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Worldbank
Worldbank
Conceived during World War II at Breton Woods, New Hampshire, the World Bank
initially helped rebuild Europe after the war. Its first loan of $250 million was to France
in 1947 for post-war reconstruction. Reconstruction has remained an important focus of
the Bank's work, given the natural disasters, humanitarian emergencies, and post conflict
rehabilitation needs that affect developing and transition economies.
Today's Bank, however, has sharpened its focus on poverty reduction as the overarching
goal of all its work. It once had a homogeneous staff of engineers and financial analysts,
based solely in Washington, D.C. Today, it has a multidisciplinary and diverse staff
including economists, public policy experts, sectoral experts, and social scientists. 40
percent of staff are now based in country offices.
Bretton Woods Conference, July 1-22, 1944
World War II was still on, D-Day took place less than one month before.
International concern over the competing currency devaluations and inflationary
tendencies which characterized the interwar years and the fear of a post-war
economic depression had been the genesis of the Conference and the Fund
proposal.
The Bank was conceived of primarily as an instrument through which the physical
assets of the post-war world might be rebuilt. Development financing would come
later.
It was the Latin American countries which were principally responsible for the
emphasis on development.
Soviet Union represented at Bretton Woods, but did not subsequently ratify the
Articles of Agreement of the Bank or Fund.
World Bank was the first multilateral development bank.
INTRODUCTION
The World Bank Group, originated as a result of the Bretton Woods Conference of 1944.
It is one of the worlds largest sources of development assistance and it has extended
assistance to more than 100 developing economies, bringing a mix of finance and ideas to
improve living standards and eliminate the worst forms of poverty. For each of its clients,
the Bank works with Government agencies, nongovernmental organizations and the
private sectors to formulate assistance strategies. Together with the separate International
Monetary Fund, the World Bank organizations are often called the "Bretton Woods"
institutions, after Bretton Woods, New Hampshire, where the United Nations Monetary
and Financial Conference that led to their establishment took place (1 July-22 July 1944).
The Bank came into formal existence on 27 December 1945 following international
ratification of the Bretton Woods agreements. Commencing operations on 25 June 1946,
it approved its first loan on 9 May 1947 ($250m to France for postwar reconstruction, in
real terms the largest loan issued by the Bank to date)
The World Bank is a vital source of financial and technical assistance to developing
countries around the world. It is not a bank in the common sense. Since it was set up in
1944 as the International Bank for Reconstruction and Development, the number of
member countries increased sharply in the 1950s and 1960s, when many countries
became independent nations. As membership grew and their needs changed, the World
Bank expanded and is currently made up of five different agencies
The World Bank Group consists of five closely associated institutions, each institution
playing a distinct role in the mission to fight poverty and improve standard of living for
the people in the developing world. The term World Bank refers specifically to two of the
five i.e. The International Bank for Reconstruction and Development (IBRD) and The
International Development Association (IDA). The other institutions are The
International Finance Corporation (IFC), The Multilateral Investment Guarantee Agency
(MIGA) and The International Centre for Settlement of Investment Disputes (ICSID).
While all five specialize in different aspects of development, they use their comparative
advantages to work collaboratively towards the same overarching goal-poverty reduction.
Each institution plays a different but supportive role in the mission of global poverty
reduction and the improvement of living standards. The IBRD focuses on middle income
and creditworthy poor countries, while IDA focuses on the poorest countries in the world.
Together it provides low-interest loans, interest-free credit and grants to developing
countries for education, health, infrastructure, communications and many other purposes
The World Bank's activities are focused on developing countries, in fields such as
human development (e.g. education, health), agriculture and rural development (e.g.
irrigation, rural services), environmental protection (e.g. pollution reduction, establishing
and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and
governance (e.g. anti-corruption, legal institutions development). It provides loans at
preferential rates to member countries, as well as grants to the poorest countries. Loans or
grants for specific projects are often linked to wider policy changes in the sector or the
economy. For example, a loan to improve coastal environmental management may be
linked to development of new environmental institutions at national and local levels and
to implementation of new regulations to limit pollution.
The World Bank is one of the most highly-regarded financial institutions in the world,
especially in the field of development economics and related research. In addition, World
Bank standards and methods have been adopted in many areas such as transparent
procedures for competitive procurement and environmental standards for project
evaluation. World Bank also engages in funding the education of promising young people
from developing countries through its graduate scholarship programs
OPERATIONS
The World Bank's two closely affiliated entitiesthe International Bank for
Reconstruction and Development (IBRD) and the International Development Association
(IDA)provide low or no interest loans and grants to countries that have unfavorable or
no access to international credit markets. Unlike other financial institutions, we do not
operate for profit. The IBRD is market-based, and we use our high credit rating to pass
the low interest we pay for money on to our borrowersdeveloping countries. We pay
for our own operating costs, since we dont look to outside sources to furnish funds for
overhead.
I. Fund Generation
IBRD lending to developing countries is primarily financed by selling AAA-rated bonds
in the world's financial markets. While IBRD earns a small margin on this lending, the
greater proportion of its income comes from lending out its own capital. This capital
consists of reserves built up over the years and money paid in from the bank's 184
member country shareholders. IBRDs income also pays for World Bank operating
expenses
and
has
contributed
to
IDA
and
debt
relief.
IDA, the world's largest source of interest-free loans and grant assistance to the poorest
countries, is replenished every three years by 40 donor countries. Additional funds are
regenerated through repayments of loan principal on 35-to-40-year, no-interest loans,
which are then available for re-lending. IDA accounts for nearly 40% of our lending.
II. Loans
Through the IBRD and IDA, we offer two basic types of loans and credits: investment
loans and development policy loans. Investment loans are made to countries for goods,
works and services in support of economic and social development projects in a broad
range of economic and social sectors. Development policy loans (formerly known as
adjustment loans) provide quick-disbursing financing to support countries policy and
institutional reforms.
Each borrowers project proposal is assessed to ensure that the project is economically,
financially, socially and environmentally sound. During loan negotiations, the bank and
borrower agree on the development objectives, outputs, performance indicators and
implementation plan, as well as a loan disbursement schedule. While we supervise the
implementation of each loan and evaluate its results, the borrower implements the project
or program according to the agreed terms. As nearly 30% of our staff is based in some
100 country offices worldwide, three-fourths of outstanding loans are managed by
country directors located away from the World Bank offices in Washington.
IDA long term loans (credits) are interest free but do carry a small service charge of 0.75
percent on funds paid out. IDA commitment fees range from zero to 0.5 percent on undisbursed credit balances; for FY06 commitment fees have been set at 0.30 percent. For
complete information about IBRD financial products, services, lending rates and charges,
please visit the World Bank Treasury . Treasury is at the heart of IBRD's borrowing and
lending operations and also performs treasury functions for other members of the World
Bank Group.
III. Grants
Grants are designed to facilitate development projects by encouraging innovation, cooperation between organizations and local stakeholders participation in projects. In
recent years, IDA grantswhich are either funded directly or managed through
partnershipshave been used to:
Relieve the debt burden of heavily indebted poor countries
Improve sanitation and water supplies
Support vaccination and immunization programs to reduce the incidence of
communicable diseases like malaria
Combat the HIV/AIDS pandemic
Support civil society organizations
Create initiatives to cut the emission of greenhouse gasses
Knowledge Sharing.
