50175 THE WORLD BANK ANNUAL REPORT 2009 YEAR IN REVIEW OPERATIONAL SUMMARY | FISCAL 2009 IBRD MILLIONS OF DOLLARS 2009 2008 2007 2006 2005 Commitments 32,911 13,468 12,829 14,135 13,611 Of which development policy lending 15,532 3,967 3,635 4,906 4,264 Number of projects 126 99 112 113 118 Of which development policy lending 34 16 22 21 23 Gross disbursements 18,564 10,490 11,055 11,833 9,722 Of which development policy lending 9,138 3,485 4,096 5,406 3,605 Principal repayments (including prepayments) 10,217 12,610 17,231 13,600 14,809 Net disbursements 8,347 (2,120) (6,176) (1,767) (5,087) Loans outstanding 105,698 99,050 97,805 103,004 104,401 Undisbursed loans 51,125 38,176 35,440 34,938 33,744 Operating incomea 572 2,271 1,659 1,740 1,320 Usable capital and reserves 36,303 36,888 33,754 33,339 32,072 Equity-to-loans ratio 35% 38% 35% 33% 31% a. Reported in IBRD's financial statements as "Income before fair value adjustment on nontrading portfolios, net and Board of Governors­approved transfers." IDA MILLIONS OF DOLLARS 2009 2008 2007 2006 2005 Commitments 14,041a 11,235 11,867 9,506 8,696 Of which development policy lending 2,820 2,672 2,645 2,425 2,331 Number of Projects 176 199 188 173 165 Of which development policy lending 33 29 35 30 33 Gross disbursements 9,219 9,160 8,579 8,910 8,950 Of which development policy lending 1,872 2,813 2,399 2,425 2,666 Principal repayments 2,209 2,182 1,753 1,680 1,620 Net disbursements 7,010 6,978 6,826 7,230 7,330 Credits outstanding 112,894 113,542 102,457 127,028 120,907 Undisbursed credits 29,903 27,539 24,517 22,026 22,330 Undisbursed grants 5,652 5,522 4,642 3,630 3,021 Development grant expenses 2,575 3,151 2,195 1,939 2,035 Note: Projects scaled up through additional financing are included in the number of projects. a. Includes a HIPC grant of $45.5 million for Côte d'Ivoire. LETTER OF TRANSMITTAL This Annual Report, which covers the period from July 1, 2008, to June with the accompanying administrative budgets and audited financial 30, 2009, has been prepared by the Executive Directors of both the statements, to the Board of Governors. International Bank for Reconstruction and Development (IBRD) and the Annual reports for the International Finance Corporation (IFC), the International Development Association (IDA)--collectively known as Multilateral Investment Guarantee Agency (MIGA), and the International the World Bank--in accordance with the respective bylaws of the two Centre for Settlement of Investment Disputes (ICSID) are published institutions. Robert B. Zoellick, President of IBRD and IDA, and Chairman separately. of the Board of Executive Directors, has submitted this report, together THE WORLD BANK ANNUAL REPORT 2009 CONTENTS CDROM CONTENTS Message from the President of the World Bank Group Year in Review and Chairman of the Board of Executive Directors 2 Financial Statements The Board of Executive Directors 3 New Operations Approved Remuneration of Executive Management, Executive Lending Data Directors, and Staff 6 Income by Region World Bank Group Fiscal Year Highlights 7 Organizational Information 1 Innovative Initiatives to Mitigate Global Crises and Expand Ongoing Operations 11 World Bank Lending 2009 (PowerPoint presentation) 2 World Bank Action in the Field 27 Africa 30 The CD-ROM contains the complete East Asia and Pacific 34 contents of the book in Arabic, Chinese, South Asia 38 English, French, Japanese, Portuguese, Europe and Central Asia 42 Russian, and Spanish. Latin America and the Caribbean 46 Middle East and North Africa 50 3 Fiscal Year Summary 54 Note: The complete Financial Statements, including Management's Discussion and Analysis and audited financial statements of the International Bank for Reconstruction and Development and the International Development Association, are published on the CD-ROM enclosed with this report. This Annual Report is also available on the Internet at http://www.worldbank.org. All dollar amounts used in this Annual Report are current U.S. dollars unless otherwise specified. As a result of rounding, numbers in tables may not add to totals and percentages in figures may not add to 100. Throughout this report, the terms "World Bank" and "Bank" refer to IBRD and IDA. "World Bank Group" refers collectively to IBRD, IDA, IFC, MIGA, and ICSID. THE WORLD BANK ANNUAL REPORT 2009 1 MESSAGE FROM THE PRESIDENT OF THE WORLD BANK GROUP AND CHAIRMAN OF THE BOARD OF EXECUTIVE DIRECTORS This has been a year of testing for the World Bank Group and our ability To fill important gaps and attract donor support, we have launched to respond to the needs of our clients. Financial crisis has spiraled into the Capitalization Fund to help strengthen banks in smaller emerging an economic crisis and an unemployment crisis, and events could next markets, and a microfinance facility that will support lending to as many become a social and human crisis with political implications. In this as 60 million poor borrowers in many of the world's poorest countries. fast-moving and uncertain environment, the 2009 Annual Report We are supporting trade financing to enable the continued flow of reflects how the World Bank is leaning forward to serve our clients with trade credit into the market through the IFC's Global Trade Liquidity flexibility, speed, innovation, and attention to results. Program, which we expect to support up to $50 billion in trade over the Our focus has been on mobilizing resources to support the projects next three years. and people who need them quickly. The World Bank is able to triple its In all these efforts, we are building out our network--partnering support to IBRD borrowers to up to $100 billion through fiscal 2011, and with UN agencies, regional banks, foundations, private businesses, and we have been moving quickly to put these resources to work. For the civil society organizations. For example, last year the World Bank poorest countries, we have established the Financial Crisis Response launched the creation of the Climate Investment Funds in support of Fast-Track Facility to accelerate approval processes for $2 billion of IDA the UN Framework Convention on Climate Change. These funds, grants and no-interest loans, and we have $42 billion of IDA resources designed through a consultative process involving a broad range of available through fiscal 2011. development partners, aim to strengthen our partnerships with both We have also established the Vulnerability Financing Facility (VFF) to developing and developed countries to address the urgent challenges streamline crisis support to the poor and vulnerable. The facility builds of climate change. on the achievements of the Global Food Crisis Response Program During fiscal 2009, the Bank Group committed $58.8 billion in loans, (GFRP), which provided immediate relief to countries hit hard by last grants, equity investments, and guarantees to its members and to year's high food prices. The VFF will address agriculture under the private businesses in member countries--an increase of $20.6 billion existing GFRP, which we expanded this year from $1.2 billion to $2 billon (54 percent) from fiscal 2008. to further help countries respond to ongoing food price volatility. It will The contributions, creativity, and commitment of the people of the address social interventions--employment, safety nets, and protection World Bank Group are critical to our scale-up effort. I know that our of basic social services including nutrition--under the new Rapid Social clients--from all parts of the world--appreciate the hard work of our Response Program. staff, and continue to look to the Bank Group for actions and ideas. So We are building on lessons learned from the financial crises that hit we must maintain the public trust that we have been given by listening Latin America in the 1980s and East Asia in the 1990s. to our clients, delivering on our commitments, monitoring results, To ensure that governments can protect targeted social expendi- anticipating risks, and putting the governance and anticorruption tures and finance effective safety nets, the World Bank Group is tripling agenda at the heart of all of our activities. support for safety net programs such as school feeding, nutrition, In closing, I want to thank the staff of the World Bank Group both in conditional cash transfer projects, and cash for work. Women and girls Washington and around the world. They have stepped up to the new are a particular focus of these efforts, because we know they are the challenges we face, and they are transforming us into a more dynamic, hardest hit during crisis times. flexible, and innovative institution. I am also grateful to our Board of To focus attention on investment in infrastructure that can create Executive Directors, the Governors, and our many contributors and jobs as well as build a foundation for long-term economic growth, the partners for their ongoing help and counsel. Bank is increasing lending in infrastructure to $15 billion per year over the next three years. We have established the Infrastructure Recovery and Assets Platform, a three-year effort to help partner countries respond to the global crisis through increased investment in infrastructure and support for public-private partnerships in infrastruc- ture. To increase our efforts to support agriculture, the Bank is boosting funding for agriculture to $12 billion over the next two years to increase productivity and production. Robert B. Zoellick 2 THE WORLD BANK ANNUAL REPORT 2009 THE BOARD OF EXECUTIVE DIRECTORS In response to the global financial and economic crisis, the Board of enhanced Heavily Indebted Poor Countries (HIPC) Initiative and the Executive Directors received periodic briefings, discussed the "World Multilateral Debt Relief Initiative (MDRI) in fiscal 2009. It considered Bank Group Operational Response to the Crisis," and provided guidance three country HIPC Completion Point proposals. The completion point on initiatives including the Vulnerability Financing Facility (VFF), is the point at which all creditors provide, unconditionally, the remain- designed to channel rapid support to protect the poor and the der of their share of debt relief agreed on at an earlier decision point in vulnerable. The Executive Directors focused on the two components of the HIPC process. The completion point is tied to implementation of key the VFF: the Global Food Crisis Response Program (GFRP) and the Rapid reforms and policies outlined in a country's PRSP. The Board also Social Response Program. They also approved the continued use of considered the progress report on HIPC and MDRI, and an update on expedited procedures for the processing of country GFRP operations. the World Bank­International Monetary Fund work program on In fiscal 2009, the Board reviewed and recommended for the Board strengthening debt management practices in low-income countries. of Governors' approval a package of reforms to enhance the voice and The Board evaluated a variety of important documents for the participation of developing and transition countries in the governance Development Committee during fiscal 2009. These included the sixth of the World Bank Group. Proposed reforms included creating a Board annual Global Monitoring Report on progress toward the Millennium chair for an additional Executive Director for Africa and an increase in Development Goals and "Development and Climate Change: A Strategic the basic votes of all members. Framework for the World Bank Group." In addition, Directors reviewed The Executive Directors continue to closely monitor implementation progress reports on the Bank Group's action plans for aid effectiveness; of the Bank's poverty reduction mandate. They review country-owned countries dealing with shocks as a result of the global food, fuel, and poverty reduction strategies, also known as Poverty Reduction Strategy economic crises; fragile and postconflict states; completing the Doha Papers (PRSPs). In February 2009, the Joint Staff Advisory Notes Development Round; and delivering increased aid for trade. They also requirements for PRS documents were simplified and streamlined to held a review of internal Board governance to ensure its effectiveness. improve the efficiency of Bank-Fund input into country poverty With regard to the Bank Group's work at the country level, during reduction strategies and to reduce client and institutional transactions fiscal 2009, the Board reviewed 22 Country Assistance Strategies (CASs) costs. In fiscal 2009, the Board considered nine country PRSPs and nine and 10 CAS Progress Reports as well as 7 Interim Strategy Notes, and country PRSP Progress Reports, emphasizing realism and monitoring approved $32.9 billion in IBRD lending and $14 billion in IDA commit- and evaluation capacity to achieve results and to measure progress in ments. In their deliberations, Directors urged greater coordination alleviating poverty. The Directors also reviewed IDA's internal controls among IBRD/IDA, IFC, and MIGA; they also stressed the need for in a report jointly carried out by Management, the Internal Audit enhanced coordination and harmonization between the Bank Group Department, and the Independent Evaluation Group. and other development partners, including the so-called nontraditional With respect to debt relief, the Board called for continued attention donors, through division of labor and complementarity, preparation of to the sustainability and full delivery of debt relief initiatives such as the joint matrices for budget support, shared mitigation strategies, and joint From left to right: (standing) Toga McIntosh, Sun Vithespongse, Abdulhamid Alkhalifa (Alternate), Dante Contreras, Rudolf Treffers, Eli Whitney Debevoise, Svein Aass, Louis Philippe Ong Seng, Pulok Chatterji, Samy Watson, Merza Hasan, Konstantin Huber, Toru Shikibu, Michel Mordasini, Sid Ahmed Dib, Ambroise Fayolle, José Rojas; (seated) Carolina Rentería, Jim Hagan, Zou Jiayi, Alexey Kvasov, Susanna Moorehead, Michael Hofmann, Giovanni Majnoni. Not pictured: Abdulrahman Almofadhi. THE WORLD BANK ANNUAL REPORT 2009 3 missions. In this connection, Directors considered the World Bank (See http://www.worldbank.org/boards and http://www. Action Plan on Aid Effectiveness, and welcomed the Agenda for Action, worldbank.org/ieg.) The Inspection Panel, which also reports directly which culminated at the Accra High-Level Forum on Aid Effectiveness. to the Board, addresses the concerns of people affected by Bank The Executive Directors approved a total administrative budget, net projects and ensures that the Bank adheres to its operational policies of reimbursements, of $2,245.7 million for fiscal 2010. The total and procedures during the design, preparation, and implementation administrative budget for fiscal 2009 was $2,189.1 million, net of phases of projects. reimbursements, including $201.1 million for the Development Grant The Executive Directors have established five standing committees-- Facility, the Institutional Grant Programs and State and Peace-Building Audit, Budget, Committee on Development Effectiveness, Governance Fund. The net administrative budget of $1,717.3 million represented a and Administrative Matters, and Personnel--which assist the Board in 4.9 percent nominal increase over the fiscal 2008 budget. overseeing and making decisions about the Bank Group's policies and Executive Directors periodically visit member countries to review procedures, financial condition, risk-management and assessment Bank assistance in progress. They meet a wide variety of people, processes, adequacy of governance and controls, and effectiveness of including project managers, beneficiaries, and government officials, as development and poverty reduction activities. In addition, an Ethics well as nongovernmental organizations, the business community, other Committee provides guidance on matters covered by the Code of development partners, financial institutions, and resident Bank staff. Conduct for Board Officials. During fiscal 2009, Directors visited Benin, Colombia, Honduras, Jamaica, Paraguay, and Togo. They also visited Tunisia to meet with the Executive INSPECTION PANEL Board of the African Development Bank. The main purpose of the Inspection Panel is to address the concerns of The Executive Directors are responsible for the conduct of the Bank's people affected by Bank-financed projects and to ensure that the Bank general operations; they perform their duties under powers delegated adheres to its operational policies and procedures during the design, by the Board of Governors. As provided in the Articles of Agreement, preparation, or implementation of the projects. The Panel submits to the five of the 24 Executive Directors are appointed by single-member Board for approval on a "no objection" basis its recommendations to countries having the largest number of shares; the rest are elected by investigate requests for inspection. If the investigation is approved, the the other member countries, which form constituencies in an election Panel will prepare an investigation report. Both this report and process conducted every two years. The resident Board of Executive Management's response are discussed by the Executive Directors, who also Directors represents the evolving perspectives of member countries on approve Management's action plan included in the Management's the role of the Bank Group. response. The Board fulfills an important role in shaping policies that guide the In fiscal 2009, the Board discussed the following projects that the general operations of the Bank and its strategic direction, as well as Panel investigated: the West African Gas Pipeline Project, the Uganda deciding on IBRD loan and guarantee proposals and on IDA credit, Private Power Generation (Bujagali) Project, the Albania Integrated grant, and guarantee proposals made by the President. It is also Coastal Zone Management and Clean-up Project, and the Ghana Second responsible for presenting to the Board of Governors at the Annual Urban Environmental Sanitation Project. The Panel is currently complet- Meetings audited accounts, an administrative budget, and the Annual ing its investigations related to the Albania Power Sector Generation and Report on the operations and policies of the Bank, as well as any other Restructuring Project. Management is preparing its response to the matters that, in their judgment, require submission to the Board of Panel's investigation of the Argentina Santa Fe Road Infrastructure Governors. The Independent Evaluation Group, which reports directly Project. The Panel also received six requests for inspection involving Bank- to the Board, provides independent advice to the Board on the financed projects in the Democratic Republic of Congo, India, Panama, relevance, sustainability, efficiency, and effectiveness of operations. and the Republic of Yemen. (See http://www.inspectionpanel.org.) 4 THE WORLD BANK ANNUAL REPORT 2009 EXECUTIVE DIRECTORS, ALTERNATES, AND COMMITTEE MEMBERSHIP | JUNE 30, 2009 EXECUTIVE DIRECTOR ALTERNATE CASTING VOTES OF APPOINTED E. Whitney Debevoisea, e (Vacant) United States Toru Shikibuc, d, f (VC) Masato Kanda Japan Michael Hofmanna, c Ruediger Von Kleist Germany Susanna Mooreheadb, d Stewart James United Kingdom Ambroise Fayollea, d (VC) Frederick Jeske-Schonhoven France ELECTED Konstantin Huber c, f Gino Alzettac Austria, Belarus, Belgium, Czech Republic, Hungary, Kazakhstan, Luxembourg, Slovak Republic, (Austria) (Belgium) Slovenia, Turkey Rudolf Treffersb, e Claudiu Doltu Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Macedonia (former (Netherlands) (Romania) Yugoslav Republic of ), Moldova, Montenegro, Netherlands, Romania, Ukraine José A. Rojasb, d Marta Garcia Jauregui Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, Venezuela (República (República Bolivariana de (Spain) Bolivariana de) Venezuela) Samy Watsonb, e Ishmael Lightbourne Antigua and Barbuda, The Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, (Canada) (The Bahamas) Ireland, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines Carolina Renteríac, d Rogerio Studart Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, Trinidad (Colombia) (Brazil) and Tobago Giovanni Majnonic (C) Nuno Mota Pinto Albania, Greece, Italy, Malta, Portugal, San Marino, Timor-Leste (Italy) (Portugal) James Hagana (VC), d Do-Hyeong Kim Australia, Cambodia, Kiribati, Korea (Republic of ), Marshall Islands, Micronesia (Federated States (Australia) (Republic of Korea) of ), Mongolia, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Vanuatu Pulok Chatterjia, e, f Kazi M. Aminul Islam Bangladesh, Bhutan, India, Sri Lanka (India) (Bangladesh) Toga McIntoshb (VC), e Hassan Ahmed Taha Angola, Botswana, Burundi, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, (Liberia) (Sudan) Namibia, Nigeria, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe Svein Aasse (C) Jens Haarlov Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, Sweden (Norway) (Denmark) Sid Ahmed Dibd (C) Javed Talat Afghanistan, Algeria, Ghana, Iran (Islamic Republic of ), Morocco, Pakistan, Tunisia (Algeria) (Pakistan) Michel Mordasinib (C) Michal Krupinski Azerbaijan, Kyrgyz Republic, Poland, Serbia, Switzerland, Tajikistan, Turkmenistan, Uzbekistan (Switzerland) (Poland) Merza H. Hasanc, e (VC), f (C) Ayman Alkaffas Bahrain, Egypt (Arab Republic of ), Iraq, Jordan, Kuwait, Lebanon, Libya, Maldives, Oman, Qatar, (Kuwait) (Arab Republic of Egypt) Syrian Arab Republic, United Arab Emirates, Yemen (Republic of ) Zou Jiayib, c (VC) Yang Yingming China (China) (China) Abdulrahman M. Almofadhia (C) Abdulhamid Alkhalifa Saudi Arabia (Saudi Arabia) (Saudi Arabia) Alexey Kvasov Eugene Miagkov Russian Federation (Russian Federation) (Russian Federation) Sun Vithespongsea, b Irfa Ampri Brunei Darussalam, Fiji, Indonesia, Lao People's Democratic Republic, Malaysia, Myanmar, Nepal, (Thailand) (Indonesia) Singapore, Thailand, Tonga, Vietnam Dante Contrerasc, e Felix Alberto Camarasa Argentina, Bolivia (Plurinational State of ), Chile, Paraguay, Peru, Uruguay (Chile) (Argentina) Louis Philippe Ong Senga, d, f Agapito Mendes Dias Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo (Mauritius) (São Tomé and Principe) (Democratic Republic of ), Congo (Republic of ), Côte d'Ivoire, Djibouti, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritius, Niger, Rwanda, São Tomé and Principe, Senegal, Togo Committees a. Audit Committee d. Personnel Committee C = Chairman b. Budget Committee e. Committee on Governance and Executive Directors' Administrative Matters VC = Vice Chairman c. Committee on Development Effectiveness f. Ethics Committee THE WORLD BANK ANNUAL REPORT 2009 5 REMUNERATION OF EXECUTIVE MANAGEMENT, EXECUTIVE DIRECTORS, AND STAFF To recruit and retain highly qualified staff, the World Bank Group has developed a compensation and benefits system designed to be internationally competitive, to reward performance, and to take into account the special needs of a multinational and largely expatriate staff. The Bank Group's staff salary structure is reviewed annually by the Executive Directors and, if warranted, is adjusted on the basis of a comparison with salaries paid by private financial and industrial firms and by representative public sector agencies in the U.S. market. After analyses of updated comparator salaries, the Board approved an average increase in the salary structure of 3.32 percent for fiscal 2009, effective July 1, 2008, for Washington-based staff. The annual salaries (net of taxes) of executive management of the World Bank Group were as follows for the period July 1, 2008, through June 30, 2009: Executive Management: Annual Salaries (Net of Taxes, in US$) ANNUAL BANK GROUP ANNUAL BANK GROUP CONTRIBUTION TO CONTRIBUTION TO NAME AND POSITION ANNUAL NET SALARYa PENSION PLANb OTHER BENEFITSc Robert B. Zoellick, Presidentd 441,980 67,181 191,825 Ngozi N. Okonjo-Iweala, Managing Director 351,740 76,996h 77,735 Graeme Wheeler, Managing Director 347,050 75,969h 88,498 Vincenzo La Via, Chief Financial Officer 347,050 52,752 76,698 Lars Thunell, Executive Vice President, IFC 347,050 52,752 76,698 Juan Jose Daboub, Managing Director 347,050 52,752 76,698 Anne-Marie Leroy, Senior VP and World Bank Group General Counsele 335,800 51,042 74,212 Izumi Kobayashi, Executive Vice President, MIGAf 334,900 50,905 74,013 Marwan Muasher, Senior Vice President, External Affairs 326,404 49,613 72,135 Vinod Thomas, Director General, IEG 321,050 70,278h 81,868 Yifu Lin, Senior Vice President and Chief Economist 304,580 46,296 67,312 Executive Directorsg 230,790 n.a. n.a. Alternate Executive Directorsg 199,650 n.a. n.a. a. Because World Bank Group (WBG) staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis. b. Approximate WBG contribution made to the Staff Retirement Plan (SRP) and deferred compensation plans from July 1, 2008, through June 30, 2009. c. "Other benefits" include annual leave; medical, life, and disability insurance; accrued termination benefits; and other nonsalary benefits. d. Mr. Zoellick, as part of WBG contribution to other benefits, receives a supplemental allowance of $79,120 to cover expenses. As a U.S. citizen, Mr. Zoellick's salary is taxable, and he receives a tax allowance to cover the estimated taxes on his Bank salary and benefits. In addition to his pension, Mr. Zoellick receives a supplemental retirement benefit equal to 5 percent of his annual salary. e. Ms. Anne-Marie Leroy's appointment was effective March 9, 2009, and her actual salary for March 9, 2009, through June 30, 2009, was $104,938. The WBG contributed approximately $15,951 to her pension and $23,191 to other benefits for the portion of the year she worked. f. Ms. Izumi Kobayashi's appointment was effective January 1, 2009, and her actual salary for January 1, 2009, through June 30, 2009, was $167,450. The WBG contributed approximately $25,452 to her pension and $37,006 to other benefits for the portion of the year she worked. g. These figures do not apply to the U.S. Executive Directors and Alternate Executive Directors, who are subject to U.S. congressional salary caps. h. Pension benefits for these staff members are based on SRP provisions in effect prior to April 15, 1998. Staff Salary Structure (Washington, DC) During the period July 1, 2008, to June 30, 2009, the salary structure (net of tax) and average salaries/benefits for World Bank Group staff were as follows: MINIMUM MARKET MAXIMUM STAFF AT AVERAGE SALARY/ AVERAGE GRADES REPRESENTATIVE JOB TITLES ($) REFERENCE ($) ($) GRADE LEVEL (%) GRADE ($) BENEFITS ($)a GA Office Assistant 23,760 30,880 40,130 0.1 33,568 15,696 GB Team Assistant, Information Technician 30,110 39,150 54,810 1.1 40,251 18,822 GC Program Assistant, Information Assistant 37,670 48,980 68,580 10.7 51,062 23,876 GD Senior Program Assistant, Information 42,610 55,390 77,550 8.5 62,416 29,186 Specialist, Budget Assistant GE Analyst 57,040 74,140 103,790 10.0 72,609 33,952 GF Professional 76,420 99,340 139,080 18.3 93,442 43,694 GG Senior Professional 102,140 132,790 185,900 30.9 129,091 60,363 GH Manager, Lead Professional 142,250 184,950 239,000 17.1 178,244 83,347 GI Director, Senior Advisor 188,000 248,900 282,000 2.9 232,820 108,866 GJ Vice President 256,760 287,570 322,000 0.4 287,652 134,506 GK Managing Director, Executive Vice 282,010 319,810 351,740 0.1 336,267 126,822 President Note: Because World Bank Group (WBG) staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the after-tax take-home pay of the employees of the comparator organizations and firms from which WBG salaries are derived. Only a relative small minority of staff will reach the upper third of the salary range. a. Includes annual leave; medical, life, and disability insurance; accrued termination benefits; and other nonsalary benefits. 6 THE WORLD BANK ANNUAL REPORT 2009 WORLD BANK GROUP FISCAL YEAR HIGHLIGHTS The World Bank Group, among the world's largest development COLLABORATING TO RESPOND institutions, is a major source of financial and technical assistance to TO THE GLOBAL FINANCIAL CRISIS developing countries around the world. Its member institutions--the Joint projects and programs by the Bank Group's institutions focus on International Bank for Reconstruction and Development (IBRD), the promoting sustainable development by expanding financial markets, International Development Association (IDA), the International Finance issuing guarantees to investors and commercial lenders, and providing Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), advisory services to create better investment conditions in developing and the International Centre for Settlement of Investment Disputes countries. The shared priorities of the Bank and IFC led to 104 active (ICSID)--work together and complement each other's activities to advisory projects in IDA countries in fiscal 2009, up from 78 in fiscal achieve their shared goals of reducing poverty and improving lives. The 2008. This collaboration also resulted in commitments for 14 investment Bank Group's purpose is to advance ideas about international projects on projects (with 33 others in the pipeline) in IDA countries in fiscal 2009. trade, finance, health, poverty, education, infrastructure, governance, These initiatives reinforce strong public-private partnerships, which climate change, and more to benefit all people in developing countries, are particularly important during the current global economic crisis. especially the poor seeking new opportunities. More than half of the 447 investment projects IFC initiated in fiscal The passing of the Millennium Development Goals midpoint is a 2009 were in IDA countries--a portfolio distribution that will help strong reminder that the international community must remain focused move IFC toward meeting its mandate to implement half of its projects on meeting the basic needs of the world's impoverished peoples. For in IDA countries by fiscal 2011. In addition, IFC is working on a series of the Bank Group, this means providing funding and technical assistance initiatives to support projects in the banking, trade, small- and as well as redoubling efforts to improve service delivery and help medium-size enterprise, and infrastructure sectors in IDA countries. countries strengthen investments in recovery and development These initiatives are expected to total about $30 billion over the next projects. three years. The global economic crisis heightens the need for action. To prevent IFC's $450 million additional contribution to the 15th Replenishment it from wiping out decades of developmental progress, the Bank Group of IDA (IDA15) in fiscal 2009, as part of IFC's IDA15 commitment totaling has increased efforts to protect the most vulnerable in the poorest $1.75 billion, improved collaborative efforts to create better living countries, maintain long-term infrastructure investment programs, and conditions in developing countries, especially in Africa. In support of sustain private sector­led economic growth and employment creation. the human development targets of the Millennium Development Goals, It is also ramping up work to help governments strengthen their health IDA15 will make $42 billion available to 78 of the world's poorest systems, promoting innovative community-based practices to deal with countries over fiscal 2009­11. global challenges such as HIV/AIDS and malaria. The Bank Group's investment projects are aimed largely at improving infrastructure services associated with poverty reduction and enhanced WORLD BANK GROUP ASSISTANCE growth. In fiscal 2009, the Bank Group committed $20.7 billion to In fiscal 2009, the World Bank Group sponsored 767 projects with a infrastructure, a critical sector to provide the foundation for rapid total commitment of $58.8 billion, distributed in credits, loans, grants, recovery from the crisis and to support job creation. The Sustainable and guarantees. This fiscal year's funding marks a 54 percent increase Infrastructure Action Plan, launched in July 2008, will leverage up to over the previous fiscal year and a record high for the Bank Group. $72 billion to provide additional financing of up to $149 billion in public Commitments from IDA totaled a record $14 billion for operations in and private investments over fiscal 2009­11. 