work.

What we should be doing, however, is making sure that every country has an effective social safety net, and we had a function on this yesterday, because we have learned a lot from developing countries about how to do this in a cost-effective way.

The Bolsa Familia Program in Brazil, the Oportunidades in Mexicos--these are done for half of one percent of GDP. Trust me, if the U.S. Congress could get their entitlement programs down to any remote degree of that, they would be pretty happy; and yet they cover 15 to 20 percent of the people, and they provide a ladder up. So, and Ethiopia has a different model. So we at the Bank have helped extend conditional cash transfer programs to about 40 other countries. So we had the Philippines Secretary here yesterday, and they have expanded to 3 million families.

So to me, the message for aid is not just the aid number but its effectiveness, and for the poorest, let's focus on basic safety nets for every country to deal with the volatility and uncertainty, because the other lesson we learned is if you wait until the crisis, it is too late.

MR. MILLS: Okay. I think we have time for one more question.

Yes, we'll go to the gentleman in the back, please.

QUESTION: Hi. I am Bernard Busuulwa from Uganda.

Now, Robert, I would like to know--you talked about the pending problems with trade finance among African exporters. I would like to know what is your first advice to central bankers in Africa who are terribly challenged in getting their banks to increase access for the exporter, and pro-poor growth in cross-border trade, especially at a time when their economies are also feeling the heat of the euro zone stress and weakness in the American economy.

MR. ZOELLICK: Well, my first advice is not necessarily to the African central bankers; it is to some of, the Basel and developed world central bankers that, as they develop these rules, build back in feedback loops, because as sure as we are sitting here, they are going to find ways that over-constrict--it is the way the pendulum works--and I am most concerned about the effect of over-constriction on poor countries and developing countries. And in the area of trade finance--something that Lamy and I have talked about--part of the problem is they put in capital requirements and they don't have very good evidence, but frankly, the evidence we have is that it is a pretty short-term loan, and, it’s a pretty - it tends to get repaid.

So my first start is with the developed world.

But secondly--again, I would not focus so much on the central bankers--there is a huge opportunity in Sub-Saharan Africa to remove border barriers, to create more integrated markets. So--you are from East Africa--I visited a one-stop border place that we helped open up--I think it was actually Kenya and Uganda--and it had gone from two days for goods transporting to two hours. And this does not require huge sums of money. We now have the systems. We have worked with some private sector firms to develop the software on this. And it means sort of systematizing the process.

Then, if we can combine that with infrastructure development so, whether it is roads or railroads or ports or electricity, to be able to strengthen it.

So you are right--at least, I think you are right--by saying that subregional integration--and I would focus on sub-regions--East Africa, West Africa, Southern Africa, Central Africa--is the way to really start to drive a potential for growth.

And I just keep coming back to this, because when I read most of the press accounts of these meetings, everything is focusing on the macroeconomic/fiscal/monetary. Fine. I am not denying that. But you are not going to ever deal with this problems unless you create sources of growth, and there are sources of growth in Africa, and I see it with private sector firms being interested in it, but Africans have to create the right enabling environment.

MR. MILLS: Very good. Thank you very much.

New Database Shows Three Quarters of World’s Poor Are “Unbanked”

2012-04-19T13:45:00.000Z

WASHINGTON, April 19, 2012 – Three quarters of the world’s poor do not have a bank account, not only because of poverty, but also because of the cost, travel distance, and amount of paper work involved in opening one, says the World Bank.

Those without access to formal banking often have to rely on money lenders who often charge high fees. The “unbanked” are also less likely to start their own business or insure themselves against unexpected events.

Financial inclusion, or being “banked” can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow allows them to build their assets, start a business, invest in education, establish a credit rating, and eventually own a home.

"Providing financial services to the 2.5 billion people who are ‘unbanked’ could boost economic growth and opportunity for the world's poor,” said World Bank Group President Robert B. Zoellick. “Harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others. This new report on the world's 'unbanked' makes the case: the more poor people are banking today, the more they are banking on their future."

