Latvia | World Bank

Health equity and financial protection datasheet : Latvia

2013-05-08T04:00:00.000Z

The health equity and financial protection datasheets provide a picture of equity and financial protection in the health sectors of low-and middle-income countries. Topics covered include: inequalities in health outcomes, health behavior and health care utilization; benefit incidence analysis; financial protection; and the progressivity of health care financing. The tables in this report show how health outcomes, risky behaviors and health care utilization vary across asset (wealth) quintiles and periods. The quintiles are based on an asset index constructed using principal components analysis. Benefit-Incidence Analysis (BIA) shows whether, and by how much, government health expenditure disproportionately benefits the poor. The distribution of subsidies depends on the assumptions made to allocate subsidies to households. Under the constant unit cost assumption, each unit of utilization is assumed to cost the same and is equal to total costs incurred in delivering this type of service divided by the number of units of utilization.

PPIAF assistance in Latvia

2013-04-02T04:00:00.000Z

Latvia joined the World Bank in August 1992. Since then, the Bank has played an important role in supporting Latvia's transition through lending, policy dialogue, and analytical and advisory assistance. The World Bank's mission in Latvia is to make the most of its European Union (EU) membership, help its economy grow, create jobs, strengthen government institutions, and improve the lives of all citizens, particularly the poor. Public-Private Infrastructure Advisory Facility (PPIAF) has funded one activity in Latvia: a grant approved in 2000 to help establish a multi-sector regulatory commission. This activity built on and completed work initiated by other donors, especially the EU and World Bank, which had been active in providing assistance towards consensus building for creating a multi-sector regulator. Latvia became an EU country in 2004 and is no longer eligible to receive PPIAF funding. Latvia requested PPIAF assistance in 2000 to plan and coordinate the implementation of its action plan to prepare a regulatory commission following the passage of a law establishing a multi-sector regulator funded out of the World Bank's institutional development fund and a policy and human resources development grant.

Doing business 2013 : Latvia - smarter regulations for small and medium-size enterprises : comparing business regulations for domestic firms in 185 economies

2013-01-22T05:00:00.000Z

This tenth edition of Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting eleven areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 185 economies, from Afghanistan to Zimbabwe, over time. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. This economy profile presents the Doing Business indicators for Latvia. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2012 (except for the paying taxes indicators, which cover the period January - December 2011).

Can public works programs help the poor during crises?

2013-01-21T05:00:00.000Z

Economic crises can be particularly arduous for poor and vulnerable people. In particular, job losses stemming from economic downturns undercut the ability of more vulnerable households to support themselves. Public works programs, which help sustain poor households through temporary employment, are one method used by governments to lessen the impacts of crises. The World Bank is focused on helping countries end poverty. Key to this knows which programs do and do not yield tangible results. To help policymakers assess the effectiveness of Latvia's public works program, the World Bank supported an evaluation of the government-sponsored public works initiative, which was launched in response to the global financial crisis of 2008-2010. The evaluation found that the program successfully reached its intended target, helping Latvia's worst-off cope with the crisis by increasing their short-term incomes. For policymakers and development experts, this evaluation underscores the usefulness of public works programs as emergency social safety net instruments even in upper-middle income countries.

Latvia - LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT : P058477 - Implementation Status Results Report : Sequence 05

2012-12-27T05:00:00.000Z

Trade at a glance

2012-12-04T05:00:00.000Z

This country level trade brief summarizes insights from the world trade indicators database as well as analyzes national impacts and responses to the food crisis and global recession. The trade at a glance tables for Latvia provides a snapshot of key aspects of trade policy and performance.

Trade at a glance

2012-10-23T04:00:00.000Z

This country level trade brief summarizes insights from the world trade indicators database as well as analyzes national impacts and responses to the food crisis and global recession. The trade at a glance tables for Latvia provide a snapshot of key aspects of trade policy and performance.

Crossing Boundaries

2012-09-06T23:45:00.000Z

As prepared for delivery

Friday, September 7, 2012

World Conservation Congress

Jeju, Korea

Rachel Kyte, Vice President, Sustainable Development

Distinguished guests, ladies and gentlemen - I am honored to have been asked to make the keynote address at this vital gathering of conservation thinking, leadership and action. I am particularly delighted to be here as I had the privilege and honor to work at IUCN a number of years ago. It feels good to be back again!

This Congress brings together some of the world’s smartest thinkers on the policy and practice of conservation and environmental protection. If anyone is going to guide the world in new ways of thinking and acting, it is this group of 7,000 or more which traverses all spheres - private, public, civil society, multilateral, large, small, left, right.

You, as a group, are not at the fringes of decision-making - you are at the very heart of it. Your scientific research, dedication, pursuit of better policies and connections to community all go towards much better, more informed decision-making.

Over the last few years I have had the opportunity to cross some of the boundaries that very often define our perceptions and determine the work in our institutions. My perspectives changed as I moved from IUCN to working with private companies during my time at the World Bank’s private sector arm - the IFC - and they’re changing again now as Vice President for Sustainable Development at the World Bank.

Today, I am convinced that we will have to make a bigger effort to cross boundaries – between our organizations, across public and private sectors and within civil society - so that we reach a better future for our planet.

Let’s take a look at just some of the evidence of environmental decline before us. Evidence is one of the many things that the World Bank and IUCN share.

· The number and size of populations of the world’s species have decreased by almost a third over the last 100 years and this is projected to continue decreasing

· Over 60 percent of ecosystems are in worse shape now than 50 years ago

· 85 percent of ocean fisheries are fully exploited or over-exploited or depleted

· The condition of coral reefs has deteriorated by 38 percent since 1980

· 80 percent of people live in areas where the quality of rivers is threatened

· Climate change is worsening everything. Flood disasters increased by 230 percent and drought disasters by 38 per cent in the 20 years to the early 2000s.

At the same time that this assault on nature has been occurring, we have enjoyed an unrivalled period of economic growth which has seen 660 million people lifted out of poverty in the past 20 years. Don’t get me wrong - we are not saying we need to stop growth to protect nature. Rather, we are calling for a different kind of growth - a greener and more inclusive growth.

An indispensable part of this will be realizing the potential of ecosystems within our economies and to put nature at the foundation of economic strategies. Nature needs to be firmly on the agendas of finance ministers and discussed in board rooms with the focus on building the public-private partnerships to invest in our natural wealth.

Are we ready to do this? Increasingly the World Bank Group is. Now let me share with you three reasons for my cautious optimism that others are ready too.

Firstly, governments are increasingly stepping up - whether by increasing the number and extent of areas under protection or by better recognizing the value of nature and ecosystem services.

Governments, however, are facing daily trade-offs - for example - building a road through a park so that farmers can have better access to markets and/or conserving a road-less national park. Or, they’re weighing up a marina in a mangrove area to boost tourism versus protecting it for its fish breeding, storm protection and carbon storage values.

Effective conservation cannot and will not be driven just by conservation for conservation’s sake. Fortunately, governments increasingly recognize that maintaining and, eventually, accounting for their natural capital comes down to a question of social and economic development. There may not be simple win-wins all the time; but there may be approaches that can come close enough.

We are seeing more and more good examples. In the State of Acre in the northwestern corner of Brazil, the State Government has been making a concerted effort to bring services to its dispersed rural population and to move away from a growth model based on extraction of forest products and expansive agriculture. Where previously 90 percent of Acre’s timber extraction was illegal, now the majority comes from approved forest management plans. Real GDP has increased by over 44 percent and deforestation rates have declined by 70 percent. Acre is showing that safeguarding a state’s natural wealth will also help lift its people out of poverty.

In Liberia, the government has installed a chain of custody system for exporting logs that is helping reduce illegal logging and bringing in much-needed funding for conservation. The Government is also enforcing fishing regulations and arresting vessels found to be fishing illegally.

To manage trade-offs, governments need better information on the economic and social effects of their decisions. More and more governments are embracing the need to use natural capital accounts alongside GDP. At the World Bank Group, we are working with countries from Botswana to the Philippines to put the value of natural capital into the center of their economic decision making. After the 50:50 Campaign at Rio, 62 countries have signed on to support natural capital accounting along with the heads of close to 90 companies. These companies are doing this for competitive reasons - they need to be able to value their assets over the long term.

That brings me to the second reason for my optimism -- the growing leadership coming from parts of the private sector, be they small businesses and local entrepreneurs or Fortune 500 companies.

I see real traction emerging from the advent of rigorous performance standards and principles for corporate behavior. For example, we are beginning to see evidence that the revised IFC Performance Standard on Biodiversity is driving major change both at corporate headquarters and, more importantly, on the ground.

Companies working in developing countries are increasingly investing in biodiversity expertise, in community development, environmental restoration and long-term conservation capacity building. The big shift is that companies are beginning to see this as more than reputational risk management and rather as a way to improve their operations and manage business risk, a key part of creating value. Mainstreaming nature conservation across their operations makes good business sense. Why? Because many companies depend on freshwater, genetic resources, climate regulation, and natural hazard protection to run their businesses successfully and to see their profits grow.

As well as making good business sense, conserving nature and maintaining the resilience of ecosystems upon which people and business depend, allows companies to build trust in the communities in which they operate and among stakeholders abroad. This creates something many call a “social license to operate”.

We are beginning to see more and more companies engage with conservation organizations and external experts to better understand the environment in which they are working. This has inspired some companies to go beyond the minimization of project impacts but also to consider how they might contribute to conservation more broadly.

One example is Rio Tinto which launched its biodiversity strategy at this Congress in 2004. That strategy committed the company to making a Net Positive Impact on biodiversity through its operations. For the past seven years, the company has been piloting the strategy - working alongside government, conservation groups and civil society in Madagascar to build public sector capacity, develop livelihood alternatives, and establish offsets to conserve high biodiversity value areas.

Other examples include Shell in Gabon and Peru LNG which have been working together with the Smithsonian Institution to develop science-based assessment and monitoring of project impacts.

I also see the first few encouraging examples from the finance sector in integrating nature and ecosystem services protection into their investments.

That takes me to my third reason for optimism - that the need for action is overcoming global political sclerosis.

Rio+20 confirmed for me that while at the global level we lack political leadership today to gain consensus, global inaction is being overwhelmed by the ideas, the innovation and the real commitment to action from smart policymakers, city mayors, community leaders and CEOs.

Like-minded coalitions across sectors emerged on almost all issues. People gravitated to ideas and approaches that promised action - whether that was about ocean health, natural capital accounting, access to sustainable energy or reducing short-term climate pollutants.

For the more than 1000 business executives who attended Rio, the message was that action on sustainability is all about future markets, future products, future employees, future investors, and competitiveness linked to sustainability as shared value.

There was an almost overwhelming sense that while we need global governance for ultimate speed and scale, we cannot afford to wait for international agreements to do what everyone knows needs to be done. For every square bracket negotiated, a species is lost and that window of opportunity gets smaller and smaller.

…………………

So, while I have these reasons for cautious optimism --- I am also speaking from a place of urgency. To address the challenges ahead, each and every one of us will have to cross boundaries and we in the conservation community will need to move collectively outside our comfort zones. To this end, I have three appeals.

First to governments: Governments have responsibilities to their citizens that are measured in units of finance – jobs, tax receipts, GDP. We are not naïve: There can be and will be tensions between conservation and development; that’s why public servants need to be armed with the tools and information they need to make fully informed decisions. And that’s why those of you here who work in government should unpack the economic benefits of conservation and translate them into real numbers through natural capital accounting to transform conservation from a discrete sector to an engine of inclusive green growth.

Second to the Private Sector: To be part of the solution, companies need to raise the profile of nature conservation in their boardrooms and recognize the value of nature to their bottom lines. On the ground, companies need to commit to best management practices which will sometimes mean working beyond their immediate project areas to offset impacts and to secure supply chains. This raises technical, political and governance challenges which is why companies need to reach out and offer a hand in partnership to governments, to conservation organizations and even to each other. We hear from the private sector the need for a level playing field when it comes to best practice in biodiversity management. A coordinated and loud voice from industry groups towards government regulators might be part of the solution.

We also need to find ways to bring to scale financial instruments like green bonds, conservation banking, subsidy reform, license to operate agreements for generating new potential sources of support so that good practice can be rewarded with access to capital.

Third to Civil Society: Very often, civil society, conservation organizations and academic institutions are the backbone of any commitment to conserving nature.

But it is important to remember that it’s governments that have the main responsibility for the stewardship of natural assets. These are their citizen’s natural assets; governments must manage them. The rest of us – civil society, donors and philanthropists – must work together, provide them support while demanding transparency and holding them to account, so that they can do more and do it better.