V. Capacity Building
Another core bank function is to increase the capabilities of our own staff, our partners
and the people in developing countriesto help them acquire the knowledge and skills
they need to provide technical assistance, improve government performance and delivery
of services, promote economic growth and sustain poverty reduction programs. Linkages
to knowledge-sharing networks such as these have been set up by the bank to address the
vast needs for information and dialogue about development:
Advisory Services and Ask Us help desks make information available by topic via
telephone, fax, email and the web. There are more than 25 advisory services at the
bank. Staff members who respond to inquiries add value to the work of our own
staff, clients and partners by responding quickly to their knowledge needs. Often,
they are the first and possibly the only contact the public at large and the people in
developing countries have with the World Bank.
Global Development Learning Network is an extensive network of distance
learning centers that uses advanced information and communications technologies
to connect people working in development around the world.
World Bank Institute Global and Regional Programs bring together leading
development practitioners online and face-to-face to exchange experiences and to
develop skills.
B-SPAN web casting service is an Internet-based broadcasting station that
presents World Bank seminars, workshops and conferences on sustainable
development and poverty reduction.
STRATEGIES:
The World Bank continually strives to improve the delivery of its aid based on the lessons
learned from experience. Recognizing that in virtually all successful past assistance
efforts the country itself was driving the agenda, the Bank strives to help governments
take the lead in preparing and implementing development strategies to shape the future of
their countries. This is the philosophy behind the Bank's Comprehensive Development
Framework which, since 1999, has guided the way its assistance has been delivered to
developing countries. The four main principles of the CDF are:
Development strategies should be comprehensive and shaped by a long-term
vision,
Development goals and strategies should be "owned" by the country, based on
local stakeholder participation in shaping them,
Countries receiving assistance should lead the management and coordination of
aid programs through stakeholder partnerships, and
Development performance should be evaluated through measurable results on the
ground, in order to adjust the strategy to outcomes and a changing world.
For low-income countries, the Bank's plans for assistance are based on Poverty
Reduction Strategies. In preparing theses strategies, the government consults a wide
cross-section of local groups and combines this with an extensive analysis of the
country's poverty and economic situation. The process is designed to develop country
ownership of the strategy, as well as to foster greater openness in policymaking and
increase government commitment to policies. After the consultations, the government
identifies the country's priorities and targets for reducing poverty over a three to five year
period. The Bank and other aid agencies then align their assistance efforts with the
country's own strategy - a proven way of boosting aid effectiveness.
The Bank's main vehicle for making strategic choices about the program design and
resource allocations for individual countries is its Country Assistance Strategy which,
since July 2002, has been based on PRSPs when dealing with low-income countries. In
producing its Country Assistance Strategy, the Bank conducts extensive analysis of the
country's economic and social situation in consultation with the government. Studies may
be conducted into issues such as poverty levels, agriculture, the health and education
systems, environmental policies, government procurement or financial management.
Additionally, the Bank has recently reviewed its role, activities, and effectiveness and the
development needs of countries in specific circumstances: Low Income Countries Under
Stress, Middle-Income Countries (MICs), and Small States.
They are based on a long-term perspective for poverty reduction. PRSPs foster greater
openness in policymaking. Governments have sought increasingly to include traditionally
marginalized groups, the private sector and civil society in developing them and because
of this, poverty-reduction strategies developed through this process tend to have broader
community and stakeholder support and are "owned" by the government
COUNTRY ASSISTANCE STRATEGY
The World Bank prepares a Country Assistance Strategy (CAS) for active borrowers from
the International Development Association (IDA) and the International Bank for
Reconstruction and Development (IBRD). The CAS takes as its starting point the
countrys own vision for its development, as defined in a Poverty Reduction Strategy
Paper or other country-owned process. Oriented toward results, the CAS is developed in
consultation with country authorities, civil society organizations, development partners,
and other stakeholders. The purpose of the CAS is to set out a selective program of Bank
Group support linked to the countrys development strategy and based on the Bank
Groups comparative advantage in the context of other donor activities. CASs are
designed to promote collaboration and coordination among development partners in a
country.
The CAS includes a comprehensive diagnosisdrawing on analytic work by the Bank,
the government, and/or other partnersof the development challenges facing the country,
including the incidence, trends, and causes of poverty. The CAS identifies the key areas
where the Bank Group's assistance can have the biggest impact on poverty reduction. In
its diagnosis, the CAS takes into account the performance of the Banks portfolio in the
country, the countrys creditworthiness, state of institutional development,
implementation capacity, governance, and other sectoral and cross-cutting issues. From
this assessment, the level and composition of Bank Group financial, advisory, and/or
technical support to the country is determined. To track implementation of the CAS
program, the CAS is increasingly results-focused. It includes a framework of clear targets
and indicators to monitor Bank Group and country performance in achieving stated
outcomes.
TYPES OF LOAN
The Bank has two basic types of lending instruments: investment loans and development
policy loans. Investment loans have a long-term focus (5 to 10 years), and finance goods,
works, and services in support of economic and social development projects in a broad
range of sectors. Development Policy loans have a short-term focus (1 to 3 years), and
provide quick-disbursing external financing to support policy and institutional reforms.
Investment Lending
Investment loans provide financing for a wide range of activities aimed at creating the
physical and social infrastructure necessary for poverty alleviation and sustainable
development. Over the past two decades, investment lending has, on average, accounted
for 75 to 80 percent of all Bank lending.
The nature of investment lending has evolved over time. Originally focused on hardware,
engineering services, and bricks and mortar, investment lending has come to focus more
on institution building, social development, and building the public policy infrastructure
needed to facilitate private sector activity. Projects range from urban poverty reduction
(involving private contractors in new housing construction, for example) to rural
development (formalizing land tenure to increase the security of small farmers); water
and sanitation (improving the efficiency of water utilities); natural resource management
(providing training in sustainable forestry and farming); post-conflict reconstruction
(reintegrating soldiers into communities); education (promoting the education of girls);
and health (establishing rural clinics and training health care workers).
Eligibility. Investment loans are available to International Bank for Reconstruction and
Development (IBRD) and International Development Association (IDA) borrowers not in
arrears with the Bank Group.
Disbursement. Funds are disbursed against specific foreign or local expenditures related
to the investment project, including pre-identified equipment, materials, civil works,
technical and consulting services, studies, and incremental recurrent costs. Procurement
of these goods, works, and services is an important aspect of project implementation. To
ensure satisfactory performance, the loan agreement may include conditions of
disbursement for specific project components.
Instruments. The large majority of investment loans are either Specific Investment
Loans or Sector Investment and Maintenance Loans. Adaptable Program Loans and
Learning and Innovation Loans were recently introduced to provide more innovation and
flexibility. Other instruments tailored to borrowers' specific needs are Technical
Assistance Loans, Financial Intermediary Loans, and Emergency Recovery Loans.
Through its loans, policy advice and technical assistance, the World Bank supports a
broad range of programmes aimed at reducing poverty and improving standard of living
in the developing world.
The global fight against poverty is aimed at ensuring that people everywhere in this
world have a chance for a better life for themselves and for their children. Over the past
generation, more progress has been made in reducing peverty and raising standard of
living than during any other period in history in developing countries.