Women are particularly disadvantaged when it comes to access to financial services. Only 37% of women in developing countries have an account, whereas 46% of men do. That gap is even bigger among those in poverty: Women living below $2 a day are 28% less likely than men to have a bank account.

Worldwide, 22% of adults report having saved at a formal financial institution in the past 12 months, according to the World Bank’s Global Financial Inclusion Database, or Global Findex. Findex provides the most comprehensive picture yet of how people around the world save, borrow, make payments and manage risks.

Even among those who do have a formal bank account, only 43% of adults use their account to save. Yet 61% of account holders worldwide use their account to receive payments from an employer, the government or family members living elsewhere.

The data was collected by Gallup, Inc. using the Gallup World Poll Survey. The Bank’s Development Research Group is building the database with a 10-year grant from the Bill & Melinda Gates Foundation.

Few adults in developing countries use formal financial products to manage risk. More than 11% of adults in developing countries have an outstanding loan for emergencies or health-care needs, but more than 80% of these adults use only informal sources of credit. Of adults in developing countries working in farming, forestry or fishing, only 6% of them have crop, rainfall or livestock insurance.

“Good, comparable national data is so important for the development of effective policies. I hope policy makers will use this research to help make sure everyone, everywhere, has access to financial services,” said Her Royal Highness Princess Máxima of the Netherlands and the UN Secretary General’s Special Advocate for Inclusive Finance for Development.

Money transfers through mobile phones is a form of increasingly popular nontraditional banking that often doesn’t require users to travel or set up an account at a brick-and-mortar bank. Such mobile banking, which allows account holders to pay bills, make deposits or conduct other transactions via text messaging, has expanded to16% of the market in Sub-Saharan Africa, where traditional banking has been hampered by transportation and other infrastructure problems. Kenya, where 68% of adults report using a mobile phone for money transactions, has seen particularly impressive growth in this market.

“Nearly two-thirds of the unbanked cite poverty as the obstacle to financial access, but about a third also blame the cost of opening and maintaining an account or the banks being too far away, which means long bus rides for many,” said Asli Demirguc-Kunt, the Bank’s director of development policy and chief economist of the Finance and Private Sector Network.

The Bank’s financial inclusion portfolio totals over $3 billion, with projects in over 60 countries. It supports country action plans for financial inclusion as well as increasing access to financial products and services such as credit, savings, payments, and insurance through low cost delivery mechanisms (ATM kiosks, mobile phones).

REGIONAL HIGHLIGHTS

High Income: Nine out of 10 adults in high-income economies report having an account at a formal financial institution.

East Asia and Pacific: 28% of adults in EAP reported having saved at a formal financial institution in the past 12 months, compared to 10 percent in the rest of the developing world.

Europe and Central Asia: 61% of account holders in ECA use their accounts to receive wages, compared to 32% in the rest of the developing world.

Latin America and Caribbean: 41% of non-account-holders in LAC cite cost as a reason for not having a formal account. 19% of adults in LAC report having a credit card, compared to 5 percent in the rest of the developing world.

Middle East and North Africa: Account holders in MENA access their accounts less frequently than do account holders in other regions: 17% of adults with a formal account report zero deposits and withdrawals in a typical month, compared to 8% globally.

South Asia: The relative gender gap in formal account ownership is highest in South Asia: 41 percent of men and 25 percent women have an account. 73% of savers in South Asia report saving for an expense in the future such as an education or a wedding.

Sub-Saharan Africa: 16% of adults in SSA report having used a mobile phone to pay bills, send or receive money in the past 12 months, compared to 3% in the rest of the developing world.

Contacts:

In Washington: Merrell Tuck-Primdahl, (202) 473-9516, Mtuckprimdahl@worldbank.org

For Broadcast Requests: Natalia Cieslik, (202) 458-9369, ncieslik@worldbank.org

For More Information:

· Measuring Financial Inclusion: The Global Findex Database World Bank Policy Research Working Paper 6025. Asli Demirguc-Kunt and Leora Klapper, 2012.