We in the conservation community need to see the private sector as full partners for solutions and not just a threat or a fundraising opportunity. For example, in public private partnerships - if we were able to develop aggregated offsets, is the conservation community collectively ready to provide the means for verification?

Across all these areas of engagement, the World Bank Group stands ready to do its part and to do more:

We entered the debate on green growth in May 2012 through our report ‘Inclusive Green Growth: The Pathway to Sustainable Development’. We want to contribute, in particular by focusing on the inclusiveness of green growth, on the importance of sound fiscal policies - like the removal of inefficient fuel subsidies - and on ensuring that nature considerations are taken into account in economic decision-making. Our work on green growth is, importantly, supported by the Korean Government.

With new energy and emphasis around Natural Capital Accounting stemming from Rio, it is crucial to keep up the political support and momentum, attract key new country partners, and visibly demonstrate action - including through our global partnership called WAVES.

We also want to do more to streamline nature considerations into our own operations by coordinating the implementation of the IFC’s Performance Standards and the World Bank’s operational policies. And I expect that the Bank Group will work more on aggregated offsets as a means of bringing public and private interests together to conserve at scale within a transparent framework.

We are also working on enhancing environmental law enforcement to ensure that the benefits of nature accrue to national economies and local communities - not thugs and organized crime.

Conclusion

Ladies and Gentlemen, as we begin this Congress:

· Let’s agree that we need to do more, better and with more far-reaching consequences

· Let’s together move away from our ardent attachment to old ideologies, old attitudes that stop us from finding solutions together. What we need today is innovation, communication and partnerships between governments, communities, financial institutions, companies and conservation organizations.

· The type and range of solutions will be as diverse as species and ecosystems. Just as nature is not just a set of charismatic species, we will need more than a set of boutique projects and anecdotes to show large-scale impact. We will need to prioritize without devaluing any one community’s chance of life. We will need brave thinkers at the table, all types of partnerships, people with the humility and patience to make them work. Who better than those of us already humbled by the glory of nature and the complexity of its life support?

· Let’s cross our boundaries together.

· I look forward to being with you every step of the way.

Drivers of convergence in eleven eastern European countries

2012-08-30T04:00:00.000Z

This paper investigates the drivers of growth and prosperity in a group of eleven European countries -- Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and equity markets are somewhat behind. As in the rest of Europe, demographic developments will pose huge challenges for the sustainability of public finance in the EU11 economies. In the next several decades, the EU11 labor force is expected to contract more than labor forces in the rest of the European Union, making it even more urgent that countries in the region reform pension systems, change migration policy, and find incentives to attract talent to the region. Closing the gap with the rest of the European Union in educational attainment levels and improving education quality might significantly soften the constraints imposed by the demographic threats and produce sizable returns in terms of additional income convergence.

Did Latvia's public works program mitigate the impact of the 2008-2010 crisis ?

2012-07-23T04:00:00.000Z

To mitigate the impact of the 2008-2010 global financial crisis on vulnerable households, the Government of Latvia established Workplaces with Stipends, an emergency public works program that targeted registered unemployed people who were not receiving unemployment benefits. This paper evaluates the targeting performance and welfare impacts of the program. It exploits the over-subscription of Workplaces with Stipends to define a control group. The paper finds that the program was successful at targeting poor and vulnerable people, and that leakage to non-poor households was small. Using propensity score matching, the paper finds that the program's stipend mitigated the impact of job loss and, in the short term, raised participating household incomes by 37 percent relative to similar households not benefiting from the program. The paper also finds that the foregone income for this program was less than foregone incomes estimated in other countries. This suggests a dearth of income-generating opportunities in Latvia; thus the program provided temporary employment opportunities and helped the unemployed mitigate the impact of the crisis. However, relative to the depth of the crisis in Latvia, the Workplaces with Stipends program scale was small, which meant long waiting periods for program applicants.

Latvia - LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT : P058477 - Implementation Status Results Report : Sequence 04

2012-07-09T04:00:00.000Z

Zoellick to Join Harvard’s Belfer Center, Peterson Institute

2012-06-27T13:00:00.000Z

WASHINGTON, June 27, 2012—Robert B. Zoellick today said he would join the Belfer Center for Science and International Affairs at Harvard University and the Peterson Institute for International Economics in Washington DC after he steps down as World Bank Group President on June 30.

Zoellick will become the Peterson Institute’s first Distinguished Visiting Fellow as well as also becoming a Senior Fellow at the Belfer Center at the Kennedy School of Government at Harvard.

“I appreciate the opportunity to engage with the scholars and practitioners at Harvard’s Belfer Center and the Peterson Institute for International Economics,” said Zoellick. “I hope to work on the intersection of economics and security, applying history to policy questions of today. Both institutions have been at the cutting edge of research and policy development, and I have benefited greatly from both in the past.”

As the 11th president of the World Bank, Mr. Zoellick turned around an institution in trouble in 2007, recapitalized the Bank, and expanded financing for the poorest countries following the food, fuel and financial crises of recent years. He modernized the Bank by making it more accountable, flexible, fast-moving, transparent, and focused on good governance and anti-corruption. He has increased representation of developing countries in governance and staffing and encouraged developing countries to set their own priorities rather than have them dictated from the Bank. His record has also been marked by an increased role for the private sector through the bank’s International Finance Corporation (IFC), which under his leadership has recruited sovereign wealth funds and pension funds to invest in poor countries, especially in Africa.

Before his term at the Bank, Mr. Zoellick served as Vice Chairman, International, of the Goldman Sachs Group as well as Managing Director and Chairman of Goldman Sachs’ Board of International Advisors from 2006-2007. Previously, he was Deputy Secretary of State in 2005-2006 and a member of the Cabinet as U.S. Trade Representative from 2001 to 2005.

From 1985 to 1993, he served at the Treasury and State Departments in various posts, as well as White House Deputy Chief of Staff. He was the lead U.S. official in the "Two-plus-Four" process of German unification in 1989-90 and served as "sherpa" for the preparation of the G-7/8 Economic Summits in 1991-92.

Mr. Zoellick graduated Phi Beta Kappa from Swarthmore College in 1975 and earned a J.D. magna cum laude from the Harvard Law School and a Master of Public Policy (MPP) from the Kennedy School of Government in 1981.

Contacts:

In Washington: Frederick Jones, (202) 473-9336, fjones@worldbank.org

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

Innovative Fund to Boost Food Security and Farmer Livelihoods is Launched

2012-06-18T19:04:43.000Z

New Approach to Financing Innovations in Food Security and Agricultural Development Unveiled at G20 Summit in Mexico

AgResults: Innovation in Research and Delivery

LOS CABOS, Mexico (June 18, 2012) – An innovative initiative that will enhance global food security and improve the livelihoods of developing country farmers through prizes and other market-based incentives was announced today by G20 Leaders. With a results-driven funding model that rewards innovators for tackling some of the biggest problems in food security and agricultural development, AgResults addresses global challenges in food security and agriculture by generating market-oriented solutions. The initiative aims to achieve significant improvements in the wellbeing of the poor and vulnerable in developing countries with a fund of up to $100 million, to be administered by the World Bank. The governments of Australia, Canada, Italy, the United Kingdom, the United States, as well as the Bill & Melinda Gates Foundation, are supporting this effort.

AgResults uses pull mechanisms to encourage innovation through results-based payments such as prizes that are typically paid out when certain objectives or milestones have been met. Such financing mechanisms have seen success in generating innovation and market-oriented solutions in other domains such as healthcare, and AgResults aims to deliver similar gains in global food security and agricultural development.

AgResults was born out of the realization that there is a great need for increased investment in global food security and agriculture, in particular from the private sector. The FAO estimates that world food production must double by 2050 to feed a growing world population, while nearly a billion people suffer from a lack of crucial micronutrients in their diet—a hidden hunger that inhibits the development of children and reduces adult productivity. Recognizing these gaps, leaders at the June 2010 G20 Summit in Toronto committed to exploring innovative, results-focused ways of harnessing private sector innovations in food security and agricultural development in developing countries. This commitment involved a two-year effort by committed partners to develop AgResults, culminating in today’s launch of the initiative in support of the Summit priority of enhancing global food security. AgResults addresses this priority directly through new funding and a focus on bringing new, innovative approaches to bear on global food security issues.

In the coming years, AgResults will launch a series of pilots that address some of the biggest problems in global food security and agricultural development. The initiative’s portfolio of pilots will represent a diverse mix of agriculture and food security issues, testing different types of pull mechanisms in different regions globally. The initial set of pilots, focusing on maize production in Sub-Saharan Africa, include:

· Incentivizing the adoption of on-farm storage technology for smallholder farmers;

· Encouraging innovative distribution of a breakthrough technology to reduce aflatoxin contamination; and

· Building a market for new vitamin A-enhanced varieties of maize.

Additional pilots will be explored in the coming years, potentially including livestock vaccines and fertilizer innovation as well as new ideas related to increasing crop yields, decreasing post-harvest losses, increasing livestock productivity and improving nutrition.

For further information, please visit www.worldbank.org/cfp/agpm

Contacts:

In Washington: Amy Stilwell, (202) 458-4906, astilwell@worldbank.org

In Mexico: Fernanda Zavaleta, 52-55-5480-4252, fzavaleta@worldbank.org

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

Global Mobility Unaffected by Financial Crisis, as Remittances Remained Resilient

2012-06-13T13:00:00.000Z

WASHINGTON, June 14, 2012 – The global financial crisis of 2008/09 has not sent migrant workers streaming back home, despite worsening employment prospects and anti-immigration rhetoric in some destination countries, says a new book on migration and remittances, published by the World Bank.

In fact, migrants may have mitigated some of the pain of the crisis as they tend to work for lower wages, receive fewer benefits and rely relatively little on the state, says the ‘Migration and Remittances during the Global Financial Crisis and Beyond’ book.

“During the crisis, remittances continued to provide a steady source of foreign currency to developing country economies at a time when foreign aid remained flat and foreign direct investment declined sharply,” said Otaviano Canuto, Vice President, Poverty Reduction and Economic Management, at the World Bank.

Removing restrictions on human mobility may help enhance financial flows among nations and alleviate some of the adverse effect of the crisis, says the book. With migrant workers projected to remit about $399 billion to their home countries during 2012, compared to $372 billion in 2011, remittances are the most tangible link between migration and development.

Although many of the 215 million international migrants are facing worsening employment prospects in some destination countries, particularly high-income Europe, their cash support to families in their home countries has remained resilient, posting, in 2009, the only decline in recent memory. Even then, remittances decreased by a modest 5.2 percent, in sharp contrast with the precipitous declines seen in global private capital flows.

“The resilience of remittances is good news for developing countries as they remain one of the less volatile sources of foreign exchange earnings, particularly for the less developed countries. At the household level, these cash transfers are, in many cases, the only lifeline for families in the home countries,” said Hans Timmer, Director of Development Prospects at the World Bank.

However, despite many years of recording ever-increasing volumes of remittances, leveraging this rather large and growing source of funds for socio-economic development remains a key challenge, with the vast majority of remittances used for maintaining families and for the purchase of consumer goods.

The book, which is the first comprehensive study of remittances during the global financial crisis, is a compilation of 45 separate studies that identify and discuss remittance practices across the world and possibilities for the future. Each study is authored by a different expert who analyzes certain countries and certain aspects of remittances, ranging from patterns of remittance flows to usage of remittances received by communities and households.

The book is co-edited by Dilip Ratha, Manager of the Bank’s Migration and Remittances Unit; Ibrahim Sirkeci, Professor of Transnational Studies and Marketing at Regent’s College, London; and Jeffrey Cohen, Associate Professor of Anthropology at the Ohio State University, USA, who also co-author the book’s first chapter on remittance flows and practices during the crisis.

“Contrary to expectations, we found no evidence of return of migrants, even as the financial crisis reduced employment opportunities in the United States and Europe, with many countries, such as Spain, offering financial incentives to encourage migrants to return,” said Sirkeci.

Migration, in fact, was a strategic response to the financial crisis. Like any political or environmental catastrophe, the financial crisis caused human insecurity and people in developing countries responded by crossing borders or moving domestically to survive the impact of the crisis.

“Remittances have remained resilient and, barring the decline in 2009, have maintained a healthy growth momentum. However, since the book went to press, the global economy continues to experience serious bouts of volatility, which could affect migrant earnings and, hence, remittances,” said Ratha.

For receiving countries, a key factor behind the resilience in remittances is the diversification of migrant destinations.

Countries in South Asia and East Asia with many migrants in the United States, Europe and the Gulf Cooperation Council (GCC) countries continued to register increased remittance inflows. One study in the book concludes that only a prolonged global slowdown would cause a decline in remittance flows to India, the largest recipient of remittances in 2011, with $64 billion.