63 low-income countries, a 25 percent increase from $11.2 billion in The largest multilateral investors and lenders in Eastern Europe--the fiscal 2008. IBRD committed $32.9 billion for 126 projects in middle- European Bank for Reconstruction and Development, the EIB Group income and creditworthy low-income countries, a 144 percent (the European Investment Bank and the European Investment Fund), increase over the $13.5 billion committed in fiscal 2008. IBRD is able to and the World Bank Group--have pledged to provide up to commit about $100 billion through fiscal 2011 to raise the living 24.5 billion to support banking sectors in the region and to provide standard of the poor, support countries facing large budget shortfalls, credit to businesses hit by the global economic crisis. Under a two-year and help sustain long-term investment projects. As the largest provider plan for 2009­10, the Bank Group will provide a collective 7.5 billion. of multilateral financing for the private sector in the developing world, IFC is expected to contribute up to 2 billion, channeled through its IFC committed $10.5 billion for its own account and mobilized an crisis response initiatives in banking, infrastructure, trade, and other additional $4 billion in fiscal 2009, funding 447 projects that support sectors and through its traditional investment and advisory services. sustainable private enterprises in developing and transition econo- IBRD will increase its lending to European and Central Asian countries in mies. MIGA issued guarantees totaling $1.4 billion for 26 projects in fiscal 2009­10 to 16 billion, of which as much as 3.5 billion is developing countries. envisaged for addressing banking sector issues in emerging Europe. THE WORLD BANK ANNUAL REPORT 2009 7 MIGA will provide political risk insurance capacity of up to 2 billion for investment projects in countries severely affected by the global investments. financial crisis. To spur economic growth in Latin America and the Caribbean, IBRD, Lighting Africa, a World Bank­IFC initiative, seeks to leverage IFC, and MIGA are coordinating crisis response initiatives in partnership expenditures on fuel-based lighting to accelerate the switch to efficient, with the Inter-American Development Bank, the Inter-American clean, and modern alternatives. The distribution of the new technology Investment Corporation, Corporación Andina de Fomento, the will be achieved by mitigating market barriers and engaging the global Caribbean Development Bank, and the Central American Bank for lighting industry, African businesses and entrepreneurs, governments, Economic Integration. Bank Group institutions will provide $35.6 billion and civil society. of the $90 billion committed for the program. A joint IDA­IFC initiative is facilitating increased funding for micro-, In fiscal 2009, the Bank Group and the African Development Bank, small-, and medium-size enterprises (MSMEs) in Ghana, with the aim of together with other partners, launched the Joint International Financial enhancing the competitiveness and employment levels of smaller Institutions/Development Finance Institutions Action Plan for Africa to private sector establishments. Development of MSMEs is considered support the region's financial systems and increase lending to the essential for poverty reduction, because they are an important source of private sector. Primary objectives for financial assistance include job creation. IDA and IFC will jointly provide risk-sharing resources to promoting trade, increasing lending to infrastructure projects, and support the sustainable development of entrepreneurship and reduce facilitating coordination between public and private sector stakeholders. the technical barriers facing MSMEs. IFC will invest in a risk-sharing IFC committed $1 billion through its crisis response initiatives to facility with a local bank to supply more than $3 million for new local support agribusiness companies and strengthen the capital base of currency loans. IDA will guarantee the losses of the facility and provide a local banks. MIGA will provide capacity for up to $2 billion in investment $1 million performance-based grant. guarantees to enhance risk mitigation and guarantee capacity for 8 THE WORLD BANK ANNUAL REPORT 2009 THE WORLD BANK GROUP INSTITUTIONS The International Bank for Reconstruction and Development (IBRD) Established 1944 | 186 Members lends to governments of middle-income and creditworthy low-income Cumulative lending: $479 billion* countries. This affiliate promotes sustainable development through loans, guarantees, risk-management products, and nonlending analytical and Fiscal 2009 lending: $32.9 billion for advisory services. IBRD's financial strength enables it to borrow in capital 126 new operations in 42 countries markets at low cost and to offer clients favorable borrowing terms. * Effective fiscal 2005, includes guarantees. IBRD KEY FINANCIAL INDICATORS | FISCAL 2005­2009 MILLIONS OF DOLLARS 2005 2006 2007 2008 2009 Operating incomea 1,320 1,740 1,659 2,271 572 Loans outstanding 104,401 103,004 97,805 99,050 105,698 Total assets 222,008 212,326 208,030 233,311b 275,420 Total equity 38,588 36,474 39,926 41,548 40,037 a. Reported in IBRD's financial statements as "Income before fair value adjustment on non-trading portfolios, net and Board of Governors­approved transfers." b. Restated to reflect the impact of certain reclassifications to conform with the current year's presentation. The International Development Association (IDA) provides Established 1960 | 169 Members interest-free, long-term loans--called credits--and grants to govern- Cumulative commitments: $207 billion* ments of the world's 82 poorest countries, which have little or no Fiscal 2009 commitments: $14 billion capacity to borrow on market terms. IDA's lending is financed by for 176 new operations in 63 countries contributions to IDA from donor countries, IBRD's net income transfers, grants from IFC, and IDA's credit reflows. * Effective fiscal 2005, includes guarantees. IDA KEY FINANCIAL INDICATORS | FISCAL 2005­2009 MILLIONS OF DOLLARS 2005 2006 2007 2008 2009 Development credits outstanding 120,907 127,028 102,457 113,542 112,894 Total sources of development resources/Total equitya 130,378 102,871 110,212 123,619 127,950 a. Up to the fiscal year ended June 30, 2007, IDA prepared special-purpose financial statements. Effective July 1, 2007, IDA's financial statements are prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP). THE WORLD BANK ANNUAL REPORT 2009 9 The International Finance Corporation (IFC) provides long-term Established 1956 | 182 Members loans, equity, structured and securitized products, and advisory and risk Committed portfolio: $34.4 billion (IFC's account), plus mitigation services to private enterprises in developing and transition $8 billion in syndicated loans countries, helping reduce poverty and improve people's lives. IFC seeks Fiscal 2009 commitments: $10.5 billion committed to reach businesses in regions and countries with limited access to and $4 billion mobilized for capital and markets that are considered too risky by commercial 447 projects in 103 countries investors in the absence of IFC participation. IFC provides services without accepting government guarantees. IFC KEY FINANCIAL INDICATORS | FISCAL 2005­2009 MILLIONS OF DOLLARS 2005 2006 2007 2008 2009 Operating income (loss)a 1,953 1,409 2,739b 1,938b (153) Liquid assets net of associated derivatives 13,325 12,730 13,269 14,622 17,864 Loans, equity investments, and debt securities, net 11,489 12,787 15,796 23,319 22,214 Total capital 9,821 11,141 14,017 18,261 16,122 a. Reported in IFC's financial statements as "(loss) income before net gains (losses) on other nontrading financial instruments accounted for at fair value and grants to IDA." b. As restated. The Multilateral Investment Guarantee Agency (MIGA) provides Established 1988 | 174 Members political risk insurance or guarantees to promote foreign direct invest- Cumulative guarantees issued: $20.9 billion* ment into developing countries. MIGA also works to resolve disputes Fiscal 2009 guarantees issued: $1.4 billion for 26 between investors and host governments to keep guaranteed invest- projects ments, and their benefits, on track. The agency's knowledge sharing and technical assistance activities help countries define and implement *Includes amounts leveraged through the Cooperative Underwriting Program. strategies to promote investment, and provide information on business opportunities, investment climate conditions, and political risk insurance. MIGA KEY FINANCIAL INDICATORS | FISCAL 2005­2009 MILLIONS OF DOLLARS 2005 2006 2007 2008 2009 Operating income 24 17 49 55 51 Operating capitala 830 863 950 1,019 1,044 Net exposure 3,138 3,310 3,209 3,578 3,966 Net exposure in IDA-eligible countries 1,341 1,435 1,411 1,477 1,362 a. Operating capital includes paid-in capital, retained earnings, and the insurance portfolio reserve net of corresponding reinsurance recoverable. The International Centre for Settlement of Investment Disputes Established 1966 | 144 Members (ICSID) provides facilities for conciliation and arbitration of international Total cases registered | 292 investment disputes between foreign investors and host states. As Fiscal 2009 cases registered | 24 evidenced by its large membership, considerable caseload, and the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development. ICSID also conducts research and publishing activities in the areas of international arbitration and foreign investment law. 10 THE WORLD BANK ANNUAL REPORT 2009 INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 1 A WORLD IN CRISIS 4 percentage points, to just 1.2 percent, in 2009. And in Europe and The world is dealing with its greatest financial and economic challenge Central Asia and Latin America and the Caribbean, the gross domestic since World War II. The financial turmoil that began in 2007 erupted product (GDP) is expected to contract. Global trade in goods and into a full-blown economic crisis in September 2008, spawned rising services is projected to fall close to 10 percent this year, the largest drop unemployment, and now threatens to become a major humanitarian in 80 years, as countries have sharply curtailed their consumption of problem. Virtually no country has escaped the impact of the widening and expenditure on durable and investment goods--which are both crisis, the effects of which are likely to be felt through 2011. heavily traded imported categories of goods. The global economy, which grew by 1.9 percent in 2008, is expected Global industrial production fell an unprecedented 13 percent in to decline by 2.9 percent this year, far deeper than the 1.7 percent the 12 months ending April 2009, with the sharpest declines concen- decrease the World Bank projected in April 2009. This is the first time trated in countries specializing in the production of durable and that global output has shrunk in more than 60 years (see box 1.1). investment products and those with large current account deficits. The Growth in developing countries is forecast to slow by more than decline has led to significant layoffs, which have disproportionately BOX 1.1 LESSONS FROM PAST FINANCIAL CRISES The Bank's Independent Evaluation Group (IEG) released a report in within the Bank Group and between the Bank Group and its fiscal 2009 on the lessons of Bank interventions in past episodes of partners, has proven crucial, not only to increasing synergies financial crisis. Key findings include: but also to avoiding tensions, such as those that have occasionally arisen between the Bank Group and the Volume with quality. The composition and effectiveness of International Monetary Fund (IMF). public expenditures is critical to the success of an intervention. Fiduciary concerns. Financial and risk management, as well as Poverty and social safety nets. Poverty issues received insufficient environmental and social safeguards, will continue to be vital to attention in past financial crises. It is crucial to factor in the ensure that scarce resources reach intended beneficiaries and implications for social safety nets from the beginning of the negative consequences are avoided. crisis rather than later. Monitoring and evaluation. While there is a premium on speed, Environment and climate change. Interventions need to take there is a heightened need for a results-based framework that into account the effects of the crisis on the environment and links objectives, program costs, and benefits. The focus on climate change. The Bank Group can build on recent momen- results is particularly important when resources are scarce. tum in mobilizing funds to address climate change and foster Preparedness and early warning. More effective mechanisms are greener development activities. needed for early warning of crises. The Bank Group needs to Leveraging resources. The adequacy of resources, including work with the IMF and other international financial institutions resources leveraged with partners, is key. Collaboration, both on the design and implementation of such mechanisms. 12 THE WORLD BANK ANNUAL REPORT 2009 affected immigrant workers, most of them from developing countries. It is estimated that every 1 percent decline in developing countries' The International Labour Organization predicts that a further 20 million growth rates traps an additional 20 million people in poverty. By this people will fall into joblessness by the end of the crisis. Given the measure, the current crisis is projected to force another 53 million to depth of the slowdown and the weak recovery that is expected, it scrape by on less than $1.25 a day. Tight borrowing conditions and will likely be several years before unemployment rates return to uncertainty about the future abruptly curtailed the flow of capital that precrisis levels. developing countries had been receiving for several years. This has PROGRESS TOWARD THE MILLENNIUM DEVELOPMENT GOALS The global financial crisis is imperiling achievement of the MDGs, most of which now 5. Improve Maternal Health appear unattainable. Targets that would have been difficult to reach even before the Among all the MDGs, the least progress has been made in improving maternal crisis are now considered implausible, and a real risk exists that the financial and health. Every year, more than half a million women die from complications during economic crisis that began in the United States may develop into a humanitarian, pregnancy or childbirth or during the six weeks after delivery. Progress in Africa-- political, and security catastrophe in the world's most vulnerable regions. the region with the highest maternal mortality rate--has been negligible. 1. Eradicate Extreme Poverty and Hunger 6. Combat HIV/AIDS, Malaria, and Other Diseases The goal of halving poverty by 2015 from its 1990 level is still reachable, but risks About 33 million people were living with HIV in 2007, and about 2 million, the abound. The number of people living in extreme poverty could rise in more than majority in Africa, died from the disease. Most countries in the world are off track half of all developing countries in 2009, including two-thirds of all low-income for reaching the target for HIV/AIDS, largely because of insufficient funding and countries and three-quarters of all countries in Africa. As a result of the worldwide inadequate supplies of antiretroviral drugs. Nevertheless, antiretroviral use has recession, an additional 55 million to 90 million people are projected to be trapped become more common and affordable, with free medication available in many parts in extreme poverty in 2009, and the number of people who are chronically hungry of the world through government partnerships and subsidies from international and has climbed to more than 1 billion, reversing gains in fighting malnutrition. nongovernmental organizations. Pilot programs for bed net distribution to combat malaria infections have recorded significant success, although the disease still causes 2. Achieve Universal Primary Education more than 1 million deaths a year among children under five, predominantly in Africa. Progress toward the primary education goal varies across regions. Many countries in East Asia and Pacific and Latin America and the Caribbean are on track. In 7. Ensure Environmental Sustainability contrast, progress has been slow in Europe and Central Asia and the Middle East About half of all developing countries for which data are available have achieved and North Africa, and neither Africa nor South Asia is on track to achieve this MDG. or are on track to achieve the improved water target. In contrast, less than a quarter have achieved or are on track to achieve the improved sanitation target. 3. Promote Gender Equality and Empower Women Additional investment of $100 billion to $200 billion will be needed to combat Female participation in the labor force has increased, but participation rates, climate change in developing countries over 2010­20, and the figure is occupational levels, and wages reveal significant gender gaps. East Asia and projected to rise to $400 billion a year on average after 2020. Pacific and Europe and Central Asia are close to reaching the gender parity target 8. Develop a Global Partnership for Development for all education levels. Although Latin America and the Caribbean is on track to Official development assistance from members of the Organisation for Economic achieve the target at the primary level, gender bias against boys is apparent at Co-operation and Development's Development Assistance Committee rose the secondary and tertiary levels. South Asia and Africa lag behind at all levels for about 10 percent in real terms in 2008, following declines in 2006 and 2007. this target, particularly at the tertiary level. Despite the increase, aid was still about $29 billion short of the Gleneagles target 4. Reduce Child Mortality of $130 billion a year by 2010. The Accra Conference on Aid Effectiveness The under-five mortality rate has fallen in all regions since 1990, and some reviewed the Paris Declaration commitments and moved beyond harmonization regions are close to being on track to reduce the rate by two-thirds between to focus on country ownership and creating inclusive partnerships (see box 1.4), 1990 and 2015. In more than three-quarters of countries for which data are while the Arab World Initiative is promoting development and opportunity available, however, the under-five mortality rate has not declined rapidly enough through partnerships focused on infrastructure, gender, and other areas (see to meet the target by 2015. box 1.5). (See http://www.developmentgoals.org.) INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 13 caused serious economic problems in countries with large current to affect people in developing countries for years to come, threatening account deficits, notably a number of countries in Europe and Central decades of development progress. Preliminary estimates for 2009­15, Asia. As a result of an increase in investors' reticence to expose themselves for example, suggest that the annual number of infant deaths in to risk, developing countries are estimated to face a financing gap of developing countries may be 200,000­400,000 higher than in the between $352 billion and $635 billion in 2009. In the absence of external absence of the economic crisis. support, many countries may be forced to slash spending on health, The 2009 Annual Report explores the actions taken and ideas education, agriculture, and social programs. Fragile and conflict-affected generated by the Bank during fiscal 2009 to create sustainable countries are in a weaker position to cope with the effects of the crisis solutions. The report focuses on the outlook for the global economic and to mediate its social impacts than other developing countries. crisis and the Bank's initiatives to help clients meet the challenge; the The projected decline in private capital flows and official aid to ripple effects of the food and fuel crises and what the Bank is doing developing countries is expected to be much larger than the drop in to address them; and the health, education, infrastructure, gender, remittances, reflecting the relative stability of the stock of migrants and climate change issues that continue to challenge low- and worldwide. As a result, remittances will be an even more important middle-income countries. source of foreign currency than they were before the crisis. But they too are expected to fall by as much as 7­10 percent in 2009--a sizable Taking Action to Overcome the Crisis decrease given the double-digit growth rates of the past few years (see and Ongoing Development Challenges box 1.2). The Bank is moving rapidly to help countries deal with the crisis while The current financial and economic crisis comes on top of the simultaneously tending to its existing projects and programs. The three skyrocketing of food and fuel prices in 2008, which dragged an main focal areas are protecting the most vulnerable people from the estimated 130­155 million people in developing countries into immediate and long-term fallout of the crisis, maintaining long-term poverty. Higher food prices persist in many countries, despite the infrastructure investment programs, and sustaining the potential for increase in the global supply of cereal and decreases in international private sector­led economic growth and employment creation, food prices. particularly through small- and medium-size enterprises and microfi- By June 2009, oil prices had dropped by more than 50 percent from nance. Ongoing development challenges, such as HIV/AIDS and climate their mid-2008 peak, while nonoil commodity prices had fallen by change, are also important. Responses to short- and longer-term crises about 30 percent. Though these declines provided some relief to the work hand in hand, as more immediate mitigation can reveal strategies poor in developing countries, oil prices at around $70 per barrel at the and launch instruments that enhance efforts toward solving problems end of June 2009 remain substantially higher than their levels before that will stretch further into the future. the spike in 2008. In the short term, oil-exporting countries should be Drawing on its financial strength and its role as the global leader in able to use windfall profits saved from 2008 to mitigate the effects of development analysis and data, the Bank Group launched a range of the global downturn on their economies. new programs and financial products in fiscal 2009. It was one of the There are increasing signs that the global economy has stabilized few development institutions to have increased aid to the poorest and that a recovery is beginning. However, the recovery is expected to countries over this period, providing an additional $2.8 billion in be slow, and the human and economic impact of the crisis will continue financing in fiscal 2009 compared to fiscal 2008. INDEPENDENT EVALUATION GROUP REVIEWS THE INTERNATIONAL DEVELOPMENT ASSOCIATION To assure stakeholders that IDA complies with Bank articles and policies, the that IDA's internal controls framework operates to a high standard. Identified Board requested that IEG perform a full review of the control system in place, in weaknesses included areas of fiduciary controls, and lack of specific focus of coordination with a self-assessment by IDA management and a review by the transaction-level controls against fraud and corruption. This assessment was the Bank's Internal Audit Department. IEG found, with some important qualifications, first of its kind done by any international development finance institution. 14 THE WORLD BANK ANNUAL REPORT 2009 Following the record 15th Replenishment of IDA, commitments are To help the poorest and most vulnerable countries cope with the expected to reach nearly $42 billion for IDA in fiscal 2009­11. These deterioration of conditions brought on by the financial crisis, in resources are being allocated to long-term country development December 2008 the Bank established the Financial Crisis Response programs. Lending by the International Bank for Reconstruction and Fast-Track Facility to accelerate approval processes for $2 billion of IDA Development (IBRD) nearly tripled, from $13.5 billion to $32.9 billion, grants and long-term, interest-free loans. Armenia, the Central African during fiscal 2009, much of it delivered through fast-disbursing Republic, and the Democratic Republic of Congo were the first development policy loans. IBRD lending volumes are expected to countries to benefit from the facility. remain strong over fiscal 2009­11. In fiscal 2009, the Bank established the Vulnerability Financing Facility, a Though additional lending is critical, an infusion of money alone realignment of resources comprising the $1.2 billion Global Food Crisis will not solve the problems of developing countries or chart a path Response Program and the new Rapid Social Response Program. The facility for their future. For this reason, the Bank is both developing financial includes both existing Bank resources and some new pledges from donors. solutions based on what has worked in the past (see box 1.1) and By the end of fiscal 2009, the Global Food Crisis Response Program had partnering with other international development and financial disbursed $780.2 million in 31 countries. The Rapid Social Response institutions to help people worldwide, recognizing that the impact of Program seeks to help all borrower countries with their immediate social the financial crisis on low- and middle-income countries varies needs and to lay the groundwork for mitigating future crises. A multidonor, dramatically. country-led trust fund, supported by Japan and the United Kingdom, will BOX 1.2 MIGRATION AND REMITTANCES Remittance flows represent the largest source of foreign exchange Fiscal 2009 saw the publication of several important regional and in many countries, accounting for more than a third of national global reports. One of them, Shaping the Future: A Long-Term income in some small countries. For poor people in developing Perspective of People and Job Mobility for the Middle East and North countries, they provide a lifeline. In 2009, developing countries will Africa, develops a policy framework for helping sending and see a decline of about 7 percent in remittances as a result of the receiving countries prepare for the rapid acceleration of job and economic crisis. The stock of international migrants, however, is not labor mobility that may result from the projected demographic and expected to decline, and remittance flows will remain resilient labor force imbalances in the region. People Move, a widely read compared with other sources of external financing for developing blog on migration, remittances, and development, was launched in countries. June 2008. (See http://blogs.worldbank.org/peoplemove.) The Bank's migration and development work program includes During the World Bank­IMF Annual Meetings in October 2008, the efforts to improve data, understand the impacts of migration and Bank organized a workshop attended by central bank governors to remittances on poverty and economic growth, and design policy discuss findings from the Bank's global survey of central banks on recommendations for both sending and receiving countries. remittances. In March 2009, the Bank organized a meeting on its Research and sector work focuses on ways to facilitate remit- Africa Migration Project at the African Development Bank in Tunis. tances; reduce remittance fees; minimize the skill losses associ- In July 2008, the G-8 nations called for the establishment of a Global ated with migration of skilled workers; understand the links Remittances Working Group and invited the Bank to coordinate and among trade, investment and migration, social protection, and facilitate its work. The group set a target of reducing remittance fees portability of pension benefits; and harness diasporas for by 5 percentage points in five years, which could raise more than development. $15 billion in additional annual resource flows to developing countries. INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 15 provide additional donor resources with which to complement IDA FINANCING STRATEGIES support for low-income and fragile states most affected by the crisis. Since the onset of the financial crisis, there has been a surge in the In addition to financing, the Bank provided advisory services in fiscal number of countries seeking IBRD's expertise and risk-management 2009 to partner with governments in developing and implementing services to reduce borrowing costs and manage volatility in exchange sound debt management frameworks. It also expanded its menu of rates and interest rates. Colombia, Indonesia, and Mexico are among customized financial products and services to assist countries in risk countries that partnered with IBRD as an intermediary in fiscal 2009 to management and protection of scarce public resources. pursue risk-management strategies. In April 2009, the Bank launched the Infrastructure Recovery and The Bank's contingent financing product, the IBRD Development Assets (INFRA) platform in coordination with other multilateral Policy Loan (DPL) with a deferred drawdown option (DDO), is a ready development banks and donor governments. It was created to ensure source of liquidity for member countries facing immediate financing that governments continue to finance infrastructure development and needs. The product provided Colombia with much-needed liquidity in provide basic infrastructure services during the global downturn. To fiscal 2009 after the global financial turmoil reduced the country's help client countries provide the foundation for recovery from the access to capital markets. Another country that also benefited from global economic crisis, the Bank is joining with donor partners to ensure the DPL DDO was Indonesia. The Bank and other donors launched a that country diagnostic analyses and project preparation efforts $5.5 billion contingent financing facility to help Indonesia respond to continue. The Bank plans to increase its own infrastructure investments the financial crisis. The largest component of the facility was a $2 to at least $45 billion over three years, a $15 billion increase over the billion DPL DDO that helped the country leverage funding from other preceding three years. The funds, along with those from INFRA partners, sources, sending a strong positive signal to international and will help jumpstart projects that have stalled in recent months, domestic markets about its available liquidity. including, for example, the installation of power grids in Cameroon and In April 2009, the Bank approved a pilot innovative financing new port facilities in Indonesia and Vietnam. mechanism--the Advance Market Commitment--to address a failure The Bank faces a twofold challenge: reducing poverty and enabling in the market for development of pneumococcal vaccines. Through the people to stay out of poverty, and shepherding its existing programs and mechanism, the IBRD will provide the financial platform for a pilot implementing new, noncrisis instruments while helping client countries vaccine program designed to give children in the world's poorest withstand the economic crisis. countries timely access to safe, effective vaccines, at affordable prices, BOX 1.3 INVESTMENT LENDING REFORM A major effort is underway to reform the Bank's investment consolidating and rationalizing the menu of investment lending model so that it responds better to borrowers' needs lending options to include instruments for rapid response and and the changing global environment. Investment lending emergency operations, projects differentiated by risk, and reform aims to sharpen the focus on results and improve the instruments to better support results-based financing; management of risk. It will address issues related to both enhancing supervision and implementation support; preparation and implementation support, as well as the policy revising the policy framework guiding investment lending; and framework and related institutional and system issues to support the reform. cultivating an enabling environment for reform by aligning incentives, addressing accountability issues, and providing Reform is organized around five objectives: training and support to teams, including in the use of informa- improving risk management by developing a risk-based model tion technology. (See http://www.worldbank.org/ to assess proposed operations and processing requirements; investmentlendingreform.) 