· Global Findex Website - http://www.worldbank.org/globalfindex and Data Portal - http://datatopics.worldbank.org/financialinclusion/

· World Bank eAtlas of Financial Inclusion http://www.app.collinsindicate.com/worldbankatlas-fi/en

· Little Data Book on Financial Inclusion - http://data.worldbank.org/products/data-books/little-data-book-on-financial-inclusion

· For info on operational support as well as other related resource materials visit – www.worldbank.org/financialinclusion

The project Rio Grande do Norte: Regional Development and Governance is now in the pipeline.

2012-04-19T04:00:00.000Z

The project Rio Grande do Norte: Regional Development and Governance is now in the pipeline. To see more information, see the project information in the World Bank project database

WB/Colombia: Mi Sangre Foundation and WB Work Together to Consolidate Peace through Education

2012-04-19T00:26:52.000Z

BOGOTA, April 16TH, 2012 – Colombia’s Mi Sangre (My Blood) Foundation, led by celebrity singer Juanes, and the World Bank, through its Director for Colombia and Mexico, Gloria M. Grandolini, subscribed a Memorandum of Understanding today with the intention of coordinating the efforts of both institutions, thus promoting education for peace.

According to Juan Esteban Aristizabal (Juanes), founder of Mi Sangre, this is a very valuable partnership, given the expertise and technical support of an organization such as the World Bank.

“Through the Mi Sangre Foundation, I have been able to meet many young people, friends and colleagues who are able to establish bonds and feel responsible for their community, their history and building their own future. Through art, many boys, girls and youngsters are able to transcend the violent situation in their neighborhoods and improve their lives,” Juan Esteban stated. “The weapons they use are microphones, guitars, spray cans... through them they express their dreams, their view of the current situation and their proposals. I believe in them. With Mi Sangre I have seen the other side of the conflict, and because of this, I am convinced that the new generations carry with them an immense transformative power, and that it is worth investing in them,” he concluded.

This agreement seeks to establish a relationship of mutual learning based on shared lessons and methodologies that can then be extended and copied in Colombia and abroad.

“The situation faced by boys, girls and young people in Colombia serves as an urgent warning sign that we need to work towards creating protected spaces where that can develop social skills, create networks and have access to complementary activities outside school,” said Gloria M. Grandolini, World Bank Director for Mexico and Colombia. “The World Bank recognizes the power of music and art to transform the lives of young people impacted by violence. Music and art are instruments that build peace through and within education,” she added.

Some of the activities to be undertaken include analyzes of education for peace campaigns; recruitment prevention through art and culture; development of instruments to talk to potential donors; systematization of the Foundation’s experience, using the methodology developed by the Alliance of Education for the Construction of a Peace Culture; and the organization of a national forum on education for peace through art and culture, among others.

The signing of this agreement exemplifies a novel collaborative approach that includes key actors involved in the construction of development solutions.

Contacts:
In Colombia: María Clara Ucros, (5280) 326-3600, mucros@worldbank.org
In Washington: Denise Marinho Dos Santos, (202) 473-7587, dmarinho@worldbank.org

For more information, please visit: worldbank.org/co
Visit us on Facebook: facebook.com/bancomundialcolombia
Or our YouTube channel: youtube.com/bancomundialcolombia

In Spite of Persistent Global Volatility, Latin America and Caribbean Poised to Grow

2012-04-18T16:00:00.000Z

· Portfolio capital flows see eight-fold rise between early 2011 and 2012

· Continued slowdown in Europe and sluggish U.S. recovery

· Potential China and/or commodity prices downturn

WASHINGTON, April 18, 2012 – Latin America and Caribbean (LAC) countries are forced to confront the new global reality of persistent volatility, resulting, among others, from wide fluctuations in capital flows in search of easy profits and with little concern for long-term horizons, according to the semiannual report by the World Bank Chief Economist Office for Latin America and the Caribbean released here today.

The report "Latin America Copes with Volatility, The Dark Side of Globalization" finds that portfolio flows to the region have surged in the first months of 2012. Investments from mutual funds in the largest seven LAC countries -- which fell markedly during the second half of 2011 – rose eight times in January and February of 2012, compared to the average monthly flows in the beginning of last year.

