co L-O n) * Contents World Bank Highlights, Fiscal Year 1999 Lending Highlights, Fiscal Year 1999 ii Contents (Complete) v Letter of Transmittal xi The World Bank Group xii Message from the Chairman xiv Overview of Worid BankActivities in FiscalYear 1999 1 1: The Board of Executive Directors 23 2: Regional Perspectives 29 3: Thematic Perspectives and Development Effectiveness 95 4: World Bank Finances 151 Summaries of Projects Approved 155 IBRD/IDA Appendixes 187 Management's Discussion and Analysis 237 IBRD Financial Statements 265 IDA Special Purpose Financial Statements 307 Interim Trust Fund Special Puzrpose Financial Statemoents 335 Index 346 World BankWeb Sites 351 Acronyms 352 On the cover An eager young generation stands poised on the threshold of a new era.Throughout the developing world, the same questions resound. Will these children complete school? Will they be healthy? Will their environment be corruptton-free, law-abiding, and peaceful' Will the girls among them enjoy the same opportunities as their brothers? The new millennium offers a unique chance-and challenge-for the world to come together in shaping the destinies of this new generation For the World Bank, it means a renewed commitment to improving the lives of people and the prospects for children everywhere. Partnerships-with governments, civil society, private sector, and other development agencies-will be vital to progress Development is multidimensional, and forging strong parnerships to jointly tackle a holistic development agenda is, more and more, at the heart of all Bank assistance, as seen in the pages of this Annual Report. LENDING HIGHLIGHTS, FISCAL YEAR 1999 IBRD Lending Commitments and * New lending commitments from the World Bank to client Disbursements, Fiscal Years 1995-99 countries reached a record $29 billion in Fiscal Year 1999, (billions of LAS. dollars) with disbursements at $24.2 billion. Overall lending qual- 21.1 22.2 ity also improved: the share of projects at risk of being un- successful declined significantly, and the quality of new 16.9 Commitmrents . projects entering the portfolio improved. 4.5 14.5 18.2 * IBRD commitments in FY99 rose slightly above last year's 14.0 Disbu.emens record, to $22.2 billion. The increase reflected a second 12.7 year of continued strong demand from countries emerging 5 from-or seeking to prevent-financial crisis. Developing countries relied more on Bank assistance in the face of weakened investor confidence and reduced access to private capital. IBRD also extended a $300 million partial 1995 1996 1997 1998 1999 credit guarantee to Thailand in support of the power authority's investment program. * IDA-the Bank's concessional lending arm-provided an extraordinary level of support to countries in Eastern Europe and Central Asia that suffered the effects of the Russia and Kosovo crises. As part of an effort to be ex- IDA Lending Commitments and tended through FY02, it also began to provide exceptional Disbursements, Fiscal Years 1995-99 levels of support to Honduras and Nicaragua, severely af- (billions of U.S. dollars) fected by Hurricane Mitch. Apart from its lending commit- ments, IDA extended a Heavily Indebted Poor Countries grant for $150 million in support of an economic manage- (ommitments 7.5 ment project in Mozambique as well as a $30 million 6.9 ; partial risk guarantee for a power project in C6te d'Ivoire as part of a pilot program. 6.00* Disbursements for CBRD remained well above recent aver- 5.7 , 5.1 ages, though slightly below the FY98 level. IDA disburse- .6 )Disbursements ments were 7 percent above last year's level. Reflecting higher lending levels, total IBRD and IDA disbursements were above the average level of recent years. 1995 1996 1997 1998 1999 * East Asia received a third of total lending in FY99, reflect- ing the large needs of countries recovering from financial crisis. The Bank also responded quickly to new crises-and risks of contagion-in the Latin America and Caribbean and the Eastern Europe and Central Asia Regions. * Nearly all lending to the Africa Region ($2.1 billion) was from IDA. South Asia, too, relied heavily (71 percent) on IBRD and IDA Lending by Region IDA. These two regions alone accounted for close to 60 (share ofnasal lending of $29billion) IA hs w ein ln cone o ls o6 percent of total IDA lending. In East Asia, Indonesia became Africa 7% IDA-eligible again after graduating from IDA in FY81, fol- lowing a drop in its GNP and weakened near-term prospects. Lat, nAnte-c an-dY8 t h n sribbean ^27% a Compared with FY98, lending to the Latin America and Caribbean Region was considerably higher (28 percent). EastAsaand In another major change, South Asia's total was a third M ddle Eas and Pac fic. 34% y m North Africa 5% lbeow ast year's, reflecting mamly lower lendmg to India. Europe and - The year's 5 largest borrowers were Argentina ($3.2 bil- Central As a 18% lion), Indonesia ($2.7 billion), China ($2.1 billion), Korea South Asia, 9° ($2.0 billion), and Russia ($1.9 billion). The top 10 bor- rowers-including Brazil, Thailand, India, Bangladesh, and Mexico-accounted for 62 percent of total lending. ii THE WORLD BANK ANNUA[. REPORT 1999 WORLD BANK HIGHLIGHTS FISCAL YEAR 1999 (millions of US. dollars) FY99 FY98 Lending New Commitments IBRD 22,182 21,086 IDAa 6,812 7,508 Totala 28,994 28,594 IBRD Loans outstanding 117,228 106,576 IDA Credits outstanding 83,666 78,347 Disbursements IBRD 18,205 19,232 IDA' 6,023 5,630 Totala 24,228 24,862 IBRD Finances Net income 1,518 1,243 Borrowings outstandingb 115,739 103,477 Subscribed capital 188,220 186,436 Equity capital-to-loans ratio 20.65% 21.44% Cofinancing and Trust Funds Cofinancing 11,350 9,705 Cofinancing/World Bank Lending ratio 39.1% 33.9% Trust Fund Contributionsc 1,568 1,544 Trust Fund Disbursementsc 1,333 1,136 a. Excludes IDA HiPc grants b. Before swaps, net of premium/discount c. Includes all World Bank Group trust funds IN THE YEAR UNDER REVIEW: * New lending rose slightly above last year's record, as the Bank helped countries in crisis undertake vital economic and financial reforms while dealing with the harsh social conse- quences of the global crisis. * About 83 percent of total IDA commitments went to countries with a 1998 GNP per capita of less than $761. * The Twelfth Replenishment of IDA was agreed in November 1998, providing for SDR 8.6 billion in new donor funding for FYOO-02. * About a dozen countries began to pilot the Comprehensive Development Framework, a country-owned, holistic approach to development based on partnerships and focused on results. * The Economic Development Institute was expanded to become the World Bank Institute, in a move to maximize synergies between internal and external knowledge-sharing. IBRD and IDA Lending by Sector * Lending for human development-education, health, nutri- (share of total lending of $2 9 billion) tion, and social protection-accounted for the largest share Public sector Ih deseonment.2% of FY99 lending ($7.3 billion). Nearly half this total was for social protection, to address reemerging poverty, widening e 2l%roOment% . 6% inequality, and welfare losses especially in crisis countries. Such assistance was nearly 42 percent above last year's level. Infrastracture.j 13% sectocs 25% * Strong support for financial sector-financial systems, France 23% corporate governance, bankruptcy laws, and disclosure- (economic policy), 5% and economic policy reform was the other side of the Bank's response to crisis, much of it through adjustment lending. Note: Data reflect reclassification of sector data, explained in Table 1, page 10. a. Includes transport, telecommunications, and water supply and sanitation. b. Includes industry, mining, power, and other energy. * Lending for rural and urban services, at about 30 percent of the total, remained a priority, reflected in support for infra- Adjustment and Investment Lending, Fiscal Years 1994-99 srcue giutr n niomna aaeet ra (billions of U.S. dollars) structure, agriculture and environmental management, urban 30,000 28.6 29.0 development, and energy (2 percent, included in "Other"). Adjustment _ 25,000 Of which, poverty-focused * Adjustment lending of $15.3 billion exceeded investment 22.5 lending for the first time in FY99, as the Bank supported a 20.8 2 I 4 wide range of reforms found vital in the aftermath of crisis. 20,000 191Institution building, governance, and social protection were the dominant themes. East Asia and Latin America together 15,000 , accounted for $10.2 billion, with the Europe and Central Asia Region at $3.4 billion. 10,000 ___ Investment * More than half of adjustment lending in FY99 was poverty- _ g g g _ focused, with strong support to social sectors. This assistance 5,000 _ I I helped protect social spending for basic services, strengthen FY94 | I _safety nets, and put in place reforms ensuring a pro-poor, o FY94 FY95 FY96 FY97 FY90 FY99 job-creating economic recovery. Note: An operation is considered poverty-focused if it eliminates distortions that disadvantage the poor, reorients public expenditures toward them, and/or * Investment lending supported diverse needls, ranging from supports programs that provide safety nets or target specfic groups of the poor. girls' education and disease control to urban congestion Investment Lending for the Poor: Program of Targeted and-unique to this year-the Year 2000 computer problem. Interventions Lending (PTI), Fiscal Years 1994-99 Lending for emergency reconstruction doubled, following (percent of total) 51 hurricanes, floods, and wars in the Balkans and several African countries. Learning and Innovation Loans, introduced 40 last year, gained momentum. 32 32 * The share of investment lending classified as part of the Pro- 29 gram of Targeted Interventions (PTI) rose significantly, for the 25 _ _ _ _ _ second year in a row. PTI projects have substantial components targeting the poor and include, for example, support for social funds that raise rural living standards while increasing jobs; better access to credit, especially for poor women; prevention of AIDS; slum upgrading; rural roads rehabilitation to give farmers access to markets; and school improvement programs targeting better education outcomes for poor children. Non-PTI FY94 FY95 FY96 FY97 FY90 FY99 Note: A project is included in the PTI if it has a specific mechanism for targeting projects also contribute to poverty reduction, the Bank's the poor and/or if the proportion of poor people among its beneficiaries is overarching objective. significantly larger than the proportion of poor in the total population. FIscAI. YEAR 1999 LENDING HIGHLIGHTS iii THE WORLD BANK ANNUAL REPORT 1999 CONTENTS WORLD BANK HIGHLIGHTS, FISCAL YEAR 1999 1 LENDING HIGHLIGHTS, FISCAL YEAR 1999 If CONTENTS V LETTER OF TRANSMITTAL Xi THE WORLD BANK GROUP: THE IBRD, IDA, IFC, MIGA, AND ICSID XII MESSAGE FROM THE CHAIRMAN OF THE BOARD OF EXECUTIVE DIRECTORS XIV OVERVIEW OF WORLD BANK ACTIVITIES IN FISCAL YEAR 1999 1 Global context 2 World Bank assistance: serving the client better 2 The Bank in the 21 s century 21 SECTION ONE THE BOARD OF EXECUTIVE DIRECTORS 23 Progress on the Strategic Compact 24 Response to financial crises 25 HiPC and post-conflict initiatives 25 Country and sector strategies 26 Comprehensive Development Framework 26 Financial capacity 26 Inspection Panel 27 SECTION TWO REGIONAL PERSPECTIVES 29 AFRICA 30 Regional context 30 Bank assistance 31 EAST ASIA AND PACIFIC 42 Regional context 42 Bank assistance 43 SOUTH ASIA 54 Regional context 54 Bank assistance 55 EUROPE AND CENTRAL ASIA 64 Regional context 64 Bank assistance 66 LATIN AMERICA AND THE CARIBBEAN 75 Regional context 75 Bank assistance 76 MIDDLE EAST AND NORTH AFRICA 86 Regional context 86 Bank assistance 86 CONTENTS V SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 95 POVERTY REDUCTION AND ECONOMIC MANAGEMENT 96 Placing poverty concerns at the center of Bank work 96 Mainstreaming poverty work in the Bank 96 Adjustment lending 99 Poverty-targeted interventions and poverty-focused adjustment operations 100 World Development Report on Poverty 100 Mainstreaming gender concerns 101 Reducing country vulnerability to crises 102 Strengthening public institutions 103 Strengthening the international financial architecture 104 Leveraging external partnerships 104 HUMAN DEVELOPMENT 107 Health, nutrition, and population 108 Education 110 Social protection 112 ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT 113 Environmental management 113 Rural development 117 Social development 120 FINANCE AND PRIVATE SECTOR DEVELOPMENT 123 Promoting private sector development 124 Strengthening financial sector development and corporate governance 125 Stimulating private provision of infrastructure 126 Supporting urban development 128 Promoting private investment by mitigating risk 129 Partnerships 129 Knowledge services in private sector and financial sector development 130 Performance of the private sector development portfolio 131 DEVELOPMENT EFFECTIVENESS 131 Operations evaluation 131 Quality assurance 134 Research 135 Partnerships 137 Partnerships with NGOs and civil society 139 Cofinancing and trust funds 141 Knowledge building through World Bank Institute 146 Administrative budget 148 Human resources 148 SECTION FOUR WORLD BANK FINANCES 151 IBRD financial highlights 152 IDA finances 152 vi THE WORLD BANK ANNUAL REPORT 1999 SUMMARIES OF PROJECTS APPROVED FOR IBRD, IDA, IDA INTERIM TRUST FUND, AND TRUST FUND FOR GAZA AND THE WEST BANK ASSISTANCE IN FISCAL 1999 155 IBRD/IDA APPENDIXES I Governors and Alternates of the World Bank 188 2 Executive Directors and Alternates of the World Bank and Their Voting Power 193 3 Officers of the World Bank 196 4 Offices of the World Bank 197 5 World Bank Budget by Program, Fiscal Years 1996-99 201 6 Country Eligibility for Borrowing from the World Bank 202 7 Note to Appendixes 7-11 204 7a IBRD and IDA Disbursements for Foreign and Local Expenditures 205 7b IBRD and IDA Disbursements for Foreign Expenditures, by Source of Supply 205 7c IBRD and IDA Payments to Supplying Eligible Borrowing Countries for Local and Foreign Procurement in Fiscal Year 1999 206 8 IBRD and IDA Payments to Supplying Countries for Foreign Procurement 209 9 IBRD and IDA Payments to Supplying Countries for Foreign Procurement, by Description of Goods, Fiscal Year 1999 212 10 IBRD and IDA Disbursements for Foreign Expenditures, by Description of Goods (for Investment Lending), Fiscal Years 1997-99 215 11 Estimates of IBRD and IDA Payments to Supplying Countries for Foreign Procurement under Adjustment Lending, Fiscal Year 1999 216 12 IBRD and IDA Cumulative Lending by Major Purpose and Region, June 30, 1999 217 13 IBRD and IDA Cumulative Lending by Country, June 30, 1999 219 14 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1999, by Region, July 1, 1998-June 30, 1999 223 15 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1999, by Purpose, July 1, 1998-June 30, 1999 225 16 Development Committee Communiques, Fiscal Year 1998 231 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MANAGEMENT'S DISCUSSION AND ANALYSIS 237 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT FINANCIAL STATEMENTS 265 INTERNATIONAL DEVELOPMENT ASSOCIATION SPECIAL PURPOSE FINANCIAL STATEMENTS 307 INTERIM TRUST FUND SPECIAL PURPOSE FINANCIAL STATEMENTS 335 INDEX 346 WORLD BANK WEB SITES 351 ACRONYMS 352 BOXES 1 Global Poverty: Stalled Progress 3 2 Piloting the Comprehensive Development Framework 6 CONTENTS vii 3 Examples of Poverty Reduction Efforts in Fiscal Year 1999 Bank Lending 9 4 Progress in Anticorruption Efforts 12 5 Y2K: Bank Assistance in a Nontraditional Area 15 6 Financial Crisis: Lessons for the Bank's Work 1 7 2-1 Building a Successful, Visible Export Processing Zone in Support of Ghana's Vision 2020 Program 35 2-2 Intensifying Action Against HIV/AIDS in Africa: Responding to a Development Crisis 39 2-3 The Partnership for Capacity Building in Africa 40 2-4 Decentralization of Bank Staff in East Asia 44 2-5 East Asia: The Road to Recovery 45 2-6 Multidimensional Structural Adjustment Lending in Korea 46 2-7 Regional Initiatives in East Asia: Supporting Countries in Crisis 48 2-8 Innovative Approaches to Municipal Services Delivery in Indonesia 49 2-9 Reversing Agricultural Land Degradation Through Participatory Management in India 57 2-10 Addressing Bangladesh's Massive Environmental Health Problem 61 2-11 Piloting New Approaches to Deinstitutionalize the Severely Disadvantaged in Lithuania 71 2-12 Bank Support for Anticorruption in ECA 72 2-13 A Participatory Approach to Rural Poverty and Natural Resource Degradation in Turkey 73 2-14 Responding to Hurricane Georges and Hurricane Mitch 79 2-15 Honduras Public Sector Modernization Structural Adjustment Credit 81 2-16 Supporting Disease Surveillance and Control in Brazil 83 2-17 A $250 Million Vote of Confidence for Reform in Morocco 89 2-18 Supporting Communities and Alleviating Poverty in the West Bank and Gaza 90 2-19 MNA-MED Water Initiative: Supporting National Water Resource Management Strategies 92 3-1 Heavily Indebted Poor Countries Initiative 105 3-2 Dealing with the Social Impact of the Indonesia Crisis 107 3-3 Rwanda: Reconciliation Through Participation, Decentralization, and Reconstruction 121 3-4 The Challenge of Institution Building 132 3-5 Progress on the Strategic Compact 135 3-6 Supporting Partnerships and Innovation Through Grant Making 138 4-1 Highlights from IDA-Il 153 TABLES 1 World Bank Lending by Sector, Fiscal Years 1990-99 10 2 Commitments to the Twelfth Replenishment of IDA Resources 20 2-1 Lending to Borrowers in Africa, by Sector, Fiscal Years 1990-99 33 2-2 World Bank Commitments, Disbursements, and Net Transfers in Africa, Fiscal Years 1994-99 34 2-3 Operations Approved During Fiscal Year 1999, Africa 36 2-4 Lending to Borrowers in East Asia and the Pacific, by Sector, Fiscal Years 1990-99 43 viii THE WORLD BANK ANNUAL REPORT 1999 2-5 World Bank Commitments, Disbursements, and Net Transfers in East Asia and the Pacific, Fiscal Years 1994-99 45 2-6 Operations Approved During Fiscal Year 1999, East Asia and Pacific 52 2-7 Lending to Borrowers in South Asia, by Sector, Fiscal Years 1990-99 56 2-8 World Bank Commitments, Disbursements, and Net Transfers in South Asia, Fiscal Years 1994-99 56 2-9 Operations Approved During Fiscal Year 1999, South Asia 62 2-110 Lending to Borrowers in Europe and Central Asia, by Sector, Fiscal Years 1990-99 65 2-11 World Bank Commitments, Disbursements, and Net Transfers in Europe and Central Asia, Fiscal Years 1994-99 66 2-12 Operations Approved During Fiscal Year 1999, Europe and Central Asia 68 2-13 Lending to Borrowers in Latin America and the Caribbean, by Sector, Fiscal Years 1990-99 77 2-14 World Bank Commitments, Disbursements, and Net Transfers in Latin America and the Caribbean, Fiscal Years 1994-99 78 2-15 Operations Approved During Fiscal Year 1999, Latin America and the Caribbean 84 2-16 Lending to Borrowers in Middle East and North Africa, by Sector, Fiscal Years 1990-99 87 2-17 World Bank Commitments, Disbursements, and Net Transfers in Middle East and North Africa, Fiscal Years 1994-99 88 2-18 Operations Approved During Fiscal Year 1999, Middle East and North Africa 93 3-1 World Bank Adjustment Commitments, Fiscal Years 1997-99 97 3-2 World Bank Adjustment Operations, Fiscal Year 1999 98 3-3 Program of Targeted Interventions (PTIs), Fiscal Years 1992-99 99 3-4 World Bank mpi Operations, Fiscal Years 1988-99 127 3-5 Patterns in World Bank-NGo Operational Collaboration, Fiscal Years 1987-99 140 3-6 Total IBRD and IDA Lending and Cofinancing Operations, Fiscal Years 1996-99 141 3-7 World Bank Cofinancing Operations by Region, by Fiscal Year, Fiscal Years 1998-99 142 3-8 Trust Fund Disbursements, Fiscal Years 1998-99 145 FIGURES 1 Heavily Indebted Poor Countries (HIPC) Initiative 13 2 Marginal Impact on Private Investment of $1 of Aid 18 2-1 Accounting for Growth in Sub-Saharan Africa, 1995-97 31 2-2 Africa: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 34 2-3 Estimated Life Expectancy at Birth: Selected African Countries, 1955-2000 39 2-4 East Asia and the Pacific: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 44 2-5 South Asia: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 55 2-6 Number of Social Assessments in Bank-Assisted Projects in South Asia, Fiscal Years 1994, 1996, 1998 58 2-7 Europe and Central Asia: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 67 2-8 Main Macroeconomic Indicators, Latin America and the Caribbean Region, 1995-98 76 CONTENTS ix 2-9 Latin America and the Caribbean: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 78 2-10 Middle East and North Africa: IBRD and IDA Lending Commitments by Sector, Fiscal Year 1999 88 3-1 PTI Lending by Region, Fiscal Year 1999 100 3-2 PTI Lending by Sector, Fiscal Year 1999 101 3-3 Lending for Human Development, Fiscal Year 1999 109 3-4 IBRD and IDA Lending to Sectors with Potential for Private Sector Involvement, Fiscal Year 1999 123 3-5 Long-term Resource Flows to Developing Countries, 1990-98 124 3-6 Lending for Urban Development, Fiscal Year 1999 128 3-7 NGO Involvement Throughout the Project Cycle, Fiscal Year 1999 140 3-8 Cofinancing by Region, Fiscal Years 1998-99 143 3-9 Trust Fund Contributions and Disbursements, Fiscal Years 1995-99 144 3-10 IBRD/IDA Income and Expenditure at a Glance, Fiscal Year 1999 147 X THE WORLD BANK ANNUAL REPORT 1999 LETTER OF TRANSMiTTAL This Annual Report, which covers the period July 1, 1998, to June 30, 1999, has been prepared by the executive Executive Directors directors of both the International Bank for Reconistruction and Development (IBRD) and the International Develop- Khalid M. Al-Saad Khalid H. Alyahya ment Association (IDA) in accordance with the respective Ruth Bachmayer by-laws of the two institutions. James D. Wolfensohn, presi- Andrei Bugrov dent of the IBRD and IDA and chairman of the boards of ex- Federico Ferrer Godfrey Gaoseb ecutive directors, has submitted this Report, together with Valeriano F. Garcia accompanying administrative budgets and audited financial Janmnes Hutagalung statements, to the board of governors. Young-Hoi Lee Annual Reports for the International Finance Corporation Matthias Meyer (IFC), the Multilateral Investment Guarantee Agency (MIGA), Jean-Claude Milleron and the International Centre for Settleinent of Investment Satoru Miyamura Ilkka Niemi Disputes (IcsID) are published separately. Terrie O'Leary Franco Passacantando Stephen Pickford Jan Piercy Murilo Portugal Helmut Schaffer Surendra Singh Pieter Stek Bassary Toure Zhu Xian Alternates Mohame-d Kamel Amr Khaled AInAboodi Luc Hubloue Eugene Miagkov Meeting of World Bank Executive Directors, December 1998 (vacant) Seated at table, counterclockwise from left; Sven Sandstrom. Managing Girmai Abraham Director, Caio Koch-Weser, Managing Director,aJaies D.Wolfensohn, President, Ivan Rivera Shengman Zhang, Managing Director and Corporote Secretory, Daoud Khairallah, Mohamed Dhif Deputy General Counsel,Admmnstration, Finance & InstitutionalAffairs, Khalid M. NVan Abdul Aziz Wan Abdull ah Al-Saad, Kuwait, Khalid H.Alyahya, Saudi Arabia, Ruth Bachmayer, Austria,Andrei Lewis D. Holden Bugrov, Russian Federation, Federico Ferrer, Spain, Girmai Abraham, Erttrea, Jerzy Hylewski Valeriano F Garcia, Argentina. lnaamul Haque, Pakistan,Jannes Hutagalung, Jean Pesme Indonesia,Young-Hoi Lee, Republic of Korea, Li Yong, China, Matthias Meyer, Akira Kamitomai Switzerland,Jean-Claude Milleron, France, Satoru Miyamura,japan, llkka Niemi, Anna M. Brandt Finland,Terrie O'Leary, Canada, Franco Passacantando, Italy, Stephen Pickford, Alan David Slusher United Kingdom, Michael Marek, United States, Murilo Portugal, Brazil, Helrnut Helena Cordeiro Schaffer, Germany, Surendra Singh, India, Mihai Tanasescu. Romania, Bassary Mvles Wickstead Toure, Mali. Michael Marek Patricio Rubianes Seated counterclockwise from left, second row: Mohamed Kamel Amr, Arab Eckhardt Biskup Republic of Egypt, Khaled Ai-Aboodi, Saudi Arabia, Luc Hubloue, Belgium. Eugene Syed Ahmed Miagkov, Russian Federotion,Agil Elrmanan, Sudon, Ivan Rivera, Peru, Kacim Tamara Solyanyk Brachemi,Algeria,Wan Abdul AzizWan Abdullah, Malaysia, Christopher Legg. Paulo F. Gomes Australia, Zhao Xiaoyu, China,Jerzy Hylewski, Poland.Jean Pesme, France,Akira Zou Jiayi Kamitomai,Japan,Anna M. Brandt, Sweden,Alan David Slusher, Belize, Helena Cordeiro, Portugal, MylesWickstead, United Kingdom. Patricio Rubianes, Ecuador, Syed Ahmed. Bangladesh, Paulo F Gomes. Guinea-Bissau. Unable to be as of June 30, 1999 present: Executive Directors: Godfrey Gaoseb, Namibia,Jan Piercy, United States, Pieter Stek, Netherlands.Alternates: Eckhardt Biskup, Germony. xi THE WORLD BANK GROUP THE IBRD, IDA, IFC, MIGA, AND ICSID The World Bank Group consists of five closely associated institutions. References in this report to the World Bank or the Bank refer to two of these institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank's purpose is to reduce poverty and improve living standards for people in the develop- ing world. The Bank provides loans ("credits" in the case of IDA), policy advice based on economic and sector analytical work, technical assistance, and increasingly, knowledge-sharing services to its client countries. Closely associated with the World Bank are three other institutions: IFC, IMIGA, and ICSID. The International Finance Corporation (IFC) works closely with private investors and provides capital to commercial enterprises in developing countries. The Multilateral Investment Guarantee Agency (MIGA) encourages direct foreign investment in developing countries by offering insurance against noncommercial risk. The International Centre for Settlement of Investment Disputes (ICSID) provides facilities for settling disputes between foreign investors and their host countries. >99 .. International Bank IBRD provides loans and 9 International WOIR[LD BAK for Reconstruction development assistance to 4 t j. Development and Development middle-income countries and A Association "' 't creditworthy poorer countries. Year established: 1945 Voting power is linked to Year established: 1960 Members: 181; shares allo- members' capital subscrip- Members: 160 cated to each member reflect tions, which in turn are based Membership criteria: IBRD its quota in the International on each country's relative membership Monetary Fund (IMF), which economic strength. The IBRD Eligibility criteria: Relative in turn reflects the country's obtains most of its funds poverty and lack of credit- relative economic strength in through the sale of bonds in worthiness. Operational cutoff the world economy international capital markets. for FY99 IDA eligibility was a Membership criteria: IMF While not a profit-maximizing 1997 GNP per capita of $925, membership Wie poi-amzng with some exceptions. membership organization, it has earned a some exceptions. Source of funds: Paid-in capi- net income every year since Source of funds: Contribu- tal, capital market borrowings, 1948. IBRD'S practice is not to tions from governments, repayments on earlier loans, reschedule payments or par- transfers from IBRD profits, re- retained earnings ticipate in debt rescheduling payments on earlier IDA credits Cumulative lending: $338.5 agreements on its loans. Con- Cumulative lending: $115.9 billion servative lending policies, billion FY99 lending: $22.2 billion strong financial backing FY99 lending: $6.8 billion for 131 new operations in 39 from members, and prudent for 145 new operations in countries financial management give 53 countries Lending terms: Average cost the IBRD a strong standing in Lending terms: Interest-free of borrowings plus a spread capital markets. (service charge of 0.75 per- (for most products-see also cent), 35-40-year maturities "Management's Discussion with 10-year grace period and Analysis"), for 12-20-year maturities, 3- to 5-year grace As the Bank's concessional period on most loans lending arm, IDA plays a key role in supporting the Bank's poverty reduction mission. xii THE WORLD BANK ANNUAL REPORT 1999 IDA assistance is focused on the international financial markets, risks (currency transfer, ex- poorest countries, to which it and providing technical assis- propriation, and war, for provides interest-free loans tance and advice to govern- example). MIGA also provides (known as "credits") and other ments and businesses. In part- technical assistance to help nonlending services. IDA de- nership with private investors, countries disseminate infor- pends on contributions from it provides loan and equity fi- mation on investment oppor- its wealthier member coun- nance for business ventures in tunities, and to build capacity tries-including some devel- developing countries and plays for investment promotion. oping countries-for most of a catalytic role by demonstrat- MIGA has its own operating its financial resources. In ing the profitability of invest- and legal staff and is legally FY99, 81 countries were IDA- ments in these countries. It and financially a separate en- eligible. IDA credits are made also helps build efficient capi- tity from the World Bank, on only to governments. IDA is le- tal markets. It bas its own op- wvhich it draws, however, for gally and financially distinct erating and legal staff and is certain services. from IBRD, but it shares the legally and financially a sepa- same staff, and the projects it rate entity from the World supports have to meet the Bank, on which it draws, how- same criteria. ever, for certain services. -1i . International N Centre for s the Settlement: 1F( ri e International Multilateral 7 of Investment Finance , MI.G.A. Investment G Disputes _.tCt Corporation - ' Guarantee Year established: 1966 / F'y--oCMs Agency Members: 131 Year established: 1956 Year established: 1988 Membership criteria: IBRD Members: 174 Members: 149 membership Membership criteria: IBRD Membership criteria: IBRD Total cases registered: 65 membership membership FY99 cases registered: 11 Source of funds: Member Source of funds: Member capital, borrowings from capi- capital ICSID provides facilities for tal markets (80 percent) and Cumulative Guarantees is- the settlement, by conciliation IBRD (20 percent) sued: $5.5 billion or arbitration, of investment Committed portfolio: $21.2 FY99 Guarantees issued: $1.3 disputes between member billion billion countries and nationals of FY99 commitments: $3.6 bil- Estimated FDI facilitated: $30 other member countries. Pro- lion in 79 countries billion visions referring to arbitration Lending terms: Market rates, under the auspices of ICSID are long-term maturities, up to MIGA's main objective is to a common feature of interna- four-year grace period encourage the flow of foreign tional investment contracts, direct investment to its devel- investment laws, and bilateral IFC fosters economic growth oping member countries. It fa- and multilateral investment in the developing world by fi- cilitates investment primarily treaties. nancing private sector invest- by providing investment guar- ments, mobilizing capital in antees against noncommercial THE 'WORLD BANK GROUP xiii MlESS-NGE l lRO THE CIAIRI\AN OF THE BOARD OF EXECUTIVE DIRECT(_RS Our Annual Report is always an oppor- tunity to pause and take a good, hard look at where we have been, what we ihave learned, and where we should be going. This year, all the more so. As the special moment of passage that is the new millennium approaches, we are more than usually challenged to con- front our future with a better under- standing of our past. We must invigorate this special moment with an exceptional clarity of mission. It is two years since the financial crisis of the late 1 990s began in East Asia. Since I last reported to you, we have confronted further dangers in Russia and in Brazil. Now there are signs of recov- ery in a number of countries, some of them remarkable. Elsewhere, the pain _A .; lingers on. If we can harness the energies of lessons learned in this tough class- room of crisis, I am optimistic that we will deal more effectively with such - _ challenges in the future. Most important, what we call the Daughters' Day at the World Bank, April 1999 "financial crisis" is now understood to go far beyond that. At the core of the various crises have been the very structural and social building blocks of society and, of course, bearing the brunt of these crises have been the millions of citizens who found no refu-ge. Institutional and governance reform and the provision of some harbor for the most vulnerable have been central to the Bank's work of the past 1 2 months. Crisis has changed and challenged the very way in which we work and the instruments and necessary flexibil- ity we have to do that work. And we have been flexible: the Bank has developed new lend- ing approaches, and our levels of efficiency and quality are up, as you will read in the pages of this report. Crisis has also alerted us to focus intently on the inter-relatedness of policy and structure, and people. I am quite convinced that wNe wwill not get one right without the other. And this is clearly true at all levels of society. The Comprehensive Development Framework that we are piloting is the Bank's vision of how we might take this understanding forward. It is a formulation that stresses partnership, shared goals, and an integrated approach to what needs to be done. In the driving seat of both developing and implementing this agenda xiv TiE WORI.D BAKANN IAL REPORT 1 999 is-and must be-the country itself. The To do all this will take partnerships the Bank's role will be defined by what we can likes of w-hich we have not seen before. I best bring to the mix, as I hope will be the am convinced that our work with the pri- role of our many other development part- vate sector will leap ahead as the millen- ners. We have found broad support for this nium turns and companies understand the comprehensive approach, and I thank those scale of corporate social responsibility that who have enthusiasm for the partnership will make a real difference. Partnerships that this requires of all of us. with civil society will and must underpin But just as crisis has worked to rally us everything we do as new areas of work in around a wider and deeper agenda, it has governance, post-conflict, environment, cul- also called our attention to the sobering tural heritage, and the development of so- fact that the number of people in poverty cial capital become very much a part of the is rising. Yes, the fight against poverty has Bank's workaday agenda. This report is as made gains: life expectancy has risen, in- much about the Bank and its multiple part- fant mortality has dropped, and there are ners as it is a Bank report, and that is as it more girls in school than before. But should be. achieving our agreed goal to halve the inci- The fight against poverty is not a fight for dence of poverty by 2015 now requires a glory. It is about equity and social justice, strengthening of effort. In many of the about the environment and the resources poorest developing countries, progress on we all share, and about peace and security. poverty reduction and sustainable develop- It is a fight for a better life for all of us and mcnt is lagging. These silent crises require for our children who will live in this very as much energy of us as those crises that interconnected world. grab the headlines. JAMES D. WOLFENSOHN xv OVERVIEW OF WORLD BANK ACTIVITIES IN FISCAL YEAR 1999 Global context arose from natural disasters, stretched itself to new bound- Fiscal year 1999 (FY99) was particularly in Asia, Central aries to respond rapidly and in a year of continued-and America, and the Caribbean. a manner commensurate with formidable-challenges. The Despite remarkable ad- the wide-ranging emergency financial crisis in East Asia vances in the last quarter of and long-term needs. Through abated but left in its wake a the twentieth century, poverty crisis and then emerging re- huge restructuring agenda. is rising in many parts of the covery, the Bank has sought Serious weaknesses in public, world, especially those af- to meet country demand for financial, and corporate sec- fected by crisis and conflict finance and expertise, focused tors had been exposed and (Box 1). In 1998, developing- on basic human needs as well made an unambiguous and country growth fell by half, as investor needs as a basis for compelling case for institu- to 1.9 percent; given steady strong growth. tional and governance reform. population growth, per capita Underlying all the Bank's Equally critical was protection incomes have fallen. The East activities in FY99 are the com- for the most vulnerable. Even Asia crisis is believed to have mon threads of change, flex- as these lessons were being produced millions of new ibility, and partnership to learned, Russia and Brazil fell poor, following two decades of victim to failing investor remarkable poverty reduction. Change, flexibility, confidence. Borrowing costs Korea and Indonesia have seen and partnership, to soared, and capital flows to major increases in urban pov- serve clients beter emerging market economies erty especially, reversing years plunged. On the positive side, of progress. Of particular con- serve clients better. Providing considerable stability returned cern are long-term impacts higher quality service, more to capital markets in the sec- of child malnutrition on later efficiently and with greater ond half of the fiscal year, and learning capacity and of un- development impact, was at employment on child labor, the heart of the Strategic A year of continued to note two examples. In some Compact established in 1997. and formidable of the former Soviet Union In the rigorous learning challenges economies, post-transition ground of the past two years, poverty-and income inequal- the Bank has come far in foreign direct investment has ity-had already been rising meeting these goals, by listen- remained reassuringly strong; over the last decade; after the ing, learning real-time lessons, Brazil's crisis, moreover, was Russia crisis, the numbers of innovating, and partnering. short-lived and its contagion poor have likely increased. Quality and efficiency are up effect relatively contained. In addition, the challenges of substantially. Raising develop- Nevertheless, the impact of literacy and basic health- ment impact is a longer term the crises continued to drive compounded by AIDS-loom task, and will remain the through these regions' real as large as ever, notably in Bank's dominant challenge economies. The crises also Africa and South Asia. Pros- for the next several years. adversely affected commodity pects for achieving the Inter- The spirit of change, flex- prices, hurting especially national Development Goals ibility, and partnership is best Africa, already in the grip of for 2015, adopted internation- captured in the piloting of the conflict. Among the year's ally in 1996, have suffered a Comprehensive Development more tragic highlights was serious setback. Framework (CDF), launched in the Kosovo (Yugoslavia) crisis: FY99. In his Annual Meetings many died, and many more World Bank assistance: speech in Hong Kong in the were displaced, as refugees serving the client better fall of 1997, the Bank's Presi- fled to neighboring countries. The global challenges of the dent, James D. Wolfensohn, Additional emergency and past two years have been un- outlined a vision of the Bank long-term restructuring needs precedented. The Bank has as an institution committed to 2 THE WORLD BANK ANNUAL REPORT 1999 BOX 1 GLOBAL POVERTY: STALLED PROGRESS The financial turmoil of the last two years has dealt a blow to the expectations we had for reduc- ing poverty. Just a short time ago, we had confidence that the International Development Goal of halving poverty would be met in the next 20 years in most areas of the world. Today, countries that until recently believed they had tumed the tide in the fight against poverty are witnessing its re- emergence along with hunger and the human suffering it brings.... We must now draw on the les- sons of recent experience to help us reshape our strategies for the future. World Bank Group President James D. Wolfensohn The share of people living on less than $1 per day (at 1985 purchasing power parity) fell slightly, to 29 percent of the developing world's population, between 1987 and 1993 (the latest year for which a global total is available). The numbers of poor, however, rose. As of 1993, the South Asia Region had the most poor (515 million persons or 39 percent of the total). The last two decades (to the mid-I 990s) saw an extraordi- nary decline in poverty in East Asia, from some 60 percent to 20 percent of the population (and a halving of the numbers). Further dramatic improvement was recorded in China in the late 1990s. But much of the rest of East Asia has seen partial reversals, takingpoverty rates back to levels experienced earlier in the 1990s. The overall picture is one of stalled progress: * Poverty is on the rise -340 million poor in India in the mid- I 990s vs. 300 million in the late 1980s -sharp worsening in Europe and Central Asia region -continued growth in number of poor people in Sub-Saharan Africa -an increase in the incidence of poverty in Indonesia of about 10 percent since 1997 * Inequality is on the rise -Rising world inequality has been mainly driven by inter-country differences -Inequality in some former Soviet Union countries has worsened significantly since the transition -Rising inequality in countries as diverse as Bangladesh, China, Malaysia, and Thailand * Urban areas will account for a rising share of the poor * Life expectancy gains are at risk -Having risen from 55 to 65 years between 1970 and 1997, since 1990 life expectancy has declined in 33 countries, mostly related to AIDS. Two thirds of 33 million infected are in Africa. > Education is much worse for the poor -There are often enormous gaps within countries between the educational attainment of the rich and the poor. In India, for example, 15-19 year-olds from the richest 20 percent of households have completed on average 10 years of schooling, compared with no schoolingfor children from the poorest 40 percent of households. Note: The World Development Report 2000/2001 on poverty and development, to be issued in September 2000, will present a major synthesis of poverty trends and underlying determinants of poverty reduction while outlining an updated poverty-reduction strategy that reflects the lessons of recent experience. tforgin, < loser partnt rsh ip X .irried oui t series ot constil- discusuion pap;tr titled "Part- with othe r ac2tors to nlhance taltionls, incltuling touLr rottni- nerships tor Development: dexelopltilit electines. In tables, ill the AnmericatS, Proposed Actions For the the sumnin 'r (dI I 98, thie Blank Iluirope, Asia, andc Africa on a; Worldl Ilank.' PLrticipants ( )\ i R\ 11 ( M W(lI i) BANK A(3 1 included representatives from The CDF is essentially a pro- Box 2 offers a closer look at governments, bilateral donor cess: it is not a blueprint to be the piloting of the CDF. agencies, multilateral financial applied to all countries in a The CDF is one further step institutions, academia, non- uniform manner. It is a new in a longstanding effort to governmental organizations way of doing business, a tool strengthen external partner- (NGOS), and other civil society to achieve greater develop- ships. While relations with organizations as well as the ment effectiveness in a world client-country governments CDF: A country- challenged by poverty and will remain fundamental, distress. In the short run, the expanding the universe of owned, holistic CDF establishes mechanisms partners is increasingly seen as approach based on to bring people together and essential to success. In FY99, a long-term vision build consensus, forges stron- considerable joint work con- ger partnerships that allow for tinued with other multilateral and strong strategic selectivity, reduces development agencies, partnerships, wasteful competition, and em- especially on international phasizes the achievement of financial architecture and focused on results concrete results. For the Bank, corruption. Partnership with private sector. In October it will help it become more se- regional development banks 1998 at the Joint Annual lective in what it does. In the is intensifying, ranging from Meetings, Mr. Wolfensohn long run, the CDF enhances de- close consultations on Coun- returned to this theme, sug- velopment effectiveness and try Assistance Strategies (CASS) gesting the need for a more in- contributes toward the central and sector strategies to exten- tegrated approach to develop- goal of poverty reduction and sive collaboration on response ment based on a framework reaching agreed targets such to crisis countries and post- articulated and "owned" by as the International Develop- conflict issues. Cooperation the country itself That vision, ment Goals. now known as the Compre- The CDF opens up new op- As democracy hensive Development Frame- portunities for cooperation. grows, partnership work, builds on these ideas: it Numerous constructive com- wh suggests a holistic approach to ments were received following civil society development that recognizes extensive consultation with becomes crucial for the importance of macroeco- multilateral and bilateral agen- change. nomic fundamentals but gives cies, with government minis- equal weight to the institu- ters and senior officials, and between the Bank Group and tional, structural, and social with the private sector and other multilateral develop- underpinnings of a robust civil society. Many partners ment banks has also been market economy. It empha- have offered to collaborate important in project and pro- sizes strong partnerships with the Bank in implement- gram cofinancing. At the same among governments, donors, ing the CDF. This is critical as time, partnership with civil civil society, the private sec- the whole framework rests society is taking on enormous tor, and other development on the premise that the Bank importance as national con- actors. Perhaps most impor- need not lead-or even be sensus becomes more recog- tant, the country is in the involved-as long as the nized as crucial for change. driver's seat, both "owning" process produces the desired The Bank is also working more and directing the develop- results. During FY99, about a and more with NGOS, founda- ment agenda, with the Bank dozen countries worldwide tions, trade unions, and reli- and the country's other were in active discussion with gious organizations; new ini- partners each defining their the Bank and other partners, tiatives range from creating a support in their respective exploring ways in which the forestry alliance (World Wide business plans. CDF might be implemented. Fund for Nature) to protecting 4 THE WORLD BANK ANNUAL REPORT 1999 |-~~~~~~~~-r ~~~~~~~~~~~~~- - Peasant farmers in Colombia. displaced by violence, set up "enterprise zones" to take charge of their owIn development, culttiral heritage (Getty 'lTrust). the Baiki as an equal partner, Focusing 71ore on polertv G-row-ing 1Utimbers of fleld to pilot new approaches in Given dimmed prospects staff are b-eing cncouraged and illany sectors, for achievin, the Interinational emrpowered to work closely In FY919, serving the client Development Goals for 2()1 5 with V A Ps and .iVil society, better nmeant focusing more the Bank strengthened its fight 'I'he se groups cian plavy a ccn- on povcrtv; increasing responi- against poverty in FY)9). In a tral role in helpling build a siIeness to client needss; sVmbolic move, it reaflirnied counltrv's holistic- d(ewlopillent improx ing development commitnienit to poverty re- agendail and ark, key to helping effective(ness; and becoming ductioll in its new missioll the Bank undelrstand better a more open), transparenit statement, to "fight poverty the political aLndL social con- organization. Relatively new with passion and professional- texts in wh liich it operat(s. themes gaining importance- ism, for lasting results." Such J\'N9)) also Sa\., the of reflecting a pointed ef'ort to commitment had multiple di- Rusiness PartnerS for lDeVe0lop- learn from experience-were mensiotis in FY99, encompass- ment (ci;t i a TI-partner social development, inclusioll, ing nSs;\new lending andl program1 bringing together governance, and in1stituttionI nonilending services; r.A re- firmis, goVernm11ilents, alld civil huililig, as kley elements of pleniishiment; debt relief; and society oranllizatiols, with poverty redu(ction. aid coordin ation Ovri:Q\ ii-w a) Wo(RiI) BANK A( i j\ I in;r BOX 2 PILOTING THE COMPREHENSIVE DEVELOPMENT FRAMEWORK During FY99, a number of countries were in ac- investment programs that require harmonization of tive discussion with the Bank and other partner ex- procedures and significant donor collaboration. ploring ways in which the Conprehenstve Develp- Ghana. The cDFfor Ghana has been successfully ment Framework (cDF) might be ptein th* launched through the "Mini-cG," a government- country partnergroup established to improve coordination. Bolivia. The government is using the CDF to foster A particularfocus of the Ghana CDF process has intensive country discussion on the societal transfor been the creation of a network of sector partner mation and institutional aspects of the development groups. There is now such a group for each sector of challenge in Bolivia. The CDF Pilot, launched June the cDF, chaired by the relevant Ghanaian agency, 1999, aims to help Bolivia and its partners be more and wtuh a "focal point of support." This latter re- effective in reducing poverty. After 18 months, its suc- sponsibility is spread among all the main partners. cess will be measured through indicators and annual Kyrgyz Republic. The prime minister chairs a client and staff surveys. Core Committee charged with outlining the country's Cote d'Ivoire.The government is prepang its CDF vision and goals. Working groups comprising repre- for discussion, first with the prvate sector and Cvil sentatives from Parliament, the private sector, and society, then including donors. In parall, the ank nongovernmental organizations (NGos) are being es- is updating the cDF-inspired cAs jointly with the, tablished. Donor consultation and coordination ef- African Development Bank. The CDF process should forts have been initiated. The first in-country CDF benefit government leadership, transactions costs of Workshop, in July 1999, focused on macroeconomic aid, and donor coordination in capacity building, stabilization and growth; the state's role; private poverty reduction, and private sector dvement, sector's role; poverty and its social impact; and re- To maximize public information and understanding gional issues& the Bank has set up-for later han to the gov- Morocco. The planning process undertaken by the ernment-a prototype CDF web site for aUl donors to new government in 1998 embodies key CDF prin- contribute information. ciples: long-term vision, holistic approach, and own- Dominican Republic. The CDF pilot butilds on re- ership including civil society participation. The CDF cent societywide consultations such as the govern- has given the government and the Bank an opportu- ment-sponsored "National Dialogue" of 1997-98. nity, through seminars and workshops, to jointly The first stage, launched in April 1999, actively in- engage civil society on key issues such as gender, volves, as before, all major political parties, civil soci- cornuption, rural development, and education. The ety, and the private sector and seeks concrete, work- government is keen to strengthen donor coordination, able action plans in a few priority areas. While and will be convening, for the first time, a donors addressing long-term priorities, the effort will contrib- meeting in September to present the Plan's broad ute to a better-informed, higher quality debate in the orientations. short term. Romania. The government sees the CDF as a ve- Eritrea. The government is tailoring the CDF to its hicleforfacilitating and building consensus around own development strategy, embodied in the National a shared vision for the country's development. In Economic Policy Framework and Programme. This launching it, the government and the Bank hosted a stage of the CDF partnership focuses on establishing series of in-country consultations inviting a wide an efficient and outward-looking private sector that range of stakeholders to help the country articulate can fuel and sustain well-diversified growth, in a its own development strategy. More effective collabo- process that offers a constructive means of engaging ration between government, the Bank, and other do- allpartners. nors is expected in support of economic growth and Ethiopia. The government is interested in using poverty reduction based on objectives set by Roma- the CDF to promote a meaninul dialogue with its nians themselves. partners regarding its development policy. Specific ar- Uganda. The government is focusing its CDF on eas to be addressed could include decentralization, improving those services that most affect the poor national capacity building, or private sector develop- Emphasis is on strengthening government ownership, ment. The government would like the CDF to help im- improving partnerships, and better aligning donor prove donor coordination, particularly in the sector programs with Uganda's needs and capacity. In 6 T 1IF WoRI I) B1ANK A'.\NI \I Ri I II I 1998, a Consultative Group (cc) meeting in ing groups on systemic issues such as environment Kampala broke new ground in terms of civil society and governance; and better analyzing and sharing participation, paralel meetings open to all interested information, including on public expenditure, budget parties, and the president's active involvement. A data, and donor programs. UCDF matrixs gWn overmet and donors a West Bank and Gaza. Strong parnership is al- clearer sense of how to develop a more widely en- ready embedded through forums such as the Consul- dorsed country strategy tative Group and the Ad Hoc Liaison Committee, Vitnam. The govenment intends to work with its and through extensive field-level donor coordination partners to impement key cDF principles, including and close relationships with the Palestinian Author- partership, long-term fos, holistic development, ity, the private sector, NGOs, and local communities. monitorabe indicators, and inclusion-themes fea- 7hese relationships, which involve workshops and tured at the last CG and special government-donor- seminars with partners on such topics as water, mu- NGO diussions. Actions under way include piloting nicipal finance, and legal reform, feed into CDF matri- the CDF approach in key sectors (for example, health, ces that will spell out major challenges and possible rural development, transport); extending the cc to solutions in each sector of the economy. nongovernment stakeholders; establishing joint work- Comprehensive Development Framework: Pilot Countries Romania la Kyrgyz Republic 9 sWest Bank and Gaza Doominican Repubik EritreaL Vietn C6t:e O'voir.11fhan. Ethi.pia& Ugandap {olivia . w /1£~a" v. * 05 00 uaf T h0et 0,v b/.l TIan .h.fO I:RVII NV, () W I BANK Aa* AULOYT M9 (iWWOIiu BANK AcIIvrITIFS 7 Country Assistance Strategies. financial crisis entailed inten- * Latin America. The finan- CASs are increasingly placing sive efforts to strengthen cial crisis, reduced capital poverty reduction at the cen- financial markets and corpo- flows, and devastating hurri- ter of Bank assistance. Assis- rate governance-with an canes set the agenda for Bank tance in FY99 centered on anticorruption focus-and to assistance; other efforts sup- preserving and building hu- protect social expenditures ported ongoing priorities of man capital; restructuring and ensure adequate safety removing constraints to pov- financial, corporate, and public nets, current and future. erty reduction; consolidating sectors to revive prospects for China had no crisis but re- institutional reforms; enhanc- capital flows; and preserving quired support for infrastruc- ing provision of health, educa- the environment, the misman- ture. Key new partnerships tion, and infrastructure ser- agement of which can signifi- were the Miyazawa Initiative vices; and preserving the cantly worsen poverty. The and Japanese Post-Conflict environment. The Bank espe- Bank also responded to the Fund, as well as the European cially supported country ef- effects of emergencies and Commission's Asia-Europe forts to emerge stronger from natural disasters, conflict, and Meeting Trust Fund. The the crises, including those at- the growing deterioration in region's urban needs are also tacking corruption. Following urban living conditions. Sev- growing. Given its drop in GDP Hurricane Mitch, IDA in- eral CASS were prepared and commitment to reforms, creased its allocations to jointly with IFC in FY99, in Indonesia was again declared Honduras and Nicaragua recognition of the key role of IDA-eligible in FY99 (on a over the FY99-02 period. private investment in poverty "blend" basis), after having * Middle East and North reduction. CASS are also be- graduated from IDA in FY8 1. Africa. The Bank supported ginning to focus on poverty * South Asia. Although this economic reforms to increase outcomes, making a start on was relatively the highest- private sector-led growth and what represents one of the growing region-partly a re- programs directly aimed at biggest challenges facing the sult of limited integration into support for vulnerable groups. Bank today. the world economy-it is also Given countries' limited glo- Regional emphases of Bank home to 40 percent of the bal integration, helping to assistance in FY99 are summa- world's poor. Bank assistance open up economies to regional rized below: is therefore heavily poverty- and international trade re- * Africa. Given the region's focused (rural and urban), mained a priority. The Bank high poverty, low social indi- supporting education, health also helped countries' efforts cators, and conflict problems, sector reforms and disease to invest in human capital and Bank assistance focused on control, environmental needs, effectively manage scarce private sector development to and private sector participa- natural resources. accelerate economic growth; tion to meet massive infra- Lending and nonlending peace and stability as well as structure needs. services. Total IBRD and IDA governance; and human devel- * Europe and Central Asia. lending reached $29 billion opment. A particular chal- The Bank helped Russia and in FY99, focused heavily on lenge is AIDS. A new initiative its low-income neighbors poverty reduction (Box 3). was launched with the United maintain basic social expendi- While this total is only slightly Nations (UNAIDS) to intensify tures and undertake important above that of last year, it re- action against the disease. Se- structural reforms; fostered flects two years of increased lective assistance to reformers social inclusion amid growing lending-with attention to and donor coordination have inequality; helped fight cor- project quality-in response been important in promoting ruption; assisted in health sys- to a surge in demand, with aid effectiveness. tems reform; and supported countries relying more on the * East Asia. Helping coun- European Union accession for Bank for counter-cyclical fi- tries during and after the more advanced economies. nance at a time when private 8 THE WORI.D BANK ANNIJAI. REPORT 1999 BOX 3 EXAMPLES OF POVERTY REDUCTION EFFORTS IN FISCAL YEAR 1999 BANK LENDING Lending Objectives Adjustment * Protect key social expenditures Lending * Help design/implement social safety nets to protect the most vulnerable -Social ¢ Support labor-intensive public works and job-creation schemes Protection -. Improve poverty targeting and poverty measurement -Structural * Maintain education for the poor Reform *5 Improve public sector governance (ensure aid flows to poor, promote investor confidence) * Strengthen corporate governance * Strengthen financial institutions Strengthen public sector institutions Private ¢ Improve climate for private investment, prerequisite for growth and poverty Sector reduction Development s Increase efficiency in delivering key services; reduce cost; extend energy, tele- communications benefits to underserved groups ¢ Promote public-private partnerships and IFC partnerships in infrastructure and energy * Expand capacity of cities to provide affordable water, transport Emergency * Maintain basic lifeline services, imports Assistance * Rehabilitate critical infrastructure * Maintain macroeconomic stability Support long-term reconstruction * Support disaster preparedness Human * Increase education quality and access, especially of poor, disadvantaged girls Development * Focus AIDS prevention especially on poor, high-risk groups * Eradicate malaria * Promote health systems reform to address needs of poor - Pursue solutions for child labor o Eliminate malnutrition Community ¢* Empower rural poor and Rural *. Promote social mobilization and participatory development Development ¢* Support social funds to improve rural life while increasing jobs and building capacity * Reduce isolation, increase rural access to markets * Raise farmer productivity and incomes * Improve access to credit, especially for poor women Natural * Improve poor's access to affordable, clean water Resource * Increase agricultural productivity through improved research Management : Preserve poor's sustenance and livelihood/assets (land, forests, fishing waters) Post-Conflict * Support economic recovery ¢ Support emergency rehabilitation (especially of infrastructure); meet institutional and infrastructure needs of refugees *. Reintegrate ex-soldiers into home communities, provide assistance to veterans * Promote social stability (pursue inclusion policies, help address root causes of violence) Urban Poverty * Pilot itnnovative solutions for urban poverty and falling living standards . Address air pollution and transport needs with attention to needs of poor; women * Upgrade urban slums along with community development o Promote private delivery of urban services ()\I 1x\ 11 \\ ( [ W H 1) B.\NK As i ivn'i i i " flows had stalled. Social sec- protect the poor, particularly pilot vaccine project in Bolivia tors received strong emphasis, in crisis countries, were often and a pilot effort to train as the Bank responded to supported under adjustment rural women to be teachers trends of reemergent poverty, lending, which accounted for in Yemen to an integrated widening inequality, and wel- more than half of total Bank approach to nutrition in fare losses that are especially commitments in FY99; East Madagascar and innovative acute in countries facing dual Asia was the top recipient of efforts to bring technology to pressures of post-crisis reforms such lending. Investing in education in Africa. Much of and rapid globalization. The people was a high priority: such lending was financed by Bank's stepped-up efforts to new lending ranged from a IDA, which also played an im- TABLE 1 WORLD BANK LENDING BY SECTOR, FISCAL YEARS 1990-99 (millions of US. dollars) Explanatory Note: Beginning with this year's Annual Report, sector lending data are being reclassified, to ensure greater transparency in reporting the use of funds. Whereas the original classification assigned each loan approved to a single (primary) sector, the reclassification classifies lending on the basis of project components. The change reflects the evolution in the nature of Bank lending. Ten years ago a coal industry restructuring project, for example, would have included mostly coal-sector activities; today such a project could well include environmental, financial, private sector, social, and employee retraining aspects, all combined within a multisector-typically adjustment-loan. Multisector lending has especially grown in the last year, as efforts to deal with macro-flnancial crises have sought to address not only economic management issues but also needs in the financial, corporate, and social sectors. Reclassi- fied data capture these individual elements. Thus, total lending for Social Protection in FY99 is no longer shown as the sum of all projects classified under Social Protection ($2.7 billion under the original classification), but as the sum of all Social Protection components across all projects ($3.6 billion as reclassified), regardless of these projects' primary sector classification. Sector FY90-94 FY95 FY96 FY97 FY98 FY99 Agriculture 3,215.5 2,205.3 2,078.9 3,562.5 2,691.9 2,807.8 3,052 2,528 Education 1,811.2 2,052.2 1,705.7 1,017.4 3,129.3 1,344.3 3,110 2,014 Electric power and other energy 2,466.4 2,241.5 3,247.1 1,889.2 2,004.0 440.0 1,900 591 Environment 621.5 824.0 882.7 226.7 801.6 539.3 1,083 978 Finance 1,476.9 2,929.7 1,430.4 1,178.8 6,249.5 2,876.4 5,824 6,645 Industry 634.1 178.2 252.1 195.5 73.0 677.0 73 677 Mining 105.6 24.8 692.0 321.4 1,376.5 315.0 1,216 346 Multisector 3,033.7 3,151.5 1,665.5- 2,186.0 1,852.6 10,269.6 1,296 4,293 Oilandgas 842.9 603.1 55.6 135.6 140.0 17.5 140 18 Population, health, and nutrition 1,037.4 1,101.2 2,353.4 920.4 1,990.9 1,106.7 2,181 1,726 Public sector management 930.5 1,097.6 1,876.2 940.5 2,260.2 1,430.0 1,336 1,083 Social protection 337.9 1,050.7 994.5 1,389.7 1,340.0 2,678.6 2,530 3,595 Telecommunications 436.9 325.0 35.0 - 70.5 10.8 75 228 Transportation 2,802.9 2,253.4 2,772.6 3,831.8 3,287.5 3,021.8 2,989 3,022 Urban development 1,140.5 1,502.0 868.5 668.3 773.5 706.5 1,313 605 Water supply and sanitation 1,031.0 981.5 609.8 682.8 552.9 752.7 476 645 Total 21,925.0 22,521.7 21,516.6' 19,146.7 28,593.9b 28,994.1b 28,594 28,994b Of whichiBRD 15,583.3 16,852.5 14,488.1, 14,524.9 21,086.2 22,182.3 IDA 6,341.7 5,669.2 6,864.1 4,621.8 7,507.7b 6,811.8b _ Zero Note: Numbers may not add to totals because of rounding. a. Includes the refinancedlrescheduled overdue charges of $168 million for Bosnia and Herzegovina. b. Excludes iDA HIPC grants of $75 million to Uganda in FY98 and $150 million to Mozambique in FY99. I() THE WORI.D BANK ANNUAI. Ri:()R,i 1999 portant role in respondinig to Bank assistance supported The agreement includes SL)R natural disaster an1d confl et- strictural reforms aiming to 8.6 billion in new donor fund- relatcd emergenicies. ill in- ensure that econiomic recovery ing forr F'Y(O-()2 compared vestmennt lending was below would favor the poor and that with the in)\-l l lcvel of SDR its FY08 ltvel, reflecting strong satety niets were ptit in 6.9 billion (including special lower lending to Ildia as place inl aItOPce of crisis, as a contributions) for FYV7-99. major lesson of the Asian crisis 'I'he new fundinig will allow Nearlv 70 percett ol was that scaling up safety nets IoA to commit about st)r 1 5.3 adjttst?nent lentling durinig a crisis was extremely billion (approximately $2(0.5 difficult. In FY99, 25 percent billion) during FY()(l-()2 and in F'Y99 w{Zas of adiLustmiienit lendling wvas to- thus contillue IDA letnding at poverty-focused. cused on social sectors. currenit levels. The agreement In additioni to new lending, represents a return to the tra- w tl]] as sonie ss itchirig, in the Batiik relied substantiallvy ditional burden-shared funld- individual tiirt) country on1 its ongoing portfolio to ing process after the extraordi- programs, troni investment help addiess new needs that nary ftundinig arrangements of to aidjustmetit leniding. arose durinig the ear. About the Intetim Trust Fund during Strong Ldjustmenit lendi- SI S( million from ongoitig ing which is increlasingly projects was made available Poverty-redluction multidimensional (se Table 1, for Hurricanie Nlitch enier- explanatory n(te)-rfleitts "ency needs. Substantial strategis tie BRank's contintling foctis in portfolio restructtiring also increasinglv FY'9 on1 respondingm to the fi- htelpedL meet urgent needs emphasize the nanci ial C-IS that betgan ill following Bangladetsh's xworst last Asia and spreaid to other floods ever and the crises in vulnierabilitv of the parts of the world. The ftinda- Rtissia aidL Kosovo. Notilend- poor to shocks, the menital rationale for Bank iin- ing services orietitecd to vo]l1e(1n1t in CiriscS is to re- poVerty rL-dUCtion includteld role ot itstittitions, dncei their short- aind poverty assessments, social a[Lfl( tile iinporlanlce long-te r m efctt(ts on puivert. and strttctural policy reviews, of participation, 'I']11s involv es suppolrt ior ec o- itistitutiotiial assessieliets, ionmic and finaiiciacj reforni and \sork on a social risk partnerships, a2d as economin recovery is crtu- manageient framework to soctial capital. cial to restore iico(imes aitid help identifyI groups at risk, emrp]oVinelit-as well as ntea- better understand social is- the itm- I I period. The iii.s\- I stIres to mitigate the social sties, and promote policies of agreelmenit was the result of a c(ists of se vre ccononiy-wide inclusioni. Workshops have simoothi process anid a shlared transitions. In response to b-eet increasingly useftil for vision. Donors agreed oiiI 1)1 wide reducJttions in jobs, wages, inforniation-sharing atic par- funitding reqcuiremetits ancd anid Public spendiig, the Batik ticipiotiOn in sutcl kev areas development priorities, the ha's sought to provide gre-ater as go(Veratice and anticorrtp- foremost being to support sttpport to tle social sectors tion; poverty reductioll, over- poverty reutictioii through a Ffforts have ran,ed fl'roni help- all and urbati; and entiiron- parttiership amorng recipients, ing protec t sOm ial speriding mental tiianagemie[t of air, donors, a i i, atid other- parts of and streiigullien safetv nets, i s- swater, and forests. the Bank Group. It was agreed peciall]y i0r the poor atid eld- IDA- 12. II\ Deputies agreed that progress on poverty re- erlv, to supporting scholar- oti the Twelfth Replenishment ductioni he nmeasuired in the ships i or lo\N-it-oliie studelits ot IIr\ in Novembcr 1 998 in context ofthe Ititeriiational and omnmuiiti'v-based jubs Copewnhalgen (contributions by Developnient Goals for the creoation pro(gram,s. In addition, dotior are shown in 'ahle 2). 21st Century, sshich are hased O \ Is ii \\ i)t Woiti o BANK A(rivi I r 11 oni Uniteci Nations cotifer- concerns, social sector lending should promote accouLitable ences and resolutions reflect- is expected to reniLin at public institutionis, transparent in, broad agreemtent Iy the around 40 percent of invest- ptublic policymaking, fairness international donor cormmil- nenit lending. in the rule of law, and open- nitv. II),%- 1 2 resotircs are to * promoting good golvernlnce ness to participation of citi- tocus on: Poor governance, includinig zens (Box 4). in nesting in pople C Given corruption, hinders develop- * promoting broad-based the neied to invest in people- nient and reduces opportuni- growth. Focus should be on andl to mainstream gendler ties for the poor; effor-ts reforms that promote labor- BOX 4 PROGRESS IN ANTICORRUPTION EFFORTS The Bank made strong progress in implementing its reforming nations in Latin America and Africa. anticorruption agenda in FY99. Work with countries In one example, consultations during Kenya CAS and important partners such as Transparency Inter- preparation helped increase understanding among national is growing, and more Country Assistance key stakeholder groups, including the Bank, of the Strategies (cAss) are addressing the issue. Corruption links between the country's economic governance and and poor governance worsen poverty directly-by development; Bank assistance will support Kenyan- diverting resources away from the needy-and indi- led reform efforts to improve economic governance, rectly-by harming the climate for private invest- including by strengthening accountability mecha- ment, key to growth and poverty reduction. The nisms, beginning with participatory public sector in- agenda covers the globe-but begins, first, within stitutional assessments. the Bank: The Bank addresses corruption in systemic o An Oversight Commiftee, reporting directly to terms-that is, as a symptom of underlying public the president, addresses internal fraud issues includ- sector dysfunction. Its role is to help address key as- ing allegations offraud and corruption in Bank pects of policy and institutional reform. Ensuring projects. high-level political support is the first step. Beyond O A confidential hotline set up in October 1998 is that prerequisite, Bank anticorruption efforts typi- open to receive allegations from anywhere in the cally include detailed surveys of citizens, private world (1-800-831-0463). firms, and government officials to diagnose the na- O Financial management and internal audit ca- ture of the problem within a country, raise aware- pacity have been strengthened in headquarters and ness, and design reform programs in a public- field offices, with a special unit set up in the Internal workshop setting. Also in demand have been Bank Audit Department. Procurement training has been training programs in investigative journalism, par- retooled with emphasis on procurement ethics; the liamentary procedures, and financial management aim is to ensure that loans are used for their in- and auditing. Helping countrties police themselves is tended purposes. Oversight of borrower procurement an important objective. practices is also being tightened. The new Country Most far-reaching, perhaps, are the governance re- Procurement Assessment Review, being introduced forms increasingly accompanying Bank adjustment with objectives of operational efficiency and good gov- lending, which strengthen countries' institutions and ernance, has already proven to reduce opportunities attack corruption at its roots. These measures mini- for fraud and corruption by ensuring a well-defined, mize opportunities for corruption, increase predict- open, and transparent procurement system. ability and accountability in the private sector, Assistance to client countries is growing rapidly and raise investor confidence by emphasizing better Since 1996, when the Bank explicitly put corruption financial regulation, supervision, and disclosure; on the development agenda, over two dozen countries greater transparency in public sector decisionmaking have sought Bank assistance. Anticorruption work (for example, allocatingfishing licenses in a more has been particularly active in about two dozen of automatic, less discretionary way); and stronger these countries, in East Asian crisis countries, and in corporate boards as well as shareholder and creditor Eastern Europe's transition economies as well as in rights. 12 TI F W()RI 1i RA\NK ANNt [Al. RI P I, I I')')' intensixe, hroad-based growth was also endorsed. Donors also Bissau, and Mauritania, re- bewnefiting the poor a.nd that agreed that (xs dctuOCments viiew-ed by the hoards of ii) \ support dvnamic growth of he made public, with sensitix e and the ixI: in FY`99, indicated the private sector. information appropriately that the Cum111ulatiVCe 1fli( ini- * prtecting the environment. hiandled in consutltationl with tiative assistance reqtuired for Efforts shotuld aim at strength- governmelit uinless justified these and the earlier seven ening environmental manage- hb exceptiolnal circumstanices. cases could reach $4.6 billion ment capacity, regulatory antl Debt relief As an integral in N'sx terl11s, or $9.2 billion in legislative infrastrutturet and part of its povrety-redtutction norminLal terms. energy efficiency, strategy, the Bank madle sig- In FY91)9, Bolivia, Gvuana, Perfnrmnice--lisC(e in).I dlloco- nlificanit headway in IFY9'9 in anlLd Nozabiqique reached the tiOlS. Donors ag^reed to allo- providin,g edebt relief makinig completioll point, clearin(1 cate lox resotirces according to it possible for the government the wax for debt relief totaling each coulIntrv's economic per- resotirccs freed tip as a result $2.4 billion in NIlX terms to fornlaiMe. Perf'ormance assess- to lie channiled toxvard mi uCh- be- delivered to thest CoUnl- rcnt will take partiul-ar niote neerl lded social spending. I JnJler tries. 'IThe ank's share ot progress in poverty redtic- the Heavily Indebted Poor amounteditd to $54 million tion andl governaiLe, recoginiz- (0oun1tries Ian ) Initiative, for Bolivia, S27 nmillioni for ing the signifianlt impalct of established by the Bank and Guvan a, and $3)SI million goxernani. e on development the ixiI in 1996 to reduce the tor Nozambiielu, delivered antd o)n effective uise oif dlonr debt blir'len of selected poor through recimtion in its out- resoutrces. Donors highlighted couintries to sustainable levels, standing claims. Last fiscal the need to assist Africa and seven coulintries have qualified vear, ( Iganda also received proposedl that its share of ii\ so sifar for debt reliefpacka3ges sub)staltial debt relief of resourtcs be increased with estimatedl to be worth $3.4 $347 millioni in \'s[i terms, the aim of reachinig 51) per- hillion in net present valtie of xvhich the Bank- provided cent, as lolln as indlividiual (;\'I ) terns, or $6.8 billion in $1 (1) million. con1i.trFV perfeormtlan(e war- nominal debt ser\ice relief Debt reli titedcl to debt ranted it. The key role of the (FIigure I ). In addition, pre- oweJ to lo x as x\vell as other c onsuiltative pros e(ss ftor liminary debt sustainahilitv creditors, is delivered through deternining couintrv priorities alalysis for Ethiopia, Guiiea- the Iin Trust Fulid. In the FIGURE I HEAVILY INDEBTED POOR COUNTRIES (HIPC) INITIATIVE Assistance committed to HIPC countries to date Total: $3,355 million (Net PresentValue terms) l ~ I....... NsI \ t- I~,lti Bank _~,and,l ~47 - (o [1,i p , . 1 -148~~~~~~~~~~~~~~~~~~Bwin ~- 54- . . .' oil, 2' ' , ', 27(I Ma 'le m t)l IS 4-4 NIJiI12 . W_k,4A N1.11, ~ ~ i-s 1 as WiiltBAKA xrr case of IDeA, the ojil( Trust FY99, including $109 million East Asia, the Bank led the co- IFund purchases and cancels tied to IoA debt alone. Addi- ordiniation of technical assis- idenltified IIA credits or makes tional debt relief will he pro- tance, facilitated Consultative payment of debt service to IDA vided from the I IIIe Trust Group mneetinigs, and mobi- on behalf of the country hen- Fund in early FY20()( in re- lized bilateral support. To- efiting from the 11iW( Initiative. spect of the completion points gether with the sNil, it hosted a Contributionis received bv the successfully reached near the special donor conference to Tc [rust F unid to diate (since end of FY9 9 by Guyana and help IDA coun1tries hurt by the I 99Q(; alootiunt to S 1,233 Mozambique. Russia crisis. In May 1999, it million. Bank conitribtitionis As part of the iii'( Initiative, w*as asked to lead efforts, to- of $859) millioln, from InRI) debt relief to losw-income gether with the Europeani unallocated net in-ome, ac- countries is also provided in U!nion (Iii ), to asscss the eco- count for the largest share of the form of IDA grant ftunding. nomic, social, and restrtictur- this total, other contributors In FY99, the $1 5( million ing needs emerging from the accoUint for the remaining Mozambique Economic Man- Kosovo crisis and to mobilize $383 million, coniprisinig agement Reform proiect wLas donor support for affected $90.4 million from the Afri- funded on grant terms and counitries. In another example cani Development Banlk Group fully disbursed. This was the of aid coordination, the Bank (Afi)i GroU1p), $1 .2 million seconid such grant since IPA opened a web page in early from the Nordic Development started extending them to Funid (NPI ), and $291 1.4 mil- iiii c-eligible coulitries dtiring TIhe Bank .s lion from 14 donor counitr-ies the "interim period. Anothcr comparative (Belgium, C(anada, Denmark, grant was in preparation for Finland, Greece, Japan, l ux- Cote d'lvoire in support of its advantage in post- enihourg, Netherlands, Nor- reformn program ]during the in- conflict countries is way, Portuigal, Spain, Swedein, terim period, in .stpport for long- SwitzerlaLind, anid the UJnited Another vehicle for debt Kingdom). Of these totals, in relief, apart from the wi)( Ini- termti development, FY99 the Bank contribUtde tiative, is the Debt ReduIctionl rather than $1 9() million, and other do- Facilitv for n,sA-only countries, nors, $229 million. (The which provides grants to emergenLy reuej. Bank's FY99 contributions was heavily indcbted countries to 1999 to invite disCussion Irl-om made from 'FY98 unallocated buv back their commercial the civil societv of debtor and net income; in early FY0)0 the debt at a deeop discount. An creditor couLntries and other Board of Directors recoin- operation for G(uiie a was groups as part ol' a joint Bank- mended a $299 million contri- completed in F'Y99 uinder the Fundl reviess to identify op- bution from FIY939 uliallocated Facility. The Bank also helped tions to increase the I ilP( net income.) With respect to countries affected by Hurri- Initiative's speed and reach. Uganda and Bolivia-the two cane Mitch (notably Honduras The consultations were swel- countries for which the i i(' and Nicaragua) to meet their comed worldcvide and are Trust Funid has provided debt multilateral debt service obli- beilng supplemenited by discus- relief sin-e inceptioll-the gations through the establish- sion seminars that are svidely I iII( Trust Fund had commiit- ment of the Central AmericLa participated in to help formu- ted $233 million, by the end Emergency Trust Funid, wshich late proposals fkr change. of FY99, to provide debt relief chaninels donor conitribLutions on debt owed to IDA, Afi>I; for this purpose. Grotip, Nl)l and Corporation Aid coordination. An impor- Iiiterinii p(rid(1 relf rs to tne tinie Andina de Fomento. Disburse- tant part of povertv-reduction 1pl t\s dcilr otp dcimll T.al h eo1n1pletion Poinits, dui-inig wrhid-l thet .-unt, ments related1 to such deblt re- activities in FY99s was aid mo- tindic rtakes and L.onsolijdtcs its lief were S1 51 million in hilization and coordination. In w onoii ie anti oi,l i,eror ,r,,grLrns. 14 Tii WIF )V BAsix A\xxil \i Rrt, ilit 199)9 Increasing responsiveness to country directors, compared greatest, increased staff decen- client needs vwith only 3 two years ago. The tralization has had a marked The Btank fturthered its ef- trend reflects the Bank's desire impact at a time of crisis, forts in FY99 to get closer to to listeni more and provide enahling 24-hour service, real- its clienits. More Banlk staff an1d quicker and higher quality time policy advice, and shorter managers nowv work otit of service. In East Asia, -where project preparation times. Half resident missions, includinig 24 time-zone differentials are the staff working with Souith BOX 5 Y2K: BANK ASSISTANCE IN A NONTRADITIONAL AREA As the millennium draws ever closer, the "Year million from Canada), total funding amounts to $34 2000 Problem" or "Y2K Bug" has the potential to million. Some 80 governments have launched Y2K disrupt national social and economic life in develop- programs in developing countries with InfoDev's sup- ing countries that have not taken steps to immunize port. New commitments to InfoDev's Y2K initiative themselves against the problem. Until recently, the were formalized in FY99, with the United States con- Y2K Bug, a side effect of an early software shortcut tributing $12 million, Canada $650,000, and Italy by the computer industry to designate years in two $350,000. InfoDev has supported the Y2K effort by: digits instead offour, has been seen as a vague and + conducting regional and national awareness distant threat in many developing countries confront- and planning seminars, with participation of high- ing more immediate problems of keeping life and level ministers and senior information technology limb together. Distant no longer, the Year 2000 managers Problem has the ability to affect even the poorest + developing and distributing a Year 2000 toolkit countries that have computerized systems for provi- for use by national governments (available also on sion of vital services-power, water, transport, the Bank's web site) telecommunications, food, and health care. Regional o making technical assistance grants to help gov- economic relationships in areas such as Africa ernments design national Y2K plans. As of the end could break down, disabling critical systems such of June, 1999, 105 countries had requested about as air traffic, telecommunications, and financial $39 million in grant assistance, with 92 approved transactions. for a total of $15 million. Status of Y2K preparedness. Results of a Bank Ensuring a Y2K-compliant portfolio. Assistance InfoDev survey, updated throughout 1998 and has entailed: January 1999, showed that of 139 developing O assessing the loan portfolio to identify projects countries, only 21 had begun safeguarding their most at risk (a third of the Bank's portfolio, or computing systems, 54 had initiated Y2K policies, about $45 billion, notably in the health, urban, and 33 had awareness of the problem but had not transport, power, and agriculture sectors) acted on it. For the most part, developing countries * ensuring borrower awareness of high-risk lack the technical manpower and resources needed projects and of Bank resources available to help to counteract the Y2K Bug. o helping borrowers with Y2K remediation Bank assistance. The Bank's objectives have been through reallocation of existing project funds or new twofold: to catalyze governments and aid agencies to lending. In the largest such example, a $100 million engage in preemptive remedial action and to en- loan to Malaysia was approved in March 1999. sure-to the extent possible-that the Bank's portfo- The government saw Bank support in this area as a lio is Y2K-compliant by the end of 1999. key early step to realizing Malaysia's Vision 2020- Outreach. The "wake-up call" is being issued an open and export-oriented economy associated largely through InfoDev, a donor-funded grant pro- with efficiency, knowledge, and high technology. In gram managed by the Bank. InfoDev, which provides January 1999, the Bank lent Sri Lanka $29 million financial assistance (or grants), was launched in for Y2K immunization efforts, and, in December 1995 with a $17 million contribution from the 1998, a $30 million loan was approved for United Kingdom. With additional donations ($12 Argentina for a Y2K remediation project. million from the United States, $3.8 million from the (For information on Y2K efforts within the Bank, Netherlands, $1.2 million from Sweden, and $0.7 see "Management's Discussion and Analysis.") Ovi.RviiAv ()i WoiRI I) B \NK Ac( IVriIs 15 Asian countries are now in external environment, Bank refugee assistance in Albania the field; gains are being real- work has expanded into and Macedonia. Since its in- ized in the quality of both untraditional territory. The ception in 1997, the cci has economic and sector work Bank is workinig with clients supported innovative efforts and the lending portfolio. on Institutional Reviews, Vul- to address the needs of reinte- South Asia's version of the nerability Assessments, social gration, jobless youth in Sierra Bank's "Village Immersion" Leone, and children involved Program, where staff mem- )1:1): Assistance in armed conflict. Where vio- hers experience village life, . a lent environments obstruct has helped improve project m a lf rence assistance to the poor, the design and strcngtheni onlv if a country s Bank is also beginninlg to ex- grassroots partnerships. "lix V plore assistance for conflict An important lesson for polity prevention: an example of Bank work from past experi- illSttlt ioal neea! ds such a proactive approach is ence has been the role of were also mnel. found in a report analyzing country participation in build- violence in Colombia. The ing consensus for change and safeguard policies (especially report supports a national ownership of development ef- on resettlement antid indig- strategy for sustainiable social lorts. Consultations with civil enous peoples), understanding peace, Colombia's central society antd other stakeholders the role of social capital, pre- objective, and proposes a have become stanclard to (AS serving cultural heritage to multidimensional solution formulation. In one example, promote social cohesion, Su- that includes fiscal aspects intense discussions over an preme Court and -judicial sys- and attacks root causes. I 8-monith period on sensitive tems reform, strengthening Flexibility is also reflected issues of corruption and gov- Rule of Law implementation, in the Bank's greater reliance, ernance greatly beniefited the corporate restructuring and in FY99, on new lendinig in- preparationi of the Indonesia governance, and Y2K issues struments to meet the needs (AS Progress Report; partici- (Box 5). In another example of borrowers: pant feedback was highly of flexibility, a Task Force es- * In October 1 998, the positive. In Mexico, the CAS, tablished by the Bank and the Board of Executive Directors was prepared after extensive Commonwealthl Secretariat is approved two new kinds of dialogue with antd participa- assessing the effectivetness of adjustmenit loans: the Pro- tion by government; for the existing instruments in meet- grammatic Structural Adjust- first time, consultations wNith ing the needs of small states. ment Loan, which supports representatives of various In an open trading environ- longer term reforms to address civil society groutps took place ment, globalization presents systemic social, structural, and (for example, business, unionis, many challenges for these na- institutional issues; ancl the hankers, N(c(iS). Consultative tions as does their vulnerabil- Special Structural Adjustment Group meetings are on the ity to external economic Loan, reserved for IHRD bor- rise, particularly in Africa. shocks and natural disasters. rowers in exceptional crisis Client feedback surveys are The Bank is paying increas- situations with major social also beginninlg to be regularly ing attention to countries and poverty consequences. fed into LASs, to introduce emerging from conflict. The * A first, partial-risk IDA- more realism in setting objec- Post-Conflict Fund (I'cr)- only guarantee ($30 million) tives and timetables for assis- which enables rapid response was approved in support of tance programs. to early reconstruction situa- a Bank- irc-funded power Increased flexibility, to serve tions wherc alternative Bank project in C6te d'lvoire in clients better, is translating instruments are unavailable- December 1998; this is one into nevw areas of intervention. was tapped three times in of two guarantee instruments With dramatic shifts in the FY99 to support intensive approved in 1997 to encour- 16 Ttii. WORLD BANK AxxiAI. Rl'()RI 1999 age capital flows to poor pilot approaches in uncharted project portfolio as well as countries. but promising waters, and economic and sector work, * In April 1999, the board phased, sustained implemen- and greater partnership with approved a new Partial tation of long-term develop- reformers, applying lessons Credit Guarantee that would ment programs. In FY99, i.l.s learned especially from the be policy based: the new and API,.s numbered 27 and 28, global crises (Box 6) and in- guarantee could play a cata- respectively, compared to 15 tensifying the focus on results, lytic role in helping IBRD Cli- and 11 the prior year. Reviews seen particularly in the new ents with strong economic of the new instruments are outcome-orientation of (CASS and social programs improve planned. and a gradual move toward re- their access to private foreign * In February 1999, the sults-based management. financing. board approved new loan The quality of Bank services * In FY99, nearly all loans and hedging products for IBRD is up-a particularly satisfying approved were single-currency borrowers, for introduction achievement given the many loans. The fcature, which on September 1, 1999. These new areas of Bank interven- gives borrowers more control market-based products will tion. In latest estimates of the over their foreign exchange enable borrowers to better Operations Evaluations De- exposure, was introduced two manage their market-related partment (owr[), 77 percent of years ago together with more risks and offer greater scope Bank projects had satisfactory flexible lending terms and a to tailor loan maturities to outcomes, up from 65-70 per- wide range of new financial project needs. cent in 1 990-96. The Strategic products. Compact has been the driving * Borrowers also relied con- Improving development force behind these gains, siderably on Learning and In- effectiveness which translate into improved novation Loans (.ll.s) and In FY99, the Bank strength- performance of an incremen- Adaptable Program Loans ened its focus on development tal $4 billion of lending (API.S), introduced in late effectiveness through renewed (double the original target). 1997, to fund, respectively, emphasis on the quality of its Efforts to address-as well BOX 6 FINANCIAL CRISIS: LESSONS FOR THE-BANK'S WORK OED's 1998 Annual Review of Development tion, supervision, information, and governance are Effectiveness focuses on the lessons of the global essential. financial crisis. Noting the growing influence of exog- 4 Social developmnent, inclusion, and safety enous factors on development outcomes, the report nets are vitaL These should be key elements of re- identifies the following lessons: form strategies and development programs given the * Sound macroeconomic conditions are not severe drops in employment in crisis countries; the enough to sustain equitable growth. Unlike the greater vulnerability to shocks in an increasingly glo- 1980s debt crisis, the recent financial crisis started balized environment; and the sharply rising inequal- in countries with relatively strongfiscal and mon- ity within countries (49 out of 74 countries saw in- etary policies and outward-oriented trade regimes. creases in inequality in the 1 990s). * Institutions matter. The crisis showed the cost O Only through partnering can development of weak and unregulated financial systems and successes be scaled up. Sustainable development corporate sectors and how detrimental the lack of requires simultaneous attention to macroeconomic transparency, accountability, and financial disclo- stability; social, human, and structural factors; so- sure can be. Weak institutions also hurt investor cial equity; and capacity building to ensure a social confidence, adaptability to change, and projects' and economic environment conducive to development development impact. A recent analysis found that progress. This extensive agenda calls for donors and only one of 41 low-income countries was rated other stakeholders to jointly address these over- satisfactory on institutional quality. Better regula- whelmingly interdependent issues. OVERVIEW (F WORLD BANK ACTIVITIES 1 7 as anticipate-problems in at two thirds the cost of five impacts. Examples range project performance are also years ago. from agriculture and health yielding results, with a decline In FY99, OED accelerated sector reviews in India and in the share of risky projects. efforts to strengthen measure- Zimbabwe, respectively, to In calendar year 1998, the ment of development effec- civil service reform and public Bank also achieved an esti- tiveness. First, wider stake- expenditure reviews in Africa mated 86 percent satisfactory holder participation in and a Post-Conflict Review in rating for project quality 'at evaluation is being sought: Bosnia-Herzegovina and Gaza entry"-attesting to how well oEIn reviews and studies in- and the West Bank. Finally, they are designed-compared creasingly rely on workshops building country capacity for with 66 percent five years for discussion, report prepara- evaluation is being pursued. earlier, before the "watchdog" tion, and dissemination (for This effort, in partnership Quality Assurance Group was example, Country Assistance with the African Development created to ensure greater disci- Reviews; Aid Coordination Bank, was advanced at a re- pline in project preparation Review; Forestry Review; gional workshop in Abidjan, and supervision. At the same Resettlement; Post-Conflict C6te d'lvoire's capital, in time, the Bank is making Study). Second, evaluations November 1998, with wide progress on the Strategic are becoming broader in attendance including I I Compact's efficiency goals: scope, going beyond individual bilateral donors, the United projects in FY99 were pre- projects within a country to Nations Development pared in half the time and cover sectoral and thematic Programme, the EU, and sev- eral evaluators from a dozen African countries. The work- FIGURE 2 MARGINAL IMPACT ON PRIVATE shop produced action plans INVESTMENT OF $1 OF AID and will promote greater coordination in this area 1.9 According to AssessingAid, in poor couLntries that among assistance agencies. score well on policies, every dollar of foreign aid at- a l B tracts nearlv twvo dollars ot investimlenit, because aid A landmark Bank study, iincreases the confidenice of the private sector an:d Assessing Aid: H/that V4Vorks, helps to provide public services that investors need, Wlhat Doesn't and WVhy, stich as education and infrastructuIre. l'olicies are defined broadly, to include not only sound macro- p economic anid finanicial policies hut also open trade, concluded that foreign aid ex- sectire private property rights, absence of corruption, tended to countries with poor respect for the rule of law, and social safety niets, policies has no or negative im- pact on growth, but that assis- tance to countries with sound 0.5 management raises growth significantly and improves social indicators. According to the study, $10 billion of aid targeted to poor countries wvith good management would raise an extra 25 million people out of poverty, com- -0.5 pared to only 7 million if the Good Average Weak funds were allocated evenly. Economic Policy The findings reinforce the links between aid and private SmA>- A>s,,, >AO IV!A '$v * Population growth: 2.6% GNP per capita index, 1990-98 * Life expectancy at birth: 51 years * Infant mortality per 1,000births: 91 U * * * * a * * * Female youth illiteracy: 29% 100 96 * 1998 GNP per capita: $480 EAST ASIA AND PACIFIC page 42 * Total population: 1.8 billion GNP per capita index, 1990-98 * Population growth: 1.1% * 57 * Life expectancy at birth: 69 years n * Infant mortality per 1,000 births: 37 * Female youth illiteracy: 4% * 1998 GNP per capita: $990 100 SOUTH ASIA page 54 - Total population: 1.3 billion GNP per capita index, 1990-98 * Population growth: 1.9% * Life expectancy at birth: 62 years * 131 * Infant mortality per 1,000 births: 77 u b : , * Female youth illiteracy: 48% * * - 1 1998 GNP per capita: $430 i00 EUROPE AND CENTRAL ASIA page 64 * Total population: 0.5 billion GNP per capita index, 1990-98 * Population growth: 0.1% n * Life expectancy at birth: 69 years loo * * Infant mortality per 1,000 births: 23 * a * * * Female youth illiteracy: 2% * 1998 GNP per capita: $2,190 LATIN AMERICA AND THE CARIBBEAN page 75 * Total population: 0.5 billion GNP per capita index, 1990-98 * Population growth: 1.6% * Life expectancy at birth: 70 years a * * * U * a * Infant mortality per 1,000 births: 32 1 * Female youth illiteracy: 6% _____ * 1998 GNP per capita: $3,940 MIDDLE EAST AND NORTH AFRICA page 86 * Total population: 0.3 billion GNP per capita index, 1990-98 * Population growth: 2.1% * Life expectancy at birth: 67 years a * * * * Infant mortality per 1,000 births: 49 "00 l05 * Female youth illiteracy: 27% * 1998 GNP per capita: $2,050 Note: Population and GNP data are for 1998, other indicators are for 1997. Source: World Development Indicators database. SECTION Two AFRICA 29 AFRICA COUNTRIES ELIGIBLE FOR Regional context of the year as well as a pos- WORLD BANK BORROWING: For the fourth year in a row, sible turning point for Western Angola most African economies con- Africa as a whole. Benin tinued to grow, despite the Slower global growth, Botswana slowdown in world trade and weaker commodity prices, and Burkina Faso reemergence of civil conflict greater competition in some Burundi in several countries. First- export markets-all rooted in Cameroon round effects of the Asian cri- the Asia crisis-may affect Cape Verde sis were more muted on the Africa more in 1999. Effects Central African Republic continent than elsewhere, ex- will vary by country. South Chad cept for South Africa. Domes- Africa, which is more inte- Comoros tic economic activity is also grated into world capital and Congo, Democratic Republic of growing, in food production, trading systems, will continue Congo, Republic of small-scale enterprises, and in- to face a particular challenge. Cote d'lvoire tra-African trade. These begin- Oil exporters (Nigeria, Djibouti nings of economic diversifica- Angola, Gabon) faced major Equatorial Guinea tion show an Africa changing income losses during FY99. Eritrea not only at the top hut also at Conversely, lower fuel prices Ethiopia ground level-in local com- cushioned oil-importing coun- Gabon munities, among farmers and tries from losses on their own Gambia,The entrepreneurs. Most impor- export income. Countries Ghana tant, growth reflects sustained more vulnerable to the global Guinea government efforts to improve slowdown-for example, pro- Guinea-Bissau the climate for investors, bet- ducers of copper, tobacco, Kenya ter manage public resources, timber, and perhaps cotton- Lesotho and promote private sector will need special attention, Liberia provision of key services. particularly to maintain basic Madagascar Although growth in Africa spending for health and Malawi in 1 998 was significant (over 5 education. Mali percent growth in 13 coun- In the longer term, Africa Mauritania tries], and stronger than in will nevertheless benefit from Mauritius many other parts of the devel- the strong reforms that have Mozambique oping world, it was lower than spurred growth (Figure 2-1) Namibia in 1997 due to weaker inter- and created the foundations Niger national commodity prices, for sustained future growth in Nigeria and barely enough to keep up most countries. All African Rwanda with population growth. The governments are less interven- SaoTome and Principe typical African economy grew tionist in productive activities Senegal by 4 percent, compared with than two decades ago. Ineffi- Seychelles 4.4 percent in 1997. Africa's cient public sector marketing Sierra Leone overall eni' growth was only boards have been largely abol- Somalia 2 percent, however, reflecting ished or commercialized and, South Africa slow progress-or none at where still present, made Sudan all-in large countries like more flexible. All economies Swaziland South Africa, Nigeria, and are less protectionist, with Tanzania the Democratic Republic of fewer price distortions. Most Togo Congo. In Nigeria, home to interest rates are market- Uganda one fifth of all Africans, a po- driven, though high due to Zambia litical turnaround marked per- excessive government borrow- Zimbabwe haps the most important event ing. Most foreign exchange re- 3(0 'Fill WoRI 1) BANK ANNi lAI Rll'()RnI 1999 gimes are market-based, with nearly universal growth, with strong commitment from the access to foreign exchange-with the result that region's leaders to expand opportunities and the typical private market premium on foreign services for the poor. Even among reformers, currency was below 5 percent in 1997, com- an unfinished agenda of institutional and gover- pared to 45 percent as recenitly as 1991. nance reform remains, to attract private invest- Despite this progress, huge challenges remain, ment-fundamental to growth. African coun- ranging from the natural obstacles of geography tries are still not as open as the most open of to human-made situations of conflict. People the developing countries. Studies such as the in Sub-Saharan Africa are among the poorest in Africa Competitiveness Report suggest that small the world. While some social indicators have countries face particular problems. improved, others such as primary school enroll- ment have not. AIDS is seriously threatening past Bank assistance gains, reversing life expectancy trends in some Bank assistance to Africa recognizes the broad countries. Effective poverty reduction wvill re- development challenges facing the continent. quire sustained and higher per capita cmp Economic growth must be accelerated to im- FIGURE 2-1 ACCOUNTING FOR GROWTH IN SUB-SAHARAN AFRICA, 1995-97 6 All Sub-Sahoran those with ... and with and with resource countries social stability macro stobility allocation efficiency o4 3 C- ,U a 0 0 K KW V W Ki 9 K 3E 4i~' ' ' K K 'M Z ,. K K ft," ,43 - K K ,,. , t K C,,. W K$i',' '':K W K W . w. Kr K . wK 44 countries 37 countries 30 countries 21 countries Source: World Development Indicators. 1999. SEcnI-IoI Two AFRICA 31 k~~~~~~~~~~~~~~ F:armers in Africa work to increase cl-op productivity, which enhances food security and raises their incomes. -I-o\ I tle( li\ves ot hitundreds ola millions ot resou-rcs overall dedIi nd-a totis oni citialitv Alrir Ilooir. Politic al clt e alnd stabilitv must thait helied cOll\ in5 I[)\ I d detpties to target halt' pir-x 1dil, uimdl-1raIMed bV 110honeSt JIld al .CoLIntahl(e of tihe iI \-2 replll - isnishrment (I'Y()() FYO2) to go\'e'i- fl men11t ..\Aci o(-di In the peast thri( e iti 1a refotIlls to supi ort to par-liallienltarialis to- veais, the hest-ei crori11imIg OuLntie,sas anC A inl- \vward gre'ater inte'grit\ in prithli life. The dual tr(eLas( iln aLhsolUtit r-soiirR es, eVen tIhtiglh 1 emopasis a selertivitv and aid coordi nation 2 TI l 10 W(,\o is A\\'a ,i PI I' (4(1) received strong endorsement from the Bank's ber 1998, a renewed mandate for the Special African partners at two major meetings be- Program of Assistance for Africa (SPA) gave new tween President Wolfensohn and African leaders vigor and relevance to the Bank's role in aid in Kampala and Dakar in the second half of coordination. SPA has given more prominence to FY98. Where policy environments are still the African "voice" by adding the Economic weak, Bank assistance will emphasize dialogue Commission for Africa to its membership. In to strengthen prospects for reform. addition, more countries hosted Consultative Partnership and consultation are solid pillars Group meetings, allowing for greater govern- of Bank assistance to Africa, aimed at maximiz- ment participation, media coverage, and private ing the impact of limited resources. Studies sector and civil society involvement. Partnership and workshops, involving also the African De- and selectivity among donors will be pursued velopment Bank, UN Economic Commission for more systematically over the coming year in Africa, and other African partners, are spurring C6te d'Ivoire, Eritrea, Ethiopia, Ghana, and debate among African policymakers about the Uganda-five countries piloting the Compre- new opportunities-and risks-of a global hensive Development Framework. economy; a joint report on "Africa in the 21 st In June, the Board agreed that Mozambique Century" is expected in spring 2000. In Decem- had completed the requirements to receive $3.7 TABLE 2-1 LENDING TO BORROWERS IN AFRICA, BY SECTOR, FISCAL YEARS 1990-99 (millions of US. doUars) Annual average, Sector FY90-94 FY95 FY96 FY97 FY98 FY99 Agriculture 490.0 407.1 301.3 193.7 176.9 188.1 228 Education 331.6 156.6 131.6 75.1 372.3 194.1 280 Electric power and other energy 200.7 255.3 73.3 163.7 380.3 - 12 Environment 41.0 8.0 38.5 95.4 71.8 15.0 86 Finance 304.9 7.2 116.9 65.9 5.0 79.9 32 Industry 78.2 - 23.7 23.8 - - - Mining 5.4 24.8 12.2 21.4 5.0 15.0 86 Multisector 663.6 420.9 387.8 706.9 404.9 715.1 446 Oil and gas 95.4 - - - - 17.5 18 Population, health, and nutrition 190.6 250.4 158.7 54.9 227.0 172.1 253 Public sector management 90.3 117.3 592.2 110.7 150.1 108.8 109 Social protection 76.9 155.7 257.5 - 114.7 129.6 104 Telecommunications 65.4 - - - - 10.8 13 Transportation 426.9 74.8 420.7 52.9 770.1 236.6 1 252 Urban development 138.2 158.0 190.0 147.3 85.0 110.9 66 Water supply and sanitation 186.0 248.2 35.7 25.0 110.7 75.0 84 Total 3,385.2 2,284.3 2,740.1 1,736.7 2,873.8b 2,068.5 b 2,069 b Of which IBRD 544.6 80.7 - 56.0 57.4 5.0 IDA 2,840.6 2,203.6 2,740.1 1,680.7 2,816.4b 2,063.5 b - Zero. Note: Numbers may not add to totals because of rounding. a. See Explanatory Note, Table 1 (page 10). b. Excludes IDA Hipc grants of $75 million to Uganda in FY98 and $150 million to Mozambique in FY99. SECTION Two AFRICA 33 TABLE 2-2 WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN AFRICA, FISCAL YEARS 1994-99 (millions of US. dollars) Ethiopia Cote d'lvoire Ghana Total region Item 1999 1994-99 1999 1994-99- 1999 1994-99- 1999 1994-99- IBRD and IDA commitments 100 1,142 76 1,656 282 1,091 2,069 14,494 Undisbursed balance 1,008 1,008 427 427 656 656 8,676 8,676 Gross disbursements 148 818 119 1,342 223 1,325 2,387 16,277 Repayments 19 94 147 1,040 30 131 1,123 6,546 Net disbursements 129 724 -28 301 193 1,195 1,264 9,731 Interest and charges 12 65 82 694 25 130 538 4,204 Nettransfer 117 659 -110 -392 168 1,064 726 5,527 Note: The table shows the three countries with the largest lending commitments in the Region over the past two fiscal years (FY98-99). a. Disbursements frln the IDA Specal Fund are included through fiscal 1996. billion (in nominal terms) in debt reduction preliminary discussions on debt relief which from its external creditors, the largest debt could potentially provide up to $2.5 billion in reduction package so far under the Heavily relief While the debt relief process for Ethiopia Indebted Poor Countries (HIPC) Initiative. and Guinea-Bissau has been delayed due to Mozambique became the fourth country over- problems associated with armed conflict, all, and joined Uganda as the second in Africa, Mauritania is expected to have its package to begin receiving assistance under the HIPC Ini- approved in 1999. tiative. For its part, IDA will provide debt service Table 2-1 shows the value and sectoral distri- relief to Mozambique equivalent to $975 mil- butions of total Bank lending to the Africa lion. Elsewhere in Africa, debt relief packages Region in the FY90 to FY99 period. Table 2-2 have been approved for Burkina Faso, C6te compares commitments, disbursements, and d'lvoire, and Mali, amounting to more than $1.2 net transfers to the Region for fiscal years 1994 billion in debt service relief when completed. to 1999, and Table 2-3 shows operations ap- Three other countries-Ethiopia, Guinea- proved in FY99, by country. Figure 2-2 shows Bissau, and Mauritania-have completed IBRD and IDA commitments by sector. FIGURE 2-2 AFRICA: IBRD AND IDA LENDING COMMITMENTS BY SECTOR, FISCALYEAR 1999 Total $2.1 billion a Finance. 2% Electr c power- and other energy, Urban development, 3% Telecommunications, 1% Wsater supply and san,tatmon. 4% Oil and Gas. Mining, 4% Multisector, 21% Environment, 4% Socal protectiorn 5% ELduation, 14% Public sector management. 5% Agriculture, 11% Transportation, 12% Population, heath and nutr bon 1 2% a. Excludes an IDA HIPC grant for $S150 million in support of an economic management proiect in Mozambique. 