16 THE WORLD BANK ANNUAL REPORT 2009 by accelerating the creation of a viable market for pneumococcal SPURRING TRADE AND DEVELOPING vaccines. THE FINANCIAL AND PRIVATE SECTORS Trade Protecting Scarce Public Resources The Bank launched the Trade Facilitation Facility, a rapid-response fund As the financial crisis led to substantial macroeconomic adjustments aimed at helping developing countries reduce trade costs and enhance around the world, many countries were required to revise their debt their ability to move goods and services across borders rapidly, cheaply, management strategies. Most significantly, the crisis highlighted the and predictably. The facility is designed to finance activities that will urgent need to develop or put in place a robust public debt manage- make immediate and direct improvements in trade facilitation systems ment framework that helps promote long-term debt sustainability in a by modernizing infrastructure, institutions, policies, and regulations. changing market environment. Reducing trade costs represents a significant opportunity for countries In response to these challenges, the Bank helped client govern- to realize their economic development and poverty-reduction goals ments develop and implement sound debt management practices, during this time of economic crisis. including strategy formulation and execution, risk management, Surveys of exporters, importers, and local banks involved with trade governance, access to international capital markets, and capacity finance in 14 developing countries reveal that the cost of trade finance building. The Debt Management Facility, a multidonor trust fund, was has increased markedly and the supply of export finance has contracted. established to help low-income and IDA-only countries strengthen their The World Bank has put in place operational programs with a trade debt management capacity. And in partnership with other donors, the finance component in the amount of $4 billion through the IFC Global Bank used its existing Debt Reduction Facility to help Liberia reduce its Trade Finance Program (GTFP) and the Global Trade Liquidity Program foreign commercial debt through a buy-back operation of $1.2 billion at (GTLP). Together with its official and private partners, the GTLP is a discount of nearly 97 percent of face value, the deepest discount ever expected to contribute up to $50 billion in short-term trade finance over negotiated by a developing country. a three-year period. (See http://www.worldbank.org/trade.) BOX 1.4 AID EFFECTIVENESS POST-ACCRA The Accra Agenda for Action (AAA), adopted in September 2008 countries and donors need to accelerate progress to meet the during the Third High Level Forum on Aid Effectiveness in Ghana, AAA commitments. builds on progress achieved to date in implementing the Paris Building on the AAA, the Bank developed an Action Plan on Aid Declaration. Reflecting the voice of developing countries, it goes Effectiveness in March 2009. Priorities include increasing country beyond harmonization to focus on strengthening country ownership and use of country systems; effectively engaging with ownership and creating inclusive partnerships, underscoring all development partners, especially newer donors and in fragile mutual accountability for results and identifying concrete actions state contexts; and improving management for development for all development partners. results and aid predictability. Both developing countries and donors have made progress on As part of its international engagement on aid effectiveness, the the aid effectiveness commitments made in the Paris Declaration Bank is currently co-Vice Chair of the Development Assistance and the AAA. The 2008 monitoring survey indicates that Committee's Working Party on Aid Effectiveness and its Executive countries have made some improvements in formulating Committee. The Bank is also providing substantial technical national development strategies, with sound results frameworks input to the working party, which will play a central role in to monitor them, and that donor support is increasingly aligned defining the agenda for the Fourth High Level Forum on Aid with those strategies. However, in many areas, developing Effectiveness scheduled to take place in Korea in 2011. INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 17 Financial and Private Sector Development challenges of financial systems. The Bank has engaged in FSAPs and FSAP The Bank's fiscal 2009 work on financial and private sector development updates in more than 120 countries over the past 10 years, contributing focused on assisting governments in managing their responses to the to the analytical underpinnings of financial sector reforms and some of financial crisis; maintaining financial stability; ensuring access to finance, the recent crisis-related loans to governments. especially by micro-, small-, and medium-size enterprises and the poor; In more than 50 countries, the Bank is helping to enhance the and creating conditions for economic recovery and growth. It did so stability of and promote access to basic payment services. Jointly through three main mechanisms: crisis preparedness, financial sector with IFC, the Bank is promoting credit bureau development in more reforms, and investment climate reforms. than 50 countries, and has helped establish or improve 13 bureaus supporting approximately $19 billion in financing and working on Crisis Preparedness and Tracking The Bank supported national secured transaction and collateral registry projects in nine countries. authorities in undertaking simulation exercises in fiscal 2009 to replicate Such a project in China, completed in June 2009, supported more the key characteristics and behaviors of a financial system in crisis. The than $350 billion in receivables financing. process was designed to prepare authorities to better manage potential The Bank's Remittance Prices Worldwide Database (http:// crises and increase the speed of their responses. In addition, CGAP (Con- remittanceprices.worldbank.org) contains detailed information on the sultative Group to Assist the Poor) offered a suite of analytical products cost of sending remittances in 134 bilateral corridors. These data are that tracked what was happening to microfinance performance globally. intended to increase transparency in the market for remittances, which And as part of a campaign for responsible finance, CGAP helped investors combined with adequate consumer protection, helps foster a competitive implement the Client Protection Principles. (See http://www.cgap.org.) and safe market for remittances, and is an important factor in the Financial Sector Reforms The Bank advised a number of governments reduction of costs. on the design of regulatory reforms during fiscal 2009. The Financial Sector Assessment Programs (FSAPs), carried out with the IMF in low- Investment Climate Reforms The Bank supports governments in and middle-income countries, will continue to play a critical role as a developing countries in reforms to improve the environment for business, key diagnostic in understanding the vulnerabilities and developmental with the objective of promoting a robust and competitive private sector. BOX 1.5 PROMOTING DEVELOPMENT AND OPPORTUNITY THROUGH THE ARAB WORLD INITIATIVE The Arab World Initiative (AWI) aims to promote development and piloted an assessment of barriers to female employment in Jordan; opportunity in the Arab world by strengthening partnerships; scaled up support to countries severely hit by soaring food prices; and scaling up successful regional initiatives; and piloting new, increased support to community projects in fragile and conflict- high-impact regional and country-specific initiatives. affected countries, including Iraq, Lebanon, Mauritania, Sudan, and Following extensive consultations with country authorities and other the West Bank and Gaza. The AWI also provided support to the Arab stakeholders, the AWI supported several new programs in fiscal 2009 Water Academy as a platform of knowledge exchange and enhance- and scaled up some existing ones. It developed an integrated index ment of Arab leadership in sustainable resource management. for education performance; provided technical assistance to launch Under the AWI, IFC and the Multilateral Investment Guarantee the Regional Academy for Learning and Leadership in Education, Agency (MIGA) scaled up activities in housing finance, student based in Jordan; initiated assessments of energy integration in the loans, and investment guarantees, while the World Bank Institute Arab world; supported investments in ports, airports, and logistics launched a corporate social responsibility program, the Bank's in the Arab Republic of Egypt, Jordan, and Tunisia; and assessed Development Economics Vice Presidency launched a regional cross-border facilitation and infrastructure in Iraq, Jordan, Lebanon, research capacity development program, and Treasury scaled up the Syrian Arab Republic, and the West Bank and Gaza. The AWI reserves-management capacity building. 18 THE WORLD BANK ANNUAL REPORT 2009 One focus of this work is improving the efficiency of business regulation, changes in the way the Bank does business. It will require commitment leading to more opportunities for entrepreneurship and formal sector to an ongoing and comprehensive renewal program to create an employment. The annual Bank­IFC publication Doing Business (http:// organization that: www.doingbusiness.org) has tracked close to 1,000 such reforms in values global excellence in development effectiveness as the core 158 countries over the past five years. Business startup reforms in Mexico, goal and aligns its incentives and culture along this objective, for example, boosted formal sector employment by close to 3 percent. A is driven by client focus, new initiative launched this year, the online Gender Law Library (www. doingbusiness.org/gender), tracks laws and regulations that affect the can rapidly respond across the globe with a highly mobile technical economic status of women in 181 economies. The database facilitates and managerial staff deeply connected to diverse internal and exter- comparative analysis of legislation, contributing to reforms that can nal networks of expertise, enhance women's full economic participation. focuses on results, and The multidonor Foreign Investment Advisory Service (FIAS), focused on values open debates on development policies and issues. supporting measurable reforms to improve the investment climate in about 40 countries in fiscal 2009, expanding activities in strategic priority Deploying Global Expertise areas such as Africa, IDA countries, and conflict-affected states. In response In fiscal 2009, the Bank Group created 10 Global Expert Teams (GETs) in to the global financial crisis, it scaled up its work in business reform, strategic priority areas: Climate Change Adaptation; Disaster Risk secured lending and collateral frameworks, business tax simplification, and Management; Financial Crisis; Fragile and Conflict Situations; Growth; trade logistics. FIAS also began developing a new insolvency product to Health Systems; Public-Private Partnerships; Public Sector Performance; assist countries in improving their legal and institutional frameworks for Social Safety Nets; and Science, Technology, and Innovation. The core insolvency and corporate restructuring. (See http://www.fias.net.) objectives of these teams are to provide highest quality, rapid-response service to clients; to mobilize and deploy the best global expertise TRANSFORMING AND DEPLOYING (internal and external); and to improve the capture, sharing, and use of THE WORLD BANK'S KNOWLEDGE BASE knowledge within their areas. The GET provides a unique opportunity to Knowledge is the key to development effectiveness and the driver for a convene subject matter expertise from across the Bank, for which there successful development institution. The Bank is able to draw on a global is no other existing mechanism. network of platforms in 120 countries, close and long-standing relation- Since their creation in February 2009, the GETs have delivered a large ships with partners, a deep understanding of global and national policy portfolio of activities. For example, the Disaster Risk Management GET issues, an unparalleled pool of development data and expertise, a strong conducted a reconnaissance mission to mobilize assistance for Namibia balance sheet, and a highly motivated and entrepreneurial workforce. after it had been hit by the worst floods of the past 40 years. The Public The global financial crisis and the associated questioning of Private Partnership GET provided infrastructure financing assessments conventional wisdom will create more demand for the Bank's knowl- to Indonesia, Mexico, and Thailand. The Health Systems GET organized edge services over the coming years, underscoring the critical need for and led a high-level health systems strengthening conference involving the Bank to strengthen its knowledge base. the Global Fund for AIDS, TB, and Malaria (GFATM), the Global Alliance The recently created Knowledge Strategy Group is developing a for Vaccines Initiative (GAVI) and the World Health Organization (WHO). shared vision that will guide a broad set of actions over the coming Other activities have included the Science, Technology, and Innovation years. Revitalizing the knowledge agenda will require deep-seated GET working closely with the governments of both Ghana and Rwanda to FINANCIAL SOLUTIONS FOR NATURAL CATASTROPHES The Bank moved a step forward in its efforts to provide financial solutions to help help. This year also marks the first time that a country drew upon the new countries plan efficient responses to catastrophic weather-related events in fiscal Development Policy Loan with a catastrophe risk drawdown option (CAT DDO). 2009. Malawi, a landlocked African country heavily exposed to the risk of drought, With the Board's approval of a $65 million loan, Costa Rica became the first country became the first country to hedge its exposure to weather-related risk with IBRD's to benefit from the CAT DDO, IBRD's contingent financing for natural disasters. INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 19 develop science and technology programs in their country strategies. In in fiscal 2009. This followed the approval of the World Bank Group Ghana, the Public Sector Performance GET conducted a diagnostic to Strategic Framework on Climate Change and Development, endorsed assist the country team on public sector pay reform. by the Development Committee at the 2008 Annual Meetings. Under the framework, the Bank will support climate actions in CLIMATE CHANGE country-led development processes; mobilize additional concessional Climate change will most severely affect the poorest people and and innovative finance; facilitate the development of market-based the poorest countries, potentially reversing decades of development financing mechanisms; leverage private sector resources; support achievements and slowing progress toward several of the MDGs. The accelerated development and deployment of new technologies; and issue is particularly important because the financial crisis has jeopardized step up policy research, knowledge, and capacity building initiatives. the momentum of the climate change agenda. In response to the need to mobilize additional concessional and Conscious of the enormous importance of helping client countries innovative finance, the Bank's Board of Executive Directors approved the incorporate climate action into their development plans, and building creation of the Climate Investment Funds (CIFs) in July 2008. Created in on more than a decade of experience on the issue, the Bank moved to close cooperation with other multilateral development banks, the funds are integrate climate change work more fully into its projects and programs designed as an interim measure, pending the establishment of a post-2012 international regime governing national greenhouse gas emissions. The funds will scale up climate change assistance to developing countries and strengthen the climate change knowledge base in the development community. They will allow multilateral development banks and developing countries to undertake investments that help countries achieve their development goals through transition to a climate-resilient economy and a low-carbon development path. One of the most innovative features of the CIFs is their inclusion of equal numbers of potential recipient and donor countries on decision-making committees. Recognizing the importance of the demonstration effects of investments in climate action, donor countries committed more than $6.1 billion to the CIFs. A large share of this funding was allocated to the Clean Technology Fund, which aims to promote scaled-up financing for the demonstration, deployment, and transfer of low-carbon technolo- gies with a significant potential for reducing greenhouse gas emissions. The Clean Technology Fund finances innovative renewable energy and efficient technologies to reduce carbon intensity; greater efficiency and modal shifts in the transport sector; and energy efficiency in buildings, industry, agriculture, and other areas where significant greenhouse gas emission reductions can be obtained. In May 2009, Turkey became the first country to benefit directly from the fund, with financing to support a large-scale renewable energy and energy-efficiency program. Other countries have submitted detailed requests for funding. The second fund, the Strategic Climate Fund, will provide financing to pilot new approaches or scale up activities aimed at a specific climate change challenge. A Pilot Program for Climate Resilience was established to support climate resilience in national development planning. And a Forest Investment Program was designed to help catalyze policies and 20 THE WORLD BANK ANNUAL REPORT 2009 measures that reduce deforestation and forest degradation and promote Lessons from previous financial crises point to the need to maintain or the sustainable management of forests in developing countries. expand investments in infrastructure. The new INFRA Platform, developed Earlier in the year, the Bank launched a comprehensive analysis of as part of the Bank's Vulnerability Fund, will work in tandem with IFC's the economics of adaptation to determine the level of financing that new Infrastructure Crisis Facility to provide developing countries with a will be needed to put efficient adaptation policies into place. It also set of technical and financial assistance proposals that enable them to initiated studies of low-carbon growth strategies in six countries (Brazil, maintain or expand infrastructure investments during global economic China, India, Indonesia, Mexico, and South Africa) to share knowledge downturns. INFRA will support governments that want to use infrastruc- on how to integrate climate action into national development plans. ture investments to advance the "green agenda," with financing in areas (See http://www.worldbank.org/climatechange.) such as renewable energy, mass transit systems, and water and sanitation. As part of a series of planned evaluations on climate change, IEG These infrastructure investments, expected to reach $15 billion recently focused on the Bank's experience in key win-win policies in the a year over fiscal 2009­11, will leverage and support private sector energy sector--policies that combine developmental gains with initiatives in the field, creating jobs during the downturn. The platform reductions in greenhouse gas emissions. It recommended shifting will also lay the foundation for robust and sustainable growth over the energy subsidies toward targeted social safety nets and policies that longer term. (See http://www.worldbank.org/infrastructure.) promote end-user energy efficiency. Both are more relevant than ever in light of the 2008 spike in energy prices and the current economic SUPPORTING FOOD AND AGRICULTURE and financial crisis. High volatility in food prices combined with the impact of the financial crisis threatens to further increase food insecurity and exacerbate the IMPROVING INFRASTRUCTURE hardships faced by the poorest people. According to the latest Food Despite vast improvements in infrastructure over the past decade, and Agriculture Organization estimates, more than 1 billion people 2.5 billion of the world's people still lack sanitation services, 1.6 billion worldwide are undernourished. live without electricity, 1 billion have no easy access to all-weather roads, The Global Food Crisis Response Program, a $1.2 billion fast-track and nearly 900 million have no choice but to use unsafe water. To help financing facility, was launched by the Bank in May 2008 to respond to client countries fill these gaps, the Bank increased its investment in the food crisis. In response to high demand, in April 2009 the Bank infrastructure by 50 percent in fiscal 2009 to $17.2 billion. increased the ceiling on financing to $2 billion. Since the program was Additionally, the Bank updated its approach to infrastructure created, projects totaling nearly $1.2 billion have been approved in development with the Sustainable Infrastructure Action Plan. The plan 33 countries and $780.2 million has been disbursed in 31 countries. The provides a roadmap to guide scaled-up investments in modern, continuing World Bank response has been articulated in coordination cost-effective infrastructure services that also support environmental with the United Nations' (UN) High-Level Task Force on food security. sustainability and social inclusion. It emphasizes three main areas: Following the publication of World Development Report 2008: Agriculture developing more focused approaches to complex issues that cut for Development, and in the wake of the food crisis, the World Bank Group across several sectors of the economy, such as the role of infrastruc- projects an increase in support (from IDA, IBRD, and IFC) to agriculture and ture in climate change mitigation and adaptation efforts, the role related sectors from a baseline average support in fiscal 2006­08 of of public-private partnerships in the provision of infrastructure $4.1 billion annually to between $6.2 billion and $8.3 billion annually over services, and new ways to provide infrastructure support for fiscal 2010­12. Bank support will be aligned around five focus areas: raising rural-urban integration and development, agricultural productivity, linking farmers to markets and strengthening value chains, reducing risk and vulnerability, facilitating agriculture entry improving the monitoring of results and the evaluation of sustain- and exit and rural nonfarm income, and enhancing environmental able infrastructure interventions, and sustainability and services. In addition, the Bank will continue support for placing sustainability at the core of infrastructure interventions by the Consultative Group on International Agricultural Research, which focusing on the "triple bottom line" (economic/financial, environ- mobilizes cutting-edge science to reduce hunger and poverty, improve mental, and social sustainability). human nutrition and health, and protect the environment. INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 21 INVESTING IN PEOPLE Education As a result of the global economic crisis, decades of human develop- The Bank nearly doubled its spending to the education sector over the past ment achievements in low- and middle-income countries are at risk of year, from $1.9 billion in fiscal 2008 to $3.4 billion in fiscal 2009. The $9.4 unraveling. Accordingly, the Human Development Network (HDN)-- billion education lending portfolio--over half of which is provided through which focuses on education, health, HIV/AIDS, and social protection and IDA on concessionary terms--supports 152 operations in 89 countries. labor--mobilized record levels of lending and knowledge services to East Asian countries, with a total of $941 million, account for the help Bank client countries weather the worst effects of the crisis. HDN's largest share of new lending for education in fiscal 2009, followed by recommendations appeared in a policy report, "Averting a Human Crisis Africa with $720 million; Latin American countries with $711 million; during the Global Downturn: Policy Options from the World Bank's South Asia with $648 million; Europe and Central Asia with $357 million; Human Development Network," released in April 2009. (See http:// and the Middle East and North Africa with $68 million. siteresources.worldbank.org/NEWS/Resources/ Almost every education project focuses on improving educational AvertingTheHumanCrisis.pdf.) quality, and nearly 90 percent of new projects include support for teacher training, and two-thirds include a component to upgrade or expand the use of learning materials. About half of all projects involve the expansion of secondary education, which is surging in many countries, following increases in primary enrollment and completion. (See http://www.worldbank.org/education.) Health, Nutrition, and Population Lending for HNP reached an unprecedented $2.9 billion in fiscal 2009, a threefold increase over the previous year's commitments. The funds will be used to achieve better health results in low-income countries by strengthening their health systems; boost effective prevention and treatment of communicable diseases; and improve child and maternal health, and hygiene and sanitation. During fiscal 2009, HNP presented the Board with a progress report on the implementation of "Healthy Development"--the Bank's strategy for HNP results--which was approved in May 2007. The progress report, which took into account the recent IEG 1997­2007 evaluation of the HNP sector, described the Bank Group's efforts to achieve HNP results for the poor-- health improvements and financial protection and, as a means to those ends, strengthening health systems. According to IEG's recent evaluation of HNP support, the Bank Group has provided $17 billion in country-level project financing and $873 mil- lion in private health and pharmaceutical investments since 1997, in addition to policy advice and analytic work. Key health and nutrition outcomes have improved in every developing region, but progress has been uneven among countries. In its March update to the Board, the HNP sector described how it had located senior program implementation experts in Ethiopia, Mali, Mozambique, and Nepal and plans to locate additional experts in nine more African countries by 2011. The Bank also established two African 22 THE WORLD BANK ANNUAL REPORT 2009 regional health system hubs, Dakar and Nairobi, which will provide In response to the surge of interest in social safety nets since the expert advice to country policy makers on health financing, gover- onset of the global crisis, the HDN published For Protection and nance, service delivery, supply chains and pharmaceuticals, and human Promotion: The Design and Implementation of Effective Safety Nets in late resources for health. 