The magnitude of these flows is such that if Vanguard, one of many international asset management companies, decided to move 1 percent of its mutual funds to Colombia that would amount to a capital inflow equivalent to 6 percent of that country’s gross domestic product, the report explains.

“The problem is that this type of market-based, as opposed to bank-based, capital flows has not added to financial stability—as many had initially hoped. To the contrary, portfolio flows into and out of emerging economies tend to be pro-cyclical and seem to be increasingly respond to global factors, rather than country-specific ones,” said World Bank’s Chief Economist for the region, Augusto de la Torre. “International financial intermediation has tilted towards a herd behavior that is focused on short-term horizons and where being able to exit rapidly dominates over patient analysis of long-term prospects.”

An attractive choice for foreign investors, LAC has been growing and building up steam for more than a decade. Current growth forecasts for the region stand between 3.5 and 4 percent for 2012 and 2013, higher than those of Eastern Europe and Central Asia, and similar to those of East Asia. Inflation rates are expected to remain, on average, around 6.25 percent this year.

But even regions that seem to be in a position of strength, such as LAC, must learn to cope with volatility that originates elsewhere, especially if they hope to secure and further its recent gains. That is why it is essential to better understand the nature of the unprecedented challenge posed by today’s financial integration.

The report also evaluates the vulnerability of countries across LAC to three types of external shocks:

· A slowdown in Europe and slow recovery in the U.S.,

· A downturn in China and/or a decline in commodity prices, and

· A rise in risk aversion in international financial markets.

“In today’s financial world, more integration means more exposure to external volatility but not necessarily means more vulnerability. The risks are not in how much you are exposed but, more importantly, in how little policy response capacity you have to cope with such unpredictability,” said De la Torre. “Several countries in Latin America are exposed to both a slowdown in U.S., Europe and China and a reduction in commodity prices and investment. However, since policymakers in these countries have space to maneuver, their level of vulnerability remains low.”

Indeed, countries such as Brazil, Chile, Colombia, Mexico, Paraguay, Peru, and Uruguay have high exposure to external shocks and yet a relatively low vulnerability, the report says. Those countries count on healthy levels of foreign reserves and exchange rate flexibility that can help absorb shocks. They also have the capacity to respond at from various fronts, including fiscal, monetary and macro-prudential. The latter, which gained momentum in the aftermath of the 2008/09 crisis, refers to measures aimed at dampening excessive financial fluctuations and enhancing the resiliency of financial systems to them. Macro-prudential policy instruments include liquidity requirements, cycle-adjusted loan to value ratios, and taxes on short-term capital inflow surges.

On the other hand, there are countries such as Venezuela and Ecuador, mostly exposed to fluctuations in oil prices but highly vulnerable. Policymakers in these countries would clearly benefit from reforms oriented at building greater room to maneuver, particularly through fiscal buffers. Most English-speaking Caribbean countries are both highly exposed to external volatility and highly vulnerable, as their policy maneuvering room is severely limited by the countries’ size and openness as well as high levels of public debt.

Somewhere in the middle are the rest of LAC countries with significant levels of exposure to external fluctuations and moderate vulnerability. For these countries, small improvements in their monetary, fiscal, and macro-prudential policies can have large payoffs in terms of reduced vulnerability, the report argues.

The report also highlights that, adding to today’s complexities in financial globalization, is the rising role of the international asset management industry (particularly mutual funds, pension funds, and hedge funds). This industry is becoming the main conduit for cross-border capital movements, as compared to banks.

In times of high risk aversion and uncertainty, even the well managed countries with a strong set of policies are vulnerable to the whims of those investors, according to the report. When tensions subside, however, those countries are better able to recover fast and are better placed to reap the benefits of global integration for long-term growth with social equity.