34 THE WORLD BANK ANNMAi. REPORT 1999 In FY99, IDA lending commitments to Africa Accelerating private sector-led growth were $2.1 billion-slightly down from last year, The absence of strong economic growth that because of conflict, but with significant support exceeds population growth makes it extremely for economic management and social policy, difficult to solve most development problems. human development, and rural and urban de- In many African countries, income per bead to- velopment. Lending included Learning and In- day is still lower than it was at independence 20 novation Loans, introduced last year, for pur- or 30 years ago. The poor are growing in num- poses as diverse as community development in ber each year. Without greater trade and private Lesotho, medicinal plants in Ethiopia, small- investment, faster growth will be elusive, and town water supply in Nigeria, land reform in Africa's role in the world economy will remain Zimbabwe, school-based teacher training in marginal. Africa accounts for 10 percent of Guinea, and a community-based school in Mali. world population but only 1 percent of global Another relatively new lending instrument- GDP. Less than one twentieth of the $210 billion the Adaptable Program Loan-will help educa- in capital that flowed to developing countries in tion in Gambia, agriculture in Senegal, and 1997 went to Africa. Less than 10 percent of reproductive health in Guinea, with particular developing-country merchandise trade-mostly attention to that country's youth. primary exports-came from Africa. BOX 2-1 BUILDING A SUCCESSFUL, VISIBLE EXPORT PROCESSING ZONE IN SUPPORT OF GHANA'S VISION 2020 PROGRAM With its population growing at about 3 percent a Export Processing Zone (Epz) can be a powerful way year, Ghana needs economic growth of 8 to 10 per- to break through the wall of ignorance of a country's cent annually to significantly reduce poverty levels. potential-and "kickstart" a country's visibility in Growth has averaged less than 5 percent over the the global business arena. Ghana has made sub- last decade. To accelerate private investment and stantial progress in this area, but further efforts are growth, Ghana must consciously develop and con- needed toward a successful, privately developed and solidate its "competitive advantages" and cater to managed EPZ. To meet these needs, the Gateway export markets. The Trade and Investment Gateway Project will support: legislative, regulatory, and in- Project is designed to help remove the constraints to centive reforms to meet the requisite international development of trade and exports and to attract di- standards; institution and capacity building to at- rea investments for industrial and infrastructure tract export-oriented manufacturing tenants into a development. It is part of the Ghana Vision 2020 new environment; and improvements in offsite infra- Program that envisages, by that year, middle-income structure such as power, water, waste-treatment, and country status for Ghana and equitably shared telecommunications. growth. Anticipated benefits. With project support, pri- Ghana's business environment today is one of the vate foreign and domestic investors will face reduced best in Africa for private sector development, after al- uncertainties and transaction costs associated with most 15 years of sustained economic reform. Studies doing business in Ghana, more ready sites will be commissioned by the Gateway Project confirm that available for export processing industries, and trade Ghana compares favorably to Togo and Kenya- procedures will be simplified. The project would also potential competitors-and has advantages that benefit the local population, by creating more job make it attractive even in relation to Mauritius and opportunities and improving the skills and mobility Dubai. Yet foreign investors in Asia, Europe and the of the labor force. The project's favorable impact on Americas are largely unaware of the country's busi- foreign direct investment-with firm commitments ness potential-both as a platform for production for of $900 million targeted by end-2002-should world markets and, more broadly, as a gateway to also have a positive effect on Ghana's balance of the West African subregion. payments. International experience suggests that a well- functioning, privately developed and managed SECTION Two AFRICA 35 TABLE 2-3 OPERATIONS APPROVED DURING FISCAL YEAR 1999, AFRICA Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Benin Decentralized City Management I Project Jun 3, 1999 2009/2039 18.90 25.50 Burkina Faso Pilot Private Irrigation Development Project Jan 12, 1999 2009/2038 3.70 5.20 Economic Management Reform Support Operation Nov 5, 1998 2009/2038 11.00 15.00 Cameroon Structural Adjustment Credit III Jan 20, 1999 2008/2038 9.90 13.10 National Agricultural Extension and Research Program Support Project Oct 15, 1998 2009/2038 11.40 15.10 Cape Verde Education and Training Consolidation and Modernization Project May 25, 1999 2009/2039 4.50 6.00 Social Sector Development Project May 25, 1999 2009/2039 11.90 16.10 Energy and Water Sector Reform and Development Project May 11, 1999 2009/2039 12.50 17.50 Privatization and Regulatory Capacity Building Project Jul21,1998 2009/2039 6.80 9.00 Chad Structural Adjustment Credit III May 4, 1999 2009/2039 22.20 30.00 Health and Safe Motherhood Project Supplement Sep 17, 1998 2008/2038 8.20 10.90 C6te d'lvoire Transport Sector Adjustment/Investment Program Dec 15, 1998 2008/2038 19.20 25.60 National Agricultural Services Support II Project Jul14,1998 2008/2038 37.10 50.00 Djibouti Ex-Combatants Reintegration Pilot Project Dec 16, 1998 2009/2038 2.00 2.70 Social Development and Public Works May 25, 1999 2009/2039 11.00 14.80 Ethiopia Health Sector Development Program Project Oct 27, 1998 2009/2038 75.10 100.00 Gabon Pilot Infrastructure Works Aug 24, 1998 2003/2013 n.a. 5.00 Gambia Poverty Alleviation and Capacity-Building Project Mar 16, 1999 2009/2038 10.70 15.00 Education Sector III Project Sep 10, 1998 2009/2038 15.10 20.00 Ghana National Functional Literacy Program Jun 17,1999 2009/2039 23.70 32.00 Community-Based Poverty Reduction Project Jun 9, 1999 2009/2039 3.70 5.00 Economic Reform Support Operation Credit 11 May 27, 1999 2009/2039 1.32 1.80 Economic Reform Support Operation Credit 11 May 27,1999 2009/2039 131.40 178.20 Public Sector Management Reform Project May 4, 1999 2009/2039 10.50 14.30 Trade and Investment Gateway Project Jul 9, 1998 2008/2038 37.60 50.50 Guinea Urban Development III Project Apr 20, 1999 2009/2038 12.90 18.00 Village Communities Support Program Project Feb 23, 1999 2009/2038 15.70 22.00 Population and Reproductive Health Project Dec 1, 1998 2009/2038 8.50 11.30 Pre-service Teacher Education Project Jul 15, 1998 2008/2038 3.10 4.10 Kenya El Niiio Emergency Project Ju 16, 1999 2008/2038 29.70 40.00 Lesotho Education Sector Development II Project Apr 15, 1999 2009/2038 15.00 21.00 Madagascar Structural Adjustment Credit II May 20, 1999 2009/2039 73.50 100.00 36 THE WORLD BANK ANNUAI. REPORI 1999 Principal amount (millions) Country/project name Date of approval Maturities SOR U.S. $ Microfinance Project May 20, 1999 2009/2039 12.10 16.40 Social Fund III Project Mar 23, 1999 2009/2038 10.70 15.00 Malawi Road Maintenance and Rehabiltation Project Jun 10, 1999 2009/2039 22.20 30.00 Fiscal Restructuring and Deregulation Program 11 Technical Assistance Project Dec 3, 1998 2009/2038 67.20 92.00 Second Social Action Fund Project Oct 15, 1998 2009/2038 49.60 66.00 Population and Family Planning Project Sep 23, 1998 2009/2038 3.80 5.00 Mali Health Sector Development Program Dec 17, 1998 2009/2038 28.50 40.00 Mauritania Telecommunications and Postal Sectors Reform Project Jun 10, 1999 2009/2039 8.00 10.80 Mining Sector Capacity Building Project May 13, 1999 2009/2039 11.10 15.00 Nutrition, Food Security, and Social Mobilization Investment Project Mar 15, 1999 2009/2038 3.60 4.90 Public Resource Management Project Feb 26, 1999 2006/2036 0.10 0.10 Moz-ambique Agricultural Sector Public Expenditure Program Project Feb 18, 1999 2009/2038 21.70 30.00 Education Sector Strategic Program Project Feb 18, 1999 2009/2039 51.10 71.00 Economic Managemnent Reform Operation Dec 10, 1998 * 109.50 150.00 National Water Development Project I Jun 17,1999 2009/2039 55.40 75.00 Niger Public Finance Reformn Credit Oct 13, 1998 2009/2038 48.00 64.00 Privatization and Regulatory Reform Technical Assistance Project Sep 15, 1998 2008/2038 14.00 18.60 Rwanda Economic Recovery Credit Mar 30, 1999 2009/2038 53.00 75.00 Community Reintegration and Development Project Oct 15, 1998 2008/2038 3.70 5.00 Senegal Second Transport Sector Project Mar 30, 1999 2009/2039 64.30 90.00 Agricultural Services and Producer Organizations Project May 20, 1999 2009/2038 20.20 27.40 Tanzania Tax Administration Project Mar 30, 1999 2009/2039 28.60 40.00 Togo Pilot Social Fund Project Apr 14, 1999 2009/2039 3.80 5.00 Uganda Road Development Program Phase I Project Jun 29, 1999 2009/2039 67.20 91.00 Financial Markets Assistance Project May 27, 1999 2009/2039 9.60 13.00 Nakivubo Channel Rehabilitation Project May 6, 1999 2009/2039 16.50 22.40 Agricultural Research and Training II Project May 6, 1999 2009/2039 19.10 26.00 Institutional Capacity-Building for Protected Areas Management and Sustainable Use Project Jul 9,1998 2008/2038 9.10 12.40 Zambia Public Sector Reform and Export Promotion Credit Jan 28, 1999 2009/2038 2.00 2.80 Public Sector Reform and Export Promotion Credit Jan 26, 1999 2009/2038 122.70 170.00 Basic Education Subsector Investment Program Support Project Apr 8, 1998 2009/2038 28.50 40.00 Total 1,622.72 2,218.50- n.a. Not applicable (fBRD loan) * The Mozambique Economic Management Reform Operation was financed by an IDA grant under the Heavily Indebted Poor Countries Initiative. It is therefore included in total operations of $2,218.5 million but excluded from total lending commitments of $2,068.5 million shown in Table 2-1. SECTION Two AFRICA 37 In FY99, the Bank continued to support policies promoting greater private investment. Reforms that openi up markets, ease access to capital, simplify business codes, and enhance property rights are the gateway to higher invest- mtent-hb small farmers and entrepreneurs, not just large enterprises. Under the Ghana Irade anid Investmenit Gateway Project, the Bank will help Ghana complete its already ad- vanced reform agenda to boost investment in its Fxport Processing Zone (Box 2- 1). Without _ better governanice, moreover, other efforts to attract private investmc nt will bear little fruit. A kev reform supportedl by the Madagascar Structural Adjustncit Credit reduces oppor- trinities for corruptioni by making rights and license allocations in the mining, tourisnm, and lishinig inu(tistries less discretionarv and more auitomaiLitic- As a precursor of wider public-privatc part- nershlips in infrastructure development, thte Bank approved its first-ever In)A guaranitee f'or the A/,ito powver project in Cote dilvoire, wx hich swill genterate electricitv from locally produced natural gas at a privately owned and Increasing opportunities for girls and women is a operated plant. In a neighboring counitry, priority in Bank assistance to Africa. Burkina Faso, assistance to a privately managed irrigation promotion agent(v will involve, and benefit, small f'armers. this vicious circle can be turned around, as Africani countries are also beginning to work progress in the last five years has shown. with private partners in social sectors. During Those countries that have enjoyed peace, the Bank's Private Sector Development Ex- stability, and good governance have posted change, numerous participants suggested wxays the highest growth. in which private sector groups could help in- TI'he Bank recogo i/es that restoring and crease access to e(litlcation, improve school keeping the peace is the paramounrt challenge children's health, and expand links to knowl- for Africa as the new centurv daws ns. AlthOugh edge oxver the linteriet. thie Bank Group has ilo direct involvement in peacemaking, its readiness to provicle support Promoting peace anld stabilit,? once the conditionis are right catn help ensure Another important buildling block of growth that stability spreads aindl endures. Rsanda, is political stability. After a period of increased xxhic h is reb(ildling its national confidleo ne and security across the continent, FY99 sawT open social fahric after the genot ile of 1 9(t4, re- conflict erupt in at least five countries. One in ceived a $75 million c redlit in FYIt f'or its c-o- five Africans now- lives in a country at war or nomic recovery progranm andc additional support in strit'e. Without peace, there can be no lasting for governmernt de e(entralization anid c ommto- improvement in people's lives. At the same nity participation in dlevelopment. A l earning time, conflict itself is often the result of eco- and Innovation c redit to Djiihouti stipports the nomic stagnation, lowv develoPment, poor reintegration of oe1r1nr comnbatanits both arms' governan(e, injustice, and corrup)tion. War and veterans antid rebel fighters into their h;ome untlerlev'elopment can ftuel each other. But communities through nicroprojects, adlilt 38 TolF WoRii)R B1ANK ANN[ Ai Ri (s ii 19999 education, basic infrastructure, and assistance International Consortium for Cooperation on to the disabled. the Nile, with assistance from the Bank. Cross- Support to regional initiatives is also key to country needs can also be supported through ensuring greater social stability across Africa. investment in shared infrastructure. Bridges FY99 saw significant progress in preparing an and roads damaged in last year's El Nifio BOX 2-2 INTENSIFYING ACTION AGAINST HIV/AIDS IN AFRICA: RESPONDING TO A DEVELOPMENT CRISIS Nowhere has the impact of HIV/AIDS been more se- tions and to help the millions of Africans already vere than in Sub-Saharan Africa. AU but unknown affected. In May 1999, the Bank adopted a new a generation ago, AIDS today poses the foremost strategy, Intensifying Action Against HIv/AIDs in threat to development in the region. Because it kills Africa: Responding to a Development Crisis, in so many adults in the prime of their working and partnership with African governments and the Joint parenting lives, it decimates the workforce, fractures United Nations Programme on HvI/AIDS (UNAIDS). and impoverishes families, orphans millions, and A multisectoral AIDS Campaign Team for Africa shreds the fabric of communities The impact is (ACTafrica), being set up in the Bank's Africa Vice unprecedented and, by any measure, staggering: Presidents' Office, will catalyze implementation of - More than 11 million Africans have already the strategy and maximize internal coordination. died, and another 22 million are now living with The strategy stands on four pillars: HIV/AIDS, representing two thirds of all cases O Advocacy to position HIV/AIDS as a central de- worldwide. velopment issue and to increase and sustain an in- + Ranked by HIv prevalence, the top 21 most tensified response; affected countries in the world are in Africa. In 4 Increased financial and technical support for Botswana and Zimbabwe, one in four adults is African partners and Bank country teams to main- infected. In at least 10 other African countries, stream anti-HIV/AIDS activities in all sectors; prevalence rates among adults exceed 10 percent. + Prevention efforts targeted to both general and * A child born in Zambia or Zimbabwe today is specific audiences, and activities to enhance HIv/AIDs more likely than not to die of AIDS. In many other treatment and care; African countries, the lifetime risk of dying of AIDS * Expanded knowledge base to help countries is greater than one in three. design and manage prevention, care, and treatment Urgent action, by African governments and their programs. partners, will be critical to prevent further HIv infec- FIGURE 2-3 ESTIMATED LIFE EXPECTANCYAT BIRTH: SELECTED AFRICAN COUNTRIES, 1955-2000 70 60 xi 50 _ 40 BoLswaina 40 Uganda Malawi 30 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 Source: Population Division of the Department of Economic and Social Affairs of the United Notions Secretariat, 1998. SECTION Two AFRICA 39 flooding are being repaired with assistance about health while promoting a sense of com- from IDA; sections of the Nairobi-Mombasa munity among the learning groups. The Chad road are important to both Uganda's and Population and AIDS Control Project includes a Kenya's economies. social fund that meets the micro-credit needs of Chadian women as a means of lessening the Supporting human and social development economic burdens caused by HIV/AIDS. Even where they exist, growth and stability The Bank also helped countries strengthen will falter if Africans do not have better access their social safety nets. Malawi received a credit to health, education, and knowledge. In most of $92 million for a second fiscal restructuring direct measures of well-being, Africa still trails and deregulation program and a second credit badly behind the rest of the world. Despite of $66 million for the Malawi Social Action efforts to increase enrollments, more primary Fund. The first Social Fund project created school-aged children are out of school today more than 160,000 jobs, dug 1,100 water bore- than in 1990; in 14 African countries, fewer holes, built 1,500 km of rural roads, and aided than 60 percent of children are in school. One the construction of 1,200 classrooms over three in three Africans still has no access to proper years, mainly in rural areas. Examples of support health services. And HIV/AIDS is reversing 40 for improved social policies and public expendi- years of progress in improving life expectancy ture include the Guinea Public Expenditure (Box 2-2). Human development is a priority Management Adjustment Credit and the Village in Bank country assistance strategies for Africa. Communities Support Program, with its cross- The Senegal Pilot Female Literacy Project is sectoral approach based on local communities' addressing developmental issues that cannot own priorities and the role reserved for them in be handled in formal education settings. The project implementation. The Bank also stepped project not only increases women's literacy up analytical support for improved social poli- rates but also delivers educational messages cies and public expenditure. BOX 2-3 THE PARTNERSHIP FOR CAPACITY BUILDING IN AFRICA Afrtca's chronic lack of human, organizational, flects a growing consensus among African and institutional capacity is widely recognized as a policymakers that, to set the climate and environ- major impediment to sustainable development. Yet ment for the private sector and civil society to flour- efforts by the Bank and virtually all other donors to ish, the public sector must be accountable for its per- build capacity by providing conventionally packaged formance. Such accountability, in turn, depends on a "technical assistance' have so far produced little real vibrant civil society and private sector. impact. Such efforts have too often been ad hoc, PACT will present new opportunities for intro- donor-driven, and dependent on the placement of ducing greater coordination and coherence and a expati ate advisers, far-reaching perspective in capacity-building activi- In May 1999, the Board of Executive Directors ties in Africa, consistent with the approach of the approved Bank suppott for a new framework for col- Comprehensive Development Framework. The part- laboration between African countries and their inter- nership will focus primarily on strengthening the pub- national development partners. The Partnership for lic sector-especially its relationship with oivtl society Capacity Building in Africa (PAcT) is an African ini- and cross-border initiatives (such as regional innova- tiative and, being run by Africans, stands a far tion, research, and training). It will be housed with greater chance of success than many previous donor- an existing institution-the African Capacity Build- driven programs. Initiated in 1995 by the African ing Foundation in Harare. Governors of the Bank, who consistently took the The board has agreed to consider an initial contri- lead in conducting the necessary consultations and bution of $30 million for the initiative. African lead- analytical work, a vision has been shaped into a vi- ers have asked President Wolfensohn to cochair the able program of activities. The partnership also re- Partnership for an initial period. 40 THE WORI.D BANK ANNUAL REPORT 1999 Strengthening capacity and leadership And an Indigenous Knowledge for Develop- African governments need to attract back to ment Initiative was launched to help build public service the level of talent seen in the capacity for sharing successful local develop- 1960s and 1970s. They need to develop a public ment practices. sector that will spark innovation, spread best The quality of IDA's Africa portfolio in FY99 practice, support individual and community ini- was maintained at the FY98 level but, signifi- tiatives in the rest of society, and make Africa cantly for the future, 82 percent of new project less dependent on outside advice. A key Bank designs were judged satisfactory by the Bank's initiative in FY99 in this area was to support a Quality Assurance Group. Countries with top new Partnership for Capacity Building in Africa economic and social policy performance have (Box 2-3). There was also continued support historically had good portfolios. Greater reliance for the African Virtual University and direct on local resources and field office portfolio assistance for improving Africa's technology management, with attention especially to finan- links with the rest of the world. A targeted cial management, is helping. About a fifth of program of assistance supported 30 countries the region's country directors are located in the in preparing their information systems for the field, which has facilitated dialogue, forged Year 2000, using grant funds from the United closer relationships with governments and ben- Kingdom. Particular support was given to eficiaries alike, and benefited portfolio imple- power utilities in Kenya, Tanzania, and UJganda. mentation and monitoring. SECTION Two AFRICA 41 EAST ASIA AND PACIFIC COUNTRIES ELIGIBLE FOR Regional context economies in crisis. While, WORLD BANK BORROWING: FY99 saw the East Asian fi- for example, the Solomon Cambodia nancial crisis abate, and the Islands were hit by the China hard work of recovery begin. collapse of log export markets Fiji Reputed for its fast growth, elsewhere in the region, Papua Indonesia sound management, and in- New Guinea was able to rely Kiribati come equity, the region is now on its abundant natural re- Korea, Republic of emerging from its worst eco- sources to cushion the shock. Lao People's Democratic Republic nomic collapse in modern Within countries also, the situ- Malaysia times-a collapse that pushed ation is uneven. Urban unem- Marshall Islands millions back to the brink of ployment remains high, and Micronesia, Federated States of poverty and decimated the low-income groups are not Mongolia savings of a whole generation sharing in the recovery. Myanmar of new middle-class citizens. The recovery is also fragile. Palau Current account balances, One of the risks relates to the Papua New Guinea dangerously in deficit in early Japanese economy. Despite a Philippines 1997, have swung by more large stimulus package an- Samoa than $100 billion into large nounced in 1998, private fore- Solomon Islands surpluses, enabling sizable re- casters foresee only sluggish Thailand serve accumulations. The re- growth, if that, for calendar Tonga gion has enjoyed more stable year 1999. A Japanese recov- Vanuatu exchange rates since early ery is crucial to the stabiliza- Vietnam 1998, and interest rates have tion and prosperity of Asian fallen to pre-crisis levels. economies. Another risk stems These developments have from the still robust U.S. and provided the foundations for European economies: if they recovery in the region, but enter recession, Asian exports recovery remains uneven. would suffer and likely cut The Republic of Korea's re- short recovery. covery has been rapid and im- Still, profound changes al- pressive. Philippines, Malaysia, ready taking place in East Asia and Thailand are projected bolster the region's long-term to show positive, though prospects. Not only do savings slow, economic growth, and rates remain high and past Indonesia will probably investments in education continue to stagnate. In the continue-ingredients for the transition economies of China East Asian "miracle" years- and Vietnam, protected in the economic crash has forced part by closed capital accounts a new thinking about previ- and also reflecting appropriate ously accepted ways of doing macroeconomic policies and business. A new East Asia is progress in structural reform, being built: one with stronger growth is still rapid but uncer- financial institutions and cor- tain because of slowing inter- porations and one where nal demand and falling export openness applies not just to revenues. Effects on Pacific trade and finance but increas- Island countries have varied, ingly to information and even depending on the extent of politics. The hard work is just their trade, investment, tour- beginning-including creating ism, and aid links with the strong institutions to with- 42 THE WORID BANK ANNUAI REPORT 1999 stand future shocks, building new social safety years 1994 to 1999, and Table 2-6 shows opera- nets to protect the most vulnerable, and aiming tions approved in FY99, by country. Figure 2-4 for strong medium-term growth. The serious shows IBRD and IDA commitments by sector. economic restructuring under way in the crisis- The Bank has played an important role in the affected countries holds out promise for a re- past year's positive developments. New lending gion that will emerge stronger and more resil- operations numbered 55 in FY99, up from 37 ient to future shocks. East Asia, according to in FY97; commitments over the same period present Bank forecasts, is on its way to becom- more than doubled. A key element of Bank sup- ing the fastest-growing region among develop- port was the decentralization of Bank staff to ing countries in 2000. come closer to the needs and wishes of its bor- rowers (Box 2-4). Strategically, assistance fo- Bank assistance cused on helping put East Asia back on the road Table 2-4 shows the value and sectoral distri- to recovery (Box 2-5). Four areas emerged as butions of total Bank lending to the East Asia critical: restructuring the microeconomy and and Pacific Region in the FY90 to FY99 period. strengthening institutions in the region's corpo- Table 2-5 compares commitments, disburse- rate and financial sectors; minimizing corrup- ments, and net transfers to the region for fiscal tion; protecting social sectors; and safeguarding TABLE 2-4 LENDING TO BORROWERS IN EAST ASIA AND THE PACIFIC, BY SECTOR, FISCAL YEARS 1990-99 (millions of US. dollars) Annual average, Sector FY90-94 FY95 FY96 FY97 FY98 FY99 P xa Agriculture 1,074.8 373.0 844.9 1,265.0 1,058.7 1,011.8 919 Education 437.2 526.5 437.9 645.0 103.5 557.2 755 Electric power and other energy 928.5 1,383.0 1,683.0 1,131.4 783.7 100.0 60 Environment 207.3 308.1 170.7 - 278.4 304.0 609 Finance 205.9 - 49.0 28.4 5,385.0 826.0 2,299 Industry 114.2 175.0 217.0 60.0 - 100.0 100 Mining - - 35.0 - - - - Multisector 195.5 167.0 130.0 - 315.0 4,112.0 1,579 Oil and gas 135.4 245.0 - - - - - Population, health, and nutrition 130.8 242.2 296.0 58.9 146.5 104.7 263 Public sector management 78.1 88.0 - - 230.0 203.5 128 Social protection 1.9 267.5 40.0 - 10.0 990.0 1,602 Telecommunications 230.1 325.0 - - 34.5 - 100 Transportation 878.1 1,032.5 916.9 1,243.7 1,110.0 1,041.5 1,014 Urban development 251.3 486.0 542.7 265.0 45.1 264.7 247 Water supply and sanitation 197.4 75.0 57.0 168.6 87.8 149.8 90 Total 5,066.5 5,693.8 5,420.1 4,866.0 9,623.2 9,765.2 9,765 Of which: IBRD 3,990.7 4,592.6 4,252.2 4,074.4 8,847.0 8,754.8 IDA 1,075.8 1,101.2 1,167.9 791.6 776.2 1,010.4 - Zero. Note: Numbers may not add to totals because of rounding. a. See Explanatory Note, Table I (page 10). SECTION Two EAST ASIA AND PACIFIC 43 BOX 2-4 DECENTRALIZATION OF BANK STAFF IN EAST ASIA The East Asia and Pacific Region has continued to and their improved integration into the Bank's net- shift operational work closer to the client. More Bank work structure, including through increased training. staff members were located in field offices in FY99, + In the second half of FY99, 11 projects out of 28 with more authority transferred to them-a move of were negotiated in the fteld. Loan signings are also special significance in a region marked by the biggest beginning to occur in-country. In the case of the $80 time-zone differentials from the Bank's Washington million Yangtze Flood Emergency Rehabilitation headquarters. The move has allowed the Bank to op- Project in China, the Bank's Beijing team was able erate in real time and provide 24-hour service. More to prepare and negotiate the project with three differ- fundamentally, it has enhanced the quality of the ent provinces in just a few months. Bank's relationship with its clients and increased the * Policy advice is also reaching the client more speed and relevance of its services. quickly. Short policy notes, produced by sector spe- o Six out of the region's eight country directors are cialists in the field, are now the rule rather than now located in the field. the exception. * The capacity of East Asia local offices has in- creased, with stepped-up recruitment of national staff the environment. These areas are relevant to scoring the need to manage the opportunities- the five market-economy countries most af- and risks-of a globalized economy, with its fected by the crisis (Korea, Thailand, Indonesia, large, rapid, and often undiscerning capital Philippines, and Malaysia), but also apply to flows. Restructuring these sectors is vital to transition countries that were spared the full long-term recovery. Specifically, countries need: brunt (China, Mongolia, and Vietnam) and a strong, well-regulated banking sector, long- to the region's small economies (Cambodia, term bond markets, and internationally recog- Lao PDR, the Pacific Islands, and Papua New nized accounting and auditing standards, to Guinea). minimize their vulnerability to external shocks and maximize their ability to profit from capital Restructuring the microeconomy and strengthening flows; appropriate corporate governance sys- institutions tems to provide protection and voice to minor- The crisis exposed major weaknesses in the ity shareholders; and systems for transparency region's financial and corporate sectors, under- and openness so that investors, borrowers, and FIGURE 2-4 EASTASIAANDTHE PACIFIC: IBRDAND IDA LENDING COMMITMENTS BY SECTOR, FISCALYEAR 1999 Total $9.8 billion Urban develop,ent. 3% Water supply and sanitation, 1% Populat on health, and nutrit on, 3% ndcustry, 1%/e Env ronment, 6% Electric power and other energy, % Publ c sector management 1% Eduaction, 8% Finanice, 24% Agriculture, 9% Social protection, 16% Transportation, ' 0% M.Itisecto 16% 44 THE WORID BANK ANNUAI. REPORT 1999 BOX 2-5 EAST ASIA: THE ROAD TO RECOVERY East Asia has everything it needs to restore eco- sion in Thailand, Korea, Indonesia, and Malaysia nomic growth, as long as it persists with economic with spillover effects in the Philippines and smaller reforms and protects the poor during the long and East Asian economies. Countries have faced falling difficult recovery. That is the message of East Asia: wages, skyrocketing unemployment, a shift of labor The Road to Recovery, a report published by the from high-wage to low-wage jobs, and sharp cuts in Bank in September 1998. The report analyzes the average consumption. Economic expansion, which crisis, reviews progress in tackling problems, and once raised the incomes of poor and served as an suggests policy directions that will affect the pace of unofficial social safety net, has ended, leaving large economic revival. segments of society vulnerable, with greatest hard- The three-point road to recovery consists of. enact- ship for the poor and politically disenfranchised- ing governance, financial, and environmental re- especially women and children, ethnic minorities, forms to stimulate sustainable growth; protecting and migrants. low-income groups from the crisi' social impacts, While the analysis was an important part of the ensuring that they share in the recovery; and revital- Bank's nonlending assistance, touring the region, izing international capital flows by restoring investor Europe, and the United States to disseminate the confidence. report's conclusions and recommendations has been The crisis is noted to be unique in that it has equally significant. In addition to printed copies, mfused a currency cris, banking crisis, and a re- the entire book has been available on the Bank's gional financial panic into a particularly virulent web site. At bookstores and the web site, demand strand of economic malady." The result: severe reces- has been high. shareholders play on a level field, free from ing the Financial Supervisory Commission de- corruption. sign and implement corporate and financial sec- Bank support for strengthening the corporate tor restructuring, with particular focus on legal and financial sectors is being provided under and regulatory aspects. The independent com- large adjustment loans accompanied by policy mission was created and charged with restruc- advice and technical assistance: turing as a part of government's prompt and Korea. Through a multidimensional $2 billion comprehensive response to the crisis. The crisis Adjustment Loan (Box 2-6), the Bank is help- broke when five major corporations (chaebols), TABLE 2-5 WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN EAST ASIA AND THE PACIFIC, FISCAL YEARS 1994-99 (millions of US. dollars) Korea, Republic of China Indonesia Total region Item 1999 1994-99' 1999 1994-99' 1999 1994-99 1999 1994-99' IBRDand iDA commnitments 2,048 7,703 2,097 16,568 2,741 8,257 9,765 41,403 Undisbursedbalance 249 249 10,711 10,711 4,669 4,669 19,321 19,321 Gross disbursements 2,091 8,118 2,026 12,607 2,135 6,981 7,947 34,342 Repayments 252 2,422 497 2,258 781 6,390 2,265 16,027 Net disbursements 1,839 5,696 1,530 10,349 1,354 591 5,682 18,315 Interest and charges 515 1,400 682 3,171 819 4,982 2,514 12,903 Net transfer 1,324 4,296 848 7,178 535 -4,391 3,168 5,412 Note: The table shows the three countries with the largest lending commitments in the Region over the past two fiscal years (FY98-99). a. Disbursements from the IDA Special Fund are included through fiscal 1996. SECTION Two EAST ASIA AND PACIFIc 45 overly indebted, abruptly failed as a conse- Philippines. The banking and corporate sectors quence of rapidly rising interest rates, dragging did not suffer crisis but are facing major strains. down with them numerous small and medium The Banking System Reform Project aims to enterprises. strengthen the banking system and help it bet- Thailand. The Bank has participated actively ter withstand current difficulties and future in measures to speed corporate restructuring, shocks.The Private Enterprise Credit Support including support to develop intercreditor arbi- Project will help private enterprises affected by tration agreements and training programs for the credit crunch and currency crisis. all participants in restructuring, and for the Malaysia. A $2.7 million Policy and Human Corporate Debt Restructuring Advisory Resources Development (PHRD) grant is helping Committee of the Bank of Thailand in its facili- the government of Malaysia implement a series tation and monitoring role. of reforms in the corporate and financial sectors. BOX 2-6 MULTIDIMENSIONAL STRUCTURAL ADJUSTMENT LENDING IN KOREA The Republic of Korea suffered a severe financial poor and vulnerable and make lasting improvements crisis in late 1997. Rising interest rates dealt a in Korea's social protection system. crushing blow to highly indebted Korean firms A multiparnner approach. SALI is part of a $57 (average debt-equity ratios three times above indus- billion international financing package for Korea try norms), intensifingfinancial system distress in agreed to in late 1997, toward which the Bank com- their wake. The crisi and ensuing recession reversed mitted $10 billion. Several multilateral and bilat- gains in economic performance made over three eral donors came together, with the Asian Develop- decades of strong investment in human and capital ment Bank leading support for financial sector resources and technological capacity. The social technical assistance. Within the Bank Group, SALII impact has been severe: unemployment has risen is complemented by IFc's renewed engagement in sharply-from a pre-crisis rate of 3 percent to over Korea to support market or individual corporate 7 percent, affecting particularly the self-employed needs, as well as mIGA's continued support for capac- and unorganized workers from small and medium- ity building in investment promotion, where demand sized firms, and resulting in-at least-2.4 million is increasing. more poor. A muldimensional approach. SALII is especially Objectives. The $2 biUion Korea Second Struc- indicative of the increasingly multidimensional na- tural Adjustment Loan (SALII) was approved in late ture of Bank adjustment lending. Efforts target as 1998 as the second in a series of adjustment loans much the social and human as the macroeconomic supporting the government's reform program, adopted side of development. Public assistance programs in following the crsis. SAIJI will help Korea restore fi- Korea have been limited, given rapid growth and nancial stability, and thereby investor confidence- near-full employment. Adjustment lending has pro- key to a return to strong and sustained growth- vided quick-disbursing budget support for maintain- while mitigating the social costs of adjustment, ing spending on existing safety nets, while supporting through: structural reforms that better protect the poor and * financial sector reform to address weak financial elderly (expanded safety nets, better targeting of institutions, strengthen regulation and supervision, poor), increase workers' social protection (expanded and develop capital markets; unemployment insurance and pension systems), and * corporate sector reform to restructure corporate improve public sector health insurance. Another non- debt, promote corporate governance and competition traditional emphasis of adjustment support to Korea policies, and reform and privatize state-owned has been governance: the reforms under SALs i and ii enterprises; and strengthen shareholder rights, creditor rights, and fi- + labor market/social protection reform to cushion nancial transparency and accountability, all contrib- the impact of crisis and economic restructuring on the uting to a sounder institutional framework and in- creased investor confidence. 46 THE WORLD BANK ANNUAI. REPORT 1999 The funds xvould help coordinate various gov- ernment initiatives, including the establishment of anl asset-management corporation and a (or- .. porate Debt Restructuring Committee, and also lay the groundwork for effective use of future donor funds. Similarly, the Bantk is administering a $7 35,000 Asia-Europe Meeting (ASFNI) Tech- nical Assistance Grant (Box 2-7) to help Bank, Negara design and implement an early wvarning system for the hanking sector, on an institution- _ hy-institution basis. The grant also ftunds a studyv of international practices in depositor protec- tion and deposit insurance plans, including their t1 possible iniplications for Malaysia. The events of the past twvo years have lent ne w urgency to China's dual-track reformn of state-owned enterprises aLid banks, begun r belore the crisis. Lagging internal consumption and increased unemployment threaten con- tinued growth. Vietnam is pursuing similar reforms with mixed results to date. However, L 43 its efforts to modify trade lawvs and to rediuce I ., . and simplify impor-t barriers and export rules J are a significant step forwvard. Vietiana is one Broad financial sector reforms are changing the face of of the countries piloting the Comprehensive financial transactions in East Asia. Development Framework approach, which brings together e conomic, structtiral, and social issues in support of the gov%ernment's next controls, and transformation of state-owned en- five-year plan, with heavy reliante on donor terprises to achieve financially viable operations. coordination. Throughi the Infrastructurt Asset Management The Lao baniking sector is in a precarious Project, the Banik is helping the government state, with recent audits indicating that the boost efficienicv, increase commnunity participa- state-owned comnmnercial banks are insolvent tion, andl strengthen mantagernent of the wvith large shares of nonperforming loans. Finani- counItry's vital infrastructure. In the Solomon cial sector problems are also integrally litike(d Islands, the Bank is supporting government wvith the prevailing macroeconomic crisis. 'lhe efforts to stabilize aLndi restruCture the et.onomy, government has requested the Bank, the sii, l]aunche 1d in response to the country's f'inanicial and the Asian Development Bank to undertake crisis. a joint review to aid in the formulation of a sec- tor ref'orm strategy and program that would he Mohiiini-cing corriuqtion supported by an mA sector adjustment opera- Efforts to minimize opporttnities for corrup- tion once macroeconomic imbalances are reined tion within Bank-supported projects andl, more in. Related issues of state-owned enterprises, the broadily, in society xvere mainstreamed into the regulatory environment for private sector devel- region's work this fiscal year. The impetus wvas a opment, the Agricultural Promotion Bank, and heightened awareness, universally, that corrup- microcredit would also be addressed. Samoa is tion could dlerail recov ery by undermining in- engaged in an a-tive progrim of public sevtor vestor .ontfiden-e and by imposing a harsh, in- reform and private sector growtth, which in- visible tax tn the poor anid vulnerable. Although cltides accountability and performance monitor- the Banik had worked against (orruption in the ing for line departments, devolution of financial past, the new political and economit. landscape Si ( I It N T W) LAE 1 AsIA ANI) PA( ii;ic 47 BOX 2-7 REGIONAL INITIATIVES IN EAST ASIA: SUPPORTING COUNTRIES IN CRISIS The Asia-Europe Meeting (AsEM) Asian Financial to short-term capital needs during the process of Crisis Response Trust Fund was set up by the Euro- implementing economic reforms, and the other half pean Commission and many European Union (Eu) is earmarked for medium- and long-term reformns. member states in response to the crisis. It makes The initiative is providing major assistance for available expertise in the social and financial sectors, restructuring corporate debt, reforming financial which are funded equally by the initiative. sectors, strengthening social safety nets, increasing Thus far, more than 50 activities have been ap- employment, and addressing the credit crunch. proved from the ASEM Trust Fund, costing a total of Asia Growth and Recovery Initiative. In $33 million in the seven recipient countries-China, November 1998, US. President Clinton and Indonesia, Malaysia, the Philippines, South Korea, Japanese Prime Minister Obuchi announced The Thailand, and Vietnam. The fund is helping reform Asia Growth and Recovery Initiative (AGRI), a social security programs, monitor poverty, design pro- multilateral effort to stimulate economic growth in grams to mitigate the crisis' impact on the health Asia. With support from the Bank and the Asian and education of the poor, and restructure the finan- Development Bank, AGRI will initially target the mo- cial and corporate sectors. bilization of $5 billion in bilateral and multilateral The New Miyazawa Inifative Japan pledged a support to further corporate restructuring and restore generous package of support for its neighbors in Oc- access to capital, includingfor smaU and medium tober 1998. The Miyazawa Initiative, named for the enterprises. The first meeting to review the progress country's Finance Minister Kiichi Miyazawa, is pro- of the initiative was held in Bangkok in April 1999. viding approximately $30 billion; half is dedicated in the region presented new opportunities for establishing institutional mechanisms for progress. Anticorruption support has become developing and implementing a national anti- prominent in all East Asia Country Assistance corruption strategy; and initiating action on Strategies (CASS). While much remains to be longer-term governance reforms. With Bank done in East Asia, as elsewhere, the past year support, Thailand is developing a decentrali- offers encouragement that governments, busi- zation and local government-strengthening nesses, civil society, and donors are serious program, which will improve the weak financial about maintaining the pressure for progress. management, service delivery, and public infra- Assistance was most significant in Indonesia, structure management capacity of local urban where the Bank explored, first, what could governments. be done about the atmosphere of KKN-the Vietnam also made significant strides. A new Indonesian acronym for corruption, collusion, Regulation on Fiscal Publication was introduced, and nepotism in the country-and second, which promotes transparency in the accounts how to protect the integrity of Bank-financed of state and provincial governments, budgetary activities in Indonesia. Working with govern- spending units, state enterprises, and funds ment, other stakeholders, and Indonesian civil from public contributions. The government of society, the Bank is helping develop a strategy Vietnam committed to publishing the budget to combat corruption in public sector opera- in 1999; several donors at the December 1998 tions. Preliminary recommendations focus on Consultative Group (CG) meeting offered tech- safeguarding the government's social safety nical assistance for this purpose. net programs from misuse of funds; making Cambodia suffers from weak governance and immediate progress on transparency and infor- corruption in public sector management, and mation through freedom-of-information mea- the new government has given high priority to sures, whistleblower protection, and conflict- addressing these ills. In the recent Public Ex- of-interest rules in public decisionmaking; penditure Review, published for the Consulta- 48 THE WORLD BANK ANNUAI, REPORT 1999 tive Group meeting in February 1999, the Bank with efforts to stimulate growth through labor- tackled these issues in the context of revenue intensive public works and job-creation pro- loss and expenditure leakage and diversion. grams. In the transition economies, governments With funding from the Danish Trust Fund on are paying increasing attention to the social Governance, the Bank conducted a private en- costs of needed state enterprise reform by main- terprise survey on business environment and taining incomes of laid-off workers. In the poor public sector governance to get a detailed ac- Southeast Asia and Pacific Island countries, gov- count of the nature and severity of the impact ernment capacity to cushion the blow of reces- of public sector governance problems on the sion is severely limited. private sector. In addition, with Institutional Assistance for social protection has increased. Development Fund funding, the Bank will In hardest-hit Indonesia, the Bank has empha- survey public officials and private citizens on sized assistance to protect social sector spend- governance and corruption issues and jointly ing, especially on safety nets and effective tar- prepare an action plan with the government. geting, to ensure that scarce resources have their intended impact. In Korea, the Bank has Protecting social sectors worked with the government, business, and The crisis broke down part of East Asia's im- labor unions to amend labor laws, enabling plicit social contract, in which the state pro- company restructuring without causing undue vided investments in health and education, hardship to workforces. The Philippines Second while growth and family ties provided a safety Vocational Training Project, scheduled to close net. At the peak of the crisis, external finance in December 1998, has been extended through had to support basic social expenditures. As the end of 1999 to fund training for displaced the focus moves to recovery, the agenda is overseas workers and unemployed youth with a changing. Basic health and education expendi- view to mitigating the social impact of the East tures remain central components, together Asia financial crisis. In Thailand, the Bank's BOX 2-8 INNOVATIVE APPROACHES TO MUNICIPAL SERVICES DELIVERY IN INDONESIA The Municipal Innovations Project for Indonesia municipalities. Infonnation-sharing is an important originated in an August 1997 Bank-sponsored con- element. ference for innovative mayors, aimed at exploring The municipal innovation proposals approved fo- ways to provide efficient services at lower cost for cus mainly on improving the delivery of services to Indonesia's growing urban population. The current the urban poor through new approaches such as process of central approval for financing of municipal community-based waste recycling programs, upgrade programs reduces flexibility: private sector-commu- of vendor locations, development of small businesses, nity consultation and participation are limited, local cultural heritage preservation, and improved infor- financingfor new approaches is seldom available, mation and urban management. A three-year period and incentives are few. The $5 million Learning and is allowed for implementation and for a learning and Innovation Loan is helping fund grants (maximum dissemination period. of $100,000) for a series of small initiatives de- With an urban population of 60 million in Indo- signed to test new approaches in delivery of services nesia, the benefits could be widespread if the innova- to the urban poor. tions are replicated broadly. Experiences will be dis- The project, approved in February 1999, aims to seminated via workshops, newsletters, and promote institutional refonm and demonstrate that electronically, and the project implementation agency client-responsive municipal service improvements can will promote the development of an independent net- be stimulated through small participatory efforts, work of local government agencies to encourage the funded on a competitive basis. It encourages munici- replication of successful initiatives. As a further in- pal innovation, dissemination of successes, and im- centive, awards for excellence will be presented in provement in central government practices affecting late 2000 for the three best innovations. SECrIIONTwo EAST ASIA AND PACIFIC 49 Urbanization is an emerging issue for East Asia. $300) million) Social Iinvestmienit Program-i Loan gress, whiere mavors fromT all over the world aimis to fonid job c:reation f'or tile poor anid oni- met to diiscuss efficienicies in inifrastruictuire emiployled, expand traininig for the urnemployed, firnancial optos was oattract in vestment; andc suppor-t low-incomre hecalthi insuirance corrn mLunication and in Form iation strategies;- programis. A follow-up loani anid a sk-ills develop- andcl managemnent issues. The Banik is working menit prolect are also addressing jobs, uinenm- closely wvith several counitries to pilot ap- ployment, aInd traininig leeds. In trailsition andc proaches to urban poverty redluction anid sniall economnies, tile Bank iS fOculSing Onl publiC muin icipal service dielivery (Box 2-8). expenditutre reviews and advice oni the struictuire of social spendcing. Specific econiomiic aildi sector Stif>giiirdiig the enviiruntnent work is Being" condulictedI inl Chinai, Vietnam, Althouigh the crisis niaturally forced the Bank alild Carlillodia. to shiift its focuis fromi the lotig-terill dlevelop- Ani emecrging issuec for Last Asia is its rapid nIlilt agenda of a few\, years ago, certaini arecas u1rbanization aIlidaSSOCiated imlJ)iCatiOns, for oir- continuedl to clenlanid--and receive-priority ban poverty andc dleliveryv ±furban ilasic services. atteiltion. Deforestation, severe tiarhat air polloi- As the rego' cties enlerge as growing eniginies tioll, Pt)l ae talt n(aiato,dgaa of econonliic groxvtlh, basic services suelli as en- ti(oil of coastal zoneS, and loss of hahitats for 1er Lv, iloig, an1d Sailitation are -oninfg und1Cer rare species wvere seriouis eniviroilmrental prob- grow,ing1 Il-eSSUlre. Disease is re-emnerging, espe- leills for East Asia even ibefore the crisis. XVith cially amiong tIle uirban poor, xvlo r-ailk amiong inc reased nlUmrbers of poor folloxwing the crisis, those lardlest 11 it by tile finaniiciail crisis. Eff'Orts reliance oiinIauttral resources Ilais growil. More aire nleeded to upgrade basic Se'r\ iCeS aild helpI- fishl IlaLve been Consumed, aind mlore trees Cuit financially wveak utilities. in May, the Bank, down, to beniefit donliestic conisumptioll as well cobosted tIle Global Conlpetitiv'e Cities Con-_ as exports, whlich are illore comipetitive as a re- 50 Tini WOR IP BANK A,\\ '\i Rioa I k99 sult of currency devaluation. At the same time, support activities. Apart from projects and the crisis has resulted in a cutback of expendi- activities that have direct environmental com- tures needed to staff protection agencies and, in ponents (such as rural development, Global some cases, has encouraged governments to Environmental Facility-funded biodiversity open valuable forest land for farming and log- and conservation projects, land management, ging. A Bank report, The Environmental Conse- and forestry projects), all infrastructure and quences of the East Asian Financial Crisis, being energy projects have a strong bias toward envi- discussed across the region and in Europe and ronmental sustainability. For example, under North America, has sought both to raise global the Nam Theun 2 Hydropower Project pro- awareness of the issue to attract donor and civil posed for a World Bank risk guarantee, an society support and to galvanize borrowers into unprecedented program of international over- action to prevent the need for more costly re- sight and local consultations is accompanying medial action later. A set of supporting surveys environmental and social impact assessment on poverty and the environment, mining, and studies, which in most cases exceed Bank natural resources will help define the environ- operational requirements. mental risks and opportunities posed by the financial crisis. Building relationships and partnerships To address environmental concerns in the cri- The Bank has been increasingly active in aid sis countries, the Bank is recommending a three- coordination. In response to the crisis, it pronged approach. First, preventive measures emerged as the primary coordinator of technical would include raising natural resource fees and assistance (TA) for financial and corporate re- strengthening or adopting natural resource man- structuring activities and for the social sector as agement policies; focusing social programs on a whole. Bank staff have facilitated Consultative settlements close to environmentally sensitive Group meetings for these countries, with areas to address poverty-environment links; and greater attention to public consultation and protecting expenditures with simultaneous so- collaboration with civil society. Full or interim cial and environmental benefits and identifying CG meetings for Cambodia, Indonesia, and the alternative revenue sources to maintain key en- Philippines were conducted in FY99. The Bank vironmental functions. Second, efforts to build is also mobilizing bilateral support and becom- on synergies between adjustment and environ- ing more active in reviewing and prioritizing mental objectives include those under the first TA proposals. Examples include the European and second Indonesia Policy Reform Support Union-financed Asia-Europe Meeting funds Loans, addressing forestry sector issues in par- and the Japanese-financed Special PHRD funds, ticular. Third, monitoring and ensuring the which support TA needs in the financial, corpo- implementation of environmental conditions of rate, and social areas. adjustment lending have also been important. The Bank and the IMF have established a Key to Cambodia's development is the ex- strong working relationship in all the crisis ploitation of forestry in an environmentally sus- countries, holding joint and synchronized mis- tainable, socially responsible, and economically sions to review and assess respective programs. viable manner. In recent years, however, condi- Regular reporting systems between the two tions in the forestry sector have continued to organizations have improved dialogue signifi- decline with rampant illegal log smuggling. In cantly since the start of the crisis. Common response, the Bank helped prepare four studies guidelines for coordinating activities are also on forestry policy, log control and monitoring, helping improve discussions at technical and legal review of concession contracts, and con- policy levels. cession management. Recommendations from In preparing Country Assistance Strategies those studies are being implemented, including (CASS), the Bank is emphasizing close consulta- under a Learning and Innovation Loan. tions not only with governments but also with Environmental issues in Lao PDR are fully broader civil society, including NGOS, people's mainstreamed in the Bank's lending and other groups, business groups, trade unions, and SECTIONTwo EASTASIA AND PACIFIC 51 TABLE 2-6 OPERATIONS APPROVED DURING FISCALYEAR 1999, EAST ASIA AND PACIFIC Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Cambodia Road Rehabilitation Project Mar 23, 1999 2009/2039 32.30 45.31 Social Fund II Project Mar 23, 1999 2009/2039 17.90 25.00 Northeast Village Development Project May 18, 1999 2009/2039 3.60 5.00 China Enterprise Reform Project Jun 28, 1999 2009/2034 3.70 5.00 Western Poverty Reduction Project Jun 24, 1999 2005/2019 n.a. 60.00 Western Poverty Reduction Project' Jun 24, 1999 2005/2034 73.80 100.00 Fujian Highway II Project Jun 24, 1999 2005/2019 n.a. 200.00 Sichuan Urban Environment Project Jun 17, 1999 2005/2019 n.a. 150.00 Sichuan Urban Environment Project' Jun 17, 1999 2009/2034 1.50 2.00 National Highway IV Project-Hubei/Hunan Jun 17, 1999 2005/2019 n.a. 350.00 Renewable Energy Development Project Jun 8, 1999 2005/2019 n.a. 100.00 Pension Reform Project Jun 4, 1999 2009/2034 3.70 5.00 Rural Water Supply and Sanitation IV Project Jun 3, 1999 2005/2019 n.a. 16.00 Rural Water Supply and Sanitation IV Project Jun 3, 1999 2009/2034 22.20 30.00 Loess Plateau Watershed Rehabilitation 11 Project May 25, 1999 2005/2019 n.a. 100.00 Loess Plateau Watershed Rehabilitation II Project May 25, 1999 2009/2034 36.90 50.00 Guanzhong Irrigation Improvement Project I May 25, 1999 2005/2019 n.a. 80.00 Guanzhong Irrigation Improvement Project ' May 25, 1999 2009/2034 14.70 20.00 Higher Education Reform Project May 18, 1999 2005/2019 n.a. 20.00 Higher Education Reform Project' May 18, 1999 2009/2034 36.80 50.00 Technical Cooperation IV Project May 18, 1999 2005/2019 n.a. 10.00 Technical Cooperation IV Project * May 18, 1999 2009/2034 25.70 35.00 Health Nine Project May 4, 1999 2005/2019 n.a. 10.00 Health Nine Project' May 4, 1999 2009/2034 36.80 50.00 Liaoning Urban Transport Project Mar 30, 1999 2004/2019 n.a. 150.00 Container Transport Project Mar 16, 1999 2004/2019 n.a. 71.00 Accounting Reform and Development Project* Feb 23, 1999 2004/2019 n.a. 27.40 Accounting Reform and Development Project Feb 23, 1999 2009/2033 4.10 5.61 Yangtze Flood Emergency Rehabilitation Project Feb 9, 1999 2004/2019 n.a. 40.00 Yangtze Flood Emergency Rehabilitation Project a Feb 9, 1999 2004/2019 28.90 40.00 Anning Valley Agricultural Development Project Jan 21, 1999 2004/2034 n.a. 90.00 Anning Valley Agricultural DevelopmentProject' Jan 21, 1999 2009/2019 21.40 30.00 Anhui Provincial Highway Project Dec 15, 1998 2004/2019 n.a. 200.00 Indonesia Social Safety Net Adjustmnent Loan May 20,1999 2003/2014 n.a. 600.00 Policy Reform Structural Adjustnent Loan 11 May 20, 1999 2003/2014 n.a. 500.00 Water Resources Sector Adjustment Loan May 18, 1999 2003/2014 n.a. 300.00 Urban Poverty Project May 18, 1999 2009/2033 73.50 100.00 Sulawesi and Eastern Islands Basic Education Project Apr 8, 1999 2002/2014 n.a. 47.90 Sulawesi and Eastern Islands Basic Education Project' Apr 8, 1999 2009/2033 11.70 15.90 Sumatera Basic Education Project' Apr 8, 1999 2002/2014 n.a. 54.50 Sumatera Basic Education Project I Apr 8, 1999 2009/2033 14.80 20.10 Corporate Restructuring Technical Assistance Project Mar 25, 1999 2002/2014 n.a. 31.50 academia. Public consultation in Indonesia has on Bank assistance strategy over an 18-month been especially intense, given political and eco- period, and on proposed adjustment operations. nomic uncertainty and highly divisive issues: Feedback was highly positive, with the sessions protecting social safety net spending from cor- especially productive for Bank staff In the ruption, implementing governance reforms un- Philippines, the Bank met extensively with gov- der a transitional government, and continuing ernment and donors, as well as with representa- policy reform to address institutional weak- tives from NGOS, civil society, business groups, nesses and entrenched interests at the heart of and academia, to discuss the 1999 CAS. Here, the crisis. Field office-led consultations focused too, the response was overwhelmingly support- 52 THE WORI., BANK ANNtAI REPORT 1999 Principal amount (niillions) Country/project name Date of approval Maturities SDR U.S. $ Municipal Innovations Project Feb 9, 1999 2002/2014 n.a. 5.00 Early Child Development Project Jul 28, 1998 2002/2014 n.a. 21.50 Health V Project Jul 14, 1998 2002/2013 n.a. 44.70 Policy Reform Structural Adjustment Loan Jul 2,1998 2002/2013 n.a. 1,000.00 Korea, Republic of Structural Adjustment Loan ll Oct 22, 1998 2004/2013 n.a. 2,000.00 Financial and Corporate Restructuring Assistance Program Aug 6, 1998 2004/2013 n.a. 48.00 Lao People's Democratic Republic District Upland Development Conservation Project Mar 18, 1999 2009/2039 1.50 2.00 Provincial Infrastructure Project Sep 22, 1998 2008/2038 20.70 27.80 Malaysia Education Sector Support Project Mar 30, 1999 2002/2014 n.a. 244.00 Year 2000 Technical Assistance Project Mar 30, 1999 2002/2014 n.a. 100.00 Social Sector Support Project Mar 30, 1999 2002/2014 n.a. 60.00 Mongolia Private Sector Development Project May 25, 1999 2009/2039 8.90 12.00 Philippines Local Government Finance and Development Project Mar 23, 1999 2004/2019 n.a. 100.00 LGU Urban Water and Sanitation Project Dec 15, 1998 2004/2019 n.a. 23.30 Private Enterprise Credit Support Project Dec 3, 1998 2004/2019 n.a. 150.00 Rural Finance Ill Project Dec 3, 1998 2004/2018 n.a. 150.00 Banking System Reform Project Dec 3, 1998 2004/2018 n.a. 300.00 Samoa Infrastructure Asset Management Apr 15, 1999 2009/2039 10.30 14.40 Solomon Islands Structural Adjustment Credit Jun 17, 1999 2009/2039 8.90 12.00 Thailand Economic and Financial Adjustment Loan II Mar 25,1999 2003/2014 n.a. 600.00 Social Investment Project Jul 9,1998 2002/2013 n.a. 300.00 Economic and Financial Adjustment Loan Ju19,1998 2002/2013 n.a. 400.00 Vietnam Three Cities Sanitation Project May 18,1999 2009/2039 59.40 80.50 Mekong Delta Water Resources Project May 4,1999 2009/2039 72.80 101.80 Higher Education Project Aug 27, 1998 2009/2038 62.10 83.30 Urban Transport Improvement Project Aug 27, 1998 2008/2038 31.80 42.70 Total 740.40 9,765.22 n.a. Not applicable (miRD loan). a. "Blend" loan/credit. ive; the Manila office plans regular meetings organizations to share data, research, perspec- with these groups to maintain strong dialogue. tives, and solutions. The Bank also participates To coordinate efforts and share information in regular meetings of finance and central bank on the crisis' social impact, the Bank chaired deputies to develop regional strategies to ad- the first "Regional Meeting on Social Issues dress the crisis and has been an active partner Arising from the Crisis" in Bangkok in January in designing and developing regional initiatives 1999. The "Social Crisis in East Asia" web site including the new Miyazawa Initiative and the continues this work by serving as a clearing- Asia Growth and Recovery Initiative (Box 2-7). house for aid agencies and nongovernmental SECTION Two EAST ASIA AND PACIFIC 53 SOUTH ASIA COUNTRIES ELIGIBLE FOR Regional context this situation is that the region WORLD BANK BORROWING: South Asian GDP grew at an continues to underinvest in Afghanistan estimated 5.2 percent in 1998. human capital. Another is that Bangladesh Growth was slightly below the South Asia remains the region Bhutan 1991-97 average of 5.7 per- that is least integrated into the India cent but faster than in other world economy: it accounts Maldives regions. South Asian econo- for only 1 percent of world Nepal mies were largely insulated trade and receives just 3.6 per- Paklstan from the immediate fallout cent of net private long-term Sri Lanka of the East Asian financial capital flows to developing crisis, not having the large countries. The medium-term buildup of short-term exter- outlook has been further nal debt that made so many clouded by a wavering of other countries vulnerable to reform. Fiscal deficits are contagion. now among the highest in Slower growth was the re- the world, progress toward sult of a slackening of export privatization is slow, and the markets, loss of momentum in momentum to liberalize trade policy reforms, political insta- has largely been lost. bility, the century's worst Another factor that contin- floods in Bangladesh, the fall ues to impede economic in Asian tourist arrivals in Sri progress and deter foreign Lanka, and economic sanc- private investment and exter- tions imposed on India and nal aid is widespread civil Pakistan by the Group of conflict and political unrest. Eight countries after both Afghanistan is the extreme countries performed nuclear case, where a lengthy war has tests. India's growth was 5.8 precipitated economic and so- percent, compared with some cial crises, including the exclu- 7 percent in the mid-1990s. sion of women from the labor Pakistan achieved 3.0 percent market and girls from school growth, a figure reduced by a in large parts of the country. foreign exchange and debt cri- In Bangladesh, political strikes sis provoked by the sanctions, (hartals) have imposed sub- which may have prevented stantial social and economic some trade and temporarily costs. Civil conflict in Sri halted most foreign capital Lanka continued to take a inflows. In Bangladesh, the heavy toll on lives and budget economic impact of floods resources. Nepal continues was partially offset by strong to confront a low-level insur- agricultural performance; GDP gency by Maoists. Political growth is estimated at about instability in India has con- 4.5 percent, as compared tributed to a slowdown in with the pre-flood estimates national-level reforms; the im- of 6 percent. position of sanctions on India While the region contains and Pakistan and the armed a little more than 20 percent conflict in Kashmir have been of the world's population, it harmful to both countries. is home to 40 percent of the Poverty-related challenges world's poor. One reason for loom. With more than 40 54 THE WORLD BANK ANNUAI. REPORT 1999 percent of the region's people living belowv the Pakistan) and selected states in India have initi- international poverty line ($1 a day), raising the ated steps to address the problem of child labor. living standards of the poor remains of over- Sri Lanka has recently taken steps to address whelming importance. While the gap hetween the growing problem of child labor in prostitu- rich and poor has substantially narrowved, pov- tion and as combatants in the civil conflict. erty incidence throtighout South Asia has changed little over the past decade. With some Bank assistance exceptions, poverty is both a cause and conse- Table 2-7 showvs the value and sectoral distri- quence of the region's low level of human de- hutions of total Bank lending to the South Asia velopment and the low status of South Asia's region in the FY90 to FY99 period. Table 2-8 xvomen. South Asia has the xvorld's loxvest adult compares commitments, disbursements, and literacy rate (48 percent) and one third of the net transfers to the region for fiscal years 1 994 world's maternal deaths, while more than half to 1999, and Table 2-9 shows operations ap- of the region's children under 5 years are mal- proved in FY99, by country. Figure 2-5 shows nourished. While government action and donor IBir and IDA commitments by sector. support have slowed population growth over The imposition of sanctions affected the Bank the past decade to 1 .4 percent, fertility rates are Group's FY99 lending programs for India and high, and access to family planning is uneven. Pakistani. Executive directors postponed consid- Economic growth also creates environmental eration of several IBRD an1d 11 loans to India, pressures in the forms of pollution, soil erosion, deemed not to address basic human needs. Dip- land degradation, deforestation, and deteriora- lomatic progress combined wvith Pakistan's pre- tion of the urban environment. Poor governance carious finanicial situation and its commitment and corruption are also hampering the region's to serious reform paved the xvay for approval of development efforts. a Structural Adjustment Loan (SAI.) in January Child labor is also a formidable challenge: de- 1999. The easing of sanctions on India enabled spite government legislation, South Asia re- resumption of lending for some infrastructure mains home to the largest number of economi- and power programs and wc operations. cally active children in the vorld. While Fighting poverty is central to the Bank's statistics vary, some 29 million-more than a Country Assistance Strategies (('Ass) in the re- third of the world's xvorking children aged 1 0 to gion. Priority areas are: investing in social and 14-live in South Asia. On a positive note, human capital; protecting the environment; however, several countries (Bangladesh, Nepal, ensuring sotind economic managemenit; and FIGURE 2-5 SOUTH ASIA: IBRD AND IDA LENDING COMMITMENTS BY SECTOR, FISCALYEAR 1999 Total $2.6 billion -doul I i- -l D-)-c,r/' i -- _ ,1 * 1 'i'1;.1 mt, ,I , t . nX 110 t, I 1t ItI'' ~~~~~~~~~~~~~~~~~~~I '. '-,Ir.]r y ¢;-1[ 1 dSFTIDN Two SIOUT AsI 55 SE ( HON TWO SOUFTH ASIA 55 TABLE 2-7 LENDING TO BORROWERS IN SOUTH ASIA, BY SECTOR, FISCAL YEARS 1990-99 (millions of US. dollars) Annual average, Sector FY90-94 FY95 FY96 FY97 FY98 FY99 Agriculture 435.5 551.3 420.6 409.0 876.1 390.6 i 301 Education 318.5 423.7 499.8 718.2 98.2 112 Electric power and other energy 618.5 250.0 700.0 24.2 295.0 210.0 i 350 Environment 106.3 168.0 263.9 64.8 - 138.6 189 Finance 94.5 916.0 205.0 105.0 - 119.0 155 Industry 213.5 3.2 3.4 - - 32.0 32 Mining 2.4 - 63.0 - 532.0 - ! Multisector 257.0 - - - - 550.0 310 Oil and gas 183.0 120.8 - - - - Population, health, and nutrition 292.2 257.9 376.7 574.3 626.4 325.0 339 Public sector management 92.4 - 92.0 31.7 250.0 - - Socialprotection 111.5 - - 19.5 543.2 - 31 Telecommunications 22.4 - 35.0 - - - Transportation 260.9 - - 684.5 23.5 561.3 611 Urban development 49.2 39.0 21.5 - - 105.0 100 Water supply and sanitation 120.9 275.8 251.6 98.6 - 32.4 32 Total 3,178.8 3,005.7 2,932.5 2,011.6 3,864.4 2,562.0 2,562 Of which: IBRD 1,246.5 1,584.8 1,161.6 626.5 1,318.0 750.0 IDA 1,932.3 1,420.9 1,770.9 1,385.1 2,546.4 1,812.0 - Zero. Note: Numbers may not add to totals because of rounding. a. See Explanatory Note, Table I (page 10). TABLE 2-8 WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN SOUTH ASIA, FISCAL YEARS 1994-99 (millions of US. dollars) India Bangladesh Pakistan Total region Item 1999 1994-99 1999 1994-99- 1999 1994-99 1999 1994-99- IBRD and IDA commitments 1,055 9,796 1,021 3,005 440 3,240 2,562 16,743 Undisbursed balance 8,939 8,939 1,190 1,190 1,794 1,794 12,624 12,624 Gross disbursements 1,437 9,185 472 1,992 683 3,685 2,743 15,818 Repayments 1,157 6,549 71 315 264 1,457 1,525 8,468 Net disbursements 280 2,636 401 1,677 419 2,228 1,218 7,350 Interest and charges 671 4,793 47 266 222 1,348 963 6,543 Net transfer -391 -2,157 354 1,411 197 880 255 808 Note: The table shows the three countries with the largest lending commitments in the Region over the past two fiscal years (FY98-99). a. Disbursements from the IDA Special Fund are included through fiscal 1996. 56 THE WORLD BANK ANNUAI. REPORT 1999 promoting private sector participation, institu- development, empowerment, and social mobili- tional development, and good governance to zation of poor and disadvantaged groups. For create a sound climate for private investment example, the Pakistan Poverty Alleviation Fund and to ensure effective public expenditure. In empowers the rural and urban poor, particularly the case of India, the strategy explicitly seeks women, by providing access to microcredit and partnership with reforming states through com- community infrastructure, working through prehensive multisector state reform programs. nongovernmental organizations (NGOS). Atten- The Bank is already helping Andhra Pradesh tion to rural areas, where more than three forge ahead with its economic restructuring fourths of the region's poor live, is key to reduc- program, while engaged in exploratory discus- ing poverty. To provide a framework for rural sions with several other states. growth and poverty reduction, rural develop- ment strategies were prepared for India and Focusing on poverty Bangladesh. The aim is to restore productivity In FY99, the Bank scaled up its rural anti- growth in agriculture and the nonfarm economy poverty work and increased its efforts to help and ensure that the benefits of growth flow to countries address the needs of the urban poor. the rural poor. The Uttar Pradesh Sodic Lands Work increasingly focused on participatory Reclamation II Project, approved in December BOX 2-9 REVERSING AGRICULTURAL LAND DEGRADATION THROUGH PARTICIPATORY MANAGEMENT IN INDIA Issue. Uttar Pradesh, India's largest state, has menting agency, water user groups carry out all about 17 million hectares under cultivation and ac- site activities associated with the reclamation pro- counts for 10 percent of India's net sown area and cess: tubewell boring, field preparation, leaching, and 25 percent of the total irrigated area. It produces crop production. Project funds flow directly into the nearly 20 percent of India's foodgrains. Over the accounts of these groups for implementation of works, past decade, the state's agrarian economy has been with NGOS providing detailed accounting assistance. undermined by population pressure and land degra- Once land is reclaimed, water user groups take re- dation. About 7 percent of the state's net cultivable sponsibility for maintenance of the pumpsets and land is unused because of a high buildup of salts drains linking their fields to the main drains. that are toxic to plants and adversely affect human The project has also fostered the formation of and animal health. The result: growth of crop yields women's self-help groups to improve the socioeco- is slowing. Between 1990 and 1995, rice yields grew nomic well-being of village families and empower at I percent, compared to 5 percent between 1980 women. Developed initially around the concept of and 1990; wheat yields grew at 1.6 percent com- group savings, these groups have evolved into impor- pared to 2.4 percent over the earlier period. tant centers of village activity. They have undertaken Project objectives. Since 1993, the Uttar Pradesh a wide range of microenterprises with bank credit to Sodic Lands Reclamation I Project has supported the the groups in such areas as dairy farming, sewing, reclamation of barren and low-yielding croplands and tree nurseries. The groups also operate adult lit- and aimed to boost incomes of the rural poor by in- eracy programs. creasing crop yields and intensity in the hardest-hit Results. As a result of the project, more than areas of the state. The $111.2 million project is being 47,677 hectares have been reclaimed, well above financed with a $54.7 million IDA credit. target. Cropping intensity and yields have shown a Participatory approach. The project's system of dramatic increase. Average incomes among beneficia- participatory management emphasizes transparency, ries have been boosted by more than 60 percent. To decentralized decisionmaking, capacity building, and date more than 85,000 farm families have benefited. accountability. With assistance from nongovernmen- In FY99, the Bank announced a $194 miUion IDA tal organizations (NGos), water user groups are credit to continue the effort on another 150,000 hect- formed and are involved in decisionmakingfrom the ares of sodic lands. The project model is so successful earliest planning stages to the end of project services. that the government of Uttar Pradesh plans to follow With technical support from the government imple- it in all future sodic land reclamation. SECTION Two SOUTH AsIA 57 1998, expands a successful ongoing initiative to lance, quality improvements for condoms, and help reclaim low-yielding crop lands and boost health education. Critical elements of the low rural incomes of mostly disadvantaged sub- program's second phase are the strengthening of sistence farmers by increasing crop yields and institutions that deal with HIV/AIDS at the na- intensity in the hardest-hit areas of India's larg- tional, state, and municipal levels and targeting est state (Box 2-9). the poorest and most vulnerable high-risk The World Bank Institute (WBI) convened a groups. At the same time, the Bank has initiated regional workshop in Dhaka on poverty, bring- a dialogue with other South Asian countries on ing together government officials, policymakers, HIV/AIDS as a major public health and develop- researchers, NGOs, and donors. Similar country- ment issue. The Bank also continued its support level meetings were held in India and Pakistan. for state-level health sector reforms in India The objectives were to debate poverty allevia- through the Maharashtra State Health Systems tion policies and approaches and the role of do- Project. To support institutional reforms in Sri nor agencies; facilitate early and open discussion Lanka's health sector, the Bank is helping the of the forthcoming World Development Report government formulate a health strategy that en- 2000/2001 on poverty; and discuss poverty re- compasses organizational change. search, including that of the Bank. In Sri Lanka, Reflecting Operations and Evaluation De- the Bank supported poverty research in order to partment (OLD) lessons from earlier programs in guide the government's formulation of a pov- South Asia, the Bank is increasingly emphasiz- erty alleviation strategy. ing social concerns in its regional activities. In FY99, South Asia field offices significantly Supporting human and social development strengthened their Social Development Units. Building human capital remains a top priority The South Asia Region continued to lead the in Bank CASS in South Asia. In India's Rajasthan Bank in the area of social assessments, which state, the Bank expanded its support for the District Primary Education Program; the project FIGURE 2-6 NUMBER OF SOCIAL will increase enrollment rates for girls and chil- ASSESSMENTS IN BANK-ASSISTED dren from disadvantaged groups and impover- PROJECTS IN SOUTH ASIA, ished areas. An Adaptable Program credit will FISCALYEARS I 994 19961998 also provide long-term support for primary F Y education in Nepal. Work is under way to 30 explore innovative public and private models to improve the quality of primary education in Bangladesh. 25 In the health sector, the Bank is helping India step up its fight to control the spread of HIV/AIDS with the approval of a second AIDS pre- 20 vention project. Currently, about 0.9 percent of the adult population, or 4 million people, are Hiv-infected. While the rate is low, the absolute I5 number of persons with HIV is more than in nearly any other country. Without an expanded response, iDIV infection could grow to at least 10 5 percent of the adult population, or more than 37 million people, by 2005. Even with interven- tion, the absolute number of Hiv-infected 5 people is certain to grow. The first phase of sup- port helped establish program management and - made important gains in improving blood safety, control of sexually transmitted diseases, surveil- 1994 1996 1998 58 THEWORLD BANKANNUAI REPORI 1999 help ensure adequate participatory approaches pollution to better target expenditures on water and attention to social dimensions in project and sanitation infrastructure, while another design and implementation (Figure 2-6). Impor- study assessed the costs and benefits of eight tant social concerns being addressed include distinct sustainable forest management systems protecting indigenous peoples and resettlement in Nepal. Also, to help raise awareness and en- and rehabilitation through support for work- able policymakers regionwide to better address shops to help the Indian government strengthen the problem of lead poisoning, the Bank, the national policies in these areas. Bank-funded George Foundation, the Centers for Disease projects are also helping the government of In- Control and Prevention (United States), and dia devise strategies that address the problem of the U.S. Environmental Protection Agency co- child labor. sponsored an International Conference on Lead Poisoning Prevention and Treatment in Irmprovling environmental managemeint Bangalore, India. Through nonlending as well as lending ser- vices, the Bank continued to support South Promotinig pri vate sector participation Asian countries' efforts to ensure that economic South Asia's infrastructure requirements are development and environmental protection go massive. Bank support has centered on increas- hand-in-hand. In workshops in New Delhi and ing public investment and expanding private Dhaka, the government and private sector sector participation-in close cooperation with agreed on plans to reduce transport-related air IFc and MIGA-in the funding and management pollution. of basic infrastructure, namely power, telecom- In Andhra Pradesh, a joint government-Bank munications, natural gas utilities, and transport. study quantified the health impacts of water In response to the government's request, the 6 ,- .e ~ * .:. .. .. w 1 10'r1. >ea'';';e'Z'>'~~ '-"'''" ol~~I The Bank is increasing attention to urban development, transport, and related environmental needs in South Asia. SE I'ON Two SOUTH AsIA 59 'S : 5 \S rrzp /~~~~~~~~~~~~~ Women's self-help groups improve the socioeconomic well-being of village families and empower women in Uttar Pradesh, India. Baink prepared a pioneering, coniprehensive as- port sectort-, 11t and the Bank (throtigih the Sessrnent of Indlia's trarnesortk or private it- onlenlCiln of al II)A credit to SFri [ anka's Private s'etmen('1t in infrastruc-ttire. A private sector con- Settor Infrrastruicttire v)eselIoprment Corpora- teren te in Paris was alIo organized in tion) financed the Souith Asia Gateway I'erimii- pairtnershilp with the government of India, nals Limited Project. 'I'his project represents the Morga n Stanley Dean Witter, itit I Ltd., Intra- gov erinenCts first (lfort to inIvolvc the private st ti ttire I )es'elopmient Finance Company, Ltd., sec tor in ports and enables the counitry to dIe- alldI the Baik of Tokyo-Mitsubishi, as part ot a velop its positioni as a transshipment htlh. Other se ries 0ot dist n>sioSns on private investment in lending and nonlending services are helping Inlia's intrastrUctture andci to aivantce the tlia- (-reate an environnment ftor private investnielit l ogne amnone key partners. II ( anti lKiA aso and economi( groslth in Sri lanka hy iniprov- providedl stupport to Coastal Power Khtilna ing the regional transport network, thuts faacili- Iltd- ior its isvestnic nt in the first indepen dent tating regional trade, tratle liberaliz'.tion, and pose\'('r prodl(t er in 13angladtesh. privatization. In stipport of the Bank ( irouLps strategy to With rapitd trhanization, expantling at cess help the govern ment of Sri Lanka reform the to urban infraStrutCtUr(e and services--especiially T( I II W( )II I! 1\N ANM! AlI i I'()R I 1t) of the urban poor-is a critical challenge. To component in low-income areas, and securing raise awareness and devise related strategies, the additional private funding. Bank organized a workshop in Manila for Asian policymakers on upgrading urban services for Meeting energy needs the poor. The dialogue contributed to the cre- Economic growth in South Asia will continue ation of an Asian urban upgrading network that to be hampered as long as an inadequate power shares experience and best practices on urban supply constrains industrial development. The infrastructuLre service provision. The Dhaka Ur- Bank Group continued to provide technical and ban Transport Project supports ongoing efforts financial assistance to help meet energy needs to improve the city's transport infrastructure across the region, promoting sector reforms as and traffic management and to help strengthen well as private investment. A wide range of sec- long-term transport planning. Numerous con- tor reforms is under way in parts of India with sultations were held with women's groups, rick- Bank support. An APL, pioneered last year in shaw pullers, aind other transport operators to Haryana, was the vehicle used in FY99 to sup- reflect their concerns in project design. In India, port long-term power sector restructuring in the second Bank-assisted Tamil Nadu Urban Andhra Pradesh. The program's first phase will Development Project will help improve basic establish a new legal, regulatory, and institu- urban service delivery by providing a line of tional framework; support preparatory work for credit to finance basic urban infrastructure in- privatization; and finance critically needed vestments, financing an integrated sanitation transmission and distribution system rehabilita- BOX 2-10 ADDRESSING BANGLADESH'S MASSIVE ENVIRONMENTAL HEALTH PROBLEM Issue. Arsenic contamination of country's main tion and education activities, safe water supply, wa- source of potable water ter treatment). It will also help develop sustainable Population affected. At least 15 percent of the approaches to water supply management and sup- population estimated to be exposed port research to bridge the huge knowledge gap and Bangladesh is facing perhaps the largest mass help design the next phase operation. poisoning in history. High concentrations of arsenic The project is noteworthy for several reasons. The have been found in water from tubewells across more unprecedented scope of this environmental health than half of Bangladesh. Although the extent of the problem has demanded a rapid, multisectoral re- problem is still largely unknown, much of the sponse, addressing emergency as well as long-term country's groundwater is suspected to be contami- needs in a sustainable fashion. Bank assistance has nated with arsenic that occurs naturally in alluvial sought to respond to all of the above, relying heavily and deltaic sediments. At least 18 million people are on development partners and on innovative partici- believed exposed, with many more possibly at risk. patory approaches involving village-level organiza- In late 1997, the Bank began working with the tions and local governments. Direct benefits-social, government to tackle this huge public health chal- environmental, and sanitational-would accrue to lenge. International and local experts traveled arsenic-affected communities, especially the poor. throughout Bangladesh to identify contaminated Indirectly, rural and urban dwellers will benefit from villages and wells. A key aspect of Bank intervention capacity-building efforts and private sector participa- was awareness-building among government and do- tion in water supply. nors to quickly arrive at a strategy to arrest the Partners. Government, local communities, Swiss poisoning. In August 1998, a $32.4 million IDA Development Cooperation, NGOs, Bangladeshi and credit for the Arsenic Mitigation Water Supply international technical experts, UK Department for Project was approved. The four-year project will International Development, Netherlands Develop- help stop contamination through emergency activities ment Assistance, United Nations Development (wells-screening, medical services provision, informa- Programme, and others. SECTI ION Two SOuJI ASIA 6 1 tion. In the coal subsector, wc, invested in one mentary processes and public accountability. of the first private coal mines in India, comple- Also, to strengthen public institutions, a seminar menting the Bank's ongoing support for sector to share international best practices on adminis- reforms and high-priority environmental and trative reforms in Bangladesh was held in part- social mitigation programs. nership with Bangladesh's Public Administrative Reform Commission. The Bank also undertook Promotitg good governance and strentgthening an Institutional Review in Bangladesh, which institutions advanced dialogue on reforms needed to South Asian countries are increasingly con- strengthen public sector management and fed cerned with good governance and institutional into the Bank's assistance strategy. and legal reforms. In FY99, wlin, Transparency Bank assistance to Pakistan through the SAI. is International, and the Parliamentary Centre improving governance in banking, tax adminis- jointly sponsored a regional seminar in Dhaka tration, public utilities, and public expenditure. for legislators, aimed at strengthening parlia- In preparation for a forthcoming legal reforms TABLE 2-9 OPERATIONS APPROVED DURING FISCAL YEAR 1999, SOUTH ASIA Principal amount (nmillions) Country/project name Date of approval Maturities SDR U.S.$ Bangladesh Export Diversification Project Jun 1, 1999 2009/2039 23.60 32.00 Rural Roads and Markets Improvement and Maintenance II Project Supplement May 11, 1999 2007/2036 14.74 20.00 Road Rehabilitation and Maintenance II Project Supplement May I1, 1999 2004/2034 59.00 80.00 Coastal Embankment Rehabilitation Project Apr 20, 1999 2006/2035 12.00 16.50 Inland Water Transport III Project Supplement Apr 20, 1999 2001/2031 4.60 6.30 River Bank Protection Program Supplement Apr 20, 1999 2006/2035 32.80 45.00 Municipal Services Project Mar 16, 1999 2009/2039 100.00 138.60 Dhaka Urban Transport Project Jan 19, 1999 2009/2038 129.30 177.00 Emergency Flood Recovery Project Nov 24, 1998 2009/2038 146.00 200.00 Road Rehabilitation and Maintenance III Project Oct 1, 1998 2008/2038 203.40 273.00 Arsenic Mitigation-Water Supply Project Aug 27, 1998 2009/2038 24.20 32.40 India Integrated Watershed Development Project Jun 15, 1999 2005/2019 n.a. 85.00 Integrated Watershed Development Project' Jun 15, 1999 2009/2034 36.90 50.00 National HIV/AIDS Control 11 Project Jun 15, 1999 2009/2034 140.80 191.00 Rajasthan District Primary Education Project Jun 8, 1999 2009/2034 63.00 85.70 Tamil Nadu Urban Development II Project May 27, 1999 2005/2019 n.a. 105.00 Andhra Pradesh Power Sector Restructuring Project Feb 18, 1999 2004/2019 n.a. 210.00 Uttar Pradesh Sodic Lands Reclamation II Project Dec 15, 1998 2009/2033 141.70 194.10 Maharashtra Health Systems Renewal Project Dec 8, 1998 2009/2033 97.90 134.00 Nepal Rural Infrastructure Learning and Innovation Credit May 14, 1999 2009/2039 3.70 5.00 Basic and Primary Education 11 Project Mar 30, 1999 2009/2039 9.00 12.50 Pakistan Structural Adjustment Loan Jan 21, 1999 2004/2019 n.a. 350.00 Poverty Alleviation Fund Project Jun 17, 1999 2009/2034 66.50 90.00 Sri Lanka EmergencyYear 2000 Technical Assistance Project Jan 19, 1999 2009/2034 21.00 29.00 Total 1,330.14 2,562.10 n.a. Not applicable (IBRD loan) a. "Blend" loan/credit. 62 TIE WORL.D BANK ANNl'AI Rl.P'wR 1999 project, the government of Sri Lanka has set crease transparency and openness, field offices up, with Bank assistance, a standing Technical in Nepal and Bangladesh developed country- Group, comprising several leading private sector specific web sites; these are being increasingly lawyers to identify and draft new laws; a Con- accessed by researchers, students, NGOS, govern- sultative Group with representation from gov- ment, donors, and others. WBi-sponsored Eco- ernment, business, NGOS, and international ex- nomic Journalism training workshops in perts to help the Technical Group formulate Bangladesh, India, Nepal, and Pakistan, mean- recommendations; and a Steering Committee while, are also promoting greater understanding comprising senior government policymakers to of development economics among South Asian steer the ensuing legislative process. journalists. Moving swiftly to meet clients' urgent needs Improving operational effectiveness Bangladesh's devastating floods challenged The Bank has continued efforts to improve the Bank to respond rapidly. It did so with a the quality of its products and services in South three-part strategy of quick-disbursing assis- Asia, ensure greater participation of stakehold- tance to help maintain macroeconomic stability ers in operations, and work more closely with in the short term; restructuring of existing and partners. Five South Asia country directors and proposed IDA-financed projects, including four 60 percent of Bank staff working on the South supplemental credits, to help repair damaged Asia region now do so from the Bank's five infrastructure and facilities; and long-term country field offices. This has helped foster strengthening of country capacity for disaster closer relationships with clients and helped to preparedness and management. The Bank has ensure that staff better understand that the also moved swiftly to coordinate the donor region's cultural, political, and social dimensions community and provide resources to help the are taken into account in the Bank's work. government respond to the country's arsenic- Management of lending and nonlending ser- contaminated water supply crisis (Box 2-10). vices has been more evenly divided between In Pakistan, the Bank and the iMF together headquarters and field offices. In portfolio man- provided balance of payments support for struc- agement, the region consolidated prior-year tural reforms in banking, tax administration, gains, with a further drop in the number of public utilities, and public expenditure. Based problem projects. on the reform program, the Paris Club resched- More than 120 Bank staff members working uled Pakistan's publicly guaranteed debt. The in the South Asia region have participated in program builds on previous successful reforms Village Immersion Programs, which allow par- aimed at good governance and strengthening ticipants to step out of the normal business con- key institutions in the banking sector. text and share the lives of economically disad- vantaged villagers. The "trainers" are some of the Reaching out to civil society world's most innovative NGos and the villagers In FY99, the Bank continued its efforts to themselves. The experience aims to rekindle reach out to civil society. In preparing the commitment to eliminating poverty and deepen Nepal CAS, Bank staff traveled around the coun- understanding of how NGOS mobilize communi- try to consult with local NGOS, women's groups, ties and relate to Bank and other donor-financed farmers, and the private sector. Both the Nepal programs. Lessons learned are altering the way and Bangladesh CASs and the Sri Lanka CAS Up- staff members work and are being transformed date were made available to the public for the into new grassroots partnerships and project first time. To foster public debate, the Bank's concepts. Examples include the Pakistan Dhaka office has been working extensively with Poverty Alleviation Fund and the proposed the media in holding roundtable discussions Sri Lanka Village Self-Help Initiative Pilot, with key policymakers and civil society on which tests a holistic approach to development privatization, administrative reform, and other through participatory planning at the village development issues. To share knowledge and in- level. SECoI I(N Two SOUTH AsIA 63 EUROPE AND CENTRAL ASIA COUNTRIES ELIGIBLE FOR Regional context Trade and investment flows WORLD BANK BORROWING A deteriorating external envi- have suffered, as has investor Albanii ronment over the past year confidence; tourism revenues Armeniia threatened the hard-won eco- have fallen, particularly in Azerb,aijar nomic and social gains Croatia; and the cost of bor- Belaris achieved by many countries rowing on international capital Bosnia arid derzegovina in the Europe and Central markets has increased. Balance Bulgaral Asia (ECA) Region. Key factors of payments financing gaps Croatia were the global financial cri- of countries bordering the Czech Republ c ses, which increased borrow- Kosovo region are expected to Estoni,a ing costs in international capi- increase substantially in 1999, Georgia tal markets; the Russian crisis as are extraordinary budget H(u igary in particular; slowdown of needs. As the situation nor- Kazakhstan-i growth in Western Europe; malizes, these negative trends Kyrgyz Repuolic and since early 1999, the are expected to reverse gradu- Latvia Kosovo crisis. Reforming ally, but extraordinary financ- Lithuania countries generally held up ing needs are likely to remain Macedonia, formerYugoslav Republic of better. high for some time. Mo dova Countries in Central Europe The Russian financial crisis Pooland and the Baltics with strong dominated the region's eco- Romaniia public finances and relatively nomic developments. Growing Russiant Federation robust financial sectors are reliance on short-term debt to Slovak Republc weathering the external finance fiscal deficits and a Siovelia shocks better. Their growth is strong contagion effect from Tailkistran expected to remain positive in East Asia on international Turkey 1999 but below the highs of lenders led to an unsustainable Turkmiienistanr 1997-partly the result of debt repayment situation. In Ukraine deliberate efforts to cool August 1998, the government Uzbelisran economies experiencing high sharply devalued the ruble current account deficits. and announced a moratorium These countries' sustained on public debt. Output con- reforms have helped maintain tracted by about 5 percent in high levels of foreign invest- 1998. A further decline is ment. Output rebounded likely in 1999, although it may strongly in Albania and Bul- be smaller, as the devaluation garia during 1998, a result of has increased exports and pro- the significant reforms under- duction in import-competing taken in the past few years. In industries. The government contrast, inconsistent reform has made important efforts to efforts in Romania were prevent hyperinflation and largely responsible for its avoid reintroducing foreign continuing output decline. exchange and price controls. The Kosovo crisis has placed Sustained stabilization will re- significant strains on countries quire aggressive efforts both to in South Central Europe. The reduce tax arrears and tax large influx of refugees is se- avoidance and to rationalize verely pressuring the eco- consolidated public expendi- nomic and social infrastruc- tures, still about 40 percent ture of Albania, Bosnia and of GDP. Making Russia more Herzegovina, and Macedonia. investor-friendly is critical to 64 THE WORLD BANK ANNUAI. REPORT 1999 boost small enterprise creation and foreign di- and floods affected Kazakhstan, the Kyrgyz rect investment; both are wveak in Russia but Republic, and Azerbaijan. The crisis also hurt have been key to growth in Central Europe Ukraine: after finally turning positive in the and the Baltics. first half of 1998 for the first time since inde- The Russian crisis sharply worsened the ex- pendence, growth faltered, xvith continued de- ternal environment for many of the countries clines foreseen for 1 999, as reforms continue of the Commonwealth of Independent States to prove elusive. ( s). Exports to Russia, ranginig from 3(1 per- Poverty has increased in the region over the cent of total exports in Georgia to almost 6() past decade and continues to deepen, most percent in Moldova, dropped sharplv. So, too, notahly in Russia and the ( IS countries most did annual renmittanices from expatriates work- affec-ted by the Russia crisis. Restoring growth ing in Russia (amounting, in Armenia for ex- and better targeting of social assistance remain ample, to ahout 1 percent of GDI). Borrowing key to long-term poverty reduction. costs increased suLbstantially, and investor inter- On a positive note, the region's pre-crisis re- est in priva tization programs fell. In addition, formers have staved on course, resisting populist lower energy aind minerals prices, had harvests, reactions. Growth estimates for 1999 have been TABLE 2-10 LENDING TO BORROWERS IN EUROPE AND CENTRAL ASIA, BY SECTOR, FISCAL YEARS 1990-99 (millions of US. dollars) Annual average, I _ Sector FY90-94 FY95 FY96 FY97 FY98 FY99 Agriculture 309.3 202.0 185.8 787.7 124.0 242.9 216 Education 60.0 40.0 5.0 137.8 592.4 41.1 59 Electric power and other energy 342.8 191.7 325.4 504.9 545.0 46.0 66 Environment 19.6 123.0 30.1 10.0 93.4 27.4 34 Finance 268.2 147.0 638.9 274.3 82.0 362.0 1,358 Industry 93.0 - - 111.8 10.3 470.0 470 Mining - - 540.8 300.0 800.0 300.0 260 Multisector 811.9 2,085.0 656.8b 1,227.0 1,115.0 1,773.5 689 Oil and gas 310.3 226.3 10.0 135.6 10.0 - - Population, health, and nutrition 74.2 220.4 350.4 95.5 27.0 94.5 136 Public sector management 204.8 70.9 505.6 99.1 587.4 616.9 552 Social protection 49.6 127.5 212.0 935.2 383.1 229.1 438 Telecommunications 90.6 - - - 30.0 - 2 Transportation 295.0 486.0 868.0 312.7 356.0 638.0 639 Urban development 131.2 418.0 44.3 56.0 314.4 59.1 43 Water supply and sanitation 93.8 161.0 21.5 67.3 154.4 385.5 324 Total 3,154.2 4,498.8 4,394.6b 5,054.8 5,224.3 5,286.0 5,286 Of which: IBRD 3,086.4 3,953.8 3,918.2 4,560.9 4,462.3 4,350.3 IDA 67.7 545.0 476.4 493.9 762.0 935.7 - Zero. Note: Numbers may not add to totals because of rounding. a. See Explanatory Note, Table I (page 10). b. Includes the refinanced/rescheduled overdue charges of $168 million for Bosnia and Herzegovina. SiC,:ION Tw\%,o Et aROPIr ANI) CENI RAI AsIA 65 TABLE 2-11 WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN EUROPE AND CENTRAL ASIA, FISCAL YEARS 1994-99 (millions of U.S. dollars) Russian Federation Turkey Poland Total region Item 1999 1994-99w 1999 1994-99' 1999 1994-99' 1999 1994-99, IBRD and IDA commitments 1,930 10,352 528 1,813 327 1,459 5,286 28,136 Undisbursedbalance 3,510 3,510 1,505 1,505 961 961 11,480 11,480 Gross disbursements 657 6,321 249 2,121 140 1,971 2,930 20,631 Repayments 89 117 656 4,624 204 642 1,293 8,921 Net disbursements 568 6,203 -407 -2,503 -65 1,328 1,637 11,709 Interest and charges 369 909 247 2,006 132 740 1,217 6,270 Net transfer 199 5,294 -655 -4,509 -196 588 420 5,439 Note: The table shows the three countries with the largest lending commitments in the Region over the past two fiscal years (FY98-99). a. Disbursements from the IDA Special Fund are included through fiscal 1996. revised downward hut remaini positive for coutn- of F.IA countries through widc-ranging eff'orts tries that have consistenitly pursued reform. involving lending and nonleniding activities. Sustainied efforts are nevertheless essential. De- Poverty alleviation is a central element of Bank spite their relatively good performanice, most assistanice, with a strong focuis on social protec- of the Central European and Baltic couinitries tion and restricttirinig health and educationial still carry large currenit accounit deficits and de- systems. Support has also heen active in the penid heavily on privatization revenues. Sustain- areas of public administratiotn reform, private ing growth wvill require adjusting currenit ac- sector and financial sector development, the coUnlt and fiscal balances to levels that can he rural sector, and the environmenit. RedLiucig finaniced hv suIstained levels of foreign invest- counitries' vulnerahility to external sholcks ment and reveniues as well as continued struc- through improved macroeconomic and finani- tural, social, and institutionial reforms as they cial sector management has also Ieen a priority, prepare f'or Europeani Union (1-L[) accession. ( [S along with assistance to the I () counitries on couLntries will especially need to improve public track for i : accession to meet the challenges finances hy redressing tax evasion and wide- of entry into a single market. spread nonpayment of titility charges while prioritizing public expenidituires in favor of the Supporting structural rejonns and emnerge,ncy most vulnerahle. needs To assist low-income ID-A countries deeply Bank assistance hurt hy the Russia crisis-Armenia, Azerhaijan, Tahle 2-1 () shows the value and sectoral Georgia, Kvrgyz Republic, Moldova, and distributions of total Bank lending to the Tajikistan the Biank and the Fund jointly Europe and Central Asia Region in the FY9() hosted a special donor coniference in December to FY99 period. Tahle 2-1 1 compares commit- 1998, raising approximately S20() million in ad- ments, disbursements, and net transfers to the ditional balance of payments support. The Bank regioll for fiscal years 1 994 to 1999, and Tahle increasedl the size of seconcl-tranche dishurse- 2-12 showvs operations approved in FY99, hy ments of ongoing adjulstnient operations in coulitry. Figure 2-7 shows liR) and o,A commit- Azerhaijan and 'I'ajikistani and has accelerated melits hv sector. preparationi of new adjustment lendinig, with The BEank has sought to respolid to the emer- increased loan amounits for Armenia, Georgia, gency and long-term economilic and social needs and Moldova to prevenit sharp reductions in 66 T1i W[RI.J) BA\K A\N\ AiR Rl-I'ORI 1999 social spending. These operations also help im- prise reforms. An agricultural sector adjustment prove efficiency in the key energy and agricul- loan will provide budgetary support to Bulgaria. ture sectors. The Bank also made flood emer- At a high-level ministerial meeting in Washing- gency loans to Kyrgyz Republic and Tajikistan ton in April, the Bank was asked, in cooperation (and an IBRD loan to Turkey, which also experi- with the EU, to lead efforts to assess the eco- enced serious flooding). nomic, social, and reconstruction needs, mobi- In collaboration with the IMF, EU, donor coun- lize donor support, and help plan long-term tries, and other partners, the Bank responded regional integration for the Balkans. comprehensively and rapidly to the needs of In Russia, the Bank, together with the IMF and countries affected by the Kosovo crisis. Support in consultation with LFC and the European Bank included emergency financing assistance to help for Reconstruction and Development, is provid- close balance of payments and budgetary gaps ing technical assistance to help restructure the so that countries could maintain vital expendi- banking sector and has resumed its dialogue on tures and continue reform efforts. In Albania, social policy in the context of working to re- two Post-Conflict grants are supporting institu- structure adjustment operations in the social tional and infrastructural needs of the refugee sectors and coal sector. The restructured SAI. ILL program; an emergency rehabilitation operation would be the Bank's main vehicle to support aimed to provide budget support; and an adjust- cross-sectoral reform of the enabling environ- ment operation focused primarily on improving ment for business development in Russia. governance and public sector management. The The loan supports a stronger institutional Bank is helping the former Yugoslav Republic of policy framework to enhance property rights Macedonia through an emergency rehabilitation protection, improves regulatory oversight of credit to finance critical imports, a Post-Conflict infrastructure monopolies, reduces opportuni- grant, and a social support project. Budget ties for discretionary behavior to enhance support to Bosnia and Herzegovina wvill come competition, and provides for more effective from the Public Finance Structural Adjustment bankruptcy procedures. Credit (amount increased to compensate for In Romania, the Bank is assisting a renewed crisis-induced declines in tax revenues and trade effort of the government through an adjustment flows) and a financial and enterprise adjustment operation that supports restructuring and credit. Fast-disbursing support to Croatia, to- privatization of the banking sector, accelerating gether with the LNL:, is also under discussion, privatization of large public enterprises, and to address both the effects of the Kosovo crisis improving the business environment for the and acceleration of fiscal, banking, and enter- private sector The operation also includes FIGURE 2-7 EUROPEAND CENTRALASIA: IBRDAND IDA LENDING COMMITMENTS BY SECTOR, FISCALYEAR 1999 Total $5.3 billion Ldu_,t,- " _|| 5Ap cLurltLIe 4%e Hec, pl-e, h Cp. -up,,r ,> , i cc> .co1 i ar d c lboP. F., rme 1 Uix d'omclapmc-,. Soc, pro:ect on, 9% r- g Pl, ne Lo e,ge" an-0t iS F Mc iii l 'f(i Pcp . DC 10P or Ihe., cE, nto ietreton SE(-TI(ONTw(o EtROPE AND CENTRAI ASIA 67 TABLE 2-12 OPERATIONS APPROVED DURING FISCAL YEAR 1999, EUROPE AND CENTRAL ASIA Principal amount (nmillions) Country/project name Date of approval Maturities SDR U.S. $ Albania Community Works Project Supplement Jun 22, 1999 2009/2038 3.70 5.00 Microcredit Project Jun 22, 1999 2009/2039 8.90 12.00 Structural Adjustment Credit Jun 3, 1999 2009/2039 33.20 45.00 Irrigation and Drainage Rehabilitation 11 Project Jun 3, 1999 2009/2039 17.70 24.00 Public Expenditure Support Credit May 6, 1999 2009/2039 22.10 30.00 Community Works Project Jan 19, 1999 2009/2038 6.50 9.00 Armenia Dam Safety Project Jun 24, 1999 2009/2034 19.70 26.60 Electricity Transmission and Distribution Project Mar 4, 1999 2009/2033 15.00 21.00 Structural Adjustment Credit III Dec 22, 1998 2009/2033 46.20 65.00 Title Registration Project Oct 13, 1998 2009/2033 6.00 8.00 Azerbaijan Pilot Reconstruction Project Supplement Jun 8, 1999 2008/2033 7.40 10.00 Agricultural Development and Credit Project Jun 8, 1999 2009/2034 22.20 30.00 Education Reform Project May 24, 1999 2009/2034 3.70 5.00 Cultural Heritage Support Project May 13, 1999 2009/2034 5.60 7.50 Structural Adjustment Credit I Supplement Mar 31, 1999 2007/2032 5.00 7.00 Pilot Reconstruction Project Jul 2, 1998 2008/2033 14.90 20.00 Bosnia and Herzegovina Pilot Cultural Heritage Project Jun 28, 1999 2009/2034 3.00 4.00 Enterprise and Bank Privatization Facility Project Jun 24, 1999 2009/2034 37.60 50.00 Enterprise Export Facility Project Jun 24, 1999 2009/2034 8.90 12.00 Public Finances Structural Adjustment Credit II Jun 24, 1999 2009/2034 53.20 72.00 Basic Health Project May 4, 1999 2009/2034 7.40 10.00 Local Development Pilot Project Apr 13, 1999 2009/2034 11.10 15.00 Bulgaria Agriculture Sector Structrual Adjustment Loan I Jun 22, 1999 2004/2019 n.a. 75.80 Regional Initiatives Fund Project Nov 20, 1998 2004/2018 n.a. 5.00 Social Protection Structural Adjustment Loan Nov 19, 1998 2004/2018 n.a. 80.00 Croatia Technical Assistance Project for Institutional and Regulatory Reform for Private Sector Development Apr 20, 1999 2004/2014 n.a. 7.30 Railway Modernization and Restructuring Project Jan 12, 1999 2004/2014 n.a. 101.00 Georgia Judicial Reform Project Jun 29, 1999 2009/2034 9.90 13.40 Structural Reform Support Project Jun 29, 1999 2009/2034 12.20 16.50 Energy Sector Adjustment Credit Jun 29, 1999 2009/2034 18.10 25.00 Structural Adjustment Credit III Jun 29, 1999 2009/2034 44.30 60.00 Enterprise Rehabilitation Project Dec 17, 1998 2009/2033 11.00 15.00 Integrated Coastal Management Project Dec 17, 1998 2009/2033 3.20 4.40 Restructuring of the Ministry of Transport Project Sep 2, 1998 2009/2033 1.80 2.30 Kazakhstan Atyrau Pilot Water Supply and Sanitation Project Jun 8, 1999 2005/2019 n.a. 16.50 Legal Reform Project May 13, 1999 2004/2019 n.a. 16.50 Health Restructuring Program Apr 8, 1999 2004/2019 n.a. 42.50 Road Transport Restructuring Project Feb 9, 1999 2004/2019 n.a. 100.00 Kyrgyz Republic Rural Finance Project l Jun24, 1999 2009/2034 11.10 15.00 Flood Emergency Project Jan 26, 1999 2009/2034 7.30 10.00 Social Sector Adjustment Credit Dec 10, 1998 2009/2033 26.70 36.50 Latvia Education Improvement Project May 6, 1999 2003/2014 n.a. 31.10 State Revenue Service Modernization Project Dec 3, 1998 2002/2014 n.a. 5.00 68 THE WORID BANK ANNUAI. REPORT 1999 Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Health Reform Project Nov 12, 1998 2002/2014 n.a. 12.00 Rural Development Project Jul 30, 1998 2002/2015 n.a. 10.50 'Lithuania Municipal Development Project May27, 1999 2004/2016 n.a. 20.10 Macedonia, former Yugoslav Republic of Social Support Support Jun 29, 1999 2009/2034 7.50 10.00 Emergency Recovery Project May 13, 1999 2009/2034 36.90 50.00 Transport Sector Project Feb 9, 1999 2004/2018 n.a. 32.00 Pension Reform Technical Assistance Project Jul 9, 1998 2008/2033 0.80 1.00 Social Sector Adjustment Credit Jul 9, 1998 2008/2033 21.60 29.00 Moldova Social Protection Management Project Jun 24, 1999 2009/2034 8.20 11.10 Structural Adjustment Credit Jun 24, 1999 2009/2034 29.60 40.00 Social Investment Fund Project Feb 16, 1998 2009/2033 10.90 15.00 Poland Hard Coal Sector Adjustment Loan Jun 10, 1999 2004/2014 n.a. 300.00 Wholesale Markets II Project Sep 24, 1998 2004/2013 n.a. 11.10 Wholesale Markets I Project Jul 23, 1998 2003/2013 n.a. 15.90 Romania Private Sector Institution Building Project Jun 10, 1999 2004/2019 n.a. 25.00 Private Sector Adjustment Loan Jun 10, 1999 2004/2019 n.a. 300.00 Social Development Fund Project 'Jan 19, 1999 2004/2018 n.a. 10.00 Cultural Heritage Project Dec 23, 1998 2004/2018 n.a. 5.00 Russian Federation State Statistical System Project May 13, 1999 2004/2016 n.a. 30.00 Highway Rehabilitation and Maintenance 11 Project Dec 22, 1998 2004/2015 n.a. 400.00 Structural Adjustment Loan III Aug 6, 1998 2002/2005 n.a. 1,500.00 Slovenia Real Estate Registration Modernization Project Jun 22, 1999 2003/2014 n.a. 15.00 Tajikistan Institutional Building Technical Assistance l1 Project Jun 17, 1999 2009/2039 5.00 6.70 Farm Privatization Support Project Jun 10, 1999 2009/2039 14.80 20.00 Structural Adjustment Credit Supplement May 17, 1999 2008/2038 5.00 6.70 Education Reform Project May 13, 1999 2009/2039 3.70 5.00 Emergency Flood Assistance Project Aug 27, 1998 2009/2038 3.80 5.00 Structural Adjustment Credit I Jul 30, 1998 2008/2038 37.10 50.00 Turkey Industrial Technology Project Jun 17, 1999 2005/2016 n.a. 155.00 Emergency Flood and Earthquake Recovery Project Sep 10, 1998 2002/2014 n.a. 369.00 Commodities Market Development Project Jul 16,1998 2002/2014 n.a. 4.00 Ukraine Financial Sector Adjustment Loan Sep 15, 1998 2004/2018 n.a. 300.00 Enterprise Development Adjustment Loan 11 Sep 15, 1998 2004/2018 n.a. 300.00 Uzbekistan Financial Institution Building Project May 27, 1999 2005/2019 n.a. 25.00 Health Project Sep 22, 1998 2004/2018 n.a. 30.00 Total 689.50 5,286.00 n.a. Not applicable (IBRD loan) a. "Blend' loan/credit SECTION TWO EIROPE AND CENTRAL ASIA 69 Children gather at a refugee camp in Tirana, Albania. measures to impro e the effectiveness of social also improve overall targeting of social assis- assistance. tance, as do operationis in Armenia, Georgia, Eveni before the Russiani crisis, the Bank was Moldova, anid Tajikistani that, in addition, aim expanding its nionlendinig work on F.CA couin- at private sector development', strengthening tries' vulnierability to a deteriorating externial public finiance, and protecting vital social ex- env ironment and imiplications for domestic penditures. In Poland, adjustment lendiing for policy. Stuidies, technical assistance, and policy coal sector restructuring is helping fund sever- advice have sinice intensified, covering especially ance packages for laid-off miners (as xvell as eni- fiscal sustainabilityv public expenditutre, anid fi- vironimenital remediation efforts). Ani ininovative nancial sector issues. Responding to requiests approach to deinstittutionalizing at-risk groups from 1.atvia and Lithuania, for example, the offers a somexvhat different, but powerfuil, ex- Bank carried out macroeconomic and financial ample of Bank efforts toward social protection sector vuilnerability assessmenits. (Box 2-Il1). Poverty alleviation is also the focus of Helping ailleviate poverty, ensuring sociail investmenit lending. Building on the successful protecrion Albania Ruiral Development Project, a Poverty alleviation remains ani important fo- microcredit project will help develop self- cus of adjustment lending. Specific social pro- sustaining village savinigs and credit associations tection operations in Bulgaria, Kyrgyz Republic, as part of a long-term approach to poverty and Macedonia support reforms that hielp aligni reduiction. Projects in Latvia and the Kyrgyz. pension expeniditures with revenues, wvhile en- Repuiblic also suipport poor rural areas through suring a minimuim pension. These operations credit lines to ruiral enitrepreneurs with mnad- 70 THEW ORI.tBANK ANNUlAL RIORI 1999 equate collateral. The Albania Community region, including tobacco control, tuberculo- Works Project and Social Fund projects in sis-particularly multidrug-resistant -rB-and Bulgaria, Moldova, and Romania also target HIV/AIDS. ECA'S first Adaptable Program Loans poverty alleviation by helping meet small-scale in the health sector, to Kazakhstan and Latvia, infrastructure needs while generating labor- will enable countries to adapt to evolving priori- intensive, short-term local employment, includ- ties within an agreed overall policy framework. ing for women. The loan to Uzbekistan has a rural focus and The regioni's health systems are financially pilots health reform models in several parts of unsustainable and unresponsive to today's the country aimed at improving the efficiency changing patterns of disease and illness. In sev- of service delivery. A basic health project in eral countries, the Bank is supporting systemic Bosnia helps put in place a system of famnily health reforms in the finalncing, delivery, and doctors and clinics. regulation of health care. Projects also target serious and disturbing health problems in the BOX 2-11 PILOTING NEW APPROACHES TO DEINSTITUTIONALIZE THE SEVERELY DISADVANTAGED IN LITHUANIA In the early 1990s, key social protection issues care. Of 1,655 clients served in the Multiservice faced by Lithuania were extremely weak capacity to Centers, more than two-thirds are expected to be develop and implement social policy and a growing diverted from institutional placement, saving the need for alternatives to institutional placement of se- government an estimated $2 million a year. verely disabled children, elderly, and others unable Halfway through implementation, project results to care for themselves, both because the numbers of are noteworthy. Numerous disabled and vulnerable needy were growing, following independence, and be- children, battered women, and elderly-either at cause institutional care was expensive and ineffective, risk of being institutionalized or formerly in an Prepared at the government's request, the project is institution-are receiving intensive help for the first helping address both issues, focused especially on the time. The numbers are small but growing. More poor and on vulnerable women. important, the results are demonstrating what is Policy formulation for social safety nets is becoming possible: this represents one of the very few successful more effective and efficient. Capacity is being built to efforts at deinstitutionalization in Central and improve targeting of benefits to the poor and to better Eastern Europe. In perhaps the greatest testimony anticipate transition policies' impacts on them. A to project success, the government is now providing first annual Social Report-based on new monthly direct budgetary support to expand the community- Household Surveys-has been published, setting pri- services concept to other areas. ority areas for action. The project embodies several principles increas- New means of providing community-based social ingly central to Bank assistance: partnership, partici- services are being tested through pilot Community pation, community-based development to ensure Multiservice Centers and Education Centers for dis- sustainability, institution building, and learning. abled children in six municipalities, covering about Apart from government and communities, key part- 25 percent of the population (900,000 persons). ners are the Swedish and Dutch governments, Multiservice centers include, for example, shelters for United Nations Development Programme, Univer- battered mothers and children, temporary homes for sity of Stockholm, nongovernmental organizations, children, home delivery for the elderly, training for and private sector agents involved in social service the disabled, and rehabilitation for substance abus- delivery. Beneficiary participation was key to project ers. Each of the 14 projects proposed by the munici- preparation; it now drives monitoring and evalua- palities aims at a feasible, cost-effective approach to tion. A municipality-wide competitive tendering pro- social service delivery that is community-based and cess for the community pilots was the first of its kind responsive to local needs. Each is designed to result in Lithuania's social sectors. in the placement offewer individuals in institutional SECTI(N Two ElIR(PF AND CENTRAI. ASIA 71 BOX 2-12 BANK SUPPORT FOR ANTICORRUPTION IN ECA The region's govermments increasingly recognize tute, surveys help identify the pattern and profile of corruption as a problem. Latvia was the first to corruption. Results are then presented in workshops, launch a joint anticorruption effort, following which help define priorities and involve the public President Wolfensohn's offer of such support at the in monitoring government commitments, helping 1996 Annual Meetings. Ukraine, Georgia, Albania, produce sustainable results. In Latvia, a diagnostic Bulgaria, Russia, and most recently Azerbaijan, approach showed public concern with corruption in followed. The Bank's catalytic role has involved the judiciary and high-level influence-peddling; the knowledge building; support for strategy develop- input is helping reshape the anticorruption program. ment and diagnostics; and mainstreaming of Survey diagnostics feed into project design anticorruption efforts into all Bank work. and strengthen institutions. Diagnostics are helping Building understanding, developing strategy. attack the underlying institutional dysfunctions A frequent starting point of Bank support is to ex- that create opportunities for corruption. A Structural plain how corruption hurts growth and the poor Adjustment Credit in Albania focuses on patronage and to show-using cross-country evidence-that in judicial appointments and the civil service. In it is a symptom, fundamentally, of weak policy envi- Georgia, where diagnostics showed corruption ronments and institutions. Anticorruption strategies rooted in excessive licensing and regulations, an developed jointly with governments often combine existing Institutional Development Fund grant economic policy reforms, public sector reforms to and newly approved adjustment credit are setting improve civil service pay and accountability, up a sound legal and institutional framework for financial controls, legal and judicial reforn, and procurement, licensing, and tax administration transparency. reform. Similar efforts in Russia and Latvia have Powerful diagnostic approaches are innovative fed into the design of a treasury project and a state and inclusive. Also involving the World Bank Insti- revenue service project, respectively. Improving the investment climate Central Europe and the Baltics, the focus has A critical area of increasing emphasis in this been on modernizing old systems; in the cis, a region is the Bank's work on public sector insti- region with virtually no history of land owner- tutional reform and anticorruption. Cross- ship, reform needs vary. In FY99, such problems country evidence shows that the cis countries were addressed by two stand-alone projects rank particularly poorly along key dimensions (Armenia, Slovenia) and four operations with of government credibility (including corruption, important land components (Azerbaijan, unpredictable laws and policies, and an unreli- Bulgaria, Latvia, and Tajikistan). able judiciary) that are crucial for investment and economic growth. The region has made an Supporting EU accession important start in implementing the anticorrup- The Bank continues to help countries in Cen- tion initiative in several countries, addressing tral Europe and the Baltics prepare for accession underlying policy and institutional dysfunctions to the European Union. Country-specific re- that give rise to incentives and opportunities for ports have focused on EtU accession issues for corruption (Box 2-12). Slovenia, Hungary, and the Czech Republic. A An area of expanding lending and analytical regional work program of studies is under way focus is land ownership and markets. Land covering EU accession issues of macroeconomic policy is important for private investment and management, labor markets, trade and agricul- growth and features in Bank assistance to nearly tural policy, competition and regulatory policy all ECA countries. The aim is to increase incen- in infrastructure, public administration and in- tives to invest in land and real property by giv- stitutional reform, and public investment and ing individuals secure ownership rights and the regional development. Study findings are dis- opportunity to engage in land transactions. In seminated through workshops and seminars in 72 THE WORLD BANK ANNUA[. REPORT 1999 close partnership with the Commission, FEU i members, and accession countries. Seminars and conferences over the past year covered is- sues such as public sector contingent liabilities, private capital flows, financial sector regulations agricultural policies, and gas and electricity market reforms, Promoting enivironvmenital management The Bank is increasingly emphasizing envi- ronmental priorities (especially water quality and industrial hot spots) identified under National Environmental Action Plans in Iis countries, with continued involvement in multi- lateral regional initiatives (Black Sea, Danube Rehabilitation of erosion gullies in Turkey BOX 2-13 A PARTICIPATORY APPROACH TO RURAL POVERTY AND NATURAL RESOURCE DEGRADATION IN TURKEY Issue. More than 70 percent of Turkey's land area between provincial agencies and the rural commu- faces soil degradation from erosion. About 60 percent nity, which is offered a "menu of interventions," rang- offorest land is degraded due to centuries of exces- ingfrom afforestation of erosion-damaged slopes to sive cuttingfor fuel wood and fodder as well as over- intensive agriculture and beekeeping A balance be- grazing The result: low productivity and low rural tween income-generating activities and natural re- incomes. Isolated, mountainous regions of Eastern source rehabilitation activities is sought. Anatolia are particularly affected. Results. After a slow start, participation by villag- Project objectives. The loan was approved in ers to restore degraded natural resources increased 1993 to improve productivity of range and forest substantially. By December 1998, around 30,000 land; promote production offuel wood and culti- hectares of land was afforested. The project is having vated fodder and more sustainable use of marginal considerable impact on households in some 184 farmlands; facilitate and adopt treatments for range mountain villages. Lower-than-estimated unit costs and forest land through activities designed to yield have enabled expansion of project coverage, from 3 to quick benefits; and ensure increased responsibility 11 provinces. The original provinces are transferring and involvement of local communities in planning experience to new ones, with continual improvements and managing their resources. The project supported in techniques. An unexpected outcome: the provincial Bank Country Assistance objectives for Turkey: envi- agencies concerned are, for the first time, jointly de- ronmentally sustainable development and help to veloping integrated programs for a given geographic poorer regions. area, avoiding duplication of efforts and resources. Innovation, participation. Watershed rehabilita- On the environmental front, satellite images reveal tion projects being relatively new and not always a marked difference in vegetation, which will help successful, innovation was essential. Based on les- reduce floods and sedimentation. Meanwhile, new sons learned, project design centered on village par- cash crops and new techniques are increasing agri- ticipation. Typically, the first step is a census of cultural production dramatically. Rural incomes household and village problems and community- have at least doubled. proposed solutions. An action plan is then agreed SP(:IN Two EUROPE AND CENTRAL ASIA 73 River, Caspian Sea, and Aral Sea). With Global intensive technical assistance effort to help Environmental Facility funding, projects ap- the government restructure the banking sector proved this year support greenhouse gas reduc- has been a necessary first step in addressing tion in the Czech Republic, biodiversity protec- the problems of operations with credit line tion in Romania and Central Asia, wetlands components. protection in Croatia, and integrated coastal The Russian crisis has also had a negative, management in Georgia (also IDA-funded). A though less severe, impact on the portfolio of successful example of ongoing environmental some neighboring (is countries. Portfolio re- efforts is reflected in Box 2-13. views carried out in several other E(CA countries are aiming to ensure that projects are meeting Portfolio performance client needs. To the same end, the Bank has Russia's banking system collapse and lack continued to vigorously pursue staff decentrali- of counterpart funds have seriously hurt perfor- zation; in the latest such effort, the country mance of the Bank's loan portfolio of 35 director for Turkey and the former Yugoslav projects: half the projects are facing slow dis- Republic of Macedonia is now posted in bursements, and a third need restructuring. Ankara. To meet Strategic Compact goals, ca- Corrective measures were identified in Novem- pacity in procurement as well as financial man- ber 1998 to mitigate the crisis' immediate im- agement and audits has been strengthened; sev- pact (for example, special accounts in failed eral financial management specialists are newly private banks were transferred to solvent state posted in field offices. In line with the Bank's banks to maintain funding of viable projects). anticorruption initiative, the region has also At the same time, the Bank and the IMF'S closely pursued reports of corrupt practices. 