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A PROJECTS REPORT ON “STUDY OF COMPLETE OPERATION WITH INTRODUCTION” OF
(For the fulfillment of class assignment) Presented to
Presented by Section-FN5 Sunil Patel(66) Aggrewal(06) Rahul Garg(46) kharab(52) Anamika Handique(05) Pandey(39) Sourabh Khurana(62) Nidhi Ruchi Anand
INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMANT SATBURI CAMPUS, CHHATARPUR NEW-DELHI
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Topics Pg no
World Bank History 5 World Bank Introduction 6 World Bank Focus 7 World Bank Mission 8 World Bank Management 9 World Bank Area of Operation 10 World Bank Strategies 11-13 World Bank In india 14-15 World Bank Projects N Operations 16-28 World Bank other services 29-32
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World Bank Current Projects 33-41 World Bank Criticism 42-43
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President: Robert B. Zoellick
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Membership: 185 countries represented by Boards of Directors World Bank International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) Affiliates International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID) Headquarters Washington, DC, and more than 100 country offices Staff More than 10,000 employees worldwide Established: July 1, 1944 During a conference of 44 countries in Bretton Woods, New Hampshire.
World bank history: The World Bank is an international financial institution that provides financial and technical assistance to developing countries for development
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programs (e.g. bridges, roads, schools, etc.) with the stated goal of reducing poverty. The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions:
International Bank for Reconstruction and Development (IBRD) International Development Association (IDA)
Whereas the latter incorporates these two in addition to three more:
• • •
International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID)
The World Bank was created following the ratification of the United Nations Monetary and Financial Conference of the Bretton Woods agreement. The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later, the Bank issued its first loan: US$250 million to France for post-war reconstruction, the main focus of the Bank's work in the early post-World War II years. Over time, the "development" side of the Bank's work has assumed a larger share of its lending, although it is still involved in post-conflict reconstruction, together with reconstruction after natural disasters, response to humanitarian emergencies and post-conflict rehabilitation needs affecting developing and transition economies. There were criticisms of the results of the World Bank's "development schemes" leading to corruption and widespread exploitation by the corporations who are given monopolies of developing nations' resources. The World Bank is one of the two Bretton Woods Institutions which were created in 1944 to rebuild a war-torn Europe after World War II. Later, largely due to the contributions of the Marshall Plan, the World Bank was forced to find a new area in which to focus its efforts. Subsequently, it began attempting to rebuild the infrastructure of Europe's former colonies. Since then it has made a variety of changes regarding its focus and goals. From 1968-1981 it focused largely on poverty alleviation. In the 1980s and 1990s its main focus was both debt management and structural adjustment. World bank Introduction: The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the common
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sense. We are made up of two unique development institutions owned by 185 member countries—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Each institution plays a different but collaborative role to advance the vision of an inclusive and sustainable globalization. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. World Bank focus: A World Free of Poverty The World Bank’s projects and operations are designed to support lowincome and middle-income countries’ poverty reduction strategies. Countries develop strategies around a range of reforms and investments likely to improve people’s lives from universal education to passable roads, from quality health care to improved governance and inclusive economic growth. In parallel, the Bank strives to align its assistance with the country’s priorities and harmonize its aid program with other agencies to boost aid effectiveness. The World Bank also strives to tackle global challenges from international trade to climate change and debt relief. It does so within each country’s specific socio-economic context, adapting programs to country capacity and needs. Millennium Development Goals The World Bank's current focus is on the achievement of the Millennium Development Goals (MDGs), lending primarily to "middle-income countries" at interest rates which reflect a small mark-up over its own (AAA-rated) borrowings from capital markets; while the IDA provides low or no interest loans and grants to low income countries with little or no access to international credit markets. The IBRD is a market based non-profit organization, using its high credit rating to make up for the relatively low interest rate on its loans, while the IDA is funded primarily by periodic "replenishments" (grants) voted to the institution by its more affluent member countries.