GUIDING PRINCIPLES:
In its lending operation, the Bank is guided by certain policies which have been
formulated on the basis of Articles of Agreement
First, the Bank should properly assess the repayment prospects of the loans. For
this purpose, it should consider the availability of natural resources and
productive plant capacity to exploit the resources, and operate the plant and the
countrys past debt record.
Secondly, the Bank should lend only for specific projects which are economically
and technically sound and of a high priority nature. Most Bank loans have been
made for basic utilities, such as power and transport which are prerequisites for
economic development. The Bank also places considerable emphasis upon
proper management of the projects.
Thirdly, the Bank lends only to enable a country to meet the foreign exchange
content of any project cost, it normally expects the borrowing country to mobilise
its domestic resources.
Fourthly, the Bank does not expect the borrowing country to spend the loan in a
particular country, in fact, it encourages the borrowers to procure machinery and
goods for Bank financed projects in the cheapest possible market consistent with
satisfactory performance.
Fifthly, it is the Banks policy to maintain continuing relations with borrowers with
a view to check the progress of the projects and keep in touch with financial and
economic developments in borrowing countries. This also helps in the solution of
any problem which might arise in the technical and administrative field.
Lastly, the Bank indirectly attaches special importance to the promotion of local
private enterprise.
LENDING PROGRAMMES
The World Bank has traditionally financed all kinds of capital infrastructure such as
roads and railways, telecommunications and ports and power facilities, its development
strategy also places an emphasis on investment that can directly affect the well being of
the masses of poor people of developing countries by integrating them as active partners
in the development process.
The following are the Lending Programmes of the Bank:
Structural Adjustment Lending:
The Bank in response to the deteriorating prospects for the developing
countries during the 1980s, inaugurated a programme of Structural Adjustment Lending
(SAL). This lending supports programmes of specific policy changes and institutional
reforms to achieve a more efficient use of resources and thereby:
(a) Contribute to a more sustainable balance of payment in the medium and long term
and to the maintenance of growth in the face of severe constraints, and
(b) Lay the basis for regaining momentum of future growth.
Special Action Programme:
In 1983, the Bank initiated its Special Action Programme (SAP),
designed to increase assistance to countries that were making efforts to cope with the
exceptionally difficult economic environment brought on by a global recession.
VOTING POWER
MEMBER
AMOUNT
(*)
PERCENT
OF TOTAL
NO. OF
VOTES
PERCENT
OF TOTAL
AFGHANISTAN
30.0
.02
550
.03
ALBANIA
83.0
.05
1,080
.07
ALGERIA
925.2
.59
9,502
.59
ANGOLA
267.6
.17
2,926
.18
52.0
.03
770
.05
ARGENTINA
1,791.1
1.14
18,161
1.12
ARMENIA
113.9
.07
1,389
.09
AUSTRALIA
2,446.4
1.56
24,714
1.53
AUSTRIA
1,106.3
.70
11,313
.70
AZERBAIJAN
164.6
.10
1,896
.12
BAHAMAS, THE
107.1
.07
1,321
.08
BAHRAIN
110.3
.07
1,353
.08
BANGLADESH
485.4
.31
5,104
.32
BARBADOS
94.8
.06
1,198
.07
BELARUS
332.3
.21
3,573
.22
BELGIUM
2,898.3
1.84
29,233
1.81
BELIZE
58.6
.04
836
.05
BENIN
86.8
.06
1,118
.07
BHUTAN
47.9
.03
729
.05
BOLIVIA
178.5
.11
2,035
.13
54.9
.03
799
.05
BOTSWANA
61.5
.04
865
.05
BRAZIL
3,328.7
2.12
33,537
2.07
BRUNEI DARUSSALAM
237.3
.15
2,623
.16
BULGARIA
521.5
.33
5,465
.34
BURKINA FASO
86.8
.06
1,118
.07
BURUNDI
71.6
.05
966
.06
CAMBODIA
21.4
.01
464
.03
CAMEROON
152.7
.10
1,777
.11
CANADA
4,479.5
2.85
45,045
2.78
Funding" below). A country must be a member of IBRD before it can join IDA; 165
countries are IDA members.
IDA's Articles of Agreement became effective in 1960. The first IDA loans, known as
credits, were approved in 1961 to Chile, Honduras, India and Sudan
IDAs Mission
The International Development Association (IDA) is the part of the World Bank that
helps the earths poorest countries reduce poverty by providing interest-free loans and
grants for programs aimed at boosting economic growth and improving living conditions.
IDA funds help these countries deal with the complex challenges they face in striving to
meet the Millennium Development Goals. They must, for example, respond to the
competitive pressures as well as the opportunities of globalization; arrest the spread of
HIV/AIDS; and prevent conflict or deal with its aftermath.
IDAs long-term, no-interest loans pay for programs that build the policies, institutions,
infrastructure and human capital needed for equitable and environmentally sustainable
development. IDAs goal is to reduce inequalities both across and within countries by
allowing more people to participate in the mainstream economy, reducing poverty and
promoting more equal access to the opportunities created by economic growth.
IDA's Borrowers
IDA lends to those countries that had an income in 2005 of less than $1,025 per person
and lack the financial ability to borrow from IBRD. Some "blend borrower" countries
like India and Indonesia are eligible for IDA loans because of their low per person
incomes but are also eligible for IBRD loans because they are financially creditworthy.
Eighty-one countries are currently eligible to borrow from IDA. Together these countries
are home to 2.5 billion people, half of the total population of the developing world. Most
of these people, an estimated 1.5 billion, survive on incomes of $2 or less a day.
IDA Lending
IDA credits have maturities of 20, 35 or 40 years with a 10-year grace period before
repayments of principal begins. IDA funds are allocated to the borrowing countries in
relation to their income levels and record of success in managing their economies and
their ongoing IDA projects. There is no interest charge, but credits do carry a small
service charge, currently 0.75 percent on funds paid out. See the terms of IDA lending.
In fiscal year 2006 (which ended June 30, 2006), IDA commitments totaled $9.5 billion.
New commitments in FY06 comprised 167 new operations. Fifty percent of new
commitments went to Sub Saharan Africa, 27 percent to South Asia, 11 percent to East
Asia and the Pacific, 5 percent to Eastern Europe and Central Asia, and the remainder to
poor countries in North Africa and in Latin America. The leading IDA borrowers in FY06
are listed in Table 1.
Since 1960, IDA has lent $170 billion to 108 countries. Annual lending figures have
increased steadily and averaged about $9.1 billion over the last three years. Most loans
address basic needs, such as primary education, basic health services, and clean water and
sanitation. IDA also funds projects that safeguard the environment, improve conditions
for private business, build infrastructure, and support reforms to liberalize countries'
economies and strengthen their institutions. All these projects pave the way toward
economic growth, job creation, higher incomes and better living conditions.
$million
1183
768
751
505
500
462
422
365
355
240
IDA Funding
While the IBRD raises most of its funds on the world's financial markets, IDA is funded
largely by contributions from the governments of the richer member countries. Additional
funds come from IBRD's income and from borrowers' repayments of earlier IDA credits.
See the list of cumulative contributions to IDA Replenishments and donor shares of total
contributions.