74 THE WORI.I) BANK ANNUAI. REPORT 1999 LATIN AMERICA AND THE CARIBBEAN COUNTRIES ELIGIBLE FOR Regional context VcrC 1`1 Niiio rains, aind the WORLD BANK BORROWVING G,rowvth in thlt Latin An\crica slow dl\II in its export mar- Aritiguia rid Barbuda and the Caribbean (I V'a) kets. Ai gu-tina Region declined to about 2 'I'hc region 's cirrcnt at- Belizc percent in 199)8 dIuc mainly cotnlt bal_n1c JLctcIi0ra-teCd Bonlvia to three factors: a signitiicait froim a defticit of 3.1 p&LrL ent Bi azil reduction in capital inflows, ofl :tw in 1')7' to 5 .( perCLe1t (lile sharply ftalling export priLes ot a'p in 19 ')S Ih sevcrc Coalmbia (oil andi non-oil commodities), impact oI lower oil prices re- Costi Rica and a slowdown in wvorld versed VeInzuela 's current ac- Dominica trade growth (Figure 2-8). count position from a surplus Domniriicar Repuilic While pruLdent policv re- of 6i2 pcrt-cnt oi ( I I tLo a Ecuado®r sponses in the region follow- deficit of ' / peLrCent 01 (dI)I. El Salvadcr ing the Asian crisis limnited '[he nonfinancllIial puvlbli set- Greniada contagioni effects andi allowe\d tor deficit in the region also Guatemal3Ia the region to grow at 5.5 per- d-oubleL aS talling (export GDy !na eY nt in I 0997, with capital in- priLeS and slow cr grow tl re- Hiit floWs susttaininig growth in the dut I' pvublic cector re\enues Hoildia' first half of' I 998) the Russian SUorpluses ttirncid to defiCits Jmnraica debt moratoriumal in August in Chile and Ve llCZLIa. Mexico 1998! disrupted capital tloWs Ecuador's det, it more Nicaragui to the xi\( Region. than doubled( and Brazil sawr Prtlama Growth in Argenatina, its defhiit rise by about 3( Pacaa'uay Bolivia, Chile, aim1 M\Iexico percent. Peru ranged fronm 3 percent te IThc 1next I ) Months are St. Kitts and Novis 5 per:ent in 1 998. In Central expc(teCd to be cifli,tilt for St. Lticill American counitries also, thIi regioll'S c(c iiolIliCS. FEcO- St.V ,ceiit anmd tlic Grenadities growth texceedecl 3 pertcunt, nonio gi cnowth is forc(cIst to SucirIcriieI< even as Hurri(ane Mlitch he a -egati e ((1.4 p-erncnt) in Ti iiiinad and Tob ago dan-i p edl growth iii I 999,CI tlc lailn to cc LonOlici U'uuisay Honduras antI Nicaragtl. Lointral tionl l ith iii Bra/il Vcii'z,eiula O)n thet other hanld, Brazil, (2() perce-nt) and scv(tral of its Colombia, EcLuadlor, andl Peru neighbors. PositiVCe but sloWer grew less than I percent, andt grnwth tliaIm last year is cx- Venezue la's 'cOnlomIVy ton)l- peted in Bolivia, Ch ile, anld tractel by (0.4 percent. Brazil's MIe'XicO. [)ui ii' the year re- xcohange r ate regime tcamle1 gional ec ononii alctivity unlider severe pressure fromii Should pitlx tip, as terms of fiscal in-balanices and reserve trade i a\c slightly iniproved, losses, anid outpIut conitracted ctUrrent acI. outnt alld hs al sharply, as the cotintry tight- balanices are oin the mend, enedl fisc al politvy and in- and ftinancnial flow> to I atii crecased initcr'st rates in Amierica, wlmilc still crr.atic, November. Ecuador's pootr are trencliimg tipward. performance in 1 998 \vas a I)espite rIClatiV`elv high aver- c-aused by both unbalanced age incomes in m;ally coill- macroeconoIllic policies and tries, poverty andi nIedCCLalitV exterinal and clinmatic slhoks, remain serious problemis in incltuling a sharp eld, lint in Latin Americ,a and are be- petroletim export prices, se- lievedl to be rising in sorne SI, ii-\ I, I \ Asvi i I \i' I -iill (I aCP mImi A> 7 5 areas. Inequalities in access to quality education, The Bank's medium-term strategy in the LAC in particular, constitute an important structural Region, as in others, is centered on poverty re- constraint to development. An underlying factor duction. The strategy is three-pronged. First, is the highly skewed distribution of assets, espe- the Bank seeks to help remove impediments to cially rural land. poverty-reducing growth. Sustained, stronger economic growth in the region will require im- Bank assistance provements in human capital, crucially through Table 2-13 shows the value and sectoral dis- investment in better educational achievement; tributions of total Bank lending to the Latin financial market reforms; a better legal and America and the Caribbean region in the FY90 regulatory environment; public sector modern- to FY99 period. Table 2-14 compares commit- ization; and improved public finances. Key to ments, disbursements, and net transfers to the Bank strategy in these priority areas is the de- region for fiscal years 1994 to 1999, and Table velopment of sound institutions. Second, the 2-15 shows operations approved, by country. Bank supports targeted poverty-reduction pro- Figure 2-9 shows IPRI) and IDA commitments grams to benefit those unlikely to be pulled out by sector. of poverty by growth alone or those vulnerable to falling into poverty during economic down- FIGURE 2-8 MAIN MACROECONOMIC INDICATORS, LATIN AMERICAAND THE CARIBBEAN REGION, 1995-98 Growth rate, inflation rate, nonfinancial Private capital flows public sector, and current account (current U.S. $ millions) 60 bolance (percent) 140,000 50 120,000 40 100,000 30 80,000 20 60,000 10 40,000 0 20,000 -10 0 1995 1996 1997 1998 =,GDP growth Current account balance (% of GDP) Nonfinancial public sector (% of GDP) Inflation - Private capital flows 76 TI-E WORLD BANK ANN[IAIL REPORT 1999 Hurricane Mitch: an important challenge in partnership and donor 4. coordination BOX 2-14 RESPONDING TO HURRICANE GEORGES AND HURRICANE MITCH Two hurricanes devastated the Caribbean and emergency financing, macroeconomic assistance, Central America within one month in FY99. Hurri- and debt relief; and longer term reconstruction. cane Georges hit St. Kitts and Nevis, the Dominican Short- to medium-tenn rehabilitation has been Republic, and Haiti in September 1998 and aimed at addressing the most pressing needs. In the Hurricane Mitch hit El Salvador, Guatemala, days following the emergency, Bank staff worked Honduras, and Nicaragua in October. closely with government and donor counterparts to Hurricane Georges. Bank teams were in all three assess damage, determine priorities, coordinate assis- Caribbean countries, once airports reopened. The tance, and identify sources of emergency financing, hurricane caused extensive damage to roads, power mostly by reprogramming ongoing operations. So far, infrastructure, and private homes. Tourism and free the Bank has made available about $180 million enterprise zones were affected. In response to the from existingprojects to assist countries devastated Dominican Republic's request for emergency assis- by Hurricane Mitch. Supplemental credits for about tance, the Bank reprogrammed 10 percent of project $43 million are beingprovided for transport and resources currently under implementation, identify- health in Honduras and for education in Nicaragua. ing the most urgent needs in close coordination with In addition, a $200 million Hurricane Emergency the government, and miade additional funds avail- Operation to provide balance-of-payments support able through a special emergency operation, half a for financing critical imports was approved for fast-disbursing, budget-support component to finance Honduras, and a similar $50 million operation for imports and the other half an emergency investment Nicaragua, in December 1998. component to be disbursed against specific works. In The Bank has also taken several measures to St. Kitts and Nevis, an $8.5 million program of as- assist hurricane-affected countries in dealing with sistance combined reconstruction and rehabilitation their debt service obligations. At the request of sev- of essential infrastructure and key lifeline services. eral governments, the Bank established a Central The Bank was commended by both governments for America Emergency Trust Fund, to which donor its swift response and comprehensive assessment of contributions are being channeled, to help these the damage. countries cover their multilateral debt service pay- Hurricane Mitch. In October 1998, Hurricane ments. Contributions amounted to $109 million in Mitch devastated Central America, killing about FY99 of which $82 million has been disbursed to the 9,000 people, leaving over I million homeless, and affected countries. In addition, iDA plans to increase causing massive damage to social and economic in- its allocation of highly concessional resources to frastructure. A three-pronged assistance strategy has Honduras and Nicaragua over the next four years. focused on short- to medium-term rehabilitation; SECTION Two LATIN AMERICA AND THE CARIBBEAN 79 in the design and implementation of social pro- ing governments establish efficiency-enhancing tection plans, unemployment insurance, and laws and regulations as well as institutions to social security systems was intensified in FY99 enforce them in several sectors. An innovative and supplemented with financial support. project is improving the operations of One part of Argentina's SSAL supports the Venezuela's Supreme Court. A Learning and identification and protection from budget cuts Innovation Loan (LIL) to the Dominican of a number of key social programs that provide Republic, approved last year, is improving important support to the poor, including environmental management by helping define nutrition, employment, health, and education. policy reforms and elaborate a National Envi- In addition, the government will undertake ronment Management Program. improvements in its poverty measurement Bank support for reform and modernization methodology and introduce a better system of public institutions is also helping effective for targeting key programs to the poor. Also as implementation of the laws and regulations part of this operation, the government will de- necessary for these institutions to work effi- velop a new fully capitalized unemployment ciently, including those tied to corruption. In insurance system that eliminates the current Bolivia and Mexico, assistance included support system of severance payments, thus reducing for the governments' decentralization process. labor costs and increasing labor mobility In Honduras, public sector modernization has while protecting workers. At the same time, made remarkable advances with IDA support, the loan supports a number of improvements reflecting strong government commitment in in health and education, including greater in- particular (Box 2-15). centives for cost recovery in higher education, The Bank has increased significantly its in- scholarships for higher-education students volvement in banking sector reform. All finan- from low-income areas, and improved regula- cial sector technical assistance, sector work, tion of health insurance, including the estab- and lending operations in the region incorporate lishmeht of prudential and consumer protec- efforts to promote the implementation of the tion norms. Basle Core Principles of Bank Supervision. In The Bank also responded promptly to emer- FY99, the Bank supported major reforms in the gency and reconstruction needs arising from banking sector of a number of LAC countries: two severe hurricanes that hit Central America Argentina, Bolivia, Colombia, Honduras, and the Caribbean region (Box 2-14). IDA'S role Nicaragua, and Paraguay. Pension reform pro- was significant, comprising new lending, reallo- grams are under way in Bolivia and Mexico, cations of funds from ongoing projects, and with program design having begun in Costa commitment to increase concessional lending to Rica and Nicaragua. $1 billion in FY99-FY02. Supporting anticorruption work Second-generation reforms: financial, judicial, The Bank, including the WBI, has organized a and public sector reforms number of workshops to promote public sector Latin America is expected to emerge stron- integrity, notably the Bolivia and Nicaragua ger from the crisis. Government authorities National Integrity Workshops, the Venezuela have taken advantage of the crisis to advance Municipal Integrity Plan, and the Central structural reforms. In FY99, the region was ac- America Regional Integrity Workshop. These tively engaged in important second-generation efforts were complemented by Bank training for institutional reforms designed to improve the a national anticorruption plan in Bolivia and quality and effectiveness of the education, Nicaragua. Bolivia is one of the countries pilot- health, judicial, public administration, and fi- ing the Comprehensive Development Frame- nancial sectors. work, which places a high priority on gover- Economic growth requires appropriate legal nance issues. The Bolivia workshop led to and regulatory frameworks to protect property development of a National Integrity Plan, rights and consumer interests. The Bank is help- which in turn provided the basis for an anti- 80 THEWORLD BANKANNUAL REPORT 1999 corruption component in a new Institutional Management Assessments were prepared for a Reform Project. number of countries, and several additional pro- The Bank also convened an anticorruption curement and financial management specialists panel at the Second International Congress of were recruited. the Latin American Center of Administration for Development (CLAD ii); a similar presenta- Providing infrastructure for the poor tion was made at the conference of Ibero- With 74 percent of the population living in American legislators in Uruguay. A workshop urban areas, the LAC Region is the most urban- to address corruption in administration took ized in the developing world. It is also the re- place in May in Mexico City, in collaboration gion with the highest percentage of urban with Mexico's Ministry of Finance. In addition, households living in poverty (39 percent). in Colombia, Argentina, and Ecuador, Institu- One of the greatest challenges facing the region tional Development Fund grants supported is to provide adequate infrastructure and ser- national efforts to fight corruption, and in vices to the urban poor. Equally important, the case of Argentina, helped strengthen the however, are the needs of the rural poor, who National Ethics Office. make up more than half the region's rural The Bank conducted an anticorruption households and tend to be farther below the course for its regional staff in FY99 to help poverty line than the urban poor. In a year of minimize the possibility of corruption in Bank severe natural disasters, meeting infrastructure projects. Additionally, Country Procurement needs assumed particular importance; the basic Assessment Reports and Country Financial infrastructure destroyed in affected countries BOX 2-15 HONDURAS PUBLIC SECTOR MODERNIZATION STRUCTURAL ADJUSTMENT CREDIT Improving the performance of public institutions sound regulatory agencies established, and pricing is increasingly seen to be at the heart of the economic policies modified-all greatly facilitating privatiza- development challenge. Excessive government inter- tion which will increase efficiency and reduce costs of vention, misguided resource allocation, weak regula- services, benefitting businesses and private consumers. tion, and arbitrariness and corruption have deterred .- undertaken significant restructuring of ininis- private investment and slowed growth and poverty tries, exceeding expectations reduction across the region and the developing *> strengthened public finance management by world. Featured in the 1997 World Development eliminating duplications in the budget function and Report, the important role of the state and of public simplifying procedures. institutions is receiving growing attention in Bank Important lessons are being learned or reinforced assistance. in implementing this complex program. First is the Honduras has made noteworthy advances in need to adopt broad-based approaches that help modernizing its public sector in recent years. With identify major problems and systemic distortions support from an IDA adjustment credit of $55 million that obstruct policy reform. Second, high-level equivalent, the government has sought to: increase government commitment is crucial for public enter- private sector participation in public service prise reform and privatization, given the needed provision; restructure public institutions and changes in laws and the need to deal with powerful employment to improve public finances; and in- stakeholders, including the entrenched bureaucracy, crease efficiency, transparency, and accountability labor unions, and opposition parties. Also vital is a in public management. stable and adequate political and economic frame- Marking exceptional progress, the government has work to assure investors of a business-friendly, pre- *> introduced major legal and institutional reforms dictable environment. Finally, steady implementation in the telecommunications, civil aviation, and elec- support and technical assistance are essential to en- tricity sectors. Sector laws have been approved, sure sustained momentum. SECTION Two LATIN AMERICA AND THE CARIBBEAN 81 marginal settlements. A is being prepared A ~~in Mexico to test an innovative approach to tapping private capital for provision of basic services. In Brazil, reform of the water and sanitation sectors has improved efficiency and a +E chpaved the way for private participation. Complementary projects aimed to ensure aess to water and sanitation to the urban an rur l H poor. Analytical and advisory services aincluded city development strategies for two V ~ ~~~~~~~~~~~~~countries, water and sanitation sector reviews for four countries, and strategy papers for all infrastructure sectors. Promoting environmentally sustainable development With a population exceeding 400 million and a land area of 20 million square kilometers had_ a disproportional negative impact onthe srcovering very diverse ecosystems, the region continues to face tremendous environmental challenges. The Bank is helping meet these chal- lenges through its lending and nonlending ser- vices, including several major subregional or re- gional programs. One such effort is the Meso-American Bio- logical Corridor, a multidonor initiative which includes Bank and Global Environmental Facil- ity investments in Belize, Costa Rica, El Salva- toi, Honduras, Mexico, Nicaragua, and Panama employed_ 4,0 ualpo,ad upreto protect terrestrial and marine ecosystems and promote sustainable rural development. An innovative disease surveillance and control project Another is the ongoing Pilot Program to Con- in Brazil serve the Brazilian Rain Forest, which includes new projects to manage Amazon floodplains and protect rain forest corridors. Ongoing ac- tivities support indigenous and extractive re- had a disproportional negative impact on the serves, regional scientific research centers, state welfare of the poor. environmental institutions, local nongovern- Support for infrastructure to benefit the poor mental organizations (NGOS), and new ap- was widespread. Natural disaster emergency proaches in community-based natural resource loans were prepared, or existing loans restruc- management. A third program is the Clean Air tured, for Colombia, Central America, and Initiative in Latin American Cities, which will the Caribbean. In Peru, a second-phase Rural bring together city managers, development Road Rehabilitation Project is being prepared; agencies, leaders from public sectors, and NGOS the first improved 8,000 km of rural roads, to address air quality problems in large metro- employed 4,200 rural poor, and supported politan areas. After a technical workshop in De- 322 community-based microenterprises. In cember 1998, workshops in LAC cities over the Venezuela, a new operation seeks to provide next few years will help participants exchange integrated, demand-driven packages of basic experience and formulate and implement local services, at iow cost, to the urban poor living action plans. 82 TH WORLD BANKANNUAL REPcRTl1999 Supporting social sectors an education household survey in El Salvador, The Bank prepared an education strategy for along with a series of projects to help the gov- Latin America and the Caribbean during the ernment expand the EDUCO model of commu- fiscal year. The strategy emphasizes shifting pri- nity-based schools to all rural areas and mar- mary level focus from raising coverage to raising ginal urban zones and improve the quality and quality, especially through improved training coverage of secondary education; and the Mil- and management of teachers; improving equity lennium Science Initiative in Chile, which aims and social inclusion, with particular emphasis to establish virtual centers of excellence to carry on compensatory education programs to ensure out advanced research and training in science that poor children stay in school and learn; and and technology. The health sector is also an diversifying higher education and creating con- important priority. The Bank is helping client ditions for expanding access, with emphasis on countries undertake comprehensive reforms to private sector provision and finance. Notewor- improve performance of both private and state- thy interventions in FY99 included a new Youth run health systems (Box 2-16). Development Learning and Innovation Loan in Colombia supporting training opportunities Improving results on the ground for youths at risk, as part of a new strategy to To consolidate gains made last year from staff reduce violence through preventive measures; reorganization and decentralization, the Bank BOX 2-16 SUPPORTING DISEASE SURVEILLANCE AND CONTROL IN BRAZIL In September 1998, the Board approved a $100 of the impact of these diseases under previous million loan to Brazil to improve its national disease projects. surveillance and control system in an effort to reduce The project is the first phase of a five-year pro- I mortality and morbidity resultingffrom communi- gram (supported by an Adaptable Program Loan) cable diseases. The program consists of three projects that will benefit the entire Brazilian population by phased over eight years that will strengthen surveil- increasing the effectiveness and efficiency of the lance by improving the data management telecom- health sector The first phase aims to set up a viable munications system, rehabilitating the laboratory framework for an improved national surveillance network, and training staff. Communicable diseases system, envisaged to become, in ten years, a more ef- know no borders. Brazil knew it had to develop bet- ficient and responsive system that is decentralized ter capabilities to monitor and control existing and and better equipped, in terms of human and finan- emerging infections, and its partners knew of the Bra- cial resources, to deal with the emerging needs of the zilian commitment and capabilities in this arena. population. The project will especially benefit the The project provided the financing and helped con- poorest groups, those living in the Amazon, and other summate the collaborative enterprise that is now frontier populations, since they are affected dispro- supported by this project. portionately by communicable diseases. States, mu- The project is the result of strong collaboration nicipalities, and nonprofit health care providers will I among many partners: the Bank, the government be important beneficiaries also, as their capacity to of Brazil, the US. Centers for Disease Control prepare, evaluate, and implement subprojects will be (cDc), the World Health Organization, and the Pan strengthened. American Health Organization, the regional unit As the first self-standing project on disease surveil- of the World Health Organization (wHo). The CDC lance and control in the Bank's portfolio, this project has had vital interests in supporting this effort in spotlights this issue and is expected to pave the way Brazil for many years. CDC and wHo scientists have for similar efforts in Latin America and other re- been working in Brazil on significant public health gions. It has already been a catalyst for a similar problems, including AIDs, hemorrhagic fever and project in Argentina and a project to increase other emerging infections, and polio eradication. MERCOSUR-country collaboration on disease surveil- The Bank, too, had been investing in the reduction lance and control. SECTION Two LATfN AMERICA AND THE CARIBBEAN 83 TABLE 2-15 OPERATIONS APPROVED DURING FISCAL YEAR 1999, LATIN AMERICA AND THE CARIBBEAN Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Argentina Water Sector Reform Project Jun 1, 1999 2005/2014 n.a. 30.00 Integrated Drug Prevention Pilot Project Apr 30, 1999 2002/2014 n.a. 4.80 Social and Fiscal National Identification Project Apr 20, 1999 2004/2014 n.a. 10.00 Renewable Energy in the Rural Market Project Mar 30, 1999 2004/2014 n.a. 30.00 Year 2000 Technical Assistance Project Dec 17, 1998 2004/2014 n.a. 30.30 Special Structural Adjustment Loan Nov 10, 1998 2002/2003 n.a. 2,525.30 Repurchase Facility Support Loan Nov 10, 1998 2002/2003 na. 505.00 Social Protection IV Project Oct 15, 1998 2002/2013 n.a. 90.80 Bolivia Health Sector Reform Project Jun 15, 1999 2009/2039 17.80 25.00 Institutional Reform Project Jun 15, 1999 2009/2039 23.80 32.00 Abapo-Camiri Highway Project Jun 3, 1999 2009/2039 64.70 88.00 Regulatory Reform Sector Adjustment Credit Nov 19,1998 2009/2038 29.20 40.00 Regulatory Reform Sector Adjustment Credit Nov 19,1998 2009/2038 1.30 1.80 Brazil Salvador UrbanTransport Project Jun 17,1999 2005/2014 n.a. 150.00 School Improvement lI Project Jun 8,1999 2005/2014 n.a. 202.00 Animal and Plant Health Protection Project May 27, 1999 2004/2014 n.a. 44.00 Social Protection Special Sector Adjustment Loan Jan 7, 1999 2002/2004 n.a. 252.50 Social Security Special Sector Adjustment Loan Jan 7,1999 2002/2004 n.a. 757.60 Disease Surveillance and Control Project Sep 17,1998 2004/2013 n.a. 100.00 AIDs and srD Control 1I Project Sep 15, 1998 2004/2013 n.a. 165.00 Amazon Emergency Fire Prevention and Control Project Sep 10, 1998 2004/2013 n.a. 15.00 Chile Millennium Science Initiative Project Apr 30, 1999 2003/2014 n.a. 5.00 Municipal Development 1I Project Dec 22, 1998 2004/2014 n.a. 10.10 Higher Education Improvement Project Nov 5, 1998 2004/2014 n.a. 145.40 Colombia Youth Development Project Aug 3, 1998 2002/2014 n.a. 5.00 Toll Road Concession Project Jul 2,1998 2002/2013 n.a. 137.00 Dominica Emergency Recovery and Disaster Management Project' Dec 10, 1998 2002/2014 n.a. 2.53 Emergency Recovery and Disaster Management Project Dec10, 1998 2009/2033 1.80 2.50 Dominican Republic Hurricane Georges Emergency Recovery Project Dec 10, 1998 2002/2014 n.a. 111.10 Guatemala Land Fund Project Jan 7, 1999 2004/2018 n.a. 23.00 Land Administration Project Dec3, 1998 2004/2019 n.a. 31.00 Social Investment Fund II Project Nov 12, 1998 2004/2018 n.a. 50.00 Judicial Reform Project Oct 22, 1998 2004/2018 n.a. 33.00 Reconstruction and Local Development Project Jul 28,1998 2004/2018 n.a. 30.00 Guyana El Nifio Emergency Assistance Project Oct 22, 1998 2009/2038 6.80 9.00 focused on improving the speed, flexibility, to requests for emergency assistance in Brazil, quality, and effectiveness of operations and ad- the Dominican Republic, Guyana, Honduras, visory services in FY99. Field presence has in- Nicaragua, and the Caribbean, and for fiscal creased, with three of the seven country direc- support in Argentina and Brazil. tors now based in the field and strengthened The Bank continues to seek ways to make its resident missions throughout the region. As a lending portfolio more effective. The use of result, the Bank was able to respond promptly Adaptable Program Loans (APLs) and LILS has 84 THE WORLD BANK ANNUAL REPORT 1999 Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Honduras Interactive Environmental Learning and Science Promotion Project (Profuturo) Jun 17, 1999 2009/2039 6.20 8.30 Nutrition and Health Project Supplement Jan 28, 1999 2003/2033 7.50 10.40 Transport Sector Rehabilitation Project Supplement Jan 7,1999 2003/2033 14.50 20.00 Hurricane Emergency Project Dec 22, 1998 2009/2038 144.30 200.00 Social Investment Fund IV Project Jul 14,1998 2008/2038 33.60 45.00 Mexico PovI Restructuring Project Mar 4, 1999 2004/2014 na. 505.50 Agricultural Productivity Improvement Project Dec 22, 1998 2002/2014 n.a. 444.40 Nicaragua Sustainable Forestry Investment Promotion Project Jan 7, 1999 2009/2039 6.40 9.00 Basic Education Project Supplement Jan 7, 1999 2005/2035 9.60 13.20 Hurricane Emergency Project Dec 22, 1998 2009/2038 36.10 50.00 Financial Sector Adjustment Credit Dec 16, 1998 2008/2038 1.00 1.40 Social Investment Fund III Project Nov 10, 1998 2009/2038 32.90 45.00 Panama Public Policy ReformAdjustment Project Nov 19, 1998 2003/2015 n.a. 61.00 Second Roads Rehabilitation Project Sep 15, 1998 2003/2015 n.a. 85.00 Health Sector Reform Pilot Project Jul 17,1998 2002/2014 n.a. 4.30 Peru Financial Sector Adjustment Loan 11 Jun 22,1999 2004/2016 n.a. 300.00 Urban Property Rights Project Aug 6,1998 2004/2015 na. 38.00 St. Kitts and Nevis Emergency Recovery and Disaster Management Project Dec 10, 1998 2002/2014 n.a. 8.50 St. Lucia Emergency Recovery and Disaster Management Project' Dec 10, 1998 2002/2014 n.a. 3.04 Emergency Recovery and Disaster Management Project Dec 10, 1998 2008/Z033 2.2 3.00 Trinidad and Tobago Postal Services Reform Project Apr 13, 1999 2004/2014 n.a. 14.80 Uruguay Transport 11 Project Sep 17, 1998 2004/2013 n.a. 64.50 Basic Education Quality Improvement II Project Jul 30,1998 2002/2013 n.a. 28.00 Venezuela Caracas Slum-Upgrading Project Oct 22, 1998 2003/2015 n.a. 60.70 Public Expenditure Management Reform Project Jun 29, 1999 2004/2014 n.a. 20.00 Total 439.70 7,736.77 n.a. Not applicable (lIRD loan) a. "Blend" loan/credit. improved the region's ability to respond flexibly views were held in Bolivia and other countries. to the needs of borrowers. In FY99, APLS were Reflecting intensive efforts to reduce the approved to support long-term programs in number of problem projects, the LAC Region Argentina, Bolivia, Brazil, and Guatemala, and has the lowest percentage of such projects in portfolio management is helping improve re- the Bank. sults on the ground. Joint Borrower-Bank Country Strategy and Implementation Re- SECTION Two LATIN AMERICA AND THE CARIBBEAN 85 MODLE EAST AND NORTH AFRCA COUNTRIES ELIGIBLE FOR Regional context problems, as do gaps between WORLD BANK BORROWING*: The economies of the Middle rural and urban areas in terms Algeria East and North Africa (MNA) of incomes and access to infra- Egypt,Arab Republic of region in which the Bank has structure and human services. Iran, Islamic Republic of active lending portfolios were Jordan largely spared the adverse ef- Bank assistance Lebanon fects of the global economic These enduring issues Morocco difficulties in 1998. But softer framed the components of the Syrian Arab Republic oil prices and continued un- Bank's strategic response to Tunisia certainties with respect to the countries' needs during FY99. Republic of Yemen Middle East peace process Central to this response, as in have contributed to less robust previous years, has been sup- growth than might have been port for wide-ranging eco- expected, given broad-based nomic reforms to promote substantial economic reform faster private sector-led GDP in many countries. Estimates and employment growth. Be- for GDP growth range from a cause most MNA domestic mar- high of 6.3 percent for Mo- kets are small, opening up rocco (a sharp rebound after economies to intraregional and the previous year's drought- international trade is critical, induced negative growth) to requiring not only reduction a low of 1.7 percent for Iran. of conventional trade barriers Algeria, Egypt, and Tunisia all but also institutional, legal, achieved estimated 5 percent and regulatory reforms to en- growth. Jordan, Lebanon, the hance the enabling environ- West Bank and Gaza, and ment for domestic and over- Yemen had estimated growth seas businesses. While growth rates in the 2-4 percent range. is central to alleviating pov- Despite economic recovery erty, Bank strategy also em- in recent years, MNA countries phasizes special assistance for continue to face substantial vulnerable groups. The Bank problems in achieving their has long supported human economic and social goals. capital investment in the re- Unemployment remains un- gion, stressing especially quali- acceptably high. While pov- tative improvements in health erty incidence is low, the num- and education services. Assis- bers of poor continue to tance for the prudent manage- increase, and vulnerable socio- ment of scarce natural re- economic groups have yet to sources and for agricultural share in the fruits of recovery. and rural development also Governments have invested remains a priority. heavily in health and educa- The Bank has continued to tion, but both access and qual- pay increasing attention to ity still need substantial im- results on the ground and re- provement, particularly with sponsiveness to clients. It has respect to female education intensified work on portfolio and affordable health care for management, deepened part- the poor. And environmental nerships with other donors *This section also reports issues-notably water scar- and member countries, not on West Bank and Gaza. city-pose potentially serious only at the governmental 86 THE WORLD BANK ANNUAL REPORT 1999 level but also with civil society, and used par- sector-oriented policy reform in Jordan, ticipatory approaches to project design and Morocco, and Tunisia. Following successful execution. performance under predecessor operations, the Table 2-16 shows the value and sectoral dis- Bank maintained its strong support for reform tribution of total Bank lending to the Middle in Jordan, where the third in a series of loans East and North Africa Region in the FY90-99 will benefit trade policy, privatization, and fi- period. Table 2-17 compares commitments, dis- nancial sector and legal and regulatory reform. bursements, and net transfers to the region for Two loans to Morocco are supporting an excep- FY94-99, and Table 2-18 shows operations ap- tionally broad program of economic and social proved in FY99, by country. In addition, the reform (Box 2-17) and government efforts to Board of Executive Directors approved funding reorganize and modernize the critical telecom- totaling $54 million from the Trust Fund for munications sector. The latter operation will Gaza and the West Bank. Figure 2-10 shows expand competition through increased private IBRD and IDA commitments by sector. participation in service provision and help im- prove access for the poor and isolated. Two Advancing growth and private sector development loans to Tunisia will help enhance the sound- More than 40 percent of FY99 lending was ness, efficiency, and competitiveness of the fi- for substantial programs of growth- and private nancial system and support Tunisia's ability to TABLE 2-16 LENDING TO BORROWERS IN MIDDLE EAST AND NORTH AFRICA, BY SECTOR, FISCAL YEARS 1990-99 (millions of US. dollars) Annual average, Sector FY90-94 FY95 FY96 FY97 FY98 FY99 5 Agriculture 295.7 231.6 100.0 176.5 114.2 454.0 291 Education 99.0 158.3 138.3 98.0 143.0 55.0 105 Electric power and other energy 118.9 - - 65.0 - 54.0 64 Environment 6.7 113.0 78.0 - 35.0 - 22 Finance 105.0 - 408.7 75.0 180.0 159.0 398 Industry 92.9 - - - - 35.0 35 Mining 5.0 - - - - - - Multisector 255.0 150.0 380.0 120.0 - 120.0 40 Oil and gas 48.8 - 35.0 - - - - Population, health, andnutrition 83.2 35.7 85.2 - 140.0 101.0 131 Public sector management 37.0 - 20.0 85.0 71.5 403.5 225 Social protection 34.6 - 223.0 30.0 5.0 50.0 45 Telecommunications 24.0 - - - - - 101 Transportation 55.2 239.1 37.0 42.0 57.8 - 10 Urban development 229.9 51.0 50.0 100.0 212.0 64.0 44 Water supply and sanitation 93.8 - 40.0 123.3 10.0 80.0 65 Total 1,584.7 978.7 1,595.2 914.8 968.5 1,575.5 1,576 Of which: IBRD 1,447.7 925.4 1,276.7 769.6 722.0 1,189.0 IDA 137.0 53.3 318.5 145.2 246.5 386.5 -Zero. Note: Numbers may not add to totals because of rounding a. See Explanatory Note, Table I (page I 0). SECTION Two MIDDLE EAST AND NORTH AFRICA 87 TABLE 2-17 WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN MIDDLE EAST AND NORTH AFRICA, FISCAL YEARS 1994-99 (nillions of U.S. dollars) Egypt, Morocco Arab Republic of Tunisia Total region I Item 1999 1994-99i 1999 1994-99, 1999 1994-99, 1999 1994-99, IBRD and iDAcommitments 440 1,758 550 1,140 194 1,297 1,576 7,183 Undisbursed balance 724 724 524 524 796 796 3,937 3,937 Gross disbursements 411 2,011 76 902 209 1,064 1,091 7,372 Repayments 299 1,895 127 1,146 176 1,085 992 6,557 Net disbursements 113 116 -51 -245 33 -20 100 815 Interest and charges 216 1,502 63 579 95 673 656 4,194 Net transfer -103 -1,386 -114 -823 -62 -693 -556 -3,379 Note: The table shows the three countries with the largest lending commitments in the Region over the past two fiscal years (FY98-99). a. Disbursements from the iDA Special Fund are included through fiscal 1996. compete effectively in external markets, espe- Algeria, and textiles in Morocco). MIGA has re- cially the European Union. ceived some 60 preliminary guarantee applica- The Bank's efforts to help promote private tions for activities worth approximately $1.3 sector-led growth in the MNA Region are billion in many sectors. A special area of focus complemented by those of IFC and MIGA. IFC'S for MIGA has been the West Bank and Gaza, 22 operations during the year supported invest- through the $21 million West Bank and Gaza ments with a total project cost of more than Investment Guarantee Trust Fund, created $ .1 billion. IFC has emphasized especially the under MIGA'S initiative in 1997. The Trust Fund financial sector, private participation in infra- undertook its first operation in FY99, providing structure, support for small and medium enter- $5 million in insurance for a project to restore prises, and specific activities that draw on com- and enhance several sites of cultural and histori- parative advantage to generate foreign exchange cal interest near Bethlehem, in connection with earnings and jobs (for example, agribusiness in the upcoming "Bethlehem 2000" celebrations, Egypt, Jordan, and Yemen, tourism in Egypt and which are also being supported by the Bank's the West Bank and Gaza, pharmaceuticals in Trust Fund for Gaza and the West Bank. FIGURE 2-10 MIDDLE EASTAND NORTH AFRICA: IBRDAND IDA LENDING COMMITMENTS BY SECTOR, FISCALYEAR 1999 Total $1.6 billion Environment, 1% Urban development, 3% Transportation, 1% Social Protection, 3% Industry, 2% Electric power and other energy, 4% Multisector, 2% Water supply and sanitation, 4% Finance, 26% Telecommunications,6%6_ Education 7% Agriculture, i 9% Population, health, and nutrttion, 8% Public sector management. 14% 88 THE WORLD BANK ANNUAL REPORT 1999 Supporting community-based employment and about 85,000 person-months of employment. works programs The effort is nearly double the size of the first- Policy reforms have substantial payoffs over phase operation, which also stressed poverty re- the medium term, but more jobs and better liv- duction and community involvement. ing conditions, especially in poorer communi- ties, can take time to materialize. To help such Investing in human capital development communities, more than $100 million on IDA Rising demand from growing populations, terms was approved in FY99 to provide vulner- new challenges, and changing needs is placing able groups with jobs and community infra- increasing strains on the provision and quality structure. In Egypt, the Social Fund III Project of health and education services. The Bank is re- provides additional resources for two successful sponding through support for long-term efforts ongoing programs that create employment for to improve quality and performance and the rural poor through small-scale public works strengthen institutional capacity. A project in and work with local communities and nongov- Egypt will enhance the quality of secondary ernmental organizations to provide income- schooling and expand the role of communities generating activities and basic services. The and the private sector in the system. Assistance project aims to create 2,500 permanent and to Jordan will help improve health care delivery, 20,000 temporary jobs. In the West Bank and hospital financing and management, and re- Gaza, a similar project will improve poor com- forms in the pharmaceuticals sector. Helping to munities' access to water and sanitation and upgrade health service quality is also part of the help rehabilitate clinics, schools, and feeder Bank's support for Morocco's overall social de- roads. The project builds on the success of its velopment strategy. Expected benefits of a predecessor (Box 2-18). In Yemen, a second Health Financing and Management Project in- Public Works Project will help areas with clude enhanced equity, through broader insur- above-average unemployment by financing ance coverage, and better quality care for users small-scale civil works expected to generate of public hospitals. BOX 2-17 A $250 MILLION VOTE OF CONFIDENCE FOR REFORM IN MOROCCO Morocco was one of the region's first countries to improvements in the business environment for the embrace the "policy revolution"- macroeconomic private sector, competition and price policy reform, stabilization, less state involvement in productive social assistance and community development, and economic activity, and promotion of openness and enhanced provision of rural infrastructure, education private sector-led growth-that has begun to trans- and literacy services, and health care. form mNA economies over the past decade. A strong Based on these prior measures and government reform program in the late 1 980s lost some momen- commitment to a clearly articulated, credible, and tum in the 1 990s, but early in 1998 a newly elected comprehensive medium-term reform agenda, the government took power with a wide-ranging Board approved the fiscal year's largest Bank loan medium-term program of profound, synergistically in the region-a $250 million Policy Reform Support linked, social and institutional, as well as economic, Loan (PRSL), cofinanced by the African Development reforms. Bank for about an additional $200 million. The During much of 1998, at the government's re- loan sends a strong signal of support for the new quest, Bank staff worked intensively with Moroccan government's medium-term strategy to the interna- partners on key areas of the program. Meanwhile tional investor community. In its support of the the government took a number of initial actions to government's broad-based program, the PRSL is-in get the program under way, covering budgetary line with other innovative, longer term, program- instirutions, civil service and administrative reform, matic lending approaches being developed in the judicial system reform, public enterprise reform and Bank. privarization, private participation in infrastructure, SECTION Two MIDDLE EAST AND NORTH AFRICA 89 A0 community development project in the West Bank and Gaza BOX 2-1 8 SUPPORTING COMMUNITIES AND ALLEVIATING POVERTY IN THE : WEST BANK AND GAZA Social and economic infrastructure in many corn- By its scheduled closing date at the end of FY99, munities in the West Bank and Gaza has deterio- the operation will have directly supported about rated over decades to the point where many villages 200,000 person-days of employment and socio- have minimal or nonexistent basic services such as economic infrastructure improvements in about 160 | water supply and sanitation. The resulting health communities. According to a beneficiary assessment, hazards have been compounded by the lack of ad- local communities feel that the CDP's prnncipal objec- equate medical facilities and health clinics. Mean- tives-infrastructure rehabilitation and employment while, schools are in bad physical condition, severely creation-have been met. The assessment also shows limiting educational opportunities, and economic ac- that community mobilization through participation X tivity is inhibited by degraded access roads. Unem- in decisionmaking and contribution to subproject ployment is very high, often reaching 50 percent. costs is working and is likely to help promote In February 1997, the Board approved a Commu- sustainability. nity Development Project (cDP) designed to amelio- The success of the project led the Palestinian Au- rate these conditions and targeted at poor communi- thority to request a CDP a operation, which was ap- ties not assisted by other Palestinian Authority, proved by the Board in March 1999. The newi donor, or Bank operations. The CDP has supported project embpodies lessons learned from the CDg' in- i very small subprojects, chosen and implemented by cluding improved poverty targeting; improved infor- small municipalities and village communities, for re- mation sharing and stakeholder participation to fur- storing local socioeconomic infrastructure. Local com- ther strengthen local ownership; provision of local | munities contribute to the costs of microprojects. The technical assistance for subproject implementation; operation has also helped alleviate poverty by pro- and inclusion of commitment to operation and main- viding jobs. tenance in subproject selection criteria. 90 THE WORLD BANK ANNUAL REPORT 1999 >'~~~~~~~~~~Ol W j : i \ ' ' ) Improving female literacy in a classroom in Tunisia Supporting institutional development ing to upgrade the quality of the judicial system Good governance, based on well-functioning and the legal environment. institutions for effective policymaking and pro- gram execution, is increasingly recognized as Promoting agricultural development and natural critical to development. Governance and insti- resource management tutional development components have been Agriculture continues to be a significant included in increasing numbers of operations, source of jobs and income in several countries. along with some freestanding projects directed Three operations were approved in FY99 to at institutional reform. In Yemen, a Public Sec- support Egypt's agricultural sector, which ac- tor Management Adjustment Credit will help counts for a fifth of GDP and more than a third streamline and strengthen public administra- of the labor force. The Bank is helping to trans- tion, enhance budgetary and financial manage- form the Principal Bank for Development and ment, rationalize public expenditure, and im- Agricultural Credit into a broad-based and prove revenue mobilization and administration. profitable rural financial intermediary; to reha- This is expected to be the first in a series of bilitate irrigation and drainage pumping stations public sector reform operations aimed at im- that are critical for Nile Valley and Delta agri- proving overall economic performance, sup- culture; and to support poverty alleviation, ported by private sector growth and stronger local infrastructure upgrading, and institution public service delivery. Meanwhile, a Learning building in one of Egypt's poorest rural prov- and Innovation Credit will also help Yemen's inces. This operation relies on the area's tradi- prospects for foreign direct investment by help- tional village system as a means of involving SECTION Two MIDDLE EAST AND NORTH AFRICA 91 local communities in efforts to improve rural access to piped water at prices much lower than living conditions. those now charged by commercial vendors. Bank assistance for natural resource manage- Similar assistance is being provided to the West ment in FY99 focused on water and on steps Bank and Gaza. Support to Yemen will increase toward private service provision of this increas- potable water supply to the city of Sana'a, ad- ingly scarce resource (Box 2-19). Access for the dress emergency water supply and sewerage poor is a priority. In Jordan, the Bank is helping network rehabilitation needs, and prepare for improve the management and delivery of water substantial private participation. In one of and wastewater services to 2 million people by Morocco's poorest areas, an innovative pilot introducing a private operator and financing operation will test a participatory approach to system rehabilitation. The project will help watershed management. provide low-income households with reliable BOX 2-19 MNA-MED WATER INITIATIVE: SUPPORTING NATIONAL WATER RESOURCE MANAGEMENT STRATEGIES The MNA region is home to nearly 5 percent of the and issues related to efficient use of water in agricul- world's population but accounts for less than I per- ture. During the year under review, MNA countrieS cent of accessible freshwater Resources per capita, at prepared case studies and strategy formulation de- just over 1,000 cubic meters, are far lower than in signed to illuminate and address these challenges. any other developing region-about a quarter of the In May 1999, a second conference was held in level for the next most water-scarce region by this Amman, at which future directions for sectoral measure, South Asia. Agriculture has traditionally policy development were identified on the basis of a been and remains by far the largest user of water, number of country case studies. The broad emphasis but rapid urbanization of 3-4 percent a year and was on improvements in water resources manage- growing industrial demand have placed increasing ment on an integrated basis (including appropriate strains on water resources. This process is increas- institutional development and engaging nongovern- ingly being exacerbated by pollution, which has ad- mental stakeholders, notably the private sector, versely affected quality and hence potential usage, for more substantially in the process) and upgrading example, for human consumption. Rapid population the efficiency of water usage (including technological growth has also reduced and can be expected to con- improvements and incentives to promote effective tinue to reduce per capita availability, with poten- and acceptable allocation of resources, and to ad- tially serious consequences for both economic devel- dress the problems of pollution and physical and opment and human health and quality of life. accounting losses). The MNA-MED Water Initiative has been designed The Initiative has brought together sponsor institu- to help countries in the region to respond proactively tions, national policymakers, and supportive experts to these problems by supporting national programs to from elsewhere in the world to exchange and en- formulate, update, and implement water resources hance knowledge, to discuss best practice approaches policies; mobilize financial resources; and focus at- to water resource management, and to help further i tention on the problems of managing limited re- the development of economically and socially appro- sources more efficiently. The Initiative is jointly priate national water strategies, based on individual sponsored by the European Investment Bank, the countries' needs and priorities. It has also led to the European Commission, and the World Bank. Par- creation of a region-wide network of national ticipating countries include 17 countries from the policymakers and specialists in the field. The Bank Bank's MNA Region, together with Turkey and plans to continue to encourage both exchanges of ex- Cyprus. Three sets of core challenges facing the re- perience among countries and country level work on gion were identified at a major conference held in key issues in the sector. As a first step, the Initiative Cairo in June 1998. These were water scarcity, proposes to sponsor two follow-up regional seminars quality deterioration, and drought; the institutional on the critical issues of sustainable groundwater and managerial aspects of water resources strategy; management and wastewater treatment and reuse. 92 THE WORLD BANK ANNUAL REPORT 1999 Nonlending services: innovating and diversifying pilot SSPRs Bank-wide. In addition, a Country products and activities Assistance Strategy (CAS) for Yemen was pre- Nonlending services to clients in MNA in FY99 pared on the basis of substantial consultation included policy and analytical work on key de- with Yemeni counterparts from inside and out- velopment issues; "knowledge and learning part- side government. The CAS also benefited sub- nerships" that promote two-way exchanges of stantially from the valuable analysis and recom- information; and advisory services. mendations of the Yemen Country Assistance Innovative analytical work included new-style Review (CAR), undertaken during the year by process-oriented Public Expenditure Reviews the Bank's Operations Evaluations Department. (PERS) that focused on budgetary decision- Bank analytical work typically helps frame gov- making processes and institutional constraints ernment policymaking and Bank lending. For to effective public resource management. A example, the Yemen CAS and PER, together with new nonlending product, a Social and Structural a comprehensive social and institutional assess- Policy Review (SSPR) in Tunisia, was one of six ment, provided inputs for the Public Sector TABLE 2-18 OPERATIONS APPROVED DURING FISCAL YEAR 1999, MIDDLE EAST AND NORTH AFRICA Principal amount (millions) Country/project name Date of approval Maturities SDR U.S. $ Egypt Social Protection Initiatives Project Jun 29, 1999 2009/2034 3.60 5.00 Private Sector and Agricultural Development Project' Jun 22, 1999 2005/2019 n.a. 225.00 Private Sector and Agricultural Development Project Jun 22, 1999 2009/2034 55.50 75.00 Social Fund for Development III Project Jun 1, 1999 2009/2034 36.90 50.00 Secondary Education Enhancement Project Apr 15, 1999 2009/2034 35.80 50.00 Sohag Rural Development Project Aug 27, 1998 2008/2033 18.60 25.00 Pumping Stations Rehabilitation III Project Aug 6, 1998 2003/2018 n.a. 120.00 Jordan Economic Reform and Development III Project Jun 1, 1999 2003/2016 n.a. 120.00 AmmanWater and Sanitation Management Project Mar 16, 1999 2003/2016 n.a. 55.00 Health Sector Reform Project Mar 25, 1998 2003/2016 n.a. 35.00 Morocco Policy Reform Support Loan Jun 1, 1999 2004/2019 n.a. 250.00 Pilot Fisheries Development Project May 6, 1999 2004/2019 n.a. 5.00 Telecommunications Post and Information Technology Sector Adjustment Loan May 6, 1999 2004/2019 n.a. 101.00 Lakhdar Watershed Management Pilot Project Dec 22, 1998 2004/2019 n.a. 4.00 Health Financing and Management Project Dec 17, 1998 2004/2019 n.a. 66.00 Fes-Medina Rehabilitation Project Oct 29, 1998 2004/2018 n.a. 14.00 Tunisia Export Development Project May 20, 1999 2004/2016 n.a. 35.00 Economic CompetitivenessAdjustment Loan II Apr 20,1999 2003/2014 n.a. 159.00 Yemen Legal and Judicial Development Jun 29, 1999 2009/2039 1.80 2.50 Sana'a Water Supply and Sanitation Project May 13, 1999 2009/2038 18.40 25.00 Public Sector ManagementAdjustment Credit Mar 23, 1999 2009/2038 35.80 50.00 Public Works 11 Project Jan 28, 1999 2009/2039 35.60 50.00 Sana'a Emergency Power Project Sep 24, 1998 2009/2038 40.60 54.00 Total 282.60 1,575.50 n.a. Not applicable (IBRD loan) Note: This table excludes lending to West Bank and Gaza, which is funded by the Trust Fund for Gaza and the West Bank. a. "Blend" loan/credit. SECTION Two MIDDLE EAST AND NORTH AFRICA 93 Management Adjustment Credit and for prepa- Advisory services to member countries of ratory work on a proposed Civil Service Mod- the Gulf Cooperation Council (GCC) diversified ernization Credit. Finally, a number of countries during the year under the auspices of the in the region are discussing with the Bank pos- Bank's Technical Cooperation Program (TCP), sible participation as pilots for the elaboration which provides GCC governments with (mainly of the Comprehensive Development Frame- reimbursable) technical assistance. In response work. Preparatory work for this initiative was to country requests, TCP is providing technical undertaken during the year. assistance related to diversifying GCc economies Knowledge and learning partnership activity away from oil, together with advice on included the Second Mediterranean Develop- privatization, corporatization, or restructuring ment Forum, held in Marrakech in September of services such as electricity and water supply, 1998. The Forum focused on participation and telecommunications, and airlines. Labor market development and brought together more than studies were conducted in two countries. The 500 participants from government, think tanks, TCP also organized conferences, seminars, and academia, and the business community within workshops on diverse topics spanning human and outside the region. Meanwhile, the World resources development, small-scale industry Bank Institute continued its training activities in promotion, investment promotion, and water development topics, attracting more than 1,600 sector reform. participants. The Economic Research Forum for The MNA regional office has also taken ma- the Arab Countries, Iran, and Turkey (a Bank- jor steps to realize the concept of the "Know- sponsored regional research network) received ledge Bank" at the regional level. Activities additional funding from the Bank's Develop- during the year included development of an ment Grant Facility during the year to expand external web site that provides information its activities. And following a MNA Women's not previously available to the general public Conference early in the fiscal year, a regional and the creation of a live database that pro- Consultative Council for Women was formally vides constantly expanding country, thematic, inaugurated in January 1999 to enhance under- and sectoral information. standing of gender issues in the region and pro- mote better integration of gender analysis into the design of Bank programs. 94 THEWORLD BANKANNUAI REPORT 1999 SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS An important lesson the Bank has learned A second lesson is that success in serving over the past decade is that assistance at the the client requires a cross-cutting emphasis on project level alone is not enough; projects can development effectiveness. The second half of lead to development only when conceived this section looks at what it takes to ensure and designed against broader sectoral, country, that aid dollars do indeed improve the quality regional, and thematic perspectives. The first of life for ultimate beneficiaries. Possibly the half of this section highlights these thematic biggest challenges facing the Bank today relate perspectives, organized according to the to measuring-and achieving-results at the Bank's four Thematic Networks, which bring level of not only Bank projects but also overall to bear the benefits of worldwide experience, assistance, and becoming more selective as best practice, and partnerships on all Bank donors strive for greater complementarity in operations. supporting country development strategies. V2VELO?2?ENT b Y CTIVENE§SS <ct >1hematic Pe spectives Q/i> / rF / country A~~ss'stance \C,z /~~~~~~~~~~~ a1 -St AXJ -J; X t POVERTY REDUCTION recognition of the importance ing poverty-reduction strate- AND ECONOMIC of participation, partnerships, gies at the country level and in MANAGEMENT and social capital. designing related Bank assis- Activities in FY99 reflected tance strategies, judging per- The Bank's main mission is concerns about the impact on formance based on impacts to help developing countries poverty of some of the year's has been more elusive. It is reduce poverty and improve pivotal issues: persistent con- clear that an unfinished living standards. Effective flict in some of the poorest agenda remains on both fronts. poverty-reduction strategies African countries; the sudden The first strategic shift is be- and poverty-focused lending impoverishment of millions ing implemented through bet- are central to achieving these in East Asia as a consequence ter formulated CASs and Pov- objectives and were funda- of the financial crisis; the con- erty Assessments. Making mental to Bank activities in tinuing pain of transition in substantial progress, 56 per- fiscal year 1999 (FY99). As former socialist economies; cent of CASs presented to the part of those efforts, Bank and the tenuous situation of Board of Executive Directors assistance over the year also the millions of poor who live in FY98 were judged fully sought to mainstream gender in India and China. These satisfactory with respect to issues in development strate- themes will be brought to- their integration of poverty gies, strengthen economic gether in a major new synthe- issues into forward-looking management, reduce coun- sis of the underlying determi- strategy, up from 20 percent tries' vulnerability to crises, nants of poverty reduction in two years ago. Only 7 percent strengthen public institutions the World Development Report were judged unsatisfactory. and anticorruption efforts, 2000/2001, and a subsequent The Comprehensive Develop- and build the institutional, policy paper will discuss im- ment Framework (CDF) re- structural, and social founda- plications for the Bank's policy cently proposed by President tions needed for a sound na- and operational work. Wolfensohn represents a key tional economy and a stable instrument to pilot a holistic global economy. Mainstreaming poverty approach to designing and work in the Bank implementing better poverty- Placing poverty concerns at Over the past year, reduction strategies. the center of Bank work mainstreaming poverty work By the end of FY99, 113 Bank activities continue to in the Bank has entailed two Poverty Assessments had been be broadly guided by the pov- strategic shifts: from describ- completed, covering more erty-reduction strategy pro- ing poverty to formulating than 90 percent of the world's posed in the World Develop- poverty-reduction strategies poor. Countries not yet cov- ment Report 1990 (WDR-90): and placing these at the center ered are either countries that fostering labor-based growth of Country Assistance Strate- only recently became mem- while investing in the develop- gies (CASs); and from tracking bers (especially in Europe and ment of human capital and inputs to judging performance Central Asia) or others where providing safety nets for on the basis of outcomes. conflict or other factors have those unable to benefit from These shifts are in line with led to limited or difficult rela- growth. However, several new the international emphasis on tions. Poverty Assessments for themes that have emerged outcome-based targets as de- about 10 of these countries since the early 1990s have in- fined by the International De- are scheduled for FYOO-01. fluenced implementation of velopment Goals adopted by The second shift, from the strategy: the vulnerability the international development tracking inputs to focusing of the poor to economic community in 1996. The FY98 on outcomes, is harder to shocks, the role of institutions Progress Report on Poverty Re- implement and will take in implementing policies and duction found that, while there several years. Efforts are un- providing services, and the has been progress in formulat- der way to monitor trends in 96 THEWORLD BANKANNUAL REPORT 1999 the International Development Goals at the This is a fundamental issue, and the standards country and global levels and to carefully evalu- for CASs are being raised in line with the shift ate the impact on them of specific interven- toward results-based management. To this end, tions, but much remains to be accomplished. a system is being set up to provide ex-ante Still, progress has been made in both the cover- support for CAS preparation and to review CASs age and availability of poverty data. Survey data ex-post to assess their impact. exist for most countries, more countries have Progress is also needed in evaluating the im- comparable data sets that make it possible to pact of specific projects. In still too few cases assess trends, and more data sets are openly is it possible to tell whether a project actually accessible to civil society than in 1995. reduced poverty and improved the lives of ben- Much remains to be done in assessing the eficiaries. This is clearly an area where stronger impact of Bank activities at the level of overall efforts are essential as the Bank moves to a cul- country assistance. Not all cASs contain indica- ture based fundamentally on implementation tors against which to assess Bank performance. and results. TABLE 3-1 WORLD BANK ADJUSTMENT COMMITMENTS, FISCAL YEARS 1997-99 FY97 FY98 FY99 $ Million Percent $ Million Percent $ Million Percent Adjustment commitments by region Africa 693 14 818 7 768 5 EastAsia and Pacific 10 - 5,685 50 5,712 37 Middle East and North Africa 195 4 180 2 680 4 Latin America and the Caribbean 1,011 20 1,589 14 4,445 29 Europe and Central Asia 3,174 62 2,768 25 3,372 22 South Asia 3 - 250 2 350 2 Adjustment commitments by sector Finance 895 18 6,067 54 2,014 13 Multisector 1,906 37 1,803 16 9,552 62 Other 2,285 45 3,420 30 3,760 25 IBRD and IDA adjustment commitments Debt reduction loan 183 4 85 1 - - Rehabilitation import loan 120 2 10 - - - Sector adjustment loan 2,671 53 2,151 19 4,116 27 Structural adjustment loan 2,112 42 9,043 80 11,210 73 iBRD and iDA adjustment commitments IBRD 4,138 81 9,935 88 13,937 91 IDA 948 19 1,354 12 1,389 9 Total adjustment loans 5,086 100 11,289 100 15,326 100 Total World Bank lending commitments IBRD 14,525 21,086 22,182 IDA 4,622 7,508 6,812 Total IBRD + IDA 19,147 28,594 28,994 Share of adjustment loans 27 39 53 i Zero. SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 97 TABLE 3-2 WORLD BANK ADJUSTMENT OPERATIONS, FISCAL YEAR 1999 (amounts in millions of U.S. dollars) World Bank financing Country Project lBRD IDA Total Sector adjustment loans Argentina Repurchase Facility Support Loan 505.0 0.0 505.0 Bolivia Regulatory Reform Sector Adjustment Credit 0.0 40.0 40.0 Bolivia Regulatory Reform Sector Adjustment Credit (IDA reflows) 0.0 1.8 1.8 Bosnia and Herzegovina Second Public Finance Structural Adjustment Credit 0.0 72.0 72.0 Brazil Social Security Special Sector Adjustment Loan 757.6 0.0 757.6 Brazil Social Protection Special Sector Adjustment Loan 252.5 0.0 252.5 Bulgaria Agriculture Sector Adjustment Loan 75.8 0.0 75.8 Cameroon Structural Adjustment Credit III (iDA reflows) 0.0 13.1 13.1 C6te d'lvoire Transport Sector Adjustment Credit (IDA reflows) 0.0 25.6 25.6 Georgia Energy Sector Adjustment Credit 0.0 25.0 25.0 Ghana Second Economic Reform Support Operation Credit 0.0 178.2 178.2 Ghana Second Economic Reformn Support Operation Credit (iDA reflows) 0.0 1.8 1.8 Indonesia Water Resources Sector Adjustment Loan 300.0 0.0 300.0 Jordan Third Economic Reform and Development Loan 120.0 0.0 120.0 Kyrgyz Republic Social Sector Adjustment Credit 0.0 36.5 36.5 Morocco Policy Reform Support Loan 250.0 0.0 250.0 Morocco Telecommunications, Post, and Information Technology Adjustment Loan 101.0 0.0 101.0 Nicaragua Financial Sector Adjustment Credit (IDA reflows) 0.0 1.4 1.4 Peru Financial Sector Adjustment Loan II 300.0 0.0 300.0 Poland Hard Coal Sector Adjustment Loan 300.0 0.0 300.0 Tunisia Second Economic Competitiveness Adjustment Loan 159.0 0.0 159.0 Ukraine Second Enterprise Development Adjustment Loan 300.0 0.0 300.0 Ukraine Financial Sector Adjustment Loan 300.0 0.0 300.0 Structural adjustment loans Albania Public Expenditure Support Credit 0.0 30.0 30.0 Albania Structural Adjustment Credit 0.0 45.0 45.0 Argentina Spedal Structural Adjustment Loan 2,525.3 0.0 2,525.3 Armenia Third Structural Adjustment Credit 0.0 65.0 65.0 Azerbaijan Structural Adjustment Credit (Supplement) 0.0 7.0 7.0 Bosnia and Herzegovina Enterprise and Bank Privatization Adjustment Credit 0.0 50.0 50.0 Bulgaria Social Protection Adjustment Loan 80.0 0.0 80.0 Burkina Faso Economic Management Reform Support Operation 0.0 15.0 15.0 Chad Structural Adjustment Credit III 0.0 30.0 30.0 Georgia Structural Adjustment Credit III 0.0 60.0 60.0 Indonesia Policy Reform Support Loan 1,000.0 0.0 1,000.0 Indonesia Second Policy Reform Support Loan 500.0 0.0 500.0 Indonesia Social Safety Net Adjustment Loan 600.0 0.0 600.0 Korea, Republic of Structural Adjustment Loan II 2,000.0 0.0 2,000.0 Macedonia, FYR Social Sectors Adjustmnent Credit 0.0 29.0 29.0 Madagascar Structural Adjustment Credit lI 0.0 100.0 100.0 Malawi Second Fiscal Restructuring and Deregulation Program Credit 0.0 92.0 92.0 Mauritania Public Resource Management Credit (IDA reflows) 0.0 0.1 0.1 Moldova Structural Adjustment Credit 0.0 40.0 40.0 Niger Public Finance Reform Credit 0.0 64.0 64.0 Pakistan Structural Adjustment Loan 350.0 0.0 350.0 Panama Public Policy Reform Adjustment Loan 61.0 0.0 61.0 Philippines Banking System Reform Loan 300.0 0.0 300.0 Romania Private Sector Adjustment Loan 300.0 0.0 300.0 Russian Federation Structural Adjustment Loan III 1,500.0 0.0 1,500.0 Rwanda Economic Recovery Credit 0.0 75.0 75.0 Solomon Islands Structural Adjustment Credit 0.0 12.0 12.0 Tajikistan Structural Adjustment Credit 0.0 50.0 50.0 Tajikistan Structural Adjustment Credit (Supplement) 0.0 6.7 6.7 Thailand Economic and Financial Adjustment Loan 400.0 0.0 400.0 Thailand Second Economic and Financial Adjustment Loan 600.0 0.0 600.0 Yemen, Republic of Public Sector Management Adjustment Credit 0.0 50.0 50.0 Zambia Public Sector Reform and Export Promotion Credit 0.0 170.0 170.0 Zambia Public Sector Reform Credit (IDA reflows) 0.0 2.8 2.8 Total 13,937.2 1,389.0 15,326.2 98 THE WORLD BANK ANNUAL REPORT 1999 Adjustment lending Adjustment lending has in many instances For the first time in the Bank's history, adjust- been accompanied by technical assistance (TA). ment lending accounted for more than half of In FY99, the ASEM Trust Fund and Miyazawa total commitments in FY99, reflecting the Initiative played an important role in financing continuing focus on responding to the financial TA in East Asia. Other donors helped fund TA in crisis that started in East Asia and spread to other regions. Technical assistance over the past other parts of the world (Tables 3-1 and 3-2). year has supported such needs as the creation of The Bank's response involved both support for legal and regulatory frameworks, implementa- economic and financial reform-since overall tion of financial sector and corporate gover- economic recovery is crucial to restore incomes nance reforms, fiscal sustainability, and public and employment-and measures to mitigate the expenditure management. Institution building social costs of crises felt through loss of jobs, and long-term capacity building are receiving falling wages, sharp price rises, reduced public more emphasis, with declining reliance on assis- spending, and potentially pernicious second- tance from expatriate consultants. While TA has round effects on the social fabric and families. historically had mixed success, new assistance This rising focus on social impacts is reflected of this nature is being designed with close atten- in the composition of adjustment lending: the tion to lessons learned-namely, that borrower financial sector's share of total adjustment commitment is paramount, operations should commitments declined to 13 percent in FY99, be designed to achieve outcomes rather than ac- from 54 percent in FY98, while the multisector complish activities, and information technology share increased from 16 percent to 62 percent support is effective only when the right skills in FY98. and incentives are in place. TABLE 3-3 PROGRAM OF TARGETED INTERVENTIONS (PTIS), FISCAL YEARS 1992-99 Lending FY92, FY93 FY94 FY95 FY96 FY97 FY98 FY99 World Bank (I&D and 1DA) RTI lending Millions of dollars 3,836 4,675 4,441 5,437 5,408 4,090 6,733 6,293 Percentage of investment lendingb 25 27 25 32 32 29 40 51 Total number of projects in the PTI 57 72 63 75 79 77 101 114 * Total number of projects 187 214 197 208 222 203 240 216 IDA PTi lending Millions of dollars 1,812 2,137 1,853 2,423 3,246 1,874 3,267 3,070 Percentage of IDA investment lendingb 44 41 43 54 63 54 54 65 Total number of IDA-funded * projects in the PTIr 34 44 35 46 50 36 55 71 Note: A project is included in the PeT if it has a specific mechanism for targeting the poor and/or if the proportion of poor people among its beneficiaries is significantly larger than the proportion of the poor in the total population. a. Fiscal 1992 figures differ from those in Implementing the World Bank's Strategy to Reduce Poverty (World Bank, 1993a) because they include seven projects that were added to the en after the earlier report went to press. b. Investment lending includes all lending except for adjustment, debt and debt-service reduction operations, and emergency recovery loans, which are distinct from regular investment operations. c. The number of iDA-funded projects in the mrr excludes joint IBRD/iDA projects, which are counted only once, as IBRD projects. There was one such en project in fiscal 1992, two in fiscal 1995, one in fiscal 1996, one in fiscal 1997, four in fiscal 1998, and nine in fiscal 1999. SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 99 FIGURE 3-1 PTI LENDING BY REGION, FISCALYEAR 1999 Total PTI lending: $6.3 billion IDA IBRD 1.8 1.4 0.8 AFR EAP ECA LC MNA SAS Poverty-targeted interventions and While projects in the PTI obviously seek to poverty-focused adjustment operations benefit the poor, non-PTI investment projects In addition to focusing on outcomes, the also aim to reduce poverty, as poverty reduction Bank continues to monitor lending targeted is the broader objective underlying all Bank directly to the poor. Investment operations assistance. For example, the Armenia Municipal targeted directly to the poor are part of the Development Project (IDA), though not poverty- Program of Targeted Interventions (PTI, Table targeted, will make emergency short-term 3-3). In FY99, 53 percent of projects were improvements in the water supply system to classified as a part of PTI; breakdowns by region ameliorate the drinking water supply to and by sector are shown in Figures 3-1 and Yerevan, thereby improving living conditions 3-2. A project is included in the PTI if it has a for the most deprived populations. By improv- specific mechanism for targeting the poor, if ing the quality of urban transport services in the proportion of poor people among its ben- the metropolitan area, the Brazil-Rio de Janeiro eficiaries is significantly larger than the pro- Mass Transit Project (IBRD) will benefit the portion of the poor in the total population, urban poor by facilitating access and making or both. transport affordable. Adjustment operations with a direct impact on the poor are classified as poverty-focused if World Development Report on Poverty they meet at least one of three criteria: they Work is under way on WDR-2000/2001 on focus on eliminating distortions that disadvan- Poverty and Development. The report starts tage the poor; they support a reorientation of from the premise that global trends toward public expenditures toward physical infrastruc- trade, financial, and technological integration ture or basic social services for the poor; or provide an unprecedented opportunity for they support prograrns that provide safety nets poverty reduction, but at the same time carry or target specific groups of the poor. In FY99, considerable risks of marginalization, impover- 69 percent of adjustment operations were ishment, and exclusion. In its preparatory classified as poverty-focused. stages, the report proposes that an effective 100 THE WORLD BANK ANNUAL REPORT 1999 poverty-reduction strategy will require action ment. It collaborates systematically with its on three fronts. First, the strategy must ensure clients to mainstream gender concerns into empowerment of the poor by increasing their policies, programs, and analytical work. It strives voice and participation in decisionmaking, not to enhance understanding of the relevance of only as an important outcome but also as a vital gender-based differences and disparities and to input to improving policies, institutions, effec- ensure equal access of females and males to tive service delivery, and the political basis for assets and opportunities and their equal par- the pursuit of pro-poor growth. Second, the ticipation in society's institutions. Progress strategy must provide security against shocks at on gender-related issues continued in FY99, the individual and national levels, and safety through efforts to: nets for those left behind by rapid change. Fi- * integrate gender into the CAS. For example, nally, and fundamentally, the strategy must fur- the 1998 Senegal CAS used a broad-based par- nish the material basis for poverty reduction, ticipatory approach and integrated gender both by creating opportunities for the poor and throughout the proposed country strategy. by creating the conditions for sustainable eco- The Bangladesh CAS analyzed gender issues in nomic expansion, including growth of the specific sectors: health, education, informal poor's own assets. The report will be published sector employment, local govemment training, in fall 2000. and urban transport. The CDF offers additional opportunities for integrating gender across Mainstreaming gender concerns all sectors. The Bank is unequivocally committed to a move beyond sectors of traditional empha- gender-inclusive and gender-equitable develop- sis in gender-related assistance (education, agri- FIGURE 3-2 PTI LENDING BY SECTOR, FISCALYEAR 1999 Total PTI lending: $6.3 billion 2.3 2.2 IDA 2 IBRD 0.7 r 0.1 SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 101 Economic management, institution strengthening, rural development, and social equity are important for poverty reduction in Vietnam. culture, health, nutrition, and population). Ef- *strengthen partnerships with civil society, forts are under way, for example, to help incor- NGos, and bilateral and multilateral organiza- porate gender-sensitive dimensions in transport tions. Annual meetings are held with the Exter- project work through research on the transport nal Gender Consultative Group, which has needs of women and by developing instruments 14 members affiliated with national nongovern- to meet these needs effectively. Following a mental organizations (NGos) and academic high-level workshop in Sub-Saharan Africa in institutes from various regions. This past year, 1998 that explored the links between gender the group helped organize an international and law, the Bank has become active in address- consultative process for the PRR on gender and ing gender-based violence and legal issues, development that provided important feedback custrengthen the intellectual underpinnings to the Bank from civil society. for Bank work on gender. A Policy Research Re- port (PRR) on gender and development is being Reducing country vulnerability to crises prepared that aims to strengthen understanding The rapid increase in private capital flows to of the links between gender, public policy, and developing countries during the 1990s has been development outcomes; provide guidance on accompanied by a high degree of volatility. This integrating gender issues into policymaking and was witnessed in Mexico in 1995 and subse- into donor programs and policy dialogue; and quently in East Asia in 199f7. More recently, encourage additional analytical work on gender adverse investor sentiment, stimulated by the and development. Staff sensitization to gender East Asian and Russian crises, has affected de- issues and the use of available tools for gender veloping countries on a broad front. The Bank analysis have also been a priority, has moved steadily to assess the implications of 102 THE WORLD BANK ANNUAL REPORT 1999 these developments for client countries and to the high cost to the poor of malperforming gov- develop appropriate responses. These responses ernment and inadequate service delivery. While have included: the 1980s taught that potentially good projects * helping manage the social consequences of often fail in poor policy environments, the les- the crisis by protecting public expenditures tar- son of the 1 990s has been that policy reforms geted to the poor, enhancing the quality of so- are less likely to succeed when public institu- cial services, improving the design and financing tions and governance are weak. Successful of social funds, and strengthening social security policy outcomes are crucially dependent on the systems for the unemployed and elderly. These institutional context within which they are efforts are complemented by ongoing work agreed as well as the institutional arrangements aimed at understanding better the linkages be- that bear on their implementation. tween crises and income distribution. The WDR-97, too, highlighted the lesson * working with the International Monetary that at least as important as the policies and Fund (IMF) to strengthen collaboration in both resources for development are the institutions crisis and non-crisis countries. Recognizing the within which public action is embedded- increasing interlinkages between macro and mi- the "rules of the game" and the mechanisms cro dimensions and between short- and long- through which they are monitored and en- term development, the Bank will undertake forced. Institutions can include organizational strengthened and regular assessments of struc- rules and routines, formal laws, and informal tural policies and governance at the sectoral and norms. Together they shape the incentives of corporate levels to complement the IMF's sur- public policymakers, overseers, and providers veillance at the macroeconomic level, with a of public services. In recent years, the Bank's view to strengthening CASs and Bank response in public sector reform strategy has focused on crisis and pre-crisis situations. the reform of public institutions. * strengthening efforts to prevent recent FY99 saw the development and piloting of economic events from threatening the develop- National Institutional Reviews that aim to bring ment agenda in low-income countries. This institutional concerns centrally into Bank CASS includes seeking ways to reduce external debt and lending programs. Five pilot reviews were burdens, particularly in countries emerging launched in FY99-in Armenia, Bangladesh, from conflict situations, and helping the donor Bolivia, Ethiopia, and Indonesia. These reviews community better target its assistance to poorer go beyond diagnosis to spell out what a countries. country's institutional and political profile implies for a program of action, by addressing Strengthening public institutions how institutional realities constrain what is Weak performance of public institutions- workable in economic policy and service deliv- broadly defined to include all institutions that ery; what options might be effective in strength- carry out public functions-is increasingly seen ening national institutions; and how the Bank's to be at the heart of the economic development existing operational program influences a challenge. Misguided resource allocation, country's institutions. excessive government intervention, weak regu- At the same time, the Bank has been moving lation, and arbitrariness and corruption have into high gear in implementing the anticorrup- deterred private investment and slowed growth tion strategy approved by the board in Septem- and poverty reduction. The recent financial ber 1997. This envisages action at four levels: crisis in Asia has especially exposed problems * controlling corruption in Bank-financed of governance and public sector performance projects. Rules for reporting and handling inter- in that region. nal and external allegations of fraud and cor- Recent analytical work on aid effectiveness ruption in Bank projects have been clarified, highlights the risks of lending to countries with and a high-level Oversight Committee, report- bad policies and poorly performing public sec- ing directly to the Bank's president, has been tors. Much of the Bank's poverty work points to established to supervise investigations. Action SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 103 has been taken to recover diverted resources The Bank's central contribution in this area and to exclude suspect bidders from consider- is to help build the institutional, structural, and ation. Additional procurement and financial social foundations that form the underpinnings management staff have been recruited, and of a sound national economy and a more stable internal control systems continue to be global economy. Key elements include: strengthened. * good governance, strong public institutions, * helping countries that directly seek Bank and a system that fights corruption support. The number of such countries has * a strong legal and judicial system with been growing rapidly and now stands at over laws that allow business to operate and that 30. Typical first steps in developing anticorrup- protect citizens tion programs are the mounting of surveys and * a robust and well-regulated financial sys- workshops to expose the issue and develop tem-which relies in turn on good corporate strategies to address it with strong local owner- governance, fair accounting, and bankruptcy ship. Further steps may include continued procedures that work economic policy reform to reduce rents and * social policies that protect the most vul- institutional strengthening. nerable and provide the social and political * mainstreaming corruption concerns in stability without which there would be no Bank work. This has meant increasing atten- financial stability. tion to the cost of corruption in determining This broad agenda turns out to be the same country lending strategies and enhancing efforts as the agenda needed for successful develop- to expose Bank staff to best practices in analysis ment, and is thus at the heart of the Bank's and action. New guidelines for CAS preparation business and the holistic approach of the CDF. have been issued, requiring explicit attention So broad and interconnected an agenda cannot to issues of governance and corruption. Recog- be carried forward by the Bank or IMF alone; nizing the complexity of the phenomenon, it requires cooperation among all relevant the Bank has intensified its research and is international and national organizations and beginning to disseminate the results to integrated efforts toward common goals. policymakers. Above all, it needs to be driven by countries * assisting in cross-country efforts. The themselves. Bank has actively supported the work of the In FY99, the Bank and the Fund (IMF) Organization for Economic Cooperation and agreed to jointly undertake a new Financial Development (OECD) in developing and imple- Sector Assessment Program that aims to pro- menting the Convention on Combating Bribery vide clients with high-quality diagnoses and ad- of Foreign Public Officials in International vice to help improve financial sector stability, Business Transactions and similar initiatives at build institutional capacity, and increase access the regional level. to a broader range of financial services. A key objective is to develop an approach to financial Strengthening the international financial sector assessment that is broadly consistent architecture across countries, while allowing for differences International financial architecture is the um- in emphasis to reflect different country cir- brella term used to describe efforts undertaken, cumstances. Approximately a dozen country following the Asian crisis, to reduce the risk of assessments are expected over the next year, future crises, improve their handling when they not including crisis countries where such work do occur, and help countries build systems is already under way. better able to absorb the impact of financial disruptions. It is a misleading term insofar as Leveraging external partnerships it deals mainly with how to improve national, The Bank highly values its close relations rather than international, policies, and involves with a number of international organizations. actions that go far beyond the financial area, Considerable effort is increasingly invested in to include, especially, social policy. 104 THE WORLD BANK ANNUAL REPORT 1999 ensuring that these key partnerships are pro- made at three levels: among MDB presidents, at a ductive and mutually beneficial. country and regional level, and within sectors. The Bank has worked closely with its regional Collaboration with multilateral development banks development bank partners on analytical work, Cooperation among multilateral development for example, in such areas as social protection banks (MDBS) is taking on new importance. This (Asian Development Bank [ADB]), structural development reflects the growing impact of reform (European Bank for Reconstruction globalization on development, as well as and Development [EBRD]), financial sector greater awareness that in-country donor coordi- (Inter-American Development Bank [IDB]), nation helps make aid more effective. Particu- and post-conflict (African Development Bank larly crucial has been cooperation on the inter- [AfDB]). Examples of joint operational work national financial system, debt reduction, include response to Asian crisis (ADB), regional governance, and the private sector's role in de- integration (IDB) and adjustment (AfDB), as well velopment. Progress on cooperation is being as emergency flood rehabilitation (EBRD). Coop- BOX 3-1 HEAVILY INDEBTED POOR COUNTRIES INITIATIVE The past year has been especially active for the more than 600 pages of submissions, all conveyed- Heavily Indebted Poor Countries (Hrpc) Initiative. in full and in summary form-to the boards of Bolivia, Guyana, and Mozambique joined Uganda both institutions as part of the review. These written to become the first four countries to reach the submissions were supplemented by discussion completion point for receiving debt relief under the seminars with civil society, government officials, Initiative, and three more countrties qualified for academics, and the media in Maputo, Lome, assistance: Burkina Faso, C6te d'lvoire, and Mali. Bonn, Oslo, London, Washington, Tegucigalpa, Altogether, the debt relief identified for these seven and Addis Ababa. This process of consultation countries is estimated at around $6.8 billion in has proven extraordinarily valuable in providing nominal terms. Three other countries-Guinea- concrete ideas for strengthening the HIPC Initiative Bissau, Ethiopia, and Mauritania-have completed and has established useful lessons for development a preliminary assessment and are projected to policymaking more generally. qualify for an additional $2.45 billion of relief. Proposals for revising the Initiative also came These 10 countries, plus Benin and Senegal, whose from creditor countries. The cost implications of debt has been judged to be sustainable after tradi- these proposals vary, and the stafffrom the Bank tional debt relief mechanisms, bring to 12 the num- and the IMF submitted to both boards for the ber of countries reviewed under the HiPc Initiative. Spring Meetings a set of costing implications under While this progress has been significant, the several scenarios. To date, 52 percent of the approved Bank, with the ImF, launched an in-depth review debt relief under the HiPc Initiative has been covered of the HIPC Initiative's progress to identify areas for by multilateral creditors, with bilateral creditors improvement and options for change that would help providing 48 percent (beyond the debt relief they increase the speed, depth, and reach of the Initiative, have provided under earlier efforts). The Bank This formal review by both institutions was wel- and the IMF account for the largest shares of total comed by nongovernmental organizations (NGOs), costs among multilateral creditors, at 24 and 9 churches, academics, and many grassroots organiza- percent, respectively. tions, from industrial and developing countries, From civil society and governments alike, there is which have monitored the program closely in the a clear mandate for change, to expand and acceler- three years since its inception. To enhance the qual- ate the Initiative and place significant debt relief ity of the review, early in 1999 the Bank opened within a lasting poverty-reduction and development its web page for formal solicitation of views from strategy. The Bank is working with the Fund to civil'society on a range of questions related to the expand the program and tighten the link between implementation of the Initiative. This process elicited debt relief and poverty reduction. SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 105 eration with all multilateral development banks United Nations Conference on Trade and De- on country assistance strategy is also becoming velopment, wrO, United Nations Development more common; in the Comprehensive Devel- Programme, and the International Trade Com- opment Framework pilot countries of C6te mission (ITC), created the Integrated Frame- d'Ivoire, Ghana, and Uganda, the Bank and AfDB work for Trade-Related Assistance to Least have agreed to pilot enhanced cooperation. Developed Countries to help developing coun- tries enjoy the benefits of the global trading Collaboration with the International system. The Integrated Framework is designed Monetary Fund to help low-income countries participate effec- In the wake of the Asian financial crisis, the tively in all aspects of the next round of multi- Bank and the IMF agreed to strengthen collabo- lateral trade talks, from setting the agenda to ration in helping emerging market economies negotiating the terms. To date, it has helped to reduce the likelihood of crises and to re- 40 countries assess their trade-related needs. spond to crises that do arise. A comprehensive The Bank's contribution to the integrated re- joint review also highlighted the need for en- sponse focuses on increasing basic capacities- hanced collaboration in low-income countries, such as infrastructure, transparent customs particularly in helping governments design and administration, and a healthy business implement integrated macroeconomic, struc- environment-that developing countries tural, and social reform programs. In emerging need to efficiently produce internationally market economies, the Bank and the Fund have tradable goods and services. since moved to consolidate and streamline their support for country programs. Notably, in the Organization for Economic Cooperation and financial sector, a joint liaison committee is en- Development suring more effective engagement of staff from The Organization for Economic Cooperation both institutions. and Development (OECD) and the Bank have a In poor countries, the Bank and the Fund are long tradition of fruitful collaboration, and the moving forward on strengthening the joint recent financial crises, their repercussions on the Heavily Indebted Poor Countries (HIPC) Initia- progress and welfare of people in many devel- tive (Box 3-1) and are addressing the special oping countries, and their implications for glo- needs of post-conflict countries case by case. bal prospects all underline the need to take this In addition, the two institutions have embarked collaboration still further. The Bank and the on a pilot program for enhanced collaboration OECD are currently exploring ways of enhancing in six IDA/Enhanced Structural Adjustment Fa- the scope and effectiveness of cooperation at cility countries. Particular attention is being the working level. Areas for potential enhanced paid to better forecasting and monitoring the collaboration include the broader partnership social impact of stabilization and adjustment agenda arising out of Strategy 21, corporate policies, ensuring country "ownership," and governance, social safety nets, and sustainable exploring sustainable aid financing in post- development. In addition, the Bank will con- stabilization countries. tinue its active work with the OECD, both through its leadership in the poverty and envi- World Trade Organization ronment working groups and through the World In response to a request at the 1996 World Development Indicators (wDI) annual reporting Trade Organization (wro)'Ministerial Declara- of progress toward the International Develop- tion, the Bank, in partnership with the IMF, ment Goals. 