In contrast, Latin America and the Caribbean region, whose migrants are concentrated in the United States, suffered a dramatic decline in remittances throughout the financial crisis. Mexico, the world’s third largest recipient of remittances ($24 billion in 2011), saw a significant decline in remittance inflows from the United States during the crisis. A similar strong impact was found in El Salvador. Both cases underline the fact that many Latin American countries were vulnerable to the effects of crisis, with a special impact on the urban youth in these countries, who face more difficult labor market prospects and declining opportunities to migrate.

Studies related to the effect of the crisis in the European Union on remittance-receiving countries found that Spain has been the fastest-growing immigration destination for the past decade and is now the fifth largest remittance-sending country, after the United States, Saudi Arabia, Russia and Switzerland.

In the East Asia and Pacific region, remittances account for as much as 12 percent of GDP, as in the case of New Zealand and Pacific island economies, while remittances have been keeping the national economy afloat in the Philippines for the past three decades.

Also, due to the depreciation of local currencies of many remittance-recipient countries, such as India, Mexico, and the Philippines, migrants from those countries turned to investment-oriented remittances in South Asia and East Asia where goods, services, and assets suddenly became significantly inexpensive and affordable.

The book recommends that countries develop policies that reduce restrictions on human mobility and develop programs to facilitate the use of remittances for long-term investments and promoting entrepreneurship. Such changes, tailored to both host and recipient country needs, can strengthen the contribution of remittances to development.

Eliminating the complexity of transactions and reducing transaction costs would also help increase the volume of remittances utilizing official channels, to enable many small nations, in particular, to reap the socio-economic benefits of migrant earnings.

The book is available for purchase at http://publications.worldbank.org/18826

The latest migration and remittances data are available at www.worldbank.org/migration

Interact with migration experts at http://blogs.worldbank.org/peoplemove/

Contacts:

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

For TV/Broadcast: Natalia Cieslik +1 (202) 458-9369, ncieslik@worldbank.org

WB Urges Developing Countries to Strengthen Domestic Fundamentals, to Weather Global Economic Turmoil

2012-06-12T17:00:00.000Z

WASHINGTON, June 12, 2012 – Developing countries should prepare for a long period of volatility in the global economy by re-emphasizing medium-term development strategies, while preparing for tougher times, says the World Bank in the newly-released Global Economic Prospects (GEP), June 2012.

A resurgence of tensions in high-income Europe has eroded the gains made during the first four months of this year, which saw a rebound in economic activity in both developing and advanced countries and an easing of risk aversion among investors. Since May 1^st, increased market jitters have spread. Developing and high-income country stock markets have lost some 7 percent, giving up two-thirds of the gains generated over the preceding four months. Most industrial commodity prices are down, with crude and copper prices down by 19 and 14 percent, respectively, while developing country currencies have lost value against the US dollar, as international capital fled to safe-haven assets, such as German and U.S. government bonds.

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So far, conditions in most developing countries have not deteriorated as much as in the fourth quarter of 2011. Outside of Europe and Central Asia and the Middle-East and North Africa, developing country credit default swap (CDS) rates, a key indicator of market sentiment, remain well below their maximums from the fall of 2011.

“Global capital market and investor sentiment are likely to remain volatile over the medium term – making economic policy setting difficult. In this environment, developing countries should focus on productivity-enhancing reforms and infrastructure investment instead of reacting to day-to-day changes in the international environment,” said Hans Timmer, Director of Development Prospects at the World Bank.

Increased uncertainty will add to pre-existing headwinds from budget cutting, banking-sector deleveraging and developing country capacity constraints. As a result, the World Bank projects that developing country growth will slow to a relatively weak 5.3 percent in 2012, before strengthening somewhat to 5.9 percent in 2013 and 6.0 percent in 2014. Growth in high-income countries will also be weak, 1.4, 1.9 and 2.3 percent for 2012, 2013 and 2014 respectively – with GDP in the Euro Area declining 0.3 percent in 2012. Overall, global GDP is projected to rise 2.5, 3.0 and 3.3 ⁽¹⁾ percent for the same period.

This baseline scenario remains the most likely outcome. However, should the situation in Europe deteriorate sharply no developing region would be spared. Developing Europe and Central Asia is especially vulnerable because of its close trade and financial ties with high-income Europe, but the world's poorest countries will also feel the fall out – especially countries that are heavily reliant on remittances, tourism or commodity exports or that have high-levels of short-term debt.

“Where possible, developing countries need to move to reduce vulnerabilities by lowering short-term debt levels, cutting budget deficits and returning to a more neutral monetary policy stance. Doing so will provide them with more leeway to loosen policy, should global conditions take a sharp turn for the worse,” said Andrew Burns, Manager of Global Macroeconomics and lead author of the report.

The full report and accompanying datasets are available at www.worldbank.org/globaloutlook

Regional Highlights

Growth outlooks for each country are available in the full report at:

www.worldbank.org/globaloutlook

Growth for the East Asia and Pacific region is on a moderately easing trend, with GDP gains for the region dropping to 8.3 percent in 2011 from 9.7 percent in 2010. The recent deterioration in global financial conditions is expected to add to pre-existing headwinds, including relatively weak demand from the high-income world, and a slowing phase in China to moderate regional growth to 7.6 percent in 2012, before broader global recovery lifts exports and growth for the region in 2013 to 8.1 percent, easing to 7.9 percent in 2014. China’s GDP is expected to accelerate from 8.2 percent in 2012 to 8.4 percent by 2014.

Notwithstanding the economic downturn in the Euro Area in the fourth quarter of 2011, developing Europe and Central Asia posted strong (5.6 percent) growth in 2011, driven by robust domestic demand and good harvests in countries such as Russia, Romania and Turkey. However, severe weather conditions in early 2012, capacity constraints in some countries, deleveraging by European banks, and the renewed turmoil in high-income Europe are projected to slow regional GDP growth to 3.3 percent this year, before a modest recovery begins with growth firming to 4.1 and 4.4 percent in each of 2013 and 2014.

Growth in the Latin America and the Caribbean region eased to 4.3 percent in 2011, from 6.1 percent in 2010, due to the pronounced slowdown in the region’s larger economies. In Brazil, GDP slowed sharply to 2.7 percent in 2011 (7.5 percent in 2010), as investment growth and private consumption eased. The region’s short-term outlook is clouded by a weak external environment, and capacity constraints in select economies. Regional GDP is expected to decelerate to 3.5 percent in 2012, firming to 4.1 percent and 4 percent in 2013 and 2014, respectively, while growth in Brazil is projected to remain below potential at 2.9 percent in 2012, before accelerating to 4.2 percent in 2013 and 3.9 percent in 2014.

Uncertainty, volatility, and political change continue to characterize conditions in the Middle East and North Africa region. Aggregate GDP grew by 1 percent in 2011, down from 3.8 percent in 2010. Regional growth is projected to remain weak at 0.6 percent for 2012, mainly reflecting the influence of sanctions on growth in Iran, and continued GDP declines in Syria and Yemen. As these elements fade in importance, growth for the region should step up to 2.2 percent in 2013 and 3.4 percent in 2014. Egypt’s economy is projected to move out of negative territory to 1.4 percent growth in 2012, rising to 4.6 percent in 2014. Growth is also expected to pick up strongly in Jordan and Lebanon, while oil prices, which are projected to average near $107/bbl in 2012, will benefit the region’s oil exporters.

Growth in South Asia slowed to 7.1 percent in 2011, from 8.6 percent in 2010, as headwinds from the Euro Area crisis caused a steep deceleration in exports and a reversal of portfolio inflows. Growth in India was particularly weak due to monetary policy, stalled reforms, and electricity shortages, which, along with fiscal and inflation concerns, cut into investment activity. Policy uncertainties, fiscal deficits, entrenched inflation, and infrastructure gaps will continue to weigh negatively on investment activity and are expected to limit regional growth to a relatively modest 6.4 percent in 2012, 6.5 percent in 2013, and 6.7 percent in 2014. India will see growth (measured at factor cost) increasing to 6.9, 7.2 and 7.4 percent in fiscal years 2012-13, 2013-14 and 2014-15, respectively.

Economic growth in Sub-Saharan Africa remained robust in 2011 at 4.7 percent. Excluding South Africa, growth in the rest of the region was stronger, at 5.6 percent, making it one of the fastest growing developing regions. Higher commodity prices and improved macroeconomic and political stability in recent years has supported increased private investment flows to the region, with promising prospects in the medium term. As global demand firms and domestic demand remains robust, regional growth is expected to strengthen to 5 percent in 2012, 5.3 percent in 2013 and 5.2 percent in 2014.

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

In London: Derek Warren + 44 (20) 7592-8402 , dwarren1@worldbank.org

For TV/Broadcast: Natalia Cieslik +1 (202) 458-9369, ncieslik@worldbank.org

(1) Using purchasing power parity weights, global growth would be 3.3, 3.9 and 4.2 percent for 2012, 2013 and 2014, respectively.

Globalization: Made in the Americas

2012-06-08T00:30:00.000Z

AS PREPARED FOR DELIVERY

Inter-American Dialogue 30^th Anniversary Dinner

Remarks of Robert B. Zoellick, President, World Bank Group

June 7, 2012

Introduction

Thank you for the honor of your invitation to commemorate the 30^th Anniversary of the Inter-American Dialogue.

The origins of this Dialogue stretch back to a discussion between Peter Bell and Abe Lowenthal on a park bench.

Peter and Abe were disturbed by the breakdown in inter-American exchanges during the Falklands/Malvinas war, and by the lack of ties with the rising democrats of Latin America. So they discussed bringing together leaders from across the hemisphere to set a new inter-American agenda. The Dialogue held its first ad hoc conference in late 1982.

Today, 30 years later, Latin America’s very success offers the opportunity to remake that Hemispheric partnership around new pillars:

· A revived free trade policy that will aid structural reforms for growth in all our countries;

· An energy transformation, ending the Hemisphere’s energy dependency;

· A new diplomacy infused with private sector pragmatism to solve public problems;

· Shared security; and

· The first Democratic Hemisphere.

For the United States, this new agenda could enable us to rely on a great, home-grown asset – Hispanic-Americans – as the vanguard of U.S. connectivity in a new Western Hemispheric economy.

This Dialogue can – and I believe will – help drive this change: to create a “Globalization: Made in the Americas.”

Under Peter Hakim’s and now Michael Shifter’s energetic leadership, the Inter-American Dialogue has become the leading U.S. center for policy analysis, exchange, and communication in the Western Hemisphere.

The idea at the heart of the Dialogue remains very much the same as that which emerged from the conversation on the park bench: that through dialogue and shared vision, interested citizens across the hemisphere together can plant the seeds of new policy ideas and practical proposals for progress in the Americas.

So tonight, let’s put that idea to work.

A Different Vantage Point

Just two months ago, the leaders of the Western Hemisphere met in Cartagena for the Summit of the Americas. Colombia was an excellent host, and the Summit showcased the country’s many hard-won achievements.

But the news reports were, frankly, disappointing. Aside from the behavior of some Secret Service agents, the coverage focused on disagreements about Cuba and drugs. Some even suggested this would be the last Summit of the Americas. The agenda seemed stuck in a time warp.

So when Carla Hills asked if I could join you this evening, I thought the best way to celebrate the Dialogue’s Anniversary was to offer new possibilities for the Americas in a fast-changing global economy.

My vantage point on our hemisphere is different from many U.S. contributors to the Dialogue. I am not a specialist in Latin America.

Like many of my U.S. foreign and security policy colleagues, much of my energy has been concentrated on the issues of Europe and the Asia-Pacific, the Middle East and Southwest Asia.

Yet because of my economic background, Latin America and Canada have loomed larger on my global map.

In the 1980s and early 90s, working with Secretary of Treasury and State James Baker, we were immersed in issues of Latin American debt and reforms for growth, the Canadian and North American FTAs, and Central American security and democracy.

In 2001, as U.S. Trade Representative, we were fortunate to build on that experience, negotiating FTAs with Chile, Colombia, Peru, Panama, the five countries of Central America and the Dominican Republic. Together with NAFTA, these FTAs cover 54 percent of the economy of our hemisphere, not including the United States, offering an underutilized web of free traders that could support deeper integration in the Americas – even hemispheric free trade and democracy.

Five years as President of the World Bank Group has added to this perspective.

Why am I stressing this global outlook on Latin America? Because, while working on the issues of our region, I have urged my Latin counterparts to look globally, too.

Instead, for too many years, the dialogue within our hemisphere seemed constrained by a North-South framework. The United States loomed large – whether as a hegemon, source of support, market, model, danger, or even frustrating land of inattention.

On development, debt, investment, competition, and trade, Latin Americans need to see the wider horizon – especially to benchmark with East Asia. And beyond East Asia, Latin America has a new role to play in building multiple engines of growth with other emerging markets. It is time to break out of that North-South construct.