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World Bank Mission: The Bank’s mission is to aid developing countries and their inhabitants to achieve development and the reduction of poverty, including achievement of the MDGs, by helping countries develop an environment for investment, jobs and sustainable growth, thus promoting economic growth through investment and enabling the poor to share the fruits of economic growth. The World Bank sees the five key factors necessary for economic growth and the creation of an enabling business environment as: 1. Build capacity: Strengthening governments and educating government officials. 2. Infrastructure creation: implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts. 3. Development of Financial Systems: the establishment of strong systems capable of supporting endeavors from micro credit to the financing of larger corporate ventures. 4. Combating corruption: Support for countries' efforts at eradicating corruption. 5. Research, Consultancy and Training: the World Bank provides platform for research on development issues, consultancy and conduct training programs (web based, on line, tele-/ video conferencing and class room based) open for those who are interested from academia, students, government and non-governmental organization (NGO) officers etc.
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The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-rated bonds in the world’s financial markets. The IBRD’s income is generated from its lending activities, with its borrowings leveraging its own paid-in capital, plus the investment of its "float". The IDA obtains the majority of its funds from forty donor countries who replenish the bank’s funds every three years, and from loan repayments, which then become available for relending. – World bank Management: The President of the Bank, currently Robert B. Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. Traditionally, the Bank President has always been a U.S. citizen nominated by the President of the United States, the largest shareholder in the bank. The nominee is subject to confirmation by the Board of Governors, to serve for a five-year, renewable term. The Executive Directors make up the Board of Directors, usually meeting twice a week to oversee activities such as the approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financing decisions. The Vice Presidents of the Bank are its principal managers, in charge of regions, sectors, networks and functions. There are 24 Vice-Presidents, 3 Senior Vice Presidents and 2 Executive Vice Presidents.
World bank Area of operations: The World Bank is active in the following areas
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Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector
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Law and Justice Macroeconomic and Economic Growth Mining Poverty Reduction Poverty Private Sector Public Sector Governance Rural Development
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• • • • • • • •
Gender Governance Health, Nutrition and Population Industry Information and Communication Technologies Information, Computing and Telecommunications International Economics and Trade Labor and Social Protections
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Social Development Social Protection Trade Transport Urban Development Water Resources Water Supply and Sanitation
World bank strategies: Poverty Reduction Strategies: The Poverty term vision. consultation sector. The goals. Reduction Strategy Paper (PRSPs) describes a country's long The paper is prepared by low-income country governments in with various stakeholders such as civil society and the private paper sets out macroeconomic, structural, and social policy
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The paper also lays out a country's external financing needs for meeting those goals, such as loans and grants from the World Bank and other donors, that are meant to promote economic growth and reduce poverty. The Bank and other donor agencies line up their assistance with these countries' priorities and targets. Countries have used PRSPs to address their investment climate and prescribe measures to foster private sector development, or to chart plans to improve governance and reduce corruption. Many concentrate on issues facing the agricultural sector and rural areas, and stress the need for investment in key basic services, particularly health and education in implementing their strategies. The World Bank provides training and technical and financial assistance to support the design and of national poverty-reduction strategies. For example, it helps countries improve their poverty analysis, public expenditure management, and service evaluation. It also offers Poverty Reduction Support Credits (PRSCs), annual programmatic loans, to support the implementation of these strategies. Both the World Bank' International Development Association (IDA) and the International Monetary Fund (IMF) require a Poverty Reduction Strategy Paper in order for low-income countries to receive lower cost financial assistance from the Bank (through IDA) and the IMF (through its Poverty Reduction and Growth Facility). Country Assistance Strategies The Country Assistance Strategy (CAS) - also called in some cases Country Partnership Strategy or Joint Assistance Strategy - lays out a selective program of World Bank Group support for a particular country. This strategy is developed by Bank staff in meetings with government officials, in consultation with country authorities, civil society organizations, development partners and other stakeholders. It takes as a starting point the country's own long-term vision for development and takes into account the Bank Group's comparative advantages in the context of other donor activities. The strategy is designed to promote collaboration and coordination among development partners in a country. The CAS includes a comprehensive diagnosis-drawing on analytical work by the Bank, the government, and/or other partners-of the development challenges facing the country, including the incidence, trends, and causes of
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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 Bank's portfolio in the country, the country's 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 resultsfocused. It includes a framework of clear targets and indicators to monitor Bank Group and country performance in achieving stated outcomes. Investment and development policy operations Investment operations focus on the long-term (5 to 10 years) and finance goods, works and services that support economic and social development projects. These investment projects encompass a broad range of sectors from agriculture to urban development, rural infrastructure, education and health. Development policy operations typically run from one to three years, and provide quick-disbursing external financing to support government policy and institutional reforms. Originally designed to provide support for macroeconomic policy reforms, development policy loans, credits and grants now focus more on structural, financial sector and social policy reforms improving, for example, the management of public resources, the functioning of the judiciary or promoting good governance. In all the projects it finances, the World Bank takes its responsibility to shareholders, donors and investors seriously. The Bank works diligently to make sure that procurement for projects is conducted appropriately, so that loan and other funds are used for their intended purposes.