106 THE WORLD BANK ANNUAL REPORT 1999 HUMAN DEVELOPMENT during the year, compared with $3.85 billion in FY98, reflecting the increasing trend in social The global crises have disrupted the economic sector lending and efforts to improve project and social fabric in many countries around the quality and implementation. world. Part of the Bank's response has been to The millennium refocuses attention on the work with countries to help protect public ambitious International Development Goals expenditures in crucial areas in the social sec- for equitable and universal access to basic tors; protect access to basic social services, espe- education and health services. Special efforts cially for the poor; improve social insurance are under way to go well beyond "business as (including pensions, public works programs, usual" in countries (many in Africa) that have and unemployment benefits); and increase the farthest to go in meeting the goals for lit- project and program impact on health, nutri- eracy and education, health, nutrition, and tion, population, and education indicators. One gender equity. Major new programs have been example of such a response, in Indonesia, is launched to address malaria, AIDS, and girls' presented in Box 3-2. education, and a new initiative targets eight Nearly 30 percent or $2.2 billion of the $7.3 countries with severe malnutrition. Much has billion in new lending to social sectors in FY99 been done recently to monitor and measure is embedded in broad multisector loans, which the impact of pilot nutrition programs, learn include policy reforms and budget allocations from successful small-scale programs and ex- for health and education in the face of serious pand them (as in Madagascar, Bangladesh, and fiscal pressures (Figure 3-3). A total of $5.1 Senegal), and adapt successful principles to billion in 78 projects traditionally classified other countries. under social sectors was approved in FY99, The formulation of the Comprehensive De- bringing cumulative social sector lending to velopment Framework (CDF) in FY99 has served $52.3 billion, with 408 active projects in 110 to underscore the key and increasingly recog- countries. Disbursements were $4.66 billion nized role of social, structural, and human con- BOX 3-2 DEALING WITH THE SOCIAL IMPACT OF THE INDONESIA CRISIS Decisive government action, concerted efforts by and program impact, and increasing efficiency by I donors, and good household data have helped decentralizing responsibilities. In July 1998, the mitigate the social impacts of the economic crisis government-backed by the Bank and the Asian in Indonesia. Development Bank, the United Nations Children's A uwde-ranging effort. The Bank has devoted Fund, and bilateral agencies includingAusaid and $600 million to labor-intensive public works projects the Asia-Europe Meeting-announced a new Educa- to provide temporary jobs for the poor; amended on- tion Safety Net package. The package funds block going health projects to help finance contraceptives grants to the poorest 40 percent (33,000) of schools and drugs; coordinated an effective and timely re- to help pay for teaching supplies and minor repairs sponse to the food situation; and helped protect and to waive charges for needy students; and for basic education and health budgets under adjust- scholarships-based on a rapid survey to determine ment lending. The government has protected budget where need was greatest-to 2.6 million junior sec- allocations for essential drugs, vaccines, and contra- ondary students (17 percent of such enrollment) ceptives and for basic health services, especially from urban and rural families unable to afford fees, community health and nutrition programs. books, uniforms, and transport. The program has Donor-backed support for education. Govern- been very successful in keeping children in school ment strategy has emphasized protecting the overall and has achieved a breakthrough in community par- budget and, with donor support, increasing the ticipation and civil society involvement in school allocation for basic education, keeping children in matters in many locations. school, maintaining quality, monitoring crisis effects SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 107 .... ................... ...... Investments in education, health, nutrition, and social protection are helping build better futures for children in developing countries. siderations in reducing poverty and improving Health, nutrition, and population living standards. A strong direct impact comes Since its first health, nutrition, and popula- from better health, nutrition, and reproductive tion (HNP) loan in 1970, the Bank has offered choices; greater education attainment; and pro- advice and loans totaling $15.2 billion to 98 tection from income risk. Indirect development countries. During FY99, $1.73 billion of new impact is also substantial because better educa- Bank lending for HNP was approved, 64 percent tion, health, and nutrition lead to higher pro- of which was in 20 new HNP loans, with the rest ductivity and incomes, greater social inclusion as components in other loans. The Bank's HNP and mobility, and more active participation in strategy seeks better health, nutrition, and local and national decisionmaking. Synergies population outcomes for the poor; enhanced among social sectors, too, are significant. In performance of health systems; and sustainable Pakistan, where social indicators are poor and health care financing. change is difficult, the Social Action Program is These objectives are all addressed in health bringing government, NGOS, and donors together sector reform to improve the performance of to address nationwide issues in primary educa- both private and state-run health systems. In tion and health, population growth, and rural FY99, there were eight new loans in this grow- water and sanitation. The wide-ranging program ing area for Bank advice and support, including has focused attention on critical but previously a Mali program supported by the Bank and 14 neglected sectors in a mutually reinforcing way other agencies. Ongoing health reform projects that also addresses cross-sectoral issues in gover- are progressing well. In Argentina, a $350 mil- nance (merit-hiring, third-party monitoring), lion Health Insurance Reform Loan (FY96) financial administration, and service quality. underpinned the government's path-breaking efforts to create a more efficient and equitable 108 THE WORLD BANK ANNUAL REPORT 1999 health financing system. The reforms include Country requests for assistance are growing. voluntary private health insurance and the man- In October 1998, the global Roll Back Malaria datory union-run social health insurance and effort was announced by WHO, the United Na- cover more than half the population. The re- tions Children's Fund (UNICEF), the Bank, and forms have introduced competition, greater the United Nations Development Programme, beneficiary choice, and a standard health ben- which are joining forces with malaria-affected efits package; created a single regulatory agency countries, other development agencies, donors, to supervise all health insurance markets; and NGOS, scientific organizations, and private indus- restructured the health insurance fund for pen- try. A new approach to combat malaria more sioners and 30 social insurance funds, which sustainably and effectively has been outlined, together cover about 9 million beneficiaries. with health systems playing a central role but The Bank works closely with partners to also using complementary interventions in other provide policymakers with analytical and com- sectors, such as education and infrastructure. parative information on health systems. The * New priority is being given to vaccines, one European Observatory on Health Care Systems, of the most cost-effective health interventions serving policymakers across eastern and western and of particular benefit to the poor. The Bo- Europe, is a joint endeavor with the World livia Health Sector Reform Project includes a Health Organization (WHO), the governments demonstration vaccine pilot that aims to in- of Norway and Spain, the European Investment crease immunization coverage; introduce new Bank, and the London Schools of Economics vaccines, such as Hib and hepatitis-B; and dem- and Political Science and of Hygiene and Tropi- onstrate agency partnership and selectivity cal Medicine. based on comparative advantages. A task force FY99 saw the start of two highly noteworthy is working with an NGO, the private sector, and innovations in public health: client countries to define how the Bank could * Malaria was identified as an institutional most effectively promote development of an priority, and a malaria team received special AIDS vaccine suitable for use in the developing funding in a Bank-wide competitive process. world. The disease kills one million people each year, In nutrition, the Bank supports a multi- and the toll-and drug resistance-are rising. sectoral approach that targets the poor, espe- FIGURE 3-3 LENDING FOR HUMAN DEVELOPMENT, FISCALYEAR 1999 Total lending: $7.3 billion* Heath, nutrition, Socia protection, 49% and population, 24% Education, 27% * Reclossified dota (see Table I, p. 10) SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 109 cially young children and their mothers. These Education groups are most accessible through community- The Bank's support for education aims to and school-based nutrition programs, food forti- improve quality, access, and equity. Total new fication programs, and food policy reforms. Also lending in education in FY99 was $2 billion, receiving greater attention are micronutrient through 25 new education loans in 22 coun- deficiencies, the impact of nutrition on educa- tries totaling $1.3 billion, and $0.7 billion in tion and learning ability, and early child devel- education components in projects in other opment. A collaborative interagency shared da- sectors. tabase is being built to increase access An Education Sector Strategy, completed af- worldwide to quality, updated nutrition data. ter wide consultation, will help ensure quality Complementary national-level initiatives in by increasing access not just to school places three pilot countries in Africa should further but to relevant learning. Equity in education, improve monitoring, analysis, planning, and nu- especially for girls and women, efficiency in the trition impact. A new Community Nutrition use of education resources, and institutional Project in Madagascar will continue the remark- capacity remain crucial. The strategy also em- able achievements of the recently completed phasizes a holistic sector approach and working Food Security and Nutrition Project, which with countries to identify and selectively help helped reduce malnutrition in target commu- implement their strategic priorities in educa- nities from 57 percent to 14 percent in the tion. Success will entail listening carefully to Antananarivo Province and from 25 percent to clients, developing sound country-specific strat- 13 percent in Tulear between 1994 and 1998 egies and programs, and harnessing global by targeting a half million children through knowledge to develop local know-how. 535 community nutrition centers. Distribution The Bank is helping the central government of iodized oil capsules and increased availability and 14 state governments of India address a of iodized salt in households helped decrease staggering social reality: about 33 million chil- goiter prevalence in pregnant women and dren aged 6 to 10 years (about 30 percent of school children from 45 percent to 15 percent the age group), most of them girls, are out of over the same period. school; three out of five first graders will not Population and reproductive health activities complete the lower primary five-grade cycle; remain a high priority. The Bank is increasingly and the learning achievement of those complet- helping clients link population and reproductive ing this cycle is dismally low. Begun in 1994, health policies and integrate them into the pov- the District Primary Education Program (DPEP) erty reduction and development agenda. For in- was designed to reduce dropout rates; improve stance, the new Guinea Population and Repro- learning achievement; increase access, especially ductive Health Program, the first Adaptable for girls, disadvantaged students, and working Lending Program in the Africa region, aims to and other poor children; and strengthen institu- slow population growth from 2.8 percent to 2 tional capacity, especially at the community percent by 2010 and improve reproductive and level. Results have included higher primary child health. These goals are reflected in the school enrollment, especially of girls, in some Bank's Country Assistance Strategy for Guinea. project districts; improvements in achieve- Funds for the multisectoral 12-year program ment levels; and narrowed differentials be- will be released in three phases as agreed trig- tween male-female achievements in first grade. gers are reached. The Guinea program also A new DPEP operation in FY99 in 10 low- highlights the Bank's emphasis on participatory literacy districts of Rajasthan will, in partner- approaches to project preparation and imple- ship with several NGOS, implement innovative mentation. More than 20 workshops helped teacher training and community mobilization identify issues at grassroots levels, define activities. program activities, and build consensus and Bank lending for education in India is built on support for the program. NGOS will help imple- a sound analytical base. In 1999, studies were ment the project. done on science and technical education (STE) 110 THE WORLD BANK ANNUAL REPORT 1999 and upper primary education; the findings will clude Bank funding as part of wider support feed into future assistance to foster autonomy from a consortium of donors; and capitalize and networking for STE institutions, flexibility in on new Bank lending instruments, exempli- student selection and teaching methods, and fied in new IDA credits to C6te d'Ivoire, The better professional development opportunities Gambia, Ghana, Guinea, Lesotho, Mozambique, for professors. and Zambia. The Bank is making special efforts in many Strategies to improve quality are key to help- countries to promote equity in access to educa- ing Africa accelerate education development. tion. Yemen's gross enrollment ratios are among New lending incorporates several approaches. the world's lowest: 31 percent for girls and 71 In Guinea, teacher training programs are being percent for boys at the primary level, and 11 fundamentally restructured; elsewhere, early percent for girls and 40 percent for boys at the childhood activities are included in several new secondary level. In some rural governorates, operations. To explore the potential of new these ratios are below 5 percent for girls in sec- technologies in delivering high-quality educa- ondary education, and only 16 percent of all tion at reasonable cost, the Bank helped intro- teachers are women. In developing a proposed duce the African Virtual University in 28 uni- Primary Education Project, innovative mecha- versities in 18 African countries. And the World nisms to improve girls' education are being Links for Development Program has provided devised, including a demand-driven school computer labs, Internet connectivity, teacher establishment process involving parents, training, and content to more than 100 schools communities, and mothers' committees, and in six African countries, enabling more than a school-cluster approach to support primary 300 teachers and 5,000 students to engage in education while developing a pool of girls with international collaborative educational projects secondary education qualifications to become with their peers around the world. teachers. A proposed Child Development The Bank's nonlending services in Africa are Project would link schools, health clinics, and designed to help governments formulate educa- water supply in targeted rural areas, experi- tional and financial policies needed for a "quan- menting with solar power for these facilities. tum leap" in education development. Work- These projects are still in the planning stage, but shops with senior government officials and the government has already begun to pilot other stakeholders (teachers' union and parent- project initiatives using reallocated funds within teacher association representatives) examined ongoing projects. Nine secondary schools are policy options for countries where teachers' being established in unserved areas, with com- salaries are so high as to preclude rapid progress munity participation; mothers' committees have toward universal primary education. Following a been formed to support headmistresses in meeting with senior African education special- school administration; and a program to en- ists to review national experience and identify courage qualified rural women to be trained as good practices to improve quality, the Bank is teachers for the new schools is under way. In developing a regional strategy to make its assis- three areas where secondary girls' schools are tance to African educators and children more to open next year, enrollments at basic and effective. preparatory levels have already measurably In another notable effort, the Millennium Sci- increased, reflecting improved prospects for ence Initiative was established in 1998 to sup- girls' access to secondary education. port centers of excellence where state-of-the-art In Africa, the Bank continued efforts in FY99 scientific research can flourish in vibrant re- to build partnerships to accelerate education search environments, with links to the private development, focusing especially on improving sector and international networks and expertise. quality and participation in basic education. The initiative is being piloted in the Latin Countries are encouraged to take a sectorwide America and Caribbean Region, with the and long-term perspective; make Bank assis- first Learning and Innovation Loan approved tance an integral part of national programs; in- in Chile. Argentina, Brazil, and Colombia are SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 111 likely to follow. Others eager to participate are The largest of the past year's new social pro- Romania, Poland, Czech Republic, Hungary, tection loans have been to crisis countries: $758 the Russian Federation, Vietnam, and the million for social security reform and $253 mil- Philippines. lion for social protection to Brazil; $600 million In response to the increasing role of the pri- to Indonesia for social safety nets; $300 million vate sector in provision, management, and fi- to Thailand for social investment projects; and nancing of education, the Bank and IFC set up a multisectoral loan to the Republic of Korea, the Education Investment Exchange-a forum of which $600 million is supporting long-term, for individuals, corporations, and other institu- sustainable improvements in the social protec- tions to invest in education in the Bank's client tion system by improving the information base countries. Private sector market potential in for poverty monitoring, increasing attention to education has been surveyed in C6te d'Ivoire, gender issues, improving the unemployment in- the Gambia, Mauritania, and Senegal, and surance system and related labor-market infor- policy options have been discussed with pri- mation, and reforming the pension system. vate-school managers and government officials. Though developed in an environment of finan- Focusing on results and outcomes requires cial crisis and often responding to urgent needs, good quality national data on education indica- these loans also support long-term policy re- tors, with international comparability. The form. For example, the Brazil loans support Bank's education statistics central database is substantial policy reform in social security and now fully established and operational, providing social assistance. staff with current education data for strategic The Bank also supported pension reform in planning and effective project design. Several Russia, Moldova, Macedonia, and, through a other activities aim to improve the quality of pilot project, China. Capacity is being built internationally comparable education indicators through widespread dissemination of PROST, and build national capacity in education statis- the Bank's pension modeling software, with tics. Bank assistance supported developing- training for government clients worldwide, country participation in the International including Croatia, Mexico, Nicaragua, Poland, Association for the Evaluation of Educational Romania, Tanzania, Thailand, and Zambia, Achievement's Third International Mathematics with intensive on-site training in Brazil, and Science Study and in the World Education Hungary, Morocco, and Russia. The model is Indicators pilot project of the Organization for also being used in Korea, Namibia, Philippines, Economic Cooperation and Development. The and Sri Lanka. Bank has also provided technical and financial Labor market-related assistance in FY99 in- support to establish a new Institute for Statistics cluded lending to support public works projects under the United Nations Educational, Scien- in Djibouti and Indonesia, labor code reform in tific, and Cultural Organization and continues Russia, and reforms of programs in the Kyrgyz to be involved in the preparation of the Educa- Republic that provide temporary employment, tion for All (EFA) 2000 Assessment. job-skills training, and assistance for job search or self-employment. Partnership with the Social protection International Labor Organization continued, Social protection occupies an increasingly including a high-level meeting in Washington prominent position in the Bank's portfolio, to discuss labor standards; the Bank continues with a total of $3.6 billion in new loans in FY99 analytical work on the latter. On child labor, in the areas of pensions, labor market reforms, the Bank has taken a clear position to help re- social assistance, and social funds. Of this, duce such practices through ongoing poverty $1.24 billion-about one third-was within reduction efforts as well as new initiatives, large multisectoral adjustment loans supporting such as the Global Child Labor Program, in reforms in these areas. The social protection collaboration with other organizations. Partner- portfolio remains one of the best in the Bank's ships with other international and national quality ratings. trade unions also advanced, and a workshop 112 THE WORLD BANK ANNUAL REPORT 1999 cosponsored with the International Confed- countries design comprehensive social safety eration of Free Trade Unions was attended nets that address unforeseen as well as known by 50 trade union leaders from around the and expected risks such as loss of income with world. old age. Many consultations with policymakers, In social assistance and community-based academics, and partner institutions worldwide social funds, in addition to the Thai and have enriched the design of this framework and Indonesian loans already mentioned, new loans ensured its applicability to client countries. In were approved to support social funds in addition, each of the Bank's six regions pro- Albania, Bulgaria, Moldova, and Romania in cduced a social protection sector strategy paper the ECA Region; Ghana, Lesotho, Madagascar, focused on the current status of social risk man- Rwanda, and Togo in Sub-Saharan Africa; agement among client countries, pressing needs Guatemala, Guyana, Mexico, Nicaragua, and for the future, and the applicability of the social St. Lucia in Latin America and the Caribbean; risk management framework. The social risk and Cambodia, Egypt, and Pakistan. framework will help the Bank identify coun- A major activity in FY99 was the develop- tries' vulnerable areas and assist them in better ment of a social risk management framework preparing for future crises. that will guide Bank Group strategy in helping ENVIRONMENTALLY AND SOCIALLY ening efforts to promote environmentally and SUSTAINABLE DEVELOPMENT socially sustainable development. The sections below highlight, in particular, the role of part- Poverty reduction is intrinsically linked to envi- nerships in addressing the large agenda of envi- ronmental and social sustainability. Soil degra- ronmental management, rural development, dation, forest destruction, and fisheries deple- and social development. tion are seriously affecting tens of millions of poor people who rely on these natural resources Environmental management for food and livelihood. Two thirds of Sub- The recent global financial crises exacerbated Saharan African agricultural lands are already pressures on the environment in many coun- seriously degraded; downstream siltation is de- tries. Short-term considerations to reduce pleting the capacity of major hydropower facili- public expenditures and increase output and ties such as Ghana's Akasomba Hydropower fa- exports took precedence over long-term natural cility; and, in Latin America and the Caribbean, resource management and pollution control. deteriorating drylands productivity is causing Pressures on water, forests, and fisheries and substantial migration to urban areas. The recent concerns about land degradation remain severe, historic natural disasters, such as Hurricane as do pollution-related health issues and the loss Mitch, also point to natural resource degrada- of biodiversity. Region-specific challenges are tion that appears to have exacerbated the sever- noted below: ity of storm damage. All of these problems be- * East and South Asia are witness to a grow- come more severe as population pressures grow. ing emphasis on tackling the health and eco- In the social realm, the links between economic nomic impacts of poor-quality air and water. and social well-being are becoming daily more * In Africa, the focus is on the reduction of clear. Inclusion in economic growth and devel- rural poverty by increasing productivity in opment is critical to promoting stability in a drylands, improving watershed management, society, to conflict prevention, and to national and increasing efforts to manage forest reconstruction in post-conflict situations. sustainability. Recognizing these realities, the Bank is strength- SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 113 Rapid deforestation has rendered the biologically rich Amazon floodplain the most endangered habitat in the Amazon Basin. * In Eastern Europe and Central Asia, key en- Updating environmental priorities vironmental concerns include maintaining the Understanding the links between environ- existing infrastructure that provides water and mental degradation and the livelihoods and sanitation services and dealing with industrial well-being of the poor is of growing importance. hot-spots. While some impacts are immediate and clear, * In Latin America and the Caribbean, efforts such as the acute health impacts of polluted air, continue to protect key ecological systems, in- both indoor and outdoor, others require deeper cluding support for the Meso-American Biologi- analysis. Other challenges include estimating cal Corridor and for forest systems. Another the long-term productivity of ecosystems and noteworthy trend is the Bank's increasing em- promoting understanding of the implications phasis on working with governments and the of global issues such as climate change, which private sector to improve the environmental take time. To help address these and other is- performance of industry. sues, the Bank has initiated the preparation of * In the Middle East and North Africa, the a strategy for environment and sustainable de- focus has been on improving water and sanita- velopment, to be completed in fiscal year 2000. tion and strengthening the capacity of financial Governments, NGO stakeholders, donors, and intermediaries to review and appraise the envi- other public and private sector organizations ronmental aspects of social funds and private will participate in preparing and carrying out sector and community development projects. the strategy, which will set the strategic direc- 114 THE WORLD BANKANNUAL REPORT 1999 tion for Bank activities over the next several ronmental Assessments in FY99, after extended years. Feeding into the strategy will be a forest consultations with other donors, NGOS, and the sector strategy, currently under preparation. In private sector. The scope of environmental as- addition to input from a broad spectrum of sessments is being expanded from the project to stakeholders in client countries, the forest strat- the sector level, as seen with the Water Sector egy will reflect the findings of an upcoming Adjustment Loan in Indonesia. Operations Evaluation Department (OED) re- Improving the quality of the Bank's work port as well as lessons learned from the prepa- on environmental and social issues is a fun- ration of the strategy paper on energy and the damental objective. Ten key operational poli- environment. cies, known as the Safeguard Policies, address environmental, social, rural, and legal issues Strengthening capacity for environmental of Bank operations. Their implementation af- management fects the quality of all Bank products and An increasingly important element of the services. To promote outcomes, the Compliance Bank's work has been to try to strengthen ca- Unit-which reviews the application of these pacity for environmental management in client policies-was strengthened during the past year. countries to address immediate problems. Part- The Bank launched a pilot program in FY99 nership with many groups is helping broaden to develop and test a broad framework for the quality of advice and assistance. A notable mainstreaming environment and natural re- aspect is support for the decentralization of source issues into the strategic dialogue be- environmental capacity to the local level. A tween the Bank and client countries. Assistance successful example is the Clean Air Initiative strategies are being prepared under the pilot for in Latin America, which has brought together Azerbaijan, Dominican Republic, Pakistan, and decisionmakers, technical specialists, and Zambia, to be accompanied by recommenda- private industry in a number of cities with air tions, best-practice case studies, training mate- quality problems. A network of cities provides rial, and documentation of lessons learned. the basis for sharing ideas and information. Beyond this point, the Comprehensive Devel- A similar network is starting up in Central opment Framework (CDF) offers an opportunity Europe. to incorporate environmental sustainability The Bank's growing knowledge management objectives into a country's overall development efforts are also strengthening environmental agenda. management capacity in client countries by helping identify best-practice examples, compil- Addressing global and environmental concerns ing key information, and linking with other Although the Bank's mandate centers on na- sources of information. A new Pollution Preven- tional and regional environmental issues, it also tion and Abatement Handbook was approved late addresses global environmental concerns in a in 1998, replacing earlier guidelines and pre- manner that serves the sustainable development pared by IBRD and IFC in collaboration with the interests of country clients. It pursues such World Health Organization and United Nations objectives in part through its role as one of the Environment Programme (UNEP) as well as inter- implementing agencies of the Global Environ- national agencies, governments, and industry ment Facility (GEF), the leading multilateral groups. Originally conceived to guide prepara- entity responding to the global threat to tion of Bank Group projects, the Handbook's biodiversity. The GEF Council approved 29 guidelines and standards have proved to be of Bank-GEF investment projects for $235 million much broader interest as valuable benchmarks in FY99. A total of 21 GEF medium-sized grants for investors, client governments, banks, insur- (individual grants smaller than $1 million), ance companies, and other interested parties. totaling $16 million were approved, up from (For more information on IFC's environmental $2 million in FY98. This new GEF "window" is and social activities, see the IFC Annual Report.) popular with NGOS involved in designing and The Bank also issued new guidelines on Envi- implementing most medium-sized projects. SECTION THREE THEMAATIC PERSPECTIVES AND DEVELOPMENT EFFEC'rIVENESS 115 Analytical efforts supporting environmental Alliance for Forest Conservation and Sustain- awareness included a major report, Protecting able Use between the Bank and the World Wide Our Planet, Securing Our Future, published Fund for Nature was consolidated, and opera- jointly by UNEP, the U.S. National Aeronautics tions were launched in more than 20 countries. and Space Administration, and the Bank in President Wolfensohn's chairmanship of the for- FY99, illuminating the interlinkages among est industry Chief Executives Officers' (CEOS') major global environmental problems and the Forum led to the formation of public-private opportunities for shared solutions. partnerships to improve forest concession man- Projects approved by the GEF Council and the agement in the Congo Basin and Russia. The Bank Board in FY99 continue to propose cre- CEOS' Forum includes representatives from ative and innovative actions at the local and na- about half the world's timber trade and most tional levels to address global environmental international NGOS addressing forest conserva- problems. For example, a $35 million GEF grant tion and sustainable management. A related to China will help local photovoltaic and wind initiative, Forest Trends, is helping mobilize the companies expand production and lower the private forest product industry for improved costs of renewable energy equipment. An $11 forest management in client countries; specific million grant to the governments of Cambodia, initiatives are under way in the Africa Region Laos, Thailand, and Vietnam will help these and Malaysia. countries share and jointly protect the water re- The design of a Prototype Carbon Fund was sources of the Mekong River Basin. In Peru, a completed. If approved by the Board of Execu- $10 million grant will support the involvement tive Directors in FY00, the fund will turn to of indigenous peoples in protecting biodiversity government and private company subscribers resources in the Peruvian Amazon. Finally, a to contribute a combined maximum of $150 $31 million grant to Russia, supplementing million. A "learning-by-doing" instrument, the earlier GEF grants, will help the country comply fund is expected to generate greenhouse gas with its international treaty obligations to emissions credits through investment in, for phase out the consumption of ozone-depleting example, renewable energy technologies in de- substances (ODS). veloping countries. Innovative projects to help developing coun- Selected regional partnerships are showing tries phase out the use of ODS were imple- promise for improved environmental manage- mented under the Montreal Protocol. The Bank ment. The Yaounde Declaration was signed by has met its commitment to phase out 70 per- the leaders of five Congo Basin countries to cent of total ODS under this agreement, using create a network of protected areas, supported only 40 percent of the budgeted funds. The by the Bank and the GEF, to conserve 70 per- Montreal Protocol program also successfully cent of the Basin's biodiversity. The Europe developed a sectoral approach in China and and Central Asia Region has fostered closer auction programs in Chile and China. The clo- partnerships with the European Union, envi- sure of chlorofluorocarbon production facilities ronment ministries, and other finance in China was an important milestone in the institutions on investments needed for coun- history of the Montreal Protocol and the associ- tries nearing accession to the European Union ated Multilateral Fund. In addition, the govern- and the establishment of a network of cities to ment of Thailand was the beneficiary of the work together on air pollution controls. In the first concessional loan program provided under Middle East and North Africa (MNA), regional the Fund. programs include the Mediterranean Environ- mental Technical Assistance Program, the Strengthening partnerships MNA-MED Water Initiative, the Regional Deserti- In FY99, old partnerships were strengthened fication Initiative, the Gulf of Aqaba and new ones developed with other develop- Environmental Action Plan, and the Red Sea ment organizations, NGOS, the private sector, and and Gulf of Aden Strategic Action Program. civil society, particularly in the forest sector. The In addition, regional programs to phase out 116 THE WORLD BANK ANNUAL REPORT 1999 leaded gasoline are under way in Latin fore, rural growth. Through research and ana- America and the Caribbean, Central Asia, lytical work, policy dialogue, and lending pro- and the Caucasus, grams, the Bank is helping countries liberalize prices of commodities and agricultural inputs, Rural development reform public enterprises, and correct taxation Three fourths of poor people in developing regimes that discriminate against agriculture. countries live in rural areas. The Bank's poverty An important aspect of assistance is support for reduction objective can therefore not be met community and local development, key to sus- unless widely shared growth, food security, and tainable poverty reduction. The number of par- sustainable natural resource management are ticipatory, decentralized, and demand-driven achieved in these areas. Rural development- rural projects continues to grow as best prac- especially a thriving agricultural economy-is tices are identified and disseminated. Rural fi- critical to meeting these goals. The Bank's work nance operations are growing in importance in rural development is wide-ranging, including and accounted for about 30 percent of total sustainable land and crop management, live- Rural Sector lending in FY99. Rural finance stock, agricultural research and extension, irriga- projects have trended down in size, indicating tion, river basin management, natural resource greater attention to poverty reduction through management, and rural finance, as well as cross- a shift from financing large-scale farmers to sup- cutting areas of food security, gender in devel- porting lower income, micro- and small-scale opment, and community-based rural develop- rural entrepreneurs. ment. The Bank aims to support countries' Strengthening client capacities to effectively rural development objectives through lending manage food safety will become more impor- programs and sector work developed around tant as a result of increasing globalization, and feeding into evolving strategies and policies. changing food preparation habits, and the need Forging strategic partnerships is an important for agricultural exports to promote rural devel- element of the Bank's strategy. opment. The Bank is sponsoring global and re- Demand for Bank support for rural projects gional consultations on how to help clients pur- is growing. The pipeline for agricultural and sue critical legislative reform and institution rural development projects for FY97-99 aver- building and to increase their voice in related aged 58 new projects per year, up from 46 per international negotiations. year in FY94-96. FY99 lending for rural devel- opment projects totaled about $4 billion and Promoting food security included projects supporting rural transport, The Bank is committed to helping countries rural water supply and sanitation, and natural reduce hunger and malnutrition and ensure resource management. Five countries- food security, which entails issues of availability, Bangladesh, Brazil, Morocco, Uganda, and access, and proper nutritional utilization of Vietnam-are implementing comprehensive food. With population growing and amounts of rural development programs. As the Bank's arable land and irrigation sources dwindling, rural development work is revitalized, project farmers must increase yields through intensified performance continues to improve: 80 percent agriculture to ensure the availability of food. of projects in rural development are already Sustainable agriculture calls for a system that judged satisfactory by OED-a goal set out for is profitable, conserves the environment and 2002. Further improvement is essential. natural resources, and promotes social equity. Such a framework assumes that many successful Promotinlg widely shared growth innovative changes toward sustainable agricul- Sound and stable macroeconomic and sector ture are locally driven; the farming community policies form the foundation of widely shared has the power to decide which innovations to growth. Countries increasingly recognize that adopt; project formulation should emphasize heavy government interference in productive process planning; and farmers should be well activities has inhibited agricultural and, there- represented in planning and implementing all SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 117 phases of the transition to sustainable agricul- ceives expert technical assistance on sectoral ture. The 1998 Sustainable Agriculture Frame- work and project appraisal. Collaboration con- work initiative is being implemented in partner- tinues to grow, as evidenced by joint initiatives ship with the International Federation of such as the network on land reform and a series Agricultural Producers and includes consulta- of workshops on livestock and environment in- tions with a wide variety of stakeholders teractions as well as collaborative efforts in soil through a series of regional workshops as well fertility, integrated pest management, and fish- as an interactive web site. eries research. Biotechnology offers another option for in- creasing crop yields on less land. Advances in Reversing environmental degradation biotechnology are progressing rapidly in indus- Through a series of initiatives, partnerships, trial countries, but few commercial applications and project interventions, the Bank seeks to en- exist for developing countries. Still, biotechnol- sure sustainable natural resource management, ogy holds promise for the latter in their efforts addressing links between agriculture and the to increase productivity, conserve natural re- environment. In addition, the Bank and the sources (especially biodiversity), and alleviate International Fund for Agricultural Develop- poverty. Applications for the developing world ment (IFAD) collaborate on many projects are often constrained by the rapid pace of aimed at improving rural livelihoods. They change in technologies, controversy related to also share a special cooperation on implement- risks and ethics, lack of a regulatory framework, ing the Desertification Convention and the and proprietary protection of many technolo- Civil Society Coalition to support local com- gies. Growing use of intellectual property rights munities' access to land, water, and other to protect biological organisms and processes, natural resources. especially by the private sector, is also a factor. WIVater Water is receiving increasing attention In addition to workshops held in 1998 and from the Bank and other donors, given rising 1999, the Bank has strengthened its skills base demand, declining availability, pollution, and in genetic resources and public-private partner- the need for conservation. In FY99, water ac- ships, the latter through secondment from the counted for 14 percent of Bank lending. Agri- Dutch and U.S. governments. A Bank-iFc Task culture uses more of the world's water-often Force is developing guiding principles on bio- inefficiently-than any other activity. The Bank technology, priorities for Bank support, and a is undertaking a broad range of activities to help two-year action plan. find ways to increase the efficient use of water. Poverty at the national and household levels The Bank's OED and Global Water Unit are can limit peoples' access to food even where it assessing implementation of the 1993 Water is still plentiful. Many Bank projects aim to in- Resource Management Policy through a review crease farm and nonfarm employment and in- involving stakeholder workshops in six focus comes-raising household incomes to ensure countries, studies of international rivers, and access to food. The Bank has also made strong an evaluation of the Bank's capacity to address progress in the area of nutrition, where support particular needs in the water sector. The review, has rapidly expanded over the past several years. to be completed in early 2000, will feed into a In a cross-sectoral effort, the Bank is integrating Water Resources Sector Strategy. food policy and nutrition concerns into agricul- The Bank is supporting cooperation in a tural policy dialogue and incorporating nutrition number of international basins, including the projects into operations in other sectors. Aral Sea, Lake Victoria, the Mekong Basin, the The Food and Agriculture Organization Nile, and the Senegal River. In March 1998, it (FAO) of the United Nations is the Bank's oldest participated in a major international dialogue ally in food security as well as other aspects of on water, initiated by the German Foundation rural development. The Bank continues to pro- for International Development. The resulting vide about $10 million annually to fund the Petersburg Declaration is an agreement among FAO'S Cooperative Program, for which it re- ministers, senior policymakers, researchers, 118 THE WORLD BANK ANNUAI. REPORT 1999 representatives from the private sector, and and to develop internationally acceptable NGOS to take complementary actions to promote criteria, guidelines, and standards, where appro- the improved management of shared water re- priate, for the planning, design, appraisal, con- sources. Signatories agreed on an integrated ap- struction, operation, monitoring, and decom- proach to focus on regional cooperation, sup- missioning of dams. The commission's mandate port international river basin commissions, and expires in June 2000, at which time a report strengthen institutional frameworks. with recommendations will be made to the Nile Basin Initiative. The Nile Basin Initiative Bank's president and the IUCN director-general provides a forum for the 10 Nile riparian and shared with stakeholders and the broader countries to foster cooperative development international community. and management. A transitional institution Forests. In the past 50 years, deforestation comprising a council of ministers, a technical with subsequent erosion and soil degradation advisory committee, and a secretariat has been has been responsible for the worldwide loss of formed, with participants adopting a shared 580 million hectares of fertile land-an area vision that puts socioeconomic development bigger than all of Western Europe. Forestry is and shared benefits from common Nile waters a priority area for rural development, given at its center, with emphasis on basinwide capac- the environmental importance of healthy for- ity building and subbasin investment projects ests combined with the fact that more than by groups of riparian countries. Once an initial 500 million people depend on them for their set of projects is prepared, the Bank will con- livelihood. vene a donor consortium to seek coordinated The Forest Policy Implementation Review financing. Partners in this initiative are the and Strategy, a collaborative effort with OED, is United Nations Development Programme examining broad cross-sectoral issues and solic- (UNDP) and the Canadian International Devel- iting input and advice from a range of stake- opment Agency. holders and development agencies. The effort The Bank also cosponsors the Global Water combines a three-phase consultation process, in- Partnership (GwvP), which supports information volving stakeholders worldwide, with analytical exchange, matches funding with needs, provides work on key issues to underpin the strategy- practical policy advice, and develops solutions development process. The review is expected to common water resources management to be completed in 2000. problems. The Bank also participates in the Land degradation. About 43 percent of the UNDP- World Bank Water and Sanitation Pro- world's arable land is degraded to some degree, gram, the World Water Council, and the World while more than 75 percent of coastal and ma- Commission on Dams. rine water pollution is estimated to originate The Bank is active in the International De- from land-based activities. Land degradation bate on Dams. As development priorities evolve affects the way millions of small-scale farmers and global experience with large dams accumu- make investment decisions, and there is increas- lates, some argue that dam projects have not ing awareness of the aggregate effect of degrada- produced expected economic benefits and have tion on this process. Land degradation has a not taken into account major environmental, direct impact on biodiversity, climate change, economic, and social costs. In the 1980s, pro- and international waters. It also decreases the posals for large dams began to be fundamentally potential for sustainable agricultural intensifica- questioned by local interests and global coali- tion. The Bank is intensifying efforts to tackle tions of environmental and human rights the technical, institutional, legal, and economic groups. To depolarize the tense debate, the Bank issues that cause land degradation and to ad- and the World Conservation Union (IUCN) spon- dress land issues at their root, including, for sored the World Commission on Dams whose example, land tenure, soil fertility, water pollu- mandate is to review the development effec- tion, access to services, inputs for intensifica- tiveness of large dams and assess alternatives tion, and market infrastructure. for water resources and energy developments SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 119 Knowledge management partnerships Social development Developing innovative ways to share knowl- In the past year, the Bank has continued to edge within and outside the Bank is a key make significant progress in ensuring that effort accompanying the Bank's rural develop- people, their cultures, and their societies are ment work on policy and technical issues. Two taken into account in the process of develop- innovative information sites are being devel- ment and that such development improves the oped jointly with external partners. The Rural lives of people, especially the poor. The global Development Information System, developed economic crisis highlighted the importance of in partnership with the Center for International understanding and strengthening the social un- Earth Science Information Network (CIESIN) at derpinnings of development. Columbia University, is an electronic facility In FY99, the Bank continued efforts to better that will bring together Bank and external incorporate social development concerns in the information on rural development. The Online design of Bank operations and to address the Sourcebook for Decentralization and Local potential social impact of proposed interven- Development is an international collaborative tions. Methods and tools used have included so- effort to exchange information and link exper- cial analysis, participation, and safeguard poli- tise with needs. It is being developed in col- cies, as well as compliance work related to laboration with the Swiss Agency for Develop- resettlement, indigenous peoples, and cultural ment Cooperation, FAO, the German Agency property. The Bank has also worked with exter- for Technical Cooperation, IFAD, the United nal partners on conflict-affected countries and Nations Capital Development Fund, UNDP, emphasized civil society involvement, as well and CIESIN. as the importance of culture, in development (see also Partnerships later in this Section). Of Consultative Group on International growing importance is new work on social in- Agricultural Research clusion, social capital and local-level institu- The Consultative Group on International tions, and social principles and good practice in Agricultural Research (CGIAR) works through a social policy. network of 16 international agricultural re- search centers to mobilize the best agricultural Methods and tools science on behalf of the world's poor and hun- Social assessments help to incorporate social gry. Fifty-eight developing and developed coun- development concerns and participatory pro- tries, private foundations, and regional and cesses into projects and analytical work and as- international organizations, including the Bank, sist clients in more effectively reaching the poor collectively support the CGIAR. In 1998, contri- and vulnerable. The Bank is working toward butions totaled $340 million, up from the pre- mainstreaming social assessment into the vious year. The figure reflects a nearly sevenfold project cycle. About 150 social assessments car- leveraging of Bank support of about $50 mil- ried out over the past two years have sought to lion. The CGIAR research is critical to the Bank's ensure that development initiatives contribute commitment to environmentally and socially to poverty alleviation, build ownership by in- sustainable development and its renewed focus volving key stakeholders, and factor in social on rural development. Some 300 CGIAR research diversity and gender considerations. In parallel, projects are increasing agricultural productivity, Country Assistance Strategies have become strengthening national agricultural research sys- more participatory, recognizing the critical im- tems, protecting the environment, improving portance of consultations with nongovernmen- policies, and preserving biodiversity. The third tal stakeholders and civil society. Participatory independent System Review, completed in processes are the basis for much of the work in 1998, concluded that investment in the CGIAR CDF pilot countries. Scaling up participation has been the most effective use of official devel- and tailoring it to local conditions is a major opment assistance. challenge. 120 THE WORLD BANK ANNUAL REPORT 1999 Social inclusion of the world's poorest countries. The Bank's The context of social inclusion extends be- comparative advantage in this area lies in facili- yond poverty to include deprivation, which en- tating the transition from dependence on relief compasses a broader range of factors, including to sustainable economic growth and in improv- access to health care and education, community ing the coordination of post-conflict reconstruc- coherence, and social stability. To generate a tion and recovery assistance. While rebuilding comparative body of knowledge that spans sec- infrastructure has been a significant element of tors and regions, studies on inclusion are being the Bank's post-conflict assistance thus far, more conducted in Eastern and Central Europe, Latin recent efforts have also sought to promote America and the Caribbean, and South Asia. In economic recovery, address social sector needs, addition, the Bank is increasing emphasis on and build social capital and institutional capac- projects that promote inclusion and equitable ity (Box 3-3). Operations are also being de- access to the benefits of development. It contin- signed to assist in demining, demobilization and ues to play a significant role, for example, in reintegration of ex-combatants, and reintegra- sustainable development initiatives to improve tion of displaced populations. The Bank is at an the quality of life of indigenous peoples, who early stage in identifying and addressing issues number more than 400 million worldwide. Ef- in post-conflict assistance. Notwithstanding forts to address conflict and culture issues are progress, getting results on the ground will also contributing to inclusive development. continue to be a major challenge in the face of typically weak institutional capacities and Conflict risky environments. Conflict and violence are among the most The Bank has nevertheless sought to respond pressing development problems, affecting many to the growing demand for conflict-related BOX 3-3 RWANDA: RECONCILIATION THROUGH PARTICIPATION, DECENTRALIZATION, AND RECONSTRUCTION "This is the first time we are being asked about what we need. If this is the approach this govern- ment is taking, we will finally be able to develop our country." -A community elder, on the Rwanda Community Reintegration and Development Project To dismantle Rwanda's legacy of centralized and building trust and cooperation within and be- decisionmaking, which impeded the effective fight tween local government and the local population. against poverty and contributed to the dramatic The project was prepared with the participation sociopolitical events of 1 994, the government initi- of local communities. Throughout the project cycle, ated an inclusive, community-based approach to it will empower rural people to make choices and in- development. This approach aims to involve crease self-reliance. It will also bring local economies Rwandans closely in the management of their own to life and bring communities together through local affairs and to make local administrative structures decisionmaking about development activities. primarily responsible for development activities. The project is supported by a $5 million Learning The Community Reintegration and Development and Innovation Credit, a relatively new Bank lend- Project, effective since April 1999, supports this ap- ing instrument designed to test on a small scale the proach. It assists war-affected communities, returned feasibility of a larger project. The project is being refugees, and other vulnerable groups through com- implemented in 12 communes, with a combined I munity-based reconstruction, reintegration, and de- population of approximately 500,000, and will be velopment. The projectfocuses on transferring monitored and evaluated by local participants to decisionmaking and expenditure authority from the ensure transparency, accountability, and responsive- central to the community level, buildingpartnerships ness to local needs. between local administrations and local populations, SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 121 assistance and is playing a critical role in the Social capital and local-level institutions reconstruction of countries emerging from Social capital refers to the institutions, rela- conflict. Since its inception in 1997, the Post- tionships, attitudes, and values that govern inter- Conflict Unit has provided strategic support in actions among people in society and contribute 35 countries worldwide. Key partnerships with to economic and social development. Two humanitarian agencies and others enable in- initiatives under way are helping to increase creased effectiveness on a country-by-country understanding of the role of social capital and basis. The Bank has initiated a global web site local-level institutions in development. for 21 UN and bilateral partner agencies, a four- The Local-Level Institutions Study compares country study on the effects of conflict on the the role of local institutions as a key element of transformation of social capital, and a compara- social capital in Bolivia, Burkina Faso, and Indo- tive study of conflict and exclusion. The Post- nesia. Membership in local associations can gen- Conflict Fund, part of the Bank's Development erate benefits leading to increased household Grant Facility, provided $16 million in FY98-99 welfare, access to credit, and ability to with- for post-conflict activities. Among the most stand economic shocks. The greatest benefits innovative grants were assistance for basic ser- come from inclusive associations in which vices to Kosovar refugees in Albania, a veterans' people from different economic backgrounds assistance program in Cambodia, a youth are brought together and members play an consultation and needs assessment in Sierra active role in decisionmaking. Investing in farm- Leone, and analysis and planning support for ers' associations or parent-teacher associations conversion of military bases to civilian use in can be as important as providing seeds and fer- South Africa. In January 1999, the Japanese tilizer and building schools. Decentralization Post-Conflict Fund-a World Bank adminis- strategies need to support capacity building for tered program under Japan's Policy and Hu- local associations as well as local governments. man Resource Development Fund-became The Social Capital Initiative funded 11 operational. studies to measure the impact of social capital on development effectiveness, and results were CSulture in sustainable development highlighted at the June Conference on "Social Pride in one's culture and identity can con- Capital and Poverty Reduction." The results tribute to social development and support suggest that social capital has a significant posi- poverty reduction efforts. Investments in cul- tive impact on many development issues by ture can help conserve physical assets and facilitating the provision of services, mitigating leverage private investment, stimulate cultural the effects of political transition and violence, enterprise development, and strengthen social and improving rural development outcomes. cohesion. In April 1999, the board endorsed For example, in villages in Rajasthan, India, a program that focuses on operational develop- higher levels of social capital correlated with ment, analytical work, and fostering innovation greater success in managing watershed develop- and learning through partnerships. In FY98-99, ment. The lessons from these studies are ex- the Bank developed 30 operations (20 with pected to help the Bank better integrate social culture components and 10 self-standing cul- capital considerations in project and policy ture projects), as well as a few small non- design. lending pilots and training. For example, the Indigenous and Afro-Ecuadorian Peoples Social principles Development Project in Ecuador provides At the international level, the Bank is work- support to local communities for planning and ing with other institutions, especially the United developing projects and conserving and promot- Nations agencies, to develop general "principles ing cultural traditions, including local languages and good practice in social policy," based on the and literature. The Bank is beginning to main- commitments set out in the Copenhagen stream attention to cultural issues in a variety Declaration announced at the March 1995 of sectors. World Summit for Social Development. The 122 THE WORLD BANK ANNUAL REPORT 1999 Bank is now focusing on operational issues re- Assembly on the Implementation of the Out- lated to good practice in response to economic come of the World Summit for Social Develop- crises. This exercise will be an input into prepa- ment that will be held in June 2000. rations for the Special Session of the General FINANCE AND PRIVATE SECTOR underserved groups, building strong financial DEVELOPMENT systems and capital markets to serve small as well as larger firms, and expanding the capacity Over the past fiscal year, the Bank has helped of cities to provide affordable water, transporta- create conditions for the revival and expansion tion, and other services. It was clear that the of foreign and domestic investment throughout development problems in the crisis countries the developing world. Deepening the policy and of East Asia, but also elsewhere, had to be ap- institutional environment for both the financial proached holistically, given the strong intercon- sector and private sector companies was central nection of the financial sector, the real economy, to the Bank's efforts-through policy and regu- and the needs of the poor. latory advice, stimulating private provision of In FY99, the Bank expanded and deepened infrastructure, helping to restructure corporate its assistance in private sector development and finances in a constrained financial environment, in the financial sector. A new area of assistance and improving corporate governance and trans- emerged in corporate restructuring and gover- parency. At the same time, the Bank worked to nance, concentrated initially in the countries of promote private sector-led growth, emphasiz- East Asia. Lending in the sectors most closely ing inclusion of the poor by engaging govern- linked to the Bank's efforts in the private sector ments, civil society, local communities, and and the financial sector-energy, mining, tele- private enterprises in efforts to build private communications, information technology, capi- sector approaches to poverty reduction, extend- tal markets development, banking, transporta- ing energy and communications benefits to tion, water, and urban infrastructure-finished FIGURE 3-4 IBRDAND IDA LENDINGTO SECTORSWITH POTENTIAL FOR PRIVATE SECTOR INVOLVEMENT, FISCALYEAR 1999 Total lending: $12.8 billion* Te ecommuncat ons. 2% E etcnoheeg / 11 // D \ ~~~~~~~E ectr c and otter energy 5% Finance, 51 % I Water supp y, 5% . , / / Urban development, 5% ndustry and mining, 8% Transporcation. 24% Reclassir7ed dots (see Tnbe 1 pI 0) SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMEN'T EFFEC'InIVENESS 123 the year with $12.8 billion in commitments an environment conducive to private sector (Figure 3-4). This was down from the $14 growth and development. Improving the billion recorded in FY98, due in part to declines climate for FDI is vital: These inflows will be in the energy, industry, and mining sectors that developing countries' main source of capital in were related to project timing issues. Lending the years ahead, particularly as concessional aid for private provision of infrastructure increased, from donor countries is on the decline (Figure as did joint assistance efforts of the Bank, MIGA, 3-5). Private sector development efforts are in- and IFC. Several major new partnerships with of- creasingly undertaken in a partnership setting- ficial donors and the private sector were initi- with the Bank, other donors, governments, the ated. Finally, new programs to disseminate de- private sector, and civil society. The recent velopment knowledge had a very visible impact. establishment of a Global Forum for Corporate Governance, in cooperation with the Organiza- Promoting private sector development tion for Economic Cooperation and Develop- Member countries increasingly call on the ment and member countries, is an example of Bank Group to facilitate the expansion and such collaboration. good performance of the domestic private sec- During the year, the Bank stepped up its advi- tor. The focus is on systemic policy issues that sory services aimed at policy and institutional inhibit private sector growth as well as on direct reform to stimulate domestic and foreign pri- support through IFC and MIGA. Priorities in vate investment. Technical assistance was pro- FY99 were to help revive private capital flows vided under loans and credits, as part of project to developing countries through measures to preparation, and under trust-funded partnership mitigate financial and corporate sector crises, programs. Examples include: and to assist the large number of member * Infrastructure Action Program, a Bank countries not yet receiving substantial flows of Group effort with financial support from the foreign direct investment (FDI) in establishing government of Japan, helped governments in FIGURE 3-5 LONG-TERM RESOURCE FLOWS TO DEVELOPING COUNTRIES, 1990-98 (billions of u1s dollars) Foreign direct investment 44.8 24 5 ~~~~~~~~~~~~~~~~~~~~~~~~32.7 24*5 Concessional official development finance Note: 1998 doto ore prelminary Concessionsl offciol development ernonce refers to grGnts and Wons to developing countries from bilateral and mulblaterol sources net of repayments. Source Globa Development F nance 1999, pages 24, 70 124 THE WORLD BANK ANNUAL REPORT 1999 18 countries identify impediments to increased In banking supervision, the Bank is working private capital flows for infrastructure projects closely with the Basle Committee on Effective and improve competition and regulatory re- Banking Supervision to implement the 25 core gimes in the infrastructure sectors. These in- principles defined by this group as minimum cluded major studies and advisory services in requirements for effective supervision and as a India, Indonesia, the Philippines, C6te d'Ivoire, basic reference for banking authorities interna- Mexico, and Uganda. tionally. A major contribution at the country *The Foreign Investment Advisory Service level relates to assessing country compliance (FIAS), a joint program of the IFC, the Bank, and with these principles through country-specific 12 donor countries, completed 46 technical as- Financial Sector Assessments undertaken jointly sistance projects this fiscal year, helping coun- with the IMF. tries overcome bottlenecks in their efforts to ex- The Bank is a partner in conducting banking pand FDI. Assistance focused on improving legal supervision training seminars for central bank and regulatory frameworks, investment policies, staff, covering all regions. More than 5,000 staff and statistical services. Requests for advice were members have received essential training in the especially strong in Europe and Central Asia, principles and practice of bank supervision where some 22 countries have received techni- since the inception of these programs a decade cal assistance over the past few years. Assistance ago. In addition, the Bank and the government related to the financial crisis in East Asia and to of Canada have launched the Toronto Center Middle Eastern countries liberalizing their for Banking Supervision, which delivers inten- economies was also robust. In Africa, the focus sive training to senior bank supervisors. In was on removal of administrative barriers to for- FY99, nine countries participated-the Czech eign direct investment. In Latin America, FIAS Republic, Estonia, Ghana, India, Mexico, concentrated on the smaller and poorer coun- Morocco, Nigeria, Peru, and Sri Lanka. tries, rather than larger countries with more ma- Other partners are helping to deepen fi- ture legal and institutional frameworks. nancial sectors. In the securities markets, the e The Mauritania Telecommunications Bank supports the efforts of the International Sector Reform, a technical assistance loan Organization of Securities Commissions to ($10.8 million), was designed to increase access strengthen cooperation between national se- to telecommunications services, move tariffs curities regulators, including participation in toward a cost-oriented structure, and accelerate training programs for developing-country the adoption of new technologies. The project security regulators. In the insurance sector, also encourages dissemination of information in the Bank has developed a close relationship health and education for programs benefiting with international groups such as the Interna- the poor. tional Association of Insurance Supervisors and private sector insurance firms. The Bank Strengthening financial sector development has developed and applied innovative tech- and corporate governance niques for financing natural disaster assistance In cooperation with the IMlF and external and reconstruction (in recent Caribbean and partners, the Bank expanded its support to Central America disasters) and is engaged with the financial sector during FY99, focusing IFC in country reviews of the insurance sector on countries experiencing financial crisis. The for Bank Group assistance and investment. Bank's assistance-boosted by the hiring of In capital markets and lending development, some 50 experts in the sector-was concen- the Bank's program of technical assistance, trated in supervision and prudential regulation launched during FY99, has seen a rapid buildup of financial systems; capital markets develop- of demand for its services, which are designed ment; corporate governance and restructuring; to improve the efficiency of current market sys- debtor-creditor and insolvency regimes; and tems for primary and secondary markets in gov- financial disclosure, accounting, auditing, and ernment securities (the Republic of Korea and reporting. Thailand) and to promote capital markets de- SECrInION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 125 velopment at the subnational level (I.AC and ECA nerable groups. In each country, there is exten- countries). A conference in Spain brought to- sive collaboration with the IMF. gether private sector and local government par- East Asia Country action programs in FY99 ticipants interested in building new sources of included the following: municipal finance through bond issuance. * In Indonesia, the Bank helped strengthen In corporate governance and restructuring, the legal infrastructure, support bank restructur- the Bank is rapidly developing a new area of as- ing, improve bank supervision, and support sistance. Improving the corporate environment corporate restructuring and bankruptcy reform. calls for laws, procedures, and practices that A conference, sponsored by the Bank in Jakarta, generate investor confidence while respecting on auditing and accounting practices for im- the interests of stakeholders and society at large. proved corporate transparency was attended Current corporate governance shows significant by 1,200 government and private sector partici- weaknesses in many developing countries-- pants from Indonesia and other East Asian perverse business incentives, poor capital mar- countries. kets development, overreliance on corporate * In the Republic of Korea, the Bank helped debt, and judicial system weaknesses. In the the government create a Financial Supervisory past 12 months, the Bank has rapidly expanded Commission and a Financial Supervisory its support for corporate governance reforms Service combining four regulatory agencies. in East Asia and to a lesser extent in Latin The Bank is helping the government support America, the Middle East, and Sub-Saharan numerous small to medium enterprises, which Africa. are under stress from the financial crisis, in Effective debtor-creditor and insolvency re- restructuring liabilities and increasing their gimes are critical to absorbing business failure demand for credit. The Bank lent Korea and releasing assets for productive use and are $724 million in support of the financial sector essential ingredients in overcoming financial in FY99. sector crisis. The Bank has provided extensive * In Thailand, the Bank helped recapitalize assistance for bankruptcy reform in Eastern commercial banks, strengthen the legal and Europe and, during FY99, helped countries in regulatory framework for the financial sector, East Asia design new systems for handling and assess specialized financial institutions' insolvency. These reforms are part and parcel capacity to increase lending to ease credit con- of broader financial sector assistance in that traction. Such support, adding up to $560 mil- region. lion, was provided under two loans to Thailand Financial disclosure and business information in FY99. transparency is a critical element in ensuring Outside East Asia, the Bank has provided more stable capital flows. During FY99, the lending or nonlending services to 24 countries Bank worked with the International Accounting with some degree of financial sector vulnerabil- Standards Committee to define best practices ity, including financial sector assessment, policy for developing countries in financial disclosure reviews, and intensive dialogue with govern- and helped 10 countries conduct Country Fi- ment authorities. nancial Accountability Assessments. A special Bank unit, Special Financial Opera- Stimulating private provision of tions, is working with the Bank's East Asia Re- infrastructure gion to take a comprehensive financial sector The Bank's programs in rural and urban infra- assistance approach to East Asian countries. structure support sustainable economic growth Technical assistance is enhanced by the use of and play a major part in its poverty reduction trust funds provided by Asia-Europe Meeting- efforts. Some 16 percent of the FY99 lending funded resident advisory services in a number program supported projects in transport, water of these countries. The Bank also provided re- and sanitation, urban development, and com- sources for social sector programs to reduce the munications. The strategy is to engage the pri- impact of the financial crisis on poor and vul- vate sector in the infrastructure sectors, with 126 THE WORLD BANK ANNUAL REPORT 1999 TABLE 3-4 WORLD BANK PPI OPERATIONS, FISCAL YEARS 1988-99 East Asia Europe Latin America Middle East Increase and South and and the and in Instrument Africa Pacific Asia Central Asia Caribbean North Africa Total FY99 Adjustments: Single sector 6 0 0 4 1 3 14 5 Multisector 3 6 1 8 9 2 29 14 Technical assistance 9 2 1 3 18 0 33 7 Investmentlending 46 34 22 25 39 14 180 15 Guarantees 1 5 2 0 1 0 9 2 Adaptable progam lending 0 0 1 0 0 0 1 1 Total 65 47 27 40 68 19 266 44 of which: increase in FY99 8 9 3 8 9 7 44 L _ _ _ _ _ _ _ ..__ _ . _ --.-. government and civil society as collaborators The Bank's sustained-and successful- and partners. effort to stimulate privatization and private Transport alone accounted for 10 percent of capital flows to infrastructure (PpF) is reflected lending, in response to sharp demand for im- in the growth in the number of PPI guarantees. proved access, particularly in Africa and other Over the past 11 years, the Bank has engaged low-income countries. Bank assistance in trans- in 266 i'm lending operations and guarantees port promotes public-private partnership in the (Table 3-4) with broad impact in all regions. sector, innovative management and financing The Bank's PPI projects in FY99 included a techniques for public sector transport opera- wide range of innovative operations: tions, development of capacity to develop envi- * the Niger Privatization and Regulatory Re- ronmentally responsive policies in implement- form Project ($18.6 million) to improve the ing transport investments, and improved road performance of the public enterprise sector in and transport safety. Niger through privatization in telecommunica- More than 1 billion people lack safe water, tions, water, and electric utilities 2 billion lack adequate sanitation, and more * the Philippines Urban Water and Sanitation than 90 percent of all urban centers in develop- Project ($23.3 million) to help 250 local gov- ing countries discharge wastewater without ernment water utilities operate on commercial treatment. With some exceptions, state-run principles and generate incentives for the pri- water and sanitation facilities have performed vate sector to participate in utility management, less than adequately in maintaining their assets resulting in lower production costs and in- and in generating the resources required to creased responsiveness to consumers support larger investment programs. Bank assis- * the China Container Transport Project tance therefore focuses on introducing business- ($71 million) to introduce effective competi- like management in urban water services, with tion in the inland container distribution market a lead role for the private sector. In rural and by facilitating alternative service options to periurban areas, the focus is on small, on-site existing state-owned freight forwarders sanitation services, managed directly by com- * the Colombia Toll Road Concession Project munity groups. The promotion of sound envi- ($137 million) to improve key road systems by ronmental sanitation policies is critical to attracting private services to mobilize equity these efforts. and debt to finance road improvements and manage operations SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 1 27 * the India Power Sector Restructuring Pro- World Development Report 1999/2000-Entering gram ($210 million Adaptable Program Loan), the 2 15' Century: The Changing Development the first in a series of proposed loans totaling Landscape. Haphazard, poorly managed urban up to $1 billion over the next eight years, to development is one of the principal impedi- help transform Andhra Pradesh's power sec- ments to sustainable private sector growth. It tor through private sector participation. APLS is also one of the greatest challenges faced by allow for greater flexibility than traditional developing countries in overcoming poverty. lending instruments and provide sustained In the fastest growing cities in the developing support for long-term, complex development world, the health and nutritional status of resi- programs. dents has been improving more slowly than in * the Argentina Renewable Energy in the small towns and rural areas. Rural Market Project ($30 million) to promote Underlying Bank support for urban develop- private concessions in the provision of electric- ment projects worldwide (Figure 3-6) is a new ity to rural areas. Rural communities benefit strategy to strengthen urban and local govern- through reliable and sustained access to ments. The strategy includes support for na- electricity. tional urban strategies to define policy and in- vestment priorities; city development strategies Supporting urban development to promote government, private sector, and civil Within a generation, the number of urban society involvement in solutions for specific residents in developing countries will increase urban areas; scaling up urban slum upgrading- by 2.5 billion-the current urban population community development, government pro- of the entire world. Cities are not only growing grams, and private sector-oriented investment in size and number, but they are also gaining to bring services to the poor; enhanced capacity new influence, with political and fiscal decen- building to facilitate better urban administra- tralization under way in all regions. Industrial tion; and development of new capital markets and commercial activities located, serviced, for municipal finance. marketed, and financed in urban areas account In FY99, the Bank and the United Nations for well over half of GDP in most countries. Center for Human Settlements (Habitat) Urbanization is gaining prominence as a de- formed a partnership to focus attention on ur- velopmental issue, as discussed in depth in the ban issues and increase official development as- FIGURE 3-6 LENDING FOR URBAN DEVELOPMENT, FISCALYEAR 1999 Total lending: $605 million* Eurone and Central Asia, 7% East Asia and Pacific, 4 % M ddle East and North Africa, 7% Afr ca, I 1% Latin Amer ca andSutrsa,i7 the Caribbean, 17% Reclassified dost (see Toble 1, p. 10) 128 THEWORLD BANKANNUAL REPORT 1999 sistance to the sector. The momentum culmi- A new proposal for the use of the Policy- nated in a Bank-sponsored Competitive Cities Based Guarantees received board approval. conference in May, during the Mayors' summit With this innovative instrument, new co- on the first day of the World Competitive Cities guarantee arrangements with other multilateral Congress in Washington. and bilateral organizations may be foreseen. Two new operations were launched (Guinea Promoting private investment by and Guyana II) under the IDA Debt Reduction mitigating risk Facility, representing $140 million of princi- pal eligible debt. Since its inception in 1989, Project finance and guarantees 16 operations have been successfully com- In FY99, the Bank continued to expand its pleted and a total of $3.66 billion of prin- partial risk and partial credit guarantee pro- cipal in external commercial debt has been grams and integrate them into its comprehen- extinguished. sive package of development-assistance instru- ments. Guarantees are intended to supplement Joint country work with IFC reform programs and complement the risk In the areas of energy, mining, and tele- mitigation benefits offered to the private sector communications, the Bank worked with FC in by IFC and MIGA. seven countries (Chad, Gabon, Georgia, Kenya, Guarantee operations now include more than Republic of Congo, Rwanda, and Tanzania). 80 operations in the pipeline, most of them pri- In privatization, a joint IFC-Bank team provided vately sponsored projects covering all regions advisory services to the government of Gabon and major infrastructure sectors, including on privatization strategy. power, transport, water, oil and gas pipelines, In Chad, the Bank prepared a technical assis- and trade. tance project to open up private participation In October 1998, the board approved a in telecommunications. In parallel, the govern- $300 million partial credit guarantee in ment organized a roundtable of potential Thailand, covering the first bond issue for the investors in cellular communications with the Electricity Generating Authority of Thailand participation of Bank and FC telecommunica- since the Asian financial crisis. In addition to tions staff The IFC carried out a dialogue with a nonaccelerable guarantee of the issue's prin- parties interested in submitting bids for the cipal, the Bank guaranteed a single coupon cellular license in Chad. payment on a rolling basis for the first time. In an outreach initiative, the Bank, IFC, and Although previously envisaged, this type of the Brookings Institution sponsored a confer- coverage had not been structured in any of the ence on "Financial Markets and Development: earlier Bank-guaranteed bond issues or syndi- The Crisis in Emerging Markets." The meeting cated loans. The issue, the first emerging mar- was attended by more than 160 capital market ket credit since the collapse of the Russian practitioners and policymakers. economy in August 1998, also received achievement awards from "Finance Asia" and Partnerships "Euro Week." Partnerships play a central role in private sec- The Azito Power Project in C6te d'Ivoire, tor development. In FY99, the Bank and its supported by the first IDA partial risk guarantee, partners joined forces in programs to help de- began to be implemented in FY99. The guaran- veloping countries solve Year 2000 problems tee was critical to help secure financing for and apply technology to development solutions the associated transmission line of a gas-fired (through Infodev), to promote power reform power plant. The project, jointly undertaken and renewable energy (through ESMAP, the En- with IFC, is important to the government's ergy Sector Management Assistance Program), growth plan and will also stimulate economic and to develop rural water supply and sanita- development in neighboring countries through tion (the Joint UNDP-Bank Water and Sanitation electricity exports. Program). SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 129 A recently created partnership program, NGOS, academia, and international organiza- Business Partnerships for Development, is a tions-discussed solutions to current problems global network of private companies, govern- affecting local communities as a result of min- ments, and civil society organizations, with the ing development. The conference addressed Bank as an equal partner. Private companies community issues throughout the mine life take the lead in establishing pilot programs to cycle, from exploration to post-mine closure, enhance development in a range of sectors. and included presentations on nine mines and Through pilot work, participants discover projects from five countries-Australia, Fiji, best-practice experience in how the private Indonesia, Papua New Guinea, and the sector can take a lead role in delivering devel- Philippines. The conference attracted more opment results. The program overall has 70 than 250 delegates from 16 countries. partner organizations, and their work is orga- nized in clusters, including natural resources, Knowledge services in private sector and water and sanitation, road safety, and youth. financial sector development In FY99, the companies mobilized and dis- Commitment to building knowledge services bursed, collectively, nearly $20 million of pri- through thematic groups yielded very positive vate money. benefits for the Bank's clients in FY99. The Water and Sanitation cluster, for ex- * The Road and Highways Thematic Group ample, is performing pilot work in six countries provided rapid and direct support to the gov- (Argentina, Bolivia, Colombia, Haiti, Indonesia, ernment of Pakistan in establishing a commer- and South Africa), with total expenditures of cially managed road fund. The Thematic Group $3 million in FY99. The cluster is led jointly by had prepared a worldwide database on experi- Generale des Eaux (Vivendi), Water Aid, and ence in road lending mechanisms that was the Bank Group. Eight private companies par- timely and useful to the client. The road fund is ticipate, along with nine organizations repre- now being set up within the National Highway senting civil society. Pilot activities included Development Program. definition of the roles of regulators, municipali- * In India, a number of provincial govern- ties, beneficiary communities, and private com- ments approached the Bank for assistance in panies; social mapping of the water user popu- upgrading their multivillage piped water sys- lation to help companies adapt fees and tariffs, tems. The Rural Water and Small Towns The- billing methods, and outreach programs to local matic Group responded to this request by col- situations; and mobilization of communities to lecting relevant worldwide experience from the prepare with the utility company to receive wa- water sector. The Bank and the provincial gov- ter connections. ernments will build on this knowledge base in The Global Road Safety Partnership is coordi- projects to upgrade water systems in low-in- nated by the International Red Cross in Geneva come communities. and joins corporations, civil society organiza- tions, governmental groups, and donors to pro- Performance of the private sector mote road safety initiatives in developing coun- development portfolio tries through training workshops, public The portfolio of projects in sectors contribut- awareness programs, monitoring, and evaluation. ing to financial and private sector goals is large The program includes projects in road environ- and complex. Delays and implementation prob- ment, vehicle safety, road user behavior, and lems vary considerably by sector. Telecommuni- emergency medical services. cations and transport projects experience rela- A new public-private partnership resulted in tively few problems-only 10 percent of the a major conference on "Mining and the Com- projects in the portfolio were tagged in the munity," for Asia and the Pacific nations, held in problem category-while power, industry, and Papua New Guinea. Representatives from all water and sanitation projects were much relevant stakeholder groups-the local commu- higher, at 30-40 percent. The financial sector, nity, mining companies, national governments, urban development, and mining projects fell in 130 THE WORLD BANK ANNUAL REPORT 1999 the middle. Problem projects were affected and inadequate implementation of expected adversely by lack of counterpart funding- policy changes. The performance of water and made worse in some cases by the financial sanitation projects improved during FY99. crisis, lack of technical or managerial capacity, DEVELOPMENT EFFECTIVENESS more effective. Finally, the Bank has also re- fined its budget planning exercises and human FY99 saw continuing improvement in the resource policies to be consistent with the Bank's contribution to development effective- Strategic Compact's goal to increase develop- ness. The Strategic Compact, in its third year, ment effectiveness. continued to drive gains. Noteworthy efforts to make Bank assistance more effective in- Operations evaluation cluded decentralization of Bank staff, greater emphasis on local-level ownership and involve- Improved project performance ment in projects as well as strategy formulation, OED reports show that project performance flexibility in tailoring new lending and has improved substantially. The percentage of nonlending instruments to meet client needs, Bank-supported projects with a satisfactory and broad efforts to strengthen partnerships. outcome at the end of loan disbursement in- The quality of Bank operational performance creased from an average of 65 to 70 percent in has continued to improve, but gains have the 1990-96 period to 75 percent or higher in slowed. The Bank looks to its Operations 1997-98, including 7 percent with outstanding Evaluation Department (OED) to evaluate its outcomes. This remarkable improvement dem- performance and assess impact, and to the onstrated Bank and borrower commitment to more recently established Quality Assurance improving development effectiveness. There Group (QAG) to promote quality and provide have been major quality improvements in two real-time input to management of the Bank's of the poorest performing sectors (finance and loan portfolio. public sector management) and in Africa, par- The Bank's research work also fosters devel- ticularly in agriculture, which recorded an in- opment effectiveness; the conclusions of a crease in satisfactory project ratings from 54 study assessing where aid has been the most to 76 percent. Better borrower performance, effective have particularly far-reaching implica- more realistic project designs, and better portfo- tions for Bank lending. In addition, and as lio management explain the improved out- noted throughout this Report, partnerships are comes. But the sustainability of development playing an increasingly integral role in Bank efforts and institutional development impact assistance. The Comprehensive Development need further improvement. Framework (CDF)-the year's most notable rein- forcement of the importance of partnerships- Lessons from crisis intrinsically attests to the contribution of OED'S 1998 Annual Review of Development partnerships to development effectiveness. Effectiveness (ARDE) identifies the challenges Cofinancing and Trust Fund partnerships have posed by the volatile global environment of been particularly important in helping deal the past two years. Developing countries with recent crises. The World Bank Institute have faced severe deterioration in the enabling (WBI) is also relying on an ever-growing num- environment, rooted in unregulated private ber of partners to help meet its knowledge- capital flows, global interdependence, and sharing and learning objectives, which comple- the growing influence of exogenous factors in ment other Bank efforts to make its assistance determining development impacts. To cope SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 131 with increased risks, greater attention to devel- percent are estimated for Indonesia and opment effectiveness-by learning the lessons Thailand. With devaluations and the removal summarized below-will be critical. of subsidies, the newly unemployed will suffer * A stable macro economy is not enough. Sound from drastic losses in income and sharp in- macroeconomic conditions are not enough to creases in prices. The increasingly integrated sustain equitable growth. Unlike the debt crisis global environment points to continued country of the 1980s, the recent financial crisis started susceptibility to shocks. In response, much in countries with relatively strong fiscal situa- greater attention must be given to safety nets tions, sound monetary policies, and outward- for the poor and near-poor, who bear a dispro- oriented trade regimes. Government budgets portionate share of the costs of shocks. This in most crisis-affected countries were balanced lesson, moreover, applies not only to crisis or moving into surplus; inflation was contained; countries: data for 74 countries show that 49 interest rates were going down; and unemploy- of them are experiencing growing inequality. ment was low. This confirms the need to emphasize inclusion, * Institutions matter. The crisis showed just social development, and safety nets in the de- how costly weaknesses in institutions can be- sign and implementation of reform strategies especially in the financial and social sectors- and development programs. and that strong institutions are essential for * Bank assistance should be country-focused economic and social stability (Box 3-4). Poor and partnership-based. Effective projects require institutions increase the vulnerability of devel- operations that are linked to a country's broader oping and transition economies to shifts in pri- social, civil, and economic environment. Finan- vate investor confidence. For Bank-supported cial, institutional, and social factors must be projects, the quality of institutions significantly considered together, recognizing that sustain- affects development effectiveness. This effect able development requires adequate attention is particularly pronounced in low-income to structural factors, capacity building, and countries. Where institutions are systematically social equity. To scale up successes, the Bank weak, projects yield lower returns and entail must work in close partnership with borrowers, higher risk. Better institutions strengthen a donors, and other stakeholders to maximize country's ability to adjust, and their presence development impact. A partnership-based can more than double the likelihood that a strategy that recognizes respective strengths country undergoing adjustment can stay the and weaknesses and defines accountability and course. how it will be shared is good policy from a * Social development is key to poverty reduction. development perspective, and good corporate Social development should come center stage- finance. OED'S review of Country Assistance both in assessing development effectiveness Strategies (cAss) showed that much remains and in financing country assistance programs. to be done to enhance their quality. Project Serious reductions in employment of 10 to 15 outcomes were found to be highly dependent BOX 3-4 THE CHALLENGE OF INSTITUTION BUILDING An analysis of 41 low-income countries shows Bank average. An OED evaluation showed that that only one was rated satisfactory on institutional Bank-supported financial sector projects had satis- quality. Only 40 percent of Bank-supported projects factory and sustained outcomes in just 50 percent have substantial impact on institutional develop- of countries. One problem is that a fragile institu- ment; civil service reforms undertaken as components tional environment itself renders institutional devel- of structural adjustment loans have had mixed out- opment slow and difficult. Strong aid coordination is comes; and public sector management projects, while needed, together with the development of capacity to improving, have historically performed below the absorb aid and reduce the risks of overload. 132 THEWORLD BANKANNUAL REPORT 1999 on country strategy; no country with a satis- by the Bank, operations are moving in that factory country strategy demonstrated weak direction. project performance. Streamlining OED'S review of Implementation The ARDE notes several implications of these Completion Reports. OED's review of the Imple- lessons for Bank operations: scale up successes mentation Completion Report process has through strong partnerships focused on a wide been substantially streamlined to provide a development agenda; strengthen support for more timely evaluation response. Improved institutional development, particularly in the internal communication is also increasing the financial and social protection sectors; and shift learning value of the reviews. from a project to a long-term country focus in Refocusing OED 'S sector and thematic studies. designing and implementing operational strate- Since FY98, OED has been examining the impact gies. For performance evaluation, the following of a country's overall portfolio of lending and implications hold true: performance monitoring nonlending operations in a given sector. A key and assessment need greater transparency, objective of country sector impact studies is to emphasizing governance, institutional perfor- provide upstream and relevant input to the de- mance, and monitoring of structural, social, sign of Bank country sector assistance strategies. and poverty indicators; evaluation should OED'S work program has more generally begun move beyond the individual project to focus to give greater emphasis to country, sector, and on the country, sector, and global levels; and thematic evaluations, compared with those tied evaluation rating systems should assign greater only to project impact. Thematic and sector weight to the social impact of projects and studies have been especially important where programs and to the effects of external shocks significant policy changes are under way or on the poor. overdue. Three sector studies covering the financial sector (Ecuador) and small and me- Operations evaluation renewal dium enterprises (Ecuador and the Philippines) The 1998 Annual Report on Operations and a thematic study on resettlement were Evaluation (AROE) assesses the adequacy of the completed in FY98. The resettlement study Bank's independent and self-evaluation systems. was influential in the recent revision of the re- The report notes the ongoing renewal process settlement policy and in the establishment of that is helping OED connect with other parts of the new safeguard compliance system. The the Bank in strategy setting, resource allocation, Health, Nutrition, Energy, and Environment personnel management, and quality assurance. Notes produced in FY98 are additional ex- The report also traces the progress-and the amples of OED'S efforts to connect systemati- major obstacles-in implementing results-based cally to board reviews of Bank sector policies. In management in the Bank, a central recommen- a similar emphasis on timeliness to better sup- dation of the 1997 AROE. port board decisionmaking, OED'S CAS-related Results-based management. Both a manage- assessments are becoming better synchronized ment system and a performance-reporting with the CAS cycle: Country Assistance Evalua- system, results-based management (RBM) judges tions are submitted to the board about a month an operation by its outcomes or impacts, not by prior to the CAS. inputs or outputs. The effect of this approach is FY99 brought an acceleration of OED'S efforts to link budget planning with strategic policy to strengthen measurement of development planning-to move the institution from an in- effectiveness. Key priorities were broader stake- ternal management focus to an outward-looking holder participation; continued focus on coun- orientation, centered on achieving results. RBM try, sector, and thematic evaluations; and build- emphasizes development effectiveness and ac- ing evaluation capacity in developing countries. countability and supports the ongoing change In addition to the ARDE and the AROE, important of the Bank's culture toward greater transpar- OED products in FY99 included Process Re- ency, participation, and results on the ground. views (such as the Grants Review and the While RBM has not been formally adopted Poverty Assessments Follow-up); Sector and SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 133 Thematic Evaluations (for example, the Health, evaluation capacity in the participating coun- Nutrition, and Population [HNP] Study); HNP tries and laid the groundwork for better coor- in Brazil, India, Mali, and Zimbabwe; Rural dination on African evaluation capacity de- Development; Municipal Development and velopment by development assistance agencies. Country Assistance Evaluations (Azerbaij an, For OED, working in concert with country lead- Sri Lanka, Bolivia, Yemen, Indonesia, Jamaica, ership and the Bank's respective country direc- the Maldives, and Ukraine, among others). tors, the workshop provided a departure point for piloting a new ECD strategy in client coun- Stakeholder participation in evaluation tries. The strategy combines efforts to enhance OED placed greater emphasis on bringing Bank partnerships with the country and other stakeholder participation in self-evaluation and development partners; help "keep score" of independent evaluation to a satisfactory level. structural and social performance; initiate The department has initiated a participatory action learning for improved monitoring and consultation process for its evaluation products evaluation at the project level; and strengthen by sharing design formats, eliciting information capacity in central ministries. Other ECD initia- on performance and processes, and disseminat- tives include developing partnerships for moni- ing findings among a variety of stakeholders toring and evaluation capacity with WBI and through workshops. Country Assistance Eval- Operational Core Services, with an initial em- uations for Burkina Faso, India, Indonesia, and phasis on the Africa region. Uganda were among those included in this process. An action-learning workshop was held Partnerships to discuss issues of the Aid Coordination Pro- OED is a member of the Development Assis- cess Review with 19 senior officials from a tance Committee (DAC) Evaluation Working range of borrowing countries. A workshop was Group and chairs the Evaluation Cooperation held to discuss the design of the Participation Group (ECG) of the multilateral development Study with a group of Bank staff and other banks. The ECG continued its efforts to identify stakeholders. The Forestry Review Workshop best practices, make evaluation results compa- included a wide range of players, both inside rable, and translate evaluation findings into and outside the Bank, for discussion of the results across MDBS. OED is helping to define upcoming OED Forestry Policy Review. Work- processes to relate evaluation work programs shops have also formed a part of the dissemina- to policy priorities, build evaluation capacity tion strategy for OED products, including the in the context of overall institutional develop- Involuntary Resettlement Study, Municipal ment, conduct country evaluations, and find Development Impact Study, and Post-Conflict ways to improve utilization of evaluation Study. findings. Evaluation capacity development Quality assurance Evaluation Capacity Development (ECD) Since 1996, QAG has aimed to improve the work in OED was advanced through a regional quality of Bank operations and ensure that un- seminar and workshop in Abidjan in November. satisfactory project outcomes-an inherent de- The African Development Bank and a World velopment risk-do not originate in deficient Bank team, headed by OED and drawn from Bank performance. QAG assesses selected the Africa Region, wBi, and OED, met with 36 new projects' readiness for implementation evaluators from 12 African countries to explore ("quality at entry") and ongoing projects' the road ahead for capacity building in moni- supervision effectiveness. Other indicators of toring and evaluation. They were joined by portfolio risk focus on "realism," which flags representatives from 11 bilateral donors, the chronic overoptimism and a failure to recognize UNDP, and the European Union. The workshop problems early on, and "proactivity," which sig- produced draft action plans that will provide nals problems that have been allowed to linger the basis for long-term efforts to build up too long without proactive management. 134 THEWORLDBANKANNUALREPORT 1999 QAG also reviews the quality of Economic and supervision. Actuals (for calendar 1998 and SectorWork. FY98, respectively) were 86 percent and 76 According to the FY98 Annual Report of Port- percent. The share of projects "at risk" of not folio Performance, issued in November 1998, the meeting their development objectives declined health of the Bank's $121 billion project portfo- in FY99 from 37 percent in FY93 to below 19 lio continued to improve, despite dramatic percent, the lowest level in over a decade. The changes in the global environment. Three years improvement is the result of efforts to deal ago, one in three projects was rated less than promptly with "problem" projects and to recog- satisfactory; the ratio has dropped to one in five. nize risks early on as a first step to taking cor- The improvement translates into greater effec- rective actions. tiveness of an additional $4 billion a year of new lending. However, the pace of overall Research improvement may be slowing. The Bank's research supports development Going forward, sustaining progress will be efforts within and outside the Bank, and makes the primary challenge. The Strategic Compact an important contribution to development ef- (Box 3-5) targets 100 percent "satisfactory" fectiveness. It is ultimately intended to improve ratings in FY01 for "quality at entry" and for policy in the Bank's borrowing countries. In a BOX 3-5 PROGRESS ON THE STRATEGIC COMPACT The Strategic Compact was introduced two years while the average elapsed time between project con- ago as part of an overa1l renewal program within ception and board approval also continued to de- the Bank to increase development effectiveness. Al cline, falling to 13 months compared to 20 months Compact initiatives are now under implementation lastyear and have changed the way the Bank does business. o Environmental issues are receiving increas- There is greater emphasis on quality, responsiveness, ing attention. Satisfactory ratings on "quality at en- and partnerships; on knowledge-sharing and client try" on environmental aspects of projects are ap- orientation; and on poverty reduction, as summa- proaching 100 percent. rized below: + Greater client focus is becoming evident. *i Operational quality has improved. "Quality cAss have improved in terms of client participation, at entry"-a measure of how well a project is de- more staff and managers are based in the field, signed and a key determinant of lending effective- and client surveys are beginning to show greater ness-continues to improve, as does the quality of understanding and support of the Bank's role in the Bank's existing loan portfolio and of Country development. I Assistance Strategies, with greater attention to selec- O The role of the "Knowledge Bank" is gaining tivity and a sharper focus on poverty prominence- Seventy-five percent of policymakers in 0 The level of Bank services has increased. To- a pilot survey used Bank research products, while tal loan commitments in the past two years have the newly merged World Bank Institute (wB, ex- been higher than in previous years, reflecting largely panded from the former Economic Development In- the huge needs following the global financial crises. stitute) is expanding its reach and effectiveness More economic and sector work has also been pre- through new technologies and the Internet. pared to support policy advice and project prepara- Despite progress, key challenges remain. Inevita- tion, as the Bank has tailored its nonlending services bly, gains have been slower than in the first year of to client needs through shorter and more focused the Compact, as lessons learned are consolidated. reports. Raising the quality of this work to ensure Moreover, the rapid, flexible, and continuous re- I greater impact is an important challenge going sponse of the Bank to shifting client demands is forward. creating pressures on the institution. Greater + Costs are lower and productivity has in- selectivity will be central to Bank efforts to con- creased. The average cost of preparing an operation tinue institutional renewal beyond the Strategic dropped to $270,000 from $330,000 last year, Compact period. SECTIONTHREE THEMATIC PRSPECrIVES AND DEVELOPMENT EFFECTIVENESS 135 pilot survey of 50 higher-level officials in devel- analysis of why severe crises arose in such oping and transition countries, about three circumstances and how recurrence can be fourths said they used Bank analytical reports prevented. This report points to the rapid and found them very useful and of high quality. escalation of short-term foreign currency The Bank has a unique role in undertaking debt, high debt-to-equity ratios in private firms, development research, because it serves the and increasingly risky loans for real-estate and development community worldwide, its stock market speculation. The crisis starkly researchers are in constant contact with illustrates the need for tighter financial regula- policymakers in the developing world, and tion and for supervision that proceeds in tan- it has access to incomparable data and long- dem with financial liberalization. This report term experience. suggests that, until such oversight can be well The Bank's most important research publica- implemented, short-term foreign debt be taxed tion, the World Development Report, in its Sep- domestically, creditor country authorities in- tember 1998 edition (WDR-1998/99), provided crease regulation of short-term outflows, inter- the institution's first comprehensive assessment national mechanisms facilitate debt workouts of the role of knowledge in development. The among private agents, and more reliable infor- WDR-1998/99 investigates how people and mation be compiled and published as early societies acquire and use knowledge-and warning indicators. why they sometimes fail to do so. Although Governments have relied not only on finan- some knowledge is expensive to generate, cial liberalization, but also on decentralization much technical knowledge is relatively easy and privatization as means to reduce their di- to transmit from industrial countries to the rect roles in productive economic activity. developing world. Education and free flows of However, decentralization and privatization information will be critical determinants of a in education have not always had the intended country's ability to benefit from knowledge results, as a recent multicountry impact assess- transfer efforts. ment shows. While opening education to the Foreign aid, well applied, can itself be a private sector increased enrollment, student channel for improving institutional capacity performance did not improve and the share of and transmission of knowledge. In the most the poor in enrollments dropped. Subsidies for recent Policy Research Report, Assessing Aid, poor families may be needed to prevent regres- the authors show that although aid projects sive outcomes from such reforms. On the other often embody technical knowledge, whether hand, privatization with voucher and fellowship that knowledge is adapted to the circumstances programs directed to the poor has increased and replicated elsewhere in the country de- secondary school enrollment for children of pends on the policy and institutional environ- poor families and, when specifically tailored, ment. The study also finds that financial aid is for girls. not effective in changing policy. Rather, aid is Impact assessment is one of several methods most effective in poor countries that already used to evaluate and improve the Bank's pro- have good policies and management, with aid grams and research. In an FY99 review, external activities tailored to country conditions. This experts appreciated the research quality and provocative study generated wide discussion; the studies' practical bases and policy relevance. many donor agencies are reassessing their But Bank research is as broad as its lending own performance and strategies in enhancing program, and reviewers have encouraged an opportunities and knowledge for reform in overall research agenda focused on the big recipient countries. issues facing the Bank, with some balance As noted earlier, many countries caught in between the need for technical rigor and for recent international financial crises had earlier applied, pragmatic research. reformed their fiscal and monetary policies Policy problems are many, and research re- and apparently had healthy economies. Global sources are few and declining. An important Economic Prospects 1999 is a comprehensive solution to the mounting demands for Bank 136 THE WORLD BANKANNUAL REPORT 1999 Pr,; A meeting of villagers in Mali: Civil society is fast becoming the single largest factor in development. policy analysis is to increase countries' capacity are fundamental to the Bank's strategic agenda to undertake research themselves. A Global and are increasingly recognized as indispensable Development Network initiative was launched to enhancing development effectiveness. In this year to improve analytical capacity in de- FY99, the Bank's Partnership Group strength- veloping countries, drawing on many years of ened a number of key institutional partnerships, Bank experience in fostering regional research including those with multilateral development networks in Africa, Asia, the Middle East, the banks, the OECD-DAC, and foundations. Partner- transition countries, and, in a more minor role, ships with multilateral development banks and in Latin America. The global initiative will other multilateral financial institutions have identify and support existing institutions with been strengthened through initiatives such as competitive funding of research, based on the regular meetings of the agencies' presidents needs of researchers in each region. The net- and the creation of joint working groups to works will strengthen links among researchers seek coherence and, where appropriate, harmo- in developing countries and from them to their nization of policies and practices. The Partner- counterparts in developed countries; open ship Group also undertook a series of interna- channels to articles and data; assist with data tional consultations on proposed actions for collection; offer training; and sponsor publica- the World Bank on Partnerships (see Box 2, tions and meetings. page 6). In FY99, the Bank continued work begun at Partnerships a roundtable in April 1998 to identify the risks Partnerships with external agencies, develop- associated with commodity price fluctuations ment organizations, and shareholder countries in developing countries. Participants had agreed SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 137 that current mechanisms, created in the 1970s Partnership work has been mainstreamed or- to help developing countries cope with com- ganizationally, and major partnership relation- modity price volatility (for example, price stabi- ships are now broadly based throughout the lization funds, buffer stocks, and commodity Bank. To oversee the mainstreaming process, a agreements), have had limited success. To ad- senior management Partnership Council has dress these issues and after extensive consulta- been established to track ongoing partnerships tions, the Bank took the lead in convening an and provide guidance to the staff. Working International Task Force on Commodity Risk with partners highlights the importance for Management in Developing Countries to ex- the Bank to use strategically the full range of plore new, market-based approaches to com- its instruments, including grant programs modity price risk management. Final recom- from its own resources (Box 3-6); project mendations of the task force will be discussed cofinancing; and the trust funds it administers at a roundtable to be held in fall 1999. for other donors. BOX 3-6 SUPPORTING PARTNERSHIPS AND INNOVATION THROUGH GRANT MAKING Grant making has become an important comple- vaccine research for poor areas most affected by the ment to the Bank's lending and advisory services. It epidemic supports innovation and cutting-edge approaches t the development of World Education Indicators and technologies, providing seed money for high-risk, (a joint OECD-UNESCO project), which is helping poor high pay-off pilot projects for which lending is inap- countries develop comparable data to measure edu- propriate. Through grants, the Bank leverages its fi- cational progress nancial and human resources as well as convening 4 the Solar Development Corporation, which power to combine forces with partner organizations seeks to accelerate private sector involvement in the in pursuit of shared regional and global objectives. distribution, retail, and financing of solar energy in In FY99, Bank grants helped catalyze close to $1 developing countries. billion for activities that it could not otherwise sup- Other DGF-supported programs are long-standing port through country-based loans or credits. Grants initiatives, tackling persistent challenges in the are also broadening the scope of regular Bank ser- fight against poverty, for which Bank financing |vices, helping provide a wider range of products has galvanized the participation of UN agencies, and services relevant to client needs and increasing bilateral and multilateral donors, NGOs, and the development effectiveness, private sector: The Development Grant Facility (DCF, established o the Onchocerciasis Control Programs (ocp/ in 1997 as a successor to the Special Grants Pro- Apoc), which have nearly eliminated the transmis- gram) has emerged as an effective mechanism for sion of river blindness in much of West Africa Bank grant making. In FY99, the DGF supported + the Institutional Development Fund, which 50 programs, for a total budget of $125 million, in provides small grants to assist capacity building in rural development, environment, health, education, developing countries economic policy, and private sector development. * the Consultative Group to Assist the Poorest, More than one fifth of these were new initiatives. A which is expanding the availability offinance to the new strategic approach to grant selection was intro- very poor duced during the year to ensure that grants reflect + the Consultative Group on International and reinforce both Bankwide and sectoral priorities Agricultural Research, which, according to a recent and strategies. external review, has been the single most effective use DGF-supported programs that promote innovation of official development assistance and cutting-edge approaches across a range of Bank o the Post-Conflict Fund, which is helping coun- sectors include: tries plan the transition from conflict to sustainable o the International AIDS Vaccine Initiative, peace and economic growth. which is stimulatingprivate investment in HIV 138 THEWORLD BANKANNUAL REPORT 1999 Partnerships with NGOs and civil society creasingly critical role in ensuring that Bank- Involving people in development activities supported projects are participatory in nature, that affect their lives is a top priority for the through both their own involvement and their Bank. Involvement is sought at all phases of the ability to reach out to other stakeholders- Bank's work-planning and design of projects, especially poor and excluded communities. implementation, and impact evaluation- In his proposal for a Comprehensive Devel- because participation improves the quality, opment Framework, President Wolfensohn effectiveness, and sustainability of development cites civil society as "probably the single largest activities. Nongovernmental organizations factor in development," given its size, experi- (NGOs) and other civil society groups play an in- ence, and history. The Bank has found that TABLE 3-5 PATTERNS IN WORLD BANK-NGO OPERATIONAL COLLABORATION, FISCAL YEARS 1987-99 Total 1987-96 1997 1998 1999 No. of No. of No. of No. of projects % projects % projects % projects % By Region Africa 733 36 49 61 59 54 62 61 East Asia and Pacific 424 22 37 32 45 51 54 43 South Asia 260 37 19 84 25 73 23 76 Europe and Central Asia 286 18 67 24 69 37 79 34 Latin America and the Caribbean 497 26 52 60 68 51 56 59 Middle East and North Africa 201 15 17 41 20 52 25 64 Total 2,401 28 241 47 286 50 299 52 By Sector Agriculture 476 46 45 82 47 74 39 72 Education 219 31 18 56 36 63 26 77 Electric power and energy 184 7 17 18 15 40 6 50 Environment 87 45 9 100 18 78 11 82 Finance 126 3 13 23 17 6 18 39 Health, nutrition, and population 157 65 15 60 24 79 22 82 ! Industry 90 27 5 40 2 33 7 14 Mining 24 17 2 50 4 100 2 50 Multisector 209 7 21 10 19 30 34 26 Oil and gas 56 27 5 20 2 0 1 0 Public sector management 168 8 20 5 28 24 36 19 Social sector 77 91 17 65 12 80 36 74 Telecommunications 38 0 0 0 3 0 1 100 ! Transportation 257 8 28 29. 