Consider Canada’s experience in combining regional integration with global reach: of course, Canada’s FTA with the United States in 1988 deepened the two countries’ economic integration – but in addition, the competitive adjustment driven by that accord made Canadian business more competitive globally.

A new hemispheric partnership requires leaving old habits, old mindsets, and old models of dependency behind.

That partnership will necessitate a new mix of partners, public and private.

That partnership should be the next challenge for the Summit of the Americas and this Dialogue.

Latin America’s Record of Gains

Latin America’s recent record of gains now puts it in a position to remake the Hemispheric partnership.

The numbers tell the story.

Between 2003 and 2010, the income of the average Latin American increased by more than 30 percent. A silent revolution in macro-financial policy has strengthened the economic immune system of many countries. We saw the payoff after the fall of Lehman Brothers: Sound policies in Latin America enabled expansions to offset the downturn without the aftershocks that now threaten Europe.

About 73 million Latin Americans have been lifted out of poverty since 2003. Today, almost a third of the region’s population is considered middle class.

Latin America is breaking a pattern of persistent inequality, including through an increase in women’s involvement in the economy, particularly from poor families. Colombia and Peru have buttressed this trend by boosting opportunities for people of African and indigenous origin, seeking to overcome divisions that populists have exploited.

Mexico and Brazil have led in developing well-targeted conditional cash transfer programs that have revolutionized public assistance. These programs couple income grants for poor families with incentives for health check-ups and keeping children in school. Mexico’s Oportunidades program has probably done more for women’s health than anything in the country’s history.

These are safety net programs that appeal to a fiscal conservative: They cost only about half a percent of GDP. The World Bank has helped export this model to 40 other countries, ranging from Pakistan to the Philippines.

Latin America is “going global.” As the global trade negotiations have stalled, leading Latin American free traders have tried to keep up the momentum. Mexico has FTAs with 59 countries; Chile with 43.

Colombia offers a leading example of how a democracy can combine security, development, and good governance to overcome narco-traffickers, kidnappers, and terrorists. Peru demonstrates how sound economic policy and political commitment across administrations can reverse years of stagnation.

Brazil’s influence is expanding – through its companies, agricultural and mining experience, development work, peacekeeping in Haiti, and interest in Africa. Brazil’s leaders of the left have also turned a page in history by sticking with democracy. Rising leaders of the left in other Latin American countries have seen the benefits for the poor of Brazil’s example, compared to authoritarians who tear down institutions to consolidate personal or party power.

Looking Ahead

So what’s ahead for Latin America?

Latin America’s per capita income is still only at 30 percent of the U.S. level.

To climb higher, Latin American economies will need to leap beyond the so-called middle income trap. Many developing economies make early rapid gains. But then productivity and growth tend to slow.

This is a global challenge. In 1960, the World Bank ranked 101 economies as middle income; by 2008, almost half a century later, only 13 had made it to high income levels – and one was Greece.

Many Latin American countries will need to translate the commodity boom into broader, more diversified economies. This region has lived through roller-coaster booms and busts before.

Higher productivity is the antidote to the middle income trap.

Since the 1980s, Latin America has underinvested in infrastructure – electricity, roads, bridges, ports, transport – and maintaining and operating these services. Currently, Latin America spends 2 to 3 percent of GDP on infrastructure, less than half the rate of investment in East Asia.

Public-private infrastructure partnerships not only offer a source of financing, but also better design, maintenance, and operations to deliver high-quality services on time.

Colombia has experimented with PPPs in urban water supply and sanitation. Mexico’s new Highway Concession Program has mobilized PPP projects of around $11 billion, expanding the country’s major toll roads network by some 25 percent.

Latin America has to anticipate its human capital needs. The region is aging rapidly: today, about 11 percent of Brazil’s working age-population are seniors; by 2050, it will be nearly half.

Latin America also needs to improve the results of its investments in education. By age 15, the learning achievement of the average Latin American student lags two years behind his or her developed country counterparts.

Latin America is recognizing that gender equality is smart economics. Today, women in Latin America outnumber men in schools and universities. Working age women represent roughly 40 percent of the entire labor force in the region.

To continue to grow, the region will need more competition and innovation in the service sector. Competitive services increase productivity. They supply the ‘software’ of integration: transport, where delays and losses can impose significant costs; information technology, because accurate data and effective communication is vital; financial services, to create a supportive business environment; and logistics systems, which are a driver of business competitiveness.

A New Agenda

What do these challenges mean for a new hemispheric partnership? What should have been the news coming out of Cartagena?

Let me offer five ideas.

First, the Western Hemisphere needs to revive an activist free trade and economic reform policy, globally and regionally. We need fresh approaches.

The United States will be cutting agricultural subsidies, especially given high prices, and eliminating protection for ethanol. Why not deploy these to prod others?

Service sector liberalization can boost productivity, open new businesses, create new jobs, and cut the “Latin cost” that many countries impose on their own businesses. Why not deploy this economic need to revive a mutual interest in negotiation?

A strong self-interest can drive this renewed call for liberalization. Latin American economies still need much investment and more robust capital markets – especially in local currencies – that can help Latin American entrepreneurs and family-owned businesses to expand.

Infrastructure investments require capital goods and services, as Panama’s 21st Century Canal project is demonstrating. Why not dismantle barriers to lower the cost of infrastructure expansion?

Better logistics make economies more competitive. The World Bank’s 2012 Logistics Performance Index estimated that Latin American logistics costs are between 16 and 26 percent of GDP – that’s two to four times the average in Europe or East Asia.

The World Bank has helped Colombia and Peru to implement a “single window” approach to customs clearance and border management. In Brazil and Peru, the Bank has worked with international freight forwarders to connect rural, remote villages and small businesses to export through national postal services; in the first six months, more than 300 small firms in Peru became exporters, most for the first time.

Even as the WTO works toward a Trade Facilitation agreement, the Americas could develop an accord that points the way.

Brazilian officials are focused on exchange rates. Yet to really boost growth the target should be productivity. Better infrastructure can help, and so can more efficient and effective public services. The World Bank Group has launched a deeper partnership with the Governors of the Northeastern states of Brazil to overcome these impediments. Over time, however, the United States and its free trade partners should be working with Brazil to rebuild the case for a hemispheric initiative to realize the benefits of trade liberalization and economic reforms.

It takes two to tango, and this agenda requires changes on the part of the United States, too. The United States is no longer leading the open trade agenda, as it relies increasingly on defensive measures. The United States has its own high costs of trade – antiquated ports and laws to protect special interests.

The United States should work with its current free trade partners in the Americas to deepen ties of development, reform, and investment.

The current architecture of US FTAs in the hemisphere offers a solid legal framework, but it needs to evolve into a home for an ongoing dialogue – across countries and with business, academic, civil society, and environmental communities – to see what else can be done to lower costs and barriers and create opportunities.

The United States and its partners could explore progressive integration across the FTAs, for example by expanding provisions to cumulate inputs among partners while qualifying for free trade.

The United States needs to make its hemispheric FTA network dynamic, linked to business and investment policies, and improved governance.

A new concept of an FTA network in the Americas could also support inclusive and sustainable development as the foundation for open societies and borders.

Second, innovation in the energy sector, led by the United States, could transform energy security for North America, the Hemisphere, and the world.

In 2008, imports supplied 70 percent of US oil demand. By 2020, PFC Energy estimates that imports could be down to 40 percent of US oil demand – or even 20 percent if Canadian oil is counted as part of the home market. If natural gas for Canada and the United States is added, U.S. net energy imports from the rest of the world could drop to five percent of U.S. demand. That’s an amazing game-changer in energy.

If Mexico opens PEMEX to real outside investment, the outlook is even brighter. With the discovery of the giant deep offshore PRESAL oil and gas fields, Brazil can play a major role in supplying oil and gas in the region.

Yet there is a need to connect these energy supplies – through infrastructure – with countries in Central America and the Caribbean that have suffered from high prices and limited access. Increased efficiency and alternative sources could help the energy poor, too. It’s long past time for a hemispheric energy policy – blending consideration of inclusive growth, the environment, and indigenous communities’ interests.

Third, this new Hemispheric partnership needs to break old patterns of diplomacy. There are now vibrant private sectors all across the hemisphere. The challenges of overcoming the middle income trap and structural reforms to boost productivity need private sector advice and solutions. All across the developing world, the World Bank is encountering a new pragmatism about involving the private sector in areas that used to be public monopolies: infrastructure; education; healthcare; skills training; delivery of public social services. Advanced economies such as the United States should be taking note, too.

Yet government-business dialogues can be stilted showcases. The Summit of the Americas – and perhaps the Dialogue – should review which approaches work better and why. With some guidance, businesses can better connect possibilities with policies. Governments can commit to responses, commitments, openness, and results.

Fourth, the new Hemispheric agenda should help all 35 countries overcome security threats to growth and opportunity.

The fragile governments of Central America are at risk of being overwhelmed by crime and violence linked to drug trafficking, organized crime, gangs, and firepower. Spain, which has roughly the same population as Central America, has about 400 murders per year; in 2010, Central America had over 18,000.

The region pays a heavy economic price for this insecurity – as much as 8 percent of GDP. The basic legitimacy of governments and institutions is fraying: About half of Central Americans say a military coup could be justified when crime levels are high.

Experiences from Medellin and Rio de Janeiro have shown that the best way to attack criminal insecurity is through an integrated approach: combining stepped-up policing, prevention, and community investments. Quick turnarounds are possible. Strong regional cooperation is indispensable.

The United States has an unfortunate pattern of ignoring dangers in Central America until they explode. This time U.S. diplomacy should work with Mexico, Colombia, and Panama to develop a coherent strategy – not band-aids. As in Colombia, the Central American private sector must also be part of the solution. And the United States should also take responsibility for the drug habits of its public that fuel demand for narcotics from the south.

Fragility in the Caribbean is another soft spot. But small economies can be competitive in many sectors. Accelerating integration in the Caribbean can share services, add to resilience, and boost economic prospects.

Latin America should also be looking toward a greater role in global security – through practical steps, not the old G-77 policies of the past. My friend and former colleague, Bernie Aronson has proposed, for example, that Brazil could lead by voluntarily ending its uranium enrichment program and then calling on other nations – including Iran – to follow its example. If Brazil wants to help shape the 21^st Century, leadership in preventing the spread of nuclear weapons – with an idea and action – would send a powerful signal.

Fifth, the debate over Cuba at Cartagena sounded like hollow echoes from another era. Look ahead, not back.

Chavez’s days are numbered. If his subsidies to Cuba and Nicaragua are cut, those regimes will be in trouble. The democrats of Latin America – left, center, and right – should be preparing. The calls for democracy – for an end to intimidating thugs, human rights, fair elections, and rule of law – should come from all its capitals.

There will soon be an opportunity to make the Western Hemisphere the first Democratic Hemisphere. Not a place of coups, caudillos, and cocaine -- but of democracy, development, and dignity.

This transformation will not be achieved by the Calvo doctrine. By divisive populists. By corruption. By acquiescence. By silence.

You know well that if Latins leave the work to Washington and Ottawa, the opponents of liberty and human rights will play the cards of gringoism and neo-imperialism. Trump them.

Conclusion

For the United States, a new partnership in the Western Hemisphere offers opportunities for renewal at home, too.

All the debates about macroeconomic issues – fiscal and monetary policies – as important as they are, risk inattention to microeconomic incentives, structural reforms in the United States.

Energy. Infrastructure. Education. Human capital. Competition. Environment. Innovation. The United States also needs to clear away old rigidities on these new fundamentals.

The United States also needs to draw on the energies, intelligence, and drive of all its citizens.

As my friend Luis Alberto Moreno of the Inter-American Development Bank has pointed out, the 50 million strong Hispanic community in the United States is a growing market, source of entrepreneurship, and resource for a Hemispheric economic strategy. At over $1 trillion, the purchasing power of Latinos in the United States is larger than the economies of every Latin American country except Brazil.

According to the U.S. Census Bureau, there are between two and three million Hispanic-owned businesses in the United States. Many are small. But they create jobs, earn revenues, and pay taxes.

As Latin America grows, the Hispanic businesses in the United States offer an incredible asset. Hispanics in the United States could be in the vanguard of a new Western Hemispheric economy.

Small and medium-sized Hispanic-American businesses will need help to expand their entrepreneurialism – information about markets, financing, and risk management services. To be most effective, this assistance should be decentralized – perhaps drawing on local chambers of commerce in cities and states where most Hispanic businesses can be found. The Small Business Administration, OPIC, Ex-Im Bank, the Inter-American Development Bank, and the World Bank could then deploy their resources to help.