2008. Based on the Bank's work in more than 100 countries, the book addresses why countries need social safety net programs, what type of HIV/AIDS programs are best suited to individual countries' needs, and how such To help fill critical gaps in country HIV prevention, treatment, and programs can be developed for maximum effectiveness. (See http:// mitigation programs, the Bank disbursed $290 million for existing www.worldbank.org/sp.) projects and committed $325.84 million in new funding in fiscal 2009. The Bank completed important analytical pieces on HIV in fiscal 2009. Gender A rapid survey in 71 countries of the impact of the economic crisis (with Impressive progress was made toward implementing Gender Equality UNAIDS) is part of donor efforts to prevent disruptions in treatment and as Smart Economics, the Bank's Gender Action Plan. By the end of fiscal prevention programs. New analysis in South Asia gave important insights 2009, the plan had helped finance more than 150 activities in over into the welfare and fiscal costs of HIV even where prevalence is low. 70 countries. The activities promote investments that better integrate Synthesis analyses (with UNAIDS) of all available data provided new women into the economy by increasing their access to land, labor, insights into the patterns of infection and main factors driving the credit, and product markets. epidemic in Kenya, Lesotho, Swaziland, Uganda, Zambia, and 14 Bank staff are paying particular attention to gender issues during countries in West Africa. (See http://www.worldbank.org/aids.) the global economic crisis, which poses a serious threat to poor Pandemic Preparedness women and girls in 33 developing countries, according to Bank The Bank has actively assisted countries worldwide to deploy avian and estimates. Though women are especially vulnerable in this crisis, they human influenza control strategies and pandemic preparedness plans. can also be agents of change. For this reason, the bulk of the Gender The Bank's Global Program for Avian Influenza Control and Human Action Plan's remaining funds in fiscal 2009--about $3 million--have Pandemic Preparedness and Response has a ceiling of $1 billion from been reserved to help ensure that the Bank Group's emergency IBRD and IDA, and the Avian and Human Influenza Trust Fund Facility response, implemented through its Vulnerability Financing Facility, will has pledges of $125 million. The primary focus of these operations has support participation by women and girls. been the strengthening of animal and human health systems, disease During fiscal 2009, the Board approved a variety of projects that surveillance, and country veterinary services, in close collaboration with successfully address gender issues. These included $50 million in its global, regional, and country partners. additional financing to a savings and rural finance program in Mexico, $35 million to a program in Bangladesh that addresses disability and Social Protection and Labor children at risk, and $30 million to a program in Afghanistan designed The Bank's investment in social safety net operations is projected to strengthen health activities for the rural poor. The Bank also launched to rise to $4.5 billion during fiscal 2009­11, more than triple the spending the Adolescent Girls Initiative (see box 1.6) and released two important of the previous three years. This lending includes a combination of rapid publications, Girls' Education in the 21st Century: Gender Equality, safety net response programs and conditional cash transfers. Empowerment, and Economic Growth and Equality for Women: Where In early 2009, the Bank released a joint HDN-PREM report--"How Do We Stand on Millennium Development Goal 3? (See http://www. Should Labor Market Policy Respond to the Financial Crisis?"--that worldbank.org/gender.) suggested ways in which middle- and low-income countries might best respond to the effects of the global crisis on labor markets. The report IMPROVING ENGAGEMENT IN encourages middle-income countries to consider expanding active FRAGILE AND CONFLICTAFFECTED STATES labor market and income support programs for the unemployed. For A billion people live in countries affected by fragility and conflict. low-income countries, the report recommends scaling up public works Poverty rates average 54 percent compared with 22 percent for and targeting microcredit schemes. low-income countries as a whole. These countries, which are defined INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 23 by weak institutions and the impact of warfare, constitute a protracted Coordinated efforts are essential for successful aid interventions in development challenge in which results are hard to achieve. fragile and conflict-affected countries. The UN­World Bank Partnership While the risk of failure in these countries is high, the risk of inaction Framework for Crisis and Post-Crisis Situations, signed in October 2008, is even higher: the annual global cost of conflict is estimated to be provides the foundation for the two institutions to work together more around $100 billion. Aside from the lives lost and damaged because of effectively. As a result of this and other agreements, in fiscal 2009 the conflict and the scale of human suffering it creates, conflict also destroys Bank began working more closely with the UN, the European assets and institutions. Recovering and rebuilding takes many years, and Commission, and other partners to assess disaster- and conflict-related the efforts don't always succeed; 40 percent of postconflict countries damage in Georgia, Haiti, the West Bank and Gaza, and the Republic of relapse into conflict within 10 years. Yemen. Countries that have achieved reductions in poverty suggest that During fiscal 2009, the Bank modified its operational and human development depends on an effective state that delivers core services resource policies to enable the institution to provide lending quickly such as security, rule of law, and other public goods. Countries at the after the end of conflict or natural disasters, and to increase staff end of conflict often need help to build an effective state. Such numbers in Bank offices in fragile and conflict-affected areas. assistance needs to be comprehensive and requires the integration of security and diplomatic and development support. STRENGTHENING SUPPORT During fiscal 2009, the Bank continued to provide state-building FOR MIDDLEINCOME COUNTRIES support to a large number of conflict-affected countries. This support Middle-income countries are home to nearly 70 percent of the world's involved all sectors, ranging from public administration, community poor. Most middle-income countries face constraints in mobilizing the development, and infrastructure to social services. The Bank also funds needed to invest in infrastructure, health, education, and the continued to play an important donor-coordination role, administering reform of policies and institutions essential to improving the investment multidonor trust funds in countries such as Afghanistan. climate. While some are able to borrow on foreign markets or access The Bank's capacity to provide financial support to fragile and risk-management instruments, only a few have achieved investment- conflict-affected countries was enhanced in the 15th Replenishment of grade ratings, so maturities are often short and rates high. IDA resources. The Bank's State and Peace-Building Fund complimented The global crisis is hitting these economies hard. The growing the support made by IDA by providing financing for countries in arrears worldwide downturn, with falling trade, commodity prices, tourism, and for small and urgent activities not easily funded under regular IDA remittances, and investment, is leading to collapsing growth and rising credit or grant operations. Established in April 2008, the fund received unemployment, slowing their strong growth performance and its first annual Bank contribution of $33.3 million, as well as $17.3 million adversely affecting their efforts to reduce poverty. Middle-income from other donors, in fiscal 2009, and approved some $26.9 million in countries are also facing difficult credit market conditions, with limited grants to Colombia, Côte d'Ivoire, Georgia, Guinea Bissau, Haiti, and access to capital markets and vastly higher spreads. The Bank is Thailand. responding vigorously through analytical work and lending, with both BOX 1.6 THE ADOLESCENT GIRLS INITIATIVE The Adolescent Girls Initiative--launched by the Bank in mentors and job placements. It offers potential employers partnership with governments and the Nike Foundation and incentives to hire, train, and retain young women. other private sector partners in October 2008--aims to smooth the transition from school to productive employment for girls The first pilot of the program was launched in Liberia in mid-2009. Simi- and women ages 16­24 by helping them complete their lar project initiatives are being prepared for Afghanistan, Nepal, Rwanda, education, build skills that match market demand, and find and South Sudan, each of which will receive $3 million to $5 million. 24 THE WORLD BANK ANNUAL REPORT 2009 crisis response and precautionary elements focused on capital market (see box 1.7). A Governance and Anticorruption Council meets monthly to access, social safety nets, and sustaining infrastructure expenditures. oversee Bank-wide implementation of efforts and address challenges. IBRD lending to middle-income countries almost tripled in fiscal 2009, to In about a dozen countries--including Albania, Bangladesh, Honduras, $32.9 billion. This includes a substantial increase in commitments to Latin Mongolia, Nepal, and Zambia--the council oversees good practice in America and the Caribbean, which reached $13.8 billion, and a $2.125 billion mainstreaming governance and anticorruption through diagnostics of loan for the Kazakhstan Southwest Corridor Road Rehabilitation Project, governance constraints to development effectiveness, dialogue with which is expected to bring much-needed economic stimulus to some of stakeholders on governance and anticorruption issues, and integrating Kazakhstan's poorest provinces. As part of the government's International governance and anticorruption dimensions across project portfolios. Transit Corridor Development Program, this loan will benefit not only Regional Vice Presidencies have integrated governance and Kazakhstan, but also the Kyrgyz Republic, Tajikistan, and Uzbekistan. IBRD anticorruption into risk-management frameworks, and pilots have lending volumes are expected to remain strong over fiscal 2009­11. been launched in important areas such as country procurement Beyond the financial crisis response, the Bank has significantly systems. Substantial additional financing has been made available increased its support to middle-income countries, responding to for the governance and anticorruption initiative, from both the demand for both traditional and innovative products. It has improved Bank (which has committed about $27 million in scale-up funds the delivery of customized development solutions, and introduced a over two years) and bilateral partners. The Governance Partnership range of financial and nonfinancial innovations, including simple, easily Facility, funded by about $65 million from the Netherlands, replicable projects, mechanisms for additional financing of successful Norway, and the United Kingdom's Department for International projects, and revisions to emergency and rapid response lending Development, has enabled country teams to launch a range of policies. The Country Systems for Financial Management and initiatives to mainstream governance and anticorruption activities Safeguards Pilot, approved by the Board in April 2008, has been into Bank operations. extended to national procurement systems, and investment lending procedures are being revised and streamlined. (See http://www. The Development Impact Evaluation Initiative worldbank.org/middleincomecountries.) Impact evaluations deliver scientifically valid estimates of the causal effect of development programs on the well-being of their beneficia- MAINSTREAMING GOVERNANCE AND ANTICORRUPTION ries. This is done by comparing outcomes between treatment and The Bank intensified mainstreaming of governance and anticorruption into comparison groups. If development programs are implemented under country and sector operations and programs in fiscal 2009, moving forward the leadership of the client, they can genuinely transform the way with its strategy to strengthen governance and anticorruption efforts decisions are being made at implementing agencies. BOX 1.7 ANTICORRUPTION INITIATIVES The Bank's Integrity (INT) Vice Presidency investigates allegations investigations, INT consolidates related allegations so that a single of fraud and corruption in Bank-financed projects, including but multifaceted investigation can have impact across regions and allegations of possible staff involvement. Since its creation in sectors. Enhanced preventive programs and outreach to anticor- 2001, INT has handled more than 3,300 cases. It presents its ruption partners promote greater deterrence. findings to the Bank's senior management or, as warranted, to the In fiscal 2009, INT implemented all the recommendations of the Sanctions Board, which in turn decides on corrective measures to independent review panel headed by former U.S. Federal Reserve be taken. Chairman Paul Volcker. INT's new Preventive Services Unit has so far As a result of INT investigations, the Bank has debarred 355 advised 68 Bank project teams on mitigating and addressing companies and individuals. In addition to conducting single-scope corruption risks. (See http://www.worldbank.org/integrity.) INNOVATIVE INITIATIVES TO MITIGATE GLOBAL CRISES AND EXPAND ONGOING OPERATIONS 25 Within the Bank, the Development Impact Evaluation Initiative part of multicountry thematic programs designed to address develop- (DIME) aims to strengthen the role of impact evaluation in institutional mental questions of universal import and create communities of development. DIME evaluations involve the participation of relevant practice for sharing evidence and good practices. This fiscal year the government agencies and local researchers. This involvement not only Bank began new multicountry initiatives in agricultural adaptations, helps ensure ownership, it also builds local capacity through learning by local governance and accountability, and adolescent girls, and greatly doing. expanded its program in HIV/AIDS. Ongoing programs are in the areas Through the combined efforts of regions and networks, the Bank of raising accountability and quality in education; making health has completed 139 impact evaluations. It is currently conducting 221 systems work; controlling malaria; improving rural infrastructure and the impact evaluations in 52 countries. These evaluations are conducted as water supply; strengthening safety nets; improving youth and employ- ment outcomes; and upgrading urban areas. DIME systematically reviews evidence of impact across countries. Bank researchers prepared a report this year on conditional cash transfer programs and are preparing a report on education service delivery. AgriculturalADAPTation (AADAPT), a new program created in fiscal 2009, seeks to address the need for a radical shift in the path of agricul- tural development and adaptation to climate change. In April 2009, delegations from 12 countries, operational staff from the Bank and other development institutions, and researchers from half a dozen national and international academic institutions developed learning strategies for their programs to serve as the basis for AADAPT support moving forward. By using Bank operations as learning tools and fostering the development of a cross-country community of practice, AADAPT will generate dynamic operationally useful learning on agriculture and land management. (See http://www.worldbank.org/dime.) Civil Society World Bank­civil society relations grew closer over fiscal 2009. The extensive policy dialogue carried out during four high-level roundtables on the food and financial crises between Bank management and leading international civil society organization (CSO) leaders was clear evidence of shared commitments to address the crises. This was further reflected in the growing number of CSOs, and especially their senior leaders, attending the Bank's Annual and Spring Meetings. Fiscal 2009 also witnessed extensive consultation efforts between the Bank and a wide array of CSOs on the review of the climate change and information disclosure policies. At the country level, civil society has participated in the preparation of over 80 percent of Bank-funded projects approved in fiscal 2009. CSOs have been involved in the preparation of about 87 percent of full Country Assistance Strategies, and 100 percent of full Poverty Reduction Strategies, as well as in the formulation of other policy and strategy documents. (See http://www. worldbank.org/civilsociety.) 26 THE WORLD BANK ANNUAL REPORT 2009 WORLD BANK ACTION IN THE FIELD 2 WORLD BANK REGIONS, COUNTRY OFFICES, AND BORROWER ELIGIBILITY The World Bank today operates out of nearly 120 offices worldwide. Increased presence in client countries is helping the Bank to better understand, work more effectively with, and provide more timely service to its partners in client countries. Eighty-nine percent of Country Directors/Country Managers and 37 percent of staff are now based in country offices. Mexico Dominican Republic Jamaica Cape V Belize Haiti Guatemala Honduras Nicaragua The El Salvador Gu Panama Costa Rica R.B. de Venezuela Guyana Colombia Suriname Ecuador Kiribati Samoa LATIN AMERICA AND THE CARIBBEAN Peru FY09 New Commitments Brazil Bolivia IBRD | $13,829 million Fiji Tonga IDA | $202 million Portfolio of Projects | $26 billion Paraguay Argentina Chile Uruguay Dominican Republic Antigua and Barbuda St. Kitts and Nevis Dominica St. Vincent and St. Lucia the Grenadines Countries eligible for IBRD funds only Grenada Countries eligible for blend of IBRD and IDA funds Trinidad and Tobago R.B. de Venezuela Countries eligible for IDA funds only Inactive IDA-eligible countries Countries not receiving Bank funds Offices of the World Bank Offices with the Country Director present Bank region boundaries MIDDLE EAST AND NORTH AFRICA EUROPE AND CENTRAL ASIA FY09 New Commitments FY09 New Commitments IBRD | $1,551 million IBRD | $8,978 million IDA | $172 million IDA | $384 million Portfolio of Projects | $7 billion Portfolio of Projects | $21 billion Russian Federation Russian Fed. Belarus Poland Ukraine Moldova Mongolia Romania Kazakhstan Bulgaria Georgia Uzbekistan Azerbaijan Kyrgyz Rep. China Armenia Turkmenistan Turkey Tajikistan EAST ASIA AND PACIFIC Afghanistan Rep. of Algeria Tunisia Lebanon Syrian A.R. Iraq Korea FY09 New Commitments Morocco Islamic Rep. West Bank and Gaza of Iran Pakistan IBRD | $6,905 million Jordan Bhutan Libya Arab Rep. Nepal IDA | $1,247 million of Egypt India Bangladesh Portfolio of Projects | $26 billion Myanmar Vietnam Mauritania Cape Verde Rep. of Lao P.D.R. Sudan Eritrea Yemen Philippines Senegal Mali Burkina Niger Thailand The Gambia Faso Chad Cambodia Guinea-Bissau Nigeria Federated States of Micronesia Guinea Côte Djibouti Marshall Central Islands d'Ivoire Ghana Benin African Ethiopia Sri Lanka Sierra Leone Cameroon Rep. Liberia Palau Malaysia Togo Somalia Equatorial Guinea Maldives Uganda São Tomé and Principe Gabon Kenya Kiribati Rep. of Rwanda Congo Burundi Seychelles Dem. Rep. Tanzania Solomon of Congo Indonesia Papua Islands Comoros New Guinea Angola Timor-Leste Malawi Zambia Vanuatu Fiji Madagascar Zimbabwe Mauritius Poland Namibia Botswana Ukraine South Mozambique SOUTH ASIA Africa Swaziland FY09 New Commitments Lesotho IBRD | $1,286 million Romania Croatia Serbia IDA | $4,148 million Bosnia and Herzegovina Kosovo Portfolio of Projects | $26 billion Bulgaria Montenegro Albania FYR Macedonia AFRICA FY09 New Commitments IBRD | $362 million IDA | $7,887 milliona Portfolio of Projects | $29 billion a. Includes a HIPC grant of $45.5 million for Côte d'Ivoiré. IBRD 32613R5 AUGUST 2009 AFRICA Angola Chad Ethiopia Benin Comoros Gabon Botswana Congo, Democratic The Gambia Burkina Faso Republic of Ghana Burundi Congo, Republic of Guinea Cameroon Côte d'Ivoire Guinea-Bissau Cape Verde Equatorial Guinea Kenya Central African Republic Eritrea Lesotho THE FOOD, FUEL, AND GLOBAL ECONOMIC CRISES MITIGATING THE IMPACT OF THE CRISIS Growth in Africa accelerated from 3.1 percent in 2000 to 6.1 percent in The World Bank Group has responded decisively to help African 2007, a result of improved macroeconomic policies, favorable commod- countries deal with the crises. It is supporting countries in preparing ity prices, and significant increases in aid, capital flows, and remittances. contingency plans. It is also providing advisory support on policies that Economic performance was also accompanied by improvements in could help sustain the momentum of reforms and maintain progress on governance and accountability. During that period, the region made critical institutional and governance issues, including through the headway toward reducing poverty and achieving the Millennium Extractive Industries Transparency Initiative Plus Plus (EITI++) approach Development Goals (MDGs). The proportion of Africans living on less aimed at improving the management of the commodity value chain in than $1.25 a day fell from 58 percent in 1996 to 50 percent in the first resource-rich countries such as Mozambique and Zambia. quarter of 2009. The prevalence of HIV/AIDS stabilized, primary school Lending to the region reached a record level, increasing 44.3 percent enrollment increased, and progress was being made in other areas of in fiscal 2009 to $8.2 billion, an amount that supported 99 projects: human development. $362 million in loans from IBRD and $7.9 billion in IDA commitments, The global financial crisis, coming in the wake of the food and fuel including $2 billion in grants and $45.5 million in HIPC grants. Two crises in 2007­08, is having a major impact on African countries through African countries--Côte d'Ivoire and Togo--reached the Heavily declines in commodity prices, tourism earnings, exports, remittances, Indebted Poor Countries (HIPC) Initiative Decision Point, and Burundi and private capital flows. The crisis threatens to derail the progress of and the Central African Republic reached the HIPC completion point. the previous years. Remittance inflows, which were about $20 billion Fiscal 2009 lending to Africa included fast tracking and front loading of a year to the region before the financial crisis, have fallen by 4 to IDA support to countries with urgent financial needs, for example, the 8 percent, hitting countries such as Lesotho, where remittances Central African Republic and Ghana. IDA also provided a $100 million normally account for 29 percent of gross domestic product (GDP), fast-track credit to the Democratic Republic of Congo to finance particularly hard. Private capital flows--which had surged to $53 billion infrastructure maintenance and teachers' salaries. in 2007 and were financing much-needed infrastructure and commodi- The Bank increased its involvement with Africa's middle-income ty-based investments--fell by 40 percent in the second half of fiscal countries through advisory support and deployed new, more flexible 2009. Growth is now projected at only 1.7 percent for 2009, which will financing instruments to help these emerging economies better slow progress toward the MDGs, even for countries like Ghana that were weather the crisis. For example, IBRD supplemented a development close to halving poverty by 2015. policy loan to Mauritius with a deferred drawdown option. In addition, AFRICA REGIONAL SNAPSHOT Total population: 0.8 billion Population growth: 2.5% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 52 years New Commitments Disbursements Infant mortality per 1,000 births: 89 IBRD $362 million IBRD $120 million Female youth literacy: 67% IDA $7,887 milliona IDA $4,317 million Number of people living with HIV/AIDS: 22.3 million 2008 GNI per capita: $1,082 Portfolio of projects under implementation as of June 30, 2009: $29 billion GDP per capita index (1998 100): 122 a. Includes a HIPC grant of $45.5 million for Côte d'Ivoire. Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 30 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Liberia Namibia Sierra Leone Madagascar Niger South Africa Malawi Nigeria Swaziland Mali Rwanda Tanzania Mauritania São Tomé and Principe Togo Mauritius Senegal Uganda Mozambique Seychelles Zambia IFC committed $300 million in top-up financing for viable privately from 5 percent in 2004), and the entire under-five population of Benin. funded infrastructure projects experiencing financial distress. Under Phase II, the Bank will focus on two of the most harshly impacted countries in Africa--the Democratic Republic of Congo and Nigeria-- WEATHERING THE FOOD CRISIS which together account for 30 to 40 percent of all malaria deaths AND STRENGTHENING AGRICULTURE worldwide. Africa was a major focus of the Global Food Crisis Response Program In fiscal 2009, the Bank also launched Health Systems for Outcomes, (GFRP), which has provided emergency assistance to several of the a new program in the areas of health financing; human resources for countries hardest hit by the food crisis. GFRP financed safety net health; pharmaceuticals and supply chains; governance and service programs, school feeding and food-for-work programs, and seed and delivery; infrastructure; and information and communication technol- fertilizer purchases. The program also provided budget support to ogy. The program supports Benin, Burundi, Eritrea, Ethiopia, Ghana, governments whose fiscal balances were impacted by the food and fuel Kenya, Madagascar, Mali, Mozambique, Nigeria, Rwanda, and Zambia. price spikes. In total, the Bank committed approximately $1.4 billion in new SUPPORTING EDUCATION lending to accelerate agricultural growth and productivity in fiscal 2009, As with the health sector, the Bank's support to Africa's education sector a threefold increase over fiscal 2008. In Cameroon, Niger, and Nigeria, in Africa leverages other partners' contributions and scales up govern- support was provided to small- and medium-scale producers of cereals, ment-owned programs. In fiscal 2009, IDA commitments for the horticultural products, fish, meat, and dairy products to make opera- education sector and training amounted to $697 million, up from tions more competitive and to boost sales and earnings. The East Africa $368 million the previous year. In addition, the Bank processed grants Agricultural Productivity Program, approved in June 2009, will support from the Education for All Fast Track Initiative Catalytic Fund amounting cooperation among Ethiopia, Kenya, and Tanzania in generation and to $359 million to support basic education in nine countries in fiscal dissemination of new technology, notably pertaining to wheat, rice, 2009, bringing the total number of African countries that benefit from fodder, cassava, and dairy cattle. the Catalytic Fund to 20, and the total amount of grants to $1.4 billion. Analytical work, nonlending technical assistance, and policy dialogue COMBATING DISEASE AND STRENGTHENING HEALTH SYSTEMS complement the Bank's IDA/IBRD operations in Africa. For example, the Since 2001, the Multicountry HIV/AIDS Program (MAP) has provided $1.8 New Economy Skills in Africa Program, which initially focused on informa- billion to Africa (including $218 million in commitments in fiscal 2009) tion and communications technology, was launched in eight African for prevention and treatment in more than 30 countries. The first phase countries--Ghana, Kenya, Madagascar, Mozambique, Nigeria, Rwanda, of MAP reached about 200 million people through HIV prevention Senegal, and Tanzania. Building on the study Accelerating Catch Up: Tertiary programs, gave access to services for the prevention of mother-to-child Education for Growth in Sub-Saharan Africa, the region launched a tertiary transmission to more than 1 million women, and supported orphans education program that will help countries advance policy dialogue on and vulnerable children in 22 countries. Through concerted country and higher-education financing. donor efforts, more than 2.1 million people in Africa are now receiving HIV/AIDS treatment, and 16 countries have reached 25 percent coverage SCALING UP INFRASTRUCTURE of services supporting the prevention of mother-to-child transmission. AND SUPPORTING REGIONAL SOLUTIONS To combat malaria, the Bank committed more than $1 billion in fiscal The Bank's infrastructure lending rose to $3.3 billion in fiscal 2009 (twice 2009 for Phase II (2009­12) of its Booster Program for Malaria Control in the level of 2006) to help reduce the impact of the financial crisis on the Africa. The first phase contributed significantly to the provision of bed state of infrastructure, and set the stage for postcrisis recovery and growth. nets to 72 percent of households in Zambia (up from 5 percent The Bank is increasing its support to regional projects in pursuit of the coverage in 2004), more than 90 percent of households in Ethiopia (up regional infrastructure priorities outlined by the African Union, the New WORLD BANK ACTION IN THE FIELD 31 FIGURE 2.1 FIGURE 2.2 AFRICA AFRICA IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $8.2 BILLION SHARE OF TOTAL OF $8.2 BILLION Water, Sanitation & Agriculture, Urban Development 9% 2% Economic Management Flood Protection 7% 15% Fishing & Forestry Trade & Integration 5% Environmental & Natural 3% Resource Management Social Protection & Transportation 14% Risk Management 4% Financial & Private Sector 9% Education Social Development, 19% Development Gender & Inclusion 3% Law & Justice & Public Human Administration 19% 15% Development 17% Energy & Mining Rural Development 25% Information & 1% Finance Communication 2% Health & Rule of Law <1% 14% Public Sector Governance Industry & Trade 4% 12% Other Social Services Partnership for Africa's Development, and the Regional Economic RESPONDING TO CLIMATE CHANGE Commissions, and in close partnerships with the African Development Africa is facing an annual loss of 1 to 2 percent annual GDP because of Bank and other bilateral and multilateral institutions. climate variability. Global temperature increases are expected to lead to The Bank invested a total $1.4 billion in the energy (includes mining) reduced rainfall, water shortages, and compressed growing periods in sector in Africa in fiscal 2009. That amount supported institutional reform, Western and Southern Africa, and to increased rainfall, heavier flooding, capacity expansion, transmission, and rural and renewable energy, and fiercer and more frequent cyclones in Northeast Africa. In fiscal including $181 million for the Southern Africa Power Pool and invest- 2009, the Bank prepared a strategy to better integrate climate change in ments in countries such as Benin, the Central African Republic, Côte its activities in Africa, and started mainstreaming this strategy into d'Ivoire, Kenya, Mali, and Nigeria. IDA and IBRD commitments for investments and analytical work, initially in Ethiopia and Mozambique. transportation in Africa were $1.1 billion in fiscal 2009. Investments in (See http://www.worldbank.org/afr.) water supply and sanitation and urban development benefited Burkina Faso, Burundi, the Democratic Republic of Congo, Lesotho, and Liberia. Information and communication technology investments were approved for Malawi, Mozambique, Rwanda, and Tanzania. SPOTLIGHT ON RESULTS VOICES FROM THE FIELD Cutting Costs, Growing Trade, and Improving Incomes--the Case of the East African Community Maina Gichohi uses a stretch of the Northern Corridor every day as between Kenya and Uganda. Road improvements have also caused he drives into Nairobi for work and business. "Recent improve- vehicle operating costs to fall. ments on this road have made the ride into the city so much easier Maina works along the stretch of the Northern Corridor that runs and cheaper," he says. "It was a while in coming, but I am glad we from Mombasa to Kampala. It is among the busiest in the region, are finally getting there!" Improvements on the corridor constitute with 10 percent traffic growth per year, and is considered the a major objective of the Northern Corridor Transport Improvement backbone of the Kenyan economy and its neighbors. Nearly Project (NCTIP) and the East Africa Trade and Transport Facilitation 90 percent of Uganda's and 70 percent of Rwanda's trade goes Project (EATTFP), both of which aim to lower transport cost and through the corridor. The rehabilitation efforts supported by the foster growth in trade among three East African Community Bank currently help reduce transport costs to executives like Maina member states--Kenya, Tanzania , and Uganda. Project benefits and commercial transporters. have spilled over to Burundi, the eastern portion of the Democratic Regional rehabilitation projects under implementation in this and Republic of Congo, Rwanda, and Sudan. other major trade corridors in Africa are helping reduce transport Bank Group interventions involving East Africa's main trade corridors-- costs, improving access and trade conditions in coastal and the Northern Corridor from Mombasa to Kigali, and the Central landlocked countries. For example, the CEMAC Transit-Transport Corridor from Dar es Salam to Kigali--combine physical infrastructure, Facilitation Project will provide all-weather road access to the institutional support to public and private stakeholders, and measures 4 million inhabitants of the Central African Republic and the 4 million to to facilitate trade activity. The NCTIP and the EATTFP have improved 5 million persons living in Northern Cameroon. Similarly, it will transactions at the Mombasa Port, reducing the movement of goods diminish the in-port time at Cameroon's Douala port by 30 percent from arriving ships by more than 24 hours and cutting road transit and lower transit times across that country to the Central African between Mombasa to Kigali and the time it takes to cross the border Republic by 20 percent. 