27 71 28 46 Urban development 123 40 13 46 19 55 21 66 Water supply and sanitation 110 21 13 69 13 62 11 55 ! Total 2,401 28 241 47 286 50 299 52 Figures are based on a desk review of project appraisal documentsforprojects approved by the board at the end of thefiscal year. As such, they often reflect intended involvement of NGOs and community-based organizations, as well as actual participation in the project design. The extent to which intended or sustained involvement of NGOs actually occurs during later stages of the project is not yet known. Moreover, the quality of participation can vary considerably, ranging from quick consultative meetings to major responsibility for implementation and monitoring of project components. SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 139 engaging civil society groups in projects and areas or civil society involvement in planning policy dialogue improves design, implementa- the consultations. tion, and sustainability because when com- During FY99 the Bank renewed its efforts to munities and their representatives have direct support NGO and civil society participation by involvement in development activities, they reorganizing its Civil Society Thematic Team feel greater ownership of the results. (csrr) to include senior staff from all regions NGOS play an increasingly important role in and Networks, in addition to the NGO Unit. a variety of Bank activities; examples of NGO The team is responsible for monitoring Bank- involvement in Bank work can be found NGO interaction, identifying examples of best throughout the pages of this Annual Report. practice, strengthening Bank-NGO collaboration, As Table 3-5 illustrates, 52 percent of projects coordinating approaches to collaboration in approved included NGOs in some capacity, a sig- policy dialogue and operations, and improving nificant increase over the previous year. Involve- knowledge of NGOs and civil society by sharing ment is most common in project implementa- and disseminating experience. tion and planning but can include a range of Partnerships between civil society, govern- other activities (Figure 3-7). NGOs also played ment, and business are key to development a greater role in policy-related work, including effectiveness but are often difficult to manage economic and sector work and Country Assis- and sustain. To better understand the links be- tance Strategy preparation. Three quarters of tween civil society involvement and poverty re- cASs prepared in the second half of fiscal 1998 duction, the Bank launched a "Civil Society Ini- and fiscal 1999 included consultations with tiative" in FY99 that builds capacity among civil society and NGOs, and nearly half involved Bank staff for engagement with NGOs and other broad and substantial participation, including civil society groups. In addition, as the Bank in- a major outreach into rural or high-poverty creasingly decentralizes its operations, NGO and FIGURE 3-7 NGO INVOLVEMENTTHROUGHOUTTHE PROJECT CYCLE, FISCALYEAR 1999 (As a percentage of projects with NGO invo)vement) 80 60 40 20 0 140 THE WORLD BANK ANNUAL REPORT 1999 TABLE 3-6 TOTAL IBRD AND IDA LENDING AND COPINANCING OPERATIONS, FISCAL YEARS 1996-99 (amounts in millions of US. dollars) 1996 1997 1998 1999 Amount Amount Amount Amount Lending 21,352 19,147 28,594 28,994 Cofinancinga 8,301 7,671 9,705 11,350 Cofinancing/Lending (ratio) 38.9% 40.1% 33.9% 39.1% a. Based on cofinancing plans presented at the time of approval. Includes cofinancing with Bank loans, IDA credits, and Bank guarantees, and projects financed by Bank-managed trust funds. Civil Society Specialists in over 60 country of- tional Forum on Capacity Building, which fices have been appointed, to enhance interac- brings together NGOs, donors, and other agencies tion with local groups. to share experience and develop more effective The csTT works in cooperation with the capacity-building strategies and approaches. Bank's NGO Working Group, whose 26 NGO The Bank also provides funding for NGOS in members meet twice a year with senior Bank developing countries through its Small Grants management as part of the NGo-World Bank Program. During FY99, funding reached $1.8 Committee. The Working Group established a million-nearly double the FY98 level-and more decentralized structure in FY99 and now the program was further decentralized, making operates through six regional working groups 35 Resident Missions responsible for grant- that seek to broaden effective participation by making decisions. NGOs in dialogue with the Bank. During the year, the Working Group developed proposals Cofinancing and trust funds to strengthen its capacity to more consistently Cofinancing and trust funds provide flexible monitor NGO participation in Bank-supported financial instruments for the World Bank to policy and project work. A two-day Interna- engage in partnerships for a broad range of tional Conference on "Upscaling and Main- country-based, regional, and global develop- streaming Participation of Primary Stakeholders: ment programs. Lessons Learned and Ways Forward" in Novem- ber 1998 brought together more than 150 par- Trends in cofinancing ticipants from Northern and Southern NGOS, the Cofinancing refers to funding committed Bank, USAID, and other agencies. Recommenda- by an external official bilateral or multilateral tions included creation of incentives for Bank partner, an export credit agency, or a private and other institutions' staff, to encourage mean- source in the context of a specific Bank-funded ingful participation; minimum standards for project. In FY99, cofinancing amounted to consultation with stakeholders, to ensure qual- $11,350 million in 103 operations, an increase ity and expand transparency and accountability; of 17 percent over the previous year (see Table and efforts to ensure that stakeholder involve- 3-6, including note a). Official bilateral and ment begins at the policy development phase, multilateral partners continued. to be the largest so that policies and projects reflect the needs of source of cofinancing, providing 89 percent all stakeholders. (Table 3-7). The largest cofinancing partners During the year, the Bank and the NGO included the Inter-American Development Working Group helped initiate the Interna- Bank ($4,608 million); Japan ($2,018 million); SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 141 TABLE 3-7 WORLD BANK COFINANCING OPERATIONS BY REGION, BY FISCAL YEAR, FISCAL YEARS 1998-99a (amounts in millions of US. dollars) Source of cofinancing Private (of which Projects Export Total IBRD World Bank Total Re|ion cofinanced Officlalb credit private guarantees) contribution project Region and year No. Amount No. Amount No. Amount No. Amount No. Amount IBRD IDA costs Africa 1998 35 1,887 35 1,735 1 60 3 92 - - 57 1,873 8,166 1999 33 1,998 31 1,896 - - 4 102 (1) (35) - 1,682 5,406 East Asia and Pacific 1998 9 196 9 196 - - - - - - 89 339 834 M 1999 12 2,571 11 1,719 1 375 1 478 (1) (300) 2,483 100 6,126 Middle East and North Africa 1998 13 1,469 13 775 1 510 2 184 (1) (184) 285 155 2,854 1999 12 937 12 927 - - 1 10 - - 840 25 2,048 Latin America and the Caribbean 1998 21 1,710 21 1,026 1 291 1 394 - - 1,001 244 5,294 1999 14 5341 13 5,026 - - 1 315 - - 3,812 153 9,572 Europe and Central Asia 1998 33 1,647 33 1,647 - - 2 - - - 1,606 259 4,001 1999 27 234 25 223 - - 3 11 - - 269 222 888 South Asia 1998 13 2,795 13 2,235 - - 1 560 - - 840 1,431 18,155 1999 5 268 5 268 - - - - - - 210 370 1,279 Total 1998 124 9,705 124 7,614 3 861 9 1,230 (1) (184) 3,878 4,301 39,303 1999 103 11,350 97 10,059 1 375 10 916 (2) (335) 7,614 2,552 25,319 I -Zero. Note: The number of operations shown under different sources add up to a figure exceeding the total number of cofinanced projects because a numberofprojects were cofinancedfrom more than one source Cofinancingdata are reported by thefiscal year in which the project is presented to the Bank's Executive Board. Numbers may not add to totals because of rounding. a. Cofinancing figures represent planned cofinancing at the time of Bank approval of each operation. The official cofinancing amounts shown, in most cases, are firm commitments at this stage; export credits and private cofinancing, however, are generaUy only estimates, to be finmed up during project implementation. b. These figures include cojinancing with untied loans from the Export-Import Bank of Japan. European Union institutions ($491 million); Highlights for the year include: the African Development Bank ($473 million); * Asian crisis response. The Bank has been and the United Kingdom ($323 million). collaborating closely with donors to deal with With regard to regional distribution (Figure the Asian financial crisis, most notably with 3-8), cofinancing in the East Asia and Pacific Japan in the context of the "New Miyazawa Region and the Latin America and Caribbean Initiative" announced by the Japanese govern- Region increased in the past year, reflecting ment in October 1998. Under this initiative, large commitments for countries affected by Japan stands ready to provide a package of the financial crisis (Argentina, Brazil, Indonesia, support measures totaling $30 billion, of which Philippines, and Thailand). By sector, cofi- $15 billion will be made available for the nancing was concentrated in macroeconomic medium- to long-term financial needs for and financial sector reform and social protection economic recovery in Asian countries, through operations, generally involving official partners, financial assistance from the Export-Import and in electric power, which attracted private Bank of Japan (JEXIM) and the Overseas Eco- cofinancing partners as well. nomic Cooperation Fund (OECF). To date, 142 THEWORLD BANKANNUAL REPORT 1999 JEXIM and the OECF have provided cofinancing tions for the current phase (SPA-4, 1997-99). of $1.55 billion to four programs to support Looking toward sPA-5, the partnership com- economic and financial adjustment in Thailand, pleted a review, including an independent policy reform and social safety net adjustment evaluation, to explore how it might adapt the in Indonesia, and banking and sector restructur- SPA framework and modalities in response to ing in the Philippines. changes in African needs that have occurred * Special Program of Assistance for Africa. The since the partnership was launched. The donors Special Program of Assistance for Africa (SPA) is affirmed the importance of the SPA mechanism. considered the major coordinating instrument They agreed to continue their focus on support for aid to Africa, having mobilized more than for reforms but also concluded that high-quality $15 billion in donor resources, in aggregate, sectoral programs constitute an important in- since 1987 to support eligible countries' eco- strument for enhancing aid effectiveness. A nomic reform programs, over and above about working group is pursuing technical work in $13 billion from the Bank and the Fund. About two areas: monitoring donor support for sector $5 billion in highly concessional, quick-disburs- programs and moving to a fiscal framework for ing cofinancing and coordinated assistance was financing gap calculations. pledged by SPA donors and supporting institu- FIGURE 3-8 COFINANCING BY REGION, FISCALYEARS 1998-99 (millions of U.S. dollars) 6,000 1998 1999 5,000 4,000 3,000 2,000 1,000 0 . 4ˇ~~~~~~~~~~~~~~~~~~A SECIOTRETEMTIPRSDS SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 143 Trends in trust funds million), the Central America Emergency Trust Trust fund resources continued to make im- Fund ($109 million), and activities in Bosnia portant contributions to the Bank's develop- and Herzegovina ($50 million). The main exter- ment and partnership agenda during FY99. nal donors to the Trust Fund Program during Trust funds enable the Bank, along with bilat- FY99 were the Netherlands ($221 million), eral and multilateral donors, to mobilize grant Japan ($199 million), the United States ($94 funding to cofinance investment operations, million), the United Kingdom ($87 million), debt relief, emergency reconstruction, and tech- and Sweden ($74 million). Support continued nical assistance. (Refer to Figure 3-9, including for trust funds providing financial and social note a, for aggregate financial information on advisory services to East Asian crisis countries. the trust fund portfolio.) European donors and Japan financed more During FY99 trust fund disbursements in- than 89 activities, for $58 million, to help meet creased by 17 percent, to $1,333 million. Table urgent technical assistance and advisory services 3-8 provides disbursement data for major pro- needs. In FY99, the Netherlands and Japan grams in the trust fund portfolio. During the negotiated new framework and partnership fiscal year, total contributions to trust funds agreements with the Bank. Under the new increased by 2 percent to $1,568 million. Con- Bank-Netherlands Partnership Program, replen- tributions from external donors increased by ishments for ongoing programs and funding 19 percent to $1,368 million. Contributions for new programs are reviewed jointly each from the Bank Group declined from $391 year to ensure alignment of strategic priorities million during FY98 to $200 million during in allocating funds. During FY98, the program FY99, including IBRD'S pledge of $100 million supported the environment, mainstreaming of to the Heavily Indebted Poor Countries (HiPc) poverty reduction, gender issues, promotion of Trust Fund. good governance, and joint activities with U.N. The increase in external contributions reflects agencies, in addition to continued funding for donor funding of the HIPC Trust Fund ($229 FIGURE 3-9 TRUST FUND CONTRIBUTIONSAND DISBURSEMENTS, FISCAL YEARS 1 995_99a (millions of US. dollors) External donor contributions 2,000 Bank Group contributions 500Total disbursements 1,5000 1,000 __ 500 0 1995 1996 1997 1998 1999 a. The finonciol information presented for the trust fund portfolio reflects reporting on on accrual bosis for contributions to the Heovily Indebted Poor Countries Trust Fund, and reporting on a cosh bosis for contributions to all other trust funds. Disbursements for all trust funds (including the Heovily Indebted Poor Countries Trust Fund) are reported on a cash basis. 144 THE WORLD BANKANNUALREPORT1999 TABLE 3-8 TRUST FUND DISBURSEMENTS, FISCAL YEARS 1998*992 (amounts in millions of US. dollars) j ~~~~~~~~~~~~~~~~~~1998 1999 Trust funds for multidonor special programs Highly Indebted Poor Countries (Nlpc) 0.0 150.8 Global Environment Facilty (GEF) 184.4 269.5 West Bank and Gaza 75.0 49.7 I Bosnia and Herzegovina 65.8 54.6 Montreal Protocol/Ozone 60.7 50.5 Onchocerciasis Control (ONCHO) 33.4 21.7 Central America Emergency N/A 82.3 Brazilian Rain Forest 16.1 14.3 Other trust fund programs Policy and Human Resources Development (PHRD) Fundb 147.9 134.3 Consultant Trust Fund Program' 74.4 72.3 Institutional Development Fund 20.2 17.7 Other trust fundsd 457.7 415.7 a Trustfund disbursements are reported on a cash basis. Amounts shown for FY99 include a payment in the form of a promissory note for the HiPc Trust Fund. b. These figures exclude the portion of PHRD that is allocated to Japanese Consultant Trust Funds (FY98: $9.2 million, FY99: $12.1 million). c. These figures include Japanese Consultant Trust Funds, as explained in Note b. d. This category includes smaller programs and single-purpose trst funds that finance debt reduction, cofinancing, technical assistance, and other advisory services. Bosnia and Herzegovina, debt reduction, and countries in East Asia carry out activities in the Onchocerciasis Control Program. connection with corporate debt restructuring, Policy and Human Resources Development financial sector reforms, social safety net Fund. FY99 also saw some important changes strengthening, and credit crunch issues. This in Japan's Policy and Human Resources Devel- program follows on Japan's earlier support opment (PHRD) Fund. These changes sought for the Financial Sector Advisory Services Pro- to further improve the accountability and gram. The second new program is designed to monitoring of PHRD-financed activities. A spe- strengthen the partnership between Japan and cial monitoring unit is being established at the the Bank to promote development. The PHRD Bank to intensify supervision, oversight, and Fund also continued to support technical assis- accountability of grant activities. The Bank has tance for project preparation and capacity also established a program to enhance the ac- building for implementation, the Japan Con- cessibility of information on PHRD within Japan, sultant Trust Fund, the Japan Post-Conflict including expanded information on the Bank's Fund, training and research at the World Bank web page. Institute, and scholarships for graduate students Japan contributed $146 million equivalent from Bank member countries. to PHRD in FY99, about 1 percent below last The Consultant Trust Fund Program. The year's contribution. PHRD funded two major Consultant Trust Fund (CTF) Program continued new initiatives during the year. The first, a to finance a range of Bank operational activities, special allocation of $15 million from PHRD including those of special interest to the devel- for technical assistance activities to support opment community, in areas such as the envi- the Miyazawa Initiative, aims to help crisis ronment, gender, governance, and participation. SECTION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 145 During the year, a new Consultant Trust Fund on Trust Fund Administration has been issued, was established with the French Ministry of Fi- and new training programs for operational task nance, Economy, and Industry, and agreement teams have started. was reached with Germany to establish a Ger- Finally, to deal with the introduction of the man Consultant Trust Fund. Among the special Euro currency on January 1, 1999, the Bank- contributions received under existing CTFS was after consulting with donors-adopted a gradual a $1 million contribution from Spain for the approach for redenomination of the relevant Post-Hurricane Mitch Reconstruction and Re- trust funds, while consolidating trust fund bal- habilitation of Central America and a $4 million ances as of that date for investment purposes. commitment from Finland to fund seconded The Bank preserved the ability to maintain bal- experts. The CTF program helps to broaden the ance accounts in national currencies according pool of expertise on which the Bank draws to to the wishes of some donors. support economic and sector studies, policy- oriented studies, project appraisal, supervision Knowledge building through World Bank and evaluation, and advisory services to client Institute countries. The World Bank Institute (WBI) supports the HIPC Trust Fund. Implementation of the Bank's poverty-reduction lending activities by HIPC Initiative gained momentum in FY99, with disseminating knowledge and experiences on HIPC Trust Fund disbursements increasing to the types of economic policy frameworks and $151 million during the fiscal year. During institutional set-ups clients need if they are to FY99, the HIPC Trust Fund received $329 mil- effectively reduce poverty. It does so through a lion in contributions. To date, the HIPC Trust combination of learning activities, structured Fund has received $1,233 million in contribu- dialogue with policymakers, researchers, and tions from bilateral and multilateral donors, in- civil society organizations, and support for net- cluding the Bank Group. works of practitioners in poverty reduction. Cofinancing and trust fund management. A In FY99, WBI'S work was heavily influenced by number of regular activities are strengthening two initiatives. First, the merger of the Eco- cooperation with cofinancing partners. During nomic Development Institute (responsible for FY99, new cofinancing framework agreements providing client learning activities) with the were finalized with Denmark and Italy. Seven- Learning and Leadership Center (responsible teen consultations were held with donors, cov- for staff learning activities) provided opportuni- ering a wide agenda-including the Bank's re- ties to exploit more fully the synergies between sponse to the Asian and Central American internal and external learning. The Bank is now crises, implementation of the Strategic Com- close to achieving its objective of having an in- pact, and the expanded partnership agenda, in- tegrated learning program on poverty reduction cluding the Comprehensive Development that makes the best knowledge available to Framework. A new cofinancing web site under Bank staff and professionals in client countries. preparation during FY99 will provide informa- Second, the Institute has taken the leadership in tion on the cofinancing process, statistics, donor coordinating a process of consultations with policies and procedures, and cofinancing oppor- civil society and researchers from around the tunities within the Bank. world on the WDIR-2000/01, which will exam- The Bank continued to strengthen trust fund ine poverty. These consultations not only are oversight, mainstreaming trust fund activities in providing valuable input for the WDR but are its regular work programming, budgeting, and promoting broad-based regional forums and evaluation processes, with improved transpar- dialogue on poverty reduction while strengthen- ency and accountability. A new formal monitor- ing poverty networks around the world. ing and evaluation system for trust fund activi- Noteworthy contributions of WBI in FY99, ties was launched in FY99. Also, to improve some begun in recent years, included: trust funds management, a report summarizing * support for building anticorruption strate- lessons learned as well as expanded guidelines gies. The Bank's support to client efforts to 146 THE WORLD BANK ANNUAI REPORr 1999 implement anticorruption strategies continued tor regulation and supervision, while providing to grow in FY99 as countries requested assis- an international forum for them to exchange tance to make anticorruption an integral part practical experience of strengthening financial of their development framework and poverty- markets. reduction efforts. WBI'S good governance pro- * promoting learning on clean air issues. The grams helped countries such as Bolivia, Chile, Clean Air Initiative for Latin American Cities Ethiopia, Mauritius, Nicaragua, Uganda, and is a joint program of war and the LAC Region, Ukraine undertake in-depth analysis of the insti- under which leaders from local and central tutional factors behind corrupt practices and government agencies, NGOs, research and aca- behavior, understand policy and institutional demic institutions, donor agencies, and the shortcomings, and, with the participation of international private sector have joined forces stakeholder groups, design strategies to improve to improve air quality in Latin American cities. governance. The unique program is raising awareness about * training for financial sector supervision. the impact of air pollution on health and pro- The Toronto International Leadership Centre ductivity in the region and on global climate for Financial Sector Supervision-launched change. It supports Latin American cities in by the World Bank Group and the government finding concrete ways to reduce urban air pollu- of Canada, together with the IMF and other tion through international loans and private sec- partners-offers training for senior public sector tor investments. executives with responsibility for financial sec- FIGURE 3-10 IBRD/IDA INCOMEAND EXPENDITUREATA GLANCE,FISCALYEAR 1999 Total $10,646 million Where the money comes from Commitment charges - BRD, % Other income - IBRD,a 2% Income from Investments - IDA 4% Income from development credits 6% Income from investments -BRD, I 6% ncome from loans - IBRD. 71% Where the money goes Net management fee - DA, 4% b - Other expenses, 4° Administracive expenses - ERD, 8% Changes fromn operat ens - DA, 6% (operatsng surplus) Net income - IBRD,i 4%° ' Borrowing expenses - BRD. 64% a. Other income -IBRD includes a net effect of $249 mill/on from the Stoff Retirement Plon and other Post-retirement Benefits occounts. b. Other expenses include a loon loss provision of $246 million c. Including income from pension investment SEC'FION THREE THEMATIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 147 Administrative budget proved by the executive directors in April The executive directors approved a total 1998. Significant progress has been made on administrative budget of $1,461.5 million the Bank's employment policy, compensation (Appendix 5) to carry out the Bank's FY99 system, and staff and managers' development. work program, which includes implementation The conflict resolution system has also been of Strategic Compact initiatives. The budget re- reformed. flected a decrease of 1.0 percent in real terms over the prior year. The net administrative Employment policy budget, which takes into account reimburse- A new employment framework went into ments and fee revenues that offset the cost of effect July 1, 1998, requiring all new appoint- programs not funded by the regular budget, ments, worldwide, to be either term or open- amounted to $1,256.1 million, a reduction of ended, and launching the 30-month "Non- 1.1 percent in real terms from FY98. The de- Regular" Staff Phaseout, a category for new crease reflected the impact of a moratorium hires that is being retired. The changes reflect on Bank contributions to the Retired Staff greater emphasis on consistency and equity in Benefits Plan, as approved by the Pension Fi- the application of human resource policy. nance Committee. Other efforts supporting Strategic Compact The FY99 budget-the second budget under priorities included completion of a Bank- the Strategic Compact-displayed a clear rela- wide strategic staff planning exercise and the tionship between the Bank's resource allocation mainstreaming of diversity, increasingly recog- and its business priorities, and was designed to nized as a business imperative. enhance service to clients and effectiveness in fighting poverty. The budget also demonstrated Compensation policy a Bank on the move: it showed that the Strate- After extensive consultations with managers gic Compact and the related processes of inter- and staff, in December 1998 the board unani- nal renewal were beginning to show results- mously approved a new compensation system with improvements in quality, quantity, and for the Bank Group. The new system will better responsiveness of services to clients. Figure align the Bank's salary structure to the market, 3-1 0 shows IBRD and IDA income and expendi- strengthen the links between pay and perfor- ture in FY99. mance, and yield significant budgetary savings. As part of the year's budget, the executive In FY99, the Bank also accelerated the "global directors approved additional resources of up grading" project aimed at putting staff in field to $25 million for the Financial Sector Rein- offices into the same grade structure as those at forcement Program. Under this program, the headquarters. The global grading project will be Bank is responding to the global financial crisis completed in 2002. Effective September 1, through technical assistance, policy reform, and 1998, field staff also began to benefit from a additional lending, in an effort to restore inves- new medical benefits plan available to national tor confidence, promote rapid economic recov- staff and their families. ery, and mitigate the effects of the crisis on vul- nerable groups. Staff development In June 1999, the executive directors ap- Good progress has been made in management proved a total administrative budget of and staff development, with particular emphasis $1,445.1 million for FY00, to implement the on professional training needs. New programs Bank's work program for the final year of the are being implemented to meet the special Strategic Compact. needs of national staff in field offices. These include a comprehensive training and orienta- Human resources tion, conducted through field offices and "hubs," As part of the Strategic Compact, the Bank to ensure that national staff receive the same undertook a comprehensive reform of human breadth and depth of information about key resources policies and systems, that was ap- Bank policies and processes as headquarters 148 THE WORLDBANKANNUALREPORT1999 staff. Other staff development initiatives in- including representatives from IBRD, IDA, IFC, and clude a revised approach to performance man- MIGA, as well as the chair of the Staff Associa- agement, with strong emphasis on results and tion-was to develop the best and most cost- behaviors relevant to organizational and culture effective conflict resolution system possible to change; and a comprehensive and coherent ap- meet the Bank's human, cultural, and business proach to leadership development, including a needs. The board's Personnel Committee en- systematic process of assessing the performance dorsed the new Conflict Resolution System and potential of managers, and a range of pro- on January 27, 1999. The changes focus on grams to develop leadership capacity. cost-effective prevention and informal, nonadversarial channels more likely to result Grievance process review in resolution in the earlier stages of a conflict, The Grievance Process Review Committee, reserving adjudication as a last resort. The new set up in June 1998 to bring the conflict resolu- Conflict Resolution System is being phased in tion system in line with Strategic Compact under the general direction of the newly estab- goals, completed its work at the end of Decem- lished Conflict Resolution Network. ber 1998. The mandate of the committee- SECTION THREE THEMATIIC PERSPECTIVES AND DEVELOPMENT EFFECTIVENESS 149 SECTION FOUR WORLD BANK FINANCES IBRD financial highlights status with an aggregate prin- ment among donors every Highlights of the IBRD's finan- cipal balance outstanding of three years. FY99 was the cial performance in the fiscal $2,053 million representing third year of the Eleventh year ended June 30, 1999, are 2 percent of the total IBRD Replenishment of IDA (IDA-I 1), these: outstanding loan portfolio. which was designed to provide . net income of $1,518 mil- In July 1998, the Board of IDA with resources to fund lion Executive Directors allocated credits committed during the * new loan commitments to $750 million of net income period July 1, 1996, to June member countries of $22,182 earned in the fiscal year ended 30, 1999 (Box 4-1). million June 30, 1998, to the General IDA- I resources. At the end * loan disbursements to Reserve and $182 million to of FY99, total commitment member countries of $18,205 the pension reserve. authority for IDA-l I was million The Board of Governors SDR 14.5 billion, including . outstanding borrowings agreed at the October 1998 the Interim Trust Fund (ITF) at fiscal year end of $118,631 Annual Meetings to approve administered by IDA. The ITF million, after swaps transfers out of FY98 was established by all IDA do- * average cost of all bor- unallocated Net Income and nors, except the United States, rowings, after swaps, of 5.92 Surplus as follows: to fund operations while the percent * SDR equivalent of $352 United States became current * an equity capital-to-loans million ($210 million from on IDA-I0. The commitment ratio of 20.65 percent unallocated net income and authority for IDA-II comprised * strong demand for single $142 million from surplus) SDR 4.6 billion from IDA-l l currency loans as borrowers as a grant to IDA; to be drawn donor contributions, SDR 2.1 selected LIBOR-based single down after donor contribu- billion from ITF donor contri- currency loan terms for tions available to IDA for butions, SDR 1.3 billion from $15,790 million and fixed-rate purposes of the Eleventh the unreleased portion of con- single currency loan terms for Replenishment have been tributions carried over from $5,925 million drawn down; and the IDA-1O period, SDR 0.1 * completion of the program * $100 million to the billion from special contribu- of currency choice offered to Heavily Indebted Poor tions from Brazil, Denmark, borrowers with multicurrency Countries Debt Initiative and Korea, and SDR 6.4 pool loans for which the invi- Trust Fund. billion from RITO resources- tation to negotiate was issued Further information about mostly comprising advanced prior to September 1, 1996, IBRD's financial policies and commitment authority from resulting in total conversions results of operations is con- expected repayments of past of $21,115 million of undis- tained in the Management's IDA credits and IBRD net in- bursed multicurrency pool Discussion and Analysis sec- come transfers. loans to single-currency loan tion preceding the financial IDA resources and uses in terms and $48,549 million of statements. FY99. During FY99, available disbursed and undisbursed IDA- II resources totaled multicurrency pool loans to IDA finances SDR 5,693 million. Donor single-currency pool terms IDA 's commitment authority. funds amounted to SDR 4,377 * loan loss provisions IDA is funded by donor con- million, which consisted of maintained at a level equal tributions, which are made SDR 18 million from IDA- 10 to 3 percent of total loans dis- available in annual tranches, donor resources, SDR 4,003 bursed and outstanding plus and RITO resources (Reflows, million from IDA-l l donor the present value of callable Investment Income, IBRD resources, and SDR 356 million guarantees. At the end of the Net Transfers, and Other re- from ITF donor resources. In year, there were eight coun- sources). Donor contributions addition, SDR 150 million tries with loans in nonaccrual are "replenished" by an agree- was received from Brazil, 152 THEWORLD BANKANNUAL REPORT 1999 BOX 4-1 HIHIHSFROM IDA-11-~- IDA-l l (FY97-FY99), ending this fiscal *. follow-up to national environmental year, witnessed the following initiatives and action plans or strategies through environ- efforts: mental management and other projects *>* strengthened performance assessments *-. continued improvements in the IDA as a basis for IDA resource allocations portfolio, with the percentage of projects I *>. improved poverty monitoring and analy- "at risk" falling from 32 percent at end- sis, and integration of the results into CASS FY96 to 20 percent at end-FY99, including and project design significant turnaround in the portfolios of *> greater attention to the role of gover- several African and South Asian countries. nance in development, with more focus on Total commitments under IDA-l l reached this issue in CASs and a growing number of, SDR 13.9 billion shared across regions as fol- projects (together with economic and sector lows: AFR SDR 4.9 billion, SAS SDR 4.2 billion, work and policy dialogue) focusing on civil EAP SDR 1.9 billion, ECA SDR 1.6 billion, service reform LAC SDR 0.8 billion, and MNA SDR 0.6 billion. 4 broader participation and consultations Investment lending represented 79 percent in preparing CASs and projects and growing of total commitments. Disbursements use of social and beneficiary assessments reached $17.6 billion, distributed across .. a large share for the social sectors in the sectors as follows: social sectors 30 percent, IDA-l I portfolio, and strong disbursement agriculture and rural development 18 per- performance cent, infrastructure 24 percent, industry and *" continued strong support for private sec- finance 5 percent, economy-wide 23 percent. tor development, including mnicrofinance and Disbursements for investment projects in small and medium enterprise development, the social sectors reached $5.2 billion, an I and a pilot program for IDA guarantees increase of 49 percent over the IDA-10 level. Denmark, and Korea, as special contributions to resources (SDR 266 million), special contribu- IDA, and SDR 1,166 million was made available tions to IDA [SDR 150 million), and IDA-IO donor from RITO resources, including the transfer of resources (SDR 18 million). Thus, at the end of SDR 225 million from FY98 IBRD net income FY99, there remained an uncommitted balance and SDR 941 million of commitment authority of SDR 566 million. against repayments and other income. IDA's commitment fee. For each fiscal year, the Against the resources available in FY99, IDA level of commitment fee is set by executive di- made commitments of SDR 5,127 million, in- rectors based on an annual review of IDA'S finan- cluding a partial risk guarantee for $30 million cial position. The commitment fee for Fiscal (SDR 23 million). Total FY99 commitments were 2000 was set at 0 percent for all IDA credits. funded by IDA-1I donor resources (SDR 3,912 IDA'S commitment fee was 0 percent from FY89 million), RITO resources (SDR 781 million), ITF through FY99. SECTION FOUR WORLD BANK FINANCES 153 K SUMMARIES OF PROJEcTrS APPROVED FOR IBRD, IDA, IDA INTrERIM 'TRUSTI FUJND, AND 1tRUST I FUND FOR GAZA AND TIHE WESTr BANK ASSISTIANCE IN FISCAL 1999 The following section contains projects approved by the board in fiscal year 1999. Projects are listed according to their primary sector classification. Lendinig totals obtained by adding op loan amounts tor projects listed correspond to original, not reclassified, sector data (see Table 1, p. 10). § denotes projects included in the Program of'fargeted Interven- tions (PrT). A project is included in the hir if it has a specific mechanism for targeting the poor and/or if the proportion ot poor people among its beneficiaries is signiifiicantly larger than the proportion of poor in the total population. t denotes adjustment operations categorized as poverty-focused. An operation is considered poverty-focused if it eliminates dis- tortions that disadvantage the poor, reorients public expendi- tures toward the poor, and/or supports programs that provide safety nets or target specific groups of the poor. 0 denotes projects in which NG-,Os have a marked involvement in activities ranging fronm project design to mtonitoring and evalua- tion of results. AGRICULTURE 9 Albanlia IDA---$24 million. This project will establish sustainable and equitable use of irrigation and wvater for agricultural production so as to reduce the risk of floods. It will also help the government take the first steps toward establishing an institutional framework for dam safety. Total cost: $41 million. Armenia II:)A-$26.6 million. The project aims at protecting the population and the socioeconomic infrastructure downstream of the dams at highest risk of failure. It constitutes a five-year effort to improve the safety of 20 pri- ority dams and establish an effective system for monitoring the safety of all dams in Armenia. Total cost: $30 million. § Azerbaijan IDsA--$30 million. The project will establish an interim, short-term agri- cultural lending program and a new privately funded and operated rural agricultural finance system. 'T'he credit is the first of three adaptable pro- gram credits, totaling $10() million, to be implemented over a 10-year period. Total cost: $34 million. 9 Bangladesh iL)A---$45 million. This supplemental credit to the River Banik Protection Project will finalnce the repair and reconstruction of physical facilities and replacement of equipment damaged by the 1998 floods in Bangladesh.'lotal cost: $192 million. 9 Banlgladesh LDA--$16.5 million. Cyclonie protection, improved agricultural produc- tion, and the introduction of improved technology and methods of em- banlkment imainiteniance will be achieved through the rehabilitation of 12 sea-facing embankments and afforestationi of enmbankment slopes. 'Total cost: $97.6 million. SI:I,MARI:S OF PRiJkuc Is ARPROVLD 155 0 Brazil irRD-$44 million. This project will increase competitiveness and pro- ductivity in Brazil's agricultural and livestock sectors by controlling the incidence of animal and plant disease, strengthening monitoring and sur- veillance systems, reorienting the public sector role, and increasing pri- vate sector participation in animal and plant health protection services. Total cost: $88 million. t Bulgaria irRD-$7i.8 million. The loan will support rapid development of a more efficient and responsive agricultural sector. It will provide balance of pay- ments support conditioned upon an extensive program of policy reform to develop a competitive, market-based agricultural sector. Total cost: $76 million. 0 § Burkina Faso IDA-$5.2 million. Small and poor rural farming families constitute more than 70 percent of the beneficiaries of this operation to build capacity for widespread adoption of simple, loxv-cost technologies for small- and medium-scale irrigation and complementary commercial activities. Total cost: S7 million. 0 § Cameroon IDA-$ 5. 1 million. An estimated 30 percent of farmers in each of Cameroon's 10 provinces will benefit from improved agricultural pro- ductivity and incomes through an integrated, farmer-oriented agricultural extension system and a demand-driven research system. Total cost: $46 million. § China oRD-$9S0 million; IDA-S30 million. Besides half a m-iillion indirect beneficiaries, more than 250,000 poor families in the Anning Valley will directly benefit from increased income and living standards and produc- tivity through efforts to raise productivity of marginal land through bet- ter irrigation, crop varieties, and extension. Total cost: $239 million. China IBRD--$80 million; II)A-$20 million. Improved irrigation systems in the Guanzhong Plain of Shanghai Province will raise agricultural production, of grains in particular, and incomes of farming communities as a result of this project. Total cost: $200 million. China IBR1-$40 million; IDA-$40 million. About 2.5 million people affected by the disastrous floods in China will benefit from the reconstruction and rehabilitation of basic services such as water systems, township hos- pitals, health centers, schools, and rural roads. Total cost: $132 million. 0 § China IBRI-$60 million; IDA-$ 100 million. About 1.7 million people in remote and inaccessible villages in the Inner .Mongolia Autonomous Region, Gansu, and Qinghai with annual incomes between S25 and $60 wvill benefit from significant health, education, employment, and farming improvements. Total cost: $31 1 million. 0 § C6te d'Ivoire IDA-$50 million. The entire farming population, particularly smallholders, will benefit from this adaptable program loan, which will establish a responsive and cost-effective agricultural research and exten- sion system and support farmers' organizations. Total cost: $202 million. 0 § Egypt ID,A-25 million. An estimated 3.1 million rural poor, particularly unem- ployed youth and women, will have access to sustainable basic economic and social services in the Sohag Governate through this participatory ap- proach to rural development. Total cost: S93 million. 15 6 THE WoRID BANK ANM;Al RL}ORI 1999 § Egypt IBRD-$120 million. About 700,000 rural smallholders will avoid losses in crop yields and farm incomes through efforts to improve efficiency in operations and maintenance of pumping stations, enhance reliability of irrigation water delivery, and strengthen ministry capacity to ensure a sustainable irrigation and drainage system. Total cost: $252 million. Egypt IBRD-$225 million; IDA-$75 million. This project supports government efforts to encourage broad-based private sector-led growth by strength- ening the financial and institutional viability of the Principal Bank for Development and Agricultural Credit and promoting rural economic development, creating increased income and employment. Total cost: $479.06 million. 0 § Guatemala IBRD-$23 million. About 7,500 poor rural families will benefit from in- creased access to land, improved efficiency of land markets, technical as- sistance, training, and complementary investments to operate more effi- ciently. Total cost: $23 million. 0 § Guinea IDA.-$22 million. An estimated 1 .4 million people, particularly women and youth, will benefit from this adaptable program credit that supports Phase I of the government's strategy to strengthen local governance in rural Guinea and promote social and economic empowerment of the population. Total cost: $38.7 million. 0 § India IDA-$194.1 million. About 375,000 farm families in 1 0 districts of Uttar Pradesh will benefit from reclaimed barren and low-yielding crop lands and higher incomes by increasing crop yields and intensity in the most needed areas. Total cost: $287 million. 0 § India IBRD-$85 million; IDA-$50 million. More than 1 million people in the Shivalik areas, mostly women, will benefit from efforts to raise agricul- tural productivity by improving management of scarce land and water resources and to arrest environmental decline. Total cost: $193 million. 0 Indonesia IBRD-$300 million. Balance of payments assistance will be provided to Indonesia to support a structural adjustment program of policy, institu- tional, regulatory, legal, and organizational reforms in the management of water resources and the irrigation sector. Total cost: $300 million. 0 Kyrgyz Republic IDA-$10 million. An estimated 38,0 00 of the rural population will ben- efit from rehabilitated and reconstructed flood protection infrastructure along rivers and major irrigation infrastructure in flood-damaged areas of Jalal-Abad and Osh oblasts. Total cost: $14 million. 0 § Kyrgyz Republic iDA-$1 5 million. This project is designed to develop a sustainable rural financial system, contribute to poverty reduction in rural areas, and expand access to credit for people with limited collateral. Total cost: $23 million. 0 § Latvia IBRD-S10.5 million. The first of a two-phase adaptable loan, this project supports a 1 0-year National Rural Development Program to develop a sustainable rural finance system, foster economic growth, and generate employment to benefit small farmers and small entrepreneurs. Total cost: $19 million. SUMNIARIFS OF PROJECTs APPROVED 157 0 § Mexico TBRD---$444.4 million. This project will increase capitalization and im- prove productivity and income of an estimated 240 `000 small commer- cial farmers by promoting the adoption of a sustainable agricultuiral pro- duction system through an innovative, demand-driven matching grant program, jointlv funded and administered by the federal and state gov- ernments. Total cost: $S55 million. 0 § Morocco IBRD-S4 million. This pilot project will help more than 30 ,000 rural in- habitants in mountainous areas improve living conditions and incomes through a participatory approach to land use and natural resource man- agement. Total cost: $5 million. 0 Morocco IBRD-$: million, This pilot project will improve fish product quality, upgrade landing infrastructures, consolidate dialogue with local industry, and strengthen ministry capacity to manage and develop the fishing sec- tor, benefiting a local population of 40,000 (mostly fishermen). Total cost: $12 mill,onn 0 § Mozambique bDA--S30 millioni An estimated 3 million smallholder subsistence farm- ers\ will benefit from this adaptable lending credit, which will improve food security and reduce poverty by supporting institutional reforms in the Ministry of Agriculture and Fisheries to enhance the efficiency of public expenditures and create sustainable and equitablc growth. Total cost: $656.5 million. 0 § Nicaragua IDIA---- $9 million, This project supports reforestation and land rehahilita- tion activities in areas most affected by Hurricane Mitch through en- hancing forestry management, improving the husiness environment, redticing thc perception of risk in forestry sector activities, and defining forestry institutional policies and reforms through a participatory pro- cess. Total cost: SI 5 million. 0 § Philippines iBRDa--$] 50 million. The rural economy will be bolstered and poverty alleviated through provision of mediunm-term credit facilities to about /00 subprojects; financial and institutional support to the country's microfinance system; and reinforcement of participating financial institu- tions. Total cost: $216 million. § Poland IBRD $1 5.9 million. About 1.5 million consumers in the Gdansk- Gdynia-Sopot metropolitan area will benefit from the construction of a commercially self-sustaining urban wholesale market, complete with attendant physical infrastructutre. Total cost: S23 million. Polan(i ii3R)---$S1 1.] million. A large proportion of the 500,000 ILublin metropolitan-area residents wvill benefit from the construction of a commercially self-sustaining urban wholesale market, complete with attendant physical infrastructure. Total cost: $19 million. 0 § Senegal i[)A -$27.4 million. The first phase of this adjustable lending program will support technological changes and innovation in crop, livestock, fishery, forestry production, and agroprocessing in Senegal. Total cost: $47.1 million. 0 Taiikistan II)A---$20 million. This project supports the government's program for land privatization and restructuring of pilot state and collective farms. Total cost: $24 million. 158 TF i. WORI) BANK ANˇn:Ai R EPOR I1999 Turkey IBRD-$4 million. Commodity traders, agricultural producers, and consumers will benefit from assistance during the transition from intervention-based agricultural policy to a liberal market by increasing the marketing efficiency of two major agricultural commodities and providing a model for development of other private exchanges. Total cost: $5 million. 0 Uganda IDA-$12.4 million. This program will support government efforts to conserve wildlife, cultural heritage, and assets, and promote the develop- ment of the tourist industry on an economically, environmentally, and socially sustainable basis. Total cost: $14 million. 0 § Uganda IDA-$26 million. This project will support agricultural research and technology dissemination and adoption by smallhold farmers in Uganda. Total cost: $72 million. 0 § Vietnam IDA-$101.8 million. Rural populations in the Mekong Delta will benefit from increased agricultural production, improved living conditions, flood protection, and sustainable water resource development in the project area. Total cost: $148 million. EDUCATION 0 § Azerbaijan IDA-$5 million. This learning and innovation credit will support innova- tions in curriculum development in basic education and the develop- ment of training programs, materials, and delivery mechanisms in about 5 pilot teacher-training institutions and about 20 pilot schools. Total cost: $6 million. 0 § Brazil IBRD-$202 million. This project will expand and strengthen the innova- tive school improvement program FUNDESCOLA, which targets Brazil's poorest regions with the lowest education indicators. A key objective is to ensure that every child from these regions successfully completes a relevant and effective eighth-grade education. Total cost: $402 million. 0 § Cape Verde IDA-S6 million. This project will develop an education and training sys- tem that will ensure an educated and flexible workforce, responding to Cape Verde's social and economic goals. Total cost: $7 million. 0 Chile IBRD-$145.4 million. This project will advance Chile's higher education system by improving the legal and regulatory framework, promoting study programs that respond to labor market needs, and encouraging participation of students from low-income families. Total cost: $241 million. Chile IBRD-$5 million. This learning and innovation loan will demonstrate improved performance in a highly selective segment of the Chilean sci- ence and technology system by supporting advanced training of human capital by world-class scientists engaged in cutting-edge research. Total cost: $15 million. China IBRD-$20 million; IDA-850 million. Students will benefit from en- hanced quality and relevance of undergraduate basic science and engi- neering programs in 28 universities and at least 31 partner institutions. The project is consistent with national efforts to transform a planned economy into a market economy. Total cost: $104 million. SUMMARIES OF PROJECTS APPROVED 1 59 0 § Colombia IBRD-$5 million. This learning and innovation loan will test and evaluate alternative, multisectoral, and participatory approaches to developing and delivering services and providing activities to engage low-income youth. Total cost: $7.8 million. 0 Egypt IDA-$50 million. One-third to one-half of secondary students will ben- efit from a more equitable educational system through increased access to general secondary education, improved curricular and assessment methods, and enhanced administrative and management efficiency. Total cost: $251) million. § Egypt IDA-$5 million. This project will develop and test integrated programs to improve services for disabled children and at-risk youth-among the country's poorest-through cost-effective project activities targeting better outcomes, including greater access to and improved quality of services. Lessons learned will feed into national strategy. Total cost: $5.3 million. 0 § Gambia, The IDA-$20 million. This project promotes sectorwide development from primary school through university, with a special emphasis on girls' edu- cation, by an enrollment increase of about 168,000 students and a reduc- tion in cost per student. Total cost: $106 million. 0 § Ghana IDA-$32 million. About a million learners living in areas with high rates of illiteracy and poverty will acquire literacy and functional skills to help improve their own development and that of the community. Total cost: $46 million. 0 § Guinea IDA-$4.1 million. This learning and innovation credit supports develop- ment of a school-based teacher education system that targets primary education for all children, particularly young rural girls. Total cost: $4.3 million. 0 § India IDA-$85.7 million. More than 600,000 6- to 10-year olds, especially girls, will benefit from expanded access, improved learning achievement, and better state and district capacity to manage primary education. Total cost: $101 million. 0 § Indonesia rIRD-$54.5 million; IDA-S20.1 million. This project supports the rein- forcement of social safety nets in three provinces-Sumatra Utara, Riau, and Beghulu-bv delivering basic education services to the poor through the support of students and schools. Total cost: 2 84.3 million. 0 § Indonesia IBRD-$47.9 million; IDA-SI 5.9 million. This project aims to mitigate the effects of Indonesia's economic crisis in seven provinces by support- ing students and schools with a successful back-to-school campaign. Total cost: $63.8 million. 0 § Indonesia IBRD-S21.5 million. Early child development needs of 1.2 million low- income children in selected provinces will be met by improving access to health, nutrition, and cognitive stimulation services, and enhancing delivery and management of such programs. Total cost: $25 m illion. 0 § Latvia IBRD-$3 1.1 million. This project aims to increase education sector ca- pacity in Latvia and strengthen the management of both resource inputs and learning processes. Total cost: $40 million. 160 THE WORLD BANK ANNUAL REPORT 1999 0 § Lesotho IDA-$21 million. An estimated 10,000 poor children not enrolled in schools, and about 440,000 current pupils, wvill benefit from Phase I of this adaptable program credit, which will increase access to and equity of education in Basatho. Total cost: $106 million. 0 Malaysia IBRD-$244 million. An estimated 45,000 children from economically disadvantaged backgrounds will benefit from school and hostel construc- tion and the pilot school-to-work program. Training and upgrading more than 5,000 teaching staff will result in enhanced education standards. Total cost: $362 million. 0 § Mozambique IDA-$7 1 million. This program will address the wide disparities between rural and urban areas and among regions bv gradually shifting resources, increasing enrollment rates for an estimated 1.4 million students, and improving education services delivery capacity. Total cost: $717 million. 0 § Nepal IDA-$ 12.5 million. This adaptable program credit will help strengthen institutional capacity, deliver more efficient education services, and raise learning achievements for an estimated 3.3 million children, especially girls. Total cost: $106 million. Nicaragua IDA-$13.2 million. This supplemental credit will repair and rehabilita'te 300 primary schools, provide new educational materials, and extend financing for an estimated 150,000 financially disadvantaged students to return to school in the aftermath of Hurricane Mitch. Total cost: $14 million. 0 § Tajikistan IDA-$5 million. This learning and innovation credit will help develop innovative teacher-training programs and delivery mechanisms, help rehabilitate 20 pilot schools, provide textbooks to all primary level stu- dents through an innovative textbook rental program, and build manage- ment capacity in the Ministry of Education. Total cost: $6 million. § Uruguay IBRD--$28 million. An estimated 12,300 young children and 18,000 stu- dents will benefit from more equitable and efficient education through the expansion of a new pedagogical single-shift (full-time) model of teaching within preschool and elementary education. Total cost: $40 million. Vietnam IDA-$83.3 million. The higher education system will improve through capacity building and monitoring to support system-level changes and institutional-level reforms and through creation of a fund to support changes, reforms, and improvements. Total cost: $103 million. 0 Zambia IDA-$40 million. This adaptable program credit supports the government's basic education strategy to increase child enrollment by a projected 0.5 million students, and improve learning outcomes for nmore than 4 million participating students. Total cost: $340 million. ELECTRIC POWER AND OTHER ENERGY 0 § Argentina IRRD-$30 million; GcF-$10 million. Seventy thousand rural low-income households will benefit from reliable electricity supply using renewable electrical technologies. This project will also promote private sector in- vestment through concessions for power provision-minimizing govern- ment subsidies yet enabling concessionaires to obtain a fair profit. Total cost: $40 million. SUNIMARIES OF PROIECTs APPROVED 161 Armenia IBRD-$21 million. This adaptable program loan supports Phase I of the Power Sector Restructuring and Development Program, which seeks to rehabilitate the electricity transmission and distribution network, reduce losses and the cost of service, commercialize sector enterprises, and at- tract private investment. Total cost: $33 million. China IBRD-$ 100 million; GEF-$35 million. This project will allow for schools, households, and small businesses in the poorest parts of north- west rural China to be supplied with solar-generated electricity while wind-generated electricity will be used to increase power supply to those already connected. Total cost: $444 million. t Georgia IDA-$25 million. The credit supports-and helps mitigate the social cost of-the government's energy sector reform program, which aims to enhance financial management, combat corruption, increase the availability of energy on a sustainable basis, catalyze private investment, realize Georgia's pipeline potential, and upgrade environmental manage- ment. Total cost: $25 million. 0 India IBRD-$210 million. This adaptable program loan supports the first phase of the Power Sector Restructuring Program by establishing a nesw legal, regulatory, and institutional framework and industry structure, and the preparatory work for privatizing power distribution. Total cost: $300 million. 0 Yemen IBRD-$54 million. Business and residential consumers will benefit from a more reliable and adequate power supply in Sana'a, the key load cen- ter, and the development of power sector reforms emphasizing economic and environmental sustainability. Total cost: $60 million. ENVIRONMENT Armenia IBRD-$8 million. Private farmers, small and medium-sized enterprises, and urban property owners will benefit from a more reliable registration system for land and other property, including a chronological record of property owners and their rights and obligations. Total cost: $10 million. 0 § Bangladesh IDA-$138.6 million. More than 11 million urban poor will benefit from financing of critical urban infrastructure and services such as water sup- ply, drainage, sanitation, urban roads, solid waste management, and bus terminals. Total cost: $154 million. 0 Brazil IBRD-$15 million. The project will help prevent and control wildfires in the southern Brazilian Amazon by assisting federal, state, and munici- pal environmental agencies in monitoring the risk of fire, implementing public awareness campaigns, providing training in fire prevention and control, and establishing a rapid response task force. Total cost: $27 million. 0 § China IBRD-$100 million; IDA- $50 million. This project will continue the first Loess Plateau Watershed and develop the plateau by increasing agricultural production and incomes and improving environmental conditions in the tributary watersheds of the Yellow River. Total cost: $252 million. 162 THE WORLD BANK ANNUAL REPORT 1999 § China IBRD-$1 50 million; IDA-$2 million. This project will provide a safe environmental setting for the sustainable long-term economic growth of urban areas in Sichuan Province by providing an adequate supply of safe water to its growing urban population and protecting public health. Total cost: $378 million. 0 § Gambia, The IDA-$15 million. An estimated 250,000 urban poor will enjoy improved living conditions through sustained provision of adequate public infra- structure and the development of a lasting, enabling environment for municipal investment financing, employment creation, and income generation. Total cost: $18 million. 0 Georgia IDA-$4.4 million; GEF-$1 million. The project will strengthen institu- tional capacity to manage Black Sea coastal resources by developing, testing, and evaluating methods to integrate environmental planning and management into economic development activities. Total cost: $7 million. 0 § Guatemala IBRD-$31 million. About 500,000 people in Peten, 210,000 living in extreme poverty, will benefit from increased legal security of land tenure and a strengthened legal and institutional framework for land registry services through a participatory process for conflict mitigation and reso- lution. Total cost: $39 million. 0 § Honduras IDA-$8.3 million. This project supports the creation of an interactive learning center on sustainable development for children and teachers and will finance rehabilitation of sites in Honduran archeological parks damaged by Hurricane Mitch, thereby restoring tourism flow. Total cost: $9.3 million. 0 § Lao People's IDA-$2 million. The livelihoods of rural communities in the upland dis- Democratic Republic tricts will improve through better protection and management of vital natural resources with the adoption of intensified agricultural practices by local communities through this learning and innovation credit. Total cost: $2 million. 0 Slovenia IBRD-$15 million. The loan aims to improve the efficiency and effective- ness of real estate administration systems in Slovenia. Total cost: $29 million. FINANCE 0 § Albania IDA-$12 million. This project will help establish a private, sustainable rural finance system, based on the current system of village credit funds. It will also address private sector development and poverty alleviation by increasing the availability of financial services to rural farmers and entre- preneurs. Total cost: $23 million. t Argentina IBRD-$505 million. This project, in conjunction with the Special Structural Adjustment Loan, will strengthen the Argentine financial system's safety net and safeguard economic and social achievements. Total cost: $505 million. SUMMARIES OF PROJECTs APPROVED 163 Bosnia and IDA-S50 million. The credit will support the privatization of solvent Herzegovina publicly owned commercial banks and liquidation of insolvent ones (design, legal framework and regulation, institutional capacity); financial sector reforms (bank supervision, banking laws, deposit insurance); and completion of the institutional and legal framework for enterprise privatization, to include rapid startup of small enterprise privatization. Tlotal cost: 3S5) million. Chinla IBRD-S27.4 million; IDA-$5.6 million. China's accounting system will be modernized by developing and promulgating internationally accepted accounting standards and familiarizing finance professionals with new accounting principles and practices. Total cost: $85 million. China niRD-$10 million; IDA-$35 million. The project will help the govern- ment strengthen institutions, develop structural reform programs, and strengthen agencies involved in poverty reduction. Total cost: $67 million. 0 Ghana IDA--$50.5 million. Through the Gateway Program, the government aims to attract foreign and domestic investment through a comprehen- sive private sector-led development strategy. Total cost: $56 rmillionl. 0 Korea, Republic of IBRD-$48 million. This technical assistance loan will strengthen institu- tional capacity for bank supervision and corporate restructuring, enhance development of securities markets, improve monitoring of corporate per- formance, and establish a more reliable system to ward off and deal with corporate insolvency. Total cost: $54.5 million. 0 § Madagascar IDA-S 16.4 million. The first institution-building phase of this adaptable program credit is part of a 15-year program to improve the lives of approximately 187,000 low-income families by increasing access to fi- nancial services. Total cost $39 million. Q § Mexico IrRD-$505.5 million. An estimated 2.5 million people, mostly in urban and working poor households, will benefit from the restructuring of Banco de Mexico's low-income housing trust fund (FOVI), through increased funds for the social interest housing sector, strengthened products and services, and a more transparent subsidy policy. Total cost: $506 million. 0 § Pakistan IDA-$90 million. The project will support a Poverty Alleviation Fund that will provide much needed loans, grants, and technical assistance to the poorest individuals and communities, especially women. Improved access to physical infrastructure wvill improve the poor's livelihood op- portunities and raise their incomes. Enhanced institutional capacity and financial sustainability of N,Oos will also result. Total cost: $107 million. t Peru IBRi>-$300 million. To promote the longer-term development and resil- iency of the financial system, this loan x,vill support implementation of a modernized bank resolution framework coupled with improved surveil- lance, prompt corrective actions, and finer-tuned rules for providing liquidity support to healthy banks. Total cost: $300 million Philippines IBRD-$300 million. This adjustment operation supports banking reforms that include changes to legislation aimed at strengthening the banking system and enabling it to better cope with current difficulties and with- stand future shocks. Total cost: $300 million. 164 THar WORLD BANK ANNMAL REPORT 1999 Sri Lanka IDA-$29 million. Technical assistance wvill be provided for Year 2000 remediation activities of possible systems crashes and preservation or restoration of day-to-day functions for the financial sector and critical government agencies. Total cost: $38 million. Thailand IBRD-S400 million. Measures to strengthen the corporate and financial sectors will be supported by this adjustment operation and will allow for a closer tracking of the evolving crisis to commit the government tc, remedial measures, while remaining focused on the needed fundamental restructuring of the economy. Total cost: $400 million. Tunisia IBRD-$159 million. This adjustment loan supports the second phase of financial sector reforms to improve the international competitiveness of the Tunisian economy, upgrade the financial sector's performance, and increase its contribution to economic growvth. Total cost: $159 million. 0 § Uganda IDA-$13 million. The project will improve the regulation of deposit- taking institutions and strengthen the management capabilities of insur- ance and contractual savings institutions. Total cost: $14 million. Ukraine IBRD-$300 million. This adjustment loan wvill underpin the macroeco- nomic reform program xvith a comprehensive set of policy measures intended to strengthen the financial sector, with special emphasis on the banking system. Total cost: $300 million. Venezuela IBRD-$20 million. This project will help Venezuela's Ministry of Finance set up policies and management systems that will reduce costs associated with delivering public services and support government efforts to inte- grate the 160 branch offices of the National Treasury with a central ac- counting system, thereby streamlining transactions and better managirtg and controlling public debt and projects financed by multilateral institu- tions. Total cost: $24 million. HEALTH, NUTRITION, AND POPULATION 0 § Argentina IBRD-$4.8 million. This learning and innovation loan will test the appli- cability of a multisectoral drug prevention strategy to promote local solutions to drug use in selected municipalities, by training local comrnu- nitv members, sector professionals, and vouth leaders and financing the implementation of municipal drug prevention plans. Total cost: $6.9 million. 0 § Bolivia iDLA-$25 million. This project will help reduce infant mortality by complementing other interventions in education, rural productivity, and water and sanitation, through efforts to increase coverage and quality of health services, empower communities to improve their health status, and strengthen local capacity to respond to health needs. Total cost: $75 million. 0 § Bosnia and IDA-$ 10 million. The project will support the development of a viable Herzegovina Basic Health System of primary health care, public health, and disease control. Total cost: S15 million. SLUMMARIIS OF PROJECTs APPROVED 165 0 § Brazil IBRD-$I00 million. Brazil's mortality rates from communicable diseases will decline as a result of strengthened national disease surveillance and control, which will enhance the data management telecommunications system, rehabilitate the laboratory network, and provide staff training. Total cost: $200 million. 0 Brazil IBRD-$165 million. This project will help reduce the incidence of HIV in- fection by an estimated 43,000 cases and expand and improve diagnosis and treatment of an estimated 338,000 people living with Hiv. A preven- tion program will focus on behavioral change, high-risk groups, commu- nity-based interventions, counseling, and testing. Total cost: $300 million. 0 Chad IDA-$10.9 million. About 250,000 people will enjoy increased access to, and improved quality of, health services from supplemental financing to the ongoing Health and Safe Motherhood Project. Total cost: $17 million. 0 § China IBRD-$10 million; IDA-$50 million. Maternal and child morbidity will be reduced in poor areas of China, and early child development pro- grams will be introduced. This project will have two main components: maternal health and child development; and HIV/AIDS and STD control. Total cost: $94 million. § Ethiopia IDA-$ 100 million. Mothers, children, and the rural poor will benefit from more comprehensive and integrated primary care services, based mainly at community health facilities. Total cost: $737 million. 0 § Guinea IDA-$11.3 million. About 30 percent of Guinea's population will benefit from this adaptable lending program loan supporting efforts to prevent risks related to reproductive health; reduce the occurrence of STI; and lower infant, child, and maternal mortality rates. Total cost: $44 million. 0 Honduras IDA-$10.4 million. This supplemental credit will support the ongoing Health and Nutrition Project, to rehabilitate health centers and water and sanitation projects damaged during Hurricane Mitch. The project will increase access to basic services, raise the nutritional status of chil- dren and nursing mothers, and develop institutional capacity to control the spread of communicable diseases. Total cost: $12 million. 0 § India IDA-$191 million. This project will support the second phase of India's National AIDS Control Program through efforts to reduce the growth rate of HIV and improve capacity to respond to the epidemic. Total cost: $229 million, 0 § India IDA-$134 million. More than 4.5 million people in the state of Maharashtra, especially the poor, will benefit from institutional reforms in health care delivery and improved quality, effectiveness, and coverage at the first referral and community health center stages. Total cost: $158 million. § t Indonesia IBRD-$44.7 million. The health of rural and low-income populations will be improved by distributing health personnel more equitably, enhancing the quality of health services, and improving the skills and efficiency of health professionals. Total cost: $56 million. 166 THE WORLD BANK ANNUA-I REPORT 1999 O Jordan IBRD-$35 million. This project will increase the efficiency, quality, and financial sustainability of Jordan's health services through reforms to efficiently utilize resources and contain growth in health expenditures. Benefits will include increased hospital occupancy rates, adoption of treatment protocols, and reduced drug costs. Total cost: $48 million. Kazakhstan IBRD-$42.5 million. This adaptable program credit supports government efforts to implement a long-term health restructuring strategy and achieve a sustainable performance-oriented health system that will benefit an estimated 3.2 million people. Total cost: $49.53 million. Latvia IBRD-$12 million. This adaptable program loan will create a framework for a modern and effective health care system to assist in the implemen- tation of a long-term health services restructuring strategy. Total cost: $17 million. O § Malawi IDA-$5 million. This learning and innovation credit will increase access to, and improve quality of, family planning services and contraceptive education for men, women of reproductive age, and adolescents living in rural and other underserved areas. Total cost: $5 million. O § Mali IDA-$40 million. This program will improve the population's health status and accelerate the region's demographic transition toward slower population growth by enhancing affordable, quality health care. Total cost: $227.45 million. O § Mauritania IDA-$4.9 million. This project will test the effectiveness of two different "prototypes" of programs, one urban and one rural, to reduce child mal- nutrition through growth monitoring of children, nutritional supple- ments for pregnant women and lactating mothers, income-generating ac- tivities, and social mobilization. Total cost: $5.3 million. O Morocco IBRD-$66 million. More than 7 million people in Morocco's poorest provinces will benefit from efforts to enhance the efficiency of public hospital services, mobilize additional resources through new financing mechanisms, and strengthen the health ministry's policy formulation and sector management capacity. Total cost: $76 million. O § Panama IBRD-$4.3 million. This learning and innovation loan will assist Panama's public health institutions in piloting strategies to broadly address poverty reduction and institutional development by building institutional capacity of health officials and piloting new technical, financial, and social interventions. Total cost: $6 million. O § Uzbekistan 1BRD-$30 million. Four million people in three oblasts, especially women and children, will benefit from the implementation of a health care reform strategy to improve the quality and efficiency of health care services. Total cost: $69 million. INDUSTRY O Bangladesh IDA-$32 million. This credit will expand the range, depth, and quantity of country exports by increasing access to world markets and making public policies and institutions more supportive of export needs. Total cost: $49 million. SUhlMARIES OF PROJECTS APPROVED 167 Bolivia IDA--$40 million. This project supports regulatory reforms in Bolivia that facilitate competition and private investment, contribute to the stability and efficiency of the finanicial sector, and improve coverage, quality, and productivity of key infrastructure services. Total cost: $40 million. Georgia IDA-$15 million. The project supports self-sustainable and continuous adjustment of privatized enterprises through restructuring of 10(0 owner- and creditor-led enterprises over a five-year period and through job train- ing for about 200 consultants and 400 managers. Total cost: $21 million. Malaysia IBRD-$ 100 million. Technical assistance-including for monitoring and contingency plans-will be provided to contain and minimize disruptions of social and economic infrastructure caused by the potential failure of critical central, state, and local government computer systems (Y2K). Total cost: $134 million. Tunisia IBRn)-$35 million. This project will enhance the ability of private ex- porters to integrate into the global economy and foster export competi- tiveness, by improving access to export outlets and buyers and to preshipment export finance, and simplifying import- and export-related procedures. Total cost: $50.6 million. Turkey IBRD-$l D5 million. The project will support the harmonization of Turk- ish technology infrastructure with European Customs Union standards and assist firms in upgrading their technological capabilities in order to improve the competitiveness of Turkish industry, in domestic and foreign markets. Total cost: $387 million. Ukraine mBRD-$300 million. This adiustment loan supports the privatization of public sector enterprises, development of capital markets, accounting and bankruptcy reforms, and deregulation programs. Total cost: S300 inillion. MINING AND OTHER EXTRACTIVE Mauritania IDA-$15 million. This project will help the government improve the availability of geological information about Mauritania, redress institu- tional weaknesses of public mining institutions, and stimulate foreign direct investment. Total cost: S 16 million. tO Poland IBRD-$300 million. This loan will facilitate structural reform and the start of the privatization process in the hard coal sector, help improve corporate governance in the sector, and mitigate the adverse social effects of sector reform on local communities. Total cost: $300 million. MULTISECTOR t Albania nDA-$45 million. The credit supports government efforts to restore and sustain growth and improve living standards through reforms that would improve government functioning and enhance the climate for private sector development. Total cost: $45 million. tO Albania IOA-$30 million. The credit seeks to help safeguard functioning public institutions during the Kosovo crisis, maintain macroeconomnic stabiliza- tion, monitor and enforce an orderly public expenditure pattern during the crisis, and establish a cofinancing vehicle for other donors. Total cost: $30 million. 168 THE WORILD BANK ANNUAL. REPORT 1999 Argentina IBRD-$30.3 million. This project xvill contain the potential disruptions to Argentina's social and economic infrastructure resulting from Y2K- related failure of critical central government systems through replace- ment or upgrade of all noncompliant equipment and a series of other efforts. Total cost: $43 million. t Argentina IBRD-$2.5 billion. This project, in conjunction with the Special Re- purchase Facility Support Loan, will support government efforts to transform Argentina's economy by mitigating the deleterious effect of the current international financial instability on the economy, safeguard- ing economic and social achievements, and protecting vulnerable groups. Total cost: $3 billion. t Armenia IDA-$65 million. This structural adjustment credit will support govern- ment reforms in public sector management, private sector development, energy, and social protection and will also improve financing mechanisms in health and education. Total cost: $65 million. Azerbaijan [DA-$7 million. This supplemental credit was added to the second tranche of the Structural Adjustment Credit to assist those affected by the Russian crisis. Total cost: $7 million. 0 Bangladesh IDA-$200 million. This emergency recovery project will provide quick- disbursing assistance to maintain macroeconomic stability and help fi- nance import costs associated with restoring damaged infrastructure, production levels, and food grain stocks. Total cost: $200 million. tO Burkina Faso IDA-$15 million. This credit will support government reforms to accel- erate economic growth, foster the development of the private sector, and correct public sector institutional weaknesses. Total cost: $15 million. t Chad IDA-$30 million. This adjustment credit will support government efforts to directly affect Chad's growth performance, contribute to poverty alleviation, increase public services in social sectors, and establish a more favorable environment for private sector growth. Total cost: $30 million. 0 Dominican Republic IBRD-$] lI .1 million. This project will help maintain growth in impor- tant sectors, support the reconstruction and rehabilitation of key social and economic infrastructure damaged or destroyed by Hurricane Georges, and strengthen the country's capacity to prepare for and respond to future natural disasters. Total cost: $125 million. Georgia IDA-$16.5 million. The credit supports technical assistance to accelerate change in the roles of the private and public sectors in delivering key ser- vices. Efforts will cover privatization, financial sector supervision, public sector reforms, and social sustainability measures, as well as hospital restructuring. Total cost: $20 million. t Georgia IDA-$60 million. This credit supports government economic reforms to strengthen fiscal performance wvhile ensuring budgetary provisions for health care, education, and social protection; improve the legal and regu- latory framework for private sector growth; and support the process of ow'nership change and market liberalization. Total cost: $60 million. SU!MMARIES OF PROJECTS APPROVED 169 t Ghana IDA-$178.2 million. This credit will assist the government's medium- term strategy outlined in "Ghana Vision 2020," which aims to turn Ghana into a middle-income country by the turn of the next decade. Total cost: $180 million. 0 Honduras IDA-$200 million. This project will assist Honduras in maintaining mac- roeconomic stability by financing imports associated with rebuilding so- cial and economic infrastructure and reestablishing production levels af- ter the devastation of Hurricane Mitch. Total cost: $200 million. t Indonesia IBRD-$1 billion. Balance of payments assistance will support policy re- forms to overcome the economic crisis and restore rapid growth, cover- ing financial and corporate restructuring, improved governance, protec- tion of the poor, investment in basic health and education services, and stronger management of the environment. Total cost: $1 billion. tO Indonesia IBRD-$500 million. This loan will protect social safety net budget ex- penditures crucial for the poor; support policy reforms to rebuild an efficient banking sector and build a foundation for renewed growth; and reduce corruption in public and private sector activity. Total cost: $500 million. Jordan IBRD-S 120 million. This loan supports trade, privatization, financial sec- tor, and regulatory reforms that will foster integration with world mar- kets, and reduce costly administrative obstacles through streamlined cus- toms procedures for exports and the planned conversion of the Aqaba area into a free port. Total cost: $120 million. t Korea, Republic of IBRD-$2 billion. This adjustment operation will aim to restore financial stability and deepen structural reforms in the financial and corporate sec- tors as well as labor markets while easing the social impact of the crisis by strengthening social safety nets. Total cost: $2 billion. Macedonia, IDA-$50 million. This emergency recovery credit will help the govern- former Yugoslav ment maintain macroeconomic stability and support economic growth Republic of through financing of imports and government budget support amid the severe disruptions and large inflows of refugees caused by the Kosovo conflict. Total cost: $50 million. t Madagascar IDA-$ 100 million. This adjustment credit will help the government im- prove governance and brighten prospects for private sector growth by strengthening the business environment to promote private investment and job creation, reducing state intervention in productive activities, and raising the quality of basic health and education services. Total cost: $1 00 million. t Malawi IDA-$92 million. This program will support government reforms to ac- celerate economic growth and reduce poverty by improving public ex- penditure management and promoting private sector development. Total cost: $92 million. 0 Mozambique IDA-HIPC grant-$150 million. This operation builds on earlier economic reforms and supports the progress achieved in jump-starting and stabiliz- ing Mozambique's economy since the end of the war in 1992. Total cost: $150 million. 170 THE WORLD BANK ANNUAL REPORT 1999 0 Nicaragua IDA-$50 million. This operation will assist Nicaragua in maintaining macroeconomic stability by financing imports associated with rebuildin,g social and economic infrastructure and reestablishing production levels to help Nicaragua recover from the effects of Hurricane Mitch. Total cost: $50 million. Organization of IBRD-$14.1 million; IDA-$5.5 million. The Organization of Eastern Eastern Caribbean Caribbean States disaster management program will support physical States investments and institutional strengthening to safeguard people and key infrastructure from future disasters and strengthen the capacity of na- tional emergency management agencies, the private insurance industry, and community-level disaster committees to deal with disaster prepared- ness and recovery. Total cost: $57 million. Pakistan IDA-$3 50 million. This credit supports the government in improving governance in the key public sector activities of banking, tax, administra- tion, public utilities, and public expenditure. Total cost: $350 million. t Panama IBRD-$61 million. This loan supports Panama's Public Policy Reform Program aimed at accelerated growth and poverty reduction. Reforms will promote a climate for private sector-led growth, fiscal sustainability, and increased overall economic efficiency, along with efforts to develop a comprehensive Poverty Reduction Strategy and Action Plan. Total cost: $61 million. Russian Federation IBRD-$1.5 billion. This third structural adjustment loan, the largest ever Bank loan to Europe and Central Asia, will implement economic reforms required to stimulate sustained growth and cushion the social impact of the transition to a market economy. Total cost: $1.5 billion. t Rwanda IDA-$75 million. This credit will consolidate the ongoing economic re- covery and stability, reduce rural poverty, lay the foundation for private sector-led growth, and enhance prospects for national reconciliation by increasing economic opportunity. Total cost: $75 million. t Solomon Islands IDA-$12 million. This credit aims to restore financial stability and inves- tor confidence by supporting reforms to develop the private sector, and policies to promote sustainable forestry growth as well as enhance health strategies. Total cost: $12 million. Tanzania IDA-$40 million. The government will address its fiscal problems by re- forming tax laws, expanding the tax base, building capacity, and provid- ing the necessary physical infrastructure at the Tax Revenue Authority. Total cost: $70 million. t Thailand IBRD-$600 million. This adjustment operation will strengthen the coin- petitive foundations of the economy, track financial and corporate sector reforms, and support the government's proposed fiscal stimulus, particu- larly social protection programs. Total cost: $600 million. f Zambia IDA-$ 170 million. This credit supports the government's economic re- form program, which aims at reducing widespread poverty by promoting private sector-led growth and improving the delivery of essential social services. Total cost: $170 million. SUMMARIES OF PROJEcTS APPROVED 171 OIL AND GAS O Cape Verde IDA-S 1 7.5 million; C.EF-$4.7 million. The project will improve the supply of water, power, and sanitation to the main islands of Cape Verde, which are experiencing rapid urban growth. In addition, a Global Envi- roninent Facility grant will help reduce the effects of greenhouse gases by substituting thermal power with renewable energy sources. Total cost: $48 million. PUBLIC SECTOR MANAGEMENT Argentina IBRD--$l0 million. This project will finance the creation of a social and fiscal national identification programl to improve efficiency, effectiveness, and impact of social services and fiscal programs by creating an institu- tionalized information exchange. Total cost: $12 million. Bosnia and IDA-$12 million. The objective of the project is to support sustainable Herzegovina economic growth by facilitating and expanding viable export activity, thus reducing the economy's dependence on aid. Total cost: $12 million. t Bosnia and IDA-$72 million. This second credit supporting fiscal and institutional Herzegovina reform will focus on tax policy and administration, foreign debt manage- ment, pension reform and management, foreign trade and tariffs, and customs administration. Total cost: $72 million. O § Cambodia IDA-$5 million. This project will introduce decentralized, participatory, poverty-oriented rural development approaches in the poorest areas, al- lowing government to gain the experience needed toward formulating and carrying out a cohesive national strategy for future rural develop- ment. Total cost: $6.3 million. Cape Verde IDA-$9 million. The credit will help the government reduce its role in economic activity and accelerate privatization in the utilities, transport, manufacturing, trade, and financial sectors. Total cost: $1(0 million. China IDA-$5 million. This learning and innovation credit will help the govern- ment identify potential improvements in enterprise reform methods and adapt them to local circumstances. The implementation of reform meth- ods beyond the four pilot cities is envisioned. Total cost: $8 million. Croatia IBRD--$7.3 million. The loan will finance technical assistance to support improvements in the business-enabling environment for private sector growth, and will finance consultant services, training, and equipment. Total cost: $8 million. Georgia IDA-$13.4 million. The objective of this project is to assist in the devel- opment of an independent and professional judiciary, committed to high standards of judicial ethics and capable of efficient, effective dispute resolution. Total cost: S16 million. Georgia IDA-$2.3 million. This project will transform a traditional Soviet-style ministerial structure into the kind of policy formulation and deregulation transport sector entity needed in a market economy. It will also define, and help to achieve, operational autonomy and accountability. Total cost: $2.5 million. 1 72 TIE WORID BANK ANNEAI. REP)ORT 1999 Ghana IDA-$14.3 million. The first phase of a 1(0-year adaptable lending pro- gram will support government efforts to improve the efficiency, effec- tiveness, and qualitv of public services in Ghana. Total cost: $173 million. 0 Guatemala IBRD-$33 million. This project will create a more effective, accessible, and credible judicial system that would foster public trust and confi- dence, improve consistency and equity in the application of the lawv, anid ultimately contribute toward social reconstruction and peace in rural and urban areas. Total cost: $50 million. Indonesia IBRD-$31.5 million. Technical assistance will be provided to support banking and financial sector reforms and assist the government in accel- erating corporate restructuring to resume growth in the private sector, restore the ability of corporations to borrow and service their debts, and improve corporate governance. Total cost: $35 million. 0 Kazakhstan IBRD-$16.5 million. This project will provide technical assistance to the government for modernizing its legal framework, strengthening judicia:l systems, and deepening the ongoing economic reform program. Total cost: $19 million. Latvia IBRD-$5 million. This loan will help the government to develop a sus- tainable state revenue system, based on voluntary compliance, lower compliance cost, and reduced corruption and tax evasion. Total cost: $45 million. Mauritania IDA-$0.1 million. This credit supplements the Public Resource Manage- ment Credit aimed at improving economic management capacity, strengthening and deepening recent fiscal gains, improving efficiency of public expenditure, and increasing domestic savings, through a policy reform and capacity-building program. Total cost: $0.1 million. t Moldova IDA-$40 million. This second adjustment credit carries forward the government's reform program, focusing on promoting ownership change as a precondition to improved corporate governance, financial discipline, and growth through investment. It will also pursue privatization in agri- culture, energy, and the enterprise sectors. Total cost: $40 million. Mongolia IDA-$ 12 million. This project will make available medium-term finance to be on-lent by eligible commercial banks for the development of Mongolia's private sector. Technical assistance for institutional strength- ening will also be provided for participating banks and the central bank. Total cost: $14 million. tO Morocco IBRD-$250 million. The loan will advance the government's broad-based economic and social reform program to maintain macroeconomic stabil- ity wvhile accelerating economic growth and reducing poverty within a framework of institutional reform that promotes better governance and greater transparency. Total cost: $250 million. t Morocco IBRD-$101 million. This adjustment loan supports reforms in the tele- communications, post, and information technology sectors to increase private sector competitiveness, broaden access to communications ser- vices, particularly for the rural poor, and facilitate Morocco's transitiorn toward a global, information-based society. Total cost: $101 million. SUN-MMARIES OF PROJECTS APPROVED 173 Niger IDA-$18.6 million. Technical assistance will be provided to improve effi- ciency of the public sector and selected utilities such as telecommunica- tions, water, and electricity. Total cost: $20 million. t Niger IDA-$64 million. This credit, aimed at restoring the credibility of Niger's public finances, will support the implementation of Niger's economic re- form program. Total cost: $64 million. 0 § Peru IBRD-$38 million. An estimated 4 million people, one-sixth of Peru's to- tal population, will benefit from formal and sustainable rights to real property in predominantly poor urban areas and greater security of own- ership through the financing of 960,000 properties, of which 800,000 will be individually titled. Total cost: $66 million. Philippines IBRD-$150 million. The long-term resources of the Development Bank of the Philippines and a number of other banks will be increased to bet- ter assist private sector enterprises affected by the credit crunch and cur- rency crisis. Total cost: $315 million. f Romania IBRD-$300 million. This loan will support the restructuring and privatiz- ing of state-owned banks, including strengthening of the regulation and supervision capacity of the national bank and the development of the government securities market. Total cost: $300 million. 0§ Romania IBRD-$5 million. This learning and innovation loan will support a new national cultural heritage strategy designed to preserve priority cultural heritage sites and assets by testing different partnership approaches. Total cost: $6 million. Romania IBRD-$25 million. The project will enhance the private sector's role in the economy and support institution building to improve the business environment for private sector growth. Total cost: $33 million. Russian Federation IBRD-$30 million. The project will support the initial phase of the long-term program to strengthen the state statistical system. It will help restructure the National Statistical Agency and also strengthen other data collection agencies. Total cost: $39 million. t Tajikistan IDA-$50 million. This adjustment credit will support economic reforms to restore macroeconomic stability, develop the private sector through privatization of state-owned enterprises, reform the financial sector, and lower the adverse impact of reforms on the poor by enhancing budgetary provisions for health, education, and social safety nets. Total cost: $50 million. Tajikistan IDA-$6.7 million. This supplemental credit supports structural reforms to restore macroeconomic stability, develop the private sector, reform the financial sector, and support basic social spending. Total cost: $6.7 million. Tajikistan IDA-$6.7 million. The objective of the credit is aimed at building and improving the country's institutional capacity to reform public adminis- tration, improve the budget management system, and privatize medium and large enterprises in order to develop the private sector. Total cost: $7.4 million. 174 THE WORLD BANK ANNUAL REPORT 1999 Trinidad and Tobago IBRD-$14.8 million. This project will support the development of Trinidad and Tobago's Post Office into an efficient, market-driven, high- quality provider of postal communication and financial services, thus benefiting consumers, government, local businesses, labor, and the private sector. Total cost: $23 million. Uzbekistan IBRD-$25 million. This project will help improve the policy environ- ment for financial activity, restructure the banking sector, upgrade the financial sector's legal and supervisory framework, and develop capital markets. Total cost: $30 million. t Yemen IDA-$50 million. This project aims to redefine the role of the state to focus attention and resources on essential functions while developing an incentive framework for civil servants to carry out their new mandates and strengthen budget implementation, monitoring, and control. Total cost: $50 million. 0 Yemen IDA-$2.5 million. This project is a pilot program of judicial training to assess and enhance the effectiveness of the judiciary, provide business ad- vice, develop economic legislation through judicial and legal develop- ment, and design a public awareness campaign. Total cost: $2.9 million. SOCIAL PROTECTION AND OTHER SOCIAL SECTORS 0 § Albania fDA-$9 million. Rural poor and unemployed will benefit from local eco- nomic development, strengthened local institutions, and alleviation of bottlenecks in small-scale infrastructure. Total cost: $17 million. Albania IDA-$5 million. This credit will support the Community Works Project that promotes economic development through rehabilitating small, sus- tainable, social and economic infrastructure, and also to local community and government capacity building. Total cost: $5.5 million. 0 § Argentina IBRD-$90.8 million. This project will reinforce the capacity of poor communities to develop small projects by mobilizing resources on a par- ticipatory basis, improving social programs, and strengthening the infor-- mation management capacity of provincial and national agencies. Total cost: $133 million. 0 Azerbaijan IDA-$7.5 million. The project will enhance awareness of, and support for, Azerbaijan's culture and will help strengthen national identity and social cohesion at a difficult time of national transition. Total cost: $9 million. t Brazil IBRD-$252.5 million. This loan supports government efforts to protect. social expenditures targeted at those likely to suffer from increased eco- nomic vulnerability, including children and the retired, disabled, and unemployed. Total cost: $253 million. Brazil IBRD-$757.6 million. This loan is the first of two to support Brazil's Social Security Reform, which aims at imparting financial integrity to the pension system by introducing the principle of actuarial balance, basing pension on years of contribution, eliminating most special pension re- gimes, and reducing inequalities between benefits of public and private sector workers. Total cost: $758 million. SUMMARIES OF PROJECTS APPROVED 1 75 t Bulgaria IBRL)-S80 million. Poor and vulnerable population groups will benefit from a more effective and sustainable system of income support and poverty relief through this adjustment loan, which will focus on unem- ployment programs, social insurance, and social assistance. Total cost: $80 million. 0 § Bulgaria IBRI)-$5 million. This pilot project will test the social investment fund mechanism to improve the living standards of the poor and unemployed during Bulgaria's economic transition by financing 100 microprojects and conducting a labor market analysis. Total cost: $6 million. 0 § Cambodia bDA-$25 million. This credit wvill continue support to the Social Fund Project and improve on it through programs promoting increased com- munity participation and local ownership of subprojects, and use of technical standards to raise subproject quality and productivity. Total cost: $27 million. 0 § Cape Verde IDA-S16.1 million. Approximately 117,000 people will benefit from poverty reduction programs that will improve household food security, hygiene, health, nutrition, environment, and education. Total cost: $18 million. China IDA-$5 million. Enterprise workers in the city of Qingdao wvill benefit from this learning and innovation credit that aims to reform Chiina's pension program, by reducing the cost of transitioning pension assets and strengthening future pension planning. Total cost: $6 million. 0 § Djibouti IDA-$2.7 million. Through this learning and innovation credit, 21,000 ex-combatants will have more opportunities to lead productive civilian lives as an alternative to taking up arms. Total cost: $3 million. 0 § Djibouti IDA-$14.8 million. Approximately 156,000 people will benefit from government efforts to enhance living standards of the poor bv creating low-skilled employment opportunities through a public works project. Total cost: $15 million. 0 § Egypt IDA-$50 million. This project will create jobs and provide community infrastructure and services through small-scale public works in partner- ship with communities and local government, to be executed by small local private contractors. A Community Development Program wvill support education and training, microenterprise, and health services. Total cost: $65 million. 0 § Ghana IDA-$5 million. This learning and innovation credit will help the government test approaches and methods to achieve sustainabilitv in delivering nutrition and street-children programs. Total cost: S7 million. 0 § Guatemala IBRD-$30 million. Approximately 500,000 people, mostly indigenous and poor, will enjoy improved living standards through strengthened local community organizations and municipal governments; decentrali- zation and transfer of management and financial resources to the local level; and funding of community-based, social, and economic infrastruc- ture and cultural heritage subprojects. Total cost: $38 million. 176 THF WORILD BANK ANNUAt. REPORT 1999 0 § Guatemala IDA-$50 million. This project supports the government's poverty alle- viation efforts by channeling investments to the poorest areas, as well as to immediate needs in the wake of Hurricane Mitch, for small-scale infrastructure in education, health, water supply, and sanitation and for social infrastructure. Total cost: $64 million. Guyana IDA-$9 million. This project will restore Guyana's agricultural capacity in drought-stricken areas, supply potable water service to an estimated 63,000 people, provide flood relief for about 45,000 people in low-lying areas of Georgetown, and safeguard the region from future flooding and droughts through a more reliable drainage and irrigation system. Total cost: $9 million. 0 § Honduras IDA-$45 million. This project will continue support to the ongoing So- cial Investment Fund Program, aimed at providing the urban, rural, and indigenous populations with increased access to small-scale social and economic infrastructure, development of social assistance programs, and improved efficiency, transparency, and equity in social expenditures and public investment. Total cost: $137 million. 0 t Indonesia IBRD-$600 million. This loan will support creation of a national struc- ture to ensure implementation of safety net programs as designed, anti- corruption efforts, and timely delivery of benefits. Total cost: $600 mil- lion. t Kyrgyz Republic rDA-$36.5 million. Poor and vulnerable populations will benefit from this adjustment credit that will improve efficiency and effectiveness of social insurance and social assistance systems as well as strengthen the fiscal sustainability of the pension system. Total cost: $36.5 million. Macedonia, IDA-$1 million. Technical assistance will be provided to support the former Yugoslav design and implementation of the government's pension policy reforms Republic of that form an integral part of the Social Sector Adjustment Reform Pro- gram. Total cost: $1 million. t Macedonia, IDA-$29 million. This adjustment credit will support systemic reforms former Yugoslav in pension, health, and insurance, and improve the long-term financial Republic of solvency of social sector programs. Total cost: $29 million. § Macedonia, IDA-$10 million. This project aims to help mitigate the economic former Yugoslav disruption caused by the conflict in Kosovo and the negative social and Republic of economic impact of bankruptcy and labor restructuring of majority state-owned enterprises. Total cost: $12 million. 0 § Madagascar IDA-$15 million. Rural communities, where more than 85 percent of Madagascar's poor live, will benefit from rehabilitation and construction of communal infrastructures, social funds, and capacity building. Total cost: $17 million. 0 § Malawi IDA-$66 million. This project builds on the Social Action Fund to sup- port poverty alleviation in both rural and urban communities. Total cost: $66 million. 0 § Malaysia IBRD-$60 million. Poor and vulnerable populations will benefit from poverty alleviation programs such as social services and basic health and social assistance, which will also strengthen government capacity to monitor poverty and strengthen impact. Total cost: $89 million. SUMMARIES OF PROIECTS APPROVED 1 77 0 § Moldova IBRD-$15 million. This project wvill support public sector reforms that focus on poverty alleviation and improving basic social and economic services, targeting w7omen and children in poor rural communities. Total cost: $19.8 million. 0 Moldova IDA-$ 11.1 million. The objective of this project is to develop the capac- ity required to implement pension reform and to support the develop- ment of an efficient and sustainable social protection system in Moldova. Total cost: S14 million. 0 § Nicaragua IDA-$4.5 million. Almost half of Nicaragua's population currently living below the poverty line will benefit from the government's poverty alle- viation efforts through financing of small-scale infrastructure in educa- tion, health, water supply, and sanitation in the svake of Hurricane Mitch. Total cost: S166 million. 0 § Romania .BRO-$10 million. This project will contribute to poverty alleviation at the community level, support community-driven development by strengthening local organizations, and provide training and technical as- sistance to poor rural communities and disadvantaged groups. Total cost: $27 million. 0 Rw'anda lA-Sf million. Fcmale-headed households, widows, the homeless, and orphans will benefit from strengthened capacity of their communities and reformed administrative capacity at the communal and national levels through this learning and innovation credit. Total cost: $5 million. 0 § Thailand iBRi)-$300 million. An estimated 1.7 million person-months of employ- ment and more than 900,000 person-months of training svill benefit from rapid creation of employment opportunities and the provision of essential social services through decentralization, local capacitv building, and community development. Total cost: $462 million. 0 § Togo nIA-S5 million. This project supports the human resources development and poverty alleviation objectives of the Bank's Country Assistancc Strat- egy, targeting disadvantaged populations and fostering access to funds for community-idcntified projects. Total cost: $6 million. 9 West Bank and Gaza 'rust Fund for Gaza and We\st Bank-S8 million. This project builds on the first Community Development Project to improve infrastructure ser- vices and stimulate the local economy through about 200 small-scale in- frastructure projects, targeting at least 10() poor and marginalizeed com- munities, particularlv refugee camps. Total cost: S 5 million. TELECOMMUNICATIONS AND INFORMATION TECHNOLOGY 9 § Mauritaniia IDA-S 10.8 million. The project wvill assist the government in developing a legal, regulatory, and institutional framework for delivering competi- tively priced and high-quality telecommunications and postal services. Tlotal cost: Si2 million. 178 TfiiiW:WOn)z BA\KA\\.'A:. R'R()RI 1999 TRANSPORTATION 0 Bangladesh IDA-$177 million. Dhaka's entire population, but especially the urban poor, will benefit from improved bus services, better pedestrian facilities, and support for cycle rickshaws operating as feeder services and employ- ing a large number of the poor population. Total cost: $234 million. 0 Bangladesh IDA-$20 million. This project will supplement the Second Rural Roads and Markets Improvement and Maintenance project, designed to reduce rural poverty, by removing physical bottlenecks, reducing transport and marketing costs, creating employment and income-generating opportuni- ties, and increasing institutional capacity for efficient rural infrastructure management. Total cost: $20 million. 0 Bangladesh IDA-$6.3 million. This project will improve inland water transport op- erations and the effectiveness of sector agencies through institution building, a vessel safety improvement component, a waterways develop- ment component, and a country boat component to provide extension services to the country boat sector. Total cost: $6.3 million. Bangladesh IDA-$80 million. This project will help initiate physical implementation of the Road Master Plan for the main road network in Bangladesh, thus preserving the capital base of the road system and improving high- priority sections in a systematic manner. Total cost: $80 million. 0 § Bangladesh IDA-$273 million. This project will provide and improve critical road links in the overall transport system and improve institutional capacity of the Roads and Highway Department in road maintenance, benefiting an estimated 22 million people. Total cost: $528 million. 0 Bolivia IDA-S88 million. This project will improve transport conditions along a strategic north-south corridor, linking local Bolivian departments to Argentina and Paraguay, thus lowering transport costs, fostering eco- nomic development, improving incomes of the indigenous peoples, and establishing economic transport links between local and neighboring territories. Total cost: $1 20 million. 0 Brazil IBRD-$1 50 million. This project supports the development of a fully in- tegrated urban transport system by transferring the ow,,nership and man- agement of the Salvador subdivision of the Brazilian Urban Transport Company system from federal government to state and municipality hands. Total cost: $308 million. China IPRD-$200 million. Construction of the 152-km Hefei-Anqing Express- wvay will provide a key trade link between some of China's major cities and ports and its poorer inland provinces to alleviate the income dispar- itv between coastal and interior regions by speeding access to coastal markets. Project includes highway maintenance and traffic safety work- ers' training. Total cost: $453 million. China IBRD-$71 million. This project will reduce the economic disparities be- tween coastal and inland areas by developing an inland distribution sys- tem for containers, improving service quality, and introducing market el- ements of competition and enterprise reform. Total cost: $159 million. SUNMMARIES OF PROJECTS APPROVED 179 China IBRD-$i 50 million. Improved traffic flow, lower transport costs, cleaner air quality, and increased safety of the urban transport system in three cities in Liaoning Province will be achieved by strengthening vehicle emission controls, regulations, policymaking, and implementation capac- ity of transport institutions. Total cost: $383 million. China IBRD-$350 million. The construction of this 300-km section of the high- way between Beijing and Guangzhou will provide an important trade link between the country's major cities and remote areas and will serve approximately 40 million people. Total cost: $952 million. China IBRD-$200 million. About 10 million people will benefit from the con- struction of the 140-km coastal Zhangzhou-Zhao'an Expressway. The highway will give an economic boost to the area surrounding the Fujian and Shenzhen Provinces by promoting commerce, trade, and tourism in the region. Total cost: $596 million. 0 Colombia IBRL)-$137 million. This sustainable private-public partnership will improve transport conditions along a strategic road corridor linking Bogota with Medellin and the ports on the north coast. Efforts will seek to reduce transport costs, maintain adequate private services to mobilize equity and debt finance for road improvements, and strengthen capacity for project preparation and policy implementation. Total cost: $572 million. Cote d'lvoire IDA-S25.6 million. This project will provide general budgetary support, contribute to narrowing the external financing gap, and strengthen the government's ability to ensure availability of routine and periodic road maintenance funding at sufficient levels and at appropriate times; and facilitate transition of several sector organizations from public to private sector status. Total cost: $25.6 million. 0 Croatia IBRD-S 101 million. This project will support modernization and restruc- turing of the Croatian railway company in order to diminish its financial burden on the national budget and improve infrastructure. Total cost: $183 million. Honduras IDA-S20 million. This supplemental credit will provide urgently needed financial assistance for rehabilitating and reconstructing key roads and bridges damaged by Hurricane Mitch to help improve transport infra- structure, foster export growth, and develop the institutional and regula- tory framework of the transport sector. Total cost: $200 million. Kazakhstan IBRD-$100 million. This project will rehabilitate and maintain key parts of road infrastructure, restructure the road construction industry, and en- courage domestic and international trade through reforms in sector poli- cies and institutions. Total cost: $135 million. 0 § Lao People's IDA-$27.8 million. Critical basic infrastructure will be extended to two Democratic Republic remote northern provinces, benefiting an estimated 52,000 people in 125 villages and district communities by helping to improve living standards and socioeconomic potential and to achieve gradual integration into the national economy. Total cost: $31 million. 18() TrIE WORt,m) BANK ANNUAL REPORT 1999 Macedonia, IBRD-$32 million. This project will improve efficiency of the road and former Yugoslav railway systems and finance installation of new computer systems for Republic of the railways and equipment to help consolidate data on road conditions. Total cost: $41 million. 0 Malawi IDA-$30 million. This five-year project aims to help the government re- form its road sector, in support of economic growth and diversification by reducing transport costs and improving access. Total cost: $70 million. O § Nepal IDA-$5 million. This learning and innovation credit aims to strengthen the institutional capacity of a decentralized local governance system in its planning and managing capabilities to improve the quality, efficiency, and sustainability of rural roads in selected districts with active participa- tion of project beneficiaries. Total cost: $5.8 million. 