The world economy is still struggling to recover from the worst blows since the 1930s. Europe is a danger zone. U.S. leadership remains vital to get through the storm, to reach a new world economy of multiple poles of growth.

This is why the news coming out of the Cartagena Summit was disappointing.

This is not a time for drift, for old North-South debates, for retreat behind borders, old mindsets, or out-dated dependencies.

This is a time for the New World to again inspire novel thinking – about development, growth, structural reforms, rule of law and human rights, democracy, and security.

This Dialogue should aim high: To have the Western Hemisphere shape this next era of globalization – so that future historians will title the next chapter, not “The Passing of the New World,” but “Globalization: Made in the Americas.”

Cities to Face Sharply Rising Costs for Garbage Treatment

2012-06-06T15:30:00.000Z

New report points to 70% global increase in urban solid waste

WASHINGTON, June 6, 2012 – A new, far-reaching report on the state of municipal solid waste around the world predicts a sharp rise in the amount of garbage generated by urban residents between now and 2025. The report estimates the amount of municipal solid waste (MSW) will rise from the current 1.3 billion tonnes/year to 2.2 billion tonnes/year, with much of the increase coming in rapidly growing cities in developing countries. The annual cost of solid waste management is projected to rise from the current $205 billion to $375 billion, with cost increasing most severely in low income countries.

The report, What a Waste: A Global Review of Solid Waste Management, for the first time offers consolidated data on MSW generation, collection, composition, and disposal by country and by region. In itself, this is an accomplishment because, as the report states, reliable global MSW information is either not available or incomplete, inconsistent, and incomparable. Nevertheless, the authors of the report point to a looming crisis in MSW treatment as living standards rise and urban populations grow.

“Improving solid waste management, especially in the rapidly growing cities of low income countries, is becoming a more and more urgent issue,” said Rachel Kyte, Vice President, Sustainable Development at the World Bank. “The findings of this report are sobering, but they also offer hope that once the extent of this issue is recognized, local and national leaders, as well as the international community, will mobilize to put in place programs to reduce, reuse, recycle, or recover as much waste as possible before burning it (and recovering the energy) or otherwise disposing of it. Measuring the extent of the problem is a critical first step to resolving it.”

The report notes that municipal solid waste management is the most important service a city provides. In low-income countries, MSW is often the largest single budget item for cities, and one of the largest employers. A city that cannot effectively manage its waste is rarely able to manage more complex services such as health, education, or transportation. Improving MSW is one of the most effective ways of strengthening overall municipal management.

The report shows that the amount of municipal solid waste is growing fastest in China (which surpassed the US as the world’s largest waste generator in 2004), other parts of East Asia, and part of Eastern Europe and the Middle East. Growth rates for MSW in these areas are similar to their rates for urbanization and increases in GDP. There is a direct correlation between the per capita level of income in cities and the amount of waste per capita that is generated. In general, as a country urbanizes and populations become wealthier, the consumption of inorganic materials (e.g. plastics, paper, glass, aluminum) increases, while the relative organic fraction decreases.

“What we’re finding in these figures is not that surprising,” said Dan Hoornweg, Lead Urban Specialist in the Finance, Economics, and Urban Development Department of the World Bank and eco-author of the report, “What is surprising, however, is that when you add the figures up we’re looking at a relatively silent problem that is growing daily. The challenges surrounding municipal solid waste are going to be enormous, on a scale of, if not greater than, the challenges we are currently experiencing with climate change. This report should be seen as a giant wake-up call to policy makers everywhere.”

The authors of the report say an integrated solid waste management plan is needed in cities to approach solid waste in a comprehensive manner. Key to such a plan is consultation and input from all stakeholders, including citizen groups and those working on behalf of the poor and the disadvantaged. Public health and environmental protection aspects of any such plan are also critical.

The report also spells out policy recommendations for reducing greenhouse gas emissions, many of which emanate from inefficient solid waste management practices. Post-consumer waste is estimated to account for almost 5% of total global GHG, while methane from landfills represents 12% of total global methane emissions. The report says that a number of practical approaches could be applied in most cities, including:

· Public education to inform people about their options to reduce waste generation and increase recycling and composting;

· Pricing mechanisms (such as product charges) to stimulate consumer behaviour to reduce waste generation and increase recycling;

· User charges tied to the quantity of waste disposed of, with (for example) consumers separating recyclables paying a lower fee for waste disposal; and/or

· Preferential procurement policies and pricing to stimulate demand for products made with recycled post-consumer waste.

For a link to the report, click here: http://go.worldbank.org/BCQEP0TMO0

Contacts:

In Washington: Roger Morier, +1 202 473 5675, rmorier@worldbank.org

For Broadcast Requests: Natalia Cieslik, +1 202 458 9369, ncieslik@worldbank.org

World Bank Group Unveils New Focus on ‘Green, Clean, Resilient’ Development

2012-06-05T04:00:00.000Z

WASHINGTON, June 5, 2012 -- The World Bank Group today released its ambitious, new Environment Strategy for 2012-2022 aimed at supporting countries to pursue sustainable development pathways that are green, inclusive, efficient, and affordable. The new Strategy responds to calls from governments and the private sector for new approaches to development in light of unprecedented environmental challenges and lays out a vision for “a green, clean and resilient world for all”.

“We’re seeing that working through the nexus of food crises, water insecurity, and energy needs is being made all the more complicated by environmental degradation and climate change,” said World Bank Vice President for Sustainable Development Rachel Kyte. “Countries and communities and the ecosystems they depend on need to build resilience while moving to more efficient growth paths. This Strategy lays out the areas where we will put emphasis as we work to respond to countries’ needs.”

As countries seek to reduce poverty in the face of climate change and other major environmental challenges, the Bank Group is providing knowledge, solutions and financing to foster an environment that is:

· Green where natural resources are sustainably managed and conserved to improve livelihoods and ensure food security;

· Clean in which cleaner air, water and oceans enable people to lead healthy, productive lives and where development strategies emphasize low-emission, climate-smart transport, energy, agriculture and urban development;

· Resilient in which countries are better prepared for shocks and less vulnerable to natural disasters, volatile weather patterns and other impacts of climate change.

World Bank commitments addressing environment and natural resource management have grown from $1.5 billion or 8.4 percent of World Bank lending in FY01 to $6.3 billion or 14.3 percent in FY11.

“The Strategy acknowledges the vital role of the private sector in achieving sustainable and inclusive economic growth and development,” said International Finance Corporation (IFC) Vice President for Business Advisory Services Nena Stoiljkovic. “IFC works with the private sector as an advisor, financier, and standard setter to help unlock this potential.”

The IFC invested $1.7 billion in climate-friendly projects in FY11, up 6 percent from $1.6 billion in FY10.

Under the “green” agenda, a key priority is the Wealth Accounting and Valuation of Ecosystem Services (WAVES) global partnership which supports countries’ efforts to factor natural capital into national accounting systems and through the Global Partnership for Oceans, the focus is on restoring the world’s oceans to health and optimizing their contribution to economic growth and food security. The “clean” agenda prioritizes pollution management through river clean-up and legacy pollution projects while also encouraging low-emission development strategies and financing for renewable energy, climate-smart agriculture, and lower-carbon cities.

The “resilience” agenda, targets support to countries to adapt to climate change, improve disaster risk management, with a focus on vulnerable Small Island Developing States to reduce dependence on oil imports, build sound infrastructure, and restore protective coastal ecosystems such as mangroves.

The Strategy includes action plans for the specific environmental challenges in each developing region of the world.

· In Africa, work will focus on strengthening governance for natural resource management given growing pressure on the region’s agriculture, mining, forests, and water basins. In partnership with other agencies, the private sector, and civil society, the Bank Group is seeking to expand access to clean energy across the region.

· In East Asia and the Pacific the Bank Group is supporting renewable energy and energy efficiency, sustainable urban development and transport, as well as prioritizing the phase-out of numerous industrial pollutants; advising on carbon markets and adaptation in agriculture and coastal infrastructure; scaling up forest management; and strengthening regional partnerships to preserve biodiversity.

· In Europe and Central Asia where many countries are faced with energy shortages and a legacy of industrial pollution, the Bank Group is promoting clean energy and production while supporting programs to dispose of pollutant stockpiles, rehabilitate watersheds and improve disaster preparedness.

· In Latin America and the Caribbean where pressure continues on coastlines, wetlands, and the world’s largest forest cover, the Bank Group is supporting the management of protected areas, the integration of biodiversity conservation into productive landscapes and in some countries, the use of payments for environmental services. It is also providing the world’s most urbanized region with policy advice on cleaner development paths, supporting industrial pollution abatement, and promoting “green cities”.

· In Middle East and North Africa where high population density, water scarcity, and overfishing tend primarily to affect the poor, the Bank Group is supporting programs to strengthen the capacity of countries with shared seas—the Mediterranean, the Red Sea, the Gulf of Aden and the Arabian Gulf—to reduce marine pollution and manage fisheries. Other focus areas include desert ecosystems and livelihoods; improved urban and industrial planning; scaled-up solar power generation; and efforts to reduce vulnerability to drought.

· In South Asia where the poorest live in areas of high soil erosion, variable rainfall, and degraded forests, the Bank Group is helping to strengthen the role of natural resource management in the development agenda, strengthen environmental management in industry and reduce the costs to countries of environmental degradation.

Meeting the challenges of a green, clean, and resilient world requires leveraging the comparative advantage of all development partners. The new Strategy recognizes the growing role of the private sector in addressing sustainability concerns, developing sustainability standards, and ensuring that global markets can and do promote sustainable development.

The Strategy also encompasses the Multilateral Investment Guarantee Agency (MIGA) - the arm of the World Bank Group that promotes responsible foreign direct investment into developing countries by offering political risk insurance to the private sector.

"MIGA is pleased to have contributed to this strategy and to advance the notion that the private sector is absolutely crucial to affect change with respect to environmental issues," said Michel Wormser, MIGA's Vice President and COO.

To measure and monitor progress the Environment Strategy includes a results framework to track progress over time. The new Strategy also advances work to assess greenhouse gas emissions from the Bank Group’s portfolio of development projects with pilots being undertaken in a number of World Bank energy, transport and forestry sector projects.

Contacts:
In Washington: Elisabeth Mealey, +1 202-458-4475, emealey@worldbank.org

Vanessa Bauza, +1 202-458-1603, vbauza@ifc.org
Mallory Saleson +1 202-473-0844 msaleson@worldbank.org

For Broadcast Requests: Natalia Cieslik, +1 202-458-9369, ncieslik@worldbank.org

To read the World Bank Group Environment Strategy 2012-2022, click here.

For more information on Sustainable Development at the World Bank click here.

For more information on the IFC Sustainability: www.ifc.org/sustainability

For more information on MIGA: www.miga.org

Access to Early Childhood Education and Care Key to Equal Start of Roma Children

2012-06-04T15:24:51.000Z

NEWS RELEASE

Access to Early Childhood Education and Care Key to Equal Start of Roma Children

BRUSSELS, June 4, 2012 — The Roma Education Fund, The World Bank, Open Society Foundations, and UNICEF join the European Commission in its call on governments to ensure that all Romani and other poor and excluded children have access to quality early childhood education and care (ECEC) services. The Commission's assessment of national Roma integration strategies has been issued just a couple of days ago. All Member States have acknowledged education as a priority area next to employment in their national Roma integration strategies. Moreover, 14 Member States have proposed measures to widen access to early childhood education and care. This is encouraging, but to close the gap, planned measures should be fully implemented and become much more widespread.

Global evidence from research on early childhood development underscores the importance of early intervention – from conception to age 8 – especially to prevent inequalities before life trajectories are established. Given this importance, the Commission called on Member States to increase enrolment in early childhood education and care among the most urgent policy priorities in several Country Specific Recommendations, stressing the need to eliminate school segregation and misuse of special needs education, improve teacher education and school mediation and raise parents' awareness of the importance of education.

Commenting earlier today in Brussels at the presentation of the European Commission supported “A Good Start” pilot project by the Roma Education Fund and the simultaneous launch of the World Bank study Toward An Equal Start: Closing the Early Learning Gap for Roma Children in Eastern Europe, DG Employment Commissioner László Andor and MEP Livia Jaroka, said:

“Ensuring Roma children benefit from early stimulation and learning just like all other children is both a moral obligation and good economics in the long run. Experiences like the Good Start and other projects demonstrate that inclusive preschools and home parenting support can bridge the gap between Roma people and the majority population. Countries should leverage structural funds to invest in early learning and care for all poor children," said László Andor, Member of the European Commission.

"Global evidence shows that early childhood education and care is essential to children’s development. The new regional Roma survey data show that Roma children do not have an equal chance. With the exception of Hungary, the vast majority are not in preschool. It is time to close this gap," said Livia Jaroka, Member of the European Parliament.