32 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.1 WORLD BANK LENDING TO BORROWERS IN AFRICA BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 68.0 46.5 31.4 94.6 139.4 183.5 Environmental and Natural Resource Management 195.2 217.2 250.6 212.0 338.0 246.1 Financial and Private Sector Development 810.9 768.2 979.1 962.7 982.1 1,556.4 Human Development 618.2 620.2 673.3 1,104.5 572.2 1,259.1 Public Sector Governance 818.4 708.0 964.7 859.2 1,612.1 1,131.0 Rule of Law 28.3 30.9 179.7 13.1 22.7 11.7 Rural Development 360.7 537.2 528.6 780.0 526.4 2,047.5 Social Development, Gender, and Inclusion 374.3 221.8 198.5 314.3 275.2 236.6 Social Protection and Risk Management 209.2 294.3 262.7 272.3 169.0 348.9 Trade and Integration 371.5 232.0 413.1 449.7 407.3 423.0 Urban Development 261.1 211.4 304.9 734.5 642.2 759.1 Theme Total 4,115.9 3,887.5 4,786.6 5,796.9 5,686.5 8,202.9 SECTOR Agriculture, Fishing, and Forestry 268.5 215.3 585.5 369.7 367.6 1,249.3 Education 362.9 369.0 339.3 706.6 373.0 719.7 Energy and Mining 365.8 509.5 524.5 773.0 939.4 1,417.7 Finance 165.7 68.6 142.3 26.3 129.7 75.4 Health and Other Social Services 723.1 590.3 614.0 687.3 467.5 1,004.3 Industry and Trade 95.4 253.8 348.4 144.2 196.2 289.9 Information and Communication 52.9 20.0 5.0 146.0 0.8 144.3 Law and Justice and Public Administration 1,004.2 1,077.5 1,263.0 1,352.5 1,748.0 1,602.3 Transportation 716.6 507.2 602.7 870.8 986.5 1,146.5 Water, Sanitation, and Flood Protection 360.8 276.2 361.9 720.5 477.9 553.6 Sector Total 4,115.9 3,887.5 4,786.6 5,796.9 5,686.5 8,202.9 Of which IBRD 0.0 0.0 40.0 37.5 30.0 361.5 Of which IDA 4,115.9 3,887.5 4,746.6 5,759.4 5,656.5 7,841.4 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 33 EAST ASIA AND PACIFIC Cambodia Korea, Republic of Micronesia, Federated China Lao People's States of Fiji Democratic Republic Mongolia Indonesia Malaysia Myanmar Kiribati Marshall Islands Palau As a result of the global financial crisis, growth in the low- and middle- expected to remain below the poverty line as a result of the income countries of the East Asia and Pacific region slowed sharply financial crisis. during 2009, falling for the first time since 2001. Real economic growth East Asian governments responded quickly to the crisis. All middle- in the region is projected to reach just 5.3 percent in 2009, down from income countries adopted fiscal stimulus packages and low-income 8.0 percent in 2008 and 11.4 percent in 2007. countries sought additional support from their development partners. Although this level of growth still compares favorably with that of A number of countries acted early to strengthen social protection other regions, the people of East Asia and Pacific--especially the poorest measures. China made a one-time cash payment to 74 million poor and most vulnerable--have been deeply affected by the worst global people, including millions of rural residents, and introduced a major economic and financial crisis in generations. Prospects may be better health reform package aimed at increasing poor people's access to health than those in other developing regions, but concerns remain that a return care. Indonesia strengthened a targeted cash assistance program for the to higher growth will be slow to materialize, with negative implications poor, and the Philippines put a conditional cash transfer program in place. for employment generation, living standards, and poverty reduction. The region's middle-income countries--China, Indonesia, the WORLD BANK ASSISTANCE Philippines, and Thailand--were able to withstand the initial wave of To address the impacts of the global financial crisis, the World Bank impacts because of the structural reforms implemented after the adjusted its strategy in East Asia and Pacific in fiscal 2009. While 1997­98 Asian financial crisis. But the collapse in global demand and long-term priorities remain unchanged, emphasis was placed on the sharp contraction in exports and industrial production now have managing the social and economic impacts of the crisis in the short affected every country in the region. Especially hard hit have been term by helping governments stimulate their economies and maintain countries that depend heavily on the manufacture and export of essential social and infrastructure investments. The Bank also lent its electronics (the Philippines), commodities (Indonesia, the Lao People's analytical expertise by providing detailed analysis of the potential social Democratic Republic, Mongolia, Papua New Guinea, and Timor-Leste), and economic impacts of the crisis. and garments (Cambodia and the Pacific Island economies). The Bank approved $8.2 billion for East Asia and Pacific in fiscal 2009 With jobs being shed and remittance inflows falling, the pace of for 40 development projects, almost twice the $4.5 billion financed in poverty reduction across the region is slowing. More than 10 million fiscal 2008. Support included $6.9 billion in IBRD loans and $1.2 billion people who would otherwise have moved out of poverty are in IDA commitments, including $36.4 million in grants. EAST ASIA AND PACIFIC REGIONAL SNAPSHOT Total population: 1.9 billion Population growth: 0.8% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 72 years New Commitments Disbursements Infant mortality per 1,000 births: 22 IBRD $6,905 million IBRD $3,275 million Female youth literacy: 98% IDA $1,247 million IDA $1,254 million Number of people living with HIV/AIDS: 2.4 million 2008 GNI per capita: $2,515 Portfolio of projects under implementation as of June 30, 2009: $26 billion GDP per capita index (1998 100): 207 Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 34 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Papua New Guinea Timor-Leste Philippines Tonga Samoa Vanuatu Solomon Islands Vietnam Thailand RESPONDING TO GLOBAL CRISES countries are seeking the Bank's technical support in developing Many countries in the East Asia and Pacific region were just beginning employment-generating programs targeting youth. to recover from the catastrophic rise in fuel and food prices in 2008 On a much larger scale, the Bank has been working with the Asian when the global financial crisis hit. To help them weather both crises, Development Bank and the governments of Australia and Japan to put the Bank increased its support throughout the region in fiscal 2009. in place a contingent financing support program for Indonesia that can In Indonesia, the Bank is helping support poor communities in be used if economic conditions worsen. The Bank's support of $2 billion urban and rural areas through $415 million in additional block grant constitutes the largest component of this public expenditure facility. financing for community-level activities such as local infrastructure The Indonesian government can access the funds to finance important projects, improvements to school facilities, and direct support to poor social and infrastructure programs if needed, allowing critical public families to help them send their children to school. This financing builds services and investments to continue despite the economic downturn. on Indonesia's well-performing, decade-long National Community Empowerment Program. RESPONDING TO NATURAL DISASTERS The Bank also approved a $600 million loan in support of an Exactly a month after the devastating May 2008 earthquake in Wenchuan, innovative school grants program called School Operational Assistance­ which killed almost 70,000 people, the government of China and the Knowledge Improvement for Transparency and Accountability. The Bank organized an international workshop on international good practice program aims to increase access to quality education for all children in reconstruction. These efforts laid the groundwork for a $710 million ages 7­15 and to strengthen community participation in school emergency recovery loan, approved by the Board in fiscal 2009. The loan management. It is also being used as a way to increase direct support to is helping to finance new infrastructure in quake-hit areas and rebuild families hit by job losses resulting from the financial crisis. health and education facilities in Sichuan and Gansu Provinces. In the Philippines, a $200 million development policy loan is helping Cyclone Nargis, which killed about 146,000 people in Myanmar in the country address the emergency created by high food prices. The May 2008, destroyed or damaged some 800,000 homes and laid waste loan supports measures that strengthen social protection and safety to vast areas of the country's farmland. In fiscal 2009, the Bank worked nets for poor and vulnerable households, including a new conditional with the United Nations and bilateral donors to help the Association of cash transfer program. Southeast Asian Nations build its capacity to respond to future natural In Lao PDR, a $3 million Global Food Crisis Response Program grant disasters and humanitarian crises. is helping reduce seasonal and natural disaster­related food shortages by bolstering rice production from small farms. The Bank is also piloting ADDRESSING THE CHALLENGES OF CLIMATE CHANGE a conditional cash transfer scheme designed to increase the use of Groundbreaking work on the dual challenges of reducing carbon maternal and child health services. In Vietnam, the Bank is helping the emissions and mitigating the impacts of climate change continues government finance its fiscal stimulus package, which emphasizes across the East Asia and Pacific region. In China, a $120 million eco- investment in infrastructure. farming project is helping farm households integrate biogas into their In Mongolia, which has been hit hard by plummeting commodity production systems and channel carbon credits back to households. prices, the government has put in place a program of reforms aimed at Lessons from the project will help guide the country's national rural cushioning the impacts of the crisis and reducing the effects of boom and biogas program. A $19.7 million Global Environment Facility grant is bust cycles on its minerals-based economy. The Bank and other develop- supporting the closure of inefficient coal-fired power generation units ment partners are supporting the government's policy reform agenda, in Shanxi, Shandong, and Guangdong Provinces. In Vietnam, a including through a planned series of development policy credits. $202 million IDA credit is helping the country increase the amount of Much-expanded Bank work in the Pacific, including the doubling of electricity it generates from renewable sources. staff and a new office in the Solomon Islands, is helping meet demand In the Philippines, the Bank is using the Clean Development from Pacific Island countries, Papua New Guinea, and Timor-Leste. These Mechanism to help energy providers such as wind farms and other WORLD BANK ACTION IN THE FIELD 35 FIGURE 2.3 FIGURE 2.4 EAST ASIA AND PACIFIC EAST ASIA AND PACIFIC IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $8.2 BILLION SHARE OF TOTAL OF $8.2 BILLION Environmental & Natural Water, Sanitation & Agriculture, Urban Development 7% 7% Resource Management Flood Protection 13% 2% Fishing & Forestry Trade & Integration 2% 11% Education Social Protection & Risk Management 11% Financial & Private Sector Transportation 15% 12% Energy & Mining Social Development, Gender & Inclusion 2% 24% Development Rural Development 9% 12% Finance Law & Justice & 9% Economic Management Public Administration 18% Health & Other 7% Social Services Information & Public Sector Governance 19% 10% Human Development Communication <1% 9% Industry & Trade industries benefit from the market for greenhouse gas emission across the East Asia and Pacific region. A partnership with the University reductions. The Bank helped the Philippines reduce greenhouse of Southern California (USC) established in 2009 combines USC's urban emissions by purchasing emission reductions from companies and and social planning expertise with the Bank's skills in sustainable public authorities through the various carbon finance facilities that the development. The new World Bank­Singapore urban hub, which will Bank manages. provide advice and assistance on practical solutions to major urban To help the region's cities identify their vulnerabilities to climate change, challenges facing developing countries builds on both institutions' the Bank joined the United Nations' International Strategy for Disaster Risk expertise in finding workable solutions to urban problems. Reduction and the Global Facility for Disaster Reduction and Recovery to And the Bank's new Bangkok-based governance hub, which started produce the Climate-Resilient Cities primer. This "how to" guide for local work in January 2009, is reaching out to academic institutions, civil governments helps them identify vulnerabilities and develop plans to society organizations, and governments across the region to find the mitigate the consequences of natural disasters and climate events. most effective ways to address governance and anticorruption challenges. It is connecting the Bank with leading research, professional, BUILDING PARTNERSHIPS and civil society organizations to strengthen its operations and increase The Bank places great emphasis on building partnerships to expand its its understanding of changes under way across the region. (See http:// knowledge base and extend the reach of its development outcomes www.worldbank.org/eap.) SPOTLIGHT ON RESULTS VOICES FROM THE FIELD Turning on the Lights--Creating Opportunities in a Rural Province in the Philippines For Cosme Duberte, 45, resident of a small rural town in the to the electrification project, the bulk of the money for which came Philippine province of Bohol, life started to change just after he from a grant from KALAHI-CIDSS, a community-driven development switched on his first fluorescent light in early 2009 (see photo, program being implemented by the government of the Philippines page 34). It was confirmation that, at last, electricity had reached and funded by the Bank. his remote mountainous village, courtesy of a community-driven KALAHI is an acronym for the Filipino phrase Kapitbisig Laban Sa project funded by the Bank. Kahirapan, which means "linking arms against poverty." CIDSS "The children can now work on their assignments at night, and stands for the Comprehensive and Integrated Delivery of Social their grades have improved," says the proud father of seven. His Services. The project aims to strengthen local communities' wife, he explains, has started a small business preparing cassava participation in barangay (local district) governance and develop cakes and ice candy for sale at the village and town centers. A local capacity to design, implement, and manage development farmer and carpenter with entrepreneurial inclinations, he has also activities that reduce poverty. started accepting orders for his furniture-making business. "With KALAHI-CIDSS trains villagers in project planning, technical design, and electricity, I can work into the night," he says, adding that he is financial management and procurement, building a cadre of future gradually saving money to buy power tools for his business. leaders at the local level. The project provides villagers with structured Pointing to the nearby concrete pylons that bring electricity into opportunities for accessing information, expressing their opinions, and the village, Cosme explains that it took 24 people from the influencing local governance, placing emphasis on transparency. The community to haul them up the hills and then set them in place use of funds is announced at public meetings, and information about with their bare hands. Their labor was the community's contribution community projects is posted on community notice boards. 36 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.2 WORLD BANK LENDING TO BORROWERS IN EAST ASIA AND PACIFIC BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 0.0 87.0 78.7 82.5 0.0 784.1 Environmental and Natural Resource Management 432.2 446.9 396.4 565.0 746.0 550.0 Financial and Private Sector Development 553.9 340.6 720.7 999.1 1,132.9 1,927.5 Human Development 164.6 184.6 543.7 213.4 229.0 818.7 Public Sector Governance 299.0 344.5 385.9 705.4 644.4 1,568.1 Rule of Law 67.3 45.8 13.4 0.0 23.5 0.0 Rural Development 400.9 484.1 465.7 608.2 555.4 717.8 Social Development, Gender, and Inclusion 167.2 241.1 83.3 189.9 197.1 178.0 Social Protection and Risk Management 5.5 88.7 144.9 43.8 99.3 888.2 Trade and Integration 82.9 126.5 112.1 233.0 177.3 175.9 Urban Development 399.2 493.5 456.9 403.7 663.2 544.4 Theme Total 2,572.7 2,883.3 3,401.6 4,043.9 4,468.1 8,152.7 SECTOR Agriculture, Fishing, and Forestry 290.4 207.9 373.3 268.6 112.8 200.8 Education 118.6 228.0 287.9 125.3 234.3 941.3 Energy and Mining 67.2 359.1 425.2 118.5 666.1 946.0 Finance 49.0 213.1 197.6 230.1 263.0 1,009.4 Health and Other Social Services 84.3 204.3 160.6 132.7 213.0 581.5 Industry and Trade 78.7 159.1 29.3 102.0 189.5 753.6 Information and Communication 0.0 5.0 5.3 0.0 10.0 11.0 Law and Justice and Public Administration 257.5 436.6 693.6 887.7 888.8 1,474.2 Transportation 1,209.9 306.7 652.3 1,554.7 1,531.7 1,204.9 Water, Sanitation, and Flood Protection 417.1 763.7 576.5 624.3 359.0 1,030.2 Sector Total 2,572.7 2,883.3 3,401.6 4,043.9 4,468.1 8,152.7 Of which IBRD 1,665.5 1,809.8 2,344.3 2,806.6 2,676.7 6,905.4 Of which IDA 907.2 1,073.6 1,057.2 1,237.4 1,791.4 1,247.4 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 37 SOUTH ASIA Afghanistan Bhutan Bangladesh India South Asia has experienced nearly a decade of robust economic $272.6 million in grants. Complementing the strong lending portfolio is growth, averaging 6 percent a year since 2000. This strong growth has the Bank's analytic and advisory work. Relevant parts of this work are translated into declining poverty and impressive progress on human being refocused to provide rapid-response policy advice to improve the development. The region's growth prospects are weakening, however, macroeconomic and investment environment and to reverse the in the face of the deteriorating global economy. slowdown in investment. The Bank is also providing ongoing analytical South Asian countries have taken various monetary and fiscal policy assistance to help South Asian countries strengthen their safety net measures in response to the crisis. Additional actions will be needed, programs to ensure they reach poor and vulnerable people. however, to reduce the impact and pave the way for a resumption of New Interim Strategy Notes for Afghanistan and Nepal were rapid growth. The World Bank is advocating for policies that provide discussed by the Board in fiscal 2009. The Afghanistan strategy focuses fiscal stimulus, invest in sound public infrastructure projects, create a on supporting sound national programs that have improved the favorable investment climate, and scale up existing safety net programs day-to-day life of millions of Afghans. It also seeks to bolster core to protect the poor. government systems as the basis for credible state building, through efforts to strengthen public financial management, fiscal sustainability, WORLD BANK ASSISTANCE and improved transparency and accountability. The Nepal strategy The Bank's ongoing strategy for South Asia comprises three pillars: builds on the areas and programs that have been shown to be robust accelerating and sustaining growth, making development inclusive, and and have a strong emphasis on social inclusion. By adopting a "peace strengthening human development. Promoting public accountability filter," the strategy also intends to improve sensitivity in Bank-financed and good governance is a common foundation for these three pillars. projects to the root causes of the conflict and social tensions. The Bank also recognizes that South Asia represents large and growing contrasts--some areas are middle income, a large segment is still low RESPONDING TO GLOBAL CRISES income, and there are a growing number of countries in conflict, which South Asian countries were severely impacted by the increase in world require specially tailored solutions in the Bank's support. food prices in 2007 and 2008. In Bangladesh, the food price shock The Bank approved a total of 36 projects for South Asia in fiscal 2009, pushed some 4 million people into poverty in 2008. In response, the $1.3 billion in IBRD loans and $4.1 billion in IDA commitments, including Bank committed $130 million as part of the Global Food Crisis Response SOUTH ASIA REGIONAL SNAPSHOT Total population: 1.5 billion Population growth: 1.5% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 65 years New Commitments Disbursements Infant mortality per 1,000 births: 59 IBRD $1,286 million IBRD $1,202 million Female youth literacy: 74% IDA $4,148 million IDA $2,792 million Number of people living with HIV/AIDS: 2.6 million 2008 GNI per capita: $986 Portfolio of projects under implementation as of June 30, 2009: $26 billion GDP per capita index (1998 100): 164 Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 38 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Maldives Pakistan Nepal Sri Lanka Program (GFRP) to help ease the pressure on the country's budget, development, years of neglect, and poor road maintenance have resulted under which the government was struggling to fund the expansion of in low travel speeds and poor levels of service. To help improve the food-related spending, including social protection programs. Under country's roads, the Bank approved $98 million in additional financing for GFRP, Afghanistan received $8 million for the rehabilitation of about 500 the ongoing Road Sector Assistance Project, which has so far improved small, traditional irrigation schemes. and completed 420 kilometers of national roads across the island. The Bank is also focused on helping South Asian countries cope with the impact of the global economic crisis. In Pakistan, the Bank approved INVESTING IN PEOPLE $500 million to support the government's program to regain and South Asia suffers from some of the worst human deprivation in the maintain economic stability and steer the economy back onto a higher world. It has the largest number of undernourished children in the world, growth path. In India, the Bank approved a $400 million loan to improve and an estimated 26 million children remain out of school. But the region access to finance for the country's small and medium enterprises, which has also made impressive gains. Bangladesh, for example, has achieved face serious challenges in accessing adequate and timely financing on gender parity in secondary schools. Building on this achievement, the competitive terms, particularly long-term loans. Bank approved a $130.7 million credit to improve quality and increase access to and equity of secondary education in the country in fiscal 2009. INVESTING IN INFRASTRUCTURE Similar progress has not been realized in higher education in The Bank is working to address South Asia's vast urban and rural Bangladesh: at 6 percent, the country's tertiary enrollment rate is one of infrastructure deficits, which often are cited as the greatest constraint to the lowest in the world. In fiscal 2009, the Bank provided $81 million to sustained, rapid growth. More than 40 percent of India's population, for improve the quality and relevance of teaching and research in higher example, is without electricity, and the high cost of erratic and education institutions in Bangladesh. insufficient power supply hurts industry as well as households. The new The Bank continues to be heaviliy engaged in South Asia's health country strategy for India plans to fast-track much-needed infrastruc- sector. In a major new attack on malaria, kala azar, and polio, the Bank ture development. In fiscal 2009, the Bank approved a $400 million loan provided $521 million to boost prevention, diagnosis, and treatment to the Power Grid Corporation of India, financing designed to increase reliable power exchange between regions and states. Bangladesh faces similar energy sector problems. Manufacturers surveyed in the Bank's most recent Investment Climate Assessment estimate that power shortages reduce sales by about 12 percent a year. To help address the problem, the Bank approved $350 million in fiscal 2009 for the Siddhirganj Peaking Power Project, designed to increase reliable power during periods of peak demand. The project builds on the Bank Group's long history of involvement in Bangladesh's energy sector, including support to the successful Rural Electrification and Renewable Energy Development Program, which has helped bring power to hundreds of thousands of consumers through grid connections and solar home systems. And in Nepal, the Bank committed $89.2 million in response to the country's unprecedented energy crisis, in which grid-based consumers were supplied with electricity for only eight hours per day. Inadequate road infrastructure is also a critical constraint for sustainable and inclusive growth in South Asia. In Sri Lanka, national roads carry more than 70 percent of all traffic. But uncontrolled roadside WORLD BANK ACTION IN THE FIELD 39 FIGURE 2.5 FIGURE 2.6 SOUTH ASIA SOUTH ASIA IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $5.4 BILLION SHARE OF TOTAL OF $5.4 BILLION Water, Sanitation & Agriculture, Urban Development 3% 3% Economic Management Flood Protection 3% 10% Fishing & Forestry Environmental & Natural Trade & Integration <1% 5% Resource Management Transportation 7% Social Protection & Risk Management 5% Social Development, Law & Justice & Public Gender & Inclusion 5% Administration 17% 12% Education Financial & Private Sector Rural Development 14% 34% Development Industry & Trade 3% Rule of Law <1% 22% Energy & Mining Public Sector Health & Other Governance 7% 23% Human Development Social Services 16% 10% Finance services in India. It also continued its support to improve the health Livelihoods Project seeks to empower poor rural people, especially women sector in Afghanistan with a $30 million grant. The project builds on the and disadvantaged groups, through their inclusion in self-help groups. health sector's significant achievements since 2001, including a Similarly, the Bank approved $250 million for the Pakistan Poverty doubling of the number of functioning health care facilities and a Alleviation Fund (PPAF), now active in 119 out of Pakistan's 134 districts. 