World bank in India:
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The World Bank is one of the world’s largest sources of funding and knowledge for developing countries. India is one of our oldest members, having joined the institution at its inception in 1944. In India, the World Bank works in close partnership with the Central and State Governments. It also works with other development partners: bilateral and multilateral donor organizations, nongovernmental organizations (NGOs), the private sector, and the general public—including academics, scientists, economists, journalists, teachers, and local people involved in development projects. The world bank’s plan of action in india The World Bank's work plan in India is spelt out in its Country Strategy (CAS). The Country Strategy for India is closely aligned with India's own development priorities and describes what kind of support and how much can be provided to the country over a period of around four years. The Country Strategy for India for 2009-2012 is aligned with the government's Eleventh Five Year Plan. It focuses on helping the country to fast-track the development of much-needed infrastructure, support the seven poorest states, and respond to the financial crisis. . The strategy was arrived at after a series of consultations with a broad range of stakeholders, including members of the government and civil society. . The strategy envisages total proposed lending of US$14 billion for 2009 2012. As private financing dries up in the wake of the global financial crisis, the Bank has agreed to provide an additional US$ 3 billion as part of the total financing envelope of US$ 14 billion. The strategy is implemented through lending, dialogue, analytical work, engagement with the private sector, and capacity building exercises.
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The Bank’s previous four-year Country Strategy for 2005-2008 focused on lending for infrastructure, human development, and improving rural live.
World bank’s Projects and operations: The Bank’s method of operation is not to implement “World Bank projects,” but to provide financing and advice for projects which are owned and supported by the Indian government and the people and form part of their overall development agenda. Various financing options are available based upon the type of assistance needed. It is important to note that the implementation of projects is managed by the government itself. The government designates an office, referred to as the Project Implementing Agency (PIU), which is responsible for
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aspects such as procurement and selection of consultants and day-to-day work, monitoring, and evaluation. The Bank’s operational policies set guidelines to ensure that projects meet its own criteria such as social and environmental standards. Projects are evaluated to capture and share lessons for similar projects in future.
lending At the end of June 2008, the World Bank group had 60 active projects in the country. The net commitment for these projects was about US$ 13.8 billion. New lending in FY08 (1 July 2007- 30 June 2008) amounted to US$2.7 billion. Studies and Reports The World Bank also produces studies and reports based upon its own analysis of a given issue. Topics of research come from the Bank's Country Strategy. This research is intended to provide an unbiased perspective on a range of specific development challenges faced by the country. Additional studies include reviews of economic policies (Country Economic Memoranda), fiscal spending (Public Expenditure Reviews), environmental reviews (Environmental Action Plans), and other specific topics. Further discussion of development issues is promoted through workshops and other events. These events bring together groups such as government, media, and civil society organizations to discuss how best to move forward on a given issue. Loans The Bank offers two basic types of loans: investment loans and development policy loans. The former are made for the support of economic and social development projects, whereas the latter provide quick disbursing finance to support countries’ policy and institutional reforms. While the IBRD provides loans with a relatively low interest rate, the IDA’s "credits" are interest free. The project proposals of borrowers are evaluated for their economical, financial, social and environmental aspects prior to their approval. But not all of this is true, somtimes its different.