Donors get together every three years to replenish IDA funds. Donor contributions
account for more than half of the US$33 billion in the IDA14 replenishment, which
finances projects over the three-year period ending June 30, 2008. The largest pledges to
IDA14 were made by the United States, the United Kingdom, Japan, Germany, France,
Italy and Canada, but less wealthy nations also contribute to IDA. Turkey and Korea, for
example, once IDA borrowers, are now donors. Countries currently eligible to borrow
from IBRD (but not from IDA) Brazil, Czech Republic, Hungary, Mexico, Poland,
Russia, the Slovak Republic, and South Africa are also IDA14 donors. Other
contributors include Australia, Austria, Barbados, Belgium, Denmark, Finland, Greece,
Iceland, Ireland, Israel, Kuwait, Luxembourg, Netherlands, New Zealand, Norway,
Portugal, Saudi Arabia, Singapore, Slovenia, Spain, Sweden, Switzerland and Venezuela.
To increase openness and help ensure that IDAs policies are responsive to country needs
and circumstances, representatives from each IDA region were invited to take part in the
IDA13 and IDA14 replenishment negotiations. The number of borrower representatives
was expanded to a total of nine during the IDA14 replenishment negotiations. In both
IDA13 and IDA14, background policy papers were publicly released, as well as drafts of
the replenishment reports prior to their finalization.
PURPOSE
IDA helps to reduce poverty by collaborating with other development partners, as well as
through its own programs. IDA has learned from experience that development programs
are most successful when the borrower country not just the government, but nongovernmental organizations (NGOs) and other representatives of civil society acquires
a sense of ownership of the programs through deep involvement in their design and
execution. The borrower country now leads in preparing the Poverty Reduction Strategy
(PRS) that establishes priorities for IDA support. In each country, IDA works with local
development partners to ensure that the PRS is carried out in a coherent way and that
IDA focuses on areas where it has comparative advantage. In IDA13, IDA targeted
human-development projects in areas like education, health, social safety nets, water
supply and sanitation (36%); law, justice and public administration (23%); industry
(18%); infrastructure (14%), and agriculture and rural development (8%).
ORIENTATION
IDA carries out analytical studies to build the knowledge base that allows intelligent
design of policies to reduce poverty. IDA also advises governments on ways to broaden
the base of economic growth and protect the poor from economic shocks.
The one billion children who live in countries that receive funds from IDA are the main
beneficiaries of IDA-backed investments in basic health, primary education, literacy and
clean water. IDA is now the single largest source of donor funds for basic social services
in the poorest countries.
IDA also coordinates donor assistance to provide relief for poor countries that cannot
manage their debt-service burden.
Globalization the increasing integration of world markets and societies has allowed
China, India and many other developing countries to achieve faster growth through
expanded foreign direct investments and access to export markets. IDA is re-invigorating
its work in trade to assist the poorest and most marginalized countries to limit adverse
disruptions from globalization and to enhance net benefits from it. IDAs work in this
area emphasizes measures to improve the investment climate; enhance regional
integration, particularly in Africa; strengthen competitiveness; remove barriers to the
markets of industrial countries; and forge partnerships that enable acquisition of
appropriate skills and infrastructure
LENDING PROGRAMME:
IDA's 81 eligible borrowers have very significant needs for concessional funds. But the
amounts of funds available for lending which is virtually fixed once donations are
pledged by donor governments, tends to be well below the countries' need. IDA therefore
must allocate scarce resources among eligible borrowing countries. This note describes
how this is done on the basis of borrowers' policy performance and institutional capacity
in order to concentrate resources where they are likely to be most helpful in reducing
poverty.
1. Eligibility
Three criteria are used to determine which countries are eligible to borrow IDA
resources:
2. Allocation Criteria
The main factor that determines the allocation of IDA resources among eligible countries
is each country's performance in implementing policies that promote economic growth
and poverty reduction. This bas been assessed by the Country Policy and Institutional
Assessment (CPIA). To fully underscore the role of the CPIA in the IDA Performance
Based Allocations, the overall country score is referred to as the IDA Resource Allocation
Index (IRAI). In addition to the IRAI, portfolio performance and governance also feature
in the allocation process. Together, the IRAI, portfolio performance and governance
constitute the IDA Country Performance Rating (CPR). In addition to the CPR,
population and per capita income also determine IDA allocations.
3. Performance Ratings
Every year World Bank staff assesses the quality of each borrower's policy performance.
The criteria and methodology of these assessments have evolved over time to incorporate
lessons from experience as well as research findings. Beginning in 1998, the country
performance assessment was broadened to include an appraisal not only of the
government's policies but also of the institutions in place to implement them. The 16
performance criteria are grouped into four clusters
Structural Policies
Policies for Social Inclusion/Equity
Public Sector management and Institutions
At the time of the IDA14 replenishment negotiations the World Bank Executive Board
agreed that, starting with the results for 2005, the numerical IDA country performance
ratings would be disclosed.
The performance assessment also takes into account the performance of the country's
active project portfolio performance. The combined rating is scaled up or down
depending on the strength of the country's governance performance, resulting into the
IDA Country Performance Rating (CPR).
4. Allocation Process
The allocation of IDA's resources is determined primarily by each borrower's rating in the
annual country performance and institutional assessment. In addition, the IDA14
Agreement recommends that because the acceleration of economic and social
development in Sub-Saharan Africa remains foremost among IDA's priorities, these
countries should receive priority in the allocation process, provided their policy
performance warrants it. In the case of borrowers that are eligible for both IDA and IBRD
funds ("Blend countries"), the IDA allocations must also take into account those
countries' creditworthiness for and access to other sources of funds. Individual country
performance-based allocations serve as an anchor for the formulation of Country
Assistance Strategy (CAS) lending programs.
5. Lending and Performance
IDA management monitors actual lending to each country in relation to the planning
allocations. As a result, actual lending on per capita terms is robustly correlated with
performance levels. The strong link between lending and performance has resulted in an
increasing concentration of lending to countries where policy performance is most
conducive to effective resource use.
MEMBER
PART I COUNTRIES
AUSTRALIA
AUSTRIA
BELGIUM
CANADA
DENMARK
FINLAND
FRANCE
GERMANY
GREECE
ICELAND
IRELAND
ITALY
JAPAN
KUWAIT
LUXEMBOURG
NETHERLANDS
NEW ZEALAND
NORWAY
PORTUGAL
RUSSIAN FEDERATION
SLOVENIA
SOUTH AFRICA
SPAIN
SWEDEN
SWITZERLAND
UNITED ARAB EMIRATES
UNITED KINGDOM
UNITED STATES
PART II COUNTRIES
Taking educated risks that the private sector will not take alone;
Pioneering opportunities in frontier countries and sectors, to maximize our
projects' demonstration effect and catalytic role;
Innovating by developing new products and services that better meet our clients'
needs;
Providing quality advice when the private sector is unwilling or unable to do so;
Sharing knowledge to promote successful private investment, entrepreneurship,
and enabling business environments;
Integrating fully best environmental, social, and corporate governance practices in
all our work; and
Being responsive to their needs and those of our private sector clients in a timely
manner.