In line with global evidence, the new Toward an Equal Start World Bank (2012) study and the new Roma Early Childhood Inclusion (RECI) study by UNICEF, the Roma Education Fund and the Open Society Foundations (2012), find that quality ECEC services raise educational outcomes for Romani children. The findings of the World Bank report, based on the 2011 UNDP/World Bank/EC regional Roma survey in Bulgaria, the Czech Republic, Hungary, Romania, and the Slovak Republic, show that Romani children attending pre-school have much higher scores on measures of learning, and much higher likelihood of subsequent enrolment into secondary schools. Furthermore, in the Czech Republic and Slovakia, children attending pre-school are much less likely to be streamed into ‘special needs’ education designed for children with learning disabilities.

The studies also find that access to quality and inclusive ECD services remains stark in comparison to majority populations and continues to demonstrate the lack of equity in this as in many other areas of life for Romani families. More than 80% of Romani parents wish a secondary education for their sons and their daughters, but the inequities in education start early: unlike non-Romani children, the large majority of Romani children aged 3-6 are not in pre-school, with the exception of Hungary: only 45% are in preschool in Bulgaria, in Romania 37%, in the Czech Republic 32%, and in the Slovak Republic 28%. On the other hand, in Hungary, which provides financial support for poor families to access preschool, it stands at 76%.

The RECI (2012) study highlights in detail that reaching out to parents and teachers, and provide home parenting support, can raise the quality of ECEC services and make them inclusive of all children, regardless of ethnicity.

Investing in early childhood and care means giving poor and excluded children a more equal start in life. This is both a human right and smart economics that raises long-term labor productivity and helps break the intergenerational cycle of poverty affecting Europe’s poorest and most vulnerable communities like the Roma. Close co-operation between governments, the European Commission, civil society, and international organizations can help bridge the gap.

Contacts:
In Brussels: Alexander Rowland, +32 2 504 0992, arowland@worldbank.org
In Washington: Dorota Kowalska, +1 (202) 473-2676, dkowalska@worldbank.org
In Budapest: Tom Bass, + 36 20 367 5036 tbass@romaeducationfund.org
In London: Sarah Klaus, sarah.klaus@osf-eu.org

For more information and to download the new reports – RECI (2012), World Bank (2012), please visit:

www.romaeducationfund.hu/good-start-eu-roma-pilot
www.worldbank.org/roma
www.soros.org/about/programs/early-childhood-program
www.romachildren.com

Supporting growth in South-East Europe: Financial reporting and auditing play a critical role

2012-05-31T15:55:10.000Z

World Bank conference convenes ministers and senior officials in Vienna

VIENNA, May 31, 2012 – Ministers and senior officials from seven countries of South-East Europe and Moldova, participating in the Road to Europe - Program of Accounting Reform and Institutional Strengthening (REPARIS), as well as representatives from the EU, other European countries and international bodies, gathered in Vienna for the third REPARIS Ministerial Conference on 31 May.

Participating ministers and senior officials reviewed the progress that their countries have made in enhancing their financial reporting systems and aligning them with EU legislation.

As part of their efforts to support economic growth and to integrate more closely with the EU, most countries in the program have introduced new accounting laws. Countries are also strengthening their educational systems as well as the capacity of their accounting professions. Several countries are now moving to the next stage of reform by setting up the systems of public oversight and quality control that are needed to ensure that the new accounting rules are implemented consistently and reliably in practice.

The ministers and senior officials discussed how improved financial reporting helps reduce the barriers to business investment, especially for small and medium-sized enterprises (SMEs), thus helping to boost competitiveness and economic growth. They also discussed what further measures with regard to the EU’s new accounting directive (including special provisions for microenterprises), audit oversight and quality assurance need to be taken and how REPARIS can help them implement financial reporting reform.

In his opening address to the conference, World Bank Vice President for Europe and Central Asia, Philippe Le Houerou, acknowledged that the financial crisis had left the countries of Europe and Central Asia with higher levels of public debt, weakened financial sectors, and historically high levels of unemployment. The crisis unveiled weaknesses that called for deep structural reforms. In response to these challenges, one of the main pillars of the World Bank´s strategy has been support for reforms to improve competitiveness.

“Good public and corporate governance is not a luxury, but a necessity for sustainable growth. The work of REPARIS on financial reporting is critical to the competitiveness agenda. It is also an important aspect of good governance, which requires transparency and integrity both in the public and the private sector”, said Le Houerou

The Governments of Austria, Switzerland and Luxembourg are the main supporters of REPARIS.

“One program cannot tackle all the challenges we are facing. It must be selective to use its limited resources most effectively to deliver upon its agreed objectives. REPARIS is able to achieve just that. REPARIS helps to build and strengthen institutions to make the financial system more stable and to create a business climate conducive to promote growth and employment.”, highlighted Andreas Schieder, State Secretary in the Austrian Ministry of Finance in his opening remarks.

Ms. Biljana Šćekić, Deputy Minister of Finance of Montenegro, underlined the following: “Montenegro has been a part of the REPARIS program from its very beginning, and as a candidate country of the European Union, we are serious about completing our Accounting and Audit Reform journey.

This is important […] to deliver a climate that will enable our small young country to compete for investment and jobs in the new reality that is the Europe of today.”

Gerhard Schumann-Hitzler, Director, Financial Instruments and Regional Programmes at the European Commission’s Directorate General for Enlargement emphasized the importance of regional initiatives like REPARIS in improving the business environment, especially for SMEs, in the countries of the Western Balkans.

The conference was organized as part of the REPARIS program, which supports the efforts of Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Moldova, Montenegro and Serbia to introduce effective and EU-compliant systems of financial reporting. REPARIS was launched in 2009 for a period of five years. The program is managed by the World Bank Centre for Financial Reporting Reform (CFRR), based in Vienna.

On the occasion of the Ministerial Conference, the CFRR is organizing in Vienna three technical workshops covering key aspects of the corporate financial reporting agenda relevant to policymakers, financial regulators, and professional accountancy organizations in the REPARIS countries.

World Bank Increases Transparency through Inaugural Publication of Sanctions Board Decisions

2012-05-30T13:30:00.000Z

Milestone in anti-corruption agenda unmatched by any other IFI

WASHINGTON, May 30, 2012 - Marking another advance in openness and accountability in its anti-corruption work, the World Bank Group today published for the first time a set of decisions issued by the World Bank Group’s Sanctions Board in cases of alleged fraud and corruption.

"The World Bank Group takes a hard line against corruption, and we believe that greater transparency must be part of that effort,” said World Bank Managing Director Sri Mulyani Indrawati. “By publishing Sanctions Board decisions, we are making all parties involved in the sanctions process more accountable. This move should deepen the deterrent effect of debarments and enhance the educational value of the Sanctions Board’s findings."

The first published decisions were announced at a panel discussion hosted by the World Bank Group Sanctions Board Secretariat to take stock of recent developments and consider ongoing challenges for the Bank Group’s sanctions system. At the discussion, the Bank Group also announced the appointment of two new Sanctions Board members: Mr. Yves Fortier, an international arbitrator and former Canadian Ambassador to the United Nations, who will serve as Chair of the Sanctions Board; and Ms. Catherine O’Regan, President of the International Monetary Fund Administrative Tribunal and former Judge of the South African Constitutional Court.

The Sanctions Board, an independent administrative tribunal with a majority of external members, serves as final decision-maker in all contested sanctions cases. Decisions are taken based on an adversarial process that includes written arguments and evidence and, where requested, an administrative hearing. More than 530 firms and individuals have been sanctioned by the World Bank Group for fraud, corruption and collusion since the sanctions system was established in 1999. Most of these sanctions have been in the form of debarments, where firms or individuals are rendered ineligible to participate in Bank Group-financed operations.

From December 2011, the Sanctions Board Law Digest has made publicly available summaries of past cases and the legal principles applied over time. The publication of full Sanctions Board decisions goes a step further and creates an unprecedented level of transparency by presenting the Sanctions Board’s detailed review of each new appeal to determine whether misconduct occurred and if so, what sanctions should apply.

"Publication of our decisions furthers the Sanctions Board's goal to fight fraud and corruption through the rule of law," said Fathi Kemicha, the first external Chair of the Sanctions Board. "Parties that come before the Sanctions Board, as well as our partners in the international community, will now have a more robust understanding of our process, case law, and careful examination of each case."

The decisions published today can be accessed on the World Bank’s external website, and explain the rationale for sanctions imposed in eight cases recently considered by the Sanctions Board:

· Sanctions Board Decision No. 46 (Sanctions Case No. 151): Income Electrix Limited debarred for six months for fraud.

· Sanctions Board Decision No. 47 (Sanctions Case No. 121): M/s. Concept Pharmaceuticals Limited debarred for fraud, with conditional release after three years.

· Sanctions Board Decision No. 48 (Sanctions Case No. 118): Zhonghao Overseas Construction Eng. Co., Ltd. debarred for two years for fraud, with conditional early release after one year.

· Sanctions Board Decision No. 49 (Sanctions Case No. 130): De Lorenzo of America, Corp., S.A. de C.V., and its affiliate Marketing Enterprises Latin America, LLC., each debarred for fraud, with conditional release after two years.

· Sanctions Board Decision No. 50 (Sanctions Case No. 117): ASDECON Corporation Company Limited debarred for corrupt practices, with conditional release after five years.

· Sanctions Board Decision No. 51 (Sanctions Case No. 145 and Sanctions Case No. 146):

- Sanctions Case No. 145: General Consulting Training (GCT) and Mr. Ali Safi each debarred for one year for fraud.

- Sanctions Case No. 146: TEAM Engineering & Management Consultants (TEAM) debarred for fraud, with conditional release after two years.

· Sanctions Board Decision No. 52 (Sanctions Case No. 134): Contransimex Nigeria Limited debarred for fraud, with conditional release after two years.

All sanctions are reflected on the World Bank Listing of Ineligible Firms & Individuals (www.worldbank.org/debarr).

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

Contacts:

In Washington: David Theis, (202) 458-8626, dtheis@worldbank.org;

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

New Initiatives Give Hope to a Carbon Market Facing Challenges

2012-05-30T12:30:00.000Z

World Bank releases State and Trends of the Carbon Market report 2012

COLOGNE, GERMANY, May 30, 2012 – The total value of the carbon market grew by 11 percent in 2011, to $176 billion, and transaction volumes reached a new high of 10.3 billion tons of carbon dioxide equivalent (CO₂e) according to a new report from the World Bank.

According to State and Trends of the Carbon Market 2012 this growth took place in the face of economic turbulence, growing long-term oversupply in the EU Emissions Trading Scheme (EU ETS) and plummeting carbon prices.

The report, released here at the Carbon Expo in Cologne, describes how even as prices declined, the value of the global carbon market increased in 2011, driven predominantly by a robust growth in financially motivated transactions. By far, the largest segment of the carbon market was that of EU Allowances (EUAs), valued at $148 billion. There was also a substantial increase in the volume of secondary Kyoto offsets (which grew by 43 percent, to 1.8 billion tons of CO₂e, valued at US$23 billion) fueled by increased liquidity in the Certified Emission Reduction (CER) market and in the nascent secondary Emission Reduction Unit (ERU) market. Following the same pattern observed in previous years, the global carbon market in 2011 was primarily driven by the EU ETS.

With the end of the first commitment period of the Kyoto Protocol in 2012, the value of the pre-2013 primary CER, ERU and AAU markets declined once again in 2011. Not surprisingly, however, the market is starting to look beyond 2012 and consequently the post-2012 primary CDM market increased by a robust 63 percent, to US$2 billion, despite depressed prices and limited long-term-visibility. Although China remained the largest source of contracted CERs, African countries – largely bypassed in the pre-2013 market – emerged stronger in 2011 and accounted for 21 percent of post-2012 CERs contracted during the year.

Against this backdrop, several new domestic and regional carbon market initiatives gained traction in both developed and developing economies in 2011. Five new jurisdictions passed legislation adopting cap-and-trade schemes.

“It is heartening to see that, while leading economies continue to experience difficulties and the carbon market faces major challenges, we see increasing interest in, and support for, new market-based mechanisms to mitigate climate change in the long term,” said Joëlle Chassard, Manager of the Carbon Finance Unit of the World Bank.

The Australian Parliament passed the Clean Energy Act, the California Air Resources Board adopted a cap-and-trade regulation, and Québec adopted its own cap-and-trade program. The province is now working toward linking it with California’s starting in 2013. Last month, both Mexico and the Republic of Korea passed comprehensive climate bills, laying the foundation for future market-based mechanisms.