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Grants The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. IDA grants are predominantly used for:
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Debt burden relief in the most indebted and poverty struck countries Amelioration of sanitation and water supply Support of vaccination and immunization programs for the reduction of communicable diseases such as malaria Combating the HIV/AIDS pandemic Support civil society organizations Creating initiatives for the reduction of greenhouse gases Taking to the forests and helping thive in the rainforests.
Treasury’s Approach Treasury’s approach to providing banking products and services for IBRD is to customize engagements according to individual borrowers’ needs, combining training and capacity building with a broad menu of banking and risk
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management tools. The World Bank Treasury offers services in four key areas:
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Banking products Public debt management Asset management Capital markets and risk management
Public Debt Management The Treasury's team of public debt management experts is drawn from senior positions in sovereign debt offices world-wide. The team is available to help soverign borrowers to identify and act on opportunities for better organization and performance in managing public debt portfolios, based on best practices in industrial and emerging-market countries. Areas of focus include:
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Debt office organization and management Legal frameworks and authorizing environments for public debt management Staff training and continuing professional development Portfolio-based approaches to determining the appropriate liability structure for public debt portfolios, reflecting the country’s ongoing financing needs, level of market development and risk tolerance Establishing appropriate targets and measuring performance
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In the area of asset management, Treasury offers governments both capacity building programs, as well as direct management of assets. For governments building their asset management capacity, Treasury offers intensive one-onone programs of technical advisory assistance, delivered by its strategists and portfolio, risk and IT managers. These programs cover all aspects of asset management:
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Governance Strategic asset allocation Implementation of index, enhanced index and active portfolios Managing outside asset managers Measuring, monitoring
Treasury directly manages high-grade fixed income investments for central bank and similar official sector reserves. It also offers direct management of allocations to this asset class in the portfolios of officially sponsored pension, endowment and stabilization funds. The World Bank Treasury currently manages approximately USD 65bn in global high-grade fixed income portfolios and USD 15bn in broad public and private asset classes for both the World Bank Group and other official institutions. Its asset managers specialize in highly disciplined strategies that emphasize benchmark selection to reflect clients’ risk tolerances. Portfolios may be fully indexed to these benchmarks or participate in enhanced indexing strategies where actively managed portfolios seek superior returns from small and closely monitored deviations from specified benchmarks.
Capital Markets and Risk Management
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For sovereign entities seeking funding or executing hedging strategies in international bond markets, Treasury's experts offer advice on all aspects of the process:
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Funding program strategy Investor relations and rating agency relationships Establishing and managing relationships with bankers Setting up issuance platforms for frequent borrowings Designing, selecting and executing transactions – ranging from global bonds to private placements Evaluating and executing structured financing proposals and other uses of derivatives as part of a sovereign liability portfolio
Treasury may be engaged at any stage of the funding process, from the development of the overall market access strategy to the execution of individual transactions. As Treasury does not manage or underwrite transactions, its advice is useful for clients wanting an independent but highly experienced and successful source of information on these topics. Risk Management Strategy & Implementation For sovereign entities seeking to execute derivatives transactions and build capacity, Treasury offers advice on all aspects of the process:
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Analyzing Balance Sheet dynamics and assessing potential material risks to the assets and liabilities Formulating an ALM strategy, risk guidelines and thresholds Researching derivatives markets, assessing its limitations and identifying instruments available for risk management Developing processes and procedures for the use of derivatives, including legal, systems, accounting, and risk management oversight Modeling and valuation of hedging transactions for benchmarking the market Structuring, negotiating and executing derivatives transactions Establishing and managing relationships with local and international bankers
Treasury may be engaged at any stage of the derivatives execution process, from the development of the overall ALM strategy to the execution of individual market transactions. Treasury's team provides highly experienced advice based on managing risk exposures on IBRD’s balance sheet of more than USD 120 billion. Treasury's advice is useful for member countries who want an independent and reliable source of information on these topics.