22 percent decline in the infant mortality rate, which is now saving the Since 2000, the program has facilitated the formation of 80,000 lives of 80,000 children a year. In Sri Lanka, the Bank committed community organizations and provided 1.9 million microcredit loans, $24 million to the country's ongoing health service delivery program, 16,000 community infrastructure schemes, and training support for with 50 percent going to the conflict-affected Northern and Eastern 232,000 people in enterprise development skills. Provinces to provide basic health services to the more than a quarter of In Bangladesh, the Bank approved $50 million in additional financing a million internally displaced persons. for the Social Investment Program Project to help restore the assets and livelihoods of families affected by Cyclone Sidr. The project has already PROTECTING VULNERABLE PEOPLE benefited more than 1,000 villages across Bangladesh. The Bank also The Bank's strategy for South Asia aims to make growth more inclusive by provided $75 million to Afghanistan's National Solidarity Program (NSP), a removing obstacles to growth in lagging regions, sectors, and communities. rural development initiative that has reached over 22,000 villages--about In Orissa, India, where half of the state's 38 million people live under the 68 percent of the rural population. Since its beginning in 2003, NSP has poverty line, the Bank provided a $444 million assistance package to disbursed over $564 million in block grants to communities to fund improve the state's road network, enhance its agricultural tank systems, more than 44,200 small projects to developing irrigation, power, water and increase livelihood opportunities for rural poor. The Orissa Rural supply, and roads. (See http://www.worldbank.org/sar.) SPOTLIGHT ON RESULTS VOICES FROM THE FIELD A New Sense of Security for Earthquake Survivors in Pakistan Shamim Bibi (see the photo, page 39), 33, lost her husband and financial and technical support, launched an ambitious $1.5 billion daughter in the earthquake that hit Northern Pakistan on October owner-driven rural housing rebuilding program. The salient features of 8, 2005. "When I went to school to check on my children, the this program were technical assistance to homeowners and inspec- school had collapsed. I managed to get two of my kids out alive tion of the reconstruction at various stages to ensure that seismic- from the rubble, but my daughter died. After that I went to check resistant designs provided by the program were being followed. on my husband. He also died," said Shamim Bibi. Such house-to-house assistance and inspection entailed a mammoth Her home in Ghan Chatter, a village just outside Muzaffarabad, was logistical operation for reaching out to the grant recipients, who are left in ruins. Like thousands of other houses, it came crashing down spread over an area of 30,000 square kilometers of mountainous with the first few jolts--in part because of poor construction with terrain. In three years, some 600,000 households received rapid substandard material. disbursement of nearly $1.3 billion in housing reconstruction grants. In the city of Muzaffarabad, more than 10,000 people died and about Shamim Bibi has received grants totaling Rs 175,000 (about $2,200) to half of the city's buildings were destroyed. The scale of the destruction rebuild her house. It is one of around 400,000 houses that have been and a difficult mountainous terrain made reconstruction daunting. completely rebuilt using earthquake-resistant building techniques. To help people rebuild, the government formed the Earthquake "We built our house according to the design given to us. This is a Reconstruction and Rehabilitation Authority, and, with the Bank's much better house than before. We are now happy and safe," she said. 40 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.3 WORLD BANK LENDING TO BORROWERS IN SOUTH ASIA BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 7.7 87.5 56.6 11.2 122.8 161.6 Environmental and Natural Resource Management 94.8 433.9 93.0 309.7 386.6 250.3 Financial and Private Sector Development 689.9 923.0 550.4 809.9 1,344.5 1,873.4 Human Development 760.6 1,041.6 391.7 1,476.3 788.3 1,279.0 Public Sector Governance 669.8 639.5 597.9 916.6 423.7 360.2 Rule of Law 2.9 10.5 7.2 50.4 26.0 1.7 Rural Development 314.1 1,132.5 568.6 1,095.5 574.1 739.2 Social Development, Gender, and Inclusion 642.8 265.3 366.9 372.5 321.5 294.4 Social Protection and Risk Management 98.6 337.0 472.3 550.5 145.4 282.0 Trade and Integration 52.7 63.7 138.8 31.3 68.8 30.4 Urban Development 87.8 59.0 553.7 7.7 45.2 161.4 Theme Total 3,421.6 4,993.3 3,797.2 5,631.6 4,246.8 5,433.6 SECTOR Agriculture, Fishing, and Forestry 251.9 940.8 368.9 733.6 420.5 551.7 Education 665.8 286.4 377.2 724.7 694.5 648.0 Energy and Mining 130.8 83.6 483.0 243.7 1,481.4 1,178.7 Finance 331.4 461.8 73.0 678.1 86.6 558.8 Health and Other Social Services 334.6 493.2 195.9 1,006.2 247.5 892.1 Industry and Trade 46.1 485.2 306.5 292.9 167.5 167.3 Information and Communication 16.9 91.9 50.0 2.8 13.2 0.0 Law and Justice and Public Administration 925.5 885.7 1,101.4 1,165.8 699.6 855.0 Transportation 444.8 1,181.0 520.1 559.9 229.9 402.8 Water, Sanitation, and Flood Protection 273.7 83.7 321.3 223.9 206.1 179.2 Sector Total 3,421.6 4,993.3 3,797.2 5,631.6 4,246.8 5,433.6 Of which IBRD 439.5 2,095.9 1,231.0 1,599.5 1,490.6 1,286.0 Of which IDA 2,982.1 2,897.4 2,566.2 4,032.1 2,756.2 4,147.6 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 41 EUROPE AND CENTRAL ASIA Albania Bulgaria Kosovo Armenia Croatia Macedonia, former Yugoslav Azerbaijan Georgia Republic of Belarus Kazakhstan Moldova Bosnia and Herzegovina Kyrgyz Republic Montenegro The global financial and economic crisis has hit Europe and Central Asia sector, rollover risks for countries with large current account deficits hard. Growth in the region fell from 7.1 percent in 2007 to 4.2 percent in have created a highly uncertain environment. Industrial output is down, 2008, and is projected to decline to 3.0 percent in 2009. with some countries experiencing double-digit declines in early 2009 Nearly 90 million of the region's 480 million people--about 18 percent relative to 2008, and export demand has fallen sharply. Unemployment of the population--have moved out of poverty and vulnerability since is on the rise, with unprecedented job losses of as much as 1 percent a 1999. But these gains are now at risk as a result of the financial crisis. month in some countries and double-digit unemployment forecast for Almost 40 percent of the region's residents are still considered poor or others in the near future. Deep declines in remittances are expected to vulnerable, and the number is expected to rise. By the end of 2009, push millions of people into poverty, with Albania, Armenia, Moldova, another 25 million people are expected to become poor or vulnerable. By and Tajikistan especially hard hit. the end of 2010, an additional 10 million people will likely join their ranks. The very forces of globalization that led to major economic progress WORLD BANK ASSISTANCE since 1990 are now exposing the Europe and Central Asia region's The World Bank directed $9.4 billion for Europe and Central Asia in fiscal vulnerability and its dependence on the rest of the world. Relatively high 2009, $9 billion in loans from IBRD and $384 million in IDA commit- current account deficits, elevated external debt levels, very rapid credit ments, including $32 million in grants, covering a combined total of growth, and a consumption boom financed by foreign currency 49 projects. In addition to financial support, the Bank continued to borrowing created vulnerabilities in many countries in Central and provide research and analysis to client countries, including economic Eastern Europe and the Baltics and some countries in the updates for individual countries and the region as a whole. Commonwealth of Independent States (CIS), leaving several of them particularly exposed to the crisis. Sharp drops in commodity prices STABILIZING THE FINANCIAL SECTOR halted growth in economic powerhouses of the eastern part of the The Bank is working to stabilize the financial sector by providing region, including the Russian Federation and Kazakhstan, and hit the less budget support for reforms in almost half the region's countries, well-off parts of the CIS very hard. An expectation of early integration conducting diagnostic work on the banking sector, and helping client with the Euro Area led to complacency and relaxation of reform efforts in countries restructure and recapitalize. In a joint initiative, the European parts of Central and Eastern Europe. Bank for Reconstruction and Development, the European Investment The effects of the crisis are being felt through three key transmission Bank, and the Bank Group pledged to provide up to $31 billion to mechanisms: financial, product, and labor markets. In the financial support the world banking sector in the region and to fund lending to EUROPE AND CENTRAL ASIA REGIONAL SNAPSHOT Total population: 0.4 billion Population growth: 0.3% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 70 years New Commitments Disbursements Infant mortality per 1,000 births: 21 IBRD $8,978 million IBRD $4,887 million Female youth literacy: 99% IDA $384 million IDA $493 million Number of people living with HIV/AIDS: 1.6 million 2008 GNI per capita: $7,418 Portfolio of projects under implementation as of June 30, 2009: $21 billion GDP per capita index (1998 100): 170 Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 42 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Poland Tajikistan Romania Turkey Russian Federation Turkmenistan Serbia Ukraine Slovak Republic* Uzbekistan *The Slovak Republic graduated in November 2008. businesses hit by the global economic crisis. Support includes equity Asia. Azerbaijan, the world's top regulatory reformer, rose from 97th to and debt finance, credit lines, and political risk insurance. 33rd in the global rankings on the ease of doing business. Albania, the runner-up in reforming regulations, rose from 135th to 86th in the PROVIDING EMERGENCY ASSISTANCE global rankings, with reforms in four areas. In response to emergency requests to address the financial crisis, the In support of countries' response to provide resources for the sector, Board approved financial support through a Financial Intermediary the Board approved additional financing of $200 million to Turkey and a Loan to Ukraine and is preparing lending operations in a number of $50 million loan to Armenia to increase small- and medium-size other countries, such as Hungary and Latvia. To address the energy enterprises' access to finance in fiscal 2009. It also approved a $50 million crisis, the Board approved the $11 million Emergency Energy Assistance operation in Serbia to support the government's structural reform Project for the Kyrgyz Republic, which supports implementation of the program, which includes efforts to improve the business environment. government's Energy Emergency Mitigation Action Plan to improve The $20 million Third Programmatic Development Policy Grant to access to energy and increase the reliability of thermal power Tajikistan approved in fiscal 2009 is supporting the government's efforts generation and district heating systems during winter. to improve the environment for private sector development, the overall functioning of the public sector, and the delivery of key public services. PRESERVING JOBS AND IMPROVING INFRASTUCTURE To help create jobs in Europe and Central Asia, the Bank is financing SUPPORTING THE SOCIAL SECTORS labor-intensive infrastructure projects across the region. The $122.5 As country budgets are squeezed, governments in Europe and Central million Second Rijeka Gateway Project for Croatia aims to help the port Asia will be under pressure to reduce spending on social programs that of Rijeka meet growing traffic demand through public-private partner- directly help poor and vulnerable people. Efforts are under way to ships. In Georgia, $70 million in additional financing will allow the country to scale up and restructure its secondary and local roads while creating jobs. The Bank also approved a $40 million regional and municipal infrastructure project in Georgia in fiscal 2009. A $60 million loan to Belarus will help improve the quality, efficiency, and sustainabil- ity of water supply and wastewater treatment services for some 1.7 million consumers, while the $25 million Lifeline Roads Improvement Project in Armenia will upgrade selected sections of the road network, creating much-needed temporary employment in a country that has been severely affected by the crisis. IMPROVING THE BUSINESS ENVIRONMENT One of the ways the Bank is helping prepare the region for the postcrisis period is by supporting client countries seeking to improve their business and investment climate. Much progress has already been made: for the fifth consecutive year, Europe and Central Asia led world regions in reforms to business regulation. Between June 2007 and June 2008, 23 of the region's 25 countries implemented 62 reforms that make it easier to do business. Four of the 10 economies making the most regulatory reforms are in Europe and Central WORLD BANK ACTION IN THE FIELD 43 FIGURE 2.7 FIGURE 2.8 EUROPE AND CENTRAL ASIA EUROPE AND CENTRAL ASIA IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $9.4 BILLION SHARE OF TOTAL OF $9.4 BILLION Water, Sanitation & Agriculture, Urban Development 2% 7% Economic Management Flood Protection 2% <1% Fishing & Forestry 4% Education Environmental & Natural 5% Resource Management 17% Energy & Mining Trade & Integration 25% Financial & Transportation 31% Private Sector 26% Development 7% Finance Social Protection & Risk Management 10% Health & Other 7% Social Services Social Development, Gender & Inclusion <1% 14% Human Development Rural Development 2% Law & Justice & Rule of Law <1% 9% Public Sector Governance Public Administration 25% 7% Industry & Trade monitor social spending trends and patterns and to identify crucial steadily, particularly in the area of legal frameworks, though key expenditures on health, education, and social protection programs that challenges remain in the areas of public sector reform, legal and judicial need to be protected in the face of the crisis. reform, and anticorruption. The Bank's economic and sector work in the The Bank is actively monitoring the human impacts of the crisis in region focuses on the need to adjust regulations in order to increase the region through labor market monitoring, social safety net monitor- international trade, which remains weak in many countries. ing, and rapid-response surveys. Ongoing analysis examines the In addition to supporting client countries as they cope with the impacts of the crisis on social protection and household welfare, its economic crisis, the Bank is helping them position themselves for the effect on pensions, the extent to which safety nets are capable of postcrisis period. To do so, it is supporting financial sector reforms, responding to the crisis, and the role of the Bank. enhanced social protection, and better governance. The Bank is also directly supporting efforts to protect people during the crisis through financing safety net, nutrition, and social ADDRESSING GLOBAL AND REGIONAL LONGTERM ISSUES fund operations in Armenia, the Kyrgyz Republic, Moldova, and The region launched its Adapting to Climate Change in Europe and Central Asia Tajikistan and to support conditional cash transfers in FYR Macedonia. report in fiscal 2009. The report warns that the impact of climate change will be more significant than expected. This is due to a lingering legacy of PROMOTING INSTITUTIONAL environmental mismanagement and the poor state of much of the region's STRUCTURAL REFORM AND OPEN TRADE POLICIES infrastructure, leaving the countries poorly prepared to adapt. The Bank is The Bank continues to support European and Central Asian countries in assisting countries in addressing adaptation to climate change by investing adopting institutional structural reforms. As the book Anticorruption in in adaptation pilots, clean technology, and climate resilience projects. Transition 3 and the latest round of the Business Environment and The Bank is also helping the region prepare for the demographic Enterprise Performance Survey indicate, most countries are improving changes it faces. (See http://www.worldbank.org/eca.) SPOTLIGHT ON RESULTS VOICES FROM THE FIELD A Small Village Thinks Big The small Moldovan village of Calfa is becoming even smaller as in mud, has been resurfaced, and drainage has been installed so parents leave their families behind to find work abroad and send that the improvements are not washed away. money home. More than half the children in the village school The citizens of Calfa paid for 30 percent of the capital cost of each have one parent abroad, and in many families both parents work of these projects, with the remainder provided by grants from the far from home. SIF. The fund supports projects selected by the community, which Those who have stayed behind are coping. Residents have pitched are managed by councils made up of community members. in at the village primary school, where students now have One elderly Calfa couple (see photo, page 43) celebrated their 50th computers and parents help with a range of activities. anniversary this year. As the first people in town to be connected With help from the Social Investment Fund (SIF), supported by the to gas, they had every reason to celebrate. "The SIF project has Bank, the village repaired the school's leaky roof and upgraded to a eliminated 50 percent of our workload. We don't have to cut wood," gas boiler so that the school has heat without someone having to says the husband, Ion Kravtsov, 71 years old. "Where before we had stoke the fire all day. The main road of the town, which had no hot water, now we have a bathroom, we can take showers! Now decayed to the point that students would come to school covered we have time to enjoy old age." 44 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.4 WORLD BANK LENDING TO BORROWERS IN EUROPE AND CENTRAL ASIA BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 242.0 17.4 4.6 5.7 2.6 692.5 Environmental and Natural Resource Management 309.4 394.4 148.8 397.6 461.4 452.0 Financial and Private Sector Development 950.2 933.9 1,461.1 823.6 1,295.9 2,396.9 Human Development 297.1 539.4 360.3 258.3 228.8 1,286.1 Public Sector Governance 895.1 272.3 589.1 328.8 515.0 850.9 Rule of Law 132.3 66.8 401.6 230.4 170.6 1.4 Rural Development 117.4 161.5 238.5 150.1 260.2 180.2 Social Development, Gender, and Inclusion 33.9 246.6 95.1 23.2 24.4 17.5 Social Protection and Risk Management 305.3 668.8 335.9 346.7 125.5 890.3 Trade and Integration 182.6 424.4 226.6 539.5 497.9 2,359.3 Urban Development 93.6 368.0 183.0 658.2 588.8 235.8 Theme Total 3,559.1 4,093.5 4,044.6 3,762.2 4,171.1 9,362.8 SECTOR Agriculture, Fishing, and Forestry 168.6 107.0 117.9 53.4 126.3 9.0 Education 164.0 263.8 126.7 81.9 67.4 357.1 Energy and Mining 352.2 657.9 1,108.3 337.6 546.7 1,547.1 Finance 836.9 259.1 374.5 353.5 311.5 621.0 Health and Other Social Services 244.3 484.9 339.9 192.9 215.9 630.9 Industry and Trade 126.3 253.5 274.8 395.5 499.0 699.5 Information and Communication 7.0 10.9 0.0 0.0 23.6 0.0 Law and Justice and Public Administration 1,176.8 1,160.6 1,271.7 812.6 919.0 2,346.9 Transportation 321.2 557.9 416.7 712.3 893.7 2,912.2 Water, Sanitation, and Flood Protection 162.0 337.9 14.2 822.4 568.0 239.1 Sector Total 3,559.1 4,093.5 4,044.6 3,762.2 4,171.1 9,362.8 Of which IBRD 3,012.9 3,588.6 3,531.9 3,340.1 3,714.3 8,978.4 Of which IDA 546.2 504.9 512.8 422.1 456.8 384.4 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 45 LATIN AMERICA AND THE CARIBBEAN Antigua and Barbuda Costa Rica Argentina Dominica Belize Dominican Republic Bolivia, Plurinational Ecuador State of El Salvador Brazil Grenada Chile Guatemala Colombia Guyana The global financial crisis abruptly halted five years of solid economic Meanwhile, oil-exporting nations such as Ecuador and the Républica growth averaging about 5.3 percent a year in Latin America and the Bolivariana de Venezuela are reducing spending as a result of the Caribbean. Growth in 2008 was 4.3 percent, and the region is projected plunge in international oil prices. to contract by around 2 percent in 2009 before experiencing a recovery Countries that managed to save during good times and those with of 2.4 percent in 2010. more diversified markets and stronger ties to Asian economies (Brazil, Chile, Many countries in the region entered the crisis in relatively favorable Colombia, and Peru) will be less affected than other nations. Overall, the positions, thanks in large part to prudent fiscal policies and the reduction best-positioned countries are those with autonomous central banks, flexible of macroeconomic vulnerabilities during the boom years. As a result of exchange rates, inflation-targeting regimes, and sound fiscal processes. the tightening of financial regulation and supervision that occurred in the wake of the 2001­02 financial crises in several Latin American countries, WORLD BANK ASSISTANCE the region has weathered the current crisis without experiencing a single In response to the global crisis, the Bank dramatically increased its domestic banking crisis. support to Latin America and the Caribbean in fiscal 2009. The Bank Latin America and the Caribbean countries managed to lift 60 approved $14 billion in new commitments, almost tripling its regular million people out of poverty between 2002 and 2008, a trend that is lending volume, with $13.8 billion in loans from IBRD and $202.5 million now in danger of being reversed. World Bank projections indicate that in IDA commitments. Brazil, Mexico, and Argentina, respectively, were as many as 4 million to 6 million people in the region could fall into the largest borrowers, while sectors such as health and social services, poverty (those who live on less than $4 per day) by the end of 2009 as a public administration and law, and water and sanitation led the region in result of the global economic situation. funding. Support to the region during fiscal 2009 represents 42 percent Economies closely tied to the United States--Mexico and the of IBRD lending and nearly a third of total IBRD/IDA lending. countries of Central America and the Caribbean--will likely suffer most The Bank offers its clients in the region innovative financial and from a long recession. Mexico, for example, will experience negative knowledge products on several issues related to poverty, opportunities growth in 2009. Remittance flows to the region have contracted for all, climate change, and competitiveness. A new Human Opportunity significantly, with particularly strong negative effects in Mexico, Central Index, jointly developed by the Bank and researchers from institutions in America, and the Caribbean, including a 6 percent decline in real terms Argentina and Brazil, shows how individual country circumstances play in 2008, with a possible 10 percent decline in 2009. In South America, into enabling or preventing access to basic services such as potable Argentina, Brazil, Paraguay, and Uruguay have also been affected. water, sanitation, electricity, and basic education. This opens up a whole LATIN AMERICA AND THE CARIBBEAN REGIONAL SNAPSHOT Total population: 0.6 billion Population growth: 1.1% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 73 years New Commitments Disbursements Infant mortality per 1,000 births: 22 IBRD $13,829 million IBRD $7,864 million Female youth literacy: 97% IDA $202 million IDA $180 million Number of people living with HIV/AIDS: 1.9 million 2008 GNI per capita: $6,780 Portfolio of projects under implementation as of June 30, 2009: $26 billion GDP per capita index (1998 100): 121 Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 46 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Haiti Paraguay Suriname Honduras Peru Trinidad and Tobago Jamaica St. Kitts and Nevis Uruguay Mexico St. Lucia Venezuela, República Nicaragua St. Vincent and Bolivariana de Panama the Grenadines new field of study dedicated to targeting public policy focused on support for the Rural Alliances Project, which aims to improve acces- improving opportunities for all citizens in the region. sibility to markets for poor rural producers in selected subregions of the country. Two projects totaling $25 million in grant assistance were MEETING THE NEEDS OF MIDDLEINCOME COUNTRIES approved for Haiti to finance the reconstruction of infrastructure The Bank has customized its regional strategy to meet the increasingly destroyed or damaged by the hurricanes and tropical storms that struck diverse needs of countries in the region. For middle-income countries, the country in August and September 2008. Honduras received a the Bank offers an integrated package of services, including analysis and $10 million zero-interest loan to address the food crisis. Nicaraguan advice, new financial products, and technical assistance. authorities received $40 million in grant and credit financial support to A committed credit line, known as the deferred drawdown option, improve water and sanitation services. was instrumental in several countries. Eight loans with deferred On June 30, 2009, Haiti was granted $1.2 billion of debt relief by drawdown options approved for five countries in fiscal 2009-- reaching the completion point under the Enhanced Heavily Indebted Colombia, Costa Rica, Guatemala, Peru, and Uruguay--provided an Poor Countries (HIPC) Initiative approved by the Boards of IDA and immediate source of liquidity with which to respond to shocks. The the IMF. Haiti is now the 26th country to reach the the HIPC Initiative new financing instrument reflects the Bank's commitment to assisting completion point. Debt service savings resulted from the HIPC governments in providing positive market signals by creating a Initiative ($265 million) and the Multilateral Debt Relief Initiative preventive source of financing. ($972.7 million). Active G-20 members such as Argentina, Brazil, and Mexico have become global players. To better respond to these countries' develop- EXPANDING CONDITIONAL CASH ment agendas, the Bank has introduced several innovative programs. TRANSFER PROGRAMS DURING THE FINANCIAL CRISIS During fiscal 2009, for example, it approved a $1.3 billion loan for Latin America and the Caribbean countries pioneered conditional cash sustainable environmental management in Brazil, a $1 billion loan that transfer programs, which provide cash stipends to families to ensure supports efforts to expand access to housing for low-income groups and that children and youth get regular health checkups and attend school. a $401 million loan for an environmental sustainability development Programs similar to Brazil's Bolsa Família (Family Bag) and Mexico's policy project in Mexico, a $330 million loan to Peru to strengthen the Oportunidades (Opportunities) have been launched in Colombia, El new ministry of the environment and improve environmental manage- Salvador, Jamaica, and Panama. The region's conditional cash transfer ment in key sectors of the economy, and a $400 million loan to Uruguay programs were expanded with nearly $2.5 billion from the Bank in fiscal in support of the government's reform program and additional financing 2009 as a way of protecting the most vulnerable from the impact of the to face the impact of the global economic crisis. global crisis. RESPONDING TO THE INFLUENZA AH1N1 OUTBREAK CRAFTING NEW COUNTRY PARTNERSHIP STRATEGIES To support Mexico's efforts to fight the spread of the Influenza A(H1N1) The Board endorsed several new Country Partnership Strategies in Latin virus, the Bank approved $25 million for fiscal 2009 and $480 million is America and the Caribbean in fiscal 2009, including ones for Argentina, under preparation for fiscal 2010. The Bank has provided direct support to Costa Rica, the Dominican Republic, Guatemala, Guyana, Haiti, and several countries in the region to mitigate the impacts of the Influenza Paraguay. Country strategies approved in fiscal 2008 for Brazil and A(H1N1) virus. Mexico have begun to bear fruit in key development areas, such as environmental protection and support to social safety net programs. ASSISTING THE POOREST COUNTRIES A two-year interim strategy was endorsed for Belize in March IDA provided $202.5 million in assistance to the poorest countries in 2009, a sign of the Bank's reengagement with the country. A new Latin America and the Caribbean in fiscal 2009, with interest-free credits interim strategy was also endorsed for the Plurinational State of and grants to five countries. Bolivia received $30 million in financial Bolivia in June 2009. WORLD BANK ACTION IN THE FIELD 47 FIGURE 2.9 FIGURE 2.10 LATIN AMERICA AND THE CARIBBEAN LATIN AMERICA AND THE CARIBBEAN IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $14.0 BILLION SHARE OF TOTAL OF $14.0 BILLION Water, Sanitation & Agriculture, Urban Development 7% 3% Economic Management Flood Protection 15% 10% Fishing & Forestry Trade & Integration 2% Environmental & Natural 25% Resource Management 5% Education Social Protection & Transportation 1% 4% Energy & Mining Risk Management 20% Social Development, Gender & Inclusion <1% 14% Finance Financial & Private Sector Information & Rural Development 4% 11% Development 1% Commuication Law & Justice & Rule of Law <1% Public Administration 22% Health & Other Public Sector Governance 16% 12% Human Development Industry & Trade 5% 23% Social Services IMPROVING COMPETITIVENESS AND MANAGING FOR RESULTS a position to lead middle-income countries in reducing emissions from The Bank is supporting countries' efforts to develop effective and deforestation, breaking the impasse on hydropower development, sustainable ways to promote good governance and transparency by improving energy efficiency, and transforming urban transport. strengthening country systems, improving accountability for service REGIONAL ACTIVITIES delivery, and monitoring and evaluating for results. In April 2009, the Latin America and Caribbean region held a seminar on the To achieve these results, the Bank provided a $154 million loan for financial crisis on the sidelines of the Bank's Spring Meetings. Newly elected the Pernambuco Education Results and Accountability Project in Brazil. President Mauricio Funes from El Salvador was the keynote speaker at the The project, which builds on the success of previous projects in this seminar, which included participation by several Spring Meetings delegates. area, aims to improve the quality, efficiency, and equity of public In November 2008, more than 100 senior lawmakers and executives education and increase literacy among children. In Panama, the Bank is from key energy companies in the Western Hemisphere met in Mexico. continuing to support government efforts to enhance private sector They agreed that efforts to solve the global financial crisis should be competitiveness, consolidate fiscal discipline, and increase public sector economically sustainable and help in the effort to reduce greenhouse accountability with a new $100 million loan. gas emissions by 80 percent below 1990 levels by 2050. The meeting, LATIN AMERICA: PART OF THE hosted by the Mexican Congress and cosponsored by the Bank and the GLOBAL CLIMATE CHANGE SOLUTION Global Legislators Organization (GLOBE), marked the first time lawmak- In December 2008, the Bank released its annual flagship report for the ers from the Americas assembled specifically to discuss and agree on region, this year entitled Low Carbon, High Growth: Latin American measures to address climate change. Responses to Climate Change. The report notes that Latin America produces In October 2008, the Ministry of Finance of Mexico and the Bank only 6 percent of global emissions from energy sources and has a cleaner organized the first forum for finance spokespeople from the region. A energy mix than other regions in the world. The region has abundant Web-based platform was launched to provide spokespeople with a forum hydropower, relies on coal production much less than other regions, and is to continue the conversations and exchanges that began in Mexico. (See a leader in sustainable transport. The report concludes that the region is in http://www.worldbank.org/lac.) SPOTLIGHT ON RESULTS VOICES FROM THE FIELD Improving the Health and Education of Children and Their Families with Cash Incentives Socorro Palma lives in a small house in the eastern Mexican state Elsewhere in Latin America, the Bank provided $2.5 billion in of Puebla. Her home is modest, but its occupants have grand ambi- support of conditional cash transfers in fiscal 2009. Brazil's Bolsa tions. All five of Socorro's school-age children attend school, and Família, Colombia's Familias en Acción, and conditional cash transfer even Socorro herself has begun to take night classes. (CCT) programs regionwide together now serve some 100 million Like millions of other low-income people in Mexico, the Palma people. family is a beneficiary of Oportunidades, a World Bank­sponsored CCT programs have markedly increased enrollments, reduced program that provides financial help and basic services to poor drop-out rates, and increased the health of children, according to families on the condition that they send their children to school the Bank report Conditional Cash Transfers: Reducing Present and and ensure that they receive adequate health and nutrition care. Future Poverty. So compelling are the results that in fiscal 2009 the Additional funding provided by the Bank for the program in fiscal Bank added six new countries--Bangladesh, Colombia, Kenya, 2009 guarantees assistance for 25 million people, almost a quarter Macedonia, Pakistan, and the Philippines--to its roster of countries of Mexico's population. receiving support for such programs. 