(b) Integrity:
Holding ourselves and our clients to the highest professional and ethical
standards;
Recognizing, in every investment, the importance and value of good corporate
governance;
Seeking to be transparent, accountable, and equitable; and
Being honest, open and fair in our dealings with each other, with our clients and
with local communities.
Ensuring that our projects attain high environmental and social standards;
Consulting with local communities on project-specific environmental and social
impacts and opportunities;
Working with responsible clients and other lenders, and local NGOs; and
GUIDING PRINCIPLES:
To be eligible for IFC funding, a project must meet a number of criteria. The project
must:
Be located in a developing country* that is a member of IFC;
Be in the private sector;
Be technically sound;
Have good prospects of being profitable;
Benefit the local economy; and
Be environmentally and socially sound, satisfying IFC environmental and social
standards as well as those of the host country.
The following are the Guiding Principles of the IFC:
(a) Investment Proposal:
A company or entrepreneur seeking to establish a new venture or expand an existing
enterprise can approach IFC directly by submitting an investment proposal.
After this initial contact and a preliminary review, IFC may proceed by requesting a
detailed feasibility study or business plan to determine whether or not to appraise the
project.
IFC's project/investment cycle illustrates the stages a business idea goes through as it
becomes an IFC-financed project.
(b) Government Cooperation
Although IFC is primarily a financier of private sector projects, it may provide finance
for a company with some government ownership, provided there is private sector
participation and the venture is run on a commercial basis.
Although IFC does not accept government guarantees for its financing, its work often
requires close cooperation with government agencies in developing countries.
(c) Pricing and Financing Ceilings:
To ensure the participation of investors and lenders from the private sector, IFC limits the
total amount of own-account debt and equity financing it will provide for any single
project.
For new projects the maximum is 25 percent of the total estimated project costs, or, on an
exceptional basis, up to 35 percent in small projects. For expansion projects, IFC may
provide up to 50 percent of the project cost, provided its investments do not exceed 25
Apart from its core investment activities, IFC also carries out technical cooperation
projects in many countries to improve the investment climate. These activities may be
linked to a specific investment project, or, increasingly, to broader goals such as
improving the legislative environment for a specific industry. IFC's technical cooperation
projects are generally funded by donor countries or from IFC's own budget.
VOTING POWER
NO. OF
VOTES
PERCENT
OF TOTAL
AUSTRALIA
195,130
1.24
AUSTRIA
108,386
.69
BELGIUM
172,388
1.10
CANADA
442,902
2.82
DENMARK
158,811
1.01
FINLAND
94,474
.60
FRANCE
654,788
4.16
1,043,130
6.63
GREECE
39,635
.25
ICELAND
36,795
.23
IRELAND
44,943
.29
ITALY
426,350
2.71
JAPAN
1,626,574
10.34
KUWAIT
84,679
.54
LUXEMBOURG
40,561
.26
NETHERLANDS
330,811
2.10
NEW ZEALAND
45,489
.29
161,004
1.02
PORTUGAL
42,015
.27
RUSSIAN FEDERATION
44,455
.28
SLOVENIA
34,947
.22
SOUTH AFRICA
43,501
.28
SPAIN
113,072
.72
SWEDEN
304,694
1.94
SWITZERLAND
173,112
1.10
1,367
.01
794,820
5.05
2,102,894
13.37
9,361,727
59.51
MEMBER
PART I COUNTRIES
GERMANY
NORWAY
GUIDING PRINCIPLES:
Confidence, security, and credibility. MIGA gives private investors the confidence and
comfort they need to make sustainable investments in developing countries. As part of the
World Bank Group, and having as our shareholders both host countries and investor
countries, MIGA brings security and credibility to an investment that is unmatched. Our
presence in a potential investment can literally transform a "no-go" into a "go." We act as
a potent deterrent against government actions that may adversely affect investments. And
even if disputes do arise, our leverage with host governments frequently enables us to
resolve differences to the mutual satisfaction of all parties.
Market leader. MIGA is a leader when it comes to assessing and managing political
risks, developing new products and services, and finding innovative ways to meet client
needs. But we don't stop there. We also provide expert advice to help countries attract and
retain quality foreign investment, and a host of online services to make sure investors
know about business opportunities in our developing member countries.
Complex deals. MIGA can be the difference between make or break, by providing that
all-critical lynchpin that enables a complex transaction to go ahead. MIGA offers
innovative coverage of the nontraditional sub-sovereign risks that often accompany water
and other infrastructure projects. We can also cover interest rate hedging instruments, as
we did for a power project in Vietnam, as well as provide capital markets guarantees,
which we recently did for residential mortgage-backed securities in Latvia.
PRI market. MIGA complements the activities of other investment insurers and works
with partners through its coinsurance and reinsurance programs. By doing so, we are able
to expand the capacity of the political risk insurance industry to insure investments, as
well as to encourage private sector insurers into transactions they would not have
otherwise undertaken
LENDING PROGRAMMES:
MIGA provides guarantees against noncommercial risks to protect cross-border
investment in developing member countries. Guarantees protect investors against the
risks of Transfer Restriction, Expropriation, War and Civil Disturbance, and Breach of
Contract (for contracts between the investor/project enterprise and the authorities of the
host country). These coverages may be purchased individually or in combination.