0 Panama IBRD-$85 million. This project will improve transport efficiency and safety, reduce traffic congestion, improve the adnministration and main- tenance of roads and environmental impact analysis, as well as upgrade efficiency in the public road passenger transport industry. Total cost: $124 million. O Russian Federation IBRD-$400 million. The loan will improve the selected high-priority road network on the federal road system, including in Siberia and the Far East, and improve contract management by the Russian Federation Federal Highway Administration. Total cost: $667 million. § Senegal IDA-$90 million. An estimated 2 million people will benefit from im- provements in the supply and performance of transport infrastructure, including services, in order to create an environment for improved eco- nomic growth through expanded mobility and reduced transport costs. Total cost: $581 million. Tajikistan IDA-S5 million. This project will assist in post-flood reconstruction efforts to repair and rebuild essential infrastructure, establish the condi- tions for economic groxvth in affected rural areas, and reduce the region's vulnerability to future flood damage. Total cost: $5 million. Uganda IDA-$91 million. This adjustable program credit will help the govern- ment improve access to rural and economically productive areas and build up road sector planning and management capability Total cost: $357 million. Uruguay IRD-$64.5 million. This project wvill improve efficiency in transport ser- vices and maintenance of road infrastructure through rehabilitation of se- lected national roads and bridges, increased private sector participation in the maintenance and rehabilitation of national roads, and reinforcement of road sector management. Total cost: $137 million. Vietnam IDA-$42.7 million. Support for stronger traffic management in the cen- tral areas of Hanoi and Ho Chi Minh City will be strengthened with measures to improve traffic flows, provide new traffic signals and con- trols, segregate two- and four-wheeled traffic, improve facilities for pe- destrians, and provide necessary training. Total cost: $47 million. SUIMNIARIES OF PROJECTS APPOVED 181 URBAN DEVELOPMENT Azerbaijan IoA-$20 million. About 3,600 families will benefit from the first phase of this pilot program, w;hich will improve living standards and facilitate the repatriation of people internally displaced as a result of the Nagorno- Karabakh conflict. Total cost: $54 million. § Benin :oA-$25.5 million. This adaptable program credit is part of a six-year program designed to improve the quality of life for urban residents, par- ticularly those in low-income areas of the major cities. Total cost: $69 million. O Bolivia IDA--$32 million. This project will improve the effectiveness, efficiency, and transparency of the Bolivian public administration, to support devel- opment and poverty alleviation. Over 10( years, it will improve the qual- itv of service delivery and client orientation of government operations by creating more honest, cost-effective, results-oriented institutions. Total cost: $50 million. 0 Bosnia and IA-SI 5 million. The project is designed to strengtheni the institutional Herzegovina and financial capacity of local governments to enable them to improve municipal infrastructure and services as well as to initiate, on a pilot ba- sis, the development of a municipal credit market to provide a long-term source of financing for creditworthy municipalities -for infrastructure in- vestment. Total cost: SI 5 million. O Bosnia and IDn-$4 million. This multi-donor-supported Pilot Cultural Heritage Herzegovina Project aims to improve the climate for national reconciliation through restoration of cultural heritage in the city of Mostar It includes rebuild- ing of the Mostar Bridge, reconstruction of monuments important to each of the ethnic groups, and upgrading of historic neighborhoods. Total cost: $15.5 million § Cambodia IDA-$45.3 million. Rehabilitation of about I 10 km of high-priority national roads and 52 bridges, linking provincial areas wvith the port of Sihanoukville, will be supported in order to realize the development potential of agriculture, fisheries, tourism, and trade in rural areas. 'Total cost: $47 million. Chile iBR)-S 10. I nilbion. A total of 341 municipalities will benefit from im- proved local governance and more cfficient provision of public services through strengthened capacity of the national government to formulate, implement, and monitor decentralization policies and programs, and un- dertake municipal planning, financial and human resources. Total cost: $23 million. O § Gabon IBRD-$5 million. This learning and innovation loan xvill help finance a pilot project to design and test management methods and procedures for carrying out small-scale urban infrastructure w-orks and disseminate in- formation on such methods in poor urban areas. Total cost: $7 million. O § Guinea IDA-$ 1 8 million. This adaptable program credit w-ill assist the govern- ment in addressing economic and social imbalances prevalent in urban areas by bettering living conditions through, for instance, improved sani- tation, benefiting an estimated 800,000 people. Total cost: $60 million. 182 THE WORI.D BANK ANNUAI. REPORT 1999 0 § India tBRI)-S105 million. This project supports the Tamil Nadu state's ongoing reforms to improve urban finance through an urban development fund and municipal bond financing, decentralize urban planning and help raise living standards by financing basic infrastructure investments, including an integrated sanitation program targeted to the urban poor. Total cost: $205 million. 0 § Indonesia it),-$l100 million. Poor, urban neighborhoods will benefit from im- proved basic infrastructure that will allow for sustainable income genera- tion. Local agencies will be strengthened to help assist poor communi- ties. Total cost: $130 million. 0 Indonesia IBRD-$5 million. Improved delivery of services to the poor and increased urban productivity are expected to result from institutional reforms through innovative approaches such as community-based waste recycling programs, upgrading of vendor locations, development of small busi- nesses, cultural heritage preservation, and improved information and urban management. Total cost: $7.2 million. 0 § Kenya IDA-$40 million. An estimated 8.1 million people will benefit from this fast-track credit that will mitigate the effects of flooding caused by El Ni\io. Proceeds will be used to minimize life-threatening conditions, protect health, and repair damage to essential economic infrastructure. Total cost: $40 million. Lithuania IBRD-$20.1 million. This project supports government local administra- tion and finance reforms (consistent with EU-Accession goals) as wvell as investment projects to improve the quality and cost-effectiveness of municipal services. It will also strengthen municipal capacity delivery. Total cost: $35.73 million 0 § Morocco fRBD-$14 million. This project helps alleviate poverty in the Mledina of Fes, a major Moroccan cultural and commercial center, benefiting roughly a third of the local population through an improved infrastruc- ture network that will facilitate access for medical emergencies, fire brigades, and security services. Total cost: $27 million. 0 Philippines IBID-S 10 0 million. Participating local government units will be assisted in expanding and upgrading their basic infrastructure, services, and facili- ties and in strengthening their capacities in municipal governance, invest- ment planning, revenue generation, and project development and imple- mentation. Total cost: $134 million. Samoa IDA-S14.4 million. This project will ensure that transport and coastal infrastructure assets are economically, environmentally, and socially sus- tainable. The project is also designed to increase private sector participa- tion and reform in infrastructure. Total cost: $19 million. Uganda iDA-$22.4 million. This project -vill help build the institutional capacity of Kampala City Council to plan and execute complex investment pro- grams, establish a framework for general maintenance of infrastructure and equipment, and physically rehabilitate the Nakivubo Channel. Total cost: $25 million. SUMM\,XRIES OF PROJECTS APPROVED 183 i § Venezuela IDA-$60.7 million. An estimated 184,000 people in Caracas' informal settlements will enjoy improved living standards through the develop- ment and implementation of a community-driven, sustainable, and repli- cable infrastructure improvement program, covering water, sanitation, drainage, community centers, public lighting, electricity, resettlement housing, and risk mitigation of geologically unstable areas. Total cost: $153 million. O West Bank and Gaza Trust Fund for Gaza and West Bank-$25 million. This project will sup- port development of the Bethlehem area by helping local municipalities improve basic infrastructure services and build managerial, financial, and technical capacity. It will also support the organization and marketing of the Bethlehem 2000 celebrations, in partnership with the local private sector and other agencies and donors. Total cost: $65 million. 0 § Yemen IDA-$50 million. This project will help poor communities by creating jobs and providing infrastructure to improve services and environmental conditions, especially for women and children. Community involvement and the development of local contracting and consulting firms will help sustainabilitv. Total cost: $60 million. WATER SUPPLY AND SANITATION 0 § Argentina IBRD-$30 million. This project will support water sector reforms in me- dium-sized cities with populations of about 50,000 to 500,000, including the introduction of private sector participation in the operation and management of water utilities, adoption of appropriate regulatory frame- works, and institution of tariff policies and tested investment alternatives to better reach poor consumers, Total cost: $47.1 million. 0 § Bangladesh IDA-$32.4 million. This project will help Bangladesh address the prob- lem of arsenic-contaminated groundwater through emergency mitigation efforts, better planning of groundwater use, research for alternative water supply, and raising public awareness. Total cost: $44 million. 0 § China IBRD-$16 million; IDA-$30 million. About 3 million rural poor in four Chinese provinces will benefit from this program for a clean, safe water supply and improved sanitation and health behaviors through education and pilot investments. Total cost: S92 million. Jordan IBRD-$55 million. An estimated 2 million people, particularly in low- income households and refugee camps, will enjoy health benefits through more efficient management, operation, and delivery of water services, achieved through better leakage management, network rehabili- tation, and a meter repair program. Total cost: $136 million. Kazakhstan IBRD-$16.5 million. This pilot project aims to strengthen the capacity of the city of Aytrau to provide reliable and safe drinking water and to dispose of sewage in a sustainable, efficient, and environmentally respon- sible manner. Total cost: $21 million. 0 Mozambique IDA-$75 million. About 1 .1 million people will directly benefit from improved quality, reliability, and sustainability of water services. Total cost: Si 15 million. 184 THE WOiRLD BANK ANNUAL REPORT 1999 Philippines IBRD-$23.3 million. This first phase of this adaptable program loan will help local government units provide sustainable water and sanitation ser- vices and support Phase I of the government program to strengthen ca- pacity to manage water utilities. Total cost: $31 million. Turkey IBRD-$369 million. This project will assist in post-flood and earthquake reconstruction efforts to restore basic infrastructure in municipalities and affected rural areas, rebuild homes in the Adana Province, and reduce the region's vulnerability to damage from future natural disasters. Total cost: $685 million. Vietnam IBRD-$80.5 million. Sustainable public health improvements will be implemented in three cities. Some 1.5 million people will benefit from reduced incidence of waterborne disease, environmental degradation, flooding, and poor sanitation from increased efficiency in sanitation and drainage companies. Total cost: $119.53 million. 0 West Bank and Gaza Trust Fund for Gaza and West Bank-$21 million. This project aims to improve water and sanitation services (quality and quantity) in the southern West Bank and implement an appropriate institutional frame- work for water and wastewater service provision. Total cost: $52 million. 0 Yemen IDA-$25 million. This project will improve sanitary conditions in tar- geted areas through rehabilitated sewage and water networks, increased bulk water supply, and improved efficiency of the Sana'a National Water and Sanitation Authority. Total cost: $28 million. SUMMARIES OF PROJECTs APPROVED 185 IBRD/IDA APPENDIXES 1. Governors and Alternates of the World Bank 188 2. Executive Directors and Alternates of the World Bank and Their Voting Power 193 3. Officers of the World Bank 196 4. Offices of the World Bank 197 5. World Bank Budget by Program, Fiscal Years 1996-99 201 6. Country Eligibility for Borrowing from the World Bank 202 7. Note to Appendixes 7-11 204 7a. IBRD and IDA Disbursements for Foreign and Local Expenditures 205 7b. IBRD and IDA Disbursements for Foreign Expenditures, by Source of Supply 205 7c. IBRD and IDA Payments to Supplying Eligible Borrowing Countries for Local and Foreign Procurement in Fiscal Year 1999 206 8. IBRD and IDA Payments to Supplying Countries for Foreign Procurement 209 9. IBRD and IDA Payments to Supplying Countries for Foreign Procurement, by Description of Goods, Fiscal Year 1999 212 10. IBRD and IDA Disbursements for Foreign Expenditures, by Description of Goods (for Investment Lending), Fiscal Years 1997-99 215 11. Estimates of IBRD and IDA Payments to Supplying Countries for Foreign Procurement under Adjustment Lending, Fiscal Year 1999 216 12. IBRD and IDA Cumulative Lending by Major Purpose and Region, June 30, 1999 217 13. IBRD and IDA Cumulative Lending by Country, June 30, 1999 219 14. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1999, by Region, July 1, 1998-June 30, 1999 223 15. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1999, by Purpose, July 1, 1998-June 30, 1999 225 16. Development Committee Communiques, Fiscal Year 1998 231 187 GOVERNORS AND ALTERNATES OF APPENDIX I THE WORLD BANK June 30, 1999 Member Governor Alternate Afghanistan (vacant) [vacant) Albania Arben Mvlalaj Fatos Ibrahimi Algeria Abdelkrim Harchaoui Omar Bougara Angola Emmanuel Moreira Carneiro Sebastiao Bastos Lavrador Antigua and Barbuda + John E. St. Luce Ludolph Brown Argentina Roque Benjamin Fernandez Pedro Pou Armenia Armen R. Darbinian Garnik Nanagulyan Australia Peter Costello Kathy Sullivan Austria Wolfgang Ruttenstorfer Hans-Dietmar Schweisgut Azerbaijan Elman Siradjogly Rustamov Fuad Akhundov Bahamas, The + William C. Allen Ruth Millar Bahrain - Abdulla Hassan Saif Zakaria Ahmed Hejres Bangladesh Shah A.AvI.S. Kibria Mlasihur Rahman Barbados + Owven S. Arthur Erskine R. Griffith Belarus + Gennady V Novitskv Vladimir N. Shimov Belgium Jean-Jacques Viseur Guy Quaden Belize SaidW X lusa Yvonne S. Hyde Benin Albert Te\voedjre Pierre John Igue Bhutan Yeshey Zimba (vacant) Bolivia Herbert Mueller Costas Alberto Valdes Andreatta Bosnia and Herzegovina Mirsad Kurtovic Drago Bilandzija Botswana Ponatshego H.K. Kedikilwe Serwalo S.G. Tumelo Brazil Pedro Sampaio Malan Arminio Fraga Neto Brunei Darussalam + Haji Hassanal Bolkiah Haji Selamat Haji Munap Bulgaria - Muravei Radev Martin Zaimov Burkina Faso Tertius Zongo Patrice Nikiema Burundi Astere Girukwvigomba Leon Nimbona Cambodia Keat Chhon Sun Chan Thol Cameroon Justin Ndioro Daniel Njankouo Lamere Canada Paul Martin Huguette Labelle Cape Verde Antonio Gualberto do Rosario Jose Ulisses Correia e Silva Central African Republic Anicet Georges Dologuele Jacob Mbaitadjim Chad Mahamat Ali Hassan Abderhamane Dadi Chile Eduardo Aninat Joaquin Vial China Xiang Huaicheng Jin Liqun Colombia Juan Camilo Restrepo Salazar Jaime Ruiz Comoros Mohamed Abdou Madi Maoulana Charif Congo, Democratic Republic of Fernand Tala-Ngai Jean-Claude Masangu Mulongo Congo, Republic of Mathias Dzon Clement Mierassa Costa Rica Leonel Baruch Eduardo Lizano Fait 188 THE WORLD BANK ANNUAI. REPORT 1999 Member Governor Alternate C6te d'Ivoire Daniel Kablan Duncan N'Goran Niamien Croatia Borislav Skegro Josip Kulisic Cyprus Takis Klerides Antonis Malaos Czech Republic Ivo Svoboda Oldrich Dedek Denmark Poul Nielson Ellen Margrethe Loj Djibouti Yacin Elmi Bouh Nouh Omar Miguil Dominica Julius C. Timothy Cary A. Harris Dominican Republic Hector Manuel Valdez Albizu Luis Manuel Piantini M. Ecuador Ana Lucia Armijos Hidalgo M4auricio Pareja Canelos Egypt, Arab Republic of Atef Mohamed Mohamed Ebeid Youssef Boutros Ghali El Salvador Juan Jose Daboub Jose Luis Trigueros Equatorial Guinea Antonio Nve Ngu Miguel Abia Biteo Eritrea Gebreselassie Yosief (vacant) Estonia + Siim Kallas Mihkel Parnoja Ethiopia Sufian Ahmed Girma Birru Fiji Mahendra Pal Chaudhry Savenaca Narube Finland Sauli Niinisto Pekka Haavisto France Dominique Strauss-Kahn Jean Lemierre Gabon Casimir Oye-Mba Claude Ayo iguendha Gambia, The Famara L. Jatta Yusupha A. Kah Georgia David Onoprishvili Vladimer Papava Germany Heidemarie Wieczorek-Zeul Caio Koch-Weser Ghana Richard Kwvame Peprah Victor Selormey Greece Yannos Papantoniou Christos Pachtas Grenada Keith Mitchell Garvey Louison Guatemala Pedro Miguel Lamport K. Edin Hnomero Velasquez Escobedo Guinea Elh. Th. Mamadou Cellou Diallo Cellou Dalein Diallo Guinea-Bissau Issufo Sanha Issufi Sane Guyana Bharrat Jagdeo Michael Shree Chand Haiti Fred Joseph Fritz Jean Honduras Gabriela Nunez de Reyes Victoria Asfura de Diaz Hungary Zsigmond Jarai Werner Riecke Iceland Halldor Asgrimsson Geir Hilniar Haarde India Yashwant Sinha Vijay Layman Kelkar Indonesia Bambang Subianto Miranda S. Goeltom Iran, Islamic Republic of Hossein Namazi Mehdi Navab Motlagh Iraq Issam Rashid Hwaish Hashim Ali Obaid Ireland Charlie McCreevy Paddy Mullarkey Israel Jacob A. Frenkel Ben-Zion Zilberfarb Italy Antonio Fazio Mario Draghi APPENDIX ONE 189 GOVERNORS AND ALTERNATES OF APPENDIX 1 THE WORLD BANK (continued) June 30, 1999 Member Governor Alternate Jamaica + Omar Lloyd Davies WVesley Hughes Japan Kiichi Mivazawa Masaru Hayami Jordan Rima Khalaf Humaidi Abderrzaq Bani Hani Kazakhstan Oraz Jandosov Roman Solodchenko Kenya Yekoyada F.O. Masakhalia Margaret Chemengich Kiribati Beniamina Tinga Bureti M"illiams Korea, Republic of Bong-Kyun Kang Chol-Hwan Chon Kuwait Ali Salem Al-Ali Al-Sabah Bader Meshari Al-Humraidhi Kyrgyz Republic Marat Sultanov Urkaly T Isaev Lao People's Democratic Republic Khamphoui Keoboualapha Phiane Philakone Latvia Roberts Zile Ingrida tUdre Lebanon Georges Corm Nasser Saidi Lesotho Leketekete Victor Ketso Molelekeng E. Rapolaki Liberia John Weseh McClain (vacant) Libya Mohamed A. Bait Elmal (vacant) Lithuania + Algirdas G. Semeta Arvydas Kregzde Luxembourg Luc Frieden Jean Guill Macedonia, former Boris Stojmcnov Zlatka Popovska Yugoslav Republic of Madagascar Pierrot J. Rajaonarivelo Constant Hor&ae Malawi Cassim Chilumpha 'Ted A. Kalebe Malaysia Mustapa Mohamed Othman Mohd Rijal Maldives Fathulla Jameel Adam Mlaniku Mali Ahmed El Madani Diallo Soumaila Cisse Malta + John Dalli Joseph 1'. Portelli Marshall Islands Tony de Brum David Blake Mauritania Mohamed Ould Nany Abdallah Otuld Hormtallah vlauritius Rundheersing Bheenick Dharamn Dcv M\danraj Mexico Jose Angel Gurria Trevino Mlartin M. Werner Micronesia, Federated States of John Ehsa Sebastian L. Ancial Moldova Anatol Arapu DuLmitru UrsU Mongolia Yansanjav Ochirsukh Jigjid Ulncnbat Morocco Fathallah Oualalou Ahmed Lahlinmi Alami Mozambique Adriano Afonso Maleiane Luisa Dias Dingo Mvanmar Khin Maung Theimi Soe Lo Namibia + Saara Kuugongeiwa isortLoaije Maamberua Nepal Mahesh Acharya Rain Binod Bhattarai Netherlands Gerrit Zalm Eveline flertkens New Zealand Bill English Alan Bollard Nicaragua Esteban Duque Estrada Mario De Franco Niger Ide Gnandou Acnlaou Salan 190 THFI WORLD BANK ANNUAL REPORT 1999 Member Governor Alternate Nigeria Adamu Ciroma Samuel Chukwuma Nwokedi Norway Hilde Frafiord Johnson Leiv Lunde Oman Ahmed Bin Abdulnabi Macki .Mohammed bin Nasser Al-Khasibi Pakistan 1M. Ishaq Dar Zaheer Saijad Palau Tommy Remengesau, Jr. Elbuchel Sadang Panama Fernando Aramburu Porras Rene Luciani Lasso Papua New Guinea lairo Lasaro Brown Bai Paraguay Federico Zayas Anibal Fernando Paciello Rodriguez Peru Victor Joy Way Alfredo Jalilie Awapara Philippines Edgardo B. Espiritu Gabriel C. Singson Poland Hanna Gronkiewicz-Waltz Ryszard Kokoszczynski Portugal Antonio do Sousa Franco Fernando Teixeira dos Santos Qatar + Youssef Hussain Kamal Abdullah Bin Khalid Al-Attivah Romania + Decebal Traian Remes Emil Iota Ghizari Russian Federation Yuri Maslyukov Andrei Shapovaliants Rwanda Donald Kaberuka Jean .Marie Karekezi St. Kitts atnd Nevis Denzil Douglas Timothy Harris St. Lucia Kenny D. Anthony Bernard La Corbiniere St. Vincent and the Grenadines James F. Mitchell Maurice Edwards Samoa Tuilaepa S. Malielegaoi Epa Tuioti Sao Drm6 and Principe Acacio Elba Bonfim MIaria das Neves Batista de Sousa Saudi Arabia Ibrahim A. Al-Assaf Jobarah Al-Suraisry Senegal Mohamed El MNfoustapha Diagne El Hadj Ibrahima Sall Seychelles + leremie Bonnelame Alain Butler-Payette Sierra leone James O.C. Jonah James Bucknall Singapore + Richard Flu Tsu Tau Lim Siong Guan Slovak Republic Ivan Miklos Vladimir Masar Slovenia Miitja Gaspari Irena Sodin Solomon Islands Alpha Kimata George Kiriau Somalia (vacant) (vacant) South Africa Trevor Andrew Manuel Gill Marcus Spain Rodrigo de Rato Figaredo Elena Pisonero Ruiz Sri Lanka Chandrika Bandaranaika Kamaratunga Dixon Nilaweera Sudan Abdel Wahab Osman Izzedin Ibrahim Hassan Suriname + Tjandrikapersad Gobardhan Lesley Winter Swaziland Nl/ozi Sithole MIusa D. Fakudze Swveden Bosse Ringholm Pierre Schori Switzerland Pascal Couchepin Joseph Deiss Syrian Arab Republic Nlohammed Khaled Al-Mahayni Mohamad Bittar Tajikistan Yakhvo N. Azimov Murotali M. Alimardanov APPENDIX ONE 191 GOVERNORS AND ALTERNATES OF APPENDIX 1 THE WORLD BANK ('ontinued) June 30, 1999 Member Governor Alternate Tanzania Nassoro Malocho Raphael 0. Mollel Thailand Tarrin Nimmanahaeminda Suphachai Phisitvanich Togo Abdoul-Hamid S.B. Tidjani-Dourodjaye Kossi Assimaidou Tonga Kinikinilau Tutoatasi Fakafanua Aisake V Eke Trinidad and Tobago Brian Kuei Tung Kamal Mankee Tunisia Mohamed Ghannouchi Abdelhamid Triki Turkey Yener Dincmen Cuneyt Sel Turkmenistan + Hudaiberdy A. Orazov Ovez Agaev Uganda Gerald M. Ssendaula Emmanuel Tumusiime-Mutebile Ukraine + Sergiy L. Tigipko Roman Shpek United Arab Emirates Hamdan bin Rashid Al-Maktoum Mohamed K. Khirbash United Kingdom Clare Short Gordon Brown United States Robert E. Rubin Stuart E. Eizenstat Uruguay + Luis Mosca Ariel Davrieux Uzbekistan Bakhtiyar S. Khamidov Akram Mukhidov Vanuatu Sela Molisa Jeffrv Wilfred Venezuela + Jorge Giordani Maritza lzaguirre Vietnam Nguyen Tan Dung Le Duc Thuy Yemen, Republic of Ahmed Mohamed Sofan Anwar Rizq Al-Harazi Zambia Edith Zewelani Nawakwi Benjamin M\lweene Zimbabwe Herbert M. Murerwa Leonard Ladislas Tsumba + Not a member of IDA 192 THE WORLD BANK ANNUAL REPORT 1999 EXECU T'IVE DIRECTORS AND ALTERNATES APPENDIX 2 OF THE WORLD BANK AND THEIR VOTING POWER Jioe 30, 1999 IBRD IDA Execttive Total % of Total /o of director Alternate Casting votes of votes total votes total Appointed Jan Piercy Michael Marek United States 265,219 16.53 1,745,962 14.99 Satoru Miyamura Akira Kamntomai Japan 127,250 7.93 1,252,764 10.75 Helmut Schaffer Eckhardt Biskup Germany 72,649 4.53 820,259 7.04 Jean-Claude Milleron Jean Pesme France 69,647 4.34 497,297 4.27 Stephen Pickford Myles Wickstead United Kingdom 69,647 4.34 582,514 5.00 Elected Ruth Bachmayer L.uc Hubloue Austria, Belarus,' Belgiumr, Czech 76,720 4.78 498,386 4.28 (Austria) (Belgium) Republic, Hungary, Kazakhstan, Luxembourg, Slovak Republic, Slovenia, Turkey Pieter Stek Tamara Solyanyk Armenia, Bosnia and Herzegovina, 72,208 4.50 420,880 3.61 (Netherlands) (Ukraine) Bulgaria,3 Croatia, Cyprus, Georgia, Israel, Macedonia (former Yugoslav Republic of), Moldova, Netherlands, Romania,' Ukraine' Federico Ferrer (vacant) Costa Rica, El Salvador, Guatemala, 68,475 4.27 244,522 2.10 (Spain) Honduras, Mexico, Nicaragua, Spain, Venezuela' Terrie O'Leary Alan David Slusher Antigua and Barbuda,'The 62,217 3.88 478,284 4.11 (Canada) (Belize) Bahamas,3 Barbados," Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica," St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines Murilo Portugal Patricio Rubianes Brazil, Colombia, Dominican 58,124 3.62 330,694 2.84 (Brazil) (Ecuador) Republic, Ecuador, Haiti, Panama, Philippines, Suriname,3Trinidad and Tobago Young-Hoi Leeh Lewis D Holden Australia, Cambodia, Kiribati, 55,800 3.48 342,480 2.94 (Republic of (New Zealand) Korea (Republic of), Marshall Korea) Islands, Micronesia (Federated SM.tes of), Mongolia, Ness Zealand, Palau, Papua New- Guinea, Samoa, Solomon Islands, Varuatu Godfrey Gaoseb Girmai Abraham Angola, Botswana, Burundi, Eritrea, 55,190 3.44 465,400 4.00 (Namibia) (Eritrea) Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malavsi, Mlozambique, Namibia,' Nigeria, Seychelles,3 Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe APPENDIX Two 193 EXECUTIvE DIRECTORS AND ALTERNATES APPENDIX 2 OF THE WORLD BANK AND THEIR VOTING POWER (continuei) June 3 0, 1999 IBRD IDA Exectutive Total %, of Total A of director Alterniate Castinig votes of votes total votes total Franco Helena Cordeiro Albania, Greece, Italy, Malta," 55,093 3. 43 458,030 3.93 Passacantanclo (Portugal) Portugal (Italy) Surlcirda SillglY` Syecl Ahlted Bangladesh. Bhutanl, India, 54,945 3.43 496,937 4.27 (India) (Bangladesh) Sri Lanka Inaamul Haque Mohamed Dhif Algeria, Ghana, Iran (Islamic 54,052 3.37 237,322 2.04 (Pakistan) (Algeria) Republic of), Iraq, Mlorocco, Pakistan, Tiboisia llkka Niemi Anna M. Brandt Denmark Estonia," Finland, 50,839 3.17 565,573 4.86 (Finland) (Sweden) Iceland, Latsia, I.ithuania,' Norwvay, Sweden Matthias Meyer Jerzy Hylewski Azerbaijan, Kyrgyz Republic, 46,096 2.87 4(04,7(36 3.47 [Switzcrland) (Poland) Poland, Switzerland, Tajikistan, Turkmenistan,' Uzbekistan Zhu Xian Zou Jiavi China 45,049 2.81 219,696 1.89 (China) (China) Khalid H.Alyahva KhaledAI-Aboodi SaudiArabia 45,045 2.81 412,982 3.55 (Saudi Arabia) (Saudi Arabia) Andrei Bugrov Eugene Miagkov Russian Federation 45,045 2.81 31,593 0.27 (Russian (Russian Federation) Federation) Khalid M. Al-Saad Mohamed Bahrain," Egypt (Arab Republic of), 43,984 2.74 262,432 2.25 (Kuwait) Kamel Amr Jordan, Kuwait, Lebanon, I.ibya, (Arab Republic of Maldives, Oman, Qatar,' Syrian Egypt) Arab Republic, United Arab Emirates, Yemen (Republic of) Jannes Htitagalung Wan Abdul Aiz Brunei Darussalam, Fiji, lndoniesia, 41,096 2.56 311,463 2.67 (Indonesia) Wan Abdullah lao People's Democratic Republic, (Malaysia) Malaysia, Myanmar, Nepal, Singapore,' Thailand, Tonga, Vietnam Valeriano F. Garcia Ivan Rivera Argentina, Bolivia, Chile, 37,499 2.34 22(0,223 1.S9 (Argentina) (Peru) Paragtuay, Peru, Umrguay"' Bassarv 'Yotre Paulo F. Gomes Benin, Burkina Faso, Cameroon, 32,2 2 2 2.01 348,156 2.99 (Mali) (Guinea-Bissau) Cape Verde, Central African Republic, Chad, Cormoros, Congo (Democratic RepuLblic of), Congo (Republic of), Cote d'lvoire, Djibouti, Equatorial Guiinea, Gabon, Guiniea, Gtuinea-Bissaul, Madagascar, Mali, MauLritania, Mauritius, Niger, Rwaanda, Sao Tome and Principe, Senegal, Togo 194 TIIE WORI.D BANK ANINUAl REPORI 1999 In addition to the executive directors and alternates shown in the foregoing list, the following served after October 31, 1993 Executive director End of period of service Alternate director End of period of service LiYong December 31 1998 Kacim Brachemi June 14, 1999 (China) (Algeria) Christopher Legg Milarch 3 1, 1999 (Australia) M'lihai Tanasescu May 31, 1999 (Romania) Zhao Xiaovu February 28, 1 99c (China) Note: Afghonlistaou (550 uotes in IBRD and 13,557 votes in IDA) ond So;nolit (8092 votes in IBRD amd 10,506 votes in IDA) dlid not participte in the 1998 Regzlao- Election of Executive Directors. a. Memtzber of the IBRD only. Ic. ro be succeeded bvy Neil Htyden (Australic) effective August 1, 1999. c To be szucceeded by B.P SinZgli (India) effectve August I I 999. APPEFNDIX TWO 195 OFFICERS OF THE WORID BANK APPENDIX 3 June 30, 1999 President James D. Wrolfensohn Managing Difector Sven Sandstrom Managing Director and Corporate Secretary Shengman Zhang Managing Director and Executive Vice President, IFC Peter Woicke Senior Vice President and Chief Financial Officer Gare Perlin Senior V ice President, Development Economics, and Chief Economist Joseph E. Stiglitz Vice President and Hiead, Poverty Reduction and Economic Management Netsvork Masood Ahmed Vice President, Latin America and the Caribbean Shahid Javed Burki Vice President, Financial Sector and Netwvork Head, Private Sector and Infrastructure Manuel Conthe Vice President an d Head, Human Development Network David de Ferranti Vice President, Middle East and North Africa Kemal Dervis Vice President and Head, Eneironmentally and Socially Sustainable Development Network Ian Johnson Vice President, Resource Mobilization and Cofinancing Motoo Kusakabe Vice President, Europe and Central Asia Johannes F Linn Vice President, Africa Callisto Madavo Vice President, External Affairs Mark Malloch Broxwn Vice President and Treasurer Afsaneh Mashavekhi Beschloss Vice President and Controller Jules WN Muis Vice President, South Asia Mieko Nishimizu Vice President and General Counsel Andres Rigo Sureda (Acting) Vice President, External Affairs, Europe Jean-Francois Rischard Vice Presidenit, Africa Jean-Louis Sarbib Vice President, Special Programs M. Isrnail Serageldin Vice President, East Asia and Pacific Jean-Michel Severino Vice President, Infrastructure and Private Sector Development and Network Head, Finance, Private Sector and Infrastructure Nemat Shafik Vice President and Head, Operational Core Services Network Katherine Sierra Vice President, Strategy and Resource Management Anil Sood Vice P1resident, Human Resources Richard Stern Chief Information Officer and Head, Information Solutions Network Mohamed Mubsin Director-General, Operations Evaluation Robert Picciotto 196 THE WORLD BANK ANNUAL REPORT 1999 OFFICES OF THE WORLD BANK APPENDIX 4 June 30, 1999 Headquarters: 1818 H Street, N.W.,Washington, D.C. 20433, U.S.A. New York Office: Office of the Special Representative to the United Nations, 809 United Nations llaza, Suite 9()0, Newv Yor;k, N.Y., 10017,U.SA Eturope: The World Bank, 66 avenue d'Tena, 715 16 Paris, France Brussels: The World Bank, 10 rue Montoyer, B-1000 Brussels, Belgium London: The World Bank, New Zealand House, 15th floor, Haymarket, I.ondon, SWI Y4TE, England Tokyo: The World Bank, Fukoku Seinmei Building, 10th Floor, 2-2-2 Uchisaiw-ai-cho, Chiyoda-ku, Tokyo 100-1)011, Japan * Regiossal Mission in Eastern Africa: The World Bank, Hill Park Building, Upper Hill, Nairobi, Kenya (mailing address: PO. Box 30577) * Regional Mission in Western Africa: Banque Mondiale, Corner of Booker Washington and Jacques Aka Streets, Cocody, Ahidjan 01, Cote d'lvoire (mailing address: BR.P. 1850) Albania: The World Bank, Deshmoret e 4 Shkurtit, No. 34, Tirana, Albania Angola Liaison Office: Banco Mundial, Rua Alfredo Troni, (Edificio BPC), No. 15, 14 Andar (l 4th Floor) Iuanda, Angola (mailing address: Caixa Postal 1331) * Argentina: Banco Mundial, Edificio Bouchard, Bouchard 547, 3er Piso, 1106 Buenos Aires, Argentina Armenia: 'I'he World Bank, Republic Square, 2 Khorhertarani Street, Yerevan 10, Armenia Azerbaijan: The NVorld Bank, 91-95 Mirza Mansur Street, Icheri Sheher, Baku 370004, Azerbaijan * Bangladesh: The World Bank, 3A Paribagh, Dhaka 1000, Bangladesh (mailing address: G.RO. 97) Belarus: The World Bank, 6A Partizansky Avenue, 5th Floor, Minsk, 220033, Republic of Belarus Benin: The WVorld Bank, Zone Residentielle de la Radio, Cotonou, Benin (mailing address: B.P. 03-2112) Bolivia: Banco Mundial, Edificio BISA, Piso 9, 16 de Julio 1628, La Paz, Bolivia (mailing address: Casilla 8692) Bosnia and Herzegovina: The World Bank, Hamdije Kresevljakovica 19/5, 711000 Sarajevo, Bosnia and Herzegovina * Brazil: Banco Mundial, SCN Quadra 02 - Lote A - Edificio, Corporate Financial Center, Conjuntos 303/304, 603, Brasilia, DF 70712-900, Brazil Brazil: Banco Mundial, Avenida Isaac Povoas, No. 1251, Edificio Nacional Palacius, Sala 603 - Centro, 7S.045-640 Cuiaba - (MT) Brazil Brazil: Banco Mvlundial, Edificio SUDENE, Sala IS-108, Cidade Universitaria, 50670-900 Recife, PE, Brazil Bulgaria: The World Bank, World Trade Center - Interpred, 36, Dragan Tsankov Blvd., Sofia 1057, Bulgaria Bturkina Faso: The World Bank, Immeuble BICIA, 3-eine etage, Ouagadougou, Burkina Faso (mailing address: B.P 622) Bnrundi: The World Bank, Avenue du IS Septembre, Bujumbura, Burundi (mailing address: B.P. 2637) Cambodia: The World Bank, 164 Pasteur Street (STR 51), Phnom Penh, Cambodia (mailing address: PO. Box 877) Cameroon: The World Bank, Street 1.792, No. 186, Yaounde, Cameroon (mailing address: P.O. Box 1128) APPENDIX FOUR 197 OFFICES OF T HE WORLD BANK (conhtinued) APPENDIx 4 lone 30, 1999 Central Africani Republic: Banque Mondiale, rue des Missions, Bangui, C.A.R. Chad: The World Bank, Avenue Charles de Gaulle, et Avenue du Commandant Lamy, Quartier Bololo N'Djamena, Chad (mailing address: P.O. Box 146) China: The World Bank Resident Mission in China, 9th Floot, Building A, Fuhua Mansion, No. 8, Chaoyangmen Beidajie, Dongcheng District, Beijing 10002-7, China Colombia: Banco Mundial, Diagonal 35 No. 5-98, Bogota, Colombia (mailing address: Apartado Aereo 102293 Dominicain Republic: Calle Virgilio Diaz Ordonez #36 esq. Gustavo Mejia Ricart, Edificio Mezzo Tempo, Suite 401, 4ta planta, Santo Domingo, R.D. Ecuador: Banco Mundial, Calle 12 de Octubre v Cordero, World Trade Center, 13 piso, Quite, Ecuador * Egypt: The World Bank, World Trade Center, 1191 Corniche El-Nil, 15th Floor, Boulaq, Cairo, Egypt 11 221 Eritrea: The WNorld Bank, ALPHA Building, First Floor, Andinet Avenue, Asmara, Eritrea Estonia: The World Bank, Suur-Ameerika 1,13th floor, Tallinn EE0100, Estonia Ethiopia: The World Bank, Africa Avenue, Bole Road, Addis Ahaba, Ethiopia (mailing address: P.O. Box 5515) Georgia: The World Bank, IS A Chonkadze St., ['bilisi, Georgia * Ghana: The World Bank, 69, Dr. Isert Road, [formerly 69, Eighth Avenue Extension), North Ridge Residential Area, Accra, Ghana (mailing address: P.O. Box M27) Guatemala: Bance Mtndial, 13 Calle 3-40, Zona 10, Edificin Atlantis, Piso 14, Suite Andromeda, Guatemala City Guatemala Guinea: Banque Mondiale, Immeuble de l'Archev&che, Face Baic des Anges, Conakry, Guinea (mailing address: B.P. 1420) Haiti: The WVorld Bank, 1 rue Emeric (Montana), Port-au-Prince, Haiti Honduras Liaison Office: Banco Mundial, Centro Financiero BANEXPO, Boulevard San Juan Bosco,Colonia Payaqui, Apartado Postal 3591,Tegucigalpa, Honduras Hungary: The World Bank, Bajcsy-Zsilinszky ut 42-46, 5th fBoor, 1054 Budapest, Hungary * India: T'he World Bank, 70 Lodi Estate, New Delhi 110 003, India (mailing address: P 0. Box 416, New Delhi 110 001) * Indonesia: The World Bank, Jakarta Stock Exchange Building, Tower 2, 12th Floor, Sudirman Central Business District (SCBD), Jl. Jendral Sudirman Kay 52-53, Jakarta 12190, Indonesia (mailing address: P.O. Box 324/JKT) Jamaica: The NVorld Bank, Island Life Center, 6 St. Lucia Avenue, Third Floor, Kingston 5, Jamaica Kazakhstani: The World Bank, 41 Kazybeck bi Street. 4th Flooe, 480100 Almaty; Republic of Kazakhstan * Korea, Reptublic of: The World Bank, 11th Floor, Youngpoong Building, # 33 Suhrin-Dong, Chongro-ku, Seoul 110)- 110, Republic of Korea Kvrgyz Republic: 'I'he NVorld Bank, 214. Moskovskaya Street, Bishkek 720010, Kyrgyz Republic 198 TiiF, Woei.o BANK ANNU Ai. RlEPORT 1999 Laos: The WVorld Bank, Nehru Road, Pathou Xay Vientiane, Lao P.D.R. Latvia: The World Bank, 2 Smilsu Street, Riga, Latvia LV-1 162 Lesotho: The WVorld Bank Liaison Office, UN House, United Nations Road, Maseru, Lesotho Lithuania: The World Bank, Vilniaus Str. 28, 2600 'Vilnius, Lithuania Macedonia, former Yugoslav Republic of: The WVorld Bank, 34 Leninova Street, 91000 Skopje, Macedonia Madagascar: Banque Mondiale, I bis, rue Patrice Lumumba, Antananarivo 101, Madagascar (mailing address: B.P. 4140) Malawi: The World Bank, Development House, Capital City, Lilongwe 3, Malawi (mailing address: P.O. Box 30557) Mali: Banque Mondiale, Immeuble SOGEFIH, Centre Commercial Rue 321, Quartier du Fleuve, Bamako, Mali (mailing address: B.P 1864) Mauritania: The World Bank, Villa No. 30, Lot A, Quartier Socogim, Nouakchott, Mauritania (mailing address: B.P 667) * Mexico: The World Bank, Insurgentes Sur 1605, Piso 24, San Jose Insurgentes, 03900 Mexico, D. F. Mexico Moldova: The World Bank, Sciusev str., 76/6, MD 2012, Chisinau, Republic of Moldova Mongolia: The World Bank, 11-A Peace Avenue, Ulaanbaatar 210648, Mongolia Morocco: The WVorld Bank, 7, rue Larbi Ben Abdellah, Rabat-Souissi, Morocco Mozambique: The World Bank, Ave. Kenneth Kaunda, 1224, Maputo, Mozambique (mailing address: Caixa Postal 4053) * Nepal: The World Bank, Yak and Yeti Hotel Complex, Lal Durbar, Kathmandu, Nepal (mailing address: P.O. Box 7983 Nicaragua: Banco Mundial, De los Semaforos de la Centroamerica, 400 mts. Abajo, Segundo Piso Edificio SYSCOM, Managua, Nicaragua Niger: Banque Mondiale, 42 rue des Dallols, Niamey, Niger (mailing address: B.P. 12402) Nigeria: The World Bank, Plot 433, Yakubu Gowon Crescent, Opposite Ecowas Secretariat, Asokoro District, Abuja, Nigeria (mailing address: P.O. Box 2826, Garki) * Pakistan: The WVorld Bank, 20 A, Shahrah-e-Jamhuriyat, Ramna 5, G-5/1, Islamabad, Pakistan (mailing address: PO. Box 1025) Papua New Guinea: World Bank Liaison Office, c/o Islander Travelodge Hotel, Suite 102, Port Moresby, Papua New Guinea (mailing address: PO. Box 1877) Paraguay: Banco Mundial, 14 de Mayo No. 535, Asunci6n, Paraguay Peru: Banco Mundial, Avenida Pardo v Aliaga 640, Piso 16, San Isidro, Lima, Peru * Philippines: The World Bank, Resident Mission Philippines, 23rd Floor, The Taipan Place Bldg., Emerald Avenue, Ortigas Center, Pasig City, llanila, Philippines * Poland: The World Bank, 53, Emilii Plater St., Warsaw Financial Center, 9th Floor, 00-113 Warsa-, Poland Romania: The World Bank, Boulevard Dacia 83, Sector 2, Bucharest, Romania * Russian Federation: The World Bank, Sadovaya-Kudrinskaya No. 3, Moscow 123242, Russian Federation Rwanda: The World Bank, Blvd. de la Revolution, SORAS Building, Kigali, Rwanda (mailing address: P.O. Box 609) APPENDIX FOUR 199 OFFICES OF T HE WORLD BANK (continued) APPENDIX 4 June 30, 1999 Saudi Arabia: The World Bank, UNDP Building King Faisal Street, Riyadh 11432, Saudi Arabia (mailing address: P.O. Box 5900) Senegal: Banque Mondiale, 3 Place de l Independance, Dakar, Senegal (mailing address: B.PE3296) Sierra Leone: The World Bank Liaison Office, Regent House, 14 Wilberforce Street, Freetown, Sierra Leone South Africa: 'I'he World Bank, 1st Floor, Pro Equity Court, 1250 Pretorius Street, Hatfield, Pretoria 00)83, Republic of South Africa (mailing address: P.O. Box 12629) * Sri Lanka: 'I'he World Bank, Development Finance Corporation of Ceylon, (DFCC) Bank Building, I st Floor, 73/5 Galle Road, Colombo 3, Sri Lanka (mailing address: P.O. Box 1761) Talikistan: The NVorld Bank, Rudaki Ave. 95/1, 7th Floor, Dushanbe, T'ajikistan * Tanzania: The World Bank, 50 Mirambo Street, Dar-es-Salaam, Tanzania (mailing address: PgO. Box 2054) * Thailand: The World Bank, 14th Floor, Tower A, Diethelm Towers, 93/1 Wireless Road, Bangkok 10330, Thailand Togo: The World Bank, 169 Boulevard du 13 Janvier, Immeuble BTCI, 8-eme etage, l omc, logo (mailing address: B P.3915) *Turkey: The World Bank, Ataturk Bulvari, No. 211, Gama-Guris Building Kat 6, 06683 Kavaklidere, Ankara, Turkey Turkmenistan: Liaison Office, United Nations Building, Atabaev Street, 40 Ashgabat 744000, Turkrnenistan * Uganda: The World Bank, Lumumba Road, Rwenzori IHlouse, 4th Floor, Kampala, Uganda (mailing address: P.O. Box 4463) Ukraine: The World Bank, 38 / 44, Pochainynska St., Floors 2 and 3, Kiev 252070, Ukraine Uzbekistan: The World Bank Resident Mission, Uzbekistan, 43, Academician Suleimanova St., Tashkent, Uzbekistan 700))17 Venezuela: Banco Mundial, Avenida Francisco de Miranda con Avenida del Parque, Torre Edicampo, Piso 9, Campo Alegre, Caracas, Venezuela ' Vietnam: The World Bank, 53 Tran Phu Street, FIanoi, Vietnam *West Bank and Gaza: The World Bank, Gaza City, Gaza (mailing address: P.O. Box 54842, Jerusalem) Yemen: The World Bank, Hadda, Street No. 40; Off Damascus Road, Sana'a, Republic of Yemen (mailing address: P.O. Box 18152) Zambia: The World Bank,Anglo American Building, 74 Independence Avenue, 3rd Floor, Lusaka, Zambia 1)0101 (mailing address: PO. Box 35410) Zimbabwe: The World Bank, Finsure House, 5th Floor, 84 - 86 Union Avenue, Harare, Zimbabwe (mailing address: P.O. Box 2960) * Country Directors are in the field. 200 THE WORILD BANK ANNUAI. REPORT 1999 WORLD BANK BUDGET BY PROGRAM APPENDIX 5 FiSCAL, YEARS 1996-99 (miilliokns of US. dollars) Actual FY1996 FY1997 FY1998 FY1999 Programt Regional 669.5 650. 7 711.8 738.1 Networks 61.6 61.2 84.1 99.4 Other Operational Programs 1.1 2.1 4.6 10.7 Development Economnics and World Bank Institute 80.5 87.8 95.3 101.8 Financial 74.9 74.4 74.9 83.3 Admninistrative 124.6 122.0 139.5 126.5 Corporate Management and Services 85.1 88.6 91.9 93.5 Centrally Managed Overheads and Benefits 202.6 195.0 67.5 60.3 Financial Sector Restructoring Program 0.0 0.0 4.1 14.5 Administrative Budget 1,299.8 1,281.8 1,273.7 1,328.2 Less: Reimbursemients and Fee Incomne (102.4) (107.6) (102.9) (115.1] Net Administrative Budget 1,197.4 1,174.3 1,170.8 1,213.1 Development Grant Facility 112.7 120.0 110.3 129.4 Corporate Secretariat 51.0 53.0 571.1 58.1 Operations Evaluation 14.9 15.2 16.0 16.8 Less: Reimbursements and Fee Income (0. 1) (0.5) (1.0) (1.3) Total Adminiistrative Budget 1-,37. 1,362.0 1,353.3 1,416.2 APPENDix FIVE 201 COUNTRY ELIGIBILITY FOR BORROWING APPENDIX 6 FROM THE WORLD BANK (as of June 30, 1999) Income category 1998 GNP Income category 1998 GNP and countrv per capita (UlS$)a and country per capita (US$)- COUNTRIES ELIGIBLE FOR IBRD FUNDS ONLY Per capita income over $5,280 Russian Federation 2,300 Slovenia 9,760 Belarus 2,200 Argentina 8,970 Thailand 2,200 Antigua and Barbuda 8,300 FiJi 2,110 Korea, Republic of 7,970 Tunisia 2,050 Seychelles 6,450 Namnibia 1,940 Uruguay 6,180 El Salvador 1,850 St. Kitts and Nevis 6,130 Micronesia, Federated States of 1,800 Dominican Republic 1,770 Per capita income $3,031-$5,280 Iran, Islamic Republic of 1,770 Czech Republic 5,040 Paraguay 1,760 Chile 4,810 Jamaica 1,680 Brazil 4,570 Suriname 1,660 Croatia 4,520 Guatemala 1,640 Hungary 4,510 Algeria 1,550 Trinidad and Tobago 4,430 Marshall Islands 1,540 Nlexico 3,970 Ecuador 1,530 Gabon 3,950 Jordan 1,520 Poland 3,900 Equatorial Guineab 1,500 Mauritius 3,700 Slovak Republic 3,700 Per capita income $760-$1,460 Botswana 3,600 Swaziland 1,400 Malaysia 3,600 Romania 1,390 Lebanon 3,560 Kazakhstan 1,310 Venezuela 3,500 Egypt, Arab Republic ofb 1,290 Estonia 3,390 Morocco 1,250 Turkey 3,160 Bulgaria 1'230 Panama 3,080 Philippines 1,050 Palau n.a. Syrian Arab Republic 1,020 Papua New Guinea 890 Per capita income $1,461-$3,030 Uzbekistan 870 South Africa 2,880 Ukraine 850 Costa Rica 2,780 Iraq n a. Belize 2,610 Colombia 2,600 Per capita income less than $760 Peru 2,460 Chinab 750 Lithuania 2,440 Turkmenistan n.a. Latvia 2,430 COUNTRIES ELIGIBLE FOR A BLEND OF IBRD AND IDA FUNDSC Per capita income $3,031-$5,280 Per capita incom.e $760-$1,460 St. Luciad 3,410 Macedonia, FYR of 1,290 Grenadad 3,17() Georgia 930 Bosnia and FHerzegovina na. Per capita income $1,461-$3,030 Dominicad 3,010 St. Vincent and the Grenadinesd 2,420 (continued next page) 202 THE WORI.D BANK ANNUAL' REPORT 1999 COUNTRY ELIGIBILITY FOR BORROWING APPENDIX 6 FROM THE WORLD BANK (continued) (as of June 30, 1999) Income category 1998 GNP Income category 1998 GNP and country per capita (US$)' and country per capita (US$1)J Per capita income $760 or less Pakistan 480 Indonesia 680 India 430 Zimbabwe 610 Moldova 410 Azerbaijan 490 Kyrgyz Republic 350 Armenia 480 Nigeria 300 COUNTRIES ELIGIBLE FOR IDA FUNDS ONLYc Per capita income $1,461-$3,030 Gambia, The 340 Tongad 1,690 Kenya 330 Lao People's Dem. Rep. 330 Per capita income $760-$1,460 Togo 330 Vanuatud 1,270 Vietnam 330 Maldivesd 1,230 Zambia 330 Kiribati 1,180 Uganda 320 Cape Verded 1,060 Central African Republic 300 Samoad 1,020 Yemen, Republic of 300 Bolivia 1,000 Sudan 290 Albania 810 Cambodia 280 Sri Lanka 810 Sao Tome and Principe 280 Guyana 770 Madagascar 260 Djibouti n.a. Mali 250 Burkina Faso 240 Per capita income less than $760 Rwanda 230 Solomon Islands 750 Chad 230 Honduras 730 Mozambique 210 Cote d'lvoire 700 Nepal 210 Congo, Republic of 690 Tanzania 210 Cameroon 610 Eritrea 200 Lesotho 570 Malawi 200 Guinea 540 Niger 190 Senegal 530 Guinea-Bissau 160 Haiti 410 Burundi 140 Mauritania 410 Sierra Leone 140 Mongolia 400 Congo, Democratic Republic 110 Ghana 390 Ethiopia 100 Nicaragua 390 Afghanistan n.a. Benin 380 Bhutan n.a. Comoros 370 Liberia n.a. Bangladesh 350 Myanmar n.a. Tajikistan 350 Somalia n.a. Angola 340 .n.a Precisefigures 1lot available a. World Banzk Atlas oierhodulogy. b.Graduated fromz ID.4 on Juzne 30, 1999. c.Countries are eligible for IDA oni the basis of (a) relative poverty and (b) lack of creditworthiness. The operational cutofffor ia.t eligibil- ity for F)O0 isa 1998 GNP per capita of US$895, zsing Atlas methodology. To receive bDA resources, countres also meet tests ofperfor mance. In exceptionzal circumstances, mtI extends eligibility temporarily to countries that are above the operational cutoff and are undertaking major adjustmient efforts but are not creditworthy for IERD lending. An exception has also been made for small island econ- omies (see below). d. During the ito.- 12 period (FYOO-02), an exception to the GNP per capita operational cutofffor IDA eligibility ($895 for FY00) has been mnade for some snmall islandii economies, which otherzvise would have little or no access to Bank Group assistance because they lack cred- itZforthiness. For such countries, IDAm funding is considered case by case for the financing of projects and adjustment programs designed to strengthen creditivorthiness. APPENDIX Six 203 NOTE TO APPENDIXES 7-1 1 DISBURSEMENTS AND PROCUREMENT Appendix 8 shows the amounts disbursed from the IBRD and IDA separately for foreign procurement of The procurement rules and procedures to be fol- goods, works and services from selected member lowed in the execution of each project depend on countries in fiscal 1999 and cumulatively through individual circumstances. Four considerations gen- fiscal 1999. erally guide the Bank's requirements: * economy and efficiency in the execution of a Appendix 9 shows the proportion of foreign dis- project; bursements from the srBR and IDA for specific cate- * opportunity for all eligible bidders from borrow- gories of goods and services provided by selected ing and nonborrowing member countries to com- member countries in fiscal 1999. pete in providing goods, works, and services financed by the Bank; Appendix 10 provides a summary listing of the * development of local contractors, manufacturers, amounts paid to eligible WVorld Bank borrowing and consulting services in borrowing countries; country suppliers and nonborrowing country sup- and pliers in each fiscal year from 1997 to 1999 under * transparency in the procurement process. investment projects. Amounts disbursed are com- pared with respect to significant categories of goods Appendix 7A shows consolidated foreign and local procured from foreign suppliers. The extent to disbursements for the IBRD and IDA through the end which eligible borrowing countries and nonborrow- of fiscal 1994 and for period fiscal 1995 through fis- ing countries participated in supplying these major cal 1999. Advance disbursements consist of pay- categories of goods in each of the past three fiscal ments made into special accounts of borrowers, years is also compared. from which funds are paid to specific suppliers as Under simplified procedures for structural and expenditures are incurred. Because balances in sectoral adjustment loans approved by the execu- these accounts cannot be attributed to any specific tive directors in fiscal 1996, disbursements are no supplying country until expenditures have been longer directly linked to procurement under adjust- reported to the Bank, these are shown as a separate ment loans. Thus, while appendixes 7b to 10 report category on disbursements from the IBRD and IIA, they do not include disbursements under adjustment loans. Appendix 7B provides details on foreign disburse- The information in appendix 11 reflects adjustment ments by countries eligible to borrow from the loan disbursements to each borrower as pro-rata WVorld Bank and nonborrowing countries1 for the shares of that borrower's eligible imports from sup- [BRD and IDA separately plying countries using import data drawn from United Nations trade statistics. Appendix 7C shows disbursements made in fiscal In all these tables and appendixes, IEDiu) figures 1999 by the IBRD and IDA for local procurement by exclude disbursements for loans to the IIC and "B" current borrowing countries and disbursements loans. IDA figures include Special Facility for Sub- made for goods, works, and services procured from Saharan Africa and Interim Trust Fund credits. them by other Bank borrowers (foreign procure- Disbursements for Project Preparation Facility ment) for projects funded by the Bank. advances are excluded for both the IRRD and IDA. 1. Appendix 6 lists countries eligible for IBRce and IDA funds. 204 THE WORLD BANK ANNUAL REPOR T 1999 IBRD AND IDA DISBURSEMENTS FOR APPENDIX 7A FOREIGN AND LOCAI EXPENDITURES (amounts in millions of US. dollars) IBRD and IDA Net advance Foreign' Local disbursementsb Total Period Amouniit % Amount to Amotunt % Amount Cumulative to June 30, 1994 131,294 57 93,059 41 4,331 2 228,684 Fiscal 1995 9,094 51 8,724 49 -97 - 17,720 Fiscal 1996 10,0(13c 52 8,787 46 456 2 19,256 Fiscal 1997 8,733 44 10,543 53 487 2 19,763 Fiscal 1998 14 292 57 10,112 41 449 2 24,853 Fiscal 1999 14,781 6(0 8,859 37 736 3 24,376 Cumulative to June 30, 1999 188,209 56 140,084 42 6,360 2 334,653 NOTE: Foreign expenditures are expenditures in the currency of any country other than that of the borrower or guarantor for goods or services supplied from the territory of any cou ntrv other than thze territory of thze borrowver or guarantor Local expenditures are expen- ditures in the currency of the borrower or guarantor orfor goods or services supplied from the territory of the borrower or guarantor Amounts may not add to totals because of roundinzg a. Amounts exclude debt-redutction disbursements of $3,038 million through FY94, $655 million in FY95, $213 million in FY97, and $82 million in FY98. Amounts include disbursements urmdersimplifiedproceduresforstructnral and sectoral adjustnzent loans of $556 million in FY96, $3,333 million in FY97, $9,540 million in FY98, and $10,423 mnillion in FY99. Amounts include HIPc D,ebt Initiative grant disbursements of $74 nmillion in FY98 and $149 million in FY99. b. Net advlance disbursements are advances made to special accozunts net of amounts recovered (amounts for which the Banlk has applied evidence of expenditures to recovery of the outstanding advance). c Disbursements for FY96 include the refinanced/rescheduled overdue charges of$ 1 68 million for Bosnia and Herzegovina. IBRD AND IDA DISBURSEMVIENTS FOR APPENDIX 7B FOREIGN EXPENDITURES, BY SOURCE OF SUPPLY (amounts in millions of US. dollars) IBRD IDA Period Countries Countries Countries Countries not eligible eligible not eligible eligible to borrow to borrowv Total to borrow to borrow Total Amount %s Amount 'Yo Amount Amou1nt 5,11 Amount % Amounit Cumulative to June 30, 1994 84,691 88 11,619 12 96,310 28,229 81 6,755 19 34,984 Fiscal 1995 4,787 81 1,109 19 5,896 2,116 66 1,081 34 3,197 Fiscal 1996 5,264 77 1 541 23 6,806 1,762 66 891 34 2 652 Fiscal 1997 3,082 86 521 14 3,602 1,374 76 425 24 1,798 Fiscal 1998 2,734 85 468 15 3 202 1,103 75 374 25 1 477 Fiscal 1999 2,228 89 275 11 2,503 1,164 68 542 32 1,706 Cumulative to June 30, 1999 102,785 87 15,532 13 118,317 35,749 78 10,068 22 45,817 NoTse: Amounts exclude disbursenments for debt reduction, net advance disbursenments, disbursenments under simnplified procedures for structural and sectoral adjustmnert loans, and disbursenments under moipc debt initiative grants. Counttries eligible to borrou from isrD and IDA are listed in Appendix 6. For consistency of comparison, the Republic of Korea is included as a country eligible to borrow for all periods covered by this table. Korea became eligible to borrow in December 1997. Antouzts rmay not add to totals because of rounding APPENDIX SEVEN 205 IBRD AND IDA PAYMENTS TO SUPPLYING APPENDIX 7C ELIGIBLEa BORROWING COUNTRIES FOR LOCAL AND FOREIGN PROCUREMENT IN FISCAL YEAR 1999 (millionis of US. dollars) Percenitage Borrowing Local Foreigin Total of total countries proctirement procuremenit amloulnt disbltrsemelnts1' Albania 25 1 27 0.11 Algeria 48 - 4 0.2() Angola 14 - 14 ()()6 Argentina 824 28 852 3.52 Armenia 27 + 27 . 11 Azerbaijan 6 + 6 Bangladesh 173 13 76 0 73 Barbados 5 + -5 Belarus 1 - I Belize 2 + 2-i Benin 37 +37 0.15 Bhutan I - 1 Bolivia 59 - 59 0.24 Bosnia and Herzegovina 43 43 (1.18 Botswana + + Brazil 816 19 835 3.45 Bulgaria 8 3 11 Burkina Faso 39 + 39 (1.16 Burundi 10 + 10 Cambodia 4 + 4 Cameroon 66 + 66 0 27 Cape Verde 6 - 6 Central African Republic 1 I Chad 14 - 14 0.06 Chile 64 4 68 (028 China 1,387 186 1,573 6.49 Colombia 113 7 120 (.5() Comoros I -I Congo, Democratic Republic of - + + Costa Rica 11 11 22 0.()9 Cote d'lvoire 88 3 92 0.38 Croatia 24 1 25 (1.10 Cyprus 8 17 25 (01( Czech Republic 9 19 2S 0.12 Djibouti I + I Dominica 1 + I Dominican Republic 6 + 6 Ecuador 65 5 69 0.29 Egypt, Arab Republic of 40 6 46 0. 19 El Salvador 8 2 1( Equatorial Guinea + - + Eritrea 2 2 Estonia 10 I 1() Ethiopia 23 1 23 0.10 Fiji 3 + 3 Gabon 3 3 Gambia, The 1 1 2 Georgia 9 5 14 ()()6 Ghana 127 1 128 0.53 Grenada I - I Guatemala 20 5 25 0.11) Guinea 23 1 2_5 0.10 Guinea-Bissau + - + Guyana 4 + 4 Haiti 10 + 10 Honduras 15 1 16 0.1(7 Hungary 25 7 32 (.13 India 1,285 107 1,392 5 75 206 THE WORLD BANK ANNUAL REPORT 1999 Percentage Borrowinig Local Foreign Total of total countries procurement procturemeint amount disbursementsb Indonesia 298 16 314 1.3( Iran, Islamic Republic of 45 3 47 0.20 Jamaica 22 + 22 0.09 Jordatn 30 6 37 0.15 Kazakhstan 9 + 10 * Kenya 50 5 55 0.23 Korea, Republic of 63 96 159 0.66 Kyrgyz Republic 9 + 9 Lao People's Dem. Rep. 15 + 15 (.(6 Latvia 18 - 18 0.08 Lebanon 26 2 28 0.12 Lesotho 9 9 Liberia + + Lithuania 10 nr 10 * Macedonia, FYR of 10 1 11 * Madagascar 48 - 48 0.20 Malawvi 44 + 44 (.18 Malaysia 15 11 27 0.11 Maldives + + Mali 25 + 25 0.10 Mauritania 10 + 10 * Mauritius 3 1 5 * Mexico 505 16 521 2.15 Moldova 16 + 16 0 07 Mongolia 6 - 6 Morocco 90 6 96 0.40 Mozambique 33 + 33 0.14 Nepal 30 + 30 0.13 Nicaragua 34 + 34 0.14 Niger 41 2 43 0.18 Nigeria 123 2 124 0.51 Pakistan 209 11 220 0.91 Panama 22 6 28 0.12 Papua New Guinea Paraguay 19 5 25 0.10 Peru 137 1 138 0.57 Philippines 97 2 99 0.41 Poland 101 15 116 0.48 Romania 25 1 27 0.11 Russian Federation 112 6 118 0.49 Rwanda 17 + 17 0.07 Samoa + + * Sao Tome and Principe I I * Senegal 32 11 43 0.18 Seychelles + ±+ Sierra Leone 10 + 10 Slovak Republic 7 2 10 Slovenia 712 Solomon Islands I I * South Africa - 56 56 0.23 Sri Lanka 37 7 39 0.16 St. Kitts and Nevis + + + St. Lucia I I Sudan 3 3 Swaziland I 1 2 Syrian Arab Republic - I I Tajikistan 4 - 4 Tanzania 46 3 49 0.20 Thailand 53 12 65 0.27 APPENDIX SEVEN 207 IBRD AND IDA PAYMENTS TO SUPPLYING APPENDIX 7C ELIGIBLEa BORROWING COUNTRIES FOR LOCAL AND FOREIGN PROCUREMENT IN FISCAL YEAR 1 999(continUed) (millions of US. dollars) Percenitage Borrowing Local Foreign Total of total countries procuiremelnt procurement amotunit disbursementsb Togo I 11 Tonga - + + Trinidad and Tobago 9 1 10 Tunisia 118 3 121 0.50 Turkey 161 11 172 0.71 Turkmenistan - + + Uganda 45 2 47 0.20 Ukraine 6 1 8 Uruguay 31 1 33 0.13 Uzbekistan 2 1 3 Vanuatu I - I - Venezuela 88 43 131 0.54 Vietnam 105 + 106 0.44 Yemen, Republic of 29 3 32 0.13 Zambia 30 1 31 0.13 Zimbabwe 23 2 26 (0 11 Total 8,859 834 9,694 40.01 -Zero, + less than $0.5 million, 'less than 0.05 percent. NoTF:Amounts may not add to totals because of rounding a. Countries eligible to borrow from IBRD and rDA are listed in Appendix 6. In addition, payments under disbursing loans to Barbados and Cyprus, which are no longer eligible borrowing countries, are included. Amounts exclude disbursements for debt reduction, net advance disbursements, disbursements under simplified procedures for structural and sectoral adjustment loans, and disbursements under HIPC Debt Initiative grants b. Refers to the share of all eBRe and tan payments for fiscal 1999 which totaled $24,376 million. 208 THE WORI.D BANK ANNUAL REPORT 1999 IBRD AND IDA PAYMENTS TO SUPPLYING APPENDIX 8 COUNTRIES FOR FOREIGN PROCUREMENT (amounts in millions of US. dollars) IBRD cumulative IDA cumulative toJune 30, 1999 IBRDfiscall999 to June 30, 1999 IDA fiscal 1999 Supplying country Amount % Amount % Amount % Amount % Albania 4 1 0.05 2 * * Argentina 864 0.73 11 0.43 132 0.29 17 1.02 Armenia - 1 * + * Australia 1,215 1.03 19 0.77 720 1.57 30 1.75 Austria 1,818 1.54 90 3.58 272 0.59 11 0.64 Azerbaijan 3 * - * 24 0.05 + Bahamas, The 100 0.08 + * 8 * + * Bahrain 68 0.06 - 131 0.29 + Bangladesh 18 * 2 0.06 48 0.10 1 0.07 Barbados 15 * + * 5 * + * Belgium 1,599 1.35 3 0.12 1,075 2.35 13 0.79 Belize 2 * + * 6 + * Benin 4 * - 17 * + * Bolivia 28 * + 3 * + * Bosnia and Herzegovina + * + X * _ * Botswana 6 * * 8 - Brazil 1,961 1.66 13 0.53 347 0.76 6 0.33 Bulgaria 49 * 3 0.10 55 0.12 + Burkina Faso I * - * 13 * + * Burundi 1 - * 12 * + Cambodia I _ * + + * Cameroon 5 * + * 27 0.06 + * Canada 2,760 2.33 69 2.76 850 1.85 37 2.15 Central African Rep. 4 * 1 * 6 5 0.27 Chile 386 0.33 2 0.09 40 0.09 2 0.11 China 1,571 1.33 37 1.48 1,420 3.10 149 8.73 Colombia 251 0.21 5 0.20 25 0.06 2 0.11 Congo, Democratic Rep. of 6 * 41 0.09 + * Costa Rica 63 0.05 6 0.24 45 0.10 5 0.32 C6te d'Ivoire 50 * + 258 0.56 3 0.20 Croatia 18 * + * 9 * * Cyprus 94 0.08 14 0.55 38 0.08 3 0.19 Czech Republic 100 0.08 18 0.71 9 * 1 0.08 Denmark 795 0.67 11 0.46 358 0.78 10 0.60 Djibouti + * 26 0.06 + Dominica 5 * + * 2 * - * Dominican Republic 6 * + 7 - * Ecuador 197 0.17 4 0.17 12 1 * Egypt, Arab Republic of 61 0.05 2 0.07 43 0.09 5 0.27 El Salvador 18 * + * 9 * 2 0.13 Equatorial Guinea + - * 14 * + Estonia 3 I * 4 Ethiopia 2 * - * 6 * * Fiji I 4 + Finland 589 0.50 22 0.89 151 0.33 13 0.78 France 8,474 7.16 226 9.05 4,904 10.70 135 7.94 Gambia, The 4 * I I * + * Georgia 12 * 3 0.12 7 * 2 0.12 Germany 13,427 11.35 300 11.98 3,759 8.20 131 7.69 Ghana 11 * - * 17 * 1 0.08 Greece 220 0.19 6 0.25 94 0.20 6 0.36 Grenada 2 - * 5 * - * Guatemala 19 * + * 26 0.06 4 0.26 Guinea 5 * 1 * 41 0.09 + Guyana 9 + * 1 * - * Haiti 6 * + * 4 * - * Honduras 15 * - * 8 * 1 0.08 Hungary 343 0.29 7 0.26 28 0.06 + * Iceland 12 * 1 0.06 2 * + * India 464 0.39 9 0.35 1,011 2.21 98 5.73 Indonesia 179 0.15 10 0.42 137 0.30 5 0.32 APPENDIX EIGHT 209 IBRD AND IDA PAYMENTS TO SUPPLYING APPENDIX 8 COUNTRIES FOR FOREIGN PROCUREMENT(continue4) (amounts in millions of Us. dollars) IBRD cumulative IDA cumulative to June 30, 1999 IBRD fiscal 1999 to June 30, 1999 IDA fiscal 1999 Supplying counitry Amount % Amount % Amount % Amounit % Iran, Islamic Rep. of 146 0.12 + * 200 0.44 3 0.15 Ireland 182 0.15 5 0.22 132 0.29 10 0.57 Israel 270 0.23 2 0.09 133 0.29 15 0.90 Italy 7,214 6.10 159 6.36 2,052 4.48 122 7.13 Jamaica 17 * + Japan 15,161 12.81 275 10.98 4,373 9.54 105 6.18 Jordan 50 * - 153 0.33 6 0.38 Kazakhstan 75 0.06 - 33 0.07 + KenYa 28 * + * 296 0.65 5 0.29 Korea, Republic of 1,778 1.50 28 1.11 991 2.16 68 3.98 Kuwait 270 0.23 1 258 0.56 1 0.06 Kyrgyz Republic 11 * + * * Lao People's Dem. Rep. 12 * * 7 * * Lebanon 99 0.08 1 0.05 26 0.06 1 0.05 Lesotho + - * + + Liberia 26 + 2 1 0.05 - Lithuania 24 * + * 2 * Luxembourg 74 0.06 + 36 0.08 + * Macedonia, FYR of + * - 3 1 0.07 Malawi 2 * - 11 + * Malaysia 347 0.29 1 0.05 261 0.57 10 0.59 Mali + * 14 +* Malta 21 - * + +* Mauritania 8 * 17 +* Mauritius I - 22 0.05 1 0.07 Mexico 577 0.49 7 0.26 109 0.24 10 0.57 Moldova 3 * + I + Morocco 178 (1.15 - 64 0.14 6 0.34 Mozambique 4 * 7 + Nepal I * 7 + * Netherlands 2,238 1.89 37 1.48 1,312 2.86 45 2.66 New Zealand 190 0.16 3 0.11 113 0.25 6 0.36 Nicaragua 10 + 7+ Niger 6 2 0.06 14 I Nigeria 390 0.33 1 408 0.89 + Norway 537 0.45 12 0.48 173 0.38 12 0.70 Oman 38 * + * 15 * + Pakistan 125 0.11 4 0.17 185 0.40 7 0.38 Panama 397 0.34 1 56 0.12 5 0.29 Paraguay 119 0.10 4 0.16 14 1 0.07 Peru 129 ().11 + 21 0.05 1 * Philippines 75 0.06 1 0.06 85 0.18 + Poland 300 0.25 14 0.58 53 0.12 + Portugal 77 0.07 3 0.11 368 0.80 23 1.37 Romania 324 0.27 1 0.06 75 0.16 + Russian Federation 729 0.62 1 * 87 0.19 5 0.31 Rwanda 3 * _ * 3 + Saudi Arabia 588 0.50 - 244 0.53 3 0.18 Senegal 28 * I 108 0.24 10 0.57 Sierra Leone 5 * + * 3 + * Singapore 1,170 0.99 39 1.56 745 1.63 8 0.45 Slovak Republic 18 * 2 0.10 1 * - * Slovenia 53 6 0.26 5 + SouthAfrica 453 0.38 16 0.63 1,061 2.31 40 2.33 Spain 1,452 1.23 40 1.61 329 0.72 19 1.13 SriLanka 27 2 0.08 18 + St. Kitts and Nevis I * + * I Sudan 9 * 2 0.08 21 0.05 1 Swaziland 34 * + 32 0.07 + * Sweden 1,705 1.44 13 0.52 490 1.07 10 0.58 210 THE WORILD BANK ANNUAL REPORT 1999 IBRD cumulative IDA cumulative to June 30, 1999 IBRD fiscal 1999 to June 30, 1999 IDA fiscal 1999 Supplying country Amount % Amount % Amount % Amount % Switzerland 4,625 3.91 60 2.38 1,221 2.66 21 1.21 Syrian Arab Republic 38 * - * 17 * 1 0.05 Tanzania 7 - * 35 0.08 3 0.18 Thailand 148 0.13 + * 392 0.85 12 0.69 Togo 31 * 30 0.07 + * Tonga + I + Trinidad andTobago 21 * + 23 0.05 1 * Tunisia 92 0.08 1 * 42 0.09 2 0.12 Turkey 585 0.49 5 0.21 128 0.28 5 0.31 Turkmenistan 5 - * 51 0.11 + Uganda 3 8 * 2 0.11 Ukraine 167 0.14 - * 53 0.12 1 0.08 United Arab Emirates 571 0.48 + 375 0.82 4 0.22 UnitedKingdom 8,834 7.47 203 8.12 5,890 12.86 132 7.73 UnitedStates 22,779 19.25 311 12.44 4,533 9.89 195 11.45 Uruguay 113 0.10 + * 6 * 1 0.05 Uzbekistan 4 - * 14 1 0.06 Venezuela 573 0.48 35 1.38 209 0.46 8 0.47 Vietnam 46 + * 55 0.12 +* Yemen, Republic of + * - 21] 0.46 3 0.17 Zambia 52 - 115 0.25 1 0.06 Zimbabwe 34 * - * 117 0.26 2 0.14 Others 3,841 3.25 300 12.00 685 1.49 40 2.37 Total 118,317 100 2,503 100 45,817 1()0 1,706 100 - Zero, + less than $0.5 million, less than 0.05 percent NOTE: Amounts exclude disbursements for debt reduction, net advance disbursements, and disbursements under simplified procedures for structural and sectoral adjustment loans, and disbursements under HiPc Debt Initiative grants. Amounts mtay not add to totals because of rounding APPENDIX EIGHT 211 IBRD AND IDA PAYMENTS TO APPENDIX 9 SUPPLYING COUNTRIES FOR FOREIGN PROCUREMENT, BY DESCRIPTION OF GOODS, FISCAL YEAR 1999 (amounts in millions of US. dollars) Equipment Civil works Consultants All other goods Total disbursements Supplying country Amount % Amount %.o Amount % Amount % Amount % Albania 1 0.14 - * 1 * Argentirna 10 0.40 14 1.57 5 0.68 + * 28 0.67 Armenia - * - * + - * + * Australia 23 0.96 1 0.14 23 3.33 1 0.61 49 1.17 Austria 83 3.40 14 1.55 4 0.57 + 0.18 101 2.39 Azerbaijan -* - * + 0.10 + * Bahamas, The + + * Bahrain + * + * Bangladesh 1 2 0.23 - * * 3 0.07 Barbados * - * + + * + * Belgium 12 0.50 + * 4 0.62 + * 17 0.39 Belize - * + * Benin + * - * + * - * + * Bolivia - - * + * - + * Bosnia and Herzegovina + + - * + Botswana -* Brazil 9 0.38 9 0.98 1 0.20 - * 19 0.45 Bulgaria 1 * 2 0.20 + - * 3 0.06 Burkina Faso - * - * + - + Burundi - * - - + Cambodia _ * * + * - + Cameroon + * _ * + * Canada 49 2.02 7 0.82 50 7.02 + 0.06 106 2.51 Central African Republic 5 0.21 + * + I - * 5 0.12 Chile 2 0.06 1 0.17 1 0.17 - 4 0.10 China 69 2.85 114 13.05 3 0.44 + * 186 4.42 Colombia 5 0.22 + * 1 0.20 - 7 0.16 Congo, Democratic Republic of - - * + - * + Costa Rica 5 0.22 - * 6 0.83 + 0.07 11 0.27 Cote d'ivoire + 3 0.30 1 0.09 * 3 0.08 Croatia + 1 0.06 - I * Cyprus 6 0.24 1 0.14 1 0.17 9 4.27 17 0.40 Czech Republic 19 0.78 - * + + 19 0A45 Denmark 11 0.45 3 0.34 8 1.10 + 22 0.51 Djibouti + * * - * - + * Domiica + * - * - - + Dominican Republic - + * + * + * Ecuador + - 5 0.66 - * 5 0.11 Egypt, Arab Republic of + * 6 0.68 + * 6 0.15 El Salvador 2 0.10 - * + * - * 2 0.06 Equatorial Guinea + * - + Estonia I * - * + * + I Ethiopia - + * + * I* * Fiji + * - + + Finland 30 1.22 1 0.14 4 0.63 + 0.10 36 0.85 France 232 9.56 81 9.33 47 6.63 2 0.77 362 8.60 Gambia, The + * _ 1 0.09 - * I * Georgia 2 0.10 - 3 0.36 - 5 0.12 Germany 288 11.87 108 12.40 26 3.75 8 3.97 431 10.24 Ghana * 1 0.09 1 0.09 - * I Greece 6 0.24 4 0.44 3 0.37 + 0.10 12 0.29 Grenada -* - * Guatemala 4 0.18 - * + 0.05 - * 5 0.11 Guinea 1 0.05 - + - * 1 * Guyana - * - * + - * + * 212 THE WORLD BANK ANNUAI. REPORT 1999 Equipment Civil wvorks Consultants All other goods Total disburserrments Supplying country Amount % Amount % Amount % Amount Og, Amount %/6 Haiti - * + + Honduras 1 0.05 - + I_ * 1 Hungary 6 0.26 - + + 0.13 7 0.16 Iceland + - * 1 0.20 - 2 * India 94 3.87 9 1.05 4 0.50 + 107 2.53 Indonesia 6 0.24 - * 10 1A42 - 16 0.38 Iran, Islamic Republic of 3 0.11 - * + - 3 0.06 Ireland 2 0.06 - 14 1.93 - * 15 0.36 Israel 4 0.18 10 1.18 3 0.41 + * 17 0.42 Italy 86 3.54 174 20.00 19 2.70 2 0.74 281 6.67 Jamaica + * _ * + * _ * + Japan 348 14.35 21 2.44 11 1.49 + 380 9.03 Jordan 6 0.26 - * + - 6 0.15 Kazakhstan + * - + * * + Kenya 3 0.14 1 0.10 1 0.10 + * 5 0.12 Korea, Republic of 38 1.55 58 6.65 + * + 0.07 96 2.28 Kuwait - * - * 1 0.15 1 0.45 2 0.05 Kyrgyz Republic - * + * - * - + Lao People's Democratic Republic - * - * - * * Lebanon - * - 2 0.29 - * 2 0.05 Lesotho - + + * _ * + * Liberia * + * _ * + * Lithuania + * - * + * + Luxembourg + * - * + * - 1 Macedonia, FYR of - * 1 0.14 - - I Malawi - * _ * +_ * + * Malaysia 9 0.38 - * 2 0.25 + 0.10 11 0 27 Mali + - + * _ * * Malta _ * * * + * Mauritania - * - * + * _ + * Mauritius + * - * 1 n.11 + 1 I Mexico 11 0.46 2 0.26 3 0.37 - * 16 0.38 Moldova + * - + + 0.11 + * Morocco 6 0.24 - + * - * 6 0.14 Mozambique - * * * _ * + * Nepal - * + * + * - * + Netherlands 59 2.45 2 0.25 21 2.94 + 0.10 83 1.96 New Zealand + * + * 8 1.20 - 9 0.21 Nicaragua + * ± ^ + * + Niger + + 2 0.22 - * 2 0.05 Nigeria + 1 0.15 + * - * 2 * Norway 13 0.52 7 0.77 5 0.66 + 24 0.57 Oman + * - * + 0.05 - + Pakistan 8 0.34 1 0.13 1 0.18 - 11 0.26 Panama 5 0.21 + 0.05 + 0.06 - * 6 0.14 Paraguay - * 4 0.45 1 0.19 - * 5 0.12 Peru + + * + 0.05 - I Philippines + * - * 2 0.26 - 2 0.05 Poland 7 0.29 3 0.34 4 0.63 + 15 0.35 Portugal 4 0.15 13 1.51 9 1.22 1 0.28 26 0.62 Romania I * + 0.05 + + * I * Russian Federation 5 0.21 - 1 0.13 + * 6 0.14 Rwanda + * - * - * - * + * Saudi Arabia 3 0.12 - * + * - * 3 0.07 Senegal + * 8 0.90 3 0.37 + 11 0.25 Sierra Leone - * + + + Singapore 43 1.78 + 3 0.49 + * 47 1.11 Slovak Republic 2 0.09 + - * - * 2 0.06 Slovenia 6 0.23 1 0.09 + * - * 7 0.16 (continued next page) APPENDIX NINE 213 IBRD AND IDA PAYMENTS TO APPENDIX 9 SUPPLYING COUNTRIES FOR FOREIGN PROCUREMENT, BY DESCRIPTION OF GOODS, FISCAL YEAR 1 999(continued) (amounts in millions of US. dollars) Equipment Civil works Consultants All other goods Total disbursements Supplying country Amount % Arnount 0% Amount %/b Amount % Amount % South Africa 33 1.37 17 1.90 5 0.76 1 0.27 56 1.32 Spain 19 0.79 26 2.95 11 1.54 4 1.82 60 1.41 St. Kitts and Nevis - - * * + 0.06 + * Sudan + - * 2 0.34 - 3 0.06 Swaziland + - + 0.05 - * 1 * Sweden 18 0.75 + ± 5 0.69 + * 23 0.55 Switzerland 66 2.72 4 0.49 10 1.39 + * 80 1.91 Syrian Arab Republic - * - * 1 0.11 - * I * Tanzania I 2 0.21 + * - 3 0.07 Thailand I1 0344 + * 1 0.15 12 0.29 Togo + - + + Tonga + + + + Trinidad and Tobago I * + * + I- * Tunisia - * * 2 034 - * 3 0.06 Turkey 5 0.22 3 0.36 2 0.26 + 0.12 11 0.25 Turkmenistan + * - I * - * + Uganda + 2 0 18 + * - * 2 * Ukraine 1 0.05 - + - 1 I UnitedArab Emirates 4 0.16 + * * 4 0.10 United Kingdom 211 8.67 12 1.37 112 15.90 1 0.27 335 7.96 United States 304 12.53 35 4.06 162 22.98 5 2.47 507 12.04 Uruguay 1 * + * - * 1 Uzbekistan I - + * * 1 * Venezuela 27 1.10 15 1.70 1 0.16 - * 43 1.01 Vietnam + * - * + * + * Yemen, Republic of + 2 0.28 1 0.07 - * 3 0.07 Zambia + * 1 0.07 - * - Zimbabwe + + * 2 0.24 - * 2 0.06 Others 61 2.51 59 6.79 53 7.50 168 82.32 341 8.10 Total 2,428 100.00 871 100.00 706 100.00 204 100.00 4,209 100.00 - Zero, + less than $0.5 million, * less than 0. 05 percent. NO7E: Amounts exclude disbursements for debt reduction, net advance disbursements, disbursements under simplified procedures for structural and sectoral adjustment loans, and disbursements under niPc Debt Initiative grants. Amounts may not add to totals because of rounding 214 THE WORLD BANK ANNUAI. REPORT 1999 IBRD AND IDA DISBURSEMENTSa FOR FOREIGN APPENDIX 10 EXPENDITURES, BY DESCRIPTION OF GOODS (FOR INVESTMENT LENDING), FISCAL YEARS 1997-99 FY1997 FY1998 FY1999 Item Countries Countries Countries Countries Countries Countries not eligible eligible Total not eligible eligible Total not eligible eligible Total to borrow to borrow to borrow to borrow to borrow to borrow Millions of US. dollars Civil works 668 256 924 652 227 880 586 286 871 Consultants 784 80 864 795 84 879 615 87 702 Goods 2,566 457 3,023 2,124 504 2,628 1,977 441 2,417 Allother 151 18 169 131 18 149 107 3 110 Total 4,169 811 4,980 3,702 833 4,536 3,285 817 4,100 Percent b Civil works 72 28 19 74 26 19 67 33 21 Consultants 91 9 17 90 10 19 88 12 17 Goods 85 15 61 81 19 58 82 18 59 All other 90 10 3 88 12 3 98 2 3 Total 84 16 100 82 18 100 80 20 100 NOTE: Countries eligible to borrow from IBRD and IDA are listed in Appendix 6. For consistency of comparison, the Republic of Korea is included as a country eligible to borrow for all periods covered by this table. The Republic of Korea became eligible to borrow in Decem- ber 1997. Amounts may not add to totals because of rounding. a. Amounts exclude disbursements for debt reduction and net advance disbursements. Amounts also exclude disbursements for struc- tural and sectoral adjustment loans and hybrids (loans that support policy and institutional reforms in a specific sector by financing both a policy component disbursed against imports and an investment component), and disbursements under Hnrc Debt Initiative grants. b. Percentages are based on the dollar amounts shown under the total disbursements section. These percentages show both the break- down between countries eligible to borrow from the iBRD and/or IDA, and countries not eligible to borrow, for individual goods categories and the share of each goods category compared with total disbursements. APPENDIX TEN 215 ESTIMATESa OF IBRD AND IDA PAYMENTS APPENDIX 1 1 TO SUPPLYING COUNTRIES FOR FOREIGN PROCUREMENT UNDER ADJUSTMENT LENDING, FISCAL YEAR 1999 (millions of US. dollars) Supplying countries Amount Percent Supplying countries Amount Percent Albania + 0.0% Kuwait 1.5 0.0% Algeria 21.4 0.2% Latvia 6.5 0.1% Argentina 190.2 1.8% Libya 8.8 (.1% Armenia 6.7 0.1% Lithuania 22.7 0.2% Aruba + 0.0% Macau + 0.0% Australia 230.9 2.2% Madagascar + 0.0% Austria 51.9 0.5°% Malaysia 214.3 2.0%b Barbados + 0.0%. Malta 1.0 0.0% Belgium 126.7 1.2%fi) Mauritius 1.0 0.0%f(] Belize + 0.0% Mexico 65.5 0.6% Bolivia 12.3 0.1% Morocco 5.5 0.1% Brazil 360.4 3.4% Nepal + 0.0%i Bulgaria 18.5 0.2% Netherlands 149.5 1.4% Canada 137.0 1.3% New Zealand 35.2 0.3% Chile 94.8 0.9% Nicaragua 1.0 0.0% China 414.2 3.9%4i Norway 26.1 0.2 % Colombia 24.8 0.2%/() Oman 52.0 0.5% Costa Rica 10.5 0.1% Pakistan 17.8 0.2%"X Croatia 19.1 0.2% Panama 1.0 0.0%'f Cyprus 1.0 0.0% Paraguay 12.8 0.I%"'/D Czech Republic 23.0 0.2% Peru 14.5 0.1°% Denmark 44.6 0.4% Philippines 37.4 0.4",h Dominican Republic 1.1 0.0% Poland 80.( 0.8%fi Ecuador 15.0 0.1% Portugal 23.3 0.2% Egypt 5.6 0 1°/(, Romania 17.0 0.2%)/o El Salvador 5.7 0.1% Russia 438.1 4.1% Estonia 12.0 0.1% SouthAfrica 175.9 1.7%,,, Finland 77.5 0.7% Singapore 246.9 2.3°fi) France 457.8 4.3% Slovakia 15.6 0. 1'6 Germany 744.0 7. 0%) Slovenia 16.0 0.2% Greece 32.4 0.3% Spain 188.8 1.8". Greenland + 0.0"fi) Suriname 1.0 00.() Grenada + 0.0% Sweden 106.2 1 0'?f,. Guatemala 9.1 0.1% Switz. Liecht. 91.2 1.0% Honduras 1.0 0.0% Syrian Arabic Republic 8.1 0. 1I Hong Kong 22.7 0.2% Tanzania 4.0 0.0% Hungary 25.5 0.2% Thailand 100.7 1.0%,(6 Iceland 1.0 0.0% Trinidad and Tobago 2.4 0.0°,o India 80.8 0.8% Tunisia 3.8 0.0% Indonesia 112.6 1.1% Turkey 74.6 0.7%,h Ireland 35.8 0.3% United Kingdom 307.2 2.9% Israel 34.5 0.3% Uruguay 33.8 0.3%, Italy 402.4 3.8%'?'o United States 2151.2 20.3% Jamaica + 0.0% Venezuela 38.3 0.4% Japan 1486.2 14.1% Yugoslavia 17.6 0.2'%6 Kenya 38.8 0.4% Zimbabwe 32.4 0.3 1% Korea, Republic of 334.5 3.2! TOTAL 10,572.2 100%) t Amount below $0.5 million. NOTE: Amounts exclude disbursements under investmeoit lending. See Appendix 8for payments to supplying countries forforeign procurement under investment lending, fiscal 1999. Details may not add to total because of rounding a. Based on inmport data drawn from the latest information available on borrowers' trade statistics compiled by the United Nations trade system COMcTRADE. 216 THE WORI.D BANK ANNUAL REPORT 1999 IBRD AND IDA CUMULATIVE LENDING APPENDIX 12 BY MAJOR PURPOSE AND REGION, JUNE 30, 1999 (millions of US. dollars) IBRD loans to borrowers, by region' Middle Latin Europe East Asia East and America and and North and the Central South Purposeb Africa Pacific Africa Caribbeani Asia Asia Total Agriculture 3,605.2 13,728.2 5,588.3 16,942.6 7,834.0 3,144.7 50,843.0 Education 553.1 5918.8 2,181.5 6,682.3 1,703.6 55.0 17,049.3 Electric power and other energy 1,887.1 16,103.6 2,218.8 12,452.3 6,438.0 10,807.6 49,907.4 Environment 21.9 1,661.1 244.5 2,051.5 470.5 310.0 4,759.6 Finance 717.2 11,315.5 2,479.4 10,765.0 5,239.8 3,440.2 33,957.1 Industry 1,289.1 3,828.2 1,955.3 5,671.3 4,388.4 3,420.7 20,553.0 Mining 216.5 503.0 131.7 1,148.8 1,940.8 1,304.0 5,244.8 Multisector 2,275.2 8,419.3 3,010.4 12,041.3 12,564.2 1,030.0 39,340.4 Oil and gas 381.2 1,646.9 711.2 1,527.5 2,485.1 3,359.7 10,111.6 Population, health, and nutrition 267.9 1,070.4 686.3 4,114.6 1,115.0 31.3 7,285.5 Public-sector management 105.1 944.8 1,003.2 5,157.7 2,533.9 400.0 10,144.7 Social sector 26.9 1,027.5 83.0 2,701.9 1,790.8 301.3 5,931.4 Telecommunications 510.2 1,894.2 691.5 533.9 575.3 747.5 4,952.6 Transportation 3,040.0 16,703.1 3,013.7 16,140.6 7,428.2 3,342.6 49,668.1 Urban development 933.2 4,239.0 2,142.7 5,669.4 1,569.2 399.1 14,952.6 Watersupply and sanitation 1,309.3 1,890.5 2,585.6 5,364.7 2,030.5 605.4 13,786.0 Total 17,139.1 90,894.1 28,727.1 108,965.6 60,107.3 32,699.1 338,532.3 - Zero. (continued next page) NOTE: Details may not add to totals because of rounding a. No account is taken of cancellations subsequent to original commitment. IBRD loans to the iFc are excluded. b. Operations have been classified by the major purpose they finance. Many projects include actiuity in more than one sector or subsector APPENDIX TWELVE 217 IBRD AND IDA CUMULATIVE LENDING APPENDIX 12 BY MAJOR PURPOSE AND REGION, J U NE 30 1 9 9 9 (contined) (millions of US. dollars) IDA credits to borrowers, by region Middle Latin Europe Total East Asia East anid America and IBRD and North and the Central Sotuth and Purposeb Africa Pacific Africa Caribbean Asia Asia Total IDA Agriculture 8,255.4 6,682.0 1,085.9 441.5 578.2 14,751.0 31,794.0 82,637.0 Education 3,937.6 1,8962 545.8 356.6 60.6 4,243.3 11,040.1 28,134.4 Electric power and other energy 2,608.9 927.5 306.9 291.4 267.8 3,901.1 8,303.6 58,211.0 Environment 411.9 481.2 15.0 162.0 32.4 856.6 1,959.1 6,718.7 Finance 2,338.1 409.4 154.8 206.6 165.4 916.0 4,190.3 38,147.4 Industry 1,142.4 151.2 84.4 122.2 52.0 1,861.4 3,413.6 23,966.6 Mining 198.5 51.0 - 66.7 - 84.0 400.2 5,645.0 Multisector 7,599.2 481.7 80.0 911.9 1,199.6 3,876.2 14,148.6 53,489.0 Oil and gas 535.7 66.0 101.0 94.2 52.4 520.7 1,370.0 11,481.6 Population, health, and nutrition 2,020.5 1,143.7 237.8 147.6 118.8 4,152.4 7,820.8 15,106.3 Public-sector management 2,196.6 218.7 67.7 397.5 447.8 512.5 3,840.8 13,985.6 Social sector 971.5 289.7 398.0 382.8 274.0 818.9 3,134.9 9,066.3 Telecommunications 452.0 101.8 83.0 2.4 18.0 884.2 1,541.4 6,494.0 Transportation 6,920.8 1,676.5 309.7 654.7 169.5 3,879.3 13,610.5 63,278.7 Urban development 1,791.1 753.2 164.5 149.2 191.5 1,657.0 4,706.1 19,658.7 WVater supply andsanitation 1,428.9 724.3 238.4 111.1 102.6 2,003.6 4,608.9 18,394.9 Total 42,809.1 16,054.1 3,872.9 4,498.4 3,730.1 44,918.2 115,882.9 454,415.2 - Zero. NoTE: Details may not add to totals because of rounding. a. No account is taken of cancellations subsequent to original commitment. IBRD loans to the DFC are excluded. b. Operations have been classified by the major purpose they finance. Many projects include activity in more than one sector or subsector 218 THE WORLD BANK ANNUAL REPORT 1999 IBRD AND IDA CUMULATIVE LENDING APPENDIX 13 BY COUNTRY, JUNE 30, 1 999 (amounts in millions of US. dollars) IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Afghanistan - - 20 230.1 20 230.1 Africa region 1 15.0 1 45.5 2 60.5 Albania - - 33 481.7 33 481.7 Algeria 62 5,558.5 - - 62 5,558.5 Angola - - 10 277.8 10 277.8 Argentina 104 17,714.3 - - 104 17,714.3 Armenia 1 12.0 19 523.3 20 523.3 Australia 7 417.7 - - 7 417.7 Austria 9 106.4 - - 9 106.4 Azerbaijan - - 12 369.2 12 369.2 Bahamas, The 5 42.8 - - 5 42.8 Bangladesh 1 46.1 160 9,140.8 161 9,186.9 Barbados 11 103.2 - - 11 103.2 Belarus 3 170.2 - - 3 170.2 Belgium 4 76.0 - - 4 76.0 Belize 8 71.8 - - 8 71.8 Benin - - 47 696.3 47 696.3 Bhutan - - 7 41.9 7 41.9 Bolivia 14 299.3 60 1,564.4 74 1,863.7 Bosnia and Herzegovina - - 25 547.6 25 547.6 Botswana 20 280.7 6 15.8 26 296.5 Brazil 249 27,412.9 - - 249 27,412.9 Bulgaria 18 1,210.1 - - 18 1,210.1 Burkina Faso - 1.9 50 902.2 50 904.1 Burundi 1 4.8 46 694.0 47 698.8 Cambodia - - 11 343.4 11 343.4 Cameroon 44 1,294.4 25 1,025.0 69 2,319.4 Cape Verde - - 14 146.4 14 146.4 Caribbean region 5 89.8 2 47.7 7 137.5 Central African Republic - - 24 403.5 24 403.5 Chad - - 36 622.2 36 622.2 Chile 60 3,585.9 - 19.0 60 3,604.9 China 148 23,106.3 71 9,946.7 219 33,053.0 Colombia 152 8,890.6 - 19.5 152 8,910.1 Comoros - - 16 101.7 16 101.7 Congo, Democratic Republic of 7 330.0 59 1,151.5 66 1,481.5 Congo, Republic of 10 216.7 10 183.6 20 400.3 Costa Rica 38 888.9 - 5.5 38 894.4 C6te d'Ivoire 62 2,887.9 22 1,802.3 84 4,690.2 Croatia 14 733.7 - 14 733.7 CYprus 30 418.8 - - 30 418.8 Czech Republic 2 326.0 - - 2 326.0 Czechoslovakia 1 450.0 - - 1 450.0 Denmark 3 85.0 - - 3 85.0 Djibouti - 11 75.6 11 75.6 Dominica 1 3.1 3 14.1 4 17.1 Dominican Republic 27 851.0 3 22.0 30 873.0 East African Community 10 244.8 - - 10 244.8 Eastern Africa region - - 1 45.0 1 45.0 Ecuador 66 2,442.6 5 36.9 71 2,479.5 Egypt, Arab Republic of 61 4,367.5 41 1,984.0 102 6,351.5 APPENDIX THIRTEEN 219 IBRD AND IDA CUMULATIVE LENDING APPENDIX 13 BY COUNTRY, J U N E 3 0, 1 9 9 9 (continued) (amounts in millions of US. dollars) IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount El Salvador 32 820.6 2 25.6 34 846.2 Equatorial Guinea - - 9 45.0 9 45.0 Eritrea - - 5 125.4 5 125.4 Estonia 7 125.7 - - 7 125.7 Ethiopia 12 108.6 60 2,927.7 73 3,036.3 Fiji 13 152.9 - - 13 152.9 Finland 18 316.8 - - 18 316.8 France 1 250.0 - - 1 250.0 Gabon 14 227.0 - - 14 227.0 Gambia,The - - 26 213.2 26 213.2 Georgia - - 22 509.6 22 509.6 Ghana 9 207.0 94 3,502.8 103 3,709.8 Greece 17 490.8 - - 17 490.8 Grenada I 3.8 1 8.8 2 12.7 Guatemala 34 1,058.1 - - 34 1,058.1 Guinea 3 75.2 53 1,129.2 56 1,204.4 Guinea-Bissau - - 21 234.9 21 234.9 Guyana 12 80.0 16 302.8 28 382.8 Haiti 1 2.6 36 626.5 37 629.1 Honduras 33 717.3 22 978.6 55 1,695.9 Hungary 39 4,302.0 - - 39 4,302.0 Iceland 10 47.1 - - 10 47.1 India 172 25,828.1 229 26,161.3 401 51,989.4 Indonesia 241 27,043 47 1,067 288 28,111.1 Iran, Islamic Republic of 39 2,058.1 - - 39 2,058.1 Iraq 6 156.2 - - 6 156.2 Ireland 8 152.5 - - 8 152.5 Israel 11 284.5 - - 11 284.5 Italy 8 399.6 - - 8 399.6 Jamaica 62 1,326.0 - - 62 1,326.0 Japan 31 862.9 - - 31 862.9 Jordan 50 1,882.0 15 85.3 65 1,967.3 Kazakhstan, Republic of 20 1,679.1 - - 20 1,679.1 Kenya 46 1,200.0 73 2,870.8 119 4,070.8 Korea, Republic of 114 15,647.0 6 110.8 120 15,757.8 Kyrgyz Republic - - 18 500.0 18 500.0 Lao People's Democratic Republic - - 27 576.0 27 576.0 Latvia 14 314.9 - - 14 314.9 Lebanon 15 783.5 - - 15 783.5 Lesotho 2 155.0 26 292.0 28 447.0 Liberia 21 156.0 14 114.5 35 27(0.5 Lithuania 12 293.3 - 11 293.3 Luxembourg 1 12.0 - 1 12.0 Macedonia, rYR 8 205.5 9 293.8 17 499.3 Madagascar 5 32.9 75 1,743.4 80 1,776.3 Malawi 9 124.1 66 1,854.1 75 1,978.2 Malaysia 87 4,150.6 - 87 4,150.6 Maldives - - 6 47.3 6 47.3 Mali - 1.9 59 1,241.5 59 1,243.4 Malta 1 7.5 - - 1 7.5 (continued next page) 220 THE WORLD BANK ANNUAL REPORT 1999 IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Mauritania 3 146.0 42 512.7 45 658.7 Mauritius 30 413.1 4 20.2 34 433.3 Mexico 169 30,009.6 - - 169 30,009.6 Moldova 9 302.8 6 146.0 15 448.8 Mongolia - - 11 175.7 11 175.7 Morocco 123 8,435.3 3 50.8 126 8,486.1 Mozambique - - 33 1,812.0 33 1,812.0 Myanmar 3 33.4 30 804.0 33 837.4 Nepal - - 70 1,557.5 70 1,557.5 Netherlands 8 244.0 - - 8 244.0 New Zealand 6 126.8 - - 6 126.8 Nicaragua 27 233.6 20 754.5 47 988.1 Niger - - 45 816.6 45 816.6 Nigeria 84 6,248.2 14 902.9 98 7,151.1 Norway 6 145.0 - - 6 145.0 OECS countries 1 3.6 - 2.4 1 6.0 Oman 11 157.1 - - 11 157.1 Org. of Eastern Caribbean States 1 14.1 5.5 1 19.6 Pakistan 84 6,614.2 107 5,468.1 191 12,082.3 Panama 42 1,179.8 - - 42 1,179.8 Papua New Guinea 29 597.0 9 113.2 38 710.2 Paraguay 36 807.9 6 45.5 42 853.4 Peru 82 5,053.6 - - 82 5,053.6 Philippines 150 10,666.4 5 294.2 155 10,960.6 Poland 30 4,969.5 - - 30 4,969.5 Portugal 32 1,338.8 - - 32 1,338.8 Romania 58 5,195.8 - - 58 5,195.8 Russian Federation 42 11,721.5 - - 42 11,721.5 Rwanda - - 48 869.4 48 869.4 Samoa 1 14.4 1 14.4 Sao Tome and Principe - - 8 58.9 8 58.9 Senegal 19 164.9 71 1,702.4 90 1,867.3 Seychelles 2 10.7 - - 2 10.7 Sierra Leone 4 18.7 21 403.7 25 422.4 Singapore 14 181.3 - - 14 181.3 Slovak Republic 2 135.0 - - 2 135.0 Slovenia 4 168.2 - - 4 168.2 Solomon Islands - - 7 45.9 7 45.9 Somalia - - 39 492.1 39 492.1 South Africa 12 287.8 - - 12 287.8 Spain 12 478.7 - - 12 478.7 Sri Lanka 12 210.7 71 2,271.2 83 2,481.9 St. Kitts and Nevis 1 1.5 - 1.5 1 3.0 St. Lucia 3 8.5 - 11.2 3 19.7 St. Vincent and the Grenadines 1 1.4 1 6.4 2 7.8 Sudan 8 166.0 48 1,352.9 56 1,518.9 Swaziland 12 104.8 2 7.8 14 112.6 Syrian Arab Republic 17 613.2 3 47.3 20 660.5 Taiwan, Province of China 14 329.4 4 15.3 18 344.7 Tajikistan - - 10 180.3 10 180.3 Tanzania 18 318.2 91 3,101.6 109 3,419.8 APPENDIX THIRTEEN 221 IBRD AND IDA CUMULATIVE LENDING APPENDIX 13 BY COUNTRY, JUNE 30, 1999 (continued) (amounts in millions of US. dollars) IBRD loanis IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amnount Thailand 117 7,579.1 6 125.1 123 7,704.2 Togo 1 20.0 41 733.5 42 753.5 Tonga - - 2 5.0 2 5.0 Trinidad andTobago 21 313.6 - - 21 313.6 Tunisia 109 4,423.7 5 74.6 114 4,498.3 Turkey 125 13,770.5 10 178.5 135 13,949.0 Turkmeristan 3 89.5 - 3 89.5 Uganda I 8.4 70 2,714.4 71 2,722.8 Ukraine 16 2,821.8 - - 16 2,821.8 Uruguay 44 1,640.7 - 44 1,640.7 Uzbekistan 9 434.0 - 9 434.0 Vanuatu - - 4 15.4 4 15.4 Venezuela 38 3,293.1 - 38 3,293.1 Vietnam - - 24 2,354.6 24 2,354.6 Western Africa region 1 6.1 3 52.5 4 58.6 Western Samoa - 8 46.6 8 46.6 Yemen, Republic of - - 114 1,630.9 114 1,630.9 Yugoslavia 90 6,114.7 - - 90 6,114.7 Zambia 28 679.1 44 2,115.7 72 2,794.8 Zimbabwe 24 983.2 11 656.9 35 1,640.1 Bankwide total 4,346 338,532.5 3,060 115,883.0 7,406 454,415.5 - Zero NOTE: Joint 1BRD/IDA operations are counted only once, as BReD operations. 14When more than one loan is made for a single project, the operation is counted only once. Details may not add to totals because of rounding 222 THE WORLD BANK ANNUAI. REPORT 1999 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 14 ASSISTANCE IN FISCAL YEAR 1999, BY REGION, JULY 1, 1 998 - JUNE 30, 1 999 (amounts in millions of US. dollars) IBRD loans IDA credits Total Region and Country Number Amount Number Amount Number Amount Africa Benin - - 1 25.5 1 25.5 Burkina Faso - - 2 20.2 2 20.2 Cameroon - - 1 28.2 1 28.2 Cape Verde - - 4 48.6 4 48.6 Chad - - 1 40.9 1 40.9 C6te d'lvoire - - 1 75.6 1 75.6 Djibouti - - 2 17.5 2 17.5 Ethiopia - - 1 100.0 1 100.0 Gabon 1 5 - - 1 5.0 Gambia, The - - 2 35.0 2 35.0 Ghana - - 5 281.8 5 281.8 Guinea - - 4 55.4 4 55.4 Kenva - - 1 40.0 1 40.0 Lesotho - - ] 21.0 1 21.0 Madagascar - - 3 131.4 3 131.4 Malawi - - 4 193.0 4 193.0 Mali 1 40.0 1 40.0 Mauritania - - 3 30.8 3 30.8 Mozambique - - 3 176.0 3 176.0 Niger - - 2 82.6 2 82.6 Rwanda - - 2 80.0 2 80.0 Senegal - - 2 117.4 2 117.4 Tanzania - - 1 40.0 1 40.0 Togo - - 1 5.0 1 5.0 Uganda - - 5 164.8 5 164.8 Zambia - - 2 212.8 2 212.8 Total 1 5 55 2,063.51 56 2,068.51 East Asia Cambodia - - 3 75.3 3 75.3 China 17 1,674.4 2 422.6 19 2,097.0 Indonesia 10 2,605.1 1 136.0 11 2,741.1 Korea, Republic of 2 2,048.0 - - 2 2,048.0 Lao, People's Democratic Republic - - 2 29.8 2 29.8 Malaysia 3 404.0 - - 3 404.0 Mongolia - 1 12.0 1 12.0 Philippines 5 723.3 - - 5 723.3 Samoa - - 1 14.4 1 14.4 Solomon Islands - - 1 12.0 1 12.0 Thailand 3 1,300.0 - - 3 1,300.0 Vietnam - - 4 308.3 4 308.3 Total 40 8,754.8 15 1,010.4 55 9,765.2 Europe and Central Asia Albania - - 5 125.0 5 125.0 Armenia - - 4 120.6 4 120.6 Azerbaijan - - 4 79.5 4 79.5 Bosnia and Herzegovina - - 6 163.0 6 163.0 Bulgaria 3 160.8 - - 3 160.8 Croatia 2 108.3 - - 2 108.3 Georgia - - 7 136.6 7 136.6 Kazakhstan 4 175.5 - - 4 175.5 Krygyz Republic - - 3 61.5 3 61.5 Latvia 4 58.6 - - 4 58.6 Lithuania 1 20.1 - - 1 20.1 Macedonia, former Yugoslavia Rep. of 1 32.0 4 90.0 5 122.0 Moldova - - 3 66.1 3 66.1 Poland 3 327.0 - - 3 327.0 Romania 4 340.0 - - 4 340.0 Russian Federation 3 1,930.0 - - 3 1,930.0 APPENDIX FOURTEEN 223 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 14 ASSISTANCE IN FISCAL YEAR 1999, BY REGION, JULY 1, 1998 - JUNE 30, 1999 (continued) (amounts in millions of US. dollars) IBRD loans IDA credits Total Region and Country Number Amount Number Amount Number Amount Slovenia 1 15.0 - - 1 15.0 Tajikistan - - 5 93.4 5 93.4 Turkey 3 528.0 - - 3 528.0 Ukrainie 2 600.0 - 2 600.0 Uzbekistan 2 55.0 - - 2 55.0 Total 33 4,350.3 41 935.7 74 5,286.0 Latin America and the Caribbean Argentina 8 3226.1 - 8 3226.1 Bolivia - - 4 186.8 4 186.8 Brazil 8 1,686.1 - - 8 1,686.1 Chile 3 160.5 - - 3 160.5 Colombia 2 142.0 - - 2 142.0 Dominican Republic 1 111.1 - - 1 111.1 Guatemala 5 167.0 - - 5 167.0 Guyana _ - 1 9.0 1 9.0 Honduras - - 3 283.7 3 283.7 Mexico 2 949.9 - - 2 949.9 Nicaragua - - 3 118.6 3 118.6 Organization of Eastern Caribbean States 1 14.1 - 5.5 1 19.6 Panama 3 150.3 - - 3 150.3 Peru 2 338.0 - - 2 338.0 Trinidad and Tobago 1 14.8 - - 1 14.8 Uruguay 2 92.5 - - 2 92.5 Venezuela 2 80.7 - - 2 80.7 Total 40 7,133.3 11 603.6 51 7,736.8 Middle East and North Africa Egypt, Arab Republic of 2 345.0 4 205.0 6 550.0 Jordan 3 210.0 - - 3 210.0 Morocco 6 440.0 - - 6 440.0 Tunisia 2 194.0 - - 2 194.0 Yemen, Republic of - - 5 181.5 5 181.5 Total 13 1189.0 9 386.5 22 1,575 5 South Asia Bangladesh - - 6 1,020.7 6 1,020.7 India 3 400.0 4 654.8 7 1,054.8 Nepal - - 2 17.5 2 17.5 Pakistan 1 350.0 1 90.0 2 440.0 Sri Lanka - 1 29.0 1 29.0 Total 4 750.0 14 1,812.0 18 2,562.0 Bankwidc total 131 22,182.3 145 6,811.8 276 28,994.1 - Zero. NoTE: Supplements are included in the amount but are not counted as separate lending operations. Joint IBRD/IDA operations are counted only once, as IBRD operations. 1 Excludes an IDA HIPC grant of $150 million to Mozambique. 224 THE WORLD BANK ANNUAL REPORT 1999 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 15 ASSISTANCE IN FISCAL YEAR 1999, BY PURPOSE JULY 1, 1 998 - JUNE 30, 1 999 (amiounts in mnillions of US. dollars) IBRD IDA Total Agriculture Albania - 24.0 24.0 Armenia - 26.6 26.6 Azerbaij an - 30.0 30.0 Bangladesh - 45.0 45.0 Bangladesh - 16.5 16.5 Brazil 44.0 _ 44.0 Bulgaria 75.8 - 75.8 Burkina Faso - 5.2 5.2 Cameroon - 15.1 15.1 China 60.0 100.0 160.0 China 90.0 30.0 120.0 China 80.0 20.0 100.0 China 40.0 40.0 80.0 Cote d'Ivoire - 50.0 50.0 Egypt, Arab Republic of - 25.0 25.0 Egypt, Arab Republic of 120.0 - 120.0 Egypt, Arab Republic of 225.0 75. 0 300.0 Guatemala 23.0 - 23.0 Guinea - 22.0 22.0 India 85.0 50.0 135.0 India - 194.1 194.1 Indonesia 300.0 - 300.0 Kyrgyz Republic - 10.0 10.0 Kyrgyz Republic - 15.0 15.0 Latvia 10.5 - 10.5 Mexico 444.4 - 444.4 Morocco 4.0 - 4.0 Morocco 5.0 - 5.0 Mozambique - 30.0 30.0 Nicaragua - 9.0 9.0 Philippines 150.0 - 150.0 Poland 15.9 15.9 Poland 11.1 - 11.1 Senegal - 27.4 27.4 Tajikistan - 20.0 20.0 Turkey 4.0 _ 4.0 Uganda - 12.4 12.4 Uganda - 26.0 26.0 Vietnam - 101.8 101.8 Total Agriculture 1,787.7 1,020.1 2,807.8 Education Azerbaijan - 5.0 5.0 Brazil 202.0 - 202.0 Cape Verde - 6.0 6.0 Chile 145.4 - 145.4 Chile 5.0 5.0 China 20.0 50.0 70.0 Colombia 5.0 - 5.0 Egypt, Arab Republic of - 50.0 50.0 Egypt, Arab Republic of - 5.0 5.0 Gambia, The - 20.0 20.0 Ghana - 32.0 32.0 Guinea - 4.1 4.1 India - 85.7 85.7 Indonesia 21.5 - 21.5 Indonesia 54.5 20.1 74.6 APPENDIX FItTEEN 225 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 1 5 ASSISTANCE IN FISCAL YEAR 1 999, BY PURPOSE J UL Y I 1 1998 - JUNE 30, 1 999 (continued) (amounts in millions of U S. dollars) IBRD IDN Total Indonesia 47.9 1 5.9 63.8 Latvia 31.1 - 31.1 Lesotho 21.( 21.0 Malaysia 244.0 244.0 Mozambique 71.0 71.0 Nepal - 12.5 12.5 Nicaragua 13.2 13.2 Taiikistan 5.0 5. ( Urutguay 28.) - 28.0 Vietnam - 83.3 83.3 Zambia 40.0 40.0 Total Education 804.4 539.8 1,344.3 Electric power and other energy Argentina 3(.1) -31)-( Armenia 21.0 21.0 China 100.0 1()().0 Georgia 25.() 25.0 India 2110.11 - 21(.0 Yemen, Republic of - 54.0 54.0 Total Electric Power & Other Energy 340) 10(0.0 440.0 Environment Armenia 8.( 8.( Bangladesh - 138.6 138.6 Brazil 15.11 15.0 China 150.0 2.() 152.0 China 1(0.0 50.1( 15(.0 Gambia, The 15. 0 15.0 Georgia - 4.4 4.4 Guatenmala 31.0 - 31.(1 lHondLuras 8.3 8.3 lIao People's Democratic Republic 2.0 2.0 Slovenia 15.0 15.0 Total Environment 311.0 228.3 539.3 Finanlce Albania 12.0 12.() Argentina 51(5.0 - 50(5.0( Bosnia-Flerzegovina 50.0 50.0 China 10.0 35.0 45.11 China 27.4 5.6 33.0 Ghana 50.5 50.5 Korea, Republic of 48.0 - 48.1) Madagascar - 16.4 16.4 Mexico 505.5 - 505.5 Pakistan - 90.0 90.( Peru 300.1) 300.1) Philippines 300.1 - 300.0 Sri Lanka 29.0 29.0 Thailand 400.0 - 400.0 Tunisia 159.0 - 159.0 Uganda 13.0 13.0 Ukraine 300.0 - 300.0 Venezuela 20.0 20.0 Total Finance 2,574.9 301. 5 2,876.4 (continiued next page) 226 THE WORLD BANK ANNUAL. REPORT 1999 IBRD IDA Total Industry Bangladesh 32.0 32.0 Bolivia 40.0 40.0 Georgia - 15.0 15() Malaysia 100.0 - 1(0.( Tunisia 35.0 _35. Turkey 155.0 - 155.0 Ukraine 300.0 - 3()0.0 Total Industrv' 590.0 87.0 677.0 Mining Mauritania - 15.0 15.0 Poland 300.0 300 0 Total Mining 300.0 15.0 315.0 Multisector Albania 45.0 45.0 Albania - 30.0 30.() Argentina 30.3 - 30.3 Argentina 2,525.3 - 2,525.3 Armenia - 65.0 65.0 Azerbaijan - 7.0 7.0 Bangladesh - 200.0 200.0 Bolivia - 1.8 1.8 Burkina Faso - 15.0 15.0 Cameroon - 13.1 13.1 Chad - 3().0 30.0 Dominican Republic 111.1 - 111.1 Georgia - 60.0 60.0 Georgia - 16.5 16.5 Ghana - 178.2 178.2 Ghana - 1.8 1.8 Honduras - 200.0 200.0 Indonesia 1,000.0 - 1,000.0 Indonesia 500.0 - 510.0 Jordan 120.1 - 120.0 Korea, Republic of 2,000.0 2,000.0 Macedonia, former Yugoslav Republic of - 50.0 50.0 Madagascar - 100.0 100.0 Malawi - 92.0 92.0 Nicaragua _ 50() 50.0 Org. of Eastern Caribbean States (OECs) 14.1 5.5 19.6 Pakistan 35(0.0 - 350.0 Panama 61.0 61.0 Russian Federation 1,500.0 - 1,50(.0 Rwanda - 75.0 75.0 Solomon Islands 12.0 12.0 Tanzania - 40.0 40.0 Thailand 600.) - 60(0.0 Zambia - 170.0 17(1.0 Total Multisector 8,811.7 1,457.0 10 269.6 Oil and gas Cape Verde 17.5 17.5 Total Oil and gas - 17.5 17.5 Population, Health & Nutrition Argentina 4.8 - 4.8 Bolivia - 25.0 25.0 APPENDIX FIFTEEN 227 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 15 ASSISTANCE IN FISCAL YEAR 1999, BY PURPOSE JULY 1 1998 - JUNE 30, 1999 (continued) (amounts in millions of US. dollars) IBRD IDA Total Bosnia and Herzegovina - 10.0 10.0 Brazil 100.0 - 100.0 Brazil 165.0 - 165.0 Chad 10.9 10.9 China 10.0 50.0 60.0 Ethiopia - 100.0 100.0 Guinea - 11.3 11.3 Honduras - 10.4 10.4 India - 191.0 191.0 India - 134.0 134.0 Indonesia 44.7 - 44.7 Jordan 35.0 - 35.0 Kazakhstan 42.5 - 42.5 Latvia 12.0 - 12.0 Malawi - 5.0 5.0 Mali 40.0 40.0 Mauritania - 4.9 4.9 Morocco 66.0 - 66.0 Panama 4.3 4.3 Uzbekistan 30.0 30.0 Total Population, Health & Nutrition 514.2 592.5 1,106.7 Public Sector Management Argentina 10.0 - 10.0 Bosnia and Herzegovina - 72.0 72.0 Bosnia and Herzegovina - 12.0 12.0 Cambodia - 5.0 5.0 Cape Verde _ 9.0 9.0 China - 5.0 5.0 Croatia 7.3 - 7.3 Georgia 2.3 2.3 Georgia 13.4 13.4 Ghana 14.3 14.3 Guatemala 33.0 _ 33.0 Indonesia 31.5 - 31.5 Kazakhstan 16.5 - 16.5 Latvia 5.0 - 5.0 Mauritania - .1 .1 Moldova 40.0 40.0 Mongolia - 12.0 12.0 Morocco 101.0 - 101.0 Morocco 250.0 - 250.0 Nicaragua - 1.4 1.4 Niger 18.6 18.6 Niger - 64.0 64.0 Peru 38.0 - 38.0 Philippines 150.0 - 150.0 Romania 25.0 - 25.0 Romania 5.0 - 5.0 Romania 300.0 - 300.0 Russian Federation 30.0 - 30.0 Tajikistan - 50.0 50.0 Tajikistan 6. 7 6.7 Tajikistan - 6.7 6.7 Trinidad and Tobago 14.8 - 14.8 Uzbekistan 25.0 - 25.0 Yemen, Republic of - 2.5 2.5 Yemen, Republic of 50.0 50.0 Zambia - 2.8 2.8 Total Public Sector Management 1,042.1 387.8 1,430.0 (continued next page) 228 THE WORLD BANK ANNUAL REPORT 1999 IBRD IDA Total Social sector Albania - 5.0 5.0 Argentina 90.8 - 90.8 Azerbaijan - 7.5 7.5 Azerbaijan - 10.0 10.0 Brazil 757.6 - 757.6 Brazil 252.5 - 252.5 Bulgaria 80.0 - 80.0 Bulgaria 5.0 - 5.0 Cambodia - 25.0 25.0 Cape Verde - 16.1 16.1 China - 5.0 5.0 Djibouti - 14.8 14.8 Djibouti - 2.7 2.7 Egypt, Arab Republic of - 50.0 50.0 Ghana - 5.0 5.0 Guatemala 50.0 _ 50.0 Guatemala 30.0 _ 30.0 Guyana - 9.0 9.0 Honduras - 45.0 45.0 Indonesia 600.0 - 600.0 Kyrgvz Republic - 36.5 36.5 Macedonia, former Yugoslav Republic of - 29.0 29.0 Macedonia, former Yugoslav Republic of - 1.0 1.0 Macedonia, former Yugoslav Republic of - 10.0 10.0 Madagascar - 15.0 15.0 Malawi - 66.0 66.0 Malaysia 60.0 - 60.0 Moldova - 15.0 15.0 Moldova - 11.1 11.1 Nicaragua - 45.0 45.0 Romania 10.0 - 10.0 Rwanda - 5.0 5.0 Thailand 300.0 - 300.0 Togo - 5.0 5.0 Total Social sector 2,235.9 442.7 2,678.6 Telecommunications Mauritania - 10.8 10.8 Total Telecommunications - 10.8 10.8 Transportation Bangladesh - 177.0 177.0 Bangladesh - 273.0 273.0 Bangladesh - 80.0 80.0 Bangladesh - 20.0 20.0 Bangladesh - 6.3 6.3 Bolivia - 88.0 88.0 Brazil 150.0 - 150.0 China 71.0 - 71.0 China 350.0 _ 350.0 China 150.0 - 150.0 China 200.0 - 200.0 China 200.0 - 200.0 Colombia 137.0 - 137.0 C6te d'Ivoire - 25.6 25.6 Croatia 101.0 - 101.0 Honduras - 20.0 20.0 Kazakhstan 100.0 - 100.0 APPENDIX FIFTEEN 229 PROJECTS APPROVED FOR IBRD AND IDA APPENDIX 1 5 ASSISTANCE IN FISCAI YEAR 1 999, BY PURPOSE JULY 1 1998 - JUNE 30, 1999 (&ontinue,d (amnounts itn millions of US dollars) IBRD IDA Total Lao People's Democratic Republic - 27.8 27.8 Macedonia, former Yugoslav Republic of 32.0 - 32.0 Malawi - 30.0 30.0 Nepal 5.0 5.0 Panama 85.0 - 85.0 Russian Federation 400.0 - 400.0 Senegal - 9(.0 90.( Taj ikistan 5.0 5.0 Uganda - 91.0 91.0 Uruguay 64.5 - 64.5 Vietnam - 42.7 42.7 Total 'ransportation 2,040.5 981.3 3,021.8 Urban development Azerbaijan - 20.0 20.0 Benin 25.5 25.5 Bolivia - 32.0 32.0 Bosnia and Herzegovina 15.0 15.0 Bosnia and Herzegovina - 4.0 4.0 Cambodia - 45.3 45.3 Chile 10.1 - 10.1 Gabon 5.0 5.0 Guinea 18.0 18.0 India 105.0 - 105.0 Indonesia - 100.0 100.0 Indonesia 5.0 - 5.0 Kenya 40.0 40.0 Lithuania 20.1 - 20.1 Morocco 14.0 14.0 Philippines 100.0 - 100.0 Samoa - 14.4 14.4 Uvganda - 22.4 22.4 Venezuela 60.7 - 60.7 Yemen, Republic of - 50.0 50.0 Total Urban development 319.9 386.6 706.5 WVater supply and sanitation Argentina 30.0 - 30.0 Bangladesh - 32.4 32.4 China 16.0 30.0 46.0 Jordan 55.0 55.0 Kazakhstan 16.5 - 16.5 Mozambique - 75.0 75.0 Philippines 23.3 - 23.3 Turkey 369.0 - 369.0 Vietnam - 80.5 80.5 Yemen, Republic of 25.0 25.0 Total Water supply and sanitation 509.8 242.9 752.7 Bankwide Total 22,182.3 6,811.8 28,994.1 Nose: Supplements are included in the amnount but are not counted as separate lending operations. Joint 1s3R/,11A operations are counted only once, as IBRD operations. - Zero. 230 THE WORID BANK ANNUAi. REPORT 1999 DEVELOPMENT COMMITTEE COMMU'NIQUSS APPENDIX 16 FISCAL YEAR 1999 COMMUNIQUE growth momentum and global financial stability- All countries should continue the process of market 1. The 58th meeting of the Development Committee opening and resist protectionism. All countries and was held in Washington, D. C. on October 5, 1998 the IFIs need to attach high priority to the promo- under the chairmanship of Mr Tarnin Nimmanahae- tion of good governance and the elimination of cor- minda, Minister of Finance of Thailand*. ruption. 2. Anwar Ibrahim The Committee expressed its 7. Ministers stressed that, given the magnitude of great appreciation to Mr. Anwar Ibrahim, who had reversals in capital flows that East Asia and other served so ably as Chairman of the Committee. regions had experienced, resumption of private 3. Implications of the Asian Crisis. The Committee flows was key to recovery. Ministers also empha- paid particular attention on this occasion to devel- sized the important catalytic role played by official opment priorities and the response of the World flows from multilateral agencies and bilateral Bank Group. sources. 4. Ministers recognized that the economic and 8. In this context, the Committee agreed that, social aftershocks of the crisis were more severe beyond responding to the immediate crisis, and in than earlier anticipated. The crisis had now spread parallel with ongoing efforts to improve the interna- beyond Indonesia, Korea, Thailand and Malaysia, tional financial architecture, concerted actions w ere and its global ramifications had increased the vul- needed to help countries bolster their structural and nerability of all countries. Ministers therefore noted social policies and institutions. These include the need to support an early and sustained recovery strengthening the financial sector; establishing a in East Asia and contain the risks of crises else- sound business environment; improving public and where, and to assist countries more generally to private sector governance, particularly transparency develop the prerequisites for sustainable economic and accountability; and strengthening social protec- growth in a more integrated international financial tion. Ministers noted that the primary role of the and economic system. World Bank was to help eliminate poverty and 5. Ministers agreed that a concerted strategy for improve social well-being, in line with international restoring sustainable growth and reversing the dra- development goals. They therefore encouraged the matic increase in poverty in East Asia should World Bank to work wNith the United Nations, the include the following key elements: i) maintaining Fund and other partners to develop general princi- and accelerating progress on structural reforms, ples of good practice in structural and social policies including governance structures required for the (including labor standards). efficient working of markets; ii) restructuring the 9. Bank Group Response. The Committee wel- banking system and corporate sectors and, in the comed the prompt response of the Bank Group to short term, restoring credit to viable businesses; iii) the crisis, including the pledge of up to $17 billion mobilizing necessary resources to finance growth; in financing for affected countries in the region. iv) regenerating demand; and v) protecting the envi- Ministers expressed appreciation for the significant ronment. Crucial to all these elements is a focus on steps already taken by the Bank Group to assist social concerns and the need to mitigate the most countries to address the social consequences of the harmful effects of the crisis on the poor. crisis; restructure their financial and corporate sec- 6. Ministers further noted that, if it were allowed tors; and strengthen structural reforms. They wel- to continue, financial turmoil could result in major comed the Bank Group's intention to further setbacks to the global economy, and particularly to enhance, within the Strategic Compact, its capacity the progress most developing countries had (including through consideration of new instru- achieved in the 1990s. The Committee agreed that ments) to support member governments' structural actions were needed to help restore confidence and and social development programs. prevent contagion in the event of market pressures. 10. The Committee noted the decisions and rec- Emerging market countries should strengthen their ommendations recently made by the Executive policies and institutions at an early stage to mini- Board related to the Bank's income dynamics. mize their vulnerability to adverse shifts in investor Given the increasing demands on the Bank's fi-nan- sentiment. Industrial countries should take early cial resources, Ministers asked the Executive Board and decisive actions to help regain or maintain to explore appropriate options to ensure that the APPENDIX SIXTEEN 231 Bank remains able to respond quickly and effec- urged enhanced cooperation between IFIs and the tively to the development needs of its members. United Nations system at the country level. Ministers reaffirmed the fundamental importance 14. Implementation of the Debt Initiative for Heavily of maintaining a financially strong Bank. Indebted Poor Countries (iinpc). Ministers were 11. Bank-Fund Collaboration. The Committee encouraged by the progress made during the Initia- noted the important roles to be played by the Inter- tive's first two years. They noted that nine countries national Financial Institutions in meeting the range have so far reached the decision point, and total of new challenges facing the international commu- commitments to the seven requiring assistance nity. In this context, the Committee expressed its under the Initiative amount to about $6.1 billion in appreciation for the major efforts undertaken by nominal debt service relief ($3.1 billion in NPV the Fund and Bank to help countries deal with the terms). Ministers welcomed the fact that Bolivia crisis and its broad consequences. They stressed the had reached its completion point, based on contin- importance they attached to effective coordination ued strong policy performance; savings in nominal between the Bank and the Fund. Ministers noted debt service were about S760 million (or about the joint report from the Fund's Managing Director $450 million in NPV terms). The Committee also and the Bank's President which set out the respec- welcomed the recent agreement that Mali had tive responsibilities of the two institutions and how reached its decision point and was expected to each would support the macroeconomic policy and reach its completion point in December 1999. structural reform agendas of member governments. 15. Ministers expressed continued strong support Ministers welcomed the proposed measures to for the Initiative. They endorsed the extension of improve operational mechanisms and the environ- the entry deadline, from September 1998 until end- ment for collaboration, including information shar- 2000, and the decision to add a degree of flexibility ing, so as to enhance the institutions capacity to in its evaluation of track records of policy perfor- serve member countries. Ministers requested that mance for countries receiving post-conflict assis- the Bank and Fund Executive Boards keep imple- tance. Ministers encouraged potentially eligible mentation of these actions, as well as the scope for countries, including those emerging from conflict, further strengthening of collaboration, under to undertake the necessary Bank/Fund supported review, programs as soon as possible so that by the year 12. Ministers also encouraged the Executive 2000 every eligible country is included in the Initia- Boards of the Fund and Bank to review the roles of tive. They also stressed the importance of additional the Interim and Development Committees as part contributions to the Initiative to assist all multilat- of the ongoing consideration of steps to strengthen eral institutions to meet their share of the cost, the international financial architecture. including, in particular, the African Development 13. Partnerships. Ministers also welcomed the con- Bank. tinued deepening of the partnerships between the 16. Ministers encouraged the establishment of World Bank, the Asian and African Development closer ties between debt relief and support for pov- Banks, and other multilateral and bilateral agencies erty reduction, as ways of making progress toward in addressing the crisis and its longer-term impact. achievement of the international development tar- (Ministers looked forward to receiving at the Com- gets. Ministers also supported the plan to carry out mittee's next meeting the Bank President's report a comprehensive review of the Initiative, including on progress achieved in strengthening World Bank an update of cost estimates, as early as 1999. cooperation with regional development banks.) 17. Assistance to Post-Conflict Countries. Ministers Given the importance of trade for sustained recov- discussed the special problems faced by post-con- ery, Ministers urged the IFIS to intensify cooperation flict countries. They noted that a wide range of sup- in the Integrated Framework for Trade Related port had been provided these countries by the Bank Technical Assistance for the Least Developing and Fund, along with the UN System and bilateral Countries. They also encouraged the World Bank to partners. Ministers encouraged them, within their work closely with wTO, UNCTAD and other interested respective mandates, to assist these countries with parties in building poor countries' capacity to pre- effective conflict prevention policies, thereby pav- pare for a new global trade round. Ministers also ing the way for a durable and successful post-con- 232 THE WORLD BANK ANNUAI. REPORT 1999 flict resolution. Ministers recognized, however, that COMMUNIQUE in a number of cases, especially those with large and protracted arrears to multilateral institutions, the 1. The 59th meeting of the Development Committee international community should explore additional was held in Washington, D.C., on April 28, 1999 ways to provide assistance more quickly and effec- under the chairmanship of Mr Tarrini Nimmanahae- tively. In particular, Ministers emphasized the need minda, Minister of Finance of Thailand. Mr. Renato to provide (and, where needed, increase) positive Ruggiero, Director-Genieral of the World Trade Orga- net transfers from official creditors to post-conflict nization, Mr James D. W/Volfensohn, President of the countries that are adopting sound economic and World Bank, Mr Michel Camdessus, Managing social policies. The Committee welcomed the ini- Director of the International Monetary Fund, and M\r. tial worlk done by the Bank and the Fund in identi- G.L. Peiris, Minzister of Justice and Constitutioinal and fying the issues. Ministers recognized that providing Ethnic Affairs and Deputv Minister of Finance of Sri additional assistance, especially from the IFIs, raised Lanka, Chairman of the Grouip of Twenty-Four, significant policy and resource issues which would addressed the plenarv session. Observers from a nuim- need to be considered more fully. Given the need to ber of international and regional organizations also provide more effective support to post-conflict attenided. countries, Ministers requested that the Bank and 2. Debt Initiative for Heavily Indebted Poor Coun- the Fund, in cooperation with the African Develop- tries (HIPC): Encouraged by the progress made over ment Bank and other major creditors, develop an the last two-and-half years, Ministers expressed approach to guide assistance to these countries on a their continued strong support for the Initiative and case-by-case basis, taking account of the specific reaffirmed its overarching objective of poverty capabilities of each institution. The Bank and Fund reduction. They discussed ways to strengthen the were asked to report back to the Committee at its Initiative and welcomed the results of the extensive next meeting. external consultation process in this regard. The 18. ITm and IDA Resources. Ministers urged all Committee endorsed the current review and exam- members to implement the agreed IMP quota ination of options designed to enable HIPC Initiative increase without delay to ensure the Fund has ade- debt relief to be broader, deeper and faster. Minis- quate resources to meet the substantial additional ters reiterated the importance of ensuring a clear demands placed upon it. Ministers also stressed the link between debt relief and the goals of sustainable urgency of securing the financing of the ESAF. More- development and poverty reduction and looked. for- over, given the vital need for concessional resources ward to the results of ongoing consultations in this to sustain support for poverty reduction in poor area. From the outset, the underlying reform pro- countries, particularly in Africa, they urged IDA grams should have an integral pro-poor growth Deputies to reach a successful conclusion of IDA 12 focus. Programs for HIPC should fully reflect social negotiations before the end of 1998. concerns by protecting social expenditures. 19. Executive Secretary. The Committee extended 3. Ministers endorsed a set of principles that Alexander Shakow 's term as Executive Secretary should be used in considering changes to the cur- until October 1999. rent HIPC framework. These guiding principles 20. Next Meeting. The Committee's next meeting include recommendations that debt relief should: is provisionally scheduled for (i) reinforce the wider tools of the international April 28, 1999 in Washington, DC. community to promote sustainable development - Mr James D. Wolfensohn, President of the World Bank, Mr. Michel Camdessus, Managing Director of the International Vione- tary Fund, Mr Abdelkrim Harchaoui, Minister of Finance of Algeria and Chairman of the Group of Tw,venty-Four, addressed the plenary session. Observers from a number of international and regional organizations also attensded. APPENDIX SIXTEEN 233 and poverty reduction; (ii) strengthen the incen- Fund in enhancing their capacity to assist post-con- tives for debtor countries to adopt and implement flict countries. They welcomed the recent agree- economic and social reform programs; (iii) provide ment by the IMI: Executive Board to enhance post- a clear exit from an unsustainable debt burden-tak- conflict emergency financial assistance and to take ing into account external vulnerabilities of each eli- into account, on a case-by-case basis, the special cir- gible country; and (iv) be consistent with the need cumstances of post-conflict countries with arrears to preserve the financial integrity of the IFIS. More- to the Fund. The Committee also welcomed the over, any changes should simplify implementation Bank s progress in designing financial instruments of the Initiative. aimed at providing positive net transfers to post- 4. Ministers took note of the updated and higher conflict countries implementing policies conducive cost estimates of the current framework, as the to stabilization, growth and poverty reduction. alternative costs of potential enhancements to the Ministers stressed the need, where relevant, to link Initiative, and the importance of early debt service such efforts to preparing countries for participation reduction. They emphasized that the review of in the HIPC Initiative. They encouraged the two options for change should continue to be based on institutions to continue to work together, and with cost estimates provided by the Bank and the IMrF ). N. agencies, bilateral partners, and other institu- which take into account those countries likely to tions, to strengthen their assistance to post-conflict qualify for relief, and an estimate of total resources countries and to implement enhanced assistance in required as well as the likely time period of expen- individual countries as soon as possible, in the con- ditures. The review would need to be matched by a text of appropriate macroeconomic and structural broad-based effort to find appropriate and equitable policies. They stressed that these initiatives would financing solutions. In particular, there is a need for need to complement strengthened efforts by the increased bilateral contributions-with fair burden international community to assist in the early and sharing-to the HIPC Trust Fund to help those multi- orderly transition from conflict to stabilization and lateral creditors unable to meet additional costs economic growth. They emphasized the need for from their own resources. In addition, ministers demonstrated commitment to lasting peace by the stressed the need to secure financing for the iMI- previously conflicting parties to enable donors and ESAF/HIPC Trust. While acknowledging the financial creditors to provide exceptional support. constraints facing multilateral creditors, ministers 7. Bank Grotp Financial Capacitv:The Committee encouraged them to examine further the funding welcomed the successful conclusion of the rDAl 2 they can provide for the -IIPC Initiative. Ministers replenishment agreement and the MIGA general cap- requested that changes to the HIPC Initiative frame- ital increase which will provide essential resources work and financing plans be presented for their con- for two key parts of the World Bank Group. Minis- sideration at the Committee's next meeting, ters also welcomed the attention being devoted by including specific proposals for multilateral institu- the Bank's Executive Board and management to the tions to provide cash flow relief between the deci- financial strength of the iR1D and IFC. Ministers reaf- sion and completion points. firmed their strong commitment to preserve the 5. Ministers also welcomed the proposals from IBRI)'s and il-C's financial integrity They recognized bilateral creditors to consider enhanced debt relief that the institutions must respect appropriate finan- including more relief of the eligible HiPCs' ODA cial limits in the conduct of their operations. Minis- debts. The Committee supported a better coordi- ters accordingly asked that the Executive Board nated effort to ensure that newv financing to I tttics be review iBaR and IFC priorities, particularly in light of in the form of grants or on highly concessional recent global economic and financial developments, terms. Ministers urged an intensification of efforts and report back to the Committee at its next meet- on both the aid and trade fronts, emphasizina that ing with balanced options for maintaining and sup- HIPC Initiative debt relief alone would be insufficient porting the institutions financial capacity to help to reach the overarching International Develop- them meet the future development needs of bor- ment Goal of halving the proportion of people liv- rowing member countries. ing in absolute poverty by 2015. S. Comprehensive Development Framnework (cDFU: 6. Assistance to Post Conflict Countries: Ministers The Committee welcomed the holistic approach to noted the progress achieved by the Bank and the sustainable development envisaged in the CDF. Min- 234 THF WORLD BANK ANNUAi REPORT 1999 isters appreciated that the CDF emphasizes the ulti- Bank to help countries mobilize the necessary mate importance of country ownership of decision- domestic and external resources to implement making as well as partnership and coordination these principles and to share best practice on the betsveen government, civil society, the private sec- effective use of such resources, Ministers empha- tor and other multilateral and bilateral actors in sized the importance of the Bank concentrating on pursuit of poverty reduction-the Bank's central strengthening its support for member countries in goal. They underscored the importance, within the translating broad principles into practical country- CDt, of each partner sharpening its focus. They specific results, based on the Bank's extensive oper- noted that many governments had expressed inter- ational role in promoting broad-based poverty- est in working as partners with the Bank in helping reducing development-experience of best-practice to develop the CDF. Ministers recognized that the which should be an important part of the Bank's ultimate test of the CDF Would be in its implementa- contribution to the United Nations discussion of tion, and they called on the Executive Board to principles. They emphasized the importance and. monitor and evaluate progress in the pilot country urgency of work by the Bank and the Fund to help cases as they evolve over the next eighteen months. countries be better prepared for crisis situations, 9. Mlultilateral Development Batik (OBDL) Coopera- and to ensure that when crisis strikes the most vul- tion: Ministers welcomed the President's report on nerable groups are protected and the process of strengthened World Bank cooperation with regional longer term development is sustained; ministers development banks, an important set of develop- asked the World Bank to report back to the Com- ment partners. They underscored the importance of mittee at the Annual Meetings on associated poli- continuing to strengthen cooperation between the cies and practices that could support national and World Bank, regional development banks, and the international implementation of these objectives. ini. Ministers believe such enhanced collaboration, 11. Strenigthening International Fora: Ministers dis- while respecting each institution's unique mandate, cussed a number of options for strengthening the can improve lending efficiency and effectiveness; Development and Interim Committees. They rec- they urged further concrete steps be taken by the ognized the importance of reaching agreement as MneDs as, for example, in developing comparable soon as possible and asked the two Executive methods for evaluating development effectiveness Boards to develop proposals for consideration by and in establishing best-practice MIDB procurement the Committees at their next meetings. rules. 