Contacts

In Washington: Sergio Jellinek (202) 458-2841, sjellinek@worldbank.org

Marcela Sánchez-Bender (202) 473-5863, msanchezbender@worldbank.org

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

Visit us on Facebook: http://www.facebook.com/worldbank

Be updated via Twitter: http://www.twitter.com/WorldBankLAC

For our YouTube channel: http://www.youtube.com/worldbank

The project Ceara Rural Sustainable Development and Competitiveness has changed to Active

2012-04-13T04:00:00.000Z

The project Ceara Rural Sustainable Development and Competitiveness has changed to Active. To see more information, see the project information in the World Bank project database

The objectives of the Ceara Rural Sustainable Development and Competitiveness Project for Brazil are to: (i) improve the sustainability of rural production and rural income generation; and (ii) contribute to the borrower’s efforts to universalize access to water services. The project has three components. (1) Economic inclusion component will promote investments in rural economic inclusion in the borrower's territory, through: (a) the provision of support for: (i) the preparation of business plans; (ii) the construction of warehouse facilities (iii) productive and environmental services subprojects; and (iv) the development of a state-wide disaster risk management policy, contingency plans and early warning systems for the prevention of natural disasters. (2) Water services component will support the State's efforts to ensure universal access to potable water and water services in rural areas and for the scaling up of existing water distribution management system models. (3) Institutional strengthening and project management component will support the technical and administrative management of the project, including information system, monitoring and impact evaluation; training and technical assistance activities to strengthen stakeholders and public functions that are critical to ensure the project implementation and sustainability.

The project Panama - Strengthening the Performance of Basic Health Services has changed to Dropped

2012-04-13T04:00:00.000Z

The project Panama - Strengthening the Performance of Basic Health Services has changed to Dropped. To see more information, see the project information in the World Bank project database

The project Sao Bernardo Integrated Water Management in Sao Paulo Program has changed to Active

2012-04-13T04:00:00.000Z

The project Sao Bernardo Integrated Water Management in Sao Paulo Program has changed to Active. To see more information, see the project information in the World Bank project database

The project Second Programmatic Public Finance and Social Progress Developent Policy Loan is now in the pipeline.

2012-04-12T04:00:00.000Z

The project Second Programmatic Public Finance and Social Progress Developent Policy Loan is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Fiscal Risk Management Development Policy Loan has changed to Active

2012-04-05T04:00:00.000Z

The project Fiscal Risk Management Development Policy Loan has changed to Active. To see more information, see the project information in the World Bank project database

The objective of the Fiscal Risk Management Development Policy Loan Project for Mexico is to support Mexico's fiscal risk management policies so as to foster the efficient and effective implementation of public sector expenditure programs. This will be achieved by (i) supporting Mexico's integrated risk management approach, (ii) promoting the institutionalization of risk mitigation policies, and, (iii) highlighting critical elements of Mexico's risk management framework. The operation contains three policy areas. (1) Budget stability and transparency will improve fiscal and public debt management practices and enhance budget stability and transparency; (2) Natural disaster risk management will improve the Government's ability to respond to natural disasters and mitigate the impact of natural disaster costs on the budget; and (3) Subnational debt management will enhance fiscal and debt sustainability of state and municipal governments.

The project Integrating Biodiversity in Infrastructure Planning is now in the pipeline.

2012-04-04T04:00:00.000Z

The project Integrating Biodiversity in Infrastructure Planning is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Trinidad & Tobago: Extractive Industries Transparency Initiative Implementation is now in the pipeline.

2012-04-03T04:00:00.000Z

The project Trinidad & Tobago: Extractive Industries Transparency Initiative Implementation is now in the pipeline. To see more information, see the project information in the World Bank project database

The project JSDF Grant for Emergency Community Cash for Work Project has changed to Closed

2012-04-02T04:00:00.000Z

The project JSDF Grant for Emergency Community Cash for Work Project has changed to Closed. To see more information, see the project information in the World Bank project database

The project Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan is now in the pipeline.

2012-03-27T04:00:00.000Z

The project Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Sustainable Production Systems and Biodiversity is now in the pipeline.

2012-03-21T04:00:00.000Z

The project Sustainable Production Systems and Biodiversity is now in the pipeline. To see more information, see the project information in the World Bank project database

The project CO Education System Modernization has changed to Dropped

2012-03-16T04:00:00.000Z

The project CO Education System Modernization has changed to Dropped. To see more information, see the project information in the World Bank project database