MIGA can cover only new investments. These include:
Unlike other insurers, MIGA is backed by the World Bank Group and its member
countries
PERCENT
OF TOTAL
NO. OF PERCENT
VOTES OF TOTAL
AUSTRALIA
30.19
1.73
3,285
1.50
AUSTRIA
13.66
.79
1,632
.75
BELGIUM
35.77
2.06
3,843
1.76
CANADA
52.25
3.00
5,491
2.51
CZECH REPUBLIC
7.84
.45
1,050
.48
DENMARK
12.65
.73
1,531
.70
FINLAND
10.57
.61
1,323
.60
FRANCE
85.65
4.92
8,831
4.04
GERMANY
89.36
5.14
9,202
4.21
GREECE
4.93
.28
759
.35
ICELAND
.90
.05
356
.16
IRELAND
6.50
.37
916
.42
ITALY
49.70
2.86
5,236
2.39
JAPAN
89.79
5.16
9,245
4.23
LUXEMBOURG
2.04
.12
470
.21
NETHERLANDS
38.22
2.20
4,088
1.87
NORWAY
12.32
.71
1,498
.68
PORTUGAL
6.73
.39
939
.43
SLOVENIA
1.80
.10
446
.20
SPAIN
22.65
1.30
2,531
1.16
SWEDEN
18.49
1.06
2,115
.97
SWITZERLAND
26.43
1.52
2,909
1.33
UNITED KINGDOM
85.65
4.92
8,831
4.04
UNITED STATES
325.64
18.71
32,830 15.01
1,029.73
59.17
109,357 50.00
AFGHANISTAN
1.18
.07
384
.18
ALBANIA
1.02
.06
368
.17
MEMBER
CATEGORY I COUNTRIES
CATEGORY II COUNTRIES
ALGERIA
11.44
.66
1,410
.64
ANGOLA
1.87
.11
453
.21
.50
.03
316
.14
ARGENTINA
22.10
1.27
2,476
1.13
ARMENIA
.80
.05
346
.16
AZERBAIJAN
1.15
.07
381
.17
BAHAMAS, THE
1.76
.10
442
.20
BAHRAIN
1.36
.08
402
.18
BANGLADESH
5.99
.34
865
.40
BARBADOS
1.20
.07
386
.18
BELARUS
2.33
.13
499
.23
BELIZE
.88
.05
354
.16
BENIN
1.08
.06
374
.17
BOLIVIA
2.20
.13
486
.22
.80
.05
346
.16
BOTSWANA
.88
.05
354
.16
BRAZIL
26.06
1.50
2,872
1.31
BULGARIA
6.43
.37
909
.42
BURKINA FASO
.61
.04
327
.15
BURUNDI
.74
.04
340
.16
CAMBODIA
1.64
.09
430
.20
CAMEROON
1.07
.06
373
.17
CAPE VERDE
.50
.03
316
.14
.60
.03
326
.15
CHAD
.60
.03
326
.15
CHILE
8.55
.49
1,121
.51
CHINA
55.30
3.18
5,796
2.65
COLOMBIA
7.70
.44
1,036
.47
5.96
.34
862
.39
CONGO, REPUBLIC OF
1.15
.07
381
.17
COSTA RICA
2.06
.12
472
.22
COTE D'IVOIRE
3.10
.18
576
.26
CROATIA
3.30
.19
596
.27
CYPRUS
1.83
.11
449
.21
DOMINICA
.50
.03
316
.14
DOMINICAN REPUBLIC
1.47
.08
413
.19
ECUADOR
3.21
.18
587
.27
8.09
.46
1,075
.49
EL SALVADOR
1.22
.07
388
.18
EQUATORIAL GUINEA
.50
.03
316
.14
ERITREA
.50
.03
316
.14
ESTONIA
1.15
.07
381
.17
ETHIOPIA
1.23
.07
389
.18
FIJI
.71
.04
337
.15
GABON
1.69
.10
435
.20
GAMBIA, THE
.50
.03
316
.14
GEORGIA
1.11
.06
377
.17
GHANA
4.32
.25
698
.32
GRENADA
.50
.03
316
.14
GUATEMALA
1.40
.08
406
.19
GUINEA
.91
.05
357
.16
GUINEA-BISSAU
.50
.03
316
.14
GUYANA
.84
.05
350
.16
HAITI
.75
.04
341
.16
HONDURAS
1.78
.10
444
.20
HUNGARY
9.94
.57
1,260
.58
INDIA
53.71
3.09
5,637
2.58
INDONESIA
18.49
1.06
2,115
.97
16.59
.95
1,925
.88
ISRAEL
8.35
.48
1,101
.50
JAMAICA
3.19
.18
585
.27
JORDAN
1.71
.10
437
.20
KAZAKHSTAN
3.68
.21
634
.29
KENYA
3.03
.17
569
.26
KOREA, REPUBLIC OF
7.91
.45
1,057
.48
KUWAIT
16.39
.94
1,905
.87
KYRGYZ REPUBLIC
.77
.04
343
.16
.60
.03
326
.15
LATVIA
1.71
.10
437
.20
LEBANON
2.50
.14
516
.24
LESOTHO
.88
.05
354
.16
LIBYA
5.49
.32
815
.37
LITHUANIA
1.87
.11
453
.21
MACEDONIA, FYR OF
.88
.05
354
.16
MADAGASCAR
1.76
.10
442
.20
MALAWI
.77
.04
343
.16
MALAYSIA
10.20
.59
1,286
.59
MALDIVES
.50
.03
316
.14
MALI
1.43
.08
409
.19
MALTA
1.32
.08
398
.18
MAURITANIA
1.11
.06
377
.17
MAURITIUS
1.53
.09
419
.19
.50
.03
316
.14
MOLDOVA
.96
.06
362
.17
MONGOLIA
.58
.03
324
.15
MOROCCO
6.13
.35
879
.40
MOZAMBIQUE
1.71
.10
437
.20
NAMIBIA
1.07
.06
373
.17
NEPAL
1.22
.07
388
.18
NICARAGUA
1.80
.10
446
.20
NIGERIA
14.87
.85
1,753
.80
OMAN
1.66
.10
432
.20
PAKISTAN
11.63
.67
1,429
.65
PALAU
.50
.03
316
.14
PANAMA
2.31
.13
497
.23
.96
.06
362
.17
PARAGUAY
1.41
.08
407
.19
PERU
6.57
.38
923
.42
PHILIPPINES
4.84
.28
750
.34
POLAND
7.64
.44
1,030
.47
QATAR
2.41
.14
507
.23
ROMANIA
9.78
.56
1,244
.57
RUSSIAN FEDERATION
55.28
3.18
5,794
2.65
RWANDA
1.32
.08
398
.18
.50
.03
316
.14
ST. LUCIA
.88
.05
354
.16
.88
.05
354
.16
SAMOA
.50
.03
316
.14
SAUDI ARABIA
55.28
3.18
5,794
2.65
SENEGAL
2.56
.15
522
.24
SERBIA
4.07
.23
673
.31
SEYCHELLES
.50
.03
316
.14
SIERRA LEONE
1.32
.08
398
.18
SINGAPORE
2.72
.16
538
.25
SLOVAK REPUBLIC
3.91
.22
657
.30
SOLOMON ISLANDS
.50
.03
316
.14
SOUTH AFRICA
16.62
.96
1,928
.88
SRI LANKA
4.78
.27
744
.34
SUDAN
2.06
.12
472
.22
SURINAME
.82
.05
348
.16
SWAZILAND
.58
.03
324
.15
2.96
.17
562
.26
TAJIKISTAN
.74
.04
340
.16
TANZANIA
2.48
.14
514
.23
THAILAND
7.42
.43
1,008
.46
TIMOR-LESTE
.50
.03
316
.14
TOGO
.77
.04
343
.16
3.58
.21
624
.29
TUNISIA
2.75
.16
541
.25
TURKEY
8.14
.47
1,080
.49
TURKMENISTAN
.66
.04
332
.15
UGANDA
2.33
.13
499
.23
UKRAINE
13.46
.77
1,612
.74
6.56
.38
922
.42
URUGUAY
2.02
.12
468
.21
UZBEKISTAN
1.75
.10
441
.20
VANUATU
.50
.03
316
.14
.82
1,693
.77
VIETNAM
3.88
.22
654
.30
YEMEN, REPUBLIC OF
1.55
.09
421
.19
ZAMBIA
3.18
.18
584
.27
ZIMBABWE
2.36
.14
502
.23
710.42
40.83
109,346 50.00
1,740.15
100.00
218,703 100.00
TOTAL
would offer large-scale aid on easy terms to developing countries, was rejected in the
1950s mainly because developed countries objected to the United Nations becoming
involved in financial aid to developing countries.
The view that in the international management of balance of payment disequilibrium,
there should be pressure to adjust on both surplus countries and deficit countries, rather
than only on those in deficit, was also ignores. In fact, Keynes original proposal for an
International Clearing Union (the prototype for the IMF) included the possibility of a
penalty on surplus countries-one percent of the surplus pr month to encourage them to
make adjustments, too.
Again, only very little could be done by the IMF in solving the international liquidity
problem of the developing countries in comparison with those of the developed countries.