“Together, these initiatives will drive substantial resources towards low-carbon investments and they have the potential to unleash a truly transformational carbon market, in support of a global solution to the climate challenge,” said Alexandre Kossoy, Senior Financial Specialist, World Bank Carbon Finance Unit.

Contacts:

In Cologne: Isabel Hagbrink, +1 202 458 0422, ihagbrink@worldbank.org

In Washington DC: Elisabeth Mealey, +1 202 458 4475, emealey@worldbank.org

For an electronic version of the report and more information on the Carbon Finance Unit and its carbon funds, please see: www.carbonfinance.org

World Bank Welcomes African Leadership on Natural Capital Accounting

2012-05-25T14:17:29.000Z

Announces $3m in support from Japan to help countries around the world put it into action

GABORONE, BOTSWANA, May 25, 2012 – The World Bank’s Vice President for Sustainable Development, Rachel Kyte, today welcomed the strong endorsement from ten African countries for natural capital accounting - a tool for factoring countries’ natural assets into their systems of national accounting.

Speaking at the conclusion of the African Sustainability Summit in Botswana, Kyte said African leaders had shown the way forward through a joint communiqué on natural capital accounting which recognized GDP’s limitations as a measure of well-being and sustainable growth and underscored the importance of a tool for taking natural capital into account for improved economic decision-making.

“Africa is where sustained and sustainable economic growth and the stewardship of natural wealth become one and the same thing,” Kyte said. “Making progress means more than just a strong GDP - it means giving equal attention to the economic, environmental and social pillars of sustainable development. By endorsing natural capital accounting as a tool for delivering on more inclusive green growth, Africa is showing the way for the rest of the world.”

Kyte said that 24 countries around the world were already compiling natural capital accounts. With so much on-the-ground experience to draw upon, she said the World Bank was hoping to see at least 50 countries and 50 private corporations follow Africa’s lead by endorsing natural capital accounting at the upcoming Rio+20 Conference.

The World Bank is supporting countries to factor their natural capital into systems of national accounts through a global partnership called WAVES (Wealth Accounting and the Valuation of Ecosystem Services). Ms Kyte took the opportunity of the Botswana Summit to announce the Government of Japan’s financial commitment of $US3 million to support the WAVES Partnership.

“Japan’s generous commitment helps us step up to meet the increasing demand from countries to make natural capital accounting a reality,” Kyte said.

Japan’s Deputy Vice Minister of Finance for International Affairs and Executive Assistant to the Prime Minister for Global Environmental Finance, Naoko Ishii said “Japan has long been a supporter to enhancing biodiversity and preserving ecosystems, and is excited to strengthen this initiative.”

WAVES is working to build capacity in countries to implement Natural Capital Accounting based on the UN’s recently endorsed System for Environmental and Economic Accounts (SEEA). The SEEA provides an internationally agreed method, on par with the current System of National Accounts, to account for material natural resources like minerals, timber, and fisheries.

WAVES is also working to develop an agreed methodology for accounting for ecosystem services, including for example, the `regulating’ services of forests for pollination and wetlands for reducing the impacts of floods.

The WAVES partnership includes the United Nations Environment Program, the UN Development Program, and the UN Statistical Commission; the countries of Botswana, Colombia, Costa Rica, Madagascar, and the Philippines, which are implementing programs; as well as financial or technical support from Australia, Canada, France, Japan, Norway, the United Kingdom, and several NGOS.

For a copy of the latest WAVES report “Moving Beyond GDP” go to:

http://www.wavespartnership.org/waves/

Contacts:

In Washington: Robert Bisset, +1 202 458 5191, rbisset@worldbank.org

For Broadcast Requests: Natalia Cieslik, +1 202 458 9369, ncieslik@worldbank.org

For more information about WAVES and the World Bank’s work on sustainable development visit:

http://www.worldbank.org/sustainabledevelopment

For more information about the Summit For Sustainability in Africa, please visit here.

World Bank Supports Latvia’s Policy Efforts to Boost Employment

2012-05-25T06:00:00.000Z

RIGA, May 25, 2012 – The Government of Latvia and the World Bank signed today an Agreement for Advisory Services, under which the World Bank, in collaboration with the Latvian Ministry of Welfare and the State Employment Agency, will prepare a study entitled: “Latvia: Who is Unemployed, Inactive or Needy? An Assessment of Post-Crisis Policy Options.”

The work is relevant in the context of the Europe 2020 inclusive growth agenda as it seeks to inform policies aimed at returning the country to high levels of employment and to limit the adverse impact of the crisis on social inclusion. The study will focus on the issue of long-term unemployment and associated employment, tax and benefit policies. It will provide background analysis for the Government of Latvia’s policy reforms aimed at facilitating entry into the job market for the inactive and long-term unemployed.

“Latvia has shown that strong commitment and sound policies can help a country recover rapidly from a severe economic crisis. With the return of fast economic growth, the challenge is now to mitigate the legacy of the crisis and, in particular, to put in place systems that will make it possible for the long-term unemployed to get back to the labor market. The World Bank is very pleased to work on such issues with the Government of Latvia,” said Xavier Devictor, World Bank Country Manager for Poland and the Baltic Countries.

Unemployment almost tripled during the recent economic crisis in Latvia. Prior to the crisis, the rate of unemployment fluctuated around 7 percent in 2007-2008, but rose sharply starting in 2009 reaching a peak of 20.7 percent in 2010. It has since dropped to 16.3 percent in the first quarter of 2012, but long-term unemployment remains persistent and accounts for over half of those that are out of work. The situation for the low-skilled segment of the labor force—a group that is more likely to be unemployed and not meet the requirements of available vacancies—is of great concern.

The study will analyze the unemployment, tax and benefit systems to support the re-integration of the long-run unemployed into the labor market, with a focus on:

The evolution of the Latvian labor market emerging from the crisis;
Profiles of people with no or limited labor-market attachment;
Expenditure and performance of welfare benefits and employment in Latvia;
Financial incentives of the tax and benefit system in Latvia;
Impact of employment policies;
Other countries’ experiences in linking social benefit programs to employment activation measures; and
Options for the design of income and work support measures to promote labor force participation, whilst providing adequate social protection.

“In the post-crisis period when we are faced with demographic and employment challenges, it is very important for Latvia that each decision taken has been carefully examined so that policy reforms are directed towards the further development of the country. Basing policies on expert analysis is a practice that should be implemented in daily decision making. We are grateful to have received financial support from the resources of the European Social Fund and the World Bank, as the competence of World Bank experts has been repeatedly confirmed in critical moments for Latvia,” said Ilze Viņķele, Minister of Welfare of the Republic of Latvia.

Under the Agreement for Advisory Services, the study will be co-financed by the State Employment Agency with the support of the European Social Fund (for LVL 200,000), and the World Bank (for US$ 30,000).

Latvia joined the World Bank in August 1992. Since then, the Bank has played an important role in supporting Latvia’s transition through lending, policy dialogue, and analytical and advisory assistance. Latvia graduated from World Bank lending in 2007, but continues to benefit from the Bank’s analytical and advisory services.

As part of the international crisis response announced in December 2008, to stabilize the Latvian economy, the Bank disbursed EUR 400 million in loans toward a EUR 7.5 billion package, which also included contributions from the IMF, the EU and the Nordic countries.

Contacts:
In Warsaw: Anna Kowalczyk, (+48) 605 282 998, akowalczyk@worldbank.org
In Washington: Victor Neagu, (+1) 202 458 2736, vneagu@worldbank.org

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

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World Bank Database Shows Export Markets Are Dominated by Big Firms

2012-05-24T13:46:46.000Z

Difficult for Newcomers to Survive

WASHINGTON, May 24, 2012 – A few large companies dominate export markets in developing and developed countries, with the top one percent often accounting for more than half – sometimes nearly 80 percent – of total exports, according to a new World Bank database with a wealth of details on exporting firms.

The new Exporter Dynamics Database offers the most comprehensive picture yet of exporter characteristics and dynamics – a firm’s entry, exit and survival in the export market – in 45 developed and developing countries. The database mainly covers 2003-2009, though data from the 1990s are also available for some countries.

A key finding is that the export market is difficult to tackle for newcomers, with 57 percent of companies on average – and two-thirds in Africa – quitting within a year of entering the export market.

“Governments traditionally have focused on helping exporters expand to new products and new markets, but they may need to do more to help firms survive,” says Ana Margarida Fernandes, the task leader of the database, which was developed by the Trade and International Integration team of the World Bank’s Development Research Group.

The global database allows for cross-country comparisons of exporters based on factors such as size, survival, growth, and concentration. More countries will be added as the database expands. Until now, most databases focus not on exporting firms, but on the aggregate flow of goods across borders based on countries or products.

Based on data sets covering the universe of export transactions obtained directly from customs agencies, the data are comparable across countries. Measures cover the size distribution of exporting firms, their diversification in terms of products and markets, the dynamics of exporting firms’ entry, exit and survival, and the average unit prices of the goods traded.

The Exporter Dynamics Database could help policy makers identify opportunities in particular sectors and address challenges faced by their exporters, especially in their entry and survival in export markets. For example, it can be used to analyze the performance of export sectors in a country, comparing them with their counterparts in the region or richer countries. The database can also make it easier to analyze the impact of tariffs and other trade barriers. For example, it can be used to assess the impact of stringent non-tariff measures on the numbers and average size of exporters.

The database reveals several interesting trends. For example, the rate of firms entering the export market is high, with more than half of the exporters in Laos, Malawi, Tanzania, and Yemen being newcomers in any given year. But their survival rate isn’t that good, generally with more than a third of companies on average leaving the export market every year.

“Our database shows how large the degree of churning in export markets is, particularly in less developed and smaller economies,” says Martha Denisse Pierola, an economist at the Development Research Group who started the project with Caroline Freund, now the chief economist at the Middle East and North Africa Region of the World Bank. “We need further research to better assist governments in minimizing the costs associated with these high exit rates.”

Contacts:

In Washington: Jane Zhang, (202) 473-1376, janezhang@worldbank.org

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

For more information, please visit: http://econ.worldbank.org/exporter-dynamics-database

For more information click here.

World Bank Group Finds over 80 percent of Investment Promotion Agencies’ Efforts Falling Short

2012-05-20T23:00:00.000Z

WASHINGTON, May 20, 2012 - Even as countries compete to attract investments, 80 percent of national investment promotion agencies are failing to respond to investor inquiries in the key sectors of agribusiness and tourism, according to the World Bank Group’s Global Investment Promotion Best Practices 2012 report.

The report assessing 189 economies’ responsiveness to investors finds that investment promotion agencies are less responsive to direct investor inquiries than they were three years ago. In the areas of inquiry-handling and website performance over the past two years, two regions showed improvement—the Middle East and North Africa, and Latin America and the Caribbean.

"In difficult times, governments may be tempted to cut funding for investment promotion. However, this can cost them opportunities to secure investments and jobs,” said Pierre Guislain, Director of the Bank Group's Investment Climate Department. “Skilled investment promotion agencies can give economies a competitive advantage by helping investors choose a suitable location and set up operations that create jobs and promote growth.”

The report shows that limited resources need not be an obstacle to effectiveness. For example, Cyprus Investment Promotion Agency, one of the world’s top-performing agencies, has only 10 staff members spread across a range of functions. It also finds investment promotion websites to be a bright spot, with 62 percent of agencies implementing best practices.

Nicaragua’s investment promotion agency PRONicaragua emerged as the world’s top investment facilitator, becoming the first developing country to do so. PRONicaragua achieved best-practice standards in website performance and response to investor inquiries.

"We believe that the level of service an Investment Promotion Agency offers influences an investor’s first impression of a country’s investment climate, as it demonstrates that Government’s attitude and commitment towards investors. It is with that vision, through commitment to offering high quality service and insuring that each and every investor get the information they need, we try to build a strong sense of comfort about doing business in our country and promote economic development." said Javier Chamorro, CEO of PRONicaragua.

The report was produced by the Investment Climate Department of the World Bank Group (which includes IFC, MIGA, and the World Bank) and sponsored by ProInvest, a European Commission partnership program for the countries of Africa, the Caribbean, and the Pacific, and by the government of Spain.

For more information about the report, please visit www.globalinvestmentpromotion.org

Contact:

In Washington, D.C.: Shaela Rahman, +1-202-458-0283, Srahman@ifc.org

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.

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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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.

Latvia - LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT : P058477 - Implementation Status Results Report : Sequence 03

2012-04-17T04:00:00.000Z

Doing business in a more transparent world 2012 - economic profile : Latvia - comparing regulation for domestic firms in 183 economies

2012-02-24T05:00:00.000Z

Doing business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. In a series of annual reports doing business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. This economy profile presents the doing business indicators for Latvia. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2011 (except for the paying taxes indicators, which cover the period January December 2010).