48 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.5 WORLD BANK LENDING TO BORROWERS IN LATIN AMERICA AND THE CARIBBEAN BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 111.2 310.4 42.5 54.3 131.8 483.0 Environmental and Natural Resource Management 159.1 841.2 454.0 353.0 664.8 3,437.6 Financial and Private Sector Development 912.4 729.6 1,518.7 498.9 622.7 1,569.7 Human Development 1,046.7 469.8 502.6 1,022.5 445.5 1,643.8 Public Sector Governance 672.0 506.2 1,054.2 519.9 943.4 2,180.7 Rule of Law 270.9 147.9 108.8 97.5 50.1 1.0 Rural Development 249.6 331.7 236.5 415.4 307.5 531.6 Social Development, Gender, and Inclusion 268.9 187.9 282.6 175.4 109.2 65.7 Social Protection and Risk Management 926.9 950.4 606.2 419.0 307.0 2,853.4 Trade and Integration 364.6 233.4 720.3 300.5 224.8 254.1 Urban Development 337.6 457.1 384.1 696.9 853.1 1,010.3 Theme Total 5,319.8 5,165.7 5,910.5 4,553.3 4,660.0 14,031.0 SECTOR Agriculture, Fishing, and Forestry 379.6 233.4 291.0 83.4 333.5 1,329.2 Education 218.3 680.0 712.7 369.1 525.3 710.6 Energy and Mining 50.5 212.6 172.8 19.5 266.8 502.3 Finance 405.1 530.0 907.3 286.4 249.5 1,921.0 Health and Other Social Services 1,558.9 443.4 821.8 649.1 436.7 3,190.5 Industry and Trade 428.0 199.9 569.2 236.3 462.0 696.2 Information and Communication 14.0 44.7 20.8 0.0 0.0 173.9 Law and Justice and Public Administration 1,521.3 1,776.0 1,278.8 1,187.8 851.4 3,137.4 Transportation 675.7 556.4 785.4 1,223.9 1,083.4 204.3 Water, Sanitation, and Flood Protection 68.4 489.5 350.7 497.8 451.3 2,165.7 Sector Total 5,319.8 5,165.7 5,910.5 4,553.3 4,660.0 14,031.0 Of which IBRD 4,981.6 4,904.4 5,654.1 4,353.3 4,353.5 13,828.5 Of which IDA 338.2 261.3 256.4 200.0 306.5 202.5 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 49 MIDDLE EAST AND NORTH AFRICA Algeria Iran, Islamic Republic of Djibouti Iraq Egypt, Arab Republic of Jordan This section also reports on the West Bank and Gaza. The Middle East and North Africa is also being adversely affected by the Oil-exporting countries with large populations, such as Algeria, the global economic crisis. Real gross domestic product (GDP) is projected Islamic Republic of Iran, Iraq, Libya, the Syrian Arab Republic, and the to grow just 2.2 percent in 2009, down from 6.2 percent in 2008 and Republic of Yemen entered the crisis with weaker fiscal and current from an average of 5.1 percent during 2000­07. High food and fuel account balances than the Gulf Cooperation Council countries. They prices stoked consumer price inflation, which rose from 7.2 percent in also have larger social commitments, such as subsidies, which make it 2007 to 10.6 percent in 2008. difficult for them to reduce expenditures during a downturn. Non-oil Banks and investment companies in the region were not large exporting countries such as Djibouti, Jordan, and Lebanon, which are holders of subprime mortgage­backed securities, and many Gulf economically linked to the Gulf countries, will experience declines in countries were in a strong enough financial position to cushion the tourism, remittances, and foreign direct investment from the Gulf large outflows of short-term capital in the second half of 2008. countries. In addition, some migrant workers may return home, which Nonetheless, the global financial crisis affected the financing will add to social pressures. Countries with strong trade links to Europe outlook in the region. Spreads on sovereign debt increased, regional (Egypt, Morocco, and Tunisia) may suffer more from the crisis than other stock market indices suffered sizable declines, foreign direct countries in the region, because lower European demand stifles exports, investment inflows are expected to weaken, export revenues and tourism, remittances, foreign direct investment, and possibly foreign tourism and trade-related services are declining, and remittances are assistance. Job losses by exporters will increase human strife. In the past, expected to contract. these countries have tapped international financial markets to finance The actual impact of the crisis will vary across the region. their current account deficits--which may be difficult to do in the Members of the Gulf Cooperation Council--Bahrain, Kuwait, Oman, current environment. Qatar, Saudi Arabia, and the United Arab Emirates--entered the crisis with very strong fiscal and external balances or with a signifi- WORLD BANK ASSISTANCE cant financial reserve from revenues during the oil boom. They are in The World Bank approved $1.7 billion in financing for the Middle East the best position to weather the global economic crisis. Were the and North Africa region in fiscal 2009: $1.6 billion in loans from IBRD price of oil to drop further or the real estate crisis to deepen, even and $172 million in IDA commitments, including $129 million in grants. this group of countries could be forced to draw down reserves and The increase in lending was partly in response to the food, fuel, and cut investments. financial crises. MIDDLE EAST AND NORTH AFRICA REGIONAL SNAPSHOT Total population: 0.3 billion Population growth: 1.8% TOTAL FISCAL 2009 TOTAL FISCAL 2009 Life expectancy at birth: 70 years New Commitments Disbursements Infant mortality per 1,000 births: 32 IBRD $1,551 million IBRD $1,216 million Female youth literacy: 86% IDA $172 million IDA $183 million Number of people living with HIV/AIDS: 210,000 2008 GNI per capita: $3,242 Portfolio of projects under implementation as of June 30, 2009: $6 billion GDP per capita index (1998 100): 128 Note: Life expectancy at birth, infant mortality rate per 1,000 live births, female youth literacy, and people living with HIV/AIDS are for 2007; other indicators are for 2008 from the World Development Indicators database. HIV/AIDS data are from UNAIDS/WHO's 2008 Report on the Global AIDS Epidemic. 50 THE WORLD BANK ANNUAL REPORT 2009 COUNTRIES ELIGIBLE FOR WORLD BANK BORROWING Lebanon Syrian Arab Republic Libya Tunisia Morocco Yemen, Republic of The Bank also delivered 37 economic and sector work activities SUPPORTING SUSTAINABLE DEVELOPMENT and 74 nonlending technical assistance activities. These activities AND NATURAL RESOURCE MANAGEMENT included the publication of a regional flagship report on private Climate change, water stress, and natural resource management are key sector development and a regional report on migration; public challenges in the Middle East and North Africa. To deal with them, the expenditure reviews for Libya and the Republic of Yemen; and Bank provided the Republic of Yemen with $90 million in support of a several governance-related reports. Several reports were also water sector program and $25 million to aid a rural energy project initiated in the context of the Arab World Initiative, in areas ranging focused on solar energy. To improve solid waste management, the Bank from regional infrastructure to education and knowledge sharing lent $133 million to Morocco and $25 million to Jordan. In the aftermath (see box 1.5, page 18). of floods in the Republic of Yemen in October 2008, the Bank helped carry out a needs assessment and stepped up its monitoring programs and policy dialogue to improve the country's preparedness for future REDUCING INFRASTRUCTURE BOTTLENECKS crises. In March 2009, the Bank approved $35 million in additional While addressing the immediate needs associated with the global financing for flood protection and emergency reconstruction. Earlier in recession, the Bank's fiscal 2009 program reflects its ongoing focus fiscal 2009, the Board approved $15 million in additional financing to on long-term growth. Major infrastructure projects were approved promote groundwater and soil conservation in the Republic of Yemen. for Egypt, Jordan, Lebanon, and Morocco. The Board approved two large loans to Egypt: a $600 million loan for the Ain Sokhna power EDUCATING YOUNG PEOPLE project and a $270 million loan for restructuring Egyptian Railways. A challenge in the education sector in the Middle East and North Africa The $70 million Urban Transport Development Project for Lebanon is providing quality education that prepares the region's young people and the $33 million Amman Development Corridor Project for Jordan to compete in the global economy. The $25 million Higher Education focus on removing transport bottlenecks and paving the way for Reform for the Knowledge Economy Project in Jordan focuses on future sustained growth. quality and governance issues, and the $60 million Higher Education Reform for the Knowledge Economy II Project in Jordan builds on IMPROVING PRIVATE SECTOR DEVELOPMENT, these issues and emphasizes the need to provide students enrolled COMPETITIVENESS, AND GOVERNANCE in pretertiary education institutions with increased levels of skills The Middle East and North Africa region faces the challenge of to participate in the knowledge economy. dealing with both the social difficulties brought on by globalization and the challenge of greater competitiveness. The Bank provided ASSISTING PEOPLE IN CONFLICTAFFECTED COUNTRIES Tunisia with a $250 million loan to increase integration into global The Bank responded quickly to the conflict in Gaza in fiscal 2009, markets. In Morocco, the Bank is supporting work that is strengthen- dispatching an assessment team less than a week after hostilities ing the good governance agenda while creating an enabling ceased. A central recommendation emerging from the assessment environment for stability and sustained growth. team's efforts was that the recovery and reconstruction effort be closely Doing business is becoming easier in the region. By the end of fiscal linked to ongoing development efforts in Gaza. In practice, this meant 2008, two-thirds of the region's economies had introduced an impres- continued funding and scaling up of a range of successful donor- sive total of 27 reforms. For the third time in four years, Egypt, last year's financed projects in several key areas, including water and sanitation, top regional performer, was among the top 10 global reformers. Other electricity, social safety nets, municipal development, and support from reformers in the region included Djibouti, Jordan, Lebanon, Morocco, nongovernmental organizations. In April 2009, a Bank Group delegation Oman, Saudi Arabia, Syria, Tunisia, the United Arab Emirates, the West visited Iraq to discuss its investment potential and to support the Bank and Gaza, and the Republic of Yemen. creation of a healthy business climate. WORLD BANK ACTION IN THE FIELD 51 FIGURE 2.11 FIGURE 2.12 MIDDLE EAST AND NORTH AFRICA MIDDLE EAST AND NORTH AFRICA IBRD AND IDA LENDING BY THEME | FISCAL 2009 IBRD AND IDA LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL OF $1.7 BILLION SHARE OF TOTAL OF $1.7 BILLION Environmental & Natural Water, Sanitation & Urban Development 44% 9% Resource Management Flood Protection 11% 3% Agriculture, Fishing & Forestry 4% Education Financial & Private Sector 21% Development 39% Energy & Mining 5% Human Development Transportation 23% Public Sector 1% Governance Law & Justice & Public Administration 4% Trade & Integration 12% 5% Rural Development Social Protection & Social Development, Industry & Trade 12% Risk Management 2% 1% Gender & Inclusion Health & Other Social Services <1% 3% Finance MAINSTREAMING WOMEN INTO THE ECONOMY these programs was about $11 million, and demand is expected to The Bank initiated or delivered a variety of gender studies and programs in remain steady in fiscal 2010. The Strategic Cooperation Program with the Middle East and North Africa over the course of fiscal 2009. In Egypt, it Gulf countries includes programs and services in Bahrain, the Gulf undertook an assessment of the gender dimensions of labor market Cooperation Council Secretariat, Kuwait, Oman, Qatar, Saudi Arabia, and access and constraints. In Jordan, the Bank is developing a program to the United Arab Emirates. The programs have become more strategic promote labor market access for young female graduates of community and multiyear; their volume was close to $6 million in fiscal 2009 and is colleges. In Saudi Arabia, it is providing assistance to "urban observatories" expected to remain comparable in fiscal 2010. in Jeddah and Medinah, which are studying female-headed households. In the Republic of Yemen, it is preparing a gender analysis of public expendi- INCREASING TRADE FINANCING AND tures in the health and education sectors. Through an Institutional GUARANTEEING FOREIGN DIRECT INVESTMENT Development Fund grant, the Bank is supporting a program measuring During fiscal 2009, IFC scaled up its trade finance program and the impact of national policies and strategies on gender equality. expanded its technical assistance and advisory services to private The Bank delivered a gender assessment of Lebanon, organized a investors. For its part, MIGA plans to use its guarantee facility to help capacity-building workshop on gender budgeting in Morocco, and secure foreign direct investment in client countries in the Middle East released the biennial report "Status and Progress of Women in the and North Africa. Middle East and North Africa," which examines progress in economic The Bank also strengthened its partnership with Arab and Islamic participation, access to education, access to health care, public development institutions in fiscal 2009. It exchanged experiences on participation and representation, and legal rights. how to design and implement sectorwide approaches in the water and human development sectors; held joint technical workshops and EXPANDING FEEBASED PROGRAMS dialogue on project identification, appraisal, supervision, and monitor- The list of countries in the Middle East and North Africa requesting ing and evaluation; and conducted joint missions to identify, appraise, fee-based programs expanded to 11 in fiscal 2009. Total revenue from and supervise projects. (See http://www.worldbank.org/mna.) SPOTLIGHT ON RESULTS VOICES FROM THE FIELD Rapidly Responding to Flood Devastation in the Republic of Yemen In October 2008, people living in the provinces of Hadramout and Almost 13,000 acres of agricultural land were significantly Al-Mahara experienced one of the worst floods to hit the Republic damaged by soil erosion, and some 500,000 palm trees were of Yemen in more than a decade. Dozens of people were killed, reportedly uprooted. and some 25,000 were displaced from their homes. Less than four months after a rapid assessment of the impact of The impact on agricultural land and people's livelihoods has been the flood, the Board approved additional financing of $35 million devastating. More than half a million Yemenis suffered significant to support the rehabilitation of key infrastructure facilities in the loss of property or income. Livestock losses exceeded 36,000 head disaster-affected areas of Hadramout and Al-Mahara, to restore (camels, goats, and cows), and some 60,000 beehives producing access to roads, and to strengthen local capacity in disaster the renowned Hadramout honey were reportedly destroyed. preparedness, mitigation, and response. 52 THE WORLD BANK ANNUAL REPORT 2009 TABLE 2.6 WORLD BANK LENDING TO BORROWERS IN MIDDLE EAST AND NORTH AFRICA BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 0.0 45.8 0.0 0.0 0.0 0.0 Environmental and Natural Resource Management 113.8 160.2 44.5 179.7 65.0 149.3 Financial and Private Sector Development 259.3 166.6 907.8 166.7 778.0 371.0 Human Development 192.1 95.4 128.5 14.3 17.2 92.0 Public Sector Governance 19.6 166.0 229.0 59.8 208.0 17.5 Rule of Law 1.7 1.8 46.9 33.0 11.2 0.0 Rural Development 65.1 155.3 177.9 126.6 53.3 82.3 Social Development, Gender, and Inclusion 70.7 123.0 67.8 174.9 75.5 21.0 Social Protection and Risk Management 31.6 98.5 69.7 15.4 35.7 32.9 Trade and Integration 158.3 0.0 0.0 16.0 17.2 201.4 Urban Development 178.7 271.1 28.5 121.6 208.8 755.7 Theme Total 1,091.0 1,283.6 1,700.6 907.9 1,469.8 1,723.0 SECTOR Agriculture, Fishing, and Forestry 27.2 229.2 15.3 208.5 0.0 60.0 Education 154.9 124.0 146.8 14.3 32.0 68.0 Energy and Mining 0.0 0.0 316.5 291.6 280.0 675.8 Finance 20.8 142.5 625.0 39.2 500.3 50.0 Health and Other Social Services 52.0 0.3 0.0 84.3 27.3 6.3 Industry and Trade 23.4 277.9 14.0 10.3 29.4 200.0 Information and Communication 0.0 18.5 0.0 0.0 9.0 0.0 Law and Justice and Public Administration 93.6 232.9 249.2 61.9 189.6 75.7 Transportation 409.6 29.0 237.6 27.4 104.7 390.1 Water, Sanitation, and Flood Protection 309.5 229.3 96.4 170.5 297.6 197.2 Sector Total 1,091.0 1,283.6 1,700.6 907.9 1,469.8 1,723.0 Of which IBRD 946.0 1,212.1 1,333.6 691.9 1,202.5 1,551.0 Of which IDA 145.0 71.5 367.0 216.0 267.3 172.0 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals because of rounding. WORLD BANK ACTION IN THE FIELD 53 3 FISCAL YEAR SUMMARY WORLD BANK LENDING FIGURE 3.1 The World Bank mobilizes financing by borrowing from international TOTAL IBRD-IDA LENDING BY REGION | FISCAL 2009 SHARE OF TOTAL LENDING OF $46.9 BILLION capital markets (for IBRD) and by allocating grants and credits using contributions from richer member countries (for IDA). It channels these South Asia 12% 17% Africa resources to benefit poor people in borrowing member countries. Lending is tailored to individual country needs, using lending instruments that are becoming increasingly flexible. Figures 3.1­3.3 and Middle East & table 3.1 summarize combined IBRD­IDA lending in fiscal 2009. North Africa 4% 17% East Asia & Pacific LOWINCOME COUNTRIES The developing world is poorer than recently thought, as measured by the latest International Comparison Program report. The new interna- tional poverty line of $1.25 a day at 2005 prices (the most recent Latin America & the Caribbean 30% 20% Europe & Central Asia available) is the mean of the national poverty lines for the 10 to 20 poor- est countries of the world. The 43 low-income countries and their approximately 973 million (2008) people the World Bank endeavors to serve through IDA support are now at the greatest risk in decades of FIGURE 3.2 remaining in poverty for generations to come. TOTAL IBRD-IDA LENDING BY THEME | FISCAL 2009 SHARE OF TOTAL LENDING OF $46.9 BILLION The Role of IDA Urban Development 7% 5% Economic Management IDA is the largest multilateral channel of concessional financing to the world's poorest countries. In fiscal 2009, countries with 2007 gross Environmental & Natural national income (GNI) per capita of up to $1,095 were eligible for IDA Trade & Integration 7% 11% Resource Management assistance. In addition, IDA supports some countries, including several Social Protection & small island economies, that are above the income cutoff but lack the Risk Management 11% Financial & creditworthiness needed to borrow from IBRD. A total of 79 countries Social Development, Private Sector Gender & Inclusion 2% 21% Development were eligible for IDA assistance in fiscal 2009. To date, 27 countries have graduated from IDA. Some IDA recipients, most recently China and the Rural Development 9% Arab Republic of Egypt, have now become IDA donors. The allocation of Rule of Law <1% IDA's resources is determined primarily by each recipient's rating in the annual Country Policy and Institutional Assessments. In the case of Public Sector Governance 13% 14% Human Development countries that are eligible for both IDA and IBRD funds, IDA allocations must also take into account those countries' creditworthiness for and access to other sources of funds. IDA supports countries' efforts to boost economic growth, reduce FIGURE 3.3 poverty, and improve the living conditions of the poor. In its operational TOTAL IBRD-IDA LENDING BY SECTOR | FISCAL 2009 work, it faces a full spectrum of country conditions, including post- SHARE OF TOTAL LENDING OF $46.9 BILLION conflict reconstruction, economic transition, vulnerability, and rapid Water, Sanitation & Agriculture, Fishing and sustained growth. While continuing to support all low-income Flood Protection 9% 7% & Forestry countries, IDA is expected to direct half of its financial assistance in the three-year period covered by the 15th Replenishment of IDA (IDA15) to 7% Education Transportation 13% Africa, subject to performance. Significant assistance will also be directed to the poorest countries in South and East Asia. 13% Energy & Mining IDA Commitments IDA commitments in fiscal 2009 reached $14 billion (figure 3.4). This 9% Finance funding, including $11.0 billion in credits, $2.6 billion in grants, and Law & Justice & Public Administration 20% Health & $0.4 billion in guarantees, supported 176 operations. The largest share 13% Social Services of IDA resources was committed to Africa, which received $7.9 billion, or 56 percent of total IDA commitments. South Asia ($4.1 billion) and East Information & Communication 1% 6% Industry & Trade FISCAL YEAR SUMMARY 55 FIGURE 3.4 FIGURE 3.5 TOTAL IDA COMMITMENTS BY REGION | FISCAL 2009 IDA COMMITMENTS TO AFRICA | FISCAL 1999­2009 SHARE OF TOTAL LENDING OF $14 BILLION South Asia 30% 56% Africa Millions of dollars Percent 9,000 60 8,000 50 7,000 6,000 40 5,000 30 Middle East & 4,000 North Africa 1% 3,000 20 2,000 Latin America & 10 1,000 the Caribbean 1% 0 0 Europe & 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Central Asia 3% 9% East Asia & Pacific IDA commitments (left axis) Share of IDA commitments (right axis) Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Asia and Pacific ($1.2 billion) also received large shares of total funding. FIGURE 3.6 Nigeria and Pakistan were the largest single recipients of funding. TOTAL IDA COMMITMENTS BY THEME | FISCAL 2009 IDA is one of the major sources of financing for infrastructure, SHARE OF TOTAL LENDING OF $14 BILLION including the energy and mining; transportation; water, sanitation, and Urban Development 7% 3% Economic Management flood protection; and information and communication technology Environmental & Natural Trade & Integration 3% 4% Resource Management sectors. Combined, these sectors received $4.9 billion, 35 percent of the Social Protection & total IDA commitments. The largest commitments went to the public Risk Management 5% Financial & Private Sector administration sector (including law and justice), as a single sector, 18% Development Social Development, which received $2.6 billion in financing (19 percent of the total). Gender & Inclusion 4% Significant support was also provided to the health and social services ($2.0 billion) and agriculture ($1.9 billion) sectors. Human The themes receiving the most funding were rural development 20% Development ($3.2 billion) and human development ($2.7 billion). Significant attention Rural Development 23% was also paid to financial and private sector development ($2.5 billion), public sector governance ($1.7 billion), and urban development ($1 Rule of Law <1% 12% Public Sector Governance billion). (Figures 3.5­3.7 summarize IDA lending for fiscal 2009, and figure 3.8 looks at IDA lending in relation to infrastructure.) FIGURE 3.7 IDA Resources TOTAL IDA COMMITMENTS BY SECTOR | FISCAL 2009 IDA is financed largely by contributions from donor governments SHARE OF TOTAL LENDING OF $14 BILLION (figure 3.9). Additional financing includes transfers from IBRD's net Water, Sanitation & Agriculture, Fishing income, grants from IFC, and borrowers' repayment of earlier IDA credits. Flood Protection 6% 13% & Forestry Every three years, donor governments and representatives of borrower Transportation 10% countries meet to discuss IDA's policies and priorities and to agree on the amount of new resources required to fund its lending program over Law & Justice & Public Administration 19% 12% Education the following three fiscal years. Historically, the major industrial nations have been the largest contributors to IDA, but donor nations also Information & include developing countries and transition economies--some of them Communication 1% current IBRD borrowers and former IDA borrowers. Six new countries 18% Energy & Mining joined the donor community during the IDA15 negotiations: China, Industry & Trade 4% Cyprus, Egypt, Estonia, Latvia, and Lithuania. Fiscal 2009 was the first year of IDA15, which will fund IDA's commit- Health & Other Social Services 14% 3% Finance ments for fiscal years 2009­11. During this three-year period, concessional 56 THE WORLD BANK ANNUAL REPORT 2009 TABLE 3.1 WORLD BANK LENDING BY THEME AND SECTOR | FISCAL 20042009 MILLIONS OF DOLLARS THEME 2004 2005 2006 2007 2008 2009 Economic Management 428.8 594.6 213.8 248.3 396.6 2,304.7 Environment and Natural Resources Management 1,304.6 2,493.8 1,387.3 2,017.0 2,661.8 5,085.4 Financial and Private Sector Development 4,176.6 3,862.0 6,137.8 4,260.8 6,156.2 9,694.8 Human Development 3,079.5 2,951.0 2,600.1 4,089.4 2,280.9 6,378.6 Public Sector Governance 3,373.9 2,636.4 3,820.9 3,389.7 4,346.6 6,108.4 Rule of Law 503.4 303.8 757.6 424.5 304.2 15.8 Rural Development 1,507.8 2,802.2 2,215.8 3,175.7 2,276.8 4,298.6 Social Development, Gender, and Inclusion 1,557.8 1,285.8 1,094.1 1,250.3 1,002.9 813.2 Social Protection and Risk Management 1,577.0 2,437.6 1,891.7 1,647.6 881.9 5,295.7 Trade and Integration 1,212.7 1,079.9 1,610.9 1,569.9 1,393.2 3,444.1 Urban Development 1,358.1 1,860.0 1,911.2 2,622.7 3,001.2 3,466.7 Theme Total 20,080.1 22,307.0 23,641.2 24,695.8 24,702.3 46,906.0 SECTOR Agriculture, Fishing, and Forestry 1,386.1 1,933.6 1,751.9 1,717.4 1,360.6 3,400.0 Education 1,684.5 1,951.1 1,990.6 2,021.8 1,926.6 3,444.8 Energy and Mining 966.5 1,822.7 3,030.3 1,784.0 4,180.3 6,267.4 Finance 1,808.9 1,675.1 2,319.7 1,613.6 1,540.7 4,235.6 Health and Other Social Services 2,997.1 2,216.4 2,132.3 2,752.5 1,607.9 6,305.5 Industry and Trade 797.9 1,629.4 1,542.2 1,181.3 1,543.5 2,806.5 Information and Communications 90.9 190.9 81.0 148.8 56.5 329.2 Law and Justice and Public Administration 4,978.8 5,569.3 5,857.6 5,468.2 5,296.4 9,491.6 Transportation 3,777.8 3,138.2 3,214.6 4,949.0 4,829.9 6,260.6 Water, Sanitation, and Flood Protection 1,591.6 2,180.3 1,721.0 3,059.4 2,359.9 4,364.9 Sector Total 20,080.1 22,307.0 23,641.2 24,695.8 24,702.3 46,906.0 Of which IBRD 11,045.4 13,610.8 14,135.0 12,828.8 13,467.6 32,910.8 Of which IDA 9,034.6 8,696.2 9,506.2 11,866.9 11,234.8 13,995.2 Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Numbers may not add to totals due to rounding. FISCAL YEAR SUMMARY 57 FIGURE 3.8 FIGURE 3.9 IDA's CONSISTENT COMMITMENT TO INFRASTRUCTURE SOURCES OF IDA FUNDING | FISCAL 1999­2009 BILLIONS OF DOLLARS 25.2 Millions of dollars Percent 6,000 45 40 17.7 5,000 35 4,000 30 12.3 25 9.2 9.0 3,000 20 6.3 6.3 2,000 15 3.8 3.9 2.1 1,000 10 0.9 n.a. 5 IDA13 FY03­05 IDA14 FY06­08 IDA15 FY09­11 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 IDA internal resources a IDA commitments (left axis) Share of IDA commitments (right axis) IBRD and IFC net income contribution Donor compensation for MDRI debt forgiveness Note: Effective fiscal 2005, lending includes guarantees and guarantee facilities. Donor contributionsb Note: n.a. not applicable. financing commitments of $41.7 billion (equivalent to special drawing a. IDA internal resources include principal repayments, charges less administrative expenses, and investment income. rights of 27.3 billion) will be made to IDA-eligible countries. Donors b. Net of structural financing gap. provided new financing pledges of an unprecedented $25.2 billion. These contributions were complemented by $16.5 billion of funding from prior pledges for financing the cost of debt relief; IDA's credit reflows and growth that provides productive employment, while reducing poverty investment income; and internal financing from the Bank Group, which and inequality. They must manage macroeconomic risks stemming from pledged to contribute $3.5 billion from IBRD net income and IFC retained volatile capital flows, contingent liabilities, financial markets, and pensions. earnings, more than twice the amount provided under IDA14. They must build crisis management capability to deal with global threats. Of the total IDA15 financial envelope, $9.1 billion comes from They must enhance their competitiveness, adopt clean energy, ensure donor-financed compensation of credit reflows foregone due to IDA's environmental sustainability, and strengthen the institutional and provision of debt relief. This includes IDA's Multilateral Debt Relief Initiative governance structures that underpin viable market-based economies. (MDRI)­related costs over the IDA15 disbursement period of $6.3 billion; The ongoing financial crisis is increasing the need for Bank services IDA's Heavily Indebted Poor Countries (HIPC) Initiative­related costs in for middle-income countries. IBRD is able to help these countries deal IDA15 of $1.7 billion; and the financing of arrears clearance operations with these challenges. The financial crisis, which originated in the under IDA15 of $1.1 billion. These figures illustrate the increased developed world, threatens to disrupt middle-income countries' strong dependence of IDA on donor financing due to debt-relief initiatives. growth performance and risks considerably slowing efforts to reduce poverty. The effect of the crisis is twofold: first, middle-income countries HIPC Initiative and MDRI are facing difficult credit-market conditions, with limited access to The World Bank provides debt relief to the poorest countries through capital markets, shorter maturity access, and higher interest rate the HIPC Initiative and the MDRI. To date, 35 of the 40 eligible countries spreads; and second, the growing worldwide downturn has led to have reached the HIPC Decision Point and qualified for HIPC Initiative collapsing growth; escalating unemployment; and declining trade, assistance. Of those, 26 countries have reached the HIPC completion commodity prices, tourism, remittances, and investment. The Bank is point and received debt relief under both the HIPC Initiative and the responding vigorously through analytical work and lending, with crisis MDRI. The total cost to creditors of HIPC Initiative debt relief for all response and precautionary elements focused on capital market eligible countries is estimated at $74 billion in end-2008 net present access, social safety nets, and sustaining infrastructure expenditures. value terms. For the 26 countries that have reached the HIPC Initiative completion point, Bank debt relief is expected to total approximately The Role of IBRD $26 billion in end-2008 net present value terms, of which $11 billion is IBRD is a triple-A-rated financial institution with some unusual characteris- being provided under the HIPC Initiative, and $15 billion under the MDRI. tics. Its shareholders and clients are sovereign governments, each of which has a voice in setting IBRD's policies. As a global development cooperative, MIDDLE-INCOME COUNTRIES IBRD's purpose is to work with its members to achieve equitable and Middle-income countries are home to nearly two-thirds of the world's sustainable growth in their economies and find solutions to regional poor, who face substantial development challenges. They must sustain the and global problems in economic development and environmental 58 THE WORLD BANK ANNUAL REPORT 2009 sustainability, all with a view to reducing poverty and improving standards IBRD's operating income was $572 million in fiscal 2009, down from of living. IBRD pursues these goals primarily by providing financing, risk $2,271 million in fiscal 2008, as a result of the global financial and management products, and other financial services, along with access to economic turmoil. This lower operating income was due primarily to lower experts and knowledge in development-related disciplines, so that net interest income on loans and a provisioning charge for losses on loans borrowing members can pool, administer, and prioritize resources they and guarantees compared to a release in fiscal 2008. The equity duration dedicate to development-related objectives. extension program implemented in late fiscal 2008 largely insulated IBRD's operating income from the significant downswings in interest rates. IBRD Financial Services IBRD retained $36 million in its long-term income portfolio New lending commitments by IBRD increased significantly in fiscal 2009, reserve, $25 million in its pension reserve, and $11 million in its amounting to $32.9 billion for 126 operations, exceeding the historically restricted retained earnings account from its fiscal 2009 net income. high levels of commitments during the Asian financial crisis a decade ago, In August 2009, the Executive Directors recommended that the which peaked at $22 billion during fiscal 1999. Policy-based lending Board of Governors approve a transfer of $500 million to IDA from represented 47 percent of total lending, up from 29 percent in fiscal 2008. the fiscal year 2009 net income and an additional transfer of $283.3 Latin America and the Caribbean received the highest share of million to IDA from the surplus account. IBRD maintained adequate IBRD's new lending commitments, with $13.8 billion (42 percent of liquidity to ensure its ability to meet its obligations. As of June 30, total IBRD commitments), followed by Europe and Central Asia, which 2009, it held about $38.2 billion in liquid assets. IBRD's outstanding received $9 billion (27 percent) in funding, and East Asia and Pacific, borrowings from capital markets as of that date were about $103.6 which received $6.9 billion (21 percent). Lending was less concentrated billion (net of swaps) (figure 3.13). Total disbursed and outstanding than in fiscal 2008. Whereas the largest five countries received roughly loans were $105.7 billion. 