Indeed developing countries need much larger attention of the multilateral institution than
the developed countries for various reasons. The developed countries have the capability
for, and ready access to commercial borrowing whenever the reserves run short. The
United States, which has had the largest deficit among the developed countries, has also
had option of running permanent deficit since other countries have been content to hold
dollars.
The situation for the developing countries is quite different. Due to their poor
economic conditions, the relative burden of their payment deficit is much more that that
of the absolute burden; the absolute deficit itself has been huge. Not only that the
commercial borrowing capability of these nations are limited, the accessibility has also
been limited because of their poor creditworthiness. It may be recalled that, in the early
1990s when Indias Foreign Exchange reserves position became very critical, the sources
of short-term commercial borrowings dried up due to fall in the credit rating. To make
matters worse, because of poor credit ratings, the developing countries have had to pay an
average rate of interest which was about four times the rate applied to the developed
countries on commercial borrowing.
Against the background, the IMF system has been ironic as far as the developing
countries are concerned. The unconditional borrowing rights based on the quota highly
discriminate against the developing countries. What is more draconic has been the
allocation of SDRs, the created liquid assets, in proportion to the quota.
One of the important problems of the developing countries is the increase in the debt
service due to the payment commitments of the past debt. There has been a transfer of
large amounts of funds from the developing countries to the creditors as debt services.
This has not been compensated by an increased flow from the IMF to the developing
countries. During certain period, IMF was actually withdrawing funds from developing
countries. The Bretton Woods institution thus failed many developing countries at their
times of great need.
Stiglitz very categorically observes that a half century after its founding, it is clear that
the IMF has failed in its mission. It has not done what it was supposed to do-provide
funds for countries facing an economic downturn, to enable the country to restore itself to
close to full employment. In spite of the fact that our understanding of economic process
has increased enormously during the last fifty years, and in spite IMFs efforts during the
past quarter century, crises around the world have been more frequent and (with the
exception of the Great Depression) deeper, by some reckoning, close to hundred
countries have faced crises. Worse, many of the policies that the IMF pushed, in a
IMF
WORLD BANK
Purpose
Monetary Institution
Development Institution
Activities
Stabilisation of the
international monetary
system. Finance of
temporary balance of
payment deficits.
3.
Source of
funds
4.
Eligible
Borrowers
All members
Developing countries.
5.
Outlook
Short Term
Long-Term
6.
Credit Horizon
7.
Staff
2,700
9,500
2.
The countrys achievements have, however, created new challenges. Some of the most
prominent are:
1. Improving the Delivery of Core Public Services
As incomes rise, citizens are demanding better delivery of core public services such as
water and power supply, education, policing, sanitation, roads and public health. And as
physical access to services improves, issues of quality have become more central.
Education: While India has made huge progress in getting more children into primary
school, learning outcomes have yet to make more headway.
Health: Although population growth has fallen below 2% per year due to declining
fertility, there has been little improvement in maternal mortality rates. Despite falling
child mortality, rates remain high as they are strongly related to child malnutrition where
little progress has been made.
Infrastructure: Power networks, roads, transportation systems and ports are facing huge
demands from Indias rapidly growing economy. But, shortages are eroding the countrys
competitiveness and hurting the growth of labor-intensive enterprises, particularly exportoriented manufacturing which has the potential to absorb Indias fast-growing working
population.
2. Making Growth More Inclusive
Substantial disparities persist within the country. In a marked departure from previous
decades, reforms of the 1990s were accompanied by a visible increase in income
uplift rural health (NRHM), address primary education (SSA), and renew urban
infrastructure (NURM).
But for these and other programs to be effective, it is increasingly being recognized that
deeper institutional reforms are needed to strengthen capacity and enforce
accountabilities at all levels.
Public sector services reform: Indias core public services such as healthcare,
education, power, water supply and transportation need urgent improvement. This will
require systemic reform of the public sector service providers, implementing effective
systems of accountability to citizens, decentralizing responsibilities, and expanding the
role of non-state service providers.
Infrastructure: India needs to invest an additional 3-4% of GDP on infrastructure to
sustain its current levels of growth and to spread the benefits of growth more widely.
Although this will clearly require a government role, the relative roles of the government
and private sector need to be defined.
Agricultural and rural development: Raising agricultural productivity requires a return
to investments in agricultural technology and infrastructure. Getting the rural economy
moving will also require facilitating rural - non-farm - entrepreneurship. The bright spot
on the horizon is that the private sector is now looking at the rural areas as a potentially
important market and is increasing its investments accordingly, thereby opening up new
opportunities for Indian farmers.
Labor regulations: Indias labor regulations - among the most restrictive and complex in
the world - have constrained the growth of the formal manufacturing sector where these
laws have their widest application. Better designed labor regulations can attract more
labor- intensive investment and create jobs for Indias unemployed millions and those
trapped in poor quality jobs. Given the countrys momentum of growth, the window of
opportunity must not be lost for improving the job prospects for the 80 million new
entrants who are expected to join the work force over the next decade.
Lagging states: Lagging states need to bring more jobs to their people by creating an
attractive investment destination. Reforming cumbersome regulatory procedures,
improving rural connectivity, establishing law and order, creating a stable platform for
natural resource investment that balances business interests with social concerns, and
providing rural finance are important.
HIV/AIDS: The disease has the potential to upset much of the Indias recent progress.
While less than one percent of the adult population is currently estimated to be infected,
the numbers will soon be greater than any other country in the world because of India's
large population.
Other strategic challenges: These require long-term vision and urgent action:
extending practical advice to policy makers by sharing good practices and experience
from within the country and abroad.
Lending
India is one of the oldest members of the World Bank having joined the institution in
1944. New lending to the country in FY06 (July 2005-June 2006) was US$1.416
billion. Of this, US$500 million was from the IDA, the World Banks concessional
lending arm, and US$916 million from the IBRD. At end of June 2006, the Bank group
had 56 active projects with a net commitment of about US$ 11.3 billion.