Simulating the impact of the 2009 financial crisis on welfare in Latvia

2012-01-31T05:00:00.000Z

This note details simulations of the distributional impacts of the 2009 financial crisis on households in Latvia. It uses household survey data collected prior to the crisis and simulates the impact of the growth slowdown. The simulations show that Latvia experienced a sharp rise in poverty, widening of the poverty gap, and a rise in income inequality due to the economic contraction in 2009. The 18 percent contraction in gross domestic product (affecting mainly trade hotels and restaurants, construction, and manufacturing) likely led the poverty head count to increase from 14.4 percent in 2008 to 20.2 percent in 2009. The poverty gap, which measures the national poverty deficit, was simulated to increase from 5.9 percent in 2008 to 8.3 percent in 2009. The analysis finds that the results are robust to most assumptions except post-layoff incomes, which substantially mitigated household welfare. The authors also simulate the impact of Latvia's Emergency Social Safety Net components and find that the Safety Net likely mitigated crisis impacts for many beneficiaries. The simulations measure only direct short-run impacts; hence, they do not take into account general equilibrium effects. Post-crisis income data from a different data source suggest that poverty rates increased by 8.0 percentage points between 2008 and 2009. As a result, the authors suggest that their ex-ante simulation performs reasonably well and is a useful tool to identify vulnerable groups during the early stages of a crisis.

Latvia - Second Safety Net and Social Sector Reform Program : P121796 - Implementation Status Results Report : Sequence 02

2012-01-05T05:00:00.000Z

The project Second Safety Net and Social Sector Reform Program has changed to Closed

2011-12-21T05:00:00.000Z

The project Second Safety Net and Social Sector Reform Program has changed to Closed. To see more information, see the project information in the World Bank project database

The objectives of the Second Safety Net and Social Reform Program for Latvia are (i) to protect vulnerable groups with emergency safety net support during the economic contraction; (ii) to mitigate the social costs of fiscal consolidation; and (iii) to ensure that structural reforms lay a foundation for sustainable improvements in the social sectors. This operation is part of the special lending support by the World Bank for the Republic of Latvia. This is the second operation in a program of two loans focused on safety net support and social sector reform; the first Special Development Policy Loan (SDPL 1) was fully disbursed on September 27, 2010. The second Special Development Policy Loan (SDPL 2) supports actions related to protecting the most vulnerable within a reform program that underpins fiscal adjustment in the education and health sector. The government has embarked on a 'funds follow the student' financing reform in the education sector to increase efficiency and education quality in light of the shrinking school-age population. The government has made progress in implementing the SDPL program. In substance, Latvia is on track to meet nine out of the eleven triggers outlined in SDPL 1 for the second operation. Two of the triggers have been merged, so the loan now has eight prior actions. Support for the reform program is not weakening despite the social costs it has entailed.

Latvia - LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT : P058477 - Implementation Status Results Report : Sequence 02

2011-12-13T05:00:00.000Z

Overview and summary

2011-11-29T05:00:00.000Z

This public expenditure review (PER) was conducted at the request of the Ministry of Finance (MoF) on behalf of the Government of the Republic of Latvia. The objective of the PER is to identify potential areas of further budget savings in public administration and the social sectors that could help restore fiscal balance, speed Latvia's recovery from the current crisis, and help it to meet the Maastricht Criteria by 2012 so it can adopt the Euro in 2014. The remainder of this volume is structured in the following way. Section two recounts the events and circumstances that set the Government's fiscal stance in the years prior to the crisis. Section three summarizes the principal emergency measures the Government took to cope during 2008 and 2009 as the crisis broke and led to Latvia's severe economic contraction. The purpose of these sections which draw liberally from material prepared by the financial authorities, the International Monetary Fund (IMF) and the European Central (EC) is to make the case for further fiscal adjustment plain. The report then summarizes the main messages and highlights the most important suggestions made in each of the longer, more detailed chapters of volume two of the review. Each section is followed by a matrix of the options presented for the Government to take into consideration. Given the important role that municipalities and republican cities play in the delivery of social services, the chapter three of volume two provides an in depth examination of local government finances and spending. Local authorities (municipalities and republican cities) play such a prominent role in the delivery of public services particularly social services that a close look at the character of their spending is critical.

Analytical report

2011-11-29T05:00:00.000Z

Loan Agreement for Loan 8058-LV Conformed

2011-07-06T04:00:00.000Z

The project Second Safety Net and Social Sector Reform Program is now in the pipeline.

2011-06-15T04:00:00.000Z

The project Second Safety Net and Social Sector Reform Program is now in the pipeline. To see more information, see the project information in the World Bank project database

Assessment letter for the World Bank

2011-05-20T04:00:00.000Z

Main report

2011-05-06T04:00:00.000Z

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program has changed to Closed

2010-09-28T04:00:00.000Z

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program has changed to Closed. To see more information, see the project information in the World Bank project database

The objectives of the Safety Net and Social Sector Reform Program for Latvia are: (i) to protect vulnerable groups with emergency safety net support during the economic contraction; (ii) to mitigate the social costs of fiscal consolidation; and (iii) to ensure structural reforms lay a foundation for medium term improvements in the social sectors. Given the deep impact Latvia has suffered in the wake of the global crisis, and due to the emergency nature of this program, the first operation will focus mainly on the first and second objectives. The second operation will expand this focus to the third objective. The financial crisis hit Latvia at a time when the country was particularly vulnerable, and its impact has been felt more deeply than elsewhere in the region, the economy is estimated to have declined by 18 percent in 2009 and to further contract by 4 percent in 2010. The program of World Bank support will focus on measures designed to mitigate the social impact of fiscal consolidation, and on the implementation of the Government's cross sector Emergency Social Safety Net Strategy (ESSNS). To increase transparency and accountability, the ESSNS includes procedures for and adequate financing to closely monitor its implementation and rigorously evaluate its impact.

The project MORTGAG/LAND BANK PV has changed to Closed

2010-08-05T04:00:00.000Z

The project MORTGAG/LAND BANK PV has changed to Closed. To see more information, see the project information in the World Bank project database

The project LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT has changed to Pipeline

2010-05-21T04:00:00.000Z

The project LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT has changed to Pipeline. To see more information, see the project information in the World Bank project database

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program has changed to Active

2010-03-09T05:00:00.000Z

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program has changed to Active. To see more information, see the project information in the World Bank project database

The project Financial Sector DPL, Latvia has changed to Closed

2009-11-05T05:00:00.000Z

The project Financial Sector DPL, Latvia has changed to Closed. To see more information, see the project information in the World Bank project database

The development objective of the Financial Sector Development Policy Loan (DPL) Program for Latvia is to ensure long term financial stability. This loan will support crisis management measures and structural reforms to stabilize the financial sector and increase its resilience to future shocks. The Bank is also preparing a social sector DPL that will aim to minimize the social impact of the crisis by ensuring that safeguards are in place to maintain critical social services in the midst of the economic contraction and fiscal adjustment. The loan will be a Euro-denominated fixed spread loan of - London Inter-Bank Offered rate for euro (LIBOR) plus 200 basis points, a front-end fee of 100 basis points, with a maturity of 10 years.

The project Financial Sector DPL, Latvia has changed to Active

2009-09-24T04:00:00.000Z

The project Financial Sector DPL, Latvia has changed to Active. To see more information, see the project information in the World Bank project database

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program is now in the pipeline.

2009-08-08T04:00:00.000Z

The project Latvia First Special Development Policy Loan: Safety Net and Social Sector Reform Program is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Financial Sector DPL, Latvia is now in the pipeline.

2009-06-13T04:00:00.000Z

The project Financial Sector DPL, Latvia is now in the pipeline. To see more information, see the project information in the World Bank project database

The project MORTGAG/LAND BANK PV is now in the pipeline.

2007-10-27T04:00:00.000Z

The project MORTGAG/LAND BANK PV is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Private Sector Adjustment Loan (PSAL) is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Private Sector Adjustment Loan (PSAL) is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Health Project is now in the pipeline.

2007-10-25T04:00:00.000Z

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

The Health Reform Program aims at supporting the Government of Latvia in the implementation of a long term health services restructuring strategy and achieve a sustainable performance-oriented health system. The development objective of the project, Phase I, is the creation of a framework for effective health care systems, including policy reforms, institution building and skills development within the health sector. The project's three components are: Component A) implementation of health financing reforms, which will establish the State Compulsory Health Insurance Central Fund (SCHICF) and the Regional Sickness Fund (RSF) as managers of the health care on the part of their populations; Component B) development and restructuring of health care services, establishing a centralized priority-setting mechanism for major capital investments; and Component C) implementation of health communication strategies, through focus groups, surveys and ad campaigns, the component will assess public views of the health care system and prepare reform programs. Parallel to project preparation, a social assessment of poverty was carried out to complement the project and a positive environmental impact is expected to better improve the space environment.

The project LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT is now in the pipeline.

2007-10-25T04:00:00.000Z

The project LIEPAJA REGION SOLID WASTE MANAGEMENT PROJECT is now in the pipeline. To see more information, see the project information in the World Bank project database

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

2007-10-25T04:00:00.000Z

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

The Liepaja Region Solid Waste Management Project, will demonstrate self-sustaining, modern management of municipal solid waste, through maximum collection, and utilization of landfill gas (LFG) in Liepaja. The project consists of two components: 1) the investment component will address activities related to the regional solid waste management solution, through a treatment of the existing disposal sites for final closure, with the exception of the Skede site, where the LFG will be collected, to be used for electricity generation. A solid waste management system will be established, to meet international sanitary landfill standards, in accordance with the European Union requirements, and, energy cells will be installed for improved degradation of biodegradable waste, and accelerated production of LFG. Resulting greenhouse gas emission reductions will be partly sold to the Prototype Carbon Fund. Energy conversion units will be installed at Grobina, and Skede to run LFG, and both will be connected to the power grid, whose power will be sold to Latvenergo. Technical, and managerial support will be provided to the new waste management company to be established; and, 2) the technical assistance component, will provide training, and capacity building for waste management utilities, municipal authorities, and private sector companies involved in the solid waste management strategy.

The project Second Health (Phase 2 APL) is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Second Health (Phase 2 APL) is now in the pipeline. To see more information, see the project information in the World Bank project database

The project Education Improvement Project is now in the pipeline.

2007-10-25T04:00:00.000Z

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

The Education Improvement Project will increase the education sector capacity in Latvia, and strengthen the management of both resource inputs and learning processes. Furthermore, the space utilization and energy efficiency of educational facilities will be improved, and institutional management capacity will be strengthened. The main components are: a) to achieve operating efficiency in school buildings, obtaining substantial reductions from recurrent expenditures. Essential repairs will generate savings in current expenditures, allowing benefiting municipalities to contribute a percentage of these savings for education spending. Further improvements are expected in physical facilities, in laboratories and equipment upgrading, as well as in the provision of in-service teacher training; b) to increase education quality, through the Ministry of Education and Science (MES) capacity building, for assessing and monitoring student achievements. Five sub-components will support education quality: national content and performance standards; national standardized assessment instruments; communications strategy and public relations; school self-improvement model; and, strengthening policy capacity; c) to ensure project management efficiency, consulting and training will be included in the project.

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

2007-10-25T04:00:00.000Z

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

The project State Revenue Service Project is now in the pipeline.

2007-10-25T04:00:00.000Z

The project State Revenue Service Project is now in the pipeline. To see more information, see the project information in the World Bank project database

The State Revenue Service Modernization Project supports the development of a state revenue service (SRS) that a) promotes sustainable revenue performance on the basis of voluntary compliance, reducing corruption and evasion; and facilitates private sector development by lowering compliance costs and tax rates; and b) efficiently, equitably, and honestly administers tax and customs laws; and is equipped with modern business processes, management systems, and operational tools. The first of two project components, organization and management, 1)restructures the revenue service along organizational lines; develops and implements methodology for and trains managers in strategic planning and budgeting as well as for financial and asset management; improves operational management by improving rules, regulations, and norms along with document flow, operational autonomy of regional managers, business processes, and coordination and communication links; develops internal audit controls and reforms legislation; strengthens external and internal relations; and designs, integrates, and implements management information systems. The operational component improves the performance of the SRS in the critical technical areas of tax, customs, and social insurance administration by improving taxpayer registration, procedures for tax declaration, collection, and recovery of arrears, audit and investigation, customs operations, adjudication and appeals, taxpayer and customs client services.

The project Strucutral Adjustment Loan (SAL) is now in the pipeline.

2007-10-25T04:00:00.000Z

The project Strucutral Adjustment Loan (SAL) is now in the pipeline. To see more information, see the project information in the World Bank project database