12. The Balkan Crisis. Ministers were informecd of 10. Principles and Good Practice in Social Policy: the results of the special high-level meeting of gov- Ministers noted the important contributions of the ernments and international agencies held on April Bank and the Fund in current efforts to strengthen 27. Convened by the World Bank and the Interna- the architecture of the international financial svs- tional Monetary Fund, the meeting focussed on the tem through their participation in the formulation economic impact of the Kosovo crisis on neighbor- of international standards, principles and best prac- ing countries in the Balkan region. The Committee tices. Reflecting on the lessons of the recent finan- welcomed the attention being paid to the region's cial crisis, Ministers reiterated the importance of short-term financial needs, as well as a medium- concerted action to help countries bolster their term approach to economic stabilitv in these coun- social policies and institutions. They considered a tries. They emphasized that conflict and post-con- draft note on principles and good practice in social flict situations elsewhere also required a high level policy, prepared at the Committee's request by the of attention by the international community. Minis- World Bank in cooperation with the J.N. and others. ters welcomed the request that the World Bank and Ministers agreed that further development of these the European Union coordinate these efforts for the basic social principles was best pursued within the Balkan crisis. Ministers looked forward to being framework of the United Nations, as part of the informed of follow-up actions in due course. international community's follow-up on the 13. Next Mleeting The Committee's next meeting Copenhagen Declaration of the World Summit for is scheduled for September 27, 1999, in Washing- Social Development. Ministers encouraged the ton D.C. APPENDIX SIXTEEN 235 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 1999 Section 1: Financial Overview 239 Section 2: Development Activities 240 Loans 240 Guarantees 246 Other Activities 247 Section 3: Risk Management 248 Credit Risk 248 Interest Rate Risk 250 Exchange Rate Risk 251 Operating Risk 253 Section 4: Liquidity Management 256 Section 5: Funding Resources 257 Equity 257 Borrowings 259 Section 6: Results of Operations 260 Glossary of Terms 263 237 Certain forward-looking statements contained herein are subject to risks and uncertainties. IBRD's actual results may differ materially from those set forth in such forward-looking statements. 238 Tii WIVORi.D BANK ANNUAI REPORT 1999 1. FINAiNCIAL OVERVIEW The International Bank for Reconstruction and Devel- ability to intermediate funds from international capital opment (IBRD) is an international organization estab- markets for lending to its developing member coun- lished in 1945 and owned by its member countries. tries is an important element in achieving its develop- IBRD's main goals are promoting sustainable eco- ment goals. IBRD's objective is not to maximize nomic development and reducing povertv It pursues profit, but to earn adequate net income to ensure its these goals primarily by providing loans, guarantees financial strength and to sustain its development activ- and related technical assistance for projects and pro- ities on an ongoing basis. grams in its developing member countries. IBRD's Table I presents selected financial data for the last five fiscal years: Table 1: 7 999 1998 1997 1996 7995 For the Year (US. $ millionss) Loan Income (comprised of] 7,649 6,881 7,235 7,922 8,187 Interest 7,535 6,775 7,122 7,804 8,069 Commitment Charges 114 106 113 118 118 Provision for Loan Losses (246) (251) (63) (42) (12) Investment Income 1,680 1,233 834 720 1,082 Borrowing Expenses (6,846) (6,144) (5,952) (6,570) (6,944) Net Noninterest Expense (719) (476) (769) (843) (959) Net Income 1,518 1,243 1,285 1,187 1,354 Performance Ratios (%) Net Return on Average Earning Assetsa 1.05 0.96 1.02 0.89 1.00 Gross Return on: Average Earning Assets' 6.47 6.29 6.41 6.50 6.82 Average Outstanding Loansa 6.58 6.43 6.62 6.78 6.98 Average Cash and Investments 6.01 5.63 5.02 4.47 5.78 Cost of Average Borrowings (after swaps) 5.92 6.01 6.06 6.31 6.48 Interest Coverage Ratio 1.22 1.20 1.22 1.18 1.19 Return on Equity 6.16 5.29 5.21 4.61 5.41 Equity Capital-to-Loans Ratio 20.65 21.44 22.06 21.80 21.42 Total at Year-end (us. $ millions) Total Assets 230,808 205,042 161,945 152,004 168,579 Cash and Liquid Investmentsb 30,122 24,837 18,250 15,990 18,435 Loans Outstanding 117,228 106,576 105,805 110,246 123,499 Accumulated Provision for Loan Losses (3,560) (3,240) (3,210) (3,340) (3,740- Borrowings Outstanding' 115,739 103,477 96,679 96,719 108,290 Total Equity 28,021 26,514 27_228 28,300 30,461 a. Includes incomefrom commitment and other loan charges. b. Includes investments designated as held-to-maturitvforfiscal years 1995-98. c Outstanding borrowings, before swaps, net of premium/discount. IBRD MANAGEMENT's DISCUSSION AND ANALYSIS 239 The financial strength of IBRD is based on the support from 25 basis points to 5 basis points on outstanding it receives from its shareholders and on its array of loans to eligible borrowers negotiated prior to July 31, financial policies and practices. Shareholder support 1998. These loans carry a lending spread of 50 basis for IBRD is reflected in the capital backing it has points. The interest waiver on loans for which the received from its mnembers and in the record of its bor- invitation to negotiate wvas issued on or after July 31, rowing members in meeting their debt-service obliga- 1998 remained at 25 basis points. However, the lend- tions to it. IBRD's financial policies and practices have ing spread was increased to 75 basis points. This pric- led it to build reserves, to diversify its funding sources, ing strategy effectively brought the net spread on loans to hold a large portfolio of liquid investments and to to 45 basis points for loans negotiated prior to July 31, limit a variety of risks, including credit, market and 1998 and to 50 basis points for loans negotiated on or liquidity risks. after July 31, 1998. IBRD's principal assets are its loans to member coun- FY 1999 net income increased $275 million from the tries. The majority of IBRD's outstanding loans are preceding year, due in part to the decisions taken on priced on a cost pass-through basis, in which the cost loan pricing and waivers. The largest contributing fac- of funding the loans, plus a lending spread,a is passed tor, however, was the S237 million gain realized on through to the borrower, liquidation of investments that had been classified as To raise funds IBRD issues debt securities in a variety held-to-maturity. of currencies to both institutional and retail investors. On July 29, 1999, the Executive Directors approved These borrowings together with IBRD's equity are the allocation of $700 million of FY 1999 net income used to fund its lending and investment activities as to reserves, and recommended to IBRD's Board of well as general operations. Governors the transfer of $563 million from unallo- IBRD holds its asstsndliat. cated net income and $102 million from surplus for dollarsd euro (and national culirenct sub-upiilts of the other development purposes and organizations. They duroll, eur (aandse yenatIon curec sub-units of thoue also approved the continuation of the FY 1999 level of euro), and Japanese yen. IBRDc mitigates its exposure loan interest and commitment charge waivers through to exchange rate risks by matching the currencies of its FY 2000. assets wisth those of its liabilities and reserves; how- ever, the reported levels of its assets, liabilities and IBRD has scheduled the introduction of new loan and income in the financial statements are affected by hedging products for its borrowers beginning Septem- exchange rate movements of major currencies com- ber 1, 1999. These products will carry an additional pared to IBRD's reporting currency, the 19.S. dollar. charge to cover the increased market risks inherent in This financial statement reporting effect does not providing them. From a longer-term perspective, impact IBRD's risk-bearing capacity. IBRD continues to evaluate alternative strategies to enhance its risk-bearing capacity to ensure that it can During the fiscal year ended June 30, 1999, she respond to borrowers as needed, while preserving its growth in the loan portfolio continued at the unprece- financial strength. dented level of FY 1998 as IBRD continued to respond to the financial crisis that had begun in East 2. DE.VELOPMENT ACTIVITIES and South East Asia and spread to other parts of the IBRD offers loans and guarantees to its member coun- developing world. A portion of this loan growth took tries to help meet their development needs. Is also place in the form of special structural adjustment provides technical assistance and other services to sup- loans (SSALs), which IBRD introduced in the second prover reductin ind otries. quarter of FY 1999 as a new type of loan tailored to he part of a broader financial support package for the Loans borrowing country. SSALs made up 18% of IBRD s From its establishment through June 30, 1999, IBRD total FY 1999 loan commitments of $22,182 million had approved loans, net of cancellations, totaling and 25% of its total FEN 1999 net loan disbursements $302,840 million so borrowers in 128 countries. The of $8,133 million. Relative to other IBRD loan terms, loa hl bIB ,inldg ln approved bus T SSALs car wide ledn sped an shre ,, atri loans held by IBRD, including loans approved but not SSALs carry wider lending spreads and shorter maturt- yet effective, at June 30, 1999 totaled $168,600 mil- ties.~ lion, of which $117,228 million wvas outstanding and At the beginning of FY 1999 IBRD's Executive Direc- $51,372 million was undisbursed. Cumulative loan tors took several actions to augment its financial repayments at June 30, 1999, based on U.S. dollar capacity. These measures included allocating income equivalents at the time of receipt, were $131,036 mil- to IBRD's reserves, increasing the contractual charges lion. on new IBRD loans, and reducing the interest waiver n ~~~~~~~~~The amount of loans outstanding at June 30, 1999 was $10,652 million higher than that at June 30, 1998. The increase is attributable to net disbursements of a. See Section 2. Financial Terms of Loans for more details. $8, 133 million, and translation adjustments of $2,519, b. See Section 2, Adjustment Lending. as a result of a depreciation in the value of the U.S. 240 THE WORLD BANK ANNUAL REPORT 1999 dollar during the year against the other currencies in are used only for authorized purposes and, where which IBRD holds a portion of its loans. relevant, with due attention to considerations of cost-effectiveness. This policy is enforced prima- During FY 1999 commitments of new loans reached a rily by requiring horrowers (a) to suhmit docu- record of $22,182 million, up from $21,086 million in men n estahlishing, to satiaon, FY 1998. Relative to the preceding fiscal year, the that the expendituresfinaeto IBRDt sathsfactpon, regional composition of commitments and disburse- olan are made inac r with the ppoca- ments in FY 1999 shifted more toward Latin America of loans are made in condormhty with the applgca- and somewhat awvay from South Asia. ble lending agreements and (b) to procure goodis and services through procedures, including inter- Under IBRD's Articles of Agreement (the Articles), as national competitive bidding, which IBRD judges applied, the total amount outstanding of direct loans to be likely to lead to cost-efficient procurement. made by IBRD, participation in loans and callable Within the scope permitted by the Articles, these pol- guarantees may not exceed the statutory lending limit. i m At June 30, 1999, outstanding loans and callable guar- rience and changing conditions. antees (net of loan loss provisions) totaled $114,134 million, equal to 56% of the statutory lending limit. The process of identifying and appraising a project and IBRD's lending operations have conformed generally approving and disbursing a loan often extends over several years. The appraisal of projects is carried out to five principles derived from its Articles. These bv IBRD's operational staff (engineers, financial ana- principles, taken together, seek to ensure that IBRD Iysts economists and other sector and country special- loans are made to member countries for financiallvy ' T and economically sound purposes to which those - ists). With minor exceptions, all loans must be countries have assigned high priority, and that funds approved by IBRD's Executive Directors. Loan dis- bursements are subject to the fulfillment of conditions lent are utilzed as intended. The five principles are: set out in the loan agreement. During project imple- (i) IBRD makes loans to governments, governmental mentation, IBRD staff with experience in the sector or authorities or private enterprises in the territories the country involved periodically visit project sites to of member countries. A loan that is not made review progress, monitor compliance with IBRD poli- directly to the member in wvhose territories the cies and assist in resolving any problems that may project is located must be guaranteed as to princi- arise. After completion, projects are evaluated by an pal, interest and other charges by the member or independent unit and the findings reported directly to its central bank or a comparable agencv of the the Executive Directors to determine the extent to member acceptable to IBRD. A guarantee by the which its major objectives were met. Similar member itself has been obtained in all such cases appraisal, approval, supervision and evaluation proce- to date. dures apply in the case of IBRD adjustment and other (ii) IBRD's loans are designed to promote the use of non-project loans. resources for productive purposes in its member Lending Instruments countries. Projects financed bv IBRD loans are IBRD lending generally falls into one of two catego- required to meet IBRD's standards for technical, r in economic, financial, institutional and environ- nes: investment or ad]ustment lendmg. mental soundness. Investment Lending (iii) In making loans, IBRD must act prudently and IBRD has several lending instruments that support pay due regard to the prospects of repayment. investment activities, either discrete projects or pro- Decisions to make loans are based upon, among grams of investments. Table 2 presents a breakdown other things, studies by IBRD of a member coun- of IBRD's investment lending by instrument approved trv's economic structure, including assessments of in FY 1999 and in each of the two preceding fiscal its resources and ahility to generate sufficient for- years. These loans broadly fall into the followving cate- eign exchange to meet debt-service obligations. gories: (iv) IBRD must be satisfied that in the prevailing mar- Adaptable Program Loans (APLs) are designed to ket conditions (taking into account the member's provide funding for long-term development pro- overall external financing requirements), the bor- gram through a series of operations. Succeeding rower would be unable to obtain financing under operations are committed on the basis of satisfac- conditions which, in the opinion of IBRD, are tory performance on agreed milestones, indica- reasonable for the borrower. IBRD is intended to tors, periodic reviews, and the evaluation of promote private investment, not to compete with implementation progress and emerging needs. it. Authority for approval is with the Executive Directors for the first loan of each program and (v) The use of loan proceeds is supervised. IBRD the long-term program agreement. Authority for makes arrangements to ensure that funds loaned approval of subsequent APLs under programs IBRD MANAGEMENT's DISCUSSION AND ANALYSIS 241 approved by the Executive Directors is with based models prior to large scale interventions. IBRD's management, subject to oversight and LILs are modest in size with each loan not review by the Executive Directors. exceeding S5 million. Approvals of LILs are at the management level rather than at the Execu- * Emergencv Recovery Loans are made to restore tie Dire t level. assets and productivity immediately after a major tive Director level. emergency (such as war, civil disturbance, or nat- * Sector Isrvestment and Maintenance Loans are ural disaster) that seriously disrupts a member designed to bring investments, policies and per- country's economy. formance in specific sectors or subsectors in line * Financial Intermediary Loans support the develop- with agreed economic priorities. ment of financial institutions and provide funds * Specific Investmient Loans fund the creation of new to be channeled through intermediaries for gen- productive assets or economic, social and institu- eral credit or for the development of specific sec- tional infrastructure or their rehabilitation to full tors or subsectors. The primary objective of these capacity. loans is to improve the operational efficiency of financial institutions in a competitive environ- * Tech?nical Assistance Loans are designed to ment. strengthen capacity in entities concerned with policies, strategies and institutional reforms in * Learning and Innovation Loans (LILs) are such areas as public enterprise reform and divesti- designed to support small, time-sensitive pro- ture, civil service and judicial reform, government grams to build capacity, pilot promising initia- budgetary management and the formulation of tives, or to experiment with and develop locally- economic policy. Table 2: In millioins of U.S. dollars FY 1999 FY 1998 FY 1997 As a % of As a % of As a of Total Total I otal Inuestment Lending Instrunent Amount Loans Amount Loans Amount Loans Adaptable Program Loans 5 502 2 $ 682 4 $ - - Emergency Recovery Loans 549 2 415 2 Financial Intermediary Loans 20 122 92 1 Learning and Innovation Loans 43 * 33 * Sector Investment & Maintenance Loans 120 1 599 3 545 4 Specific Investment Loans 6,791 31 9,062 43 9,477 65 Technical Assistance Loans 220 1 238 1 273 2 Total $8,245 37 $11,151 53 $10,387 72 * Indicates amounts less than 0.5%. FY 1998). The Executive Directors are aware that, in Adjustment Lending light of the specific and unusual financial circum- stances in the world at present, the guideline has been Historically, most IBRD loans have been for invest- exceeded for the past two fiscal vears, and mav possi- ment projects or programs. IBRD also makes adjust- blv be exceeded again in subsequent years. Table 3 ment loans designed to support the introduction of provides the details by instrument of IBRD's adjust- basic changes in economic, financial and other policies ment lending approved in FY 1999 and each of the of key importance for the economic development of two preceding fiscal vears. Adjustment loans are member countries. Disbursements on these loans are broadly classified as follows: conditioned on certain performance objectives. Cur- rent operating guidelines state that adjustment lend- * Structural Adjustment Loans (SAL) support spe- ing, excluding debt and debt-service reduction loans, cific policy changes and institutional reforms. will normally not exceed 25% of total IBRD lending. These loans require agreement on a satisfactory This guideline was established with the understanding macroeconomic framework and policy actions that it was likely to be exceeded if world economic that can be monitored on a specific schedule. conditions worsened. This guideline is not a rigid * Sector Adjustment Loans support comprehensive lhmit but rather a trigger for a reevaluation of such policy changes and institutional reforms in maj or lending. As a result of several large adjustment loans sectors. They also require agreerent on a satis- made bv IBRD during the fiscal year, 63% of IBRD's factory macroeconomric framework and its imple- lending in FY 1999 consisted of such loans (47% for 242 THE WORLD BANK ANNUAL REPORT 1999 mentation, and a spccific program that can be medium-term financing plan and thc attainmcnt monitored. of medium-term growth objectives. * Rehabilitation Loans support government policy * Special Structural Adjustment Loans (SSAL). reform programs to assist the private sector where These loans, introduced in the second quarter of foreign exchange is required for urgent rehabilita- FY 1999, are fast-disbursing loans providing sup- tion of key infrastructure and productive facili- port to countries facing a sectoral or economy- ties. wide crisis with a substantial structural dimen- * Debt and Debt-Service Reduction Loans assist an sion. eligible, highly-indebted member country in Adjustment lending committed for FY 1999 totaled financing an approved debt and debt-service $13,937 million, of which S 10,002 million has been reduction operation on its commercial debt that disbursed at June 30, 1999. At June 30, 1999, dis- is designed to reduce the country's total debt to a bursements on SSALs committed during FY 1999 manageable level and contribute to a viable totaled $2,035 million, representing 500/0 of FY 1999 SSAL commitments. Table 3: In millionts of U.S. dollars FY 1999 FY 1998 FY1997 As a % of As a % of Asa % of Total Total Total Adjustment Lending Inistrumenit Amount Loans Amnount Loanis Amount Loans Structural Adjustment Loans S 7,690 35 $8,285d 39 $1,295 9 Sector Adjustment Loans 2,206 10 1,650 8 2,590 18 Rehabilitation Loans - - 70 Special Structural Adjustment Loans 4,041 18 -- - Sub-total 13937 63 90935 47 3,955 27 Debt and Debt-Service Reduction Loans - - - 183 1 Total $13,937 63 $9,935 47 $4,138 28 a. Includes a $3,000 million econoomic reconistru(ction1 loani. Inidicates amounts less thtan 0.5%. Enclave Lending Lending by Sector On rare occasions IBRD will lend for a large, foreign A breakdown by sector of IBRD's loans outstanding at exchange generating project in a member country usu- the end of FY 1999 and loans approved in each of 1the ally eligible only for loans from the International last three fiscal vears is provided in Table 4. Development Association (IDA). In these circum- stances appropriate risk mitigation measures are incor- porated (including off-shore escrow accounts and debt-service reserves acceptable to IBRD) to ensure that the risks to IBRD are minimized. At June 30, 1999, IBRD had $171 million in outstanding loans for enclave projects. IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 243 Table 4: Total loans outstanding Loanis approz'ed dutlng citJune 30, 1999 FY 1999 FY 1998 FY 1997 Sectors USED M tjo USED Al ?4 USE Al °.i USD A/I % Agriculture S 11,573 10 5 1,788 s $ 1;455 7 2,811 19 Education 5,314 5 804 4 1,928 9 762 5 Electric Power and Other Energy 13,864 12 340 2 i,II5 5 1,613 II Environment 1,492 1 311 1 653 3 32 Finance 15,772 13 2,575 12 6,103 29 994 7 health, Population and Nutrition 3,105 3 514 2 911 4 246 2 Industry 5,709 5 590 3 - - 145 1 Mining and Other Extractive 1,961 2 300 1 1,369 7 300 2 uVIolri-SCtor 22,545 19 8,812 40 1,188 6 1,373 9 Oil and Gas 3,873 3 - - 130 1 114 1 Public Sector Management 5,743 5 1,042 5 1,738 8 720 5 Social 3,239 3 2,236 10 934 4 1,304 9 Telecommlunications and Infor- matics 1,3(7 1 - - 68 - - Transportation 13,367 11 2,041 9 2,285 11 3,225 22 Urban Development 5,028 4 320 1 770 4 506 3 Water Suipply and Sanitation 3,33'6 3 510 2 439 2 380 3 Total $117,228 100 $22,182 100 $21,086 100 $14, 525 100 a. Fxcludes loans to the Internlationzal Finance Corooration. e Indicates amotonts less tlhan 0.51. May differfroot suoo of iodividnal figures shown due to rounding. Financial Terms of Loans the undisbursed portion of loans are also determined Currently IBRD offers new loans with three types of annually and have been in effect for each of the last financial terms: multicurrency pool loans, LIBOR- ten fiscal years. For interest periods beginning during based single currency loans, and fixed rate single cur- FY 2000, the interest waiver is 5 basis points, except rency loans. This choice of financial terms is intended for loans with a 75 basis point lending spread, whose renc lons-Thi chiceof inacia ternsis nteded interest \vaiver is 25 basis points. The commitment to provide borrowers with flexibility to select terms charge waiver for EY 2000 is 50 basis points. Both that are both compatible with their debt management interest and commitment charge waivers are strategy and suited to their debt-servicing capability. unchand fommth e l d ined iu 1 Mos lanscarv tree t fve-ea grceperodfo unchanged from the level determined ini .luly 1998. Most loans carry a three- to five-year grace period for Further details are provided in the Notes to Financial principal and are amortized over a period that ranges Statements-Note C. from twelve to twentv years. For most products IBRD charges a lending rate com- Multicurrency Pool Loans posed of a spread plus its average cost of borrowings. Multicurrency pool loan (CPL) terms are available for Until July 31, 1998, that spread was 50 basis points. new loans. The currency composition of CPLs is However, during the first quarter of fiscal year 1999, determined on the basis of a pool, which provides a the lending spread wvas increased to 75 basis points, for currency composition that is the same for all loans in loans where the invitation to negotiate was issued on the pool. Pursuant to a policy established by the or after July 31, 1998. Also, a front-end fee of 100 Executive Directors and subject to their periodic basis points, payable for each such loan at the time it review, at least 90% of the U.S. dollar equivalent becomes effective, was introduced. In addition, all value of the pool is in a fixed ratio of one U.S. dollar loans carry a commitment charge of 75 basis points to 125 Japanese yen to one euro. per annum on undisbursed amounts. The lending rate on these cost pass-through loans is Waivers of a portion of interest owed bv all eligible variable, adjusted every six months to reflect the pre- borrowers are determined annually and have been in vious semester's average cost of outstanding borrow- effect for each of the previous eight fiscal vears. Waiv- ings allocated to fund these loans, wveighted by the ers of a portion of the commitment charge owed on average currency composition of the pool. IBRD adds its lending spread to that average cost. For interest 244 THE WORLD BANK ANNUAI. REPORT 1999 periods that commence on dates between July 1, 1999 rate SCL terms will be replaced by the new fixed and December 31, 1999, the applicable lending rate is spread loan scheduled to be introduced for loans 5.59% for loans where the invitation to negotiate was whose invitations to negotiate are issued on or after issued before July 31, 1998 and 5.84%6 for loans where September 1, 1999 and accordingly, the fixed rate the invitation to negotiate was issued thereafter. SCL product will only be available for new loans if thie Loan Conversion Options invitation to negotiate has been issued before Decern- ber 1, 1999. lBRD currently offers SCLs in U.S. dol-- In FY 1997 in response to borrower demand for lars, Japanese yen, euro, pounds sterling and Swiss broader currency choice, the Executive Directors francs, and wvill consider borrower requests for SCL approved the offer of currency choice for all IBRD loans in other currencies. multicurrency pool loans for which the invitation to negotiate was issued before September 1, 1996. The LIBOR-based SCLs carry a lending rate that is reset purpose of this invitation was to provide borrowers semi-annually. The lending rate consists of a base rate, the flexibility to amend the terms of their existina which is the prevailing six-month London interbank multicurrency pool loans to reflect their choice of the offered rate (LIBOR) for the applicable currency plus offered currencies. Under this offer, from 1996 to a spread. The spread consists of: (a) IBRD's weighted 1998 borrowers had three options: (a) retain the terms average cost margin for funding for the preceding of their existing multicurrency pool loans; (b) convert semester allocated to these loans relative to the base undisbursed loan amounts to single currency loan rate; and (b) IBRD's lending spread. These variable (SCL) terms; and (c) convert disbursed loan balances rate loans are designed to pass IBRD's funding spread and undisbursed loan amounts (to the extent not con- to LIBOR through to its borrowers. This lending rate verted to SCL terms) to one of four new single cur- is set every six months, in January and July At June rency pools (SCPs). The last conversion date was July 30, 1999, the proportion of outstanding LIBOR-based 1, 1998. Those options have now expired and all con- SCLs denominated in U.S. dollars was 92.3%, (97.3% versions under the offer have been completed. at June 30, 1998). Conversion to Single Currencv Loan Ternms Recently, IBRD approved and disbursed several large A econversions of undisbursed balances to SQL loans on non-standard SCL terms. During FY 1999, Aggregate $21,115 ondisbUrS. balars to IBRD approved and disbursed a structural adjustment prising 79wer $7 of the total. loan for $2,000 million. This loan carries a six-month U.S. dollar LIBOR interest rate plus a fixed spread of Conversion to Single Currency Pools 75 basis points and a front-end fee. During FY 1998) SCP terms are not available for new commitments. IBRD had also approved and disbursed two LIBOR- Aggregate conversions to SCPs were $48,549 million, based single currency loans with non-standard SCL. of wvhich $615 million was undisbursed at the time of terms. The first, a $3,000 million economic recon-- conversion from the multicurrency pool to single cur- struction loan, carries a six-month U.S. dollar LIBOR rency pools. Among the single currency pool choices, interest rate plus a fixed spread of 100 basis points and conversions to the U.S. dollar SCP loan pool a front-end fee. The second, a $2,000 million struc- accounted for 85.6%. Conversions to Deutsche mark tural adjustment loan, carries a six-month U.S. dollar and Japanese yen SCPs accounted for 14.2% and LIBOR interest rate plus a fixed spread of 75 basis 0.2%, respectively. To accommodate this preference points and a front-end fee. None of these loans is eli- for the U.S. dollar, IBRD borrowings in other curren- gible for waivers of interest or commitment charges. cies, which generally carried lower nominal interest SSALs also carry non-standard SCL terms. SSAL rates, were converted to U.S. dollar terms. This terms include a six-month U.S. dollar LIBOR inter-est increase in nominal funding costs is reflected in higher rate plus a minimum fixed spread, currently set at 400 average lending rates, although the contractual lending basis points, which may varv for new loans over time spread remained at 50 basis points. The U.S. dollar depending on IBRD's overall risk-bearing capacity and SCP lending rates for interest periods commencing market conditions. These loans have a maturity of five July 1, 1998 through December 31, 1998 and com- years with a three-year grace period, a front-end fee of mencing in January 1, 1999 through June 30, 1999 'one percent of the principal amount payable on effec- were 7.54% and 7.97()/ respectively, compared to the tiveness, and are not eligible for waivers of interest or corresponding CPL lending rates of 6.18'Y% and 6.03% commitment charges. (6.28(X) for loans for which the invitation to negotiate was issued on or after July 31, 1998) for the same Fixed rate SCLs carry lending rates that are set on periods. For the interest periods commencing on July specified semi-annual rate fixing dates for amounts 1, 1999 through December 31, 1999, the lending rate disbursed during the preceding six months. The lend- for the U.S. dollar SCP is 8.53%o. ing rate consists of a base rate, which reflects market interest rates for the applicable currencv on the rate- Single Currency Loans fixing date for the equivalent loan maturity, plus a For new loans, borrowers may also select LIBOR- spread. The spread consists of: (a) IBRD's funding based or fixed rate SCL terms. In general, the fixed cost margin relative to the base rate for these loans; IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 245 (b) a risk premium to compensate IBRD for mnarket The new financial products are: risks it incurs in funding these loans; and (c) IBRD * Fixed-spread loans with an interest rate based on lending spread.* Fxdsra on sih nitrs aebsdo LIBOR, plus a spread that would be fixed for the New Loan and Hedging Products life of the loan. Borrowers selecting tlhis product During the third quarter of FY 1999 IBRD approved would have the flexibility to change the currency the introduction of new loan and hedging products for or interest rate basis over the life of the loan and its borrowers to respond to their needs for more flexi- have more flexibility in selecting loan maturities; ble financial products and better risk management and tools. These products are scheduled to be introduced * Hedging products that would be linked to borrow- for loans whose invitation to negotiate is issued on or ers existing IBRD loans to assist them in manag- after September 1, 1999. ing their currency, interest rate and, on a case-by- case basis, commodity price risks. Table 5 presents a breakdown of IBRD's loan portfolio by loan product: Table 5: In millions of U S. dollars FT 1999 FY 1998 FY 1997 Principal As a A of Principal As a 5'.)/ of Principal As a '.Yo of Loan Product Balance Total Loans Balance Total Loans Balaknce Total Loans Adjustable rate multicurrency pool loans Outstanding $ 37,203 32 S 56,274 53 S 91,842 87 Undisbursed 6,344 12 8,765 17 27 422 53 LIBOR-based single currency loans' Outstanding 25,462 22 15,018 14 4,493 4 Undisbursed 33,862 66 29,801 58 19,144 37 Fixed rate single currency loans Outstandingb 11,238 9 5,683 5 2,563 2 Undisbursed 10,787 21 12,356 24 5,0I7 10 Single currency pool loans Outstanding 40,693 35 25,658 24 - - Undisbursed 374 * 131 Other loans Outstanding 2,631 2 3,943 4 6,907 7 Undisbursed 5 * 12 3 Total ** Outstandingloans $117,228 100 $106,576 100 S105,8()5 1(0 Undisbursed loans S 51,372 100 $ 51,065 100 $ 51,576 100 a. Of which, SCLs with non-standard SCL terms represent $9,035 million outstandingand $2,005 million undisbursed at June 30, 1999. b. Includes fixed rate single currency loans whose rate had not yet been fixed at fiscal year-end. * Indicates amounts less than 0.5%. May differ from the sum of individual figures due to rounding. For more information, see the Notes to Financial tor financing for individual projects through targeted Statements-Note C. and limited support, thus enhancing IBRD's impact by catalyzing private sector participation. On a pilot Guarantees basis guarantees are being made available to support IBRD offers guarantees to its members, and in excep- agreed upon policies and reforms in member coun- tional cases will offer enclave guarantees in a member tries. IBRD applies the same country creditworthiness countrv usually eligible only for credits from IDA, and project evaluation criteria to guarantees as it subject to a limit of $300 million. IBRD guarantees applies to loans. Projects in any member country that are intended as flexible instruments that provide the is eligible for IBRD lending are also eligible for IBRD credit enhancement required to mobilize private sec- guarantees. 246 THE WORLD BANK ANNUAIL REPORT 1999 IBRD guarantees can be customized to suit varying is reached the Executive Directors will review the country and project circumstances. They can be tar- program. geted to mitigate specific risks, generally risks relating JBRD may also provide partial risk guarantees for to political, regulatory and government performance, which the private sector is not normally in a position (eport-oriented projects i an IDA-only country to absorb or manage. Two basic types of guarantees (enclave guarantees) if the project is expected to gen- erate foreign exchange outside the country, and IBRD determines that the country will have adequate for- • Partial risk guarantees cover debt-service defaults eign exchange to meet its obligations under the on a loan that may result from nonperformance of counter-guarantee if the guarantee is called. The gov- government obligations. These are defined in the ernment is expected to use revenue accruing to it from contracts negotiated betw;een the government or any such project for productive development pur- a government-sponsored entity and the private poses. A project covered by an enclave guarantee company responsible for implementing the includes security arrangements with appropriate risk project. The IBRD guarantee is limited to back- mitigation measures-such as offshore revenue escrow ing the government's obligations; the obligations accounts and debt-service reserves acceptable to IB:RD of the private company contained in the project -to minimize IBRD's exposure and the risk of a call agreements are not covered and thus the private on the guarantee. The commitment of enclave guar- lenders assume the risk of nonpcrformancc by the antecs is initially limited to an aggregate guaranteed private company. amount of $300 million. * Partial credit guaranztees are used for public sector Each guarantee requires the counter-guarantee of the projects when there is a need to extend loan member government. Guarantees are priced within a maturities, but not necessarily to cover sovereign limited range to reflect the risks involved, and prepa- contractual obligations. This approach may be ration fees may be charged where there are excep- most appropriate when the lenders are not willing tional costs involved for IBRD. Generally, IBRD has to accept the sovereign risk of the host govern- retained a fee of 25 basis points per annum on its ment for a term long enough to meet the needs of exposure on guarantees; however, on enclave guaran- the project. By guaranteeing later maturities, tees IBRD would retain a higher fee. such partial credit guarantees help induce the markt toextnd te trm t themaxmum isk IBRD's exposure at June 30, 1999 on its guarantees it can bear. The presence of the guarantee may (measured as their present value in terms of their first also induce a lower interest rate, call date) is $1,524 million. For additional informa- tion see the Notes to Financial Statements-Note C. As part of IBRD's strategy of continuing to expand its range of instruments in response to client demand, Other Activities the Executive Directors approved the introduction of In addition to its financial operations, IBRD provides a new guarantee instrument in April 1999. This guar- technical assistance to its member countries, both in antee is an extension of the existing partial credit guar- connection with, and independently of, loan opera- antee instrument for projects: tions. Such assistance includes the assignment of * Poliy-based guarantees are partial credit guaran- qualified professionals to survey development oppor- tees that cover a portion of debt-service on a bor- tunities in member countries, analysis of their fiscal, rowing by an eligible member country from economec and other development problems, assistance private foreign creditors in support of agreed to member countries in drawing up evelopment pro- structural, institutional and social policies and grams, appraisal of projects suitable for in-vestmenit reforms. The guaranteed portion of the debt-ser- and assestance to mener coeunt techniques. To assist vice could consist of a combination of interest and it de ling memberntries,niBDhs ao estab- prnia pa .ns bu th aculsrcuei its developing member countries, IBRD has also cestab- principal payments, but the actual structure iS lished the World Bank Institute, which provides determined on a case-by-case basis. Eligibility for courses and other training activities related to eco- IBRD adjustment lending is a necessary condition nomic policy development and administration for gov- for eligibility for this type of instrument. The ernments and organizations working closely with terms of this instrument are the same as project- IBRD, and has made contributions for research and based partial credit guarantees. Maturity, level of other developmental activities. IBRD has on a num- fees, and possible waivers will be standard if the her ofeoains, atiterqest of m bs on - guarantee is made in situations comparable to cerned, facilitated effortorequest sof tmembers con- those under which a SAL would be made; how- international economic and financial disputes. Addi- ever, if the guarantee is made in connection with itnationalonor jointly dithuIDA adi- a SSAL, then it will be at SSAL-equivalent terms. tonally, IBRD, alone or jointly with IDA, administers Initially, . BRD will proceed .,,tb a pilot program on behalf of donors, funds restricted for specific uses. of up to $2B000 million. Once the $2 000 million These funds are held in trust and are not included in of up to 52,000 milion.Oncethe$2,000million the assets of IBRD. See the Notes to Financial State- ments-Note H. IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 247 3. RISK MANAGEMENT mance as well as any significant developments in risk IBRD assumes various kinds of risk in the process of management policies and controls. providing development banking services. Its activities Credit Risk can give rise to three major types of risk: credit risk; market risk; and liquidity risk. IBRD is also exposed Credit risk, the risk of loss from default by a borrower to operating risk, or counterparty, is inherent in IBRD's development activities. Under the direction of the ALCO, policies The objective of Asset-Liability Management (ALM) and procedures for measuring and managing such risks for IBRD is to ensure adequate funding for each prod- are formulated, approved and communicated uct at the most attractive available cost, and to man- throughout IBRD. Senior managers represented on age the currency composition, maturity profile and ALCO are responsible for maintaining sound credit interest rate sensitivity characteristics of the portfolio assessments, addressing transaction and product risk of liabilities supporting each lending product in accor- issues, providing an independent review function and dance with the particular requirements for that prod- monitoring the loans, investments and borrowings uct and within prescribed risk parameters. portfolios. The major inherent risk to IBRD is country credit risk, Country Credit Risk or loan portfolio risk. IBRD is also subject to com- Country credit risk mercial credit risk, market (interest and exchange C is the primary risk faced by IBRD. rate), operating and liquidity risk. In a reorganization It has three components as described below. Probable of the risk managment function, IBRD established a expected losses from all three components are covered Senior Vice President andC bv the accumulated provision for loan losses, while Senior Vice President and Chicf Financial Officer (CFO) position with several units reporting to it, and unexpected losses are covered by IBRD's income gen- ... ,.} ~~~erating capacitv and risk-bearing capital. IBRD con- vested it with the overall responsibility for the finan- cial and risk management of IBRD. IBRD also estab- tinuouslv reviews the creditworthiness of its lished a Risk Management Departmnent charged with borrowing member countries and adjusts its overall identifying, measuring and monitoring market risks, country programs and lending operations to reflect the liquidity risks, and counterpartv credit risks in IBRD's results of these reviews. financial operations. (i) The first component is idiosyncratic risk. This is The risk management governance structure also the risk that individual countries will accumulate includes the Asset-Liability, Management Committee extended debt-service arrears-or move closer to (ALCO) chaired by the C.O. ALCO makes decisions accumulating extended debt-service arrears-for and recommendations to senior management in the country specific reasons. areas of financial policy, the adequacy and allocation (ii) The second component is covariance risk. This is of risk capital, and oversight of financial reporting. the risk that one or more borrowers will accumu- Among the standing subcommittees reporting to late extended payment arrears-or move closer to ALCO, the Market Risk and Currency Management accumulating extended pavment arrears-as a Subcommittee meets most frequentlv. This subcom- result of a common external shock. This shock mittee develops and monitors the policies under could be, for example, a regional political crisis or which market and commercial credit risks faced by an adverse change in the global environment IBRD are measured, reported and managed. The sub- (such as a fall in commodity prices or a rise in committee also monitors compliance with policies international interest rates). governing commercial credit exposure and currency management. Specific areas of activitv include estab- (iii) The third component is portfolio concentration lishing guidelines for limiting balance sheet and mar- risk, which arises when a small group of borrow- ket risks, the use of derivative instruments, and ers account for a large share of loans outstanding. monitoring matches between assets and their funding. Portfolio concentration increases the potential financial impact of idiosyncratic and covariance For the day-to-day management of risk, IBRD's risk risk. Portfolio concentration risk is managed mtanagement structure extends into its business units. using the portfolio concentration limit described Risk management processes have been established to below. facilitate, control and monitor risk-taking. These pro- cesses are built on a foundation of initial identification In 1997 the Executive Directors approved an and measurement of risks by each of the business approach to portfolio concentration under which units. IBRD's largest loan portfolio exposure to a single bor- rowing countrv is restricted to the lower of an equita- The processes and procedures bv which IBRD man- ble access limit or a concentration risk limit. The ages its risk profile continually evolve as its activities equitable access limit is equal to IlO%'t, of IBRD's sub- change in response to market, credit, product, and scribed capital, reserves and unallocated surplus. The other developments. The Executive Directors periodi- concentration risk limit is based on the adequacy of cally review trends in IBRD's risk profiles and perfor- 248 THE WORLD BANK ANNUAL, REPORT 1999 IBRD's risk-bearing capacity relative to its largest loan by the International Monetary Fund; (c) agree to a portfolio exposure to a single borrowing country. The financing plan to clear all arrears to IBRD and other concentration risk limit takes into account not only multilateral creditors in the context of a medium-term current exposure (loans outstanding, plus the present structural adjustment program; and (d) make debt- value of guarantees) but also projected exposure over service payments as they fall due on IBRD loans dur- the ensuing three- to five-year period. The limit is ing the performance period. The signing, effectiveness determined by the Executive Directors each year at and disbursement of such loans will not take place the time they consider IBRD's reserves adequacy and until the member's arrears to fBRD have been fully the allocation of its net income from the preceding fis- cleared. cal year. For FY 2000 the concentration risk limit is $13,500 million, unchanged from FY 1999. The equi- Accumulated Provision for Loan Losses table access limit is $20,529 million. IBRD's largest IBRD's accumulated provision for loan losses reflects loan portfolio exposure (including the present value of the followilng: guarantees) to a single borrowing country was * Management's assessment of the overall collect- $11,533 million at June 30, 1999. ibility risk on accruing loans (which includes call- Overdue and Non-performing Loans able guarantees); and It is IBRD's policy that if a payment of principal, * The present value losses on nonaccruing loans. interest or other charges on an IBRD loan or IDA Such losses are equal to the difference between credit becomes 30 days overdue, no nev loans to that the discounted present value of the debt-service member country, or to any other borrower in that pay,ments on a loan at its contractual terms and country, will be presented to the Executive Directors the expected cash flows on that loan. for approval, nor will anv previously approved loan be signed, until payment for all amounts 30 days overdue The adequacy of the accumulated provision for loan or longer has been received. In addition, if such pay- losses is determined by assessing the amount required ment becomes 60 davs overdue, disbursements on all to cover probable expected losses in the accrual port- loans to or guaranteed by that member countrv are folio and losses inherent in the nonaccrual portfolio as suspended until all overdue amounts have been paid. of the balance sheet date. The amount required to Where the member countrv is not the borrower, the cover probable expected losses in the accrual portfolio time period for suspension of the approval and signing is related to the mean of the distribution of losses fac- of new loans to or guaranteed bv the member country ing the institution over the next three years, which has is 45 davs and the time period for suspension of dis- been developed to estimate the probable losses inher- bursements is 60 days. It is the policy of IBRD to ent in the accrual portfolio at the balance sheet date. place all loans made to or guaranteed by a member of This is calculated using a risk-adjusted capital alloca- IBRD in nonaccrual status, if principal, interest or tion framework that takes into account the concentra- other charges on any such loan are overdue by more tion and covariance risk in the portfolio. The amount than six months, unless IBRD determines that the required to cover losses inherent in the nonaccrual overdue amount will be collected in the immediate portfolio is based on the calculation of the discounted future. IBRD maintains an accumulated provision for prescnt valuc of cash flows. loan losses to recognize the risk inherent in current Estimating probable expected losses is inherently and probable overdue payments. The methodology uncertain and depends on manv factors, including gen- for determining the accumulated provision for loan eral macroeconomic and poltical conditions, unex- losses is discussed in the following paragraphs. Addi- pected correlations within the portfolio, and other tional information on IBRD's provisioning policy and external factors. IBRD periodically reviews such fac- status of nonaccrual loans can be found in the Notes tors and reassesses the adequacv of the accumulated to Financial Statements-Summary of Significant provision for loan losses accordingly. Accounting and Related Policies, and Note C. Commercial Credit Risk In 1991 the Executive Directors adopted a policy to assist members with protracted arrears to IBRD to IBRD's commercial credit risk is concentrated in mobilize sufficient resources to clear their arrears and investments in debt instruments issued by sovereigns, to support a sustainable growth-oriented adjustment agencies, banks and corporate entities. The majority program over the medium term. Under this policy of these investments are in AAA and AA rated instru- IBRD will develop a lending strategy and will process ments. loans, but not sign or disburse such loans, during a In the normal course of its business, IBRD utilizes var- pre-clearance performance period with respect to ious derivatives and foreign exchange financial instru- members that: (a) agree to and implement a medium- ments to meet the financial needs of its borrowers, to term, growth-oriented structural adjustment program generate income through its investment activities and endorsed by IBRD; (b) undertake a stabilization pro- to manage its exposure to fluctuations in interest and gram, if necessary, endorsed, or financially supported, currency rates. IBRD iMANAGEMENT'S D[SCUSSION AND ANTALYSIs 249 Derivative and foreign exchange transactions involve measure in the derivative and foreign exchange mar- credit risk. The effective management of credit risk is kets, it is not a measure of credit or market risk. vital to the success of IBRD's funding, investment and Mark-to-market exposure is a measure, at a point in ALM activities. The monitoring and managing of these risks is a continuous process due to changing time, of the value of a derivative or foreign exchange market environments. contract in the open market. When the mark-to-mar- ket is positive, it indicates the counterparty owes IBRD seeks to control the credit risk arising from IBRD and, therefore, creates a replacement risk for derivatives and foreign exchange transactions through IBRD. Wheni the mark-to-market is negative, IBRD its credit approval process, the use of collateral agree- owes the comnterparty and does not have replacement ments and risk control limits and monitoring proce- risk. dures. The credit approval process involves evaluating Wheii IBRD has more than one transaction outstand- counterparty creditworthiness, assigning credit limits and determining the risk profile of specific transac- ing with a counterparty, and there exists a legally- tions. Credit limits are calculated and monitored on enforceable master netting agreement with the coun- the basis of potential exposures taking into consider- terparty, the "net' mark-to-market exposure repre- ation current market values, estimates of potential sents the netting of the positive and negative future movements in those values and collateral agree- exposures with the same counterparty. If this net ments xvith counterparties. If there is a collateral mark-to-market is negative, then IBRD's exposure to .. . 1 .............. ..the counterpartv is considered to be zero. Net mnark- agreement with the counterparty to reduce credit risk, then the amount of collateral obtained is based on the to-market is, In IBRD's vlew, the hest measure of credit rating of the counterparty. Collateral held credit risk hen there is a legally-enforceable master includes cash and government securities, netting agreement between IBRD and the counter- party. For the contractual value, notional amounts and IBRD treats the credit risk exposure as the replace- related credit risk exposure amounts by instrument, ment cost of the derivative or foreign exchange prod- see the Notes to Financial Statements-Note E. uct. This is also referred to as replacement risk or the mark-to-market exposure amount. While contractual Table 6 provides details of IBRD's estimated credit prinipalamout isthe ost ommoly ued vlume exposure on its investments and swsaps, net of collat- principal amount is the most commonlv used volumne eral held, by counterparty rating category. Table 6: In millions of U.S. dollars At Jine 30, 1999 At loie 30, 1998 Atl une30, 1997 Sweap Investnients Exposure Agencies, Total Exposure 7otal Exposure Total Exposure Counterparty Banks & on 1ntestonents o!f on Inoestuents ft of on Investnents W, of Rating Sovereigns Corporates and Swaps Total and Swaps Total and Swaps AAA $4,459 $ 7,9 4 3 $111 $ 1 2, 5 13 4 1 $ 9,740 37 5 4,074 AA 1,815 13,543 91 15,449 51 14.725 56 128SS9 68 A 2,283 28 2,311 8 1,939 7 2,134 11 Total S 6274 $23,769 $230 830,273 100 $20,404 10)0 S19,097 100 The FY 1999 increase in credit exposure parallels the on its assets and the cost of borrowings which fund increase in the size of the investment portfolio. The those assets. The second is the interest rate sensitivity credit exposure from swaps declined from FY 1998 to of the income earned from funding a portion of IBRD FY 1999 by $387 million to $230 million. The assets with equity. The borrowing cost pass-through increase in the relative weight of credit exposures to formulation incorporated in the lending rates charged AAA rated entities was in part due to the increase of on most of IBRD s existing loans has traditionally investments in AAA rated asset-backed securities, helped limit the interest rate sensitivity of the net spread earnings on its loan portfolio. Such cost pass- The FY 1998 increase in credit exposure over that of through loans currently account for more than 82% of FY 1997 reflects the growth in the size of the invest- (87 metprtfli. Th rei exosr fro stvphe existing outstanding loan portfolio 187 % at the ment portfolio. The credit exposure from swaps end of FY 19989. However, the majority of cost pass- declined from FY 1997 to FY 1998 by $38 million to eao Y19) orvr h aot fcs as dcie frllom. F through loans do entail some residual interest rate risk, given the one-semester lag inherent in the lending rate Interest Rate Risk calculation. If new borrowings are at interest rates above the average of those already in the debt pooi, There are two potential sources of interest rate risk to the hhe average debtost wld not db passe IBRD. The first is the interest rate sensitivity associ- the hrgher average debt costs would not be passed ated with the net spread between the rate IBRD earns 250 THE WORLD BANK ANNUAI. REPORT 1999 and thus would not affect the interest income gener- which, in turn, reduce the nominal earnings on ated on cost pass-through loans until the following IBRD's equity. semester. The reverse is true when market interest Interest rate risk also arises from a variety of other fac- rates decline. tors, including differences in the timing between the Another potential risk arises because the cost pass- contractual maturity or repricing of IBRD's assets, lia- through currency pool products have traditionally bilities and derivative financial instruments. On flcat- been funded with a large share of medium- and long- ing rate assets and liabilities, IBRD is exposed to term fixed rate borrowings, so as to provide the bor- timing mismatches between the re-set dates on its roxvers with a reasonably stable interest basis. Given floating rate receivables and payables. the sustained interest rate declines seen over the last As part of its ALM process IBRD employs interest rate several years, the cost of these historical fixed rate borrowings in the multicurrencv pool and the single swaps to manage and align the rate sensitivity charac- teristics of its assets and liabilities. IBRD uses deriva- currency pools is currently considerably higher than tive instruments to adjust the interest rate repricing IBRD's new borrowing costs. In particular, the caeristics o s e b e sheet ats andr ha- amount of "above market" debt allocated to the CPI characteristics of specific balance sheet assets and la- debt pool exceeds the outstanding CPL's beyond FY bilities, or groups of assets and liabilities with similar 2012, i.e. the pool is over-funded beyond FY 2012. repricing characteristics. Over-funding reaches a maximum of approximately Exchange Rate Risk $4,396 million in FY 201 5. In the absence of new dis- In order to minimize exchange rate risk in a multicur- bursements and additions to the multicurrency pool, IBRD would be subject to some risk associated with rency environment, IBRD matches its borrowing obli- potentiall havinge to r oye thse- absove-ma rketh gations in any one currencv (after swap activities) with potentialnv having to redeploy these above-market borrowings, as the loans in the CPL pool repay. assets in the same currency, as prescribed by the Arti- cles. In addition, IBRD's policy is to minimize the Interest rate risk on non-cost pass-through products, exchange rate sensitivity of its reserves-to-loans ratio. which currently account for 1S% of the existing loan It carries out this policy bv undertaking currency con- portfolio (13% at the end of FY 1998), is managed by versions periodically to align the currency composition using interest rate swaps to closely align the rate sensi- of its reserves to that of its outstanding loans. This tivitv characteristics of the loan portfolio with those of policy is designed to minimize the impact of market their underlying funding. The interest rate risk on rate fluctuations on the reserves-to-loans ratio, IBRD's liquid portfolio is managed within specified thereby preserving IBRD's ability to better absorb duration-mismatch limits and is further limited by potential losses from arrears regardless of the market stop-loss limits. environment. Because equity funds a portion of outstanding loans, Figure 1 presents the currency composition of signifi- IBRD's level of net income is sensitive to movements cant balance sheet components at the end of FY 1'999 in the level of nominal interest rates. fIn general, lower anid 1998. nominal interest rates result in lower lending rates IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 251 Figure 1: FY 1999 60%- 40%- 30%- 29(2/ 10% 7~~~~~~~~~~~~~~~~~~~~~~~~~~~~1%1 2% USD EUR JPY Others Assets (, Liabilities & Equity E Loans 51 Equity 12 D Investments 14 E Borrowings 5 2 D C-Swaps (Rec.) 35 E C-Swaps (Pav.) 36 100 100 FY 1998 For comparability, FY 1998 amounts have been restated to reflect the introduction of the euro. 60°,h 50% - I * 0 6 - 20% 40% 6% 30% 32- 21% 20% 10% - USD Et]R JPY Others Assets °U l.iabilities & Equitv '%1 D Loans 53 2 Equity 1 3 2 Investmerts 14 D Borrowings 53 D2 C-Swvaps (Rec.) 33 E C-Swvaps (Pav.) 34 100 100 252 THE WMORLD BANK ANNUAI. REPORT 1 999 Operating Risk ibility for each unit to respond to its specific business Operating risk is the potential for loss arising from needs. internal activities or external events caused by break- There is no financial benefit foreseen, for either IBRD downs in information, communication, physical safe- or its borrowers, for an early redenomination of loans guards, business continuity, supervision, transaction with national currency components before their auto- processing, settlement systems and procedures and the matic conversion to euro on January 1, 2002. How- execution of legal, fiduciary and agency responsibili- ever, to reduce on-going costs and operational control ties. IBRD, like all financial institutions, is exposed to risks of operating in mixed currencies, an early conver- many types of operating risks, including the risk of sion of loans before December 2001 is being consid- fraud by staff or outsiders. IBRD attempts to mitigate ered. Due to the contractual nature of loan operating risk by maintaining a system of internal con- agreements, borrowers Xvould have to consent to an trols that is designed to keep operating risk at appro- early redenomination. Furthermore, loan accounting priate levels in view of the financial strength of IBRD systems will require significant modification for and the characteristics of the activities and markets in national currencv redenomination to euro. which IBRD operates. In the past IBRD has suffered certain immaterial losses from operating risk and while IBRD is currently adopting new information technol- it maintains an adequate system of internal controls, ogy systems xvhich will facilitate the redenomination there can be no absolute assurance that IBRD wvill not of many national currency balances. One major newv suffer such losses in the future. system, SAP, has replaced numerous systems in areas including operations, resource management, capital In FY 1996, IBRD adopted the COSOa control frame- and trust funds. A new system for liability manage- work and a self-assessment methodology to evaluate ment, called Summit, has recentlv been installed the effectiveness of its internal controls, and it has an which will process the redenomination of national on-going program in place to assess all business units. currency bonds and derivatives, the timing of which In each of the last three fiscal years, IBRD obtained an will be determined bv IBRD based on international attestation report from its external auditors that capital market developments during the transition IBRD's assertion that as of June 30 of each of these fis- period. cal years, its "system of internal control over its finan- cial reporting met the criteria for effective internal Due to the ongoing information systems changes, the control over financial reporting described in COSO" is incremental cost of euro conversion is being mini- fairly stated in all material respects. mized. Past euro preparation costs were limited through the redeployment of existing staff resources. Economic and Monetary Union in Europe IBRD's direct euro preparation costs to date are under Since January 1, 1999, in the normal course of busi- $5 million and have been funded by the administra- ness as a multicurrencv organization, IBRD has been tive budget. conducting euro-denominated transactions in paying Year 2000 Issues and receiving, investments, bond issuance, loan dis- bursements, loan billing and new lending commit- General ments. The Year 2000 issue is the result of computer pro- lORD has adopted a gradual approach to redenomi- grams using two digits rather than four to define the nate national currency balance sheet items and IBRD- applicable year. Some of IBRD's legacy computer administered donor trust funds to euro during the programs have date-sensitive software that might be aamm1stered ~ ~ ~ ~ ~ ~~nal tono properl intepre date beyon then year transition period. However, recognizing the opera- 1999. Thls culdpresultpinet dates beyond the year tional risks and complexities of operating simulta- culaTis causn disuptin o operaions, inclu neously in national currencies and euro, and the culations causmg disruptions of operations, including, resulting incremental transactions, accounts, and cash among other things, a temporary inability to process flows between these currencies, it has been concluded transactions. lORD presently believes that timely that redenomination could improve operating effi- modifications to existing softxvare and/or hardwaare, as ciency and operational control. Strategies of individ- well as introducing new systems software, will miti- ual business areas have been developed and integrated gate its Year 2000 risks. into an overall transition plan to ensure sufficient flex- IBRD's Year 2000 Program has been in active opera- tion for over two years. The overall responsibility for the Program rests wvith IBRD's Chief Information Officer (CIO). A parallel program of Year 2000 activ- a. *COSO" refers to the Inirernal Control-lntegrated Framework ities is directed toxvards raising the awareness of formulated by the Committee of Sponsoring Organizations of the IBRD's member countries, providing limited grant Treadway Commissioni which was convelned by the U.S. Congress funding for planning and remediation, and ensuring in response to the well-publicized irregularities that occurred in that IBRD-funded projects' Year 2000 risks are the financial sector during the late 1980's. assessed and that appropriate actions are taken. IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 253 The CIO has oversight and reporting responsibilities have been developed. The resources for Year for both the information technology (IT) and non-IT 2000 work are a part of the base budget alloca- components (facilities, communications, equipment tion of each unit; additional funding has been and infrastructure) of the Program. IBRD's Year 2000 made available by IBRD management according Program Office is staffed with three full-time profes- to need; sionals. IT and non-IT staff working on Year 2000 ... activities reside in operating and support units of ( pha) Renovation/Remediation: Work falling under this IBRD. These staff report on Year 2000 work to the pnoncmpl repar of retainhat are asme CIO and the Year 2000 Program Office as well as non-compliant and are to be retaned, as wmell as a their line managers. While work on the project is large Systems Renewal Project and implemenraa- ongoing, there is a biweekly meeting with the CIO tion of Summit Software solutions for several cur- and the Year 2000 Program Office, and once a month, rent finanal systems. A significant part of the representatives of the responsible operating units meet Systems Renewal Project involves the replace- to review progress and coordinate on issues. A ment of 60 information systems by new, Year . . . ¢ . . ~~~~~~~2000 com lianlt SAP R/3 modules. The SAP monthly report on the status of the Program is pro- vided to IBRD's President and Managing Directors, project work was essentially completed and The Executive Directors are apprised of the Program's implemented n July 1999. The Summit imple- status on a quarterly basis through a report and meet- mentaFion w99 as ompletedu contingency plans for ing with the Audit Committee of the Executive Fem1999. Projec sstats and coninged nc pans for Directors. remaing systems are reviewed weekly and dis- cussed monthly with the business units involved. Internal Computer Systems The remaining eight applications under remedia- Early in the Program, IBRD adopted the following tion are judged to be on schedule for completion U.S. Government Accounting Office five-phase by September 15, 1999. Of 108 applications to approach for the Year 2000 issue (i.e., awNareness, be decommissioned before January 2000, 73 `o assessment, renovation/remediation, validation (test- had been retired by June 30, 1 999, w,vith the ing) and implementation): remainder to he retired bv the end of December 1999. (i) Awareness: As noted above, the Program is rec- ognized as important not only to IBRD internallv (iv) Validation (Testimg): This is the phase of the Pro- but also to clients and partners. IBRD's senior gram that is using the most resources. It involves management has assigned overall accountability not only the actual testing and re-testing at a unit for the Program to the CIO. A strategy, approach and integration level, but also creating the test and timetable have been defined and agreed upon environments and scheduling testing. Applica- and responsible organizational units and individu- tions to be retained, which total 133, are 87(%'.b als have been identified. Key milestone dates Year 2000 tested as of June 30, 1999. Comple- have been established within the timetable, and tion of testing is scheduled for September 30, these are being actively monitored. Information 1999. and documentation have been distributed within (v) Implementation: IBRD s Year 2(000 Program calls IBRD on the Year 200(0 issue, how it affects for completion of preparation activities bv the IBRD and its clients, and the program to address end of September 1999. Upon completion of the it. A series of briefings by internal and outside testing of compliant systems, they will be imple- experts has been conducted, and these briefings mented into production status. SAP modules are continue to be run periodically. Year 2000 Pro- certified to be Year 2000 compliant, and this will gram Office staff and other key individuals in be verified by IBRD's own Year 2000 testing, IBRD are actively coordinating with other multi- which will be completed by the end of Septem- lateral development banks, the International ber 1 999. As an additional safetv measure, svs- Monetary Fund, the United Nations and other tems slated to be rcplaced by SAP have been international organizations, UJ.S. government offi- modified to ensure that they will be able to oper- cials, and private sector groups on areas of mutual ate through the first half of the IBRD s fiscal vear interest. There is also a continuing program of 2000. Howxever, there can be no guarantee that targeted information dissemination on key Year these estimates will he achieved and actual results 2000 topics, including status reporting, test plat- could differ materially from these plans. Specific form availability plus specific guidance on testing factors that might cause such material differences phases and using the agreed institutional testing include, but are not limited to, the availability methodology for both unit and integration test- and costs of personnel trained in this area, the ing. ability to locate and correct ail relevant computer (i) Assessment: The assessment phase of the Pro- code and similar uncertainties. gram has been completed. The information The key Year 2000 milestone dates are set out in resources (e.g. systems and infrastructure) have Table 7. been inventoried and categorized (i.e. compliant or non-compliant) to be retained, decommis- sioned, or replaced. Where contingency plans are required for business continuity purposes, they 254 THE WORLD BANK ANNUAl. REPORT 1999 Third Party Providers includes components or depends on services that IBRD has identified its key vendors and service pro- could be vulnerable to the Year 2000 rollover. IBRD) viders to determine the extent of their Year 2000 actively encourages mitigation action on the part of compliance and has made appropriate inquiries and the Project Implementing Agencies to avoid disrup- investigations into the state of their readiness, where tions, and offers financing of such work through new such readiness could have a material impact on loans and reallocation of existing loan funds. Should IBRD's operations. External financial entities (e.g. such efforts fail, projects may experience setbacks and correspondent banks, fund managers, swap counter- delays while problems are rectified. Serious disrup- parties) with whom IBRD does business have been tions to national infrastructure and public administra- contacted to determine the status of their systems tion due to Year 2000 problems could, in the extreme, compliance. Of the 82% responding, 81/ % expected to affect borrowers' ability to service IBRD loans. No be compliant by June 30, 1999. Follow up activities projections have been attempted as to the magnitude have included the statement that IBRD will be unable of such risks, as there are too many variables, and as to continue business relations with any banking corre- information on Year 2000 readiness, in many cases, is spondent not expected to be Year 2000 compliant by scarce and cursory at best. June 30, 1999. Estimated Costs to Complete Cash Settlements The cost of completing IBRD's Year 2000 Program is The majoritv of IBRD's financial transactions are exe- estimated at approximately $12 million. To date cuted through the SWIFT global messaging system, approximately $8 million of this amount has been which is already Year 2000 compliant. IBRD com- spent. Costs for the Information Systems Renewal pleted the SWIFT Year 2000 Customer Program in project (SAP implementation), and the Summit May and June 1999, and is using a Year 2000 compli- implementation are estimated at approximately $68 ant version of the SWIFT messaging system. Contin- million. To date $49 million of that amount has been gency plans to transmit transactions by alternate spent. SAP and Summit address a considerable part of means are already in place and tested as part of the IBRD's Year 2000 remediation requirements, but normal on-going disaster recovery planning. since they would be implemented anyway, their costs are not considered direct Year 2000 remediation Member Countries expenses. The initial focus of Year 2000 efforts in member countries was on raising awareness, promotinig educa- Contingency Plans tion and encouraging preventive action and timely Contingency plans are required for all critical systems contingency planning. Since the second quarter of FY needing repair or replacement. For the Systems 1999, operations staff have focussed on an internal Renewal Project, the contingency plan is to repair the assessment of IBRD's portfolio of loan projects for legacy applications it will replace. Some of this work Year 2000 risks. Risks for member countries primarily has already been completed, some is scheduled to be relate to critical systems in banking, telecommunica- performed in any case, and the remainder will be trig- tions, power and water, health and government ser- gered if scheduled reviews of the Systems Renewal vices. Each project has been categorized as carrying Project reveal unsatisfactory progress. The level of high, medium, or low risk for potential disruptions effort required has been assessed and the required due to Year 2000 problems. Approximately one-third resources have been earmarked. of the projects are classified as high-risk. High Year 2000 risk, in this context, means that the project Table 7: Year 2000 Action Timeline Darte Svstenzs to be Retained .Svstems Renewval Other .New Svstems June 30, 1999 Testing 97% Completed Production Transition Production Implementation September 30, 1999 Testing 100% Completed In Production In Production and in Production IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 255 4. LIQUIDITY MANAGEMENT futures and options contracts pertaining to such obli- Liquidity risk arises in the general funding of IBRD's gations. activities and in the management of its financial posi- Liquid assets are held in three distinct sub-portfolios: tions. It includes the risk of being unable to fund its stable; operational; and discretionary, each with dif- portfolio of assets at appropriate maturities and rates ferent risk profiles, funding, structures and perfor- and the risk of being unable to liquidate a position in a mance benchmarks. The stable portfolio is principally timely manner at a reasonable price. The objective of an investment portfolio holding the prudential mini- liquidity management is to ensure the availability of mum level of liquidity, which is set at the beginning of sufficient cash flows to meet all of IBRD's financial each fiscal year. The operational portfolio provides commitments, working capital for IBRD's day-to-day cash flow Under IBRD's liquidity management policv, aggregate requirements. The discretionary portfolio provides liquid asset holdings should be kept at or above a spec- flexibility for the execution of IBRD's borrowing pro- ified prudential minimum. That minimum is equal to gram and can be used to take advantage of attractive the highest six months of debt-service for a fiscal year market opportunities. plus one-half of net loan disbursements as projected At the end of FY 1999, the aggregate size of the IBRD for a fiscal year based on commitments at the begin- liquid asset portfolio stood at S3 0,010 million, an ning of that year. The FY 2900 prudential minimum increase of $5,224 million over FY 1998. This liquidity level has been set at $18,000 million, repre- increase over the prior year is in part a result of a deci- senting a $500 million decrease over that for FY 1999. sion to deliberately pre-fund a portion of the FY 2000 IBRD also holds liquid assets over the specified mini- borrowing program and create discretionary liquid- mum to provide flexibility in timing its borrowing ity. In the aggregate, the IBRD liquid asset portfolio is transactions and to meet working capital needs. largely composed of U.S. dollars, with the currency IBRD's liquid assets are held principally in obligations composition of the operational portfolio varying the of governments and other official entities, time depos- most as a result of the nulticurrency cash flows gener- .. .. .'. . .........ated by disbursements, debt-service pavments, new its and other uncondlitional obligations of banks and a b d d financial institutions, asset-backed securities, and borrowings and reserves conversions. Figure 2 repre- sents IBRD s liquid asset portfolio size and structure at the end of FY 1999 and FY 1998. Figure 2: FY 1999 Stable Portf o io FY 1998 Stable Portfolio' USDec 18,794m USDeq 18.574m 63% 75% Dscretionary Operatonal Discretionary Porfolio Portfo[ie Porfolio Operational Portfoio USDeq 3,596m USDeq 7 620m USDeq 1 447m USDeq 4,765m 12% 25% 6° 19% iof which S1 361 m (5%) was Held-to-maturity. 256 THE WORLD BANK ANNUAL REPORT 1999 The cumulative performance of the liquid asset port- 5. FUNDING RESOURCES folio in FY 1999 compared to FY 1998 is presented in Table 8. Equity Total shareholders' equity at June 30, 1999 was Table 8: $28,021 million compared with $26,514 million at Annualized Financial June 30, 1998. The increase from FY 1998 primarily Return (%) reflects the increase in retained earnings of $976 mil- lion, the decrease in cumulative translation adjust- FY 1999 FY 1998 ment of $323 million, and the increase in paid-in capital of $107 million. Table 9 presents the compo- IBRD Overall Portfolio 6.00 5.62 sition of usable equity at June 30, 1999 and 1998. Stable Portfolio of which: ActivelyorManagedof w.35i5. The increase in shareholders' equity over FY 1998 did Actively Managed 5.35 5.62 not keep up with the pace of loan growth. As a result, Held-to-maturity Portfolio 82.96 8.44 the ratio of equity capital-to-loans fell to 20.65% at Operational Portfolio 4.48 4.72 June 30, 1999, from 21.44% one year earlier. Simi- Discretionary Portfolio 5.23 5.68 larly, the reserves-to-loans ratio declined from 14.06% to 13.69%. Figure 3 depicts these ratios over the last five years. During the first quarter of FY 1999 IBRD decided to liquidate the sterling UK government securities in the During FY 1999 IBRD increased the emphasis it held-to-maturitv portfolio. At the time of their liqui- placed on the equity capital-to-loans measure and de- dation these securities in the held-to-maturity portfo- emphasized the reserves-to-loans measure it had used lio had fair and carrving values of $1,389 million and in the past. The equity capital-to-loans ratio is one $1,152 million, respectively. This resulted in a real- method among multiple approaches, such as cash flow ized gain of $237 million upon liquidation. The analysis, by which IBRD measures its income generat- underlying fixed rate debt which had previouslv ing capacity and its capital adequacy. IBRD continues funded this held-to-maturity portfolio was simulta- to consider additional methodologies for evaluating its neously swapped into floating rates. risk-bearing capacity. For further information, refer to the Notes to Finan- cial Statements-Note B. Table 9: In millions of U.S. dollars FY 1999 FY 1998 Usable Capital Paid-in Capital $11,395 $11,288 Net Receivable for Maintenance of Value (869) (944) Restricted Paid-in Capital (2,509) (2,603) Total Usable Capital 8,017 7,741 Retained Earnings and Cumulative Translation Adjustments Special Reserve 293 293 General Reserve 15,409 14,659 Pension Reserve 294 112 Surplus 195 426 Unallocated Net Income 1,518 1,243 Cumulative Translation Adjustments (CTA) (637) (960) Total Retained Earnings and CTA 17,072 15,773 Total Usable Equity $25,089 $23,514 IBRD MANAGEMENT's DIScuSsION AND ANALYSIS 257 Figure 3: (iii) $150,576 million of IBRD's capital may, under 24.0% the Articles, be called only when required to meet obligations of IBRD for funds borrowed or on loans guaranteed by it. This amount is thus 22.0% not available for use by IBRD in making loans. Payment on any such call may be made, at the option of the particular member, either in gold, in U.S. dollars or in the currency required to dis- 20.0% Equity Capital-to-Loans ratio charge the obligations of IBRD for which the call is made. 180% (iv) $26,249 million of IBRD's capital is to be called only when required to meet obligations of IBRD for funds borrowed or on loans guaranteed by it, pursuant to resolutions of IBRD's Board of Gov- 16.0% ernors (though such conditions are not required Reserve-to-Loans ratio by the Articles). Of this amount, 10%/o would be payable in gold or U.S. dollars and 90% in the 14.0% currencies of the subscribing members. While these resolutions are not legally binding on future Boards of Governors, they do record an under- 12.0% standing among members that this amount will 'I'° t LO to - a CD) not be called for use by IBRD in its lending activ- 91 91 91 91 91 T ities or for administrative purposes. -, ' : : n n No call has ever been made on IBRD s callable capital. Any calls on unpaid subscriptions are required to be Capital uniform, but the obligations of the members of IBRD The authorized capital of IBRD at June 30, 1999 was to make payment on such calls are independent of $190,811 million, ofwhich $188,220 million had each other. If the amount received on a call is insuffi- been subscribed. Of the subscribed capital, $1 1,395 cient to meet the obligations of IBRD for which the million had been paid in and $176,825 million was call is made, IBRD has the right and is bound to make callable. Of the paid-in capital, $7,946 million was further calls until the amounts received are sufficient available for lending and $3,449 million was not avail- to meet such obligations. However, no member may able for lending. The terms of payment of IBRD's be required on any such call or calls to pay more than capital and the restrictions on its use that are derived the unpaid balance of its capital subscription. from the Articles and from resolutions of IBRD's Board of Governors are: At Junc 30, 1999, $102,563 million (38%]t of thc uncalled capital was callable from the member coun- (i) $2,521 million of IBRD's capital was initially paid tries of IBRD that are also members of the Develop- in gold or U.S. dollars or was converted bv the ment Assistance Committee of the Organization for subscribing members into U.S. dollars. This Economic Cooperation and Development. This amount may, under the Articles, be freely used amount was equal to 86% of IBRD's outstanding bor- by IBRD in its operations. rowings after swaps at June 30, 1999. Table 10 sets out the capital subscriptions of those countries and (ii) $8,874 million of IBRD's capital was paid in the the callable amounts. currencies of the subscribing members. Under the Articles this amount is subject to mainte- nance-of-value obligations and may be loaned only with the consent of the member whose cur- rency is involved. In accordance with such con- sents, $5,279 million of this amount had been used in IBRD's lending operations at June 30, 1999. 258 THE WORLD BANK ANNUAL REPORT 1999 Table 10: Borrowings In millions of U.S. dollars Source of Funding and Amounts Borrowed Total Capital UncalledPortion IBRD diversifies its sources of funding by offering its Member Country'" Subscription of Subscription securities to institutional and retail investors globally on terms acceptable to IBRD. Under its Articles, United States 5 31 965 S 29/966 IBRD may borrow only with the approval of the Japan 15,321 14,377 member in whose markets the funds are raised and the Germany 8,734 8,191 member in whose currency the borrowing is denorni- France 8,372 7,851 nated, and only if each such member agrees that the United Kingdom 5 ~~~ 7,832 proceeds may be exchanged for the currency of any, United Kingdom 81372 71832otemebrwhutesicon Italy 5,404 5,1069 other member without restriction. Canada 5,404 5,069 Funding Operations Netherlands 41283 4,018 In FY 1999 medium- and long-term debt raised Belgium 3,496 3,281 directly in financial markets by IBRD amounted to Switzerland 3,210 3 012 $22,443 million compared to $28,007 million in FY Australia 2,951 2,770 1998. Table 11 summarizes IBRD's funding opera- Spain 2,857 2,682 tions for FY 1999 and FY 1998. Funding raised in any Sweden 1,806 1,696 given year is used for IBRD's general operations, Austria 1,335 1,254 including loan disbursements, re-financing of matur- Denmark 1,237 1,162 ing debt and prefunding of future lending activities. Norway 1,204 1,132 All proceeds from new funding are initially invested in Finland 1,033 97 1 the liquid asset portfolio and subsequently allocatecd to New Zealand 873 821 the different debt pools funding loans as necessary in Portugal 659 620 accordance with operating guidelines. Ireland 636 599 IBRD strategically repurchases or prepays its debt to Luxembourg 199 190 reduce the cost of borrowiings and to reduce exposure Total $109,351 $102,563 to refunding requirements in a particular year or meet other operational needs. During FY 1999 IBRD a. See details regarding the capital subscriptions of all menm repurchased or prepaid a total of $1,045 million of its hers of IBRD at June 30, 1999 in Financial Statements- outstanding borrowings. Statement of Subscriptions to Capital Stock and Voting Table 11: Power. The United States is IBRD's largest shareholder. Ff 1 999 FY ]998 Under the Bretton Woods Agreements Act, the Par Total Medium- and Long-term Value Modification Act and other U.S. legislation, the Borrowings' (USD million) $22,443 $28,007 Secretary of the U.S. Treasurv is permitted to pav up Average Maturity (years) 6.7 5.8 to $7,663 million of the uncalled portion of the sub- Number of Transactions 186 195 scription of the United States, if it were called bv Number of Currencies 12 21 IBRD, without any requirement of further congres- a. Includes one-year niotes. All net proceedis on a trade date sional action. The balance of the uncalled portion of nasis. the U.S subscription, $22,303 million, has been authorized by the U.S. Congress but not appropriated. Use of Derivatives Further action by the U.S. Congress would be IBRD engages in a combination of interest rate and required to enable the Secretary of the Treasurv to , .,, , ,, , ~~~~currency swaps to convert direct borrowings into the pay any portion of this balance. The General Counsel desired interest rate structure and currency compasi- of the U.S Treasurv has rendered an opinion that the tion. interest rat e and currency somused 11 . . n . . . . . h~~ton. Interest rate and currency swaps are also used entire uncalled portion of the U.S. subscription is an for ALM purposes to match the pool of liabilities as obligation backed by the full faith and credit of the closely as ossible to the interest rate and currency United States, notwithstanding that congressional c appropriations have not been obtained with respect to certain portions of the subscription. In FY 1999 the maiori"7 of new funding continued to be initially swapped into floating rate U.S. dollars, Far a further discussion of capital stock, restricted cur- l-with conversion to other currencies or fixed rate fund- rencies, maintenance of value and membership refer ing being carried out subsequently in accordance with to the Notes to Financial Statements-Summary of Sig- funding requirements. nificant Accounting and Related Policies and Note A. IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 259 Currency and Interest Rate Composition of Borrow- * Offset in part by an increase of $243 million in ings After-Swaps Net Noninterest Expense due primarily to a Of the borrowings outstanding after swaps at June 30, decrease in Pension and Postretirement Income. 1999, 54% was at variable rates (44% at June 30, 1998). The currency composition continues to be FY 1998 versus FY 1997 concentrated in U.S. dollars, with its share at the end Net Income for FY 1998 was $42 million lower than of June 30, 1999 rising to 79% of the borrowing port- FY 1997. This slight decline was primarilv the result folio (66% at June 30, 1998). This reflects IBRD bor- of: rowers' preference for U.S. dollar-denominated loans and the corresponding currency composition of the * An increase of $188 million for loan loss provi- liquid asset portfolio. sions, reflecting the significant growth in net loan disbursements and changes in the credit quality of A more detailed analysis of borrowings outstanding is the portfolio. provided in the Notes to Financial Statements- Note D. * A decrease of S190 million in loan interest income, net of funding costs. This decrease is 6. RESULTS OF OPERATIONS mainly attributable to the lower income margin IBRD's net income can be seen as broadlv comprising on debt funded loans resulting from conversions a spread on earning assets, plus the contribution of of the multicurrency pool loans to single currency equity, less provisions for loan losses and administra- pool terms. The SCP conversions reduced the tive expenses. Table 12 shows a breakdown of loan spread through the interaction of the change income, net of funding costs. in currency composition, resulting in a higher nominal rate, with a lag in the pass-through FY 1999 versus FY 1998 lending rate. Effectively this raised debt costs FY 1999 net income was $1,518 million, $275 million before raising the lending rate on the affected FY~~~~~~~~~~~ loans reultn mcom redce loa income mlargins.2 mlo higher than FY 1998. This increase is primarily attrib- loans, resultig In reduced loan icome margis. utable to: * These decreases in income were offset by a - The $237 million gain realized upon liquidation decrease of $293 million in Net Noninterest of the held-to-maturity portfoho during the first Expense, resulting from gains attributed to quarter of the fiscal year IBRD's pension and other postretirement benefit accounts. * The $214 million increase in loan interest income, net of funding costs, resulting from the Net Interest Income changes in loan pricing. During the year IBRD IBRD's primary interest earning assets are its loans and reduced its interest waiver on existing loans, liquid asset investments. Table 13 provides a break- introduced a front-end fee on new loans and down of the gross interest income on earning assets earned higher loan spreads on the SSALs dis- (including other loan income). Table 14 provides a bursed during the year. breakdown of gross borrowing costs. Table 12: In millions of U.S. dollars Ff 1999 Ff71998 FY 1997 Loan interest income, net of funding costs Debt funded $ 387 $ 374 $ 574 Equity funded 1,746 1,545 1,535 Total loan interest income, net of funding costs 2,133 1,919 2,109 Other loan charges 59 22 (33) Loan loss provision (246) (251) (63) Investment income, net of funding costs 291 29 41 Net noninterest expense (719) (476) (769) Net Income $1,518 $1,243 $1,285 260 THE WORLD BANK ANNUAL REPORT 1999 Table 13: In millions of U S. dollars FY 1999 FY 1998 FY 1997 Interest Income Interest Income Interest Income Average Return Average Return Average Return Volume Amount % Volume Amount . Volume Amount % Loans by Product Multicurrency Pool $ 39,607 $2,361 5.96 $ 70,047 $4,335 6.19 $ 95,631 $6,222 6.51 Single Currency Pools 43,687 3,199 7.32 18,136 1,250 6.89 - - - LIBOR-based Single Currency Loans 14,970 777 5.19 8,061 448 5.56 2,625 146 5.56 Fixed Rate Single Currency Loans 7,468 468 6.27 3,330 218 6.55 1,999 132 6.60 Nonstandard LIBOR-based SCLs 6,833 477 6.98 2,165 158 7.30 - - - Other Fixed Rate 3,618 308 8.51 5,323 450 8.45 9,005 768 8.53 Other Loan Income 59 22 (33) Total Loans 116,183 7,649 6.58 107,062 6,881 6.43 109,260 7,235 6.62 Cash and Investments 27,955 1,680 6.01 21,895 1,233 5.63 16,627 834 5.02 TotalEarningAssets S144,138 S9,329 6.47 $128,957 $S8,114 6.29 $125,887 $8,069 6.41 Table 14: In millions of U.S. dollars FY 1999 FY 1998 FY 1997 Borrowing Cost Borrowing Cost Borrowing Cost Average Cost Average Cost Average Cost Volueme Amount % Voluine Amount A/ Volume Amount Ao Borrowing Portfolio by Debt Pools MulticurrencyPool S 29,640 S1,514 5.11 $ 54,266 $3,092 5.70 $71,239 $4,245 5.96 Single Currency Pools 33,832 2,507 7.41 14,252 1,012 7.10 - - - LIBOR-based Single Currency Loans 11,961 581 4.86 6,341 348 5.49 2,230 118 5.29 Fixed Rate Single Currency Loans 6,143 367 5.97 2,767 169 6.11 1,699 106 6.24 Nonstandard LIBOR- based SCLs 5,578 284 5.09 2,164 117 5.41 - - - Other Fixed Rate - - - - - - 7,061 427 6.05 Other Debt Funding 28,541 1,593 5.58 22,382 1,406 6.28 15,966 1,056 6.61 Total Borrowings $115,695 $6,846 5.92 $102,172 $6,144 6.01 $98,195 $5,952 6.06 IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 261 FY 1999 versus FY 1998 from higher returns (up from 5.0% to 5.6%) mainly The m-nain factor contributiog to the iocrease in loan due to a shift from Japanese yen and Deutsche mark interest income of $7 68 million was the higher aver- investments into higher-yield U.S. dollar invest- age balance of loans outstanding in terms of '.S. dol- ments. Higher average outstanding investment bal- Iars. A higher volume of loans outstanding, ances, reflecting the modified liquidity policy, representing $607 million of the increased income, accounted for the remaining increase of $298 million. was the result of increased net disbursements and the The cost of borrowings increased by $192 million. The effect of translation into U.S. dollar terms for report- replacement of longer maturitv fixed rate debt with ing purposes. Additionally, increases in loan pricing variable rate debt, coupled with a falling interest rate contributed $161 million. environment, lowered the average cost of borrowings Two significant factors contributed to the increase of from 6.06% to 6.01 This decrease was offset by a $447 million in investment income. In FY 1999 a gain higher average borrowings balance. of $237 million was realized upon liquidation of the Net Noninterest Expense securities in the held-to-maturity portfolio. Addition- The main components of net noninterest expense are ally, income increased by $210 million reflecting increases in the average investment balance, offset by the effect of slightly lower market interest rates. FY 1999 versus FY 1998 The cost of borrowings increased $702 million. While Overall gross administrative expenses increased only a falting interest rate environment reduced the cost of slightly. From FY 1998 to FY 1999 net noninterest borrowings from 6.01 % to 5.92%, total costs increased expense increased by $243 million, generally return- because of the higher average borrowings balance. ing to FY 1997 levels. Staff costs increased 159%b; how- ever, the majority of the increase in expense is FY 1998 versus FY 1997 attributable to the FY 1998 non-recurring reduction in The decrease in loan income of $354 million wvas pri- expense realized as a result of the change in account- marily due to a falling interest rate environment in the ing for other postretirement benefits. See Notes to major financial markets and the continuing maturity the Financial Statements-Note I for a detailed discus- of high-interest, fixed rate loans. Of the decrease in sion of those changes. loan interest income, $208 million was due to a decrease in the average interest rate of the loan portfo- FY 1998 versus FY 1997 lio and $146 million was associated with the decrease Net noninterest expenses declined by $293 million. in the balance of average loans outstanding in terms of This decrease is primarily attributable to the recogni- U.S. dollars. tion of additional income from pension and other pos- During FY 1998 investment income increased by tretirement benefit plans. See the Notes to Financial DurmgFY 198 mvetmentmcomemcreaed X,Statements-Note I. $399 million. Of this increase, $101 million resulted Table 15: In millions of U.S. dollars FY 1999 FY 1998 FY1997 Gross Administrative Expenses Staff Costs $ 538 $466 $472 Consultant Fees 97 91 71 Operational Travel 94 94 81 Other Expenses 325 293 277 Total Gross Administrative Expenses 1,054 944 901 Less: Reimbursements 76 69 67 Contribution to Special Programs 129 112 120 Total Net Administrative Expenses 849 763 714 Contribution to Special Programs 129 112 120 Pension & Postretirement Benefit Income (249) (399) (63) Net Other Income (10) - (2) Total Net Noninterest Expense $ 719 $476 $769 262 THE WORLD BANK ANNUAL REPORT 1999 GLOSSARY OF TERMS Asset-backed Securities: Asset-backed securities are then bears the risk of an unfavorable change in the instruments whose cash flow is based on the cash price of the financial instrument underlying the option flows of a pool of underlying assets managed by a Repurchase and Resale Agreements and Securities trust.Rprhs n eaeAgemnsadScrte Loans: Repurchase agreements are contracts under Cross-Currency Interest Rate Swaps: Cross-currency which a party sells securities and simultaneously interest rate swaps are currency swaps where one set agrees to repurchase the same securities at a specified of cash flows reflects a fixed rate of interest and the future date at a fixed price. The reverse of this trans- other reflects a floating rate of interest. action is called a resale agreement. A resale agreement involves the purchase of securities with a simulta- Curreenc Swopapties: to C encyn s car agreementsi neous agreement to sell back the same securities at a between two parties to exchange cash flows denomi- stated price on a stated date. Securities loans are con- nated in different currencies at one or more certain tats unde whic s ecurities are cif , r 1 . O . , ~~~~~~tracts under which securities are lent for a specified times in the future. The cash flows are based on a pre- period of time at a fixed price. determined formula reflecting rates of interest and an exchange of principal. Return on Equity: This return in computed as net income divided bv the average equity balance during Equity Capital-to-Loans: This ratio is the sum of the the ear special and general reserves, cumulative translation y adjustment and the proposed transfer from unallo- Risk bearing Capacity: The ability to absorb risks in cated net income to general reserves divided by the the balance sheet while continuing normal operations sum of loans outstanding, the present value of guaran- without having to call on callable capital. tees, net of loan loss provisions. Short Sales: Short sales are sales of securities not held Forward Interest Rate Swaps: A forward interest rate in the seller's portfolio at the time of the sale. The swap is an agreement under which the cash flow seller must purchase the security at a later date and exchanges of the underlying interest rate swaps would bears the risk that the market value of the security will begin to take effect from a specified date, move adversely between the time of the sale and the time the security must be delivered. Futures and Forwards: Futures and forward contracts are contracts for delivery of securities or money mar- Statutory Lending Limit: Under IBRD's Articles of ket instruments in which the seller agrees to make Agreement, as applied, the total amount outstanding delivery at a specified future date of a specified instru- of loans, participations in loans, and callable guaran- ment at a specified price or yield. Futures contracts tees may not exceed the sum of subscribed capital, are traded on U.S. and international regulated reserves and surplus. exchanges. Swaptions: A swaption is an option that gives the Government and Agency Obligations: These obliga- holder the right to enter into an interest rate or cur- tions include marketable bonds, notes and other obli- rency swap at a certain future date. gations issued by governments. Time Deposits: Time deposits include certificates of Interest Rate Swaps: Interest rate swaps are agree- deposit, bankers' acceptances, and other obligations ments involving the exchange of periodic interest pay- issued or unconditionally guaranteed by banks and ments of differing character, based on an underlying other financial institutions. notional principal amount for a specified time. Maintenance of Value: Agreements with members provide for the maintenance of the value, from the time of subscription, of certain restricted currencies. Additional payments to (or from) IBRD are required in the event the par value of the currency is reduced (or increased) to a significant extent, in the opinion of IBRD. Net Disbursements: Loan disbursements net of repayments and prepayments. Options: Options are contracts that allow the holder of the option the right, but not the obligation, to pur- chase or sell a financial instrument at a specified price within a specified period of time from or to the seller of the option. The purchaser of an option pays a pre- mium at the outset to the seller of the option, who IBRD MANAGEMENT'S DISCUSSION AND ANALYSIS 263 INTERNATIONAL BANK FOR RECONSTRUCTION AND D EVE L O P M E N T FINANCIAL STATEMENTS JUNE 30, 1 999 Balance Sheet 266 Statement ofIncome 268 Statement of Comprehensive Income 269 Statement of Changes in Retained Earnings 269 Statement of Cash Flows 270 Summary Statement of Loans 272 Statement of Subscriptions to Capital Stock and Voting Power 275 Notes to Financial Statements 279 Report of Independent Accountants 306 265 BALANCE SHEET June 30, 1999 and June 30, 1998 Expressed in millions of U.S. dollars 1999 1998 Assets Due from Banks Unrestricted currencies $ 33 $ 55 Currencies subject to restrictions-Note A 664 712 697 767 Investments Trading-Notes B and E 30,345 23,441 Held-to-maturitv-Notes B and E - 2,673 30,345 26,114 Assets Designated for Other Postretirement Benefits Plans-Notes B and I - 1,456 Securities Purchased Under Resale Agreements-Trading-Note B 6 467 Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Subscribed Capital 1,846 1,890 Amounts Receivable from Currency Swaps Investments-Trading-Notes B and E 11,420 10,579 Borrowings-Notes D and E 67,592 55,767 79,012 66,346 Amounts Receivable to Maintain Value of Currency Holdings on Account of Subscribed Capital 527 392 Other Receivables Amounts receivable from investment securities traded 88 262 Accrued interest on investments-Held-to-maturity - 33 Accrued income on loans 2,100 1,963 2,188 2,258 Loans Outstanding (see Summary Statement of Loans, Notes C and E) Total loans 168,600 157,641 Less undisbursed balance 51,372 51,065 Loans outstanding 117,228 106,576 Less accumulated provision for loan losses 3,560 3,240 Loans outstanding net of accumulated provision 113,668 103,336 Other Assets Unamortized issuance costs of borrowings 712 652 Miscellaneous-Note I 1,807 1,364 2,519 2,016 Total assets $230,808 $205,042 266 THE WORLD BA.NK ANNUAL REPORT 1999 BALANCE SHEET June 30, 1999 and June 30, 1998 Expressed in millions of U.S. dollars 1999 1998 Liabilities Borrowings-Notes D and E Short-term $ 5,328 $ 6,729 Medium- and long-term 110,411 96,748 115,739 103,477 Securities Sold Under Repurchase Agreements and Payable for Cash Collateral Received-Note B Trading 102 862 Held-to-maturity - 1,374 102 2,236 Amounts Payable for Currency Swaps Investments-Trading-Notes B and E 11,501 10,182 Borrowings-Notes D and E 70,484 57,867 81,985 68,049 Amounts Payable to Maintain Value of Currency Holdings on Account of Subscribed Capital 111 2 Liabilities Under Other Postretirement Benefits Plans-Note I 103 717 Other Liabilities Amounts payable for investment securities purchased 167 255 Accrued charges on borrowings 3,012 2,519 Payable for Board of Governors-approved transfers-Note F 607 122 Accounts payable and miscellaneous liabilities 961 1,151 4,747 4,047 Total liabilities 202,787 178,528 Equity Capital Stock (see Statement of Subscriptions to Capital Stock and Voting Power, Note A) Authorized capital (1,581,724 shares-June 30, 1999 and June 30, 1998) Subscribed capital (1,560,243 shares-June 30, 1999; 1,545,457 shares-June 30, 1998) 188,220 186,436 Less uncalled portion of subscriptions 176,825 175,148 11,395 11,288 Amounts to Maintain Value of Currency Holdings-Note A (453) (554) Payments on Account of Pending Subscriptions-Note A 7 7 Retained Earnings (see Statement of Changes in Retained Earnings, Note F) 17,709 16,733 Accumulated Other Comprehensive Income-Note K (637) (960) Total equity 28,021 26,514 Total liabilities and equity $230,808 $205,042 The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS 267 STATEMENT OF INCOME ForthefiscalyearsendedJune30, 1999, June30, 1998andJune30, 1997 Expressed in millions of U.s. dollars 1999 1998 1997 Income Income from loans-Note C Interest $7,535 $6,775 $7,122 Commitment charges 114 106 113 Income from investments-Note B Trading Interest 1,419 1,107 718 Net (losses) gains Realized (17 (10) 47 Unrealized 15 1 (43) Held-to-maturity Interest 47 176 103 Realized gains 237 - - Income from securities purchased under resale agreements-Note B 15 59 53 Income from assets designated for other postretirement benefits plans-Notes B and I 4 107 Income from Staff Retirement Plan-Note I 255 182 63 Other income 18 10 12 Total income 9,642 8,513 8,188 Expenses Borrowing expenses-Note D Interest 6,703 6,000 5,827 Prepayment losses (gains) 1 (7) 16 Amortization of issuance and other borrowing costs 142 151 109 Interest on securities sold under repurchase agreements and payable for cash collateral received-Note B 36 100 44 Administrative expenses-Notes G and H 849 763 714 Other postretirement benefits expense-Note I 10 50 - Provision for loan losses-Note C 246 251 63 Other expenses 8 10 10 Total expenses 7,995 7,318 6,783 Operating Income 1,647 1,195 1,405 Effect of accounting change-Note I - 160 - Contributions to special programs-Note G (129) (112) (120) Net Income $1,518 $1,243 $1,285 The Notes to Financial Statements are an integral part of these Statements. 268 THE WORLD BANK ANNUAL REPowr 1999 STATEMENT OF COMPREHENSIVE INCOME For the fiscal vears ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in millions of U.S. dollars 1999 1998 1997 Net income $1,518 $ 1,243 $1,285 Other comprehensive income-Note K Currency translation adjustments 323 (1,045) (971) Total other comprehensive income (loss) 323 (1,045) (971) Comprehensive income $1,841 $ 198 $ 314 STATEMENT OF CHANGES IN RETAINED EARNINGS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in mnillions of U.S. dollars 1999 1998 1997 Retained earnings at beginning of the fiscal year $16,733 $16,194 $16,099 Board of Governors-approved transfers to-Note F International Development Association (352) (304) (600) Trust Fund for Gaza and West Bank (90) - (90) Heavily Indebted Poor Countries Debt Initiative Trust Fund (100) (250) (500) Multilateral Investment Guarantee Agency - (150) - Net income for the fiscal year 1,518 1,243 1,285 Retained earnings at end of the fiscal year $17,709 $16,733 $16,194 The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS 269 STATEMENT OF CASH FLOWS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in rmillions of U.S. dollars 1999 1998 1997 Cash flows from lending and investing activities Loans Disbursements $(181,215) S(19,2833 $(14,009) Principal repayments 9,988 10,146 10,710 Principal prepayments 94 1,372 1,311 Investments: Held-to-maturity Purchases of securities and repayments of securities sold under repurchase agreements (13,266) (33,202) (8,911) Maturities of securities and proceeds from securities sold under repurchase agreements 13,426 33,184 8,895 Proceeds from sale of held-to-maturity portfolio net of securities sold under repurchase agreements 1,389 - Net cash used in lending and investing activities (6,584) (7,783) (2,004) Cash flows from Board of Governors-approved transfers to International Development Association (298) (599) Debt Reduction Facility for IDA-Only Countries - (18) (1) Trust Fund for Gaza and West Bank (62) (60) (91) Heavily Indebted Poor Countries Debt Initiative Trust Fund - (2503 (500) Multilateral Investment Guarantee Agency - (150) - Net cash used in Board of Governors-approved transfers (62) ___ (776) (1,191) Cash flows from financing activities Medium- and long-term borrowings New issues 21,846 27,748 14,928 Retirements (10,034) (13,569) (14,137) Net short-term borrowings (1,512) (1,009) 3,277 Net currency swaps-Borrowings (340) (300) (266) Net capital stock transactions 175 217 71 Net cash provided by financing activities 10,135 13,087 3,873 Cash flows from operating activities Net income 1,518 1,243 1,285 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 819 855 541 Provision for loan losses 246 251 63 Gain on sale of held-to-maturity portfolio (237) - - Changes in other assets and liabilities (Increase) decrease in accrued income on loans and held-to-maturity investments (46) (157) 68 (Increase) decrease in miscellaneous assets (385) 8 (153) Increase in net assets associated with other postretirement benefits - (7393 - Increase (decrease) in accrued charges on borrowings 470 448 (49) (Decrease) increase in accounts payable and miscellaneous liabilities (131) 335 35 Net cash provided by operating activities 2,254 2,244 1,790 270 THE WORLD BANK ANNUAIL REPORT 1999 1999 1998 1997 Effect on liquid investments due to decrease in net assets associated with other postretirement benefits $ 650 $ - $ Effect of exchange rate changes on unrestricted cash and liquid investments 224 (207) (320) Net increase in unrestricted cash and liquid investments 6,617 6,565 2,148 Unrestricted cash and liquid investments at beginning of the fiscal year 23,505 16,940 14,792 Unrestricted cash and liquid investments at end of the fiscal vear $ 30,122 $ 23 505 $ 16,940 Composition of unrestricted cash and liquid investments: Investments held in trading portfolio $ 30,345 $ 23,441 $ 17,323 Unrestricted currencies 33 55 26 Net (payable) receivable for investment securities traded/purchased-Trading (79) 7 (106) Net (payable) receivable from currency swaps-Investments (81) 397 (123) Net payable for securities purchased/sold under resale/repurchase agreements and payable for cash collateral received (96) (395) (180) $ 30,122 $ 23,505 S 16,940 Supplemental disclosure Increase (decrease) in ending balances resulting from exchange rate fluctuations Loans outstanding $ 2,519 $ (6,994) $ (6,429) Investments-Held-to-maturity 13 2 94 Borrowings 1,010 (7,239) (4,701) Currency swaps-Borrowings 1,244 1,632 (495) The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS 271 SUMMARY STATEMENT OF LOANS June 30, 1999 Expressed in millions of U.S. dollars Loans approved Undisbursed Percentage but not yet balance of Loans of total loans Borrower or guarantor Total loans effective effective loans2 outstanding outstanding Algeria $ 2,144 $ - $ 537 $ 1,607 1.37% Argentina 12,045 701 4,025 7,319 6.24 Armenia 9 - - 9 0.01 Bahamas, The 5 - 5 Bangladesh 32 - - 32 0.03 Barbados 23 - 6 17 0.01 Belarus 145 - 22 123 0.10 Belize 49 - 7 42 0.04 Bolivia 18 - - 18 0.02 Bosnia and Herzegovina 566 - - 566 0.48 Botswana 29 - - 29 0.02 Brazil 10,387 1,022 2,511 6,854 5.85 Bulgaria 937 74 209 654 0.56 Cameroon 307 - 1 306 0.26 Chile 1,152 161 83 908 0.77 China 19,014 2,024 7,199 9,791 8.35 Colombia 2,314 : 619 11695 1.45 Congo, Democratic Republic of 82 - - 82 0.07 Congo, Republic of 68 - - 68 0.06 Costa Rica 184 - 26 158 0.13 C6te d'lvoire 781 - - 781 0.67 Croatia 680 7 353 320 0.27 Cyprus 57 - 9 48 0.04 Czech Republic 346 - 8 338 0.29 Dominica 7 - 6 1 Dominican Republic 463 - 239 224 0.19 Ecuador 1,089 - 235 854 0.73 Egypt, Arab Republic of 1,187 345 81 761 0.65 El Salvador 564 ;88 186 290 0.25 Estonia 99 - 19 80 0.07 Fiji 30 - 2 28 0.02 Gabon 94 5 18 71 0.06 Ghana 19 - - 19 0.02 Grenada 4 - 4 - - Guatemala 513 54 242 217 0.19 Guyana 13 - - 13 0.01 Honduras 207 - - 207 0.18 Hungary 1,033 - 362 671 0.57 India 11,324 190 3,314 7,820 6.67 Indonesia 15,657 684 3,420 11,553 9.86 Iran, Islamic Republic of 673 - 251 422 0.36 Iraq 41 - 41 0.03 Jamaica 484 - 117 367 0.31 Jordan 1,055 35 192 828 0.71 Kazakhstan 1,597 176 562 859 0.73 Kenya I118 - - 118 0.10 Korea, Republic of 8,504 - 196 8,308 7.09 Latvia 280 29 67 184 0.16 Lebanon 579 - 367 212 0.18 Lesotho 104 45 4 55 0.05 272 THE WORLD BANK ANNUAL REPORT 1999 Loans approved Undisbursed Percentage but not yet balance of Loans of total loans Borrower or guarantor Total loans effective I effective loans2 outstanding outstanding Liberia $ 133 $ - $ - $ 133 0.11% Lithuania 277 20 79 178 0.15 Macedonia, former Yugoslav Republic of 187 28 56 103 0.09 Madagascar I - - I Malawi 20 - 20 0.02 Malaysia 1,388 - 466 922 0.79 Mauritania 3 - 3 * Mauritius 127 - 25 102 0.09 Mexico 14,497 800 2,581 11,116 9.48 Moldova 246 - 55 191 0.16 Morocco 3,890 85 500 3,305 2.82 Nicaragua 12 - - 12 0.01 Nigeria 2,114 - 93 2,021 1.72 Oman 7 - - 7 0.01 Pakistan 3,667 - 404 3,263 2.78 Panama 471 85 103 283 0.24 Papua New Guinea 288 - 43 245 0.21 Paraguay 356 - 197 159 0.14 Peru 2,983 - 614 2,369 2.02 Philippines 5,398 307 1,137 3,954 3.37 Poland 3,122 291 807 2,024 1.73 Romania 2,677 325 926 1,426 1.22 Russian Federation 10,991 430 4,268 6,293 5.37 St. Kitts and Nevis 13 - 12 1 * St. Lucia 13 3 5 5 * St. Vincent and the Grenadines 2 - 2 * * Senegal 6 - - 6 0.01 Seychelles 4 - 1 3 * Sierra Leone 1 - - 1 * Slovak Republic 226 - 6 220 0.19 Slovenia 136 14 3 119 0.10 South Africa 24 - 24 - Sri Lanka 22 - - 22 0.02 Sudan 6 - - 6 0.01 Swaziland 31 - 22 9 0.01 Syrian Arab Republic 50 - - 50 0,04 Tanzania 18 - - 18 0.02 Thailand 3,657 - 1,006 2,651 2.26 Trinidad and Tobago 152 15 55 82 0.07 Tunisia 2,110 35 703 1,372 1.17 Turkey 4,617 155 1,518 2,944 2.51 Turkmenistan 74 - 65 9 0.01 Ukraine 2,687 17 867 1,803 1.54 Uruguay 751 - 277 474 0.40 IBRD FINANCIAL STATEMENTS 273 SUMMARY STATEMENT OF LOANS (Continued) June30, 1999 Expressed in millions of U.S. dollars Loans approved Undisbursed Percentage but not yet balance of Loans of total loans Borrower or guarantor Total loans effectiveI effective loans outstanding outstanding Uzbekistan $ 398 $ 25 $ 193 $ 180 0.15% Venezuela 1,623 80 357 1,186 1.01 Yugoslavia, Federal Republic of (Serbia/Montenegro)3 1,107 - - 1,107 0.94 Zambia 37 - 37 0.03 Zimlbabwe 501 - 39 462 0.39 Subtotal' 168,233 8,355 43,008 116,870 99.69 CaribbeanDevelopmentBank4 12 - 4 8 0.01 InternationalFinanceCorporation 355 - 5 350 0.30 Total-June 30, 19995 $168,600 $ 8,355 $43,017 $117,228 100.00% Total-June 30, 1998 $157,641 $11,711 $39,354 $106,576 'Indicates amount less than $0.5 million or less than 0.005 percent. NOTES 1. Loans totaling $4,371 million ($8,930 million-June 30, 1998) have been approved by IBRD, but the related agreements have not been signed. Loan agreements totaling $3,984 million ($2, 781 million-June 30, 1998) have been signed, but the loans do not become effective and disbursements there- under do not start until the borrowers and guarantors, if any, take certain actions and furnish certain documents to IBRD. 2. Of the undisbursed balance, iBRD has entered into irrevocable commitments to disburse $1,301 million ($1,215 million-June 30, 1998). 