Total IBRD/IDA Commitments as of end FY06: US$ 11.3 billion
(by fiscal year, in nearest US$ billion)
Commitments
New
FY 01
FY 02
FY 03
FY 04
FY 05
FY 06
2.6
2.2
1.5
1.4
2.9
1.4
13.5
13.0
13.0
12.0
12.8
11.3
76
69
70
63
64
56
Total
No. of Active Projects
Lending by State
(% of total Bank lending to India as on June 30, 2006)
MACRO INDICATORS
A. Real Expenditure Growth
1. GDP at market prices
2. Private consumption
3. Government consumption
4. Fixed investment
5. Exports, GNFS
6. Imports, GNFS
B. Contribution to GDP Growth
1. Private consumption
2. Government consumption
3. Fixed investment
4. Net exports
C. Price Deflators
1. GDP at market prices
2. Private consumption
3. Exports, GNFS
4. Imports, GNFS
D. Share of GDP
1. Private consumption
2. Government consumption
3. Fixed investment
4. Change in stocks
5. Total investment
2001
2002
2003
2004
2005
5.2
5.6
3.0
4.4
5.6
3.4
4.1
3.3
-2.4
5.0
21.9
10.3
8.6
8.2
3.7
12.5
9.8
11.7
6.9
8.5
4.5
8.9
13.4
25.0
8.0
9.0
6.0
9.2
12.4
16.0
3.7
0.4
1.0
0.3
2.1
-0.3
1.1
1.6
5.3
0.4
2.8
-0.2
5.5
0.5
2.0
-1.7
5.9
0.7
2.1
-0.8
-0.5
1.0
-3.9
-2.6
1.0
1.0
-1.2
6.9
6.9
1.1
5.2
10.8
3.1
1.2
3.4
11.9
5.6
1.2
7.2
14.0
65.7
12.5
22.0
0.4
22.4
65.4
12.0
22.6
0.4
23.0
66.1
11.7
23.5
0.3
23.8
68.4
11.7
24.7
0.3
25.0
70.1
11.8
25.5
0.3
25.8
6. Exports, GNFS
7. Imports, GNFS
E. Memo
1. Nominal GDP (USD billions)
2. Population (millions)
3. GDP per capita, current USD
4. Real per capita GDP growth
5. USD Fx rate
6. Current account balance (% GDP)
7. General government bal. (% GDP)
13.5
14.2
15.5
15.9
15.4
16.9
16.4
21.5
17.3
24.9
476.6
1037.8
459.2
3.5
47.7
0.3
-9.9
501.0
1054.4
475.2
2.5
48.4
1.4
-9.7
581.7
1070.8
543.2
6.9
46.0
1.2
-9.1
641.3
1087.1
589.9
5.3
45.3
-0.5
-8.5
731.0
1101.6
663.6
6.6
44.1
-2.9
-8.4
Secondly, the Bank Group has a broad array of tools that it can offer to help
mobilize private financing and foster greater private sector participation in
Indias development.
Thirdly, through lending and investment, the Bank Group can help catalyze
greater effectiveness and more efficient spending towards ultimate goal of
reducing poverty and encouraging Indias sustainable development.
STRATEGIC PRINCIPLES:
To achieve this enhanced impact three strategic principles will underpin the Bank
Groups work:
Focusing on outcomes: To ensure all of the work of the Bank Group is explicitly
geared towards supporting Indias achievement of its development goals. The
Bank Group will support achievement of these outcomes with all of its finance
and knowledge resources in India; the outcomes will in turn serve as goal posts to
measure the effectiveness of Bank Group support over the medium term
timeframe of the assistance strategy.
Selectivity: Due to complexity of Indias development challenges, Bank Group
programs will necessarily span a wide range of sectors and types of inventions.
Nevertheless selectivity will be applied, to target limited resources to activities
where assistance is welcomed and where contributions can also be most effective.
An important element of this working closely with major donors and financing
partners remaining in India, taking their programs into account and seeking to
work together for co-financing of country-led programs. Lending selectivity will
also be exercised by choosing projects in a way that seeks to maximize their
impact. Selectivity therefore means a greater emphasis on project that either
pilot/demonstrate new approaches for possible scaling up later, projects that move
from successful pilots to lager scale inventions, and projects that supports
expansion of proven government programs on sector-wide basis.
Knowledge provider and generator: The Bank will also aim to substantially
expand its role as politically realistic knowledge provider and generator. To
achieve this shift, changes are envisioned on a number of fonts, includin:
(i)
Strengthening the Banks capacity to act as a channel of ides and lessons for
international experience.
(ii)
Placing greater emphasis on understanding the motivation of interest groups
and different stakeholders in the reform process.
(iii)
Helping clients to better communicate the potential benefits of their reform
programs; and
(iv)
Operating on a more strategic and integrated fashion across different
organizational units of the Banks leverage knowledge resource more
effectively.
VOLUME OF LENDING TO INDIA:
Given Indias enormous needs, the expansion will primarily be in:
(i)
Infrastructure (roads, transport, water supply and sanitation, irrigation and
urban development-to underpin both accelerated growth and improved service
delivery)
(ii)
(iii)
Cross-cutting reforms at the state level will also remain an important focus. Expansion in
lending for human development and rural livelihoods will depend critically on
availability on IDA resources.
These programs will provide increased opportunity for collaboration across the Bank
Group to promote innovative Public-Private Partnership (PPPs) for infrastructure
development-particularly in power and transport. The Private Sector Development
Strategy suggests some areas where this collaboration might be developed. IFC and
MIGA assistance will encompass activities that fall within the private sectors role.
IFC will continue to provide equity and loan financing and guarantees to supplement
what is available from Indian financial institutions or capital markets, and will help to
mobilize financing from both domestic and international sources. This will include
pioneering investments in infrastructures and long tenors are required; and investments in
projects which are constrained by limited risk appetite of other investors, including
medium-sized manufacturing countries, agribusiness companies and companies entering
new markets domestically and internationally. IFC adds value to projects it invests in by
mobilizing finance from other sources, advising on structuring, acting as an honest broker
between various project parties and facilitating international partnership, particularly with
other developing countries.
The Bank Group focuses on adding value through advice on environment and social
sustainability, public and corporate governance and the transfer of global knowledge and
best practices. By doing so, IFC promotes higher corporate standards of social and
environmental responsibility and the Bank works to improve implementation of
environmental and social frameworks and strengthen the national and state-level
frameworks for procurement and financial management.
Additionally, Country Financing Parameters, which allow increased flexibility in the
type of expenditures that are eligible for Bank financing in India are also being
developed.
In order to also scale up the impact of the Bank Groups global knowledge resources
in India, the AAA program is being reshaped to focus on:
(i)
Preparation and dissemination of a limited number of major reports on key
issues in Indias development
(ii)
Just-in-time activities primarily in response to Government of Indias request
Since India has underutilized trust fund and grant programs offered through Bank Group
in the past, at the request of Government of India, greater effort will be made to enhance
the participation with these programs in the coming strategy period. In particular,
Government of India and the Bank will seek to help strengthen project readiness via
upfront analytical work and strengthen implementation capacity or the capacity of key
institution.
WORKING AT THE NATIONAL LEVEL
Scaling up will require expanded Bank support at the national level. A large part of this
expansion will be in the form of AAA: for instance the series of major reports will
primarily assess issues of national consequences. Some of these issues are expected to be:
the Implication of Indias Gender Imbalance, Employment Issues, the Long-Term
Economic Impacts of HIV/AIDS, Building Indias Knowledge Economy, Indias
adaptation to climate Change and Disability Issues and Impacts.
The increase in overall lending will also involve more national level lending as
compared to recent years. The use of new approaches, including co-financing with other
development partners under common arrangements, for national programs in the areas
most critical to meeting the MDGs. Using such approaches, the Bank will seek to step up
its national level engagement and work closely with partners that can join the Bank in
providing substantial assistance. Such operations are already beginning to materialize,
with the first being a major new Sector-Wide Approach (SWap) supporting Government
of Indias national elementary education program- Sarva Shiksha Abhiyan (SSA).
support and have opened the way for additional states to receive such funding on a
performance basis.
Fourthly, there is no longer an upfront decision to concentrate substantial state-level
investment lending on focus-state that are also receiving adjustment lending in support
of cross-cutting reforms. Instead, investment lending will be channeled more broadly to
states that are able to comply with new guidelines for engagement for relevant sectors.
These guidelines attempt to set out the sector-specific conditions that experience has
show to be necessary for project success.