53 percent of total lending in fiscal 2008, five countries, including Brazil, Consistent with IBRD's development mandate, the principal risk it China, Indonesia, Mexico, and Poland received combined commit- takes is the country credit risk inherent in its portfolio of loans and ments of 49 percent of total IBRD lending in fiscal 2009. guarantees. Risks related to interest and exchange rates are minimized. Among sectors, law and justice and public administration received One summary measure of the Bank's risk profile is the equity-to-loans the highest volume of IBRD lending ($6.9 billion), followed by the ratio, which is closely managed in line with the Bank's financial and risk transportation sector (4.9 billion) and the health and other social outlook. This ratio stood at 34.5 percent as of June 30, 2009 (figure 3.14). services sector (4.3 billion). The thematic composition of lending was led by financial and private sector development (7.2 billion), followed by social protection and risk management (4.5 billion) and environ- THE ROLE OF TRUST FUNDS ment and natural resources management (4.5 billion). The Bank Group is involved in a broad range of strategic partnerships in Figures 3.10­3.12 show IBRD lending by region, theme, and sector. which it collaborates with one or more entities to achieve common Development policy­based lending commitments are shown on the development objectives. These partnerships augment the Bank's own accompanying CD-ROM. development initiatives and facilitate harmonization of efforts by IBRD offers risk management products for clients to manage risks donors, recipient countries, and other stakeholders at the global, related to currency, interest rate, commodity prices, and natural disasters. regional, and country levels. In fiscal 2009, it executed USDeq (U.S. dollar equivalent) 12.8 billion To support these partnerships, the Bank establishes trust funds, to hedging transactions on behalf of clients. This included interest rate which donors contribute. Donors include sovereign agencies from hedges of USDeq 11.7 billion, and currency hedges of USDeq 1.1 billion many Bank member countries, as well as nonsovereign agencies, such (all local currency conversions). In addition, Treasury executed USDeq as multilaterals, private sector institutions, foundations, and nongovern- 0.6 billion for the International Finance Facility for Immunization and mental organizations. The Bank also contributes some of its own surplus USDeq 0.5 billion for the Advance Market Commitment. resources to selected trust funds. Trust funds have become an increasingly important vehicle for IBRD Resources channeling concessional finance. As of June 30, 2009, the Bank had IBRD obtains most of its funds by selling bonds in international capital an active portfolio of 1,046 trust funds representing $72 billion worth markets. In fiscal 2009, it raised $44.3 billion at medium- to long-term of donor funding commitments backed by signed legal agreements. maturities. Debt securities, with a wide range of maturities and struc- About 64 percent of the total was for financial intermediary funds, tures, were issued in 19 currencies. IBRD was able to borrow these high and the remaining 36 percent was for the rest of the portfolio. volumes on very favorable terms despite difficult market conditions Between fiscal 2004 and 2009, annual disbursements rose from because of its standing in the capital markets and its financial strength. $3.27 billion to $6.92 billion. The stock of trust fund assets held by the IBRD's strength is based on its prudent financial policies and practices, Bank, representing undisbursed, paid-in donor contributions, more which help maintain its triple-A credit ratings. As a cooperative institu- than tripled between fiscal 2004 and fiscal 2009, from $8.59 billion to tion, IBRD seeks not to maximize profit but to earn enough income to $28.48 billion. These consisted of $19.86 billion in cash and $8.62 ensure its financial strength and to sustain its development activities. billion in promissory notes. FISCAL YEAR SUMMARY 59 TABLE 3.2 FIGURE 3.10 TOP 10 TRUST FUND DONORS | FISCAL 2008 AND 2009 TOTAL IBRD LENDING BY REGION | FISCAL 2009 MILLIONS OF DOLLARS SHARE OF TOTAL LENDING OF $32.9 BILLION South Asia 4% 1% Africa DONOR 2008 2009 United States 760 1,263 Middle East & North Africa 5% 21% East Asia & Pacific United Kingdom 1,075 918 Netherlands 677 703 Spain 321 491 Germany 505 480 Latin America & France 736 436 the Caribbean 42% 27% Europe & Central Asia European Commission 685 416 Japan 402 405 Norway 443 395 FIGURE 3.11 Canada 516 372 TOTAL IBRD LENDING BY THEME | FISCAL 2009 Others 2,624 2,596 SHARE OF TOTAL LENDING OF $32.9 BILLION Total 8,744 8,475 Urban Development 7% 6% Economic Management Note: Cash contributions to ICSID escrow accounts have been excluded from fiscal 2009 figures. Trade & Integration 9% Environmental & Natural Fiscal 2008 figures have been restated accordingly. 14% Resource Management Social Protection & Risk Management 14% Financial & Social Development, Private Sector Gender & Inclusion 1% 22% During fiscal 2009, donors committed an additional $10.87 billion Development to trust funds, up slightly from the $10 billion posted in fiscal 2008 Rural Development 3% (cash-based donor contributions are shown in table 3.2). Of the new Rule of Law <1% commitments, $171 million was directed toward addressing the Public Sector Governance 13% 11% Human Development global food crisis response. Trust fund disbursements in fiscal 2009 of $6.92 billion represent a 3 percent increase over fiscal 2008, reflecting strong growth in the recipient-executed trust fund portfolio. About $141 million of these disbursements supported initiatives to mitigate the effects of the FIGURE 3.12 global food crisis. TOTAL IBRD LENDING BY SECTOR | FISCAL 2009 SHARE OF TOTAL LENDING OF $32.9 BILLION The largest share of trust fund disbursements continued to go to Africa (32 percent), followed by South Asia (16 percent) and East Asia Water, Sanitation & Flood Protection 11% 5% Agriculture, Fishing & Forestry and Pacific (14 percent). The health and other social services sector 5% Education received 42 percent of disbursements, followed by public administration and law (15 percent) and agriculture (8 percent). 11% Energy & Mining Transportation 15% NONLENDING ACTIVITIES Country Assistance Strategies 12% Finance A Country Assistance Strategy (CAS) guides Bank Group activities within a borrowing member country. Starting with a country's vision of its Law & Justice & Public Administration 21% Health & Other development goals, a CAS is prepared in close cooperation with the 13% Social Services government and in consultation with civil society organizations, development partners, and other stakeholders. It assesses the country's Information & Communication 1% 7% Industry & Trade 60 THE WORLD BANK ANNUAL REPORT 2009 development challenges and priorities and lays out a program of lending FIGURE 3.13 and nonlending activities to support the country's development efforts. IBRD'S BORROWINGS AND INVESTMENTS | AS OF JUNE 30, 2009 BILLIONS OF DOLLARS During fiscal 2009, the Bank prepared 39 CAS products, including 22 CASs, 10 CAS Progress Reports, and 7 Interim Strategy Notes. Of these, 103.6 24 were prepared jointly with IFC, and several were prepared collabora- 91.5 91.6 tively with other donors. 81.1 80.7 Sector Strategy Development Fiscal 2009 saw the delivery of six sector strategy documents. The Strategic Framework on Development and Climate Change, prepared at 38.2 the request of the Development Committee, will guide and support the 26.4 24.9 operational response of the Bank Group to the new development 22.2 23.0 challenges posed by global climate change. The Executive Directors considered four implementation progress reports, including reports on the governance and anticorruption strategy; the strategy for health, FY05 FY06 FY07 FY08 FY09 nutrition, and population; a second update of the Bank Group's gender Cash and liquid investments Borrowings outstanding after swaps action plan; and a midcycle update on private sector development. An interim progress report on the financial sector strategy was also submitted to the Executive Directors in fiscal 2009. FIGURE 3.14 EQUITY-TO-LOANS RATIO | AS OF JUNE 30, 2009 PERCENT Economic and Sector Work and Nonlending Technical Assistance 40 37.6 35.0 34.5 Economic and sector work (ESW) and nonlending technical assistance 33.0 31.4 (TA) activities constitute the bulk of the Bank's knowledge services. The Bank delivered 437 ESW and 545 TA activities in fiscal 2009. In terms of sectoral coverage, law and justice and public administration, followed by finance, represented the main focus of ESW and TA activities. These activities, which increasingly emphasize country ownership, participa- tory processes, partnerships, and capacity building, often provide the basis for project design and country programming. Research and Development 0 FY05 FY06 FY07 FY08 FY09 In fiscal 2009, the Bank's research group addressed vital development issues within its core research programs on macroeconomics and growth; trade and integration; finance and the private sector; poverty helped users monitor poverty, evaluate public programs, assess trade and and inequality; human development and public services; agriculture financial regulations, and measure governance. and rural development; and environment and energy. Surveys show In August 2008, Bank researchers released new estimates of global that outside researchers and the policy community use the group's poverty--the first reevaluation of the international poverty line since research findings and data and software products to understand 1990. These estimates do not change the rates of poverty reduction development issues and access key information and analytic capacity. achieved, but they do indicate that the level of global poverty is higher Research related to the crisis was understandably in high demand in and the incidence of poverty reaches farther into middle-income fiscal 2009. New crisis research concerned international capital flows; countries than previous estimates suggested. trade and migration responses; social spending responses; and impacts The Bank revised its poverty estimates based on a recalibrated on poverty and human development. The group's research has international poverty line of $1.25 a day in 2005 prices. Based on this identified both successes and failures in policy responses to past crises, metric, about 1.4 billion people in the developing world (one in four) and has pointed to concrete actions that developing countries can take were living in extreme poverty in 2005, down from 1.9 billion people to address the current crisis, including protecting their poor, without (one in two) in 1981. damaging long-term development prospects. The research group's country-specific research spanned 45 developing World Bank Institute countries, as well as cross-country comparative work. This year's results The World Bank Institute (WBI) facilitates learning, knowledge ex- were documented in 21 books, 161 journal articles, 69 book chapters, and changes, and practitioner-generated innovations. It identifies countries' more than 176 working papers. New and updated data sets in fiscal 2009 capacity needs and develops learning activities to address them. FISCAL YEAR SUMMARY 61 Rapidly growing demand for global knowledge and learning between the Bank and its partner organizations, including the private customized to local needs prompted WBI to increase its partnerships sector and the reenergized G-20. Bank and IMF staff participated in with regional and national institutions of learning in fiscal 2009. It all four of the G-20 finance ministers' working groups on reform is also building new programs on fragile and conflict-affected regarding aspects of the international financial, regulatory, and states, the global economic crisis, governance, and climate change, institutional architecture. as well as selected sectoral priorities, such as health systems, public-private partnerships in infrastructure, and sustainable urban The United Nations­World Bank Partnership Framework development. This principles-based document formally recognizes the critical and In response to the financial and economic crises, WBI launched a complementary roles of both institutions in supporting early and series of just-in-time global dialogues for groups of countries facing sustainable recovery during and after crises. It lays the foundation for a similar policy challenges. Connected by videoconferencing through the productive partnership that will anchor a common operational platform Global Development Learning Network (GDLN), officials from middle- for coordinated responses. and low-income countries have been exchanging their experiences The statement on crisis and postcrisis situations is being operation- with the current and past crises. (See http://www.gdln.org.) alized in two ways. An operational note establishes concrete opera- WBI also manages Carbon Finance Assist, a multidonor trust fund tional commitments by the two institutions to strengthen their that helps developing countries participate more effectively in the collaboration, particularly with regard to postcrisis needs assessment global carbon market. During fiscal 2009, it delivered 24 carbon finance and multidonor trust funds. A fiduciary principles accord signed by the training programs in 20 countries for some 3,000 professionals and Bank and 11 United Nations agencies facilitates the timely transfer of began developing e-learning programs on various aspects of carbon funds by allowing signatory organizations to use their own policies and finance. It organized regional carbon forums in Africa, Central Asia, Latin procedures when executing trust funds administered by other America, and South Asia; supported the publication of State and Trends signatories. The development of these documents laid the foundation of the Carbon Market 2009; and facilitated studies on the potential for for a related agreement recently signed by the United Nations carbon mitigation in the energy and cement sectors in Africa. Development Group, the World Bank, and the European Commission In fiscal 2009, the Development Marketplace, a Bank-sponsored that commits the three organizations to collaboration in assessing, global competition to identify innovative ways of fighting poverty planning, and mobilizing support for recovery. and promoting sustainable development, became part of WBI's innovation function. Cosponsored by the Global Environment The Stolen Asset Recovery Initiative Facility, the 2009 competition focuses on climate adaptation, The Stolen Asset Recovery (StAR) initiative is a partnership between the coinciding with the theme of the World Development Report 2010: Bank and the United Nations Office on Drugs and Crime. StAR's Development and Climate Change. Finalists, whose projects could objective is to deter asset theft and facilitate the recovery of assets receive up to $200,000 in grant funding for implementation over stolen through acts of corruption. StAR emphasizes that developed and two years, will be recognized at an event in Washington, DC, on developing countries share a joint responsibility for tackling corruption November 3­5, 2009. and that international collaboration and collective action are needed to facilitate asset recovery and prevent asset theft. The United Nations Cofinancing Convention against Corruption provides a framework for this collabora- Cofinancing is any arrangement under which funds from the Bank are tion and a standard against which to measure progress. associated with funds provided by sources outside the recipient Recent endorsements of the StAR through the G-20 process and country for a specific lending operation. In fiscal 2009, 65 Bank projects agreements to facilitate asset recovery in the context of the Accra leveraged $5.5 billion in cofinancing. Major cofinanciers were the Agenda for Action have demonstrated growing international commit- African Development Bank ($839 million) and the U.K. Department for ment to this agenda. StAR supports these international efforts through International Development ($417 million). The three regions that the development of innovative approaches to asset recovery, promo- benefited the most were Africa ($2,677 million), the Middle East and tion of policy reforms, capacity building in partner countries, facilitation North Africa ($1,561 million), and South Asia ($458 million). Energy and of networks of practitioners, and provision of support to countries' asset mining, education, and social protection sector projects received recovery initiatives. Following the recommendations of the report by $1,846 million, $1,045 million, and $816 million, respectively. Bilateral the G-20 Working Group on Reinforcing International Cooperation and agencies contributed $1.5 billion in cofinancing. Promoting Integrity in Financial Markets, issued at the London Summit in April 2009, StAR will review and propose mechanisms to strengthen WORKING WITH PARTNERS international cooperation around asset recovery and the enforcement of The Bank can help build bridges in what must be a multifaceted, standards related to the identification of beneficial ownership and coordinated, flexible, and fast response to the global economic crisis. monitoring of politically exposed persons. StAR is currently undertaking The challenge created tremendous impetus for collaboration analytical work to develop policy recommendations and tools in each of 62 THE WORLD BANK ANNUAL REPORT 2009 FIGURE 3.15 these areas. StAR's country assistance is geared to helping national WORLD BANK STAFF BY REGION OF NATIONALITY authorities make informed decisions about their asset recovery programs. Acting as an honest broker, StAR also helps developing countries forge North America 21% 16% Sub-Saharan Africa contacts and facilitates collaboration with financial centers. GLOBAL POLL RESULTS: THE ROLE OF THE BANK GOING FORWARD In the spring of 2008, the Bank Group commissioned the Gallup Middle East & North Africa 4% 17% East Asia & Oceania Organization to conduct a survey of opinion leaders around the world to examine the views of key stakeholders of international development and the role the Bank should play within this context. It is the only Europe 20% international financial institution that has requested a benchmark study of opinion leaders of this breadth, depth, and number of interviewees: Central and South America 10% 13% Central and South Asia more than 2,600 in 42 countries (both developing and industrialized). The randomly selected respondents came from a range of constituency groups, including government (national, state, and local), media, private sector, nongovernmental organizations, and civil society organizations. These groups generally have highly informed opinions about the Bank FIGURE 3.16 and the ability to influence opinion in their countries. DECENTRALIZATION OF WORLD BANK STAFF | FISCAL 1998­2009 The research revealed that respondents believe the Bank Group's top priority (in surveyed countries) should be poverty reduction, according 7,500 to about half of the stakeholders in East Asia and Pacific (52 percent), Latin America and the Caribbean (47 percent), and South Asia (46 per- cent), as well as in the industrialized countries polled (47 percent). There 5,000 was a greater diversity of opinions in Europe and Central Asia, the Middle East and North Africa, and Africa. A plurality in Africa (39 percent) 2,500 and Europe and Central Asia (26 percent) believes the Bank should focus its efforts on infrastructure development (nearly the same as the percentage that believes the Bank should focus on poverty), whereas in 0 the Middle East and North Africa countries, respondents (33 percent) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 believe that emphasis should be placed on economic growth and Heaquarters location Country office location strengthening economies. A GLOBAL WORKFORCE FIGURE 3.17 A true global community, Bank staff is made up of people representing WORLD BANK STAFF BY COUNTRY PART | FISCAL 1998­2009 165 countries. The work of IBRD and IDA is performed by about 9,000 staff working in Washington, DC, and in almost 120 country offices Percentage of staff from Number of World Bank staff Part II countries worldwide. Today, 37 percent of Bank staff work in country offices, 10,000 70 where an increased presence in the field helps the Bank better 9,000 60 8,000 understand, work more effectively with, and provide more timely 50 7,000 service to its partners in client countries. 6,000 40 Staff diversity is critical to the World Bank's organizational effective- 5,000 30 ness, enriching its talent base, reflecting its global membership, and 4,000 3,000 20 bringing a wide range of perspectives to bear on its poverty reduction 2,000 work. Nationals of developing countries account for 62 percent of all 1,000 10 staff and 47 percent of management and senior technical positions. 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Women currently account for 52 percent of all staff and 35 percent of management and senior technical positions. The Bank's goal is to Part II countries Part I countries achieve gender parity in management by the end of 2012. Sub-Saharan % of staff from Part II countries % of managers from Part II countries African and Caribbean nationals represent 17 percent of all staff and Note: For a listing of the Part I and Part II countries, please see the CD-Rom. FISCAL YEAR SUMMARY 63 11 percent of management and senior technical positions. The Bank's results. The Bank is expanding its use of technology and innovative 27 senior managers include 13 developing-country nationals, nine methods to reach country offices and help these teams harness global women, and three Sub-Saharan African nationals. expertise in the search for local solutions. In 2007, the Bank Group adopted a five-year Diversity and Inclusion Strategy for its staff, emphasizing four key themes--leadership Community Outreach accountability; more inclusive staffing processes; new learning to As the third-largest employer in Washington, DC, the Bank Group promote behavior change; and fresh metrics that focus on developing- recognizes the need for individual and corporate responsibility where country nationals, gender, and Sub-Saharan African and Caribbean its staff lives and works. In keeping with the Bank's poverty reduction nationals. The Bank continues to deploy a comprehensive global mission, the Community Outreach Program seeks to improve the lives diversity and inclusion agenda supportive of staff with disabilities and of of the institution's neighbors in the greater metropolitan area. The any sexual orientation, in country offices and in Washington, DC. Future program encourages staff volunteerism, administers a workplace giving policy-guiding metrics and research will focus on language, education, program, manages an annual high school summer internship program, and transferrable skill sets, to achieve more sustainable diversity and and partners with area groups to strengthen local communities. In fiscal promote more inclusive practices among the workforce. 2009, the annual World Bank Community Connections compaign raised The Bank's decentralization initiative is intended to increase its a record $1.25 million-plus for over 250 locally based charities. More responsiveness to clients and to better integrate global and country staff pledged to the campaign than ever before--3,675 or 41 percent of knowledge. The experience in recent years suggests that the Bank all headquarters staff. The World Bank Group, in recognition of the harsh has become a more responsive and effective institution since this economic climate, made a one-time-only increase in the corporate process was started slightly more than a decade ago. There continues match to 200 percent, which brought the total to more than $4 million to be a call for the Bank, most recently as part of the IDA15 replenish- in charitable donations. ment, to decentralize further, particularly in Africa and in fragile and conflict-affected countries. As a result, the move to deploy more Staff Recognition resources from headquarters into the field has continued during Contributions of staff are recognized in several forms. Since 1996, the 2009. The cost of maintaining a field presence, however, continues to Staff Association has presented annual Good Manager Awards to honor place significant pressure on the annual budget. The major drivers of individuals who demonstrate the highest qualities of leadership and this increase in many countries have been higher-than-expected management. In March 2009, for the sixth year in a row, Diversity and salary growth and office expenses and, in some countries, security Inclusion Leadership Awards were presented to individuals and teams costs. These costs have been exacerbated by the depreciation of the recognized by their peers for demonstrating respect for others, U.S. dollar against a number of currencies worldwide. The Bank is leveraging the value of differences, and promoting workforce inclusion developing a strategy to guide future decentralization efforts and to in delivering business results. adapt its human resource policies and support services to facilitate the decentralization process. World Bank Staff 56 percent work in the six regional vice presidencies. Staff Knowledge and Learning 15 percent work in the "anchor units" of the professional networks Knowledge and learning are key to the Bank Group's ability to achieve and other operational units. its mission, and a menu of learning activities and knowledge products is 29 percent work in finance, administrative, and corporate units. available to staff so that they can continuously sharpen their skills and 74 percent of staff are affiliated with one of the professional expertise to deliver on the Bank's mission. Options include activities to networks within the Bank. foster technical expertise, expand cultural awareness, and strengthen 88 percent of Country Directors and Country Managers and 37 interpersonal and client engagement skills. Learning with and from percent of staff are now based in country offices, and 31 percent of partners is an increasingly critical stepping stone for teams in producing staff are hired locally by country offices. 64 THE WORLD BANK ANNUAL REPORT 2009 THE WORLD BANK ANNUAL REPORT 2009 Office of the Publisher, External Affairs Team Leader Richard A. B. Crabbe Editor Cathy Lips Assistant Editor Can Kevenk Editorial Production Susan Graham Cindy A. Fisher Rick Ludwick Aziz Gökdemir Print Production Denise Bergeron Deb A. Barker The World Bank Annual Report 2009 was typeset by Macmillan Publishing Solutions. Design oversight was provided by Gensler Studio 585. Printed in the United States by District Creative Printing, Inc. © 2009 The International Bank for Reconstruction and The World Bank InfoShop in Washington, DC, is a page 23: John Isaac and Curt Carnemark; page 24: Development / The World Bank one-stop shop for economic development literature Curt Carnemark; page 25: Simone D. 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