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World bank’s current projects: Tajikistan: Programmatic Development Policy Operation WASHINGTON, March 26, 2009 - The World Bank’s Board of Executive Directors today approved the following project: IDA Grant: US$20 Million Project Description: This Programmatic Development Policy Grant for Tajikistan is the third and final operation supporting the Government of Tajikistan’s reform program. It aims to improve the environment for private sector development, and to improve overall functioning of the public sector and the delivery of key public services. Pakistan: (PRESO) Poverty Reduction and Economic Support Operation
WASHINGTON, March 26, 2009 - The World Bank’s Board of Executive Directors today approved the following project: IDA Credit: US$500 Million Terms: Maturity = 35 years ; Grace period = 10 years Project Description: The Poverty Reduction and Economic Support Operation for Pakistan is designed to support Government of Pakistan’s policy measures that promote macroeconomic stability. It seeks to strengthen Pakistan’s competitiveness by bolstering the financial sector and cutting barriers to business entry and exit. The operation also supports measures to ensure that poor and vulnerable people are shielded from major adverse impacts of the stabilization process. This entails improving the targeting of the government’s cash transfer programs, focusing especially on the Benazir Income Support Program. Niger: Agro-Sylvo-Pastoral Project Exports and Markets Development
Philippines - Transport for growth : an institutional assessment of transport infrastructure Infrastructure needs in the Philippines must be addressed to ensure long term economic growth. After several years of fiscal pressure, the Philippines
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is now in a position to address these needs. Despite the current international financial situation, the country is now in a position to commit resources to improve transport infrastructure. To this effect, it is necessary to: i) make resource allocation more effective; and ii) improve governance in the coordinating departments and in implementation agencies. The suggested actions that follow address these two fundamental needs within four groups of recommendations. First, focus should be on improving infrastructure quality and service delivery. While the quantity of transport infrastructure in the Philippines in network and facility density compares well with other countries in the region, its capacity and quality does not. Some critical transport costs are higher in the Philippines than in its neighboring and competing countries. Second, the processes for allocating public resources could be improved. With additional public resources available, project preparation, planning and budget processes need to ensure that expenditures are well focused on areas that offer the best value for money in improving service quality. The government has taken important initiatives to achieve this end. But much remains to be done. The quality of multiyear planning and the quality of project preparation and selection in the annual budgetary process WASHINGTON, March 26, 2009 - The World Bank’s Board of Executive Directors today approved the following project: IDA Credit: US$40 Million Terms: Maturity = 40 years; Grace period = 10 years Project Description: The Agro-Pastoral Export and Market Development Project for Republic of Niger's aims to increase the value of selected products marketed by project-supported producers. Components of the project are: (1) improvement of supply chains coordination and marketing conditions; (2) development of financing instruments; (3) securing irrigation potential, through construction or rehabilitation of community works in irrigation perimeters and protection of irrigated perimeters; and (4) project coordination, management, monitoring, and evaluation. Niger - Food security and safety nets Niger is a very poor country that faces serious problems of poverty and household food insecurity. With a per capita gross national income (GNI) of
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US$240 and an estimated 62 percent of the population living below the poverty line, Niger is one of the lowest-ranked countries on the United Nations' human development index. Reducing vulnerability and ensuring food and nutrition security is an overarching priority for the Government. Maintaining food security at the national and household level is an important priority for developing countries in general, both for the welfare of the poor and for political stability. In order to ensure food security, governments have adopted various strategies, including efforts to increase staple food crop production, market interventions, and a variety of safety net programs, especially during emergencies. In Niger, where profound vulnerabilities combined with a high level of population growth have resulted in endemic food insecurity, the Government is faced with a serious challenge. In this context, the purpose of this study is to contribute to the existing strategy and assist the Government in developing a holistic, multi-sectoral, and institutional approach to reducing the population's vulnerability to food insecurity. This report adds value to the ongoing policy discussions in two ways: first, it presents new empirical analysis of: i) food insecurity and vulnerability of households during the period of food crises as well as during normal period, Cape Verde - Enhancing planning and control to increase efficiency of public spending : public expenditure review (Vol. 1 of 2) : Synthesis A Public Expenditure Review (PER) update was conducted in 2006 which highlighted: (i) the large and increasing weight of non-discretionary expenditures in the total budget; (ii) the importance of improving coordination among the various planning instruments; (iii) the need to strengthen public finance management; (iv) the fiscal risks that emerge from the energy sector; and (v) the need to further progress with the pension reform. During 2006-07 the Government implemented several of the 2006 PER update recommendations. Building on the findings of the 2006 PER update, in mid 2007 the Government and the World Bank decided to prepare jointly an updated PER that would inform the preparation of the second Growth and Poverty Reduction Strategy Paper (GPRSP-2) and the Country Assistance Strategy (CAS). The objectives of the PER were to: (i) examine recent macro and fiscal developments (chapter one and two); (ii) provide an update of the strengths and shortcomings of the public finance management system, the recent reforms implemented in this area and the new emerging
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challenges (chapter three); (iii) conduct an analysis of the fiscal decentralization issues, with particular emphasis on the municipalities' resources, expenditures, budget processes, capacity and systems, and accountability to the citizens (chapter four); and (iv) examine public expenditure issues in infrastructure, focusing on issues of adequacy, allocation and efficiency of spending in electricity, water, roads, air transportation, and ports Low Income Countries Low income countries are the world's poorest economies, with annual gross national incomes (GNI) of less than $905 per person (in 2007). Because of the degree and extent of their poverty, low-income countries receive financial assistance on "concessional terms" from the World Bank through the International Development Association (IDA). This means that IDA credits have no or very little interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress. IDA-financed operations support broad-based growth, job creation and better living conditions for the poor. Projects include: Investment in infrastructure, agriculture and rural development
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Adoption of sustainable environmental practices Investment in people, in education and health, especially in the struggle against HIV/AIDS, malaria and TB Expansion of their capacity to provide basic services and ensure accountability for public resources Recovery from civil strife, armed conflict and natural disaster Promotion of trade and regional integration Learn more about IDA Global Challenge: Overcome Poverty and Spur Sustainable Growth
Middle Income Countries A third of the world's poor, defined as people who earn less than $2 per day, live in middle-income countries. Unlike the widespread poverty one finds in low-income countries, absolute poverty in middle-income countries tends to be more localized in particular regions or among specific ethnic groups. Middle-income countries are generally creditworthy and have access to
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financial markets. These countries borrow from the World Bank's Group International Bank for Reconstruction and Development. (Low-income countries like India and Pakistan which also borrow from IBRD are known by the Bank as "blend" countries.) Middle-income countries are increasingly important in terms of providing global public goods such as clean energy, trade integration, environmental protection, international financial stability, and the fight against communicable diseases. Many of these countries face constraints in mobilizing the funds needed to invest in infrastructure, health, education, and the reform of policies and institutions essential to improving the investment climate. Middle-income countries are also vulnerable to economic shocks, which can have a major impact on those living in poverty. Finding successful approaches to support the development objectives of middle-income countries is high on the World Bank's global development agenda.
conflict-Affected Countries Fragile States contain a significant number of the world's poor. Their state policies and institutions are weak, and the countries often face risks of conflict and political instability. They also share a range of bleak economic indicators-from GDP per capita levels that are typically half that of other lowincome countries to child mortality rates that are twice as high. Weak state policies and institutions undermine the country's capacity to deliver services to citizens, control corruption, or provide for sufficient voice and accountability. Also, fragile states can and do create negative spillovers for their neighbors, such as social and political instability caused by refugee flows. Small states Small states are not easily defined - some are quite wealthy, some very poor. Some are islands or groups of islands. Others are land locked. All have populations of 1.5 million or less. Small states are especially vulnerable to external events, including natural disasters. Many small states suffer from limited capacity in the public and private sectors. Others are facing an uncertain and difficult economic transition to a changing world trade regime.
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Several characteristics define the development challenges and vulnerabilities that many small states face: remoteness and isolation; openness and vulnerability to world markets; susceptibility to natural disasters and environmental change; limited variety in what they produce and export; slightly higher poverty levels; insufficient institutional capacity; income volatility; and less access to external capital. International development partners, including the World Bank, made an active commitment in the Paris Declaration on Aid Effectiveness (2005) to share the responsibility to improve the management of international aid so that better and faster development results can be achieved. The declaration calls for action on both sides of the aid relationship-by aid donors and by aid recipients. It contains five key principles: country ownership (where country partners set the agenda), harmonization, alignment, managing for results and mutual accountability. Harmonization Harmonization entails working to coordinate our financial aid and capacity building activities with that of other donors operating in a developing country. It also commits donors and countries to work in unison on regional and global programs, and it encourages stronger partnerships with borrower governments and among donors in undertaking research and analysis. The idea is to benefit from each others' knowledge and areas of expertise and avoid duplication of cost and effort. Reducing the transaction costs of aid for recipient countries and eliminating multiple, burdensome requirements also helps boost overall aid effectiveness. The World Bank is taking steps to promote harmonization by:
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simplifying and streamlining Bank policies, procedures and practices; standardizing our procurement documents with those of other donors; establishing a better division of labor between ourselves and other donors within countries; working through other donors and being flexible to accept their procedures (delegated cooperation); and increasing our reliance on the country's reporting and monitoring systems.
Alignment Alignment means that our and other donors' development assistance is in line with our partner country's national development strategies, priorities and systems. The aim is to increase country capacity for development through our coordinated technical assistance and to achieve better
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development results by building and using country systems for financial management, procurement, environmental assessment, project management, results measurement and other related areas. The process focuses on country ownership and government leadership to:
• • •
determine the country's needs and priorities; successfully implement the project; and measure its outcomes and/or results.
Aid Effectiveness Review Results-based national development strategies are the foundations for more effective aid. With better results management, domestic accountability and government credibility are strengthened, leading to deepened country ownership of the national development strategy. Several reviews conducted in 2005 and 2006 assessed the status of country efforts to develop and implement operational development strategies and results-oriented frameworks for policymaking. Such frameworks and strategies are the foundations for more effective aid. The reviews identified best practices and pending challenges. Vietnam receives close to US$3 billion a year from more than 30 bilateral and multilateral donor institutions. The World Bank serves as the coordinator and, often, a catalyst for foreign aid to Vietnam not only because of the funds it mobilizes but also because of its recognized technical expertise. It co-chairs consultative group meetings with the government, leads the poverty reduction support process, and increasingly fosters multi-donor credits and initiatives in areas such as education, public financial management modernization and forestry for example. Vietnam is now seen as a model for aid harmonization.
In Ghana, the Bank's over-arching goal is to support the country's growth and poverty reduction objectives. The CAS approved in May 2007 lays out objectives, baselines, targets, government actions and partner contributions. For example, the Bank proposes to help Ghana sustain economic growth of a t least 6% per year; surpass the 2015 Millennium Development Goal of halving poverty; and start to reduce inequalities.
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World bank Criticism: Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support United States' business interests, and argue that the bank has actually increased poverty and been detrimental to the environment, public health, and cultural diversity. Some critics also claim that the World Bank has consistently pushed a neoliberal agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. Some intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual output functions to blame the poor for their condition. The World Bank supported from the beginning the Brazilian Castello Branco’s authoritarian-rightist government, supplying it with a $80 million loan for power projects. It has also been suggested that the World Bank is an instrument for the promotion of U.S. or Western interests in certain regions of the world. Consequently, seven South American nations have established the Bank of the South in order to minimize U.S. influence in the region. Criticisms of the structure of the World Bank refer to the fact that the President of the Bank is always a citizen of the United States, nominated by the President of the United States (though subject to the approval of the other member countries). There have been accusations that the decision-making structure is undemocratic, as the U.S. effectively has a veto on some constitutional decisions with just over 16% of the shares in the bank;  moreover, decisions can only be passed with votes from countries whose shares total more than 85% of the bank's shares. A further criticism concerns internal governance and the manner in which the World Bank is alleged to lack transparency to external publics. In 2008, a World Bank report which found that biofuels had driven food prices up 75% was not published. Officials confided that they believed it was withheld from publication to avoid embarrassing the President of the United States, George W. Bush.
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The World Bank also plays an important role in many conspiracy theories such as the New World Order, where it is accused to be a catalyst for the growing global social disparity aiming at the financial enslavement of the western world, matching conditions with the third world, through the control of global monetary policies.
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