3. See Notes to Financial Statements-Notes A and C. 4. These loans are for the benefit of The Bahamas, Barbados, Grenada, Guyana, Jamaica, Trinidad and Tobago, and territories of the United Kingdom (Associated States and Dependencies) in the Caribbean Region, that are severally liable as guarantors to the extent of subloans made in their territories. 5. May differ from the sum of individualfigures shown due to rounding. The Notes to Financial Statemnents are an integral part ofthese Statements. 274 THE WORLD BANK ANNUAL REPORT 1999 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER June30, 1999 Expressed in millions of U.S. dollars Subscriptions Voting Power Percentage Amounts Number Percentage of Total Amounts subject of of Member Shares total amounts paid in] to call1'2 votes total Afghanistan 300 0.02% $ 36.2 $ 3.6 $ 32.6 550 0.03% Albania 830 0.05 100.1 3.6 96.5 1,080 0.07 Algeria 9,252 0.59 1,116.1 67.1 1,049.0 9,502 0.59 Angola 2,676 0.17 322.8 17.5 305.4 2,926 0.18 Antigua and Barbuda 520 0.03 62.7 1.3 61.5 770 0.05 Argentina 17,911 1.15 2,160.7 132.2 2,028.4 18,161 1.13 Armenia 1,139 0.07 137.4 5.9 131.5 1,389 0.09 Australia 24,464 1.57 2,951.2 181.8 2,769.5 24,714 1.54 Austria 11,063 0.71 1,334.6 80.7 1,253.9 11,313 0.70 Azerbaijan 1,646 0.11 198.6 9.7 188.8 1,896 0.12 Bahamas, The 1,071 0.07 129.2 5.4 123.8 1,321 0.08 Bahrain 1,103 0.07 133.1 5.7 127.4 1,353 0.08 Bangladesh 4,854 0.31 585.6 33.9 551.6 5,104 0.32 Barbados 948 0.06 114.4 4.5 109.9 1,198 0.07 Belarus 3,323 0.21 400.9 22.3 378.5 3,573 0.22 Belgium 28,983 1.86 3,496.4 215.8 3,280.6 29,233 1.82 Belize 586 0.04 70.7 1.8 68.9 836 0.05 Benin 868 0.06 104.7 3.9 100.8 1,118 0.07 Bhutan 479 0.03 57.8 1.0 56.8 729 0.05 Bolivia 1,785 0.11 215.3 10.8 204.5 2,035 0.13 Bosnia and Herzegovina 549 0.04 66.2 5.8 60.4 799 0.05 Bots,wana 615 0.04 74.2 2.0 72,2 865 0.05 Brazil 33,287 2.13 4,015.6 245.5 3,770.1 33,537 2.09 Brunei Darussalam 2,373 0.15 286.3 15.2 271.1 2,623 0.16 Bulgaria 5,215 0.33 629.1 36.5 592.6 5,465 0.34 Burkina Faso 868 0.06 104.7 3.9 100.8 1,118 0.07 Burundi 716 0.05 86.4 3.0 83.4 966 0.06 Cambodia 214 0.01 25.8 2.6 23.2 464 0.03 Cameroon 1,527 0.10 184.2 9.0 175.2 1,777 0.11 Canada 44,795 2.87 5,403.8 334.9 5,068.9 45,045 2.81 Cape Verde 508 0.03 61.3 1.2 60.1 758 0.05 Central African Republic 862 0.06 104.0 3.9 100.1 1,112 0.07 Chad 862 0.06 104.0 3.9 100l. 1,112 0.07 Chile 6,931 0.44 836.1 49.6 786.6 7,181 0.45 China 44,799 2.87 5,404.3 335.0 5,069.3 45,049 2.81 Colombia 6,352 0.41 766.3 45.2 721.1 6,602 0.41 Comoros 282 0.02 34.0 0.3 33.7 532 0.03 Congo, Democratic Republic of 2,643 0.17 318.8 25.4 293.5 2,893 0.18 Congo, Republic of 927 0.06 111.8 4.3 107.5 1,177 0.07 Costa Rica 233 0.01 28.1 1.9 26.2 483 0.03 C6ted'lvoire 2,516 0.16 303.5 16.4 287.1 2,766 0.17 Croatia 2,293 0.15 276.6 17.3 259.3 2,543 0.16 Cyprus 1,461 0.09 176.2 8.4 167.9 1,711 0.11 Czech Republic 6,308 0.40 761.0 45.9 715.0 6,558 0.41 Denmark 10,251 0.66 1,236.6 74.6 1,162.0 10,501 0.65 Djibouti 559 0.04 67.4 1.6 65.9 809 0.05 Dominica 504 0.03 60.8 1.1 59.7 754 0.05 Dominican Republic 2,092 0.13 252.4 13.1 239.3 2,342 0.15 Ecuador 2,771 0.18 334.3 18.2 316.1 3,021 0.19 Egypt, Arab Republic of 7,108 0.46 857.5 50.9 806.6 7,358 0.46 IBRD FINANCIAL STATEMENTS 275 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER (Continued) June 30, 1999 Expressed in millions of U.S. dollars Subscriptions Voting Power Percentage Amounts Number Percentage of Total Amounts subject of of Member Shares total amounts paid inI to call'12 votes total El Salvador 141 0.01% $ 17.0 $ 1.7 $ 15.3 391 0.02% Equatorial Guinea 715 0.05 86.3 2.7 83.5 965 0.06 Eritrea 593 0.04 71.5 1.8 69.7 843 0.05 Estonia 923 0.06 111.3 4.3 107.1 1,173 0.07 Ethiopia 978 0.06 118.0 4.7 113.3 1,228 0.08 Fiji 987 0.06 119.1 4.8 114.3 1,237 0.08 Finland 8,560 0.55 1,032.6 61.9 970.8 8,810 0.55 France 69,397 4.45 8,371.7 520.4 7,851.3 69,647 4.34 Gabon 987 0.06 119.1 5.1 113.9 1,237 0.08 Gambia, The 543 0.03 65.5 1.5 64.0 793 0.05 Georgia 1,584 0.10 191.1 9.3 181.8 1,834 0.11 Germany 72,399 4.64 8,733.9 542.9 8,190.9 72,649 4.53 Ghana 1,525 0.10 184.0 12.7 171.2 1,775 0.11 Greece 1,684 0.11 203.1 14.1 189.1 1,934 0.12 Grenada 531 0.03 64.1 1.4 62.7 781 0.05 Guatemala 2,001 0.13 241.4 12.4 229.0 2,251 0.14 Guinea 1,292 0.08 155.9 7.1 148.8 1,542 0.10 Guinea-Bissau 540 0.03 65.1 1.4 63.7 790 0.05 Guyana 1,058 0.07 127.6 5.3 122.3 1,308 0.08 Haiti 1,067 0.07 128.7 5.4 123.3 1,317 0.08 Honduras 641 0.04 77.3 2.3 75.0 891 0.06 Hungary 8,050 0.52 971.1 58.0 913.1 8,300 0.52 Iceland 1,258 0.08 151.8 6.8 144.9 1,508 0.09 India 44,795 2.87 5,403.8 333.7 5,070.1 45,045 2.81 Indonesia 14,981 0.96 1,807.2 110.3 1,697.0 15,231 0.95 Iran, Islamic Republic of 23,686 1.52 2,857.4 175.8 2,681.5 23,936 1.49 Iraq 2,808 0.18 338.7 27.1 311.6 3,058 0.19 Ireland 5,271 0.34 635.9 37.1 598.8 5,521 0.34 Israel 4,750 0.30 573.0 33.2 539.8 5,000 0.31 Italy 44,795 2.87 5,403.8 334.8 5,069.0 45,045 2.81 Jamaica 2,578 0.17 311.0 16.8 294.2 2,828 0.18 Japan 127,000 8.14 15,320.6 944.0 14,376.7 127,250 7.93 Jordan 1,388 0.09 167.4 7.8 159.6 1,638 0.10 Kazakhstan 2,985 0.19 360.1 19.8 340.3 3,235 0.20 Kenya 2,461 0.16 296.9 15.9 281.0 2,711 0.17 Kiribati 465 0.03 56.1 0.9 55.2 715 0.04 Korea, Republic of 15,817 1.01 1,908.1 114.5 1,793.5 16,067 1.00 Kuwait 13,280 0.85 1,602.0 97.4 1,504.6 13,530 0.84 Kyrgyz Republic 1,107 0.07 133.5 5.7 127.9 1,357 0.08 Lao People's Democratic Republic 178 0.01 21.5 1.5 20.0 428 0.03 Latvia 1,384 0.09 167.0 7.8 159.2 1,634 0.10 Lebanon 340 0.02 41.0 1.1 39.9 590 0.04 Lesotho 663 0.04 80.0 2.3 77.6 913 0.06 Liberia 463 0.03 55.9 2.6 53.3 713 0.04 Libya 7,840 0O.50 945.8 57.0 888.8 8,090 0.50 Lithuania 1,507 0.10 181.8 8.7 173.1 1,757 0.11 Luxembourg 1,652 0.11 199.3 9.8 189.5 1,902 0.12 Macedonia, former Yugoslav Republic of 427 0.03 51.5 3.2 48.3 677 0.04 Madagascar 1,422 0.09 171.5 8.1 163.5 1,672 0.10 Malawi 1,094 0.07 132.0 5.6 126.4 1,344 0.08 276 THE WORLD BANK ANNUAL REPORT 1999 Subscriptions Voting Power Percentage Amounts Number Percentage of Total Amounts subject of of Member Shares total amounts paid in to call',2 uotes total Malaysia 8,244 0.53% $ 994.5 $ 59.5 $ 935.0 8,494 0.53% Maldives 469 0.03 56,6 0.9 55.7 719 0.04 Mali 1,162 0.07 140.2 6.1 134.1 1,412 0.09 Malta 1,074 0.07 129.6 5.4 124.1 1,324 0.08 Marshall Islands 469 0.03 56.6 0.9 55.7 719 0.04 Mauritania 900 0.06 108.6 4.1 104.4 1,150 0.07 Mauritius 1,242 0.08 149.8 6.7 143.1 1,492 0.09 Mexico 18,804 1.21 2,268.4 139.0 2,129.4 19,054 1.19 Micronesia, Federated States of 479 0.03 57.8 1.0 56.8 729 0.05 Moldova 1,368 0.09 165.0 7.6 157.4 1,618 0.10 Mongolia 466 0.03 56.2 2.3 53.9 716 0,04 Morocco 4,973 0.32 599.9 34.8 565.1 5,223 0.33 Mozambique 930 0.06 112.2 4.8 107.4 1,180 0.07 Myanmar 2,484 0.16 299.7 16.1 283.6 2,734 0.17 Namibia 1,523 O.10 183.7 8.8 174.9 1,773 0.11 Nepal 968 0.06 116.8 4.6 112.1 1,218 0.08 Netherlands 35,503 2.28 4,282.9 264.8 4,018.1 35,753 2.23 New Zealand 7,236 0.46 872.9 51.9 821.0 7,486 0,47 Nicaragua 608 0.04 73.3 2.1 71.3 858 0.05 Niger 852 0.05 102.8 3.8 99.0 1,102 0.07 Nigeria 12,655 0.81 1,526.6 92.7 1,433.9 12,905 0.80 Norway 9,982 0.64 1,204.2 72.6 1,131.6 10,232 0.64 Oman 1,561 0.10 188.3 9.1 179.2 1,811 0.11 Pakistan 9,339 0.60 1,126.6 67.8 1,058.9 9,589 0.60 Palau, Republic of 16 1.9 0.2 1.8 266 0.02 Panama 385 0.02 46.4 3.2 43.2 635 0.04 Papua New Guinea 1,294 0.08 156.1 7.1 149.0 1,544 0.10 Paraguay 1,229 0.08 148.3 6.6 141.6 1,479 0,09 Peru 5,331 0.34 643.1 37.5 605.6 5,581 0.35 Philippines 6,844 0.44 825.6 48.9 776.7 7,094 0.44 Poland 10,908 0.70 1,315.9 79.6 1,236.3 11,158 0.69 Portugal 5,460 0.35 658.7 38.5 620.2 5,710 0.36 Qatar 1,096 0.07 132,2 9.0 123.3 1,346 0.08 Romania 4,011 0.26 483.9 30.5 453.4 4,261 0.27 Russian Federation 44,795 2.87 5,403.8 333.9 5,070,0 45,045 2.81 Rwanda 1,046 0.07 126.2 5.2 120.9 1,296 0.08 St. Kitts and Nevis 275 0.02 33.2 0.3 32.9 525 0.03 St. Lucia 552 0.04 66.6 1.5 65.1 802 0.05 St. Vincent and the Grenadines 278 0.02 33.5 0.3 33.2 528 0.03 Samoa 531 0.03 64.1 1.4 62.7 781 0.05 Sao Tome and Principe 495 0.03 59.7 1.1 58.6 745 0.05 Saudi Arabia 44,795 2.87 5,403.8 335.0 5,068.9 45,045 2.81 Senegal 2,072 0.13 250.0 13.0 237.0 2,322 0.14 Seychelles 263 0.02 31.7 0.2 31.6 513 0.03 Sierra Leone 718 0.05 86.6 3.0 83.6 968 0.06 Singapore 320 0.02 38.6 3.9 34.7 570 0.04 Slovak Republic 3,216 0.21 388.0 23.0 365.0 3,466 0.22 Slovenia 1,261 0.08 152.1 9.5 142.6 1,511 0.09 Solomon Islands 513 0.03 61.9 1.2 60.7 763 0.05 Somalia 552 0.04 66.6 3.3 63.3 802 0.05 IBRD FINANCIAL STATEMENTS 277 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER (Continued) June 30, 1999 Expressed in millions of U.S. dollars Subscriptions Voting Power Percentage Amounts Number Percentage of Total Amounts subject of of Member Shares total amounts paid inI to call',2 votes total South Africa 13,462 0.86% $ 1,624.0 $ 98.8 $ 1,525.2 13,712 0.85% Spain 23,686 1.52 2,857.4 175.6 2,681.7 23,936 1.49 Sri Lanka 3,817 0.24 460.5 26.1 434.3 4,067 0.25 Sudan 850 0.05 102.5 7.2 95.3 1,100 0.07 Suriname 412 0.03 49.7 2.0 47.7 662 0.04 Swaziland 440 0.03 53.1 2.0 51.1 690 0.04 Sweden 14,974 0.96 1,806.4 110.2 1,696.2 15,224 0.95 Switzerland 26,606 1.71 3,209.6 197.2 3,012.4 26,856 1.67 Syrian Arab Republic 2,202 0.14 265.6 14.0 251.7 2,452 0.15 Tajikistan 1,060 0.07 127.9 5.3 122.5 1,310 0.08 Tanzania 1,295 0.08 156.2 10.0 146.2 1,545 0.10 Thailand 6,349 0.41 765.9 45.2 720.7 6,599 0.41 Togo 1,105 0.07 133.3 5.7 127.6 1,355 0.08 Tonga 494 0.03 59.6 1.1 58.5 744 0.05 Trinidad and Tobago 2,664 0.17 321.4 17.6 303.7 2,914 0.18 Tunisia 719 0.05 86.7 5.7 81.1 969 0.06 Turkey 7,379 0.47 890.2 52.9 837.2 7,629 0.48 Turkmenistan 526 0.03 63.5 2.9 60.5 776 0.05 Uganda 617 0.04 74.4 4.4 70.1 867 0.05 Ukraine 10,908 0.70 1,315.9 79.3 1,236.6 11,158 0.69 United Arab Emirates 2,385 0.15 287.7 22.6 265.1 2,635 0.16 United Kingdom 69,397 4.45 8,371.7 539.5 7,832.2 69,647 4.34 United States 264,969 16.98 31,964.5 1,998.4 29,966.2 265,219 16.52 Uruguay 2,812 0.18 339.2 18.6 320.7 3,062 0.19 Uzbekistan 2,493 0.16 300.7 16.1 284.7 2,743 0.17 Vanuatu 586 0.04 70.7 1.8 68.9 836 0.05 Venezuela 20,361 1.30 2,456.2 150.8 2,305.5 20,611 1.28 Vietnam 968 0.06 116.8 8.1 108.7 1,218 0.08 Yemen, Republic of 2,212 0.14 266.8 14.0 252.8 2,462 0.15 Zambia 2,810 0.18 339.0 20.0 319.0 3,060 0.19 Zimbabwe 3,325 0.21 401.1 22.4 378.7 3,575 0.22 Total-June 30, 19992 _1,560,24 100.004% O $188,220 $ 11395 $176,825 1,60D,493 100.00% Total-June 30, 1998 1,545,457 100.00% $186,436 $112288 $175,148 1,590,707 NOTES l See Notes to Financial Statements-Note A. 2.May differ from the sum of individualfigures shown due to rounding. The Notes to Financial Statements are an integral part of these Statements. 278 THE WORLD BANK ANNUAL REPORT 1999 NOTES TO FINANCIAL STATEMENTS PURPOSE AND AFFILIATED ORGANIZATIONS the purpose of summarizing IBRD's financial position The International Bank for Reconstruction and Devel- and the results of its operations for the convenience cf opment (IBRD) is an international organization which its members and other interested parties. commenced operations in 1946. The principal pur- IBRD is an international organization which conducts pose of IBRD is to promote economic development in its operations in the currencies of all of its members. its member countries, primarily by providing loans IBRD's resources are derived from its capital, borrow- and related technical assistance for specific projects ings, and accumulated earnings in those various cur- and for programs of economic reform in developing rencies. IBRD has a number of general policies aimed member countries. The activities of IBRD are comple- at minimizing exchange rate risk in a multicurrency mented by those of three affiliated organizations, the environment. IBRD matches its borrowing obligations International Development Association (IDA), the in any one currency (after swaps) with assets in the International Finance Corporation (IFC), and the same currency, as prescribed by its Articles of Agree- Multilateral Investment Guarantee Agency (MIGA). ment, primarily by holding or lending the proceeds of IBRD, IDA, IFC, and MIGA are collectively known as its borrowings (after swaps) in the same currencies in the World Bank Group. Each of these other organiza- which they are borrowed. In addition, IBRD periodi- tions in the World Bank Group is legally and finan- cally undertakes currency conversions to more closely cially independent from IBRD, with separate assets match the currencies underlying its Retained Earnings and liabilities, and IBRD is not liable for their respec- with those of the outstanding loans. tive obligations. IDA's purpose is to promote eco- nomic development in the less developed areas of the Assets and liabilities are translated at market exchange world included in IDA's membership by providing rates in effect at the end of the period. Income and financing on concessionary terms. IFC's purpose is to expenses are translated at either the market exchange encourage the growth of productive private enter- rates in effect on the dates on which they are recog- prises in its member countries through loans and nized or at an average of the market exchange rates in equity investments in such enterprises without a effect during each month. Translation adjustments are member's guarantee. MIGA was established to charged or credited to Accumulated Other Compre- encourage the flow of investments for productive pur- hensive Income. poses among member countries and, in particular, to Valuation of Capital Stock: In the Articles of Agree- developing member countries by providing guarantees ment, the capital stock of IBRD is expressed in terrns against noncommercial risks for foreign investment in of "U.S. dollars of the weight and fineness in effect on its developing member countries. July 1, 1944" (1944 dollars). Following the abolition of gold as a common denominator of the monetary SUMMARY OF SIGNIICANT ACCOUNTING system and the repeal of the provision of the U.S. law AND RELATED PO ICIESANT ACCOUNTING defining the par value of the U.S. dollar in terms of gold, the pre-existing basis for translating 1944 dollars IBRD's financial statements are prepared in confor- into current dollars or into any other currency disap- mity with the accounting principles generally peared. The Executive Directors of IBRD have accepted in the United States and with International decided, until such time as the relevant provisions of Accounting Standards. the Articles of Agreement are amended, that the words "U.S. dollars of the weight and fineness in eff-ect The preparation of financial statements in conformity on July 1, 1944" in Article II, Section 2(a) of the Arti- with generally accepted accounting principles requires cles of Agreement of IBRD are interpreted to mean management to make estimates and assumptions that the Special Drawing Right (SDR) introduced by the affect the reported amounts of assets and liabilities International Monetary Fund, as the SDR was valued and disclosure of contingent assets and liabilities at the in terms of U.S. dollars immediately before the intro- date of the financial statements and the reported duction of the basket method of valuing the SDR on amounts of revenue and expenses during the reporting July 1, 1974, such value being $1 .20635 for one SDR. period. Actual results could differ from these esti- mates. Significant judgments have been used in the Maintenance of Value: Article II, Section 9 of the computation of estimated and fair values of loans and Articles of Agreement provides for maintenance of the borrowings, the determination of the adequacy of the value (MOV), at the time of subscription, of such Accumulated Provision for Loan Losses, the determi- restricted currencies (see Note A), requiring (1) the nation of net periodic pension income and the present member to make additional payments to IBRD in the value of benefit obligations. event that the par value of its currency is reduced or the foreign exchange value of its currency has, in the Certain reclassifications of the prior years' opinion of IBRD, depreciated to a significant extent in have been made to conform to the current year's pre- its territories and (2) IBRD to reimburse the member sentation. in the event that the par value of its currency is Translation of Currencies: IBRD's financial state- increased. ments are expressed in terms of U.S. dollars solely for IBRD FINANCIAL STATEMENTS 279 Since currencies no longer have par values, mainte- Board of Governors, consisting of one Governor nance of value amounts are determined by measuring appointed by each member, periodically approves the foreign exchange value of a member's currency transfers out of unallocated Net Income and Surplus against the standard of value of IBRD capital based on to various entities for development purposes consis- the 1974 SDR. Members are required to make pay- tent with IBRD's Articles of Agreement. ments to IBRD if their currencies depreciate signifi- cantly relative to the standard of value. Furthermore, Loans:bAl o pIBRD's loans are made to or guaranteed the Executive Directors have adopted a policy of by members, except loans to IFC. The majority of reimbursing members whose currencies appreciate IBRD's loans have repayment obligations based on significantly in terms of the standard of value, specific currencies. IBRD also offers multicurrency loans which have repayment obligations in various The net MOV amounts relating to restricted curren- currencies determined on the basis of a currency pool- cies out on loan, and amounts that have been reclassi- ing system. fied from receivables for those countries that have been in arrears for two years or more, are included in A r f i i a l Amounts to Maintain Value of Currency Holdings For terms are deferred and recognized over the life of the amounts on loan, these MOV amounts are shown as a loan as an adjustment of yield. However, incremental component of Equity since MOV becomes effective direct costs associated with originating loans are onl e as such currencies are repaid to IBRD. expensed as incurred as such amounts are considered immaterial. Retained Earnings: Retained Earnings consists of allo- It is IBRD's practice not to reschedule interest or prin- cated amounts (Special Reserve, General Reserve, Pension Reserve and Surplus) and unallocated Net cipal payments on its loans or participate in debt Income. rescheduling agreements with respect to its loans. In exceptional cases, however, such as when implemen- The Special Reserve consists of loan commissions set tation of a financed project has been delayed, the loan aside pursuant to Article IV, Section 6 of the Articles amortization schedule may be modified to avoid sub- of Agreement, which are to be held in liquid assets. stantial repayments prior to project completion. These assets may be used only for the purpose of Delays in receiving loan payments result in present meeting liabilities of IBRD on its borrowings and guar- value losses to IBRD since it does not charge fees or antees in the event of defaults on loans made, partici- additional interest on any overdue interest or loan pated in, or guaranteed by IBRD. The Special Reserve charges. These present value losses are equal to the assets are included under Investments held in the difference between the present value of payments for Trading portfolio, comprising obligations of the United interest and charges made according to the related States Government, its agencies, and other official loan's contractual terms and the present value of its entities. The allocation of such commissions to the expected future cash flows. Such present value losses Special Reserve was discontinued in 1964 with respect are considered in the determination of the Accumu- to subsequent loans and no further additions are being lated Provision for Loan Losses. IBRD has not written made to it. off any of its outstanding loans. The General Reserve consists of earnings from prior It is the policy of IBRD to place in nonaccrual status fiscal years which, in the judgment of the Executive all loans made to or guaranteed by a member of IBRD Directors, should be retained in IBRD's operations. if principal, interest, or other charges with respect to any such loan are overdue by more than six months, between actual funding of the Staff Retirement Plan unless IBRD management determines that the over- betweenactual funding of the Staff Retirement Pln due amount will be collected in the immediate future. (SRP) and the SRP's accounting income for the fiscal In ad , i years 1997 and 1998. This Pension Reserve would be In am btron, if development credits made by IDA to a reduced if in any future fiscal year pension accounting member governmont ara Ptleed by that member gov- expenses were tIo exceed the actual funding of the allonmdetorgrnedbvhtmmerov SRPe ernment will also be placed in nonaccrual status by SR*. IBRD. On the date a member's loans are placed in Surplus consists of earnings from prior fiscal years nonaccrual status, unpaid interest and other charges which are retained by IBRD until a further decision is accrued on loans outstanding to the member are made on their disposition or the conditions of transfer deducted from the income of the current period. for specified uses have been met. Interest and other charges on nonaccruing loans are included in income only to the extent that payments Unallocated Net Income consists of earnings in the have actually been received bv IBRD. If collectibility current fiscal year. Commencing in 1950, a portion or risk is considered to be particularly high at the time of all of the unallocated Net Income has been allocated arrears clearance, the member's loans may not auto- to the General Reserve after an assessment by the matically emerge from nonaccrual status, even though Executive Directors of IBRD's reserve needs. Upon the member's eligibility for new loans may have been recommendation by the Executive Directors, the 280 THE WORLD BANK ANNUAL REPORT 1999 restored. A decision on the restoration of accrual sta- and governmental buyers. IBRD issues short-term and tus is made on a case-by-case basis after a suitable medium- and long-term debt instruments denomi- period of payment performance has passed from the nated in various currencies with both fixed and adjust- time of arrears clearance. able interest rates. Borrowings are carried on the balance sheet at their par value (face value) adjusted IBRD determines the Accumulated Provision for Loan for any unamortized premiums or discounts. Issuance Losses based on an assessment of collectibility risk in costs assoiaed withua bond offering are deferred and the total loan and callable guarantees portfolio, includ- amortized over the period during which the related ing loans in nonaccrual status. The accumulated provi- indebtednes is outtad. Turnamortie balaned sion is periodically adjusted based on a review of the ofetedissuance costs is included in Other Assets on the prevailing circumstances. Adjustments to the accumu- balance sheet, and the issuance costs amortization is lated provision are recorded as a charge or addition to presentedeas a separate element under Borrowing income. In the context of determining the adequacy of Expenses on the income statement. Amortization of the Accumulated Provision for Loan Losses, IBRD discounts and premiums is included in Interest under considers the present value of expected cash flows rel- Borrowing Expenses on the income statement. ative to the contractual cash flows for loans. IBRD uses derivatives in its borrowing and liability Investmnents: Investment securities are classified based management activities to create synthetic debt instru- Securities which management has the intention and ments to take advantage of cost saving opportunities Securt1eswh1chmanaementhas he mtnt1o and across capital markets and lower its funding costs, to ability to hold until maturity are included in the Held- delink the time at which its borrowing costs are fixed to-maturity portfolio and reported at amortized cost. from the timing of the actual market borrowings, a.nd Securities designated for other postretirement benefits to establish an appropriate match between the cur- are carried and reported at market value or at their ency an approprate mact ee n the and estiatedfai vales. he hangs inthevalus ofthe rency and interest rate characteristics of its assets and estimated fair values. The changes in the values of the liabilities. These instruments include currency and securities designated for other postretirement benefits interest rate swaps, swap spread-locks, foreign are included in the determination of net income. All exchange forwards, exchange-traded futures and other investment securities are held in a Trading port- options. These derivatives are used to modify the folio and classified as an element of liquidity in the interest rate and/or currency characteristics of the bor- Statement of Cash Flows due to their nature and rowing portfolio and are linked to the related borrow- IBRD's policies governing the level and use of such ings at inception and remain so throughout the terms investments. Investment securities and related finan- of their contracts. The interest component of these cial instruments held in IBRD's Trading portfolio are derivatives is recognized as an adjustment to the bor- carried and reported at market value. Unrealized gains rowing cost over the life of the derivative contract and and losses for investment securities and related finan- inclue iIerest unde orringtExe on the , 1 . 1 1 1 . 1 , 1. r 1. m~icluded in Interest under Borrowing Expenses on the cial instruments held in the Trading portfolio are income statement. Upon termination, the change in included in income. Derivative instruments are used in the derivative's marke liquidity management to take advantage of profitable ment to the carrying valuef ishrecorded as an adb st- trading opportunities and as a proxy for cash secuni- ing and recognized as an adjustment of the borroing ties. These instruments include short-term, over-the- cost over the remaining life of the borrowing. In counter foreign exchange forwards, currency swaps, instances where the underlying borrowing is prepaid, cross-currency interest rate swaps, interest rate swaps, the change in the associated derivative's market value and exchange-traded futures and options on fixed is recognized immediately as an adjustment to the cost income instruments. These derivatives are carried at of the underlying borrowing instrument and accord- market value. From time to time, IBRD enters into frwr cotat fr th sal or puchs of inet ingly in the determination of net income. Currency forward contracts for the sale or purchase of invest- swap payables and receivables are recorded on a his- ment securities; these transactions are recorded at the torical cost basis and are separate items on the balance time of commitment. sheet. The notional principal on interest rate swaps is Securities Purchased Under Resale Agreements and treated as an off-balance sheet item. Securities Sold Under Repurchase Agreements: Secu- Fair Value Disclosures: Financial instruments for- rities purchased under resale agreements and securities which market quotations are available have been val- sold under repurchase agreements are recorded at his- ued at the prevailing market value. Financial instru- torical cost. IBRD takes possession of securities pur- ments for which market quotations are not readily chased under resale agreements, monitors the fair available have been valued using methodologies and value of the securities and, if necessary, requires addi- assumptions that necessarily require the use of subjec- tional collateral. tive judgments. Accordingly, the actual value at which Borrowings: To ensure funds are available for lending such financial instruments could be exchanged in a and liquidity purposes, IBRD borrows in the world- current transaction or whether they are actually wide capital markets offering its securities to private exchangeable is not determinable. IBRD FINANC;AL STATEMENTS 281 Accounting and Reporting Developments NOTE A-CAPITAL STOCK, RESTRICTED CUR- Adoption of New Accounting Standards. In fiscal year RENCIES, MAINTENANCE OF VALUE, AND 1999, IBRD adopted Statements of Financial MEMBERSHIP Accounting Standards (SFAS) issued by the Financial Capital Stock: At June 30, 1999, IBRD's capital com- Accounting Standards Board (FASB) and International prised 1,581,724 (1,581,724-June 30, 1998) autho- Accounting Standards (IAS) issued by the Interna- rized shares, of which 1,560,243 (1,545,457-June tional Accounting Standards Committee (IASC) as 30, 1998) shares had been subscribed. Each share has follows: a par value of 0.1 million 1974 SDRs, valued at the SFAS No. 130 "Reporting ComprehensiveIncrate of $1.20635 per 1974 SDR. Of the subscribed SeAS No. 130 "Reportg Comprehensive Income capital, $11,395 million ($11,288 million-June 30, (see Note K); 1998) has been paid in, and the remaining $176,825 SFAS No. 131, "Disclosures about Segments of an million ($175,148 million-June 30, 1998) is subject enterprise and Related Information" and IAS 14 to call only when required to meet the obligations of (revised) "Segment Reporting" (see Note J); IBRD created by borrowing or guaranteeing loans. SFAS No. 132, "Employers' Disclosures about Pen- Restricted Currencies: A portion of capital subscrip- sions and Other Postretirement Benefits" and IAS 19 tions paid in to IBRD has been paid in the local cur- (revised) "Employee Benefits" (see Note I), and rencies of the members. These amounts, referred to as restricted currencies, are usable by IBRD in its lending lAS 1 (revised) "Presentation of Financial Statements". operations only with the consent of the respective Prior year amounts have been provided or reclassified members, and for administrative expenses. as required. Adoption of these standards required Maintenance of Value: Of the total amount of $453 new disclosures only and did not impact IBRD's million ($554 million-June 30, 1998) included in results of operations or financial position. Amounts to Maintain Value of Currency Holdings, Recent Accounting Pronouncements. In June 1998 which has been deducted from equity, $87 million the FASB issued SFAS No. 133, "Accounting for ($86 million-June 30, 1998) represents MOV Derivative Instruments and Hedging Activities". This receivables for countries that have amounts in arrears statement establishes accounting and reporting stan- for twvo years or more. IBRD still considers these dards for derivative instruments, including certain MOV receivables in arrears as obligations due from derivative instruments embedded in other contracts the members concerned, The remaining $366 million and for hedging activities. It requires a company to ($468 million-June 30, 1998) represents net MOV recognize all derivatives as either assets or liabilities in amounts relating to restricted currencies out on loan the balance sheet and to measure those instruments at that become payable under the same terms as other fair value. This standard was effective for fiscal vears MOV obligations only after such currencies are repaid beginning after June 15, 1999; however, the FASB has to IBRD. delayed the effective date for one year, to fiscal years Membership: In February 1993 IBRD's Executive beginning after June 15, 2000 by issuing SFAS No. Directors decided that the former Socialist Federal 137, "Accounting for Derivative Instruments and Republic of Yugoslavia (SFRY) had ceased to be a Hedging Activities-Deferral of the Effective Date of member of IBRD and that the Republic of Bosnia and FASB Statement No. 133-an amendment of FASB Herzegovina (now called Bosnia and Herzegovina), Statement No. 133." In addition, in December 1998, the Republic of Croatia, the former Yugoslav Republic the IASC issued IAS 39 "Financial Instruments: Rec- of Macedonia, the Republic of Slovenia and the Fed- ognition and Measurement". This standard also eral Republic of Yugoslavia (Serbia and Montenegro) requires that all financial assets and liabilities, includ- (FRY) are authorized to succeed to the SFRY's mem- ing derivatives, be included on the balance sheet and is bership when certain requirements are met, including effective for fiscal years beginning on or after January entering into a final agreement with IBRD on IBRD's 1, 2001. Since these standards significantly change the loans made to or guaranteed by the SFRY which the accounting treatment for derivative instruments and particular successor Republic would assume. Four of hedging activities, IBRD is in the process of evaluating the five successor Republics-Bosnia and Herzegov- the potential impact of these standards on its financial ina, Croatia, Slovenia and the former Yugoslav Repub- position and results of operations. lic of Macedonia-have become members of IBRD. The paid-in portion of the SFRY's subscribed capital allocated to the FRY is included under Payments on Account of Pending Subscriptions until the require- ments of succession are met. 282 THE WORLD BANK ANNUAL REPORT 1999 NOTE B-INVESTMENTS ernment of a country, a multilateral organization or As part of its overall portfolio management strategy, any other official entity with a minimum credit rating of AA. For asset-backed securities, IBRD may only IBRD invests in government and agency obligations, ines in seuiiswt AAceiaig time deposits, asset-backed securities, repurchase agreements, securities loans, resale agreements and With respect to futures and forwards, IBRD generally related financial instruments with off-balance sheet closes out most open positions in futures contracts risk including futures, forward contracts, currency prior to maturity. Therefore, cash receipts or pay- swaps, cross-currency interest rate swaps, interest rate ments are mostly limited to the change in market swaps, options and short sales. value of the futures contracts. Futures contracts gen- For govemment and agency obligations, IBRD may erally entail daily settlement of the net cash margin. only invest in obligations issued or unconditionally For options, IBRD only invests in exchange-traded guaranteed by governments of countries with a mini- options. The initial price of an option contract is mum credit rating of AA; however, if such obligations equal to the premium paid by the purchaser and is sig- are denominated in the home currency of the issuer, nificantly less than the contract or notional amount. no rating is required. IBRD may only invest in obliga- IBRD does not write uncovered option contracts. tions issued by an agency or instrumentality of a gov- IBRD FINANCIAL STATEMENTS 283 Liquid Portfolio: A summary of IBRD's position in trading and other liquid portfolio instruments at June 30, 1999 and June 30, 1998 is as follows: In millions of U.S. dollars equivalent Other All Euroa Japanese yen U.S. dollars currencies currencies 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 Trading: Government and agency obligations: Carryingvalue 1,593 1,894 4,406 4,560 1,344 1,540 64 113 7,407 8,107 Average balance during fiscalyear 1,569 2,113 4,618 1,958 1618 2,564 294 84 8,099 6,719 Net gains (losses) for the fiscal year (39) (1) (19) (11) 13 38 (2) (45) 24 Average yield (%) 4.03 4.81 0.14 0.67 5.44 5.65 7.67 6.27 1.98 2.65 Average maturity (years) 1.31 3.20 1,62 1.44 1.31 2.62 1.23 2.53 1.54 2.09 Time deposits: Carryingvalue 3,071 2,920 1,119 1,677 14,397 7,998 1,216 1,052 19,803 13,647 Average balance during fiscal year 3,046; 2,502 1,772 2,841 11,439 7,717 1,363 842 17,620 13,902 Net gains (losses) for the fiscal year - - - - - - - - - - Average yield (%) 2.73 3.83 0.05 0.44 5.42 5.74 2.95 2.97 4.51 4.46 Average maturity (years) 0.18 0.11 0.11 0.15 0.04 0.09 0.20 0.15 0.08 0.11 Asset-backed securities: Carrying value - - - - 3,041 1,687 - - 3,041 1,687 Average balance during fiscal year - - - - 2,398 598 - - 2,398 598 Net gains (losses) for the fiscal year - - - (6) * - (6) Average yield (%) - - - 5.39 7,08 - 5.39 7.08 Average maturity (years) - - - - 6.21 7.91 - - 6.21 7.91 Options, futures and forwards:u Carrying value * * * * - * Average balance during fiscal year 1 1 (*3 * * (5) * (3) Net gains (losses) for the fiscal year (*3 (1) * (3) 1 (29) 1 1 (32) Total Trading Investments** Carrying value 4,664 4,814 5,525 6,237 18,782 11,225 1,280 1,165 30,251b 23,441 Average balance during fiscalyear 4,615 4,616 6,390 4,800 15,456 10,879 1,657 921 28,118 21,216 Net gains (losses) for the fiscal year' (39) (2) (19) (14) 8 9 * (1) (so)b (8) Repurchase agreements & Securities loans: Carrying value - (329) - - (102) (339) - (194) (102) (862) Average balance during fiscal year [26) (173) - (2) (272) (391) (12) (89) (310) (655) Average cost (/) - 3.39 - - 4.91 5.68 - 7.34 4.91 5.18 Average maturity (years) - 0.05 - - * 0.02 - 0.03 * 0.03 Resale agreements: Carrying value - 294 - - 6 - - 173 6 467 Average balance during fiscalyear 39 209 - 1 265 852 11 64 315 1,126 Average yield (%) - 3.25 - - 4.10 - - 7.27 4.10 4.74 Average maturity (years) - 0.06 - - * - - 0.03 0.05 284 THE WORLD BANK ANNUAL REPORT 1999 In millions of U.S. dollars equivalent Other All Euroa Japanese yen U.S. dollars currencies currencies 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 Short sales:d Carryingvalue - (99) - - (46) - - (52) (46) (151) Average balance during fiscal year (*) (4) - - (1) (2) (M) (1) (1) (7) Currency swaps receivable: Carrying value - 49 - 144 5,087 5,451 - - 5,087 5,644 Average balance during fiscal year 3 5 10 45 5,017 5,206 26 5 5,056 5,261 Average yield (%/) - 3.43 - 0.47 5.02 5.62 - - 5.02 5.47 Average maturity (years) - 0.41 - 0.01 0.19 0.15 - - 0.19 0.15 Currency swaps payable: Carrying value (2,942) (1,998) (1,002) (2,302) - (148) (990) (977) (4,934) (5,425) Average balance during fiscal year (2,413) (1,678) (1,485) (2,688) (31) (13) (1,135) 246 (5,064) (4,133) Average cost (%) 2.70 3.92 0.05 0.45 - 5.63 2.56 2.79 2.14 2.28 Average maturity (years) 0.18 0.15 0.16 0.16 - 0.01 0.25 0.16 0.19 0.15 Cross-currency interest rate swaps receivable:e Carrying value - - 245 - 6,088 4,935 - - 6,333 4,935 Average balance during fiscal year - - 38 - 5,863 2,922 - - 5,901 2,922 Net gains (losses) for the fiscal year' - - (2) - 5 2 - - 3 2 Average yield (%) - - 0.48 - 5.12 5.75 - - 4.94 5.75 Average maturity (years) - - 1.68 - 1.53 2.16 - - 1.54 2.16 Cross-currency interest rate swaps payable:e Carrying value (1,593) (1,806) (4,651) (2,888) (238) - (67) (47) (6,549) (4,741) Average balance during fiscal year (1,590) (1,338) (4,234) (1,612) (112) - (283) (27) (6,219) (2,977) Net gains (losses) for the fiscal yearC 39 (5) 22 10 * - {*) t*) 61 5 Average cost (%) 4.03 5.12 0.19 0.67 5.07 - 7.67 7.56 1.37 2.41 Average maturity (years) 1.33 2.11 1.63 2.20 1.64 - 1.23 1.69 1.55 2.16 Net Interest rate swaps:e Carryingvalue - - - - (18) (16) - - (18) (16) Average balance during fiscal year - - - - (47) (2) - - (47) (2) Net gains (losses) for the fiscalyearC - - - - (18) (8) - - (18) (8) Average cost (%) - - - - (0.09) 0.04 - - (0.09) 0.04 Average maturity (years) - - - - 1.66 2.18 - - 1.66 2.18 a. Effective January 1, 1999, the euro was introduced. For reporting purposes, holdings in the eleven national currencies that are con- sidered sub-units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. b. Amount does not include $94 million of assets transferredfrom Assets Designatedfor Other Postretirement Benefits Plans to trading investments or $2 million of net gains on these investments. c. Included in Net gains (losses) on the Trading portfolio in the irncome statement. d. Included in Amounts Payable for Investment Securities Purchased on the balance sheet. e. Included in Currency Swaps-Trading on the balance sheet. Less than $0.5 million, 0.005 percent, or 0.05 years. May differ from the sum of individual figures due to rounding. IBRD FINANCIAL STATEMENTS 285 Held-to-maturity portfolio: In 1994 IBRD purchased effectively transformed the sterling liabilities into long-term sterling-denominated UK government secu- floating rate obligations. At the same time, the ster- rities for the purpose of matching the duration of sev- ling UK government securities in the held-to-maturity eral sterling-denominated long-term liabilities. IBRD portfolio were liquidated and the proceeds reinvested intended to hold these securities until maturity and in floating rate securities. use their proceeds to liquidate the sterling liabilities as At the time of their liquidation, the sterling UK gov- they became due. A h ieo hi iudto,teseln Kgv ernment securities in the held-to-maturity portfolio During the first quarter of fiscal year 1999, IBRD had fair and carrying values of $1,389 million and decided to take advantage of unusually favorable mar- $1,152 million, respectively. This resulted in a realized ket conditions by executing swap agreements that gain of $237 million upon liquidation. The carrying and fair values of investment securities in the Held-to-maturity portfolio at June 30, 1998 were as follows: In millions 1998 Average Gross Gross Canying yield unrealized unrealized Fair value (%) gains losses value Government and agency obligations $ 1,138 8.74 $175 $- $ 1,313 Time deposits 1,535 7.52 - - 1,535 Subtotal 2,673 8.04 175 - 2,848 Repurchase Agreements (1,374) 7.39 - (1,374) Total $ 1,299 8.73 $175 $- $ 1,474 Less than $0.5 million. At June 30, 1998, the Held-to-maturity portfolio comprised investments in pounds sterling only. The expected maturities of investment securities in the Held-to-maturity portfolio at June 30, 1998 are summa- rized below: In millions 1998 a Net Carrying Fair unrealized value value gains July 1, 1998 throughJune 30, 1999 $ 330 $ 331 $ 1 July 1, 1999 through June 30, 2003 90 99 9 July 1, 2003 through June 30, 2008 742 870 128 Thereafter 137 174 37 Total $1,299 $1,474 $175 a. Includes repurchase agreements. Assets designated for other postretirement benefits SFAS 106 "Employer's Accounting for Postretirement plans: At June 30, 1998, the balance sheet included Benefits Other than Pensions" (see Note 13. Accord- $ 1,456 million in assets related to the Retired Staff ingly, the assets and liabilities designated for the health Benefits Plan (RSBP). During the first quarter of fiscal and life insurance accounts were removed from the year 1999, the plan was modified so that some of the balance sheet and as a result, the assets on the balance assets designated for other postretirement benefits sheet that were designated for other postretirement met the requirements for plan assets as prescribed in benefits were reduced by $806 million. The $650 286 THE WORLD BANK ANNUAL REPORT 1999 million of assets that remained on the balance sheet and MIGA which represented their shares of the were then incorporated into Trading investments. remaining net assets previously designated to satisfy During the second quarter of fiscal year 1999, IBRD postretirement benefits. The following are the assel: paid a combined total of $132 million to IDA, IFC, values at June 30, 1998: In millions 1998 Carrying Average balance Net value during fiscal year Gains Equity Securities U.S. $ 474 $ 415 $ 77 Non-U.S. 587 550 36 Other Securities 395 378 21 Total $1,456 $1,343 $134_ NOTE C-LOANS, COFINANCING AND Single Currency Loans GUARANTEES Fixed rate loans: IBRD introduced fixed rate single Multicurrency Loans currency loans in 1995. The rates charged on fixed rate single currency loans are set on semi-annual rate Fizxed rate loans: On loans negotiated prior to July fiin dae for lonaonsdsusddrn h 1982, IBRD charges interest at fixed rates. fixing dates for loan amounts disbursed during the 1982, IBRD charges interest at fixed rates, preceding six-month period and remain fixed for such Adjustable rate loans: In 1982 IBRD mitigated its disbursed amounts until they are repaid. For the interest rate risk by moving from fixed rate to adjust- interim period from the date each disbursement is able rate lending. This rate, reset twice a year, is based made until its rate fixing date, interest accrues at a on IBRD's own cost of qualified borrowings plus a variable rate equal to the rate on LIBOR-based single lending spread', resulting in a pass-through of its aver- currency loans applicable for such interim period. The age borrowing costs to those members that benefit fixed lending rate comprises a base rate reflecting from IBRD loans. medium- to long-term market rates on the semi- annual rate-fixing date for loan amounts disbursed Single Currency Pool Loans during the preceding six-month period, plus a total In fiscal year 1997 IBRD offered its borrowers the spread consisting of (a) IBRD's funding cost margin opportunity to convert their existing multicurrency for these loans in the loan currency, (b) a market risk pool loans to single currency pool loans. These loans premium (intended to compensate IBRD for market were available in four currencies (U.S. dollar, Japanese risks incurred in funding these loans), and (c) a lend- yen, Deutsche mark, or Swiss franc). All adjustable ing spread. rate multicurrency pool loans that were converted to LIBOR-based loans: IBRD introduced LIBOR-based single currency pools carry the applicable pool's single currency loans in 1993. The rates charged on adjustable lending rate, reset semi-annually to reflect LIBOR-based single currency loans are a direct pass- the previous semester average cost of outstanding bor- through of IBRD's cost of funding for these loans, and rowings allocated to fund that pool weighted by the . . s shares of currencies in the pool, plus a spread of 50 are reset semi-annually. They comprise a base rate bhasis poins Ayfxdrt uicurrency n h pool, lsasra loans equal to the six-month reference interbank offeredi basis points. Any fixed rate multicurrency pool loans rate for the applicable currency on the rate reset date that were converted to single currency pools contin- and a total spread consisting of (a) IBRD's average ued to carry their fixed rate. funding cost margin for these loans and (b) IBRD's lending spread. a. Until July 31, 1998, the lending spread was 50 basis During fiscal year 1999 IBRD approved and disbursed points. However, during the first quarter of fiscal year a structural adjustment loan for $2,000 million with 1999, the lending spread charged by IBRD to its borrowers non-standard terms. This loan carries a 6-month was increased by 25 basis points to 75 basis points for LIBOR interest rate plus a fixed spread of 75 basis loans where the invitation to negotiate was issued on or points and a front-end fee, and is not eligible for waiv- after July 31, 1998. In addition, a front-end fee of 100 ers of interest or commitment charges. basis points, payable for each such loan at the time it During fiscal year 1998 IBRD also approved anddis- becomes effective, was introduced. bursed two LIBOR-based single currency loans with IBRD FINANCIAL STATEMENTS 287 non-standard terms. The first, an economic recon- Waivers of Loan Interest and Commitment struction loan in an amount of $3,000 million, carries Charges a six-month LIBOR interest rate plus a fixed spread of For payment periods beginning during the fiscal year 100 basis points. The second, a structural adjustment ended June 30, 1999, an interest waiver of five basis loan in an amount of $2,000 million, carries a six- points on disbursed and outstanding loans to eligible month LIBOR interest rate plus a fixed spread of 75 borrowers was in effect, except that for new loans basis points. Both loans have front-end fees. Neither where the invitation to negotiate was issued on or loan is eligible for waivers of interest or commitment after July 31, 1998, which carry a 75 basis points lend- charges. ing spread, the interest waiver was 25 basis points. A During the second quar-ter of fiscal year 1999, IBRD waiver of 25 basis points was in effect for the fiscal established a new lending instrument, the Special years ended June 30, 1998 and June 30, 1997. For the Structural Adjustment Loan (SSAL), in order to fiscal year ended June 30, 1999, the combined effect respond to the needs of borrowers experiencing signif- of these waivers was to reduce Net Income by $102 icant economic difficulties from recent financial mar- million ($241 million-June 30, 1998, $259 million- ket crises throughout the world. SSAL terms include June 30, 1997). a six-month U.S. dollar LIBOR equivalent interest rate A one-year commitment charge waiver of 50 basis plus a minimum fixed spread, currently set at 400 points was in effect on undisbursed loans to all bor- basis points, but which may vary over time for new rowers for all payment periods commencing in the fis- loans depending on IBRD's overall risk-bearing capac- cal year ending June 30, 1999. A similar waiver of 50 ity and market conditions. These loans have a matu- basis points was in effect for the fiscal years ended rity of five years with a three-year grace period, a June 30, 1998 and June 30, 1997. For the fiscal year front-end fee of one percent of the principal amount ended June 30, 1999, the effect of the commitment payable on effectiveness, and are not eligible for waiv- charge waiver was to reduce Net Income by $229 mil- ers of interest or commitment charges. lion ($211 million-June 30, 1998, $226 million- June 30, 1997). 288 THE WORLD BANK ANNUAL REPORT 1999 A summary of IBRD's outstanding loans by currency and product at June 30, 1999 and June 30, 1998 follows: In millions of U.S. dollars equivalent 1999 Multicurrency loansa Single currency poolsb Single currency loans Total loans Weighted Weighted Weighted Average Weighted Currencyl average average average maturity average Rate Type Amount rate (%/6)C Amount rate (%)c Amount rate (%)c (years) Amount rate (%)c Eurod Fixed $ 786 8.81 $ 18 10.83 $ 360 5.30 5.63 $ 1,164 7.76 Adjustable 11,815 6.04 5,067 6.45 719 2.92 6.60 17,601 6.03 Japanese yen Fixed 661 8.85 - - - - - 661 8.85 Adjustable 11,756 6.04 74 5.42 132 0.33 8.62 11,962 5.97 Swiss francs Fixed 362 7.98 - - - - - 362 7.98 Adjustable 914 6.05 - - 3 1.27 4.61 917 6.03 U.S. dollars Fixed 774 8.46 149 10.54 8,759 6.45 5.85 9,682 6.67 Adjustable 11,949 6.06 35,385 7.97 26,727 5.70 7.26 74,061 6.84 Others Fixed 28 9.84 - - - - - 28 9.84 Adjustable 790 6.04 - - - - - 790 6.04 Loans outstanding Fixed 2,611 8.61 167 10.58 9,119 6.41 5.84 11,897 6.95 Adjustable 37,224 6.05 40,526 7.78 27,581 5.60 7.24 105,331 6.60 Total $39,835 6.21 $40 693 7.79 $36,700 5.80 6.90 117,228 6.63 Less accumulated provision for loan losses 3,560 Loans outstanding net of accumulated provision $113,668 a. See footnote a. in table of outstanding loans at June 30, 1998 on following page. b. See footnote b. in table of outstanding loans at June 30, 1998 on following page. c. See footnote c. in table of outstanding loans at June 30, 1998 on followingpage. d. Effective January 1, 1999, the euro was introduced. For reporting purposes, amounts in the eleven national currencies that are considered sub-units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. IBRD FINANCIAL STATEMENTS 289 In millions of U.S. dollars equivalent 1998 Multicurrency loansa Single currency poolsb Single currency loans Total loans Weighted Weighted Weighted Average Weighted Currencyl average average average maturity average Rate Type Amount rate (%of Amount rate (%)C Amount rate (%)c (years) Amount rate (%)f Eurod Fixed S 1,322 8.76 $ 13 11.42 $ 195 6.09 6.07 $ 1,530 8.44 Adjustable 19,724 6.36 1,792 7.04 422 3.87 8.08 21,938 6.37 Japanese yen Fixed 910 8.85 - - - - - 910 8.85 Adjustable 15,802 6.36 - - 61 0.86 6.94 15,863 6.34 Swiss francs Fixed 586 7.96 - - - - - 586 7.96 Adjustable 1,450 6.36 - - - - - 1,450 6.36 U.S. dollars Fixed 1,068 8.56 228 9.93 4,374 6.82 6.06 5,670 7.27 Adjustable 18,510 6.37 23,625 8.37 15,649 6.10 8.24 57,784 7.11 Others Fixed 27 9.64 - - - - - 27 9.64 Adjustable 818 6.36 - - - - - 818 6.36 Loans outstanding Fixed 3,913 8.61 241 10.01 4,569 6.79 6.06 8,723 7.70 Adjustable 56,304 6.36 25,417 8.28 16,132 6.03 8.23 97,853 6.80 Total $60,217 6.51 _$25 8.29 $20,701 6.20 7.75 106,576 6.88 Less accumulated provision for loan losses 3,240 Loans outstanding net of accumulated provision $103,336 a. Average Maturity - Multicurrency loans. IBRD maintains a targeted currency composition in its multicurrency loans. The present target ratio is one U.S. dollarfor every 125 Japanese yen and one euro. These three major currencies comprise at least 90% of the multicurrency loans' U.S. dollar equivalent value, with the remainder in other currencies. This ratio was changed in January 1999 as a result of the introduction of the euro. The composition of the multicurrency loans is affected by the selection of currencies for disbursements on those loans and by the currencies selected for the billing of the principal repayments. Along with the selection of disbursement currencies, IBRD manages the selection of repayment currencies to maintain the alignment of the multicurrency loans' composition with the target ratio. The selection of currencies for repayment billing by IBRD precludes the determination of average maturity information for multicurrency loans by individual currency. Accordingly, IBRD only discloses the maturity periods for its multicurrency loans on a combined U.S. dollars equivalent basis. b. Average Maturity - Single Currency Pools. Each single currency pool reflected the composition of the multicurrency pool at incep- tion, but at June 30, 1999 all of the Single Currency Pools had reached a level of at least 90% in the designated currency. The cur- rency composition of these single currency pools is affected by IBRD's management of the selection of repayment currencies to the extent non-designated currencies remaining in these pools are selected for repayment. This varying selection of currencies for repay- ment precludes the determination of average maturity information for the single currency pools loans by individual currencies. Accordingly, IBRD only discloses the maturity periods for its single currency pool loans on a combined U. S. dollar equivalent basis. c. Excludes effects of any waivers of loan interest. d. Effective January 1, 1999, the euro was introduced. For reporting purposes, amounts in the eleven national currencies that are con- sidered sub-units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. 290 THE WORLD BANK ANNUAL REPORT 1999 The maturity structure of IBRD's loans at June 30, 1999 and June 30, 1998 is as follows: In millions 1999 Multicurrency loans Single currency pools Single currency loans All loans Rate Period type: Fixed Adjustable Fixed Adjustable Fixed Adjustable Fixed Adjustable Total July 1, 1999 through June 30, 2000 $1,452 $ 4,283 $ 97 $ 4,823 $ 178 $ 395 $ 1,727 S 9,501 $ 11,228 July 1, 2000 through June 30, 2004 1,041 15,072 70 17,496 3,660 8,543 4,771 41,111 45,882 July 1, 2004 through June 30, 2009 117 13,546 - 14,307 4,623 12,495 4,740 40,348 45,088 Thereafter 1 4,323 - 3,900 658 6,148 659 14,371 15,030 Loans outstanding $2,611 $37,224 $167 $40,526 $9,119 $27,581 $11,897 $105,331 -$117228 In millions 1998 Multicurrency loans Single currency pools Sinzgle currency loans All loans Rate Period type: Fixed Adjustable Fixed Adjustable Fixed Adjustable Fixed Adjustable Total July 1, 1998 through June30, 1999 $1,854 $ 6,090 $149 $ 2,547 $ 42 $ 133 $2,045 $ 8,770 $ 10,815 July 1, 1999 through June 30, 2003 1,876 22,298 92 10,108 1,721 2,577 3,689 34,983 38,672 July 1, 2003 through June 30, 2008 180 20,421 - 9,280 2,518 9,182 2,698 38,883 41,581 Thereafter 3 7,495 - 3,482 288 4,240 291 15,217 15,508 Loans outstanding $3,913 $56,304 $241 $2417 $16,132 $8,723 $97,853 $06576 Estimated Value of Loans plus a 50 basis point lending spread. The estimated All of IBRD's loans are made to or guaranteed by value of adjustable rate multicurrency loans and single countries that are members of IBRD, except for those currency pools is based on the relationship of the fair loans made to IFC. IBRD does not currently sell its value to the carrying value of the underlying qualiiied loans, nor is there a market of loans comparable to borrowings, since the interest rate for such loans is those made by IBRD. based on the interest rate of the qualified borrowings. Multicurrency loans and Single Currency Pools: The Single Currency Loans: The estimated value of single estimated value of fixed rate loans negotiated prior to currency loans has been based on discounted future July 1982 has been based on discounted future cash cash flows using the rate at which IBRD could make flows using the rate at which IBRD could undertake similar loans of comparable maturities at June 30, borrowings of comparable maturities at June 30, 1999 1999. IBRD FINANCIAL STATEMENTS 291 The following table reflects the carrying and estimated values of the loan portfolio based on current borrowing rates net of the Accumulated Provision for Loan Losses at June 30, 1999 and June 30, 1998: In millions 1999 1998 Carrying Estimated Carrving Estimated value value value value Multicurrency loans Fixed $ 2,611 S 2,763 $ 3,913 $ 4,286 Adjustable 37,224 39,940 56,304 60,915 Single currency pools Fixed 167 174 241 261 Adjustable 40,526 43,646 25,417 27,861 Single currency loans Fixed 9,119 8,873 4,569 4,746 Adjustable a 27,581 27,547 16,132 16,530 Total loans Fixed 11,897 11,810 8,723 9,293 Adjustable 105,331 111,133 97,853 105,306 117,228 122,943 106,576 114,599 Less accumulated provision for loan losses 3,560 3,560 3,240 3,240 Loans outstanding net of accumulated provision $113,668 $119,383 $103,336 $111,359 a. Amount includes carrying value of $9,035 million ($5,000 million-June 30, 1998) and estimated value of $9,024 million ($5,000 million-June 30, 1998) for non-standard SCLs. Cofinancing and Guarantees Overdue Amounts IBRD has taken direct participations in, or provided At June 30, 1999, no loans payable to IBRD other partial guarantees of, loans syndicated by other finan- than those referred to in the following paragraphs cial institutions for projects or programs also financed were overdue by more than three months. by IBRD through regular loans. IBRD also has pro- At June 30, 1999, the loans made to or guaranteed by vided partial guarantees of securities issued by an c X entity eligible for IBRD loans. IBRD's partial guaran- cerin ber outstand of FRY w i on tees of bond issues are included in the gubarantees gate pincip alance outstanding of $2,053 million amount mentioned below. IBRD's direct participa- ($2,044 million-June 30, 1998), of which $o1,249 tion in sydcae lon ar inlue in th reported. .. million ($1,142 million-June 30, 1998) was overdue, loan balances. were in nonaccrual status. At such date, overdue inter- est and other charges in respect of these loans totaled Guarantees of loan principal of $1,973 million at June $ 1,011 million ($948 million-June 30, 1998). If 30, 1999 ($2,047 million-June 30, 1998) were not these loans had not been in nonaccrual status, income included in reported loan balances. At June 30, 1999, from loans for the fiscal year ended June 30, 1999 $466 million of these guarantees were subject to call would have been higher by $55 million ($84 million- ($371 million-June 30, 1998). June 30, 1998, $146 million-June 30, 1997). 292 THE WORLD BANK ANNUAL REPORT 1999 A summary of countries with loans or guarantees in nonaccrual status follows: In mi1ons 1999 Principal Principal and Nonaccrua Borrower outstanding charges overdue since With overdues Congo, Democratic Republic of $ 82 $ 100 November 1993 Congo, Republic of 68 39 November 1997 Iraq 41 69 December 1990 Liberia 133 276 June 1987 Sudan 6 6 January 1994 Syrian Arab Republic 50 180a February 1987 Yugoslavia, Federal Republic of (Serbia/ Montenegro) 1,107 1,590 September 1992 Total 1,487 2,260 Without overdues Bosnia and Herzegovina 566 - September 1992 Total $2,053 $2,260 a. Represents interest and charges overdue. During fiscal year 1998 the Syrian Arab Republic and In June 1996 the accumulated arrears on loans to the IBRD entered into an agreement covering, among former SFRY assumed by Bosnia and Herzegovina other things, the application of payments by Syria of were cleared through three new consolidation loans its overdue principal, interest, and charges. Under this extended by IBRD. These new loans consolidated all agreement, Syria paid the overdue principal to IBRD outstanding principal and overdue interest on the in one payment of $263 million on September 2,1997 loans assumed by Bosnia and Herzegovina. This and has been making monthly payments to IBRD resulted in an increase in loans outstanding of $168 since then. million and the deferral of the recognition of the In connection with the cessation of the membership of related interest income. the SFRY discussed in Note A, in February 1993 IBRD The average recorded investment in nonaccruing loans reached an agreement with the FRY for the apportion- during the fiscal year ended June 30, 1999 was $2,084 ment and service of debt due to IBRD on loans made million ($2,138 million-June 30, 1998, $2,430 mil- to or guaranteed by the SFRY and assumed by the lion-June 30, 1997). FRY, which confirmed a February 1992 interim agree- During the fiscal year ended June 30, 1999, no loans ment between the SFRY (then consisting Of thev Republics o sn and herzeovina Mc .e came out of non-accrual status. During the fiscal year Menegricsof aosnd ia and . iBR peTaidnin , amo ended June 30, 1998, Sierra Leone paid off all its Motner and Seba an IBR petiig among arrears and, as a result, its loans came out of nonac- other things, to such loans. As of the date hereof, no arrar san,sa debt-service payments have been received by IBRD crual status. from the FRY. IBRD FINANCIAL STATEMENTS 293 Accumulated Provision for Loan Losses strated good policy performance over an extended IBRD has never suffered a loss on any of its loans, with period to bring their debt burdens to sustainable lev- the exception of losses resulting from the difference els. IBRD has taken the situation of these countries between the discounted present value of expected into account in its review of the adequacy of the payments for interest and charges according to the Accumulated Provision for Loan Losses. related loan's contractual terms and the actual cash Fifth Dimension Program flows. Certain borrowers have found it difficult to make timely payments for protracted periods, result- Under IDA's Fifth Dimension program established in ing in their loans being placed in nonaccrual status. September 1988, a portion of principal repayments to Several borrowers have emerged from nonaccrual sta- IDA are allocated on an annual basis to provide sup- tus after a period of time by bringing up-to-date all plementarv IDA credits to IDA-eligible countries that principal payments and all overdue service payments, are no longer able to borrow on IBRD terms, but have including interest and other charges. In an attempt to outstanding IBRD loans approved prior to September recognize the risk inherent in these and any other 1988 and have in place an IDA-supported structural potential overdue payments, IBRD maintains an accu- adjustment program. Such supplementary IDA credits mulated provision for loan losses. Of the Accumu- are allocated to countries that meet specified condi- lated Provision for Loan Losses of $3,560 million tions, in proportion to each country's interest pay- ($3,240 million-June 30, 1998), $700 million is ments due that year on its pre-September 1988 IBRD attributable to the nonaccruing loan portfolio at June loans. To be eligible for such IDA supplemental cred- 30, 1999 ($1,000 million-June 30, 1998). its, a member country must meet IDA's eligibility cri- teria for lending, must be ineligible for IBRD lending Changes to the Accumulated Provision for Loan and must not have had an IBRD loan approved within Losses for the fiscal years ended June 30, 1999, June the last twelve months. To receive a supplemental 30, 1998 and June 30, 1997 are summarized below: credit from the program, a member country cannot be more than 60 days overdue on its debt-service pay- In millions ments to IBRD or IDA. At June 30, 1999, IDA had 1999 1998 1997 approved credits of $1,623 million ($1,590 million- June 30, 1998) under this program from inception, of Balance, beginning of which $1,604 million ($1,531 million-June 30, the fiscal year $3,240 $3,210 $3,340 19983 had been disbursed to the eligible countries. Provision for loan losses 246 251 63 Translation adjustment 74 (221) (193) NOTE D-BORROWINGS Balance, end of the Providing liquidity and minimizing the cost of funds fiscal year $3,560 $3,240 $3,210 are key objectives to IBRD's overall borrowing strat- _ _ _ _ __ egy. IBRD uses swaps in its borrowing strategy to lower the overall cost of its borrowings for those IBRD has enosd utiaeaiimembers who benefit from IBRD loans. IBRD under- addressing the debt problems of a group of countries takes swap transactions with a list of authorized coun- identified as heavilv indebted poor countries (HIPCs) terparties. Credit limits have been established for identied thas theavil indebted poortsofth countries HC each counterparty. Swaps include currency swaps, to esure that the reform efforts of these countriesswaps forard interest rate swaps and will not be put at risk by unsustainable external debt states. s burdens. Under this initiative, creditors are to provide svvaptions. enhanced debt relief for those countries that demon- 294 THE WORLD BANK ANNUAL REPORT 1999 A summary of IBRD's borrowings portfolio at June 30, 1999 and June 30, 1998 follows: Medium- and Long-term Borrowings and Swaps at June 30, 1999 In millions of U.S. dollars equivalent Currency Interest rate Direct borrowings swap agreementsa swap agreements Net currency obligations Wgtd. Wgtd. Notional Wgtd. 4Wgtd. avg. Average Amount avg. Average amount avg. Average Amount avg. Average Currency/ cost maturity payable cost maturity payable cost maturity payable cost maturityb Rate type Amount (%) (years) (receivable) (%) (years) (receivable) (%) (years) (receivable) (%) (years) Euroc Fixed $ 19,054 6.85 5.39 $ 3,550 7.70 1.80 $ 3,445 7.20 3.23 $ 26,049 7.01 4.62 (15,106) 6.91 5.47 (2,838) 5.56 2.95 (17,944) 6.70 5.07 Adjustable 6,840 7.00 9.89 7,172 2.87 2.58 2,867 2.66 2.90 16,879 4.51 5.60 (7,720) 6.36 9.11 (3,463) 3.06 3.22 (11,183) 5.34 7.29 Japanese yen Fixed 15,119 4.97 4.16 63 5.15 2.43 2,811 1.01 1.88 17,993 4.35 3.80 (8,894) 5.14 4.03 (2,792) 2.72 5.34 (11,686) 4.56 4.34 Adjustable 1,969 3.42 8.09 2,780 (0.11) 1.31 2,792 0.14 5.34 7,541 0.90 4,57 (1,629) 0.97 9.90 (2,811) 0.15 1.88 (4,440) 0.45 4.82 U. S. dollars Fixed 42,239 6.45 5.61 16,431 9.15 3.60 10,149 6.18 7.88 68,819 7.05 5.46 (1,802) 6.97 1.50 (32,292) 5.84 5.08 (34,094) 5.90 4.89 Adjustable 1,430 4.99 6.08 37,298 4.94 6.65 32,977 4.94 5.20 71,705 4.94 5.97 (7,062) 4.91 1.60 (10,862) 5.18 8.07 (17,924) 5.07 5.52 Others Fixed 23,283 7.50 5.06 1,641 5.66 1.49 416 7.08 2.30 25,340 7.37 4.78 (24,078) 7.38 4.50 (159) 6.66 7.26 (24,237) 7.38 4.52 Adjustable 355 6.51 1.42 417 0.01 2.23 159 4.82 7.26 931 3.31 2.78 (450) 7.07 3.44 (416) 1.25 2.30 (866) 4.27 2.89 Total Fixed 99,695 6.55 5.22 21,685 16,821 138,201 6.75 4.96 (49,880) (38,081) (87,961) 6.29 4.75 Adjustable 10,594 6.05 8.76 47,667 38,795 97,056 4.54 5.77 (16,861) (17,552) (34,413) 4.54 5.94 Principal at facevalue 110,289 6.50 5.56 2,611 (17) 112,883 5.88 Net unamor- tized premium 122 167 157 446 Total $110,411 6.50 5.56 $ 2,778 $ 140 $113,329 5.88 a. Currency swap agreements include cross-currency interest rate swaps. b. At June 30, 1999, the average repricing period of the net currency obligations for adjustable rate borrowings was three months. c. Effective January 1, 1999, the euro was introduced. For reportingpurposes, amounts in the eleven national currencies that are considered sub- units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. IBRD FINANCIAL STATEMENTS 295 Medium- and Long-term Borrowings and Swaps at June 30, 1998 In millions of U.S. dollars equivalent Currency Interest rate Direct borrowings swap agreementsa swap agreements Net currency obligations Wgtd. Wgtd. Notional Wgtd. Wgtd. avg. Average Amount avg. Average amount avg. Average Amount avg. Average Currency/ cost maturity payable cost maturity payable cost maturity payable cost maturityb Rate type Amount (%) (years) (receivable) (%) (years) (receivable) (%) (years) (receivable) (%Io) (years) Euro' Fixed $20,479 6.95 5.66 $ 3,763 7.34 2.25 $ 4,736 6.83 2.95 $ 28,978 6.98 4.78 (13,298) 7.25 5.83 (3,470) 5.45 3.79 (16,768) 6.88 5.40 Adjustable 5,305 5.80 7.49 8,375 3.64 2.31 3,651 3.59 3.72 17,331 4.29 4.19 (6,442) 5.26 6.18 (4,917) 3.68 2.94 (11,359) 4.58 4.78 Japanese yen Fixed 14,717 5.01 4.53 1,961 1.34 0.44 1,520 3.30 1.02 18,198 4.47 3.79 (5,625) 5.39 4.55 (3,083) 2.84 4.94 (8,708) 4.49 4.69 Adjustable 2,319 3.14 5.24 1,484 0.26 0.62 3,083 0.53 4.94 6,886 1.34 4.11 (899) 1.08 8.63 (1,520) 1.16 1.02 (2,419) 1.13 3.85 U. S. dollars Fixed 33,057 6.80 6.14 11,020 9.37 4.27 10,526 6.42 2.88 54,603 7.25 5.14 (3,096) 6.67 1.28 (22,183) 5.92 5.25 (25,279) 6.01 4.76 Adjustable 1,055 5.90 5.05 27,226 5.42 5.93 22,520 5.53 5.33 50,801 5.47 5.65 (5,885) 5.46 1.24 (10,863) 5.51 3.14 (16,748) 5.49 2.47 Others Fixed 19,587 7.90 4.39 2,108 5.53 2.01 423 7.07 2.11 22,118 7.66 4.12 (19,047) 7.51 3.56 (159) 6.43 8.27 (19,206) 7.50 3.60 Adjustable 223 9.68 1.58 424 0.29 3.24 159 5.26 8.27 806 3.87 3.77 (315) 9.02 9.52 (423) 1.51 2.11 (738) 4.71 5.27 Total Fixed 87,840 6.78 5.37 18,852 17,205 123,897 6.85 4.67 (41,066) (28,895) (69,961) 6.44 4.58 Adjustable 8,902 5.21 6.47 37,509 29,413 75,824 4.81 5.15 (13,541) (17,723) (31,264) 4.81 3.48 Principal at face value 96,742 6.63 5.47 1,754 - 98,496 6.22 Net unamor- tized premium 6 128 112 246 Total $96,748 6.63 5.47 $ 1,882 $ 112 $98,742 6.22 a. Currency swap agreements include cross-currency interest rate swaps. b. At June 30, 1998, the average repricing period of the net currency obligations for adjustable rate borrowings was three months. c. Effective January 1, 1999, the euro was introduced. For reporting purposes, amounts in the eleven national currencies that are con- sidered sub-units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. 296 THE WORLD BANK ANNUAL REPORT 1999 Short-term Borrowings and Swaps at June 30, 1999 and June 30, 1998 In millions of U.S. dollars equivalent 1999 1998 Interest Interest Currency rate Wgtd. Currency rate Wgtd. swap swap Net avg. swap swap Net avg. Currency/ Principal payable payable currency cost Principal payable payable currency cost Rate type outstanding (receivable) (receivable) obligationsa (%) outstanding (receivable) (receivable) obligations (%) Czech koruny Fixed $ - $ - - $ - - 335 $- $ - $ 335 14.45 (335) - (335) 14.45 Eurob Fixed - 281 - 281 4.71 - - - - - Adjustable - - - - - 42 319 - 361 2.82 (42) - (42) 0.78 Hong Kong dollars Fixed 451 - - 451 12.33 - - - - - (451) - (451) 12.33 Japanese yen Fixed - 12 - 12 1.83 - - - - (278) - (278) 5.29 Adjustable - - - - - - 25 - 25 0.09 New Zealand dollars Fixed - - - - 25 - - 25 7.94 (25) - (25) 7.94 Polish zlotys Fixed - - - - - 29 - - 29 20.12 (29) - (29) 20.12 U. S. dollars Fixed 3,606 289 - 3,895 5.31 3,985 - - 3,985 5.45 (332) - (332) 6.06 - (100) (100) 5.72 Adjustable 1,188 536 - 1,724 4.71 1,709 1,126 100 2,935 5.15 (333) - (333) 5.13 South African rand Fixed 83 - - 83 15.96 600 - - 600 13.98 (83) - (83) 15.96 (600) - (600) 13.98 Total Fixed 4,140 582 - 4,722 6.12 4,974 - - 4,974 7.19 (1,144) - (1,144) 9.06 (989) (100) (1,089) 13.39 Adjustable 1,188 536 - 1,724 4.71 1,751 1,470 100 3,321 4.85 (375) - (375) 4.64 Principal at face value 5,328 (26) - 5,302 5.02 6,725 106 - 6,831 5.20 Net unamortized premium - - 4 4 Total $5,328 $ (26) $- S 5,302 5.02 $6,729 $ 106 $ - $ 6,835 5.20 a. At June 30, 1999, the average repricingperiod ofthe net currency obligations for short-term borrowings was less than one monith (less than one month-June 30, 1998.) b. Effective January 1, 1999, the euro was introduced. For reporting purposes, amounts in the eleven national currencies that are considered sub- units of the euro have been aggregated with the euro and reported as euro in both the current and prior year. IBRD FINANCIAL STATEMENTS 297 The maturity structure of IBRD's Medium-and Long-term borrowings outstanding at June 30, 1999 and June 30, 1998 is as follows: In millions In millions Period 1999 Period 1998 July 1, 1999 through June 30, 2000 $ 17,900 July 1, 1998 through June 30, 1999 $ 8,573 July 1, 2000 through June 30, 2001 14,319 July 1,1999 through June 30, 2000 17,107 July 1, 2001 through June 30, 2002 14,682 July 1, 2000 through June 30, 2001 13,466 July 1, 2002 through June 30, 2003 15,000 July 1, 2001 through June 30, 2002 9,785 July 1, 2003 through June 30, 2004 8,644 July 1, 2002 through June 30, 2003 14,153 July 1, 2004 through June 30, 2009 25,016 July 1, 2003 through June 30, 2008 22,987 Thereafter 14,728 Thereafter 10,671 Total $110,289 Total $96,742 The following table reflects the carrying and estimated fair values of the borrowings portfolio at June 30, 1999 and June 30, 1998: In millions 1999 1998 Carrying Estimated Canying Estimated value fair value value fair value Short-term $ 5,328 $ 5,338 $ 6,729 S 6,793 Medium- and long-term 110,411 117,858 96,748 105,102 Swaps Currency Payable 70,467 73,736 57,755 60,073 Receivable (67,715) (72,371) (55,767) (58,911) Interest rate 140 458 112 (201) Total $118,631 $125,019 $105,577 $112,856 The estimated fair values are based on quoted market cies. In addition, IBRD establishes absolute limits on prices where such prices are available. Where no the share of outstanding loans to any individual bor- quoted market price is available, the fair value is esti- rower. The country credit risk is further managed by mated based on the cost at which IBRD could cur- financial incentives such as pricing loans using IBRD's rently undertake borrowings with similar terms and own cost of borrowing and partial interest charge remaining maturities, using the secondary market waivers conditioned on timely payment that give bor- yield curve. The fair value of swaps represents the esti- rowers self-interest in IBRD's continued strong inter- mated cost of replacing these contracts on that date. mediation capacity. Collectibility risk is covered by the Accumulated Provision for Loan Losses. IBRD also uses a simulation model to assess the adequacy of its NOTE E-CREDIT RISK equity including reserves in case a major borrower, or Country Credit Risk: This risk includes potential group of borrowers, stops servicing its loans for an losses arising from protracted arrears on payments extended period of time. from borrowers. IBRD manages country credit risk Commercial Credit Risk: For the purpose of risk man- through individual country exposure limits according agement, IBRD is party to a variety of financial instru- to creditworthiness. These exposure limits are tied to ments, certain of which involve elements of credit risk performance on macroeconomic and structural poli- in excess of the amount recorded on the balance sheet. 298 THE WORLD BANK ANNUAL REPORT 1999 Credit risk exposure represents the maximum poten- terparties. Credit risk is controlled through application tial accounting loss due to possible nonperformance of eligibility criteria and volume limits for transactions by obligors and counterparties under the terms of the with individual counterparties and through the use of contracts. Additionally, the nature of the instruments mark-to-market collateral arrangements for swap involve contract value and notional principal amounts transactions. IBRD may require collateral in the form that are not reflected in the basic financial statements. of cash or other approved liquid securities from ind.i- For both on- and off-balance sheet securities, IBRD vidual counterparties in order to mitigate its credit limits trading to a list of authorized dealers and coun- exposure. The contract value/notional amounts and credit risk exposure, as applicable, of these financial instruments at June 30, 1999 and June 30, 1998 are given below: In millions 1999 1998 INVESTMENTS - TRADING PORTFOLIO Options, futures and forwards * Long position $ 3,433 $ 6,205 * Short position 3,653 3,282 * Credit exposure due to potential nonperformance by counterparties 1 2 Currency Swaps * Credit exposure due to potential nonperformance by counterparties 182 255 Cross Currency Interest Rate Swaps - Credit exposure due to potential nonperformance by counterparties 72 15 Interest Rate Swaps * Notional principal 12,924 7,453 * Credit exposure due to potential nonperformance by counterparties 2 * BORROWING PORTFOLIO Currency swaps * Credit exposure due to potential nonperformance by counterparties 2,051 1,964 Interest rate swaps * Notional principal 55,633 46,718 * Credit exposure due to potential nonperformance by counterparties 731 1,043 Less than $0.5 million. IBRD FINANCIAL STATEMENTS 299 NOTE F-RETAINED EARNINGS, ALLOCA- $300 million. At June 30, 1999, $ 100 million ($ 100 TIONS AND TRANSFERS million-June 30, 1998) remained payable. Retained Earnings: Retained Earnings comprises the Transfer to Trust Fund for Gaza and West Bank: The following elements at June 30, 1999 and June 30, Board of Governors had approved aggregate transfers 1998: through June 30, 1998 to the Trust Fund for Gaza and West Bank, totaling $230 million. On July 13, 1998, .i milions the Board of Governors approved a transfer from Sur- plus, by way of grant, in the amount of $90 million to 1999 1998 the Trust Fund for Gaza and West Bank. At June 30, 1999, $53 million ($22 million-June 30, 1998) Special reserve $ 293 S 293 remained payable. General reserve 15,409 141,659 Transfers to the Heavily Indebted Poor Countries Debt Pension reserve 294 112 Initiative Trust Fund: At June 30, 1998, the Board of Surplus 195 426 Governors had approved aggregate transfers to the Unallocated net income 1,518 1,243 HIPC Debt Initiative Trust Fund totaling $750 million. On October 8, 1998, the Board of Governors approved Total $17,709 $16,733 a transfer to the HIPC Debt Initiative Trust Fund, by way of grant, of $100 million out of unallocated Net Income. At June 30, 1999, $100 million remained pay- On July 13, 1998, the Board of Governors approved a able. At June 30, 1998, there were no amounts pay- transfer from Surplus, by wav of grant, in the amount of able to the HIPC Debt Initiative Trust Fund. $90 million to the Trust Fund for Gaza and West Bank. Transfers to Multilateral Investment Guarantee On July 31, 1998, the Executive Directors allocated Agency: On April 6, 1998, the Board of Governors $750 million of the net income earned in the fiscal year approved a transfer from Surplus, by way of grant, in ended June 30, 1998 to the General Reserve and $182 the amount of $150 million to MIGA to be used as part million to the Pension Reserve, representing the differ- of MIGA's capital resources to strengthen its financial ence between actual funding of the Staff Retirement position. At June 30, 1999 and June 30, 1998, there Plan (SRP) and the SRP's accounting expenses for the were no amounts payable to MIGA. fiscal year 1998. This Pension Reserve would be reduced if, in any future fiscal year, pension accounting expenses were to exceed the actual funding of the SRP NOTE G-ADMINISTRATIS E EXPENSES AND On October 8, 1998, the Board of Governors approved the following transfers out of unallocated Net Income: In fiscal year 1995 the Executive Directors authorized an amount equivalent to $210 million in SDRs (valued expenditures for costs associated with planned staff at June 30, 1998) to IDA by way of grant, and a grant reductions. The cost of this program charged through of $100 million to the Heavily Indebted Poor Countries fiscal year 1997 was $112 million, of which $45 million Debt Initiative Trust Fund. In addition, the Board of was allocated to IDA. During fiscal year 1998 all Governors approved the transfer of S l4-2 million in remaining staff previously identified for separation SDRs (valued at June 30, 1998) to IDA from Surplus under this program began receiving severance pay- bv wav of grant. The total amount of these transfers ments. The total cost under this program was $87 mil- by IBRD to IDA (S352 million in SDRs valued at June lion. The difference of $25 million was taken back into 30, 1998) will be drawn down bv IDA after all other income as a reduction of administrative expenses, for resources availablc to IDA for the purposes of IDA's fiscal year 1998, of which $10 million had been allo- Eleventh Replenishment have been drawn down. cated to IDA as a reduction of the management fee charged to IDA. At June 30, 1999, $86 million ($82 Transfers to International Development Association: million-June 30, 1998, $64 million-June 30, 1997) The Board of Governors had approved aggregate trans- h been charged against the accrual of 887 million. fers through June 30, 1998 to IDA totaling $5,735 mil- hias arlncluded costs aciat wt job search lion~~~~ frmualctdNtInoe nOtbrS This accrual included costs associated with job search lion from unallocated Net Income. On October 8, assistance, training, outplacement consulting, pension 1998, the Board of Governors approved transfers to plaI contributions, medical insurance contributions and IDA, bv way of grant, of S352 million in an equivalent reat l amount in SDRs- $210 million from unallocated Net Income and $142 million from Surplus. At June 30, In March 1997 the Executive Directors approved a 1999, $354 million remained payable. At June 30, multivear program of institutional renewal to improve 1998, there were no amounts payable to IDA. IBRD's and IDA's business processes, products and ser- vices, strengthen their human resources through more Transfers to DebtoReducfion or Idaponly skilled and better trained staff, and achieve a higher Countries: The Board of Governors had approved level of development effectiveness. Implementation of aggregate transfers through June 30, 1998 to the Debt Reduction~~~~~~~~ Failt fo D-nyCunre oaigLIS program iS expected to result in costs associated Reduction Facility for IDA-Only Countries totaling with staff reductions during the fiscal years 1997 300 THE WORLD BANK ANNUAL REPORT 1999 through 1999. Through June 30, 1999, 475 staff had charge of $30 million, $11 million has been chargedto been identified for separation at a cumulative cost of IDA for the fiscal year ended June 30, 1999, consis- $78 million. Included in the total charge of $78 mil- tent with normal cost apportionment procedures lion are costs associated with outplacement consult- applied in the calculation of the management fee. ing, job search assistance, training, medical insurance The total number of IBRD employees at June 30 plan contributions and related tax allowances. Of the 1999 tas 7,859 (8,089-June 30, 1998, 8,020-June total cumulative charge of $78 million, $30 million 30 1997,0 has been charged to IDA. Of the total fiscal year 3 j Administrative Expenses for the fiscal years ended June 30, 1999, June 30, 1998, and June 30, 1997 are net of the following amounts: In millions 1999 1998 1997 Management fee charged to IDA $518 $474 $488 Amounts charged to reimbursable programs 116 104 108 Total reduction of Administrative Expenses $634 $578 $596 Amounts charged to reimbursable programs include the following: Charges allocated to IFC $ 17 $ 14 $ 21 Charges allocated to MIGA 1 1 I Contributions to special programs represent grants for which include the cofinancing of IBRD lending agricultural research, the control of onchocerciasis, projects, debt reduction operations, technical assis- and other developmental activities. tance for borrowers including feasibility studies and project preparation, global and regional programs and research and training programs. These funds are NOTE H-TRUST FUNDS placed in trust and are not included in the assets of IBRD, alone or jointly with IDA, administers on IBRD. The trust fund assets by executing agent at June behalf of donors, including members, their agencies 30, 1999 and June 30, 1998 are summarized and other entities, funds restricted for specific uses below: 1999 1998 Number Total fiduciary Number of Total fiduciary of trust assets trust fund assets fund (In millions) accounts (In millions) accounts IBRD executed $ 605 1,503 $ 401 1,223 Recipient executed 1,635 1,287 1,512 1,035 Total $2,240 2,790 $1,913 2,258 The responsibilities of IBRD under these arrange- NOTF I-PENSION AND OTHER POSTRETIRE- ments vary and range from services normally provided MENT BENEFITS under its own lending projects to full project imple- IBRD has a defined benefit Staff Retirement Plan mentation including procurement of goods and ser- (SRP) that covers substantially all of its staff. The SRP vices. During the fiscal year ended June 30, 1999, also covers substantially all the staff of IFC and MIGA. IBRD received $19 million ($14 million-June 30, In addition, IBRD provides other postretirement ben- 1998 and $15 million-June 30, 1997) as fees for efits for eligible active and retired staff through a administering trust funds. These fees have been Retired Staff Benefits Plan (RSBP) and a Post-Employ- recorded as a reduction of Administrative Expenses. ment Benefits Plan (PEBP). IBRD FINANCIAL STATEM0ENTS 301 During the fiscal year ended June 30, 1998, IBRD assets and liabilities designated on the balance sheet for reviewed the status of the RSBP and PEBP accounts other postretirement benefits were reduced by $806 and determined that the assets and liabilities did not million and $620 million, respectively. The $650 mil- qualify for off-balance sheet accounting. At June 30, lion of assets that remained on the balance sheet were 1998, the assets and liabilities were recorded on IBRD's incorporated into Trading investments. Liabilities of balance sheet, resulting in net income to IBRD of $113 $103 million for the PEBP shown on the balance sheet million, of which $56 million related to the cumulative represent pension benefits administered outside the effect of prior periods on retained earnings at June 30, SRP. 1997, and has been included in Effect of Accounting The difference between the RSBP assets and liabilities Change on the income statement. Tedfeec ewe h SPast n iblte represents a prepaid postretirement benefits cost. The During the first quarter of fiscal year 1999, the plan portion of this asset that is attributable to IBRD has was modified so that some of the assets designated for been included in Other Assets on the balance sheet. other postretirement benefits met the requirements for plan assets prescribed under SFAS 106 "Employer's The following table summarizes the benefit costs asso- Accounting for Postretirement Benefits Other than ciated with the SRP, RSBP, and PEBP for IBRD and Pensions". Accordingly, the plan assets and liabilities IDA: were removed from the balance sheet. As a result, the In millions SRP RSBP PEBP 1999 1998 1999 1998 1999 1998 Benefit Cost Service cost $ 186 $184 $ 25 $24 $ 5 $- Interest cost 324 353 36 37 7 6 Expected return on plan assets (738) (669) (65) - - - Amortization of prior service cost 7 7 - (2) - - Amortization of unrecognized net (loss) gain (175) (161) - 3 12 Amortization of Transition Asset (11) (11) -- Net periodic pension (income) cost $(407) $(297) $ (4) $59 $15 $18 The portion of the SRP income related to IBRD that related to IBRD that has been included in income for has been included in income for the fiscal year ended the fiscal year ended June 30, 1999 is $10 million ($50 June 30, 1999 is $255 million ($182 million -June 30, million-June 30, 1998). The balance has been 1998). The balance has been included as a payable to included as a receivable from IDA. IDA. The portion of the cost for the RSBP and PEBP 302 THE WORI.D BANK ANNUAL REPORT 1999 The following table summarizes the benefit obligations, plan assets, funded status and rate assumptions associated with the SRP, RSBP, and PEBP for the World Bank Group. In millions SRP RSBP PEBP 1999 1998 1999 1998 1999 1998 Benefit Obligation Beginning of year $ 5,890 $ 5,516 $627 $ 739 $ 90 $ 75 Service cost 217 213 28 28 6 -- Interest cost 378 406 40 55 8 5 Employee contributions 61 58 5 5 - -- Amendments - - - 18 - -- Benefits paid (231) (206) (18) (17) (5) (5) Actuarial (gain) loss 168 (97) (20) (201) 43 15 End of year 6,483 5,890 662 627 142 90 Fair value of plan assets Beginning of year 9,608 8,613 - - - -- Assets transfered to the Plan - - 806 - - -- Employee contributions 61 58 5 - - - Actual return on assets 788 1,143 53 - - -- Employer contributions - - - - - -- Benefits paid (231) (206) (18) - - -- End of year 10,226 9,608 846 - - -- Funded status Plan assets in excess of projected benefit obligation 3,743 3,718 184 (627) (142) (90) Unrecognized net gain from past experience differ- ent from that assumed and from changes in assumptions (2,713) (3,158) 6 - 39 Unrecognized prior service cost 50 58 - - - Remaining unrecognized net transition asset (52) (65) - - - -- Prepaid (accrued) pension cost $ 1,028 $ 553 $190 $(627) S(103) $(90) Of the $1,028 million prepaid SRP cost at June 30, Of the $190 million prepaid RSBP cost at June 30, 1999 ($553 million -June 30, 1998), $546 million 1999 (nil-June 30, 1998), $105 million was attribut- was attributable to IBRD ($295 million-June 30, able to IBRD and is included in Miscellaneous Assets 1998) and is included in Miscellaneous Assets on the on the balance sheet. The remainder has been attrib- balance sheet. The remainder has been attributed to uted to IDA, IFC and M1GA. IDA, IFC and MIGA. IBRD FINANCIAL STATEMENTS 303 Assumptions nomic conditions. Changes in these assumptions will The actuarial assumptions used are based on financial impact future benefit costs and obligations. The market interest rates, past experience, and manage- weighted-average assumptions used in determining ment's best estimate of future benefit changes and eco- expense and benefit obligations are as follows: In percent SRP RSBP PEBP 1999 1998 1999 1998 1999 1998 Discount rate 7.25 6.50 7.25 6.50 7.25 6.50 Expected return on plan assets 9 9 9 Rate of compensation increase 5.25-11.75 4.50-11.00 Health care growth rates at end of fiscal year 6.25 5.00 - to year 2011 and thereafter 5.25 4.50 a. The effect of projected conipensation levels was calculated based on a scale that provides for a decreasing rate of salary increase depending on age, beginning with 11. 75% (11. 0%-June 30, 1998) at age 20 and decreasing to 5.25% (4.5%-June 30, 1998) at age 64. The medical cost trend rate can significantly affect the percentage-point change in the assumed healthcare cost reported postretirement benefit costs and benefit obli- trend rate: gations. The following table shows the effects of a one- In millions One percentage point incrase One percentage point decrease Effect on total service and interest cost $ 16 $ (12) Effect on postretirement benefit obligation 128 (101) During the fiscal year ended June 30, 1998, health care determined that IBRD had only one reportable seg- cost trend rates were reduced after completing a five ment since IBRD does not manage its operations by years' experience study, reducing the accrued liability allocating resources based on a determination of the at June 30, 1998, from $808 million to $619 million. contribution to net income from individual borrowers. This change in the health care cost trend rate resulted In addition, given the nature of IBRD, the risk and in income of $104 million for IBRD, which has been return profiles are sufficiently similar among borrowers included in Effect of Accounting Change on the that IBRD does not differentiate between the nature of income statement. The balance was attributable to the products or services provided, the preparation pro- IDA, IFC, and MIGA. cess, or the method for providing the services among individual countries. NOTE J-SEGMENT REPORTING For fiscal year 1999, loans to two countries individually generated in excess of 10% of loan income. Loan In fiscal year 1999, IBRD adopted SFAS No. 131 "Dis- income from these two countries was $816 million and closures about Segments of an Enterprise and Related $815 million respectively. Information" and IAS 14 (revised) "Segment Report- ing". After evaluating IBRD's operations, management 304 THE WORLD BANK ANNUAL REPORT 1999 NOTE K-COMPREHENSIVE INCOME in the broader definition of comprehensive income. For During the first quarter of fiscal year 1999, IBRD IBRD, comprehensive income comprises currency adopted SFAS No. 130, "Reporting Comprehensive translation adjustments and net income. These items Income", which defines and establishes the standards are presented in the Statement of Comprehensive for reporting comprehensive income. Under SFAS No. Income. The following table presents the changes in 130 certain items which historically were not recog- Accumulated Other Comprehensive Income balances nized in the calculation of net income are now included for the years ended June 30, 1999,1998 and 1997: In millions Accumulated Other Comprehensive Income a 1999 1998 1997 Balance, beginning of the fiscal year $(960) $ 85 $ 1,056 Changes from period activity 323 (1,045) (97'I) Balance, end of the fiscal year $(637) $ (960) $ 85 a. The total accumulated other comprehensive income represents the cumulative translation adjustment. IBRD FINANCIAL STATEMENTS 305 REPORT OF INDEPENDENT ACCOUNTANTS Deoitle Touche Tohmalsu (International Firm) 555 12th Street NW Washington, DC President and Board of Governors International Bank for Reconstruction and Development We have audited the accompanying balance sheets of the International Bank for Reconstruction and Development as of June 30, 1999 and 1998, including the summary statement of loans and the statement of subscriptions to capital stock and voting power as of June 30, 1999, and the related statements of income, comprehensive income, changes in retained earnings, and cash flows for each of the two fiscal years in the period ended June 30, 1999. These financial statements are the responsibility of the International Bank for Reconstruction and Development's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of the International Bank for Reconstruction and Development for the fiscal year ended June 30, 1997 were audited by other auditors whose report, dated July 28, 1997, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards in the United States of America and International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the International Bank for Reconstruction and Development as of June 30, 1999 and 1998, and the results of its operations and its cash flows for each of the two fiscal years in the period ended June 30, 1999 in conformity with generally accepted accounting principles in the United States of America and International Accounting Standards. July 28, 1999 Beijing London Mexico City Moscow New York Paris Tokyo Toronto 306 THE WORLD BANK ANNUAL REPORT 1999 INTERNATIONAL DEVELOPMENT ASSOCIATION SPECIAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1 999 Statement of Sources and Applications of Development Resources 308 Statement of Changes in Resources Used for Heavily Indebted Poor Countries Debt Initiative 310 Statement of Changes in Cumulative Translation Adjustment on Development Credits 310 Statement of Changes in Accumulated Surplus 311 Statement of Cash Flows 312 Summary Statement of Development Credits 313 Statement of Voting Power, and Subscriptions and Contributions 317 Notes to Special Purpose Financial Statements 321 Report of Independent Accountants on Special Purpose Financial Statements 333 307 STATEMENT OF SOURCES AND APPLICATIONS OF DEVELOPMENT RESOURCES June 30, 1999 and June 30, 1998 Expressed in millions of U.S. dollars 1999 1998 Applications of Development Resources NET RESOURCES AVAILABLE FOR DEVELOPMENT ACTIVITIES Cash and investments immediately available for disbursement Due from banks $ 71 $ 30 Investments-Notes B and F 3,517 5,777 Net receivable (payable) on investment securities transactions-Notes B and F 9 (1,513) 3,597 4,294 Cash and investments not immediately available for disbursement Due from banks - 3 Investments-Notes B and F 4,689 3,975 Net payable on investment securities transactions-Notes B and F - (93) 4,689 3,885 Restricted cash and notes 56 57 Nonnegotiable, noninterest-bearing demand obligations on account of member subscriptions and contributions 11,767 12,891 Receivable from the International Bank for Reconstruction and Development-Note D 354 Other resources, net 484 415 Total net resources available for development activities 20,947 21,542 RESOURCES USED FOR DEVELOPMENT CREDITS (see Summary Statement of Development Credits, Notes E, F and I) Total development credits 103,262 97,908 Less undisbursed balance 20,104 19,892 Total resources used for development credits 83,158 7 8,016 Total applications of development resources $104,105 $99,558 308 THE WORLD BANK ANNUAL REPORT 1999 1999 1998 Sources of Development Resources Member subscriptions and contributions (see Statement of Voting Power, and Subscriptions and Contributions, Note C) Unrestricted $ 95,463 $94,257 Restricted 286 286 Subscriptions and contributions committed 95,749 94,543 Less subscriptions and contributions receivable and unamortized discounts on contributions-Note C 165 2,500 Subscriptions and contributions paid in 95,584 92,043 Deferred amounts receivable to maintain value of currency holdings (231) (230) Payments on account of pending membership-Note C 7 7 95,360 91,820 Transfers from the International Bank for Reconstruction and Development-Note D 6,082 5,728 Heavily Indebted Poor Countries Debt Initiative (see Statement of Changes in Resources Used for Heavily Indebted Poor Countries Debt Initiative, Note I) (322) (1E;8) Cumulative translation adjustment on development credits (see Statement of Changes in Cumulative Translation Adjustment on Development Credits) (194) (391) Accumulated surplus (see Statement of Changes in Accumulated Surplus) 3,179 2,569 Total sources of development resources $104,105 $99,558 The Notes to Special Purpose Financial Statements are an integral part of these Statements. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 309 STATEMENT OF CHANGES IN RESOURCES USED FOR HEAVILY INDEBTED POOR COUNTRIES DEBT INITIATIVE For the fiscal years ended June 30, 1999 and June 30, 1998 Expressed in millions of U.S. dollars Balance at beginning Additions during the Balance at end of the of the fiscal year fiscal year fiscal year 1999 1998 1999 1998 1999 1998 Resources funding development grants-Note I Transfers from the International Bank for Reconstruction and Development $ 75 $- $ - $ 75 $ 75 $ 75 Eleventh Replenishment donor funds - 154 - 154 _ 75 154 75 229 Write-down on sale of development credits-Note I 93 _ 93 93 93 Total resources used $168 $- $154 $168 S322 5168 STATEMENT OF CHANGES IN CUMULATIVE TRANSLATION ADJUSTMENT ON DEVELOPMENT CREDITS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in millions of U.S. dollars 1999 1998 1997 Cumulative translation adjustment at beginning of the fiscal year $(391) $ 2,373 $ 4,291 Translation adjustment for the fiscal year 197 (2,764) (1,918) Cumulative translation adjustment at end of the fiscal year $(194) $ (3912373 The Notes to Special Purpose Financial Statements are an integral part of these Statements. 310 THE WORLD BANK ANNUAL REPORT 1999 STATEMENT OF CHANGES IN ACCUMULATED SURPLUS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in millions of U.S. dollars 1999 1998 1997 Income from development credits-Note E $ 588 $ 555 $ 537 Income from investments, net-Note B 462 527 450 Net management fee charged by the International Bank for Reconstruction and Development- Notes G and H (368) (222) (416) Amortization of discount on subscription advances (2) (6) (13) Changes from operations 680 854 558 Effect of exchange rate changes on accumulated surplus (70) (283) (3503 Net changes 610 571 208 Balance at beginning of the fiscal year 2,569 1,998 1,790 Balance at end of the fiscal year $3,179 $2 569 $1 998 The Notes to Special Purpose Financial Statements are an integral part of these Statements. IDA SPECIAL PURPOSE FINANC:IAL STATEMENTS 311 STATEMENT OF CASH FLOWS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in miillions of U.S. dollars 1999 1998 1997 Cash flows from development activities Development credit disbursements $(5,843) $(5,432) $(5,836) Development credit principal repayments 898 682 615 (4,945) (4,750) (5,221) Development grant disbursements (149) (74) Net cash used in development activities (5,094) (4,824) (5,221) Cash flows from member subscriptions and contributions 4,071 3,821 5,115 Cash flows from the International Bank for Reconstruction and Development transfers - 298 599 Cash flows from operating activities Changes from operations 680 854 558 Less income from restricted investments 208 241 175 Net assets previously designated for other postretirement benefits received from the International Bank for Reconstruction and Development 76 - Adjustments to reconcile changes from operations to net cash provided by operating activities Amortization of discount on subscription advances 2 6 13 Net changes in other development resources (141) (268) _ Net cash provided by operating activities 409 351 396 Effect of exchange rate changes on cash and investments immediately available for disbursement (83) (140) (277) Net (decrease) increase in cash and investments immediately available for disbursement (697) (494) 612 Cash and investments immediately available for disbursement at beginning of the fiscal year 4,294 4,788 4,176 Cash and investments immediately available for disbursement at end of the fiscal year $ 3,597 $ 4,294 $ 4,78_ 8 Supplemental disclosure Increase (decrease) in ending balances of development credits outstanding resulting from exchange rate fluctuations $ 197 $(2,764) $(1,918) Write-down on sale of development credits - (93) The Notes to Special Purpose Financial Statements are an integral part of these Statements. 312 THE WORLD BANK ANNIAL REPORT 1999 SUMMARY STATEMENT OF DEVELOPMENT CREDITS June30, 1999 Expressed in millions of U.S. dollars Percentage of Total Undisbursed Development development development development credits credits Borrower or guarantor credits credits1 outstanding outstanding Afghanistan $ 75 $ - $ 75 0.09% Albania 463 209 254 0.31 Angola 248 57 191 0.23 Armenia 479 190 289 0.35 Azerbaijan 343 157 186 0.22 Bangladesh 7,516 1,319 6,197 7.45 Benin 677 126 551 0.66 Bhutan 39 16 23 0.03 Bolivia 1,450 412 1,038 1.25 Bosnia and Herzegovina 444 197 247 0.30 Botswana 10 - 10 0.01 Burkina Faso 799 108 691 0.83 Burundi 607 21 586 0.71 Cambodia 265 107 158 0.19 Cameroon 930 205 725 0.87 Cape Verde 141 70 71 0.08 Central African Republic 416 20 396 0.48 Chad 545 65 480 0.58 Chile 8 - 8 0.01 China 9,670 1,221 8,449 10.16 Colombia 9 - 9 0.01 Comoros 94 23 71 0.09 Congo, Democratic Republic of 1,212 - 1,212 1.46 Congo, Republic of 168 5 163 0.20 Costa Rica 2 - 2 * Cote d'Ivoire 1,646 342 1,304 1.57 Djibouti 69 21 48 0.06 Dominica 17 3 14 0.02 Dominican Republic 15 - 15 0.02 Ecuador 23 - 23 0.03 Egypt, Arab Republic of 1,686 450 1,236 1.49 El Salvador 17 - 17 0.02 Equatorial Guinea 50 1 49 0.06 Eritrea 146 99 47 0.06 Ethiopia 2,627 954 1,673 2.01 Gambia, The 218 52 166 0.20 Georgia 487 193 294 0.35 Ghana 3,521 634 2,887 3.47 Grenada 10 2 8 0.01 Guinea 1,094 117 977 1.18 Guinea-Bissau 251 30 221 0.27 Guyana 268 42 226 0.2-7 Haiti 531 40 491 0.59 Honduras 917 232 685 0.82 India 22,362 3,975 18,387 22.11 Indonesia 817 134 683 0.82 Jordan 61 - 61 0.07 IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 313 SUMMARY STATEMENT OF DEVELOPMENT CREDITS (continued) June 30, 1999 Expressed in millions of U.S. dollars Percentage of Total Undisbursed Development development development developnent credits credits Borrower or guarantor credits credits1 outstanding outstanding Kenya $2,515 $372 $2,143 2.58% Korea, Republic of 70 - 70 0.08 Kyrgyz Republic 429 150 279 0.34 Lao People's Democratic Republic 536 147 389 0.47 Lesotho 248 68 180 0.22 Liberia 105 3 102 0.12 Macedonia, former Yugoslav Republic of 274 100 174 0.21 Madagascar 1,614 399 1,215 1.46 Malawi 1,820 307 1,513 1.82 Maldives 45 1 44 0.05 Mali 1,114 125 989 1.19 Mauritania 515 120 395 0.48 Mauritius 14 - 14 0.02 Moldova 143 94 49 0.06 Mongolia 167 47 120 0.14 Morocco 29 - 29 0.03 Mozambique 1,641 432 1,209 1.45 Myanmar 721 - 721 0.87 Nepal 1,332 222 1,110 1.34 Nicaragua 718 164 553 0.67 Niger 828 163 665 0.80 Nigeria 674 91 583 0.70 Pakistan 4,696 963 3,733 4.49 Papua New Guinea 97 - 97 0.12 Paraguay 30 - 30 0.04 Philippines 257 56 201 0.24 Rwanda 765 105 660 0.79 St. Kitts and Nevis 1 - 1 * St. Lucia 16 5 11 0.01 St. Vincent and the Grenadines 9 2 7 0.01 Samoa 57 14 43 0.05 Sao Tomen and Principe 64 5 59 0.07 Senegal 1,696 436 1,260 1.52 Sierra Leone 375 88 287 0.35 Solomon Islands 45 14 31 0.04 Somalia 403 1 402 0.48 Sri Lanka 1,921 326 1,595 1.92 Sudan 1,188 - 1,188 1.43 Swaziland 5 - 5 0.01 Syrian Arab Republic 32 - 32 0.04 Tajikistan 175 82 93 0.11 Tanzania 2,972 515 2,457 2.95 Thailand 95 - 95 0.11 Togo 721 116 605 0.73 Tonga 4 - 4 0.01 Tunisia 42 - 42 0.05 Turkey 109 - 109 0.13 Uganda 2,364 459 1,905 2.29 314 THE WORLD BANK ANNUAL REPORT 1999 Percentage of Total Undisbursed Development development development development credits credits Borrowver or guaran2tor credits credits1 outstanding outstanding Vanuatu $ 16 $ 2 $ 14 0.02% Vietnam 1,931 1,054 877 1.05 Yemen, Republic of 1,443 383 1,060 1.27 Zambia 2,048 448 1,600 1.92 Zimbabwe 600 171 429 0.52 Subtotal members 5 103,175 20,099 83,076 99.90 West African Development Bank 3 D0 - 50 0.06 Caribbean Development Bank 3 31 5 26 0.03 Subtotal regional development banks 81 5 76 0.09 Other 4 6 - 6 0.01 Total-June 30, 19995 $103,262 $20,104 $83,158 100.00% Total-June 30, 1998 $ 97,908 $19,892 $78,016 Indicates amounizts less thani $0.05 million or less tlzan 0.005 per cenit. N'OTES 1. Of the undisbursed balance at June 30, 1999, IDA has entered inito irrevocable commitnents to disburse S213 million (S3616 million-Jime 30, 1998) 2. These development credits arefor the benefit of Benzin, Birkina Faso, C6te dIuoire, Mali. Niger, Senegal, and Togo. 3. These development credits are for the benefit of Grenada and territories of the United Kingdom (Associn ted States and Depenzdencies) inZ the Caribbean region. 4. Represents development credits made at a time when the authorities on? 7aiitan represented China in IDA (prior to May 1 5, 1980). 5. Mfay clifferfroin the sutn of individnal figures shownt becanse of roua,ling. The Notes to Special Purpose Financial Statements are an integral part of these Statements. IDA SPECIAI. PERPOSE FINAi\N(CIAI STATEMENTS 313 SUMMARY STATEMENT OF DEVELOPMENT CREDITS (continued) June30, 1999 Expressed in millions of U.S. dollars Maturity Structure of Development Credits Outstanding Period July 1, 1999 through June 30, 2000 $ 1,230 July 1, 2000 through June 30, 2001 1,207 July 1, 2001 through June 30, 2002 1,404 July 1, 2002 through June 30, 2003 1,597 July 1, 2003 through June 30, 2004 1,783 July 1, 2004 through June 30, 2009 11,836 July 1, 2009 through June 30, 2014 15,119 July 1, 2014 through June 30, 2019 16,757 July 1,2019 through June 30, 2024 15,405 July 1, 2024 through June 30, 2029 10,942 July 1,2029 through June 30, 2034 5,034 July 1, 2034 through June 30, 2039 844 Total $83,158 The Notes to Special Purpose Financial Statements are an integral part of these Statements. 316 THE WORLD BANK ANNUAI. REPORT 1999 STATEMENT OF VOTING POWER, AND SUBSCRIPTIONS AND CONTRIBUTIONS June30, 1999 Expressed in millions of U.S. dollars Subscriptions and Number of Percentage of contributions Member votes total committed Part I Members Australia 154,956 1.33% $ 1,626.7 Austria 77,992 0.67 798.0 Belgium 138,249 1.18 1,585.9 Canada 355,926 3.05 4,222.9 Denmark 114,469 0.98 1,283.1 Finland 72,613 0.62 621.1 France 497,297 4.26 6,633.5 Germany 820,259 7.03 11,006.9 Iceland 26,428 0.23 18.3 Ireland 33,266 0.28 114.2 Italy 355,274 3.04 3,957.9 Japan 1,252,764 10.73 20,722.7 Kuwait 75,954 0.65 685.1 Luxembourg 28,383 0.24 53.8 Netherlands 258,398 2.21 3,577.1 New Zealand 33,028 0.28 112.9 Norway 117,216 1.00 1,190.4 Portugal 27,513 0.24 33.4 Russian Federation 31,593 0.27 161.3 South Africa 32,404 0.28 85.4 Spain 63,889 0.55 461.3 Sweden 234,233 2.01 2,473.1 Switzerland 2 109,886 0.94 1,118.3 United Arab Emirates 1,367 0.01 5.6 United Kingdom 582,514 4.99 7,056.9 United States 1,745,962 14.96 23,431.5 Subtotal Part I Members 3 7,241,833 62.04 93,037.1 Part H Members Afghanistan 13,557 0.12 1.3 Albania 26,089 0.22 0.3 Algeria 27,720 0.24 5.1 Angola 45,662 0.39 7.9 Argentina 127,638 1.09 65.7 Armenia 2,717 0.02 0.5 Azerbaijan 644 0.01 0.9 Bangladesh 67,075 0.57 7.2 Belize 1,788 0.02 0.2 Benin 7,476 0.06 0.6 Bhutan 14,179 0.12 0.1 Bolivia 32,911 0.28 1.4 Bosnia and Herzegovina 19,571 0.17 2.3 Botswana 25,866 0.22 1.1 Brazil 191,652 1.64 192.0 Burkina Faso 21,166 0.18 0.7 Burundi 23,006 0.20 1.0 IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 317 STATEMENT OF VOTING POWER, AND SUBSCRIPTIONS AND CONTRIBUTIONS (conitinued) June 30, 1999 Expressed in ini/liions of U.S. dollars Subscriptions and Nu\umber of Percentage of contributions MWember votes total commnitted Cambodia 10,322 0o09% S 1.3 Cameroon 19,954 (.17 1.3 Cape Verde 4,916 0.04 0.1 Central African Republic 10,920 0.09 0.6 Chad 10,990 0.09 0.6 Chile 31,782 0.27 4.5 China 219,696 1.88 40.1 Colombia 43,080 0.37 22.5 Comoros 13,141 0.11 0.1 Congo, Democratic Republic of 12,164 0.10 0.6 Congo, Republic of 8,385 0.07 3.8 Costa Rica 12,480 0.11 0.3 Cote d Ivoire 20,369 0.17 1.3 Croatia 32,475 (.28 5.5 Cyprus 3(,572 0.26 1.1 Czech Republic 44,907 0.38 27.1 Djibouti 532 0.2 Dominica 16,7/49 0.14 0.1 Dominican Republic 2 7,80 0.24 0.6 Ecuador 23,80( 0.20 0.8 Egypt, Arab Republic of 1,228 0.44 6.8 El Salvador 6,244 0.05 0.4 Equatorial G-uinea 6,167 0.05 0.4 Eritrea 25 295 0.22 (0.1 Ethiopia 23 053 0.20 0.7 Fiji 9,423 0.08 0.7 Gabon 2,093 0.02 0.6 Gambia, The 16,744 0.14 0.4 Georgia 22,523 0.19 0.9 Ghana 23,831 0.20 3.0 Greece 49,154 0.42 27.9 Grenada 20,596 0.18 0.1 Guatemala 25,634 0.22 0.5 Guinea 28,087 O.24 1.3 Guinea-Bissati 6,790 0.06 0.2 Guyana 18. 160 0.16 1.0 Haiti 19,479 0.17 1.0 Honduras 21, 70 0.18 0.4 Hungary 87,931 0.75 36.4 India 367 ,195 3.15 55.0 Indonesia 105,307 0.9( 14.3 Iran, Islamic Republic of 15,455 0.13 -.7 Iraq 9,407 0.(8 1.0 318 Tt-Ne YV'OR.LD BANK ANNUIAi Rl.PORI 1999 Subscriptions and Number of Percentage of contributions Member 2 votes total committed Israel 38,253 0.33% $ 3.6 Jordan 24,865 0.21 0.4 Kazakhstan 806 0.01 1.8 Kenya 29,995 0.26 2.2 Kiribati 6,477 0.06 0.1 Korea, Republic of 49,028 0.42 202.8 Kyrgyz Republic 2,700 0.02 0.5 Lao People's Democratic Republic 11,723 0.10 0.6 Latvia 614 0.01 0.7 Lebanon 8,562 0.07 0.6 Lesotho 25,849 0.22 0.2 Liberia 22,467 0.19 1.1 Libya 7,771 0.07 1.3 Macedonia, former Yugoslav Republic of 15,759 0.14 1.0 Madagascar 11,600 0.10 1.2 Malawi 28,748 0.25 1.0 Malaysia 44,457 0.38 3.5 Maldives 24,811 0.21 * Mali 24,808 0.21 1.2 Marshall Islands 4,902 0.04 * Mauritania 12,585 0.11 0.6 Mauritius 31,411 0.27 1.2 Mexico 87,783 0.75 127.0 Micronesia, Federated States of 18,424 0.16 * Moldova 612 0.01 0.7 Mongolia 24,389 0.21 0.3 Morocco 52,492 0.45 4.9 Mozambique 9,517 0.08 1.7 Myanmar 40,569 0.35 2.9 Nepal 28,345 0.24 0.7 Nicaragua 26,922 0.23 0.4 Niger 16,541 0.14 0.7 Nigeria 9,957 0.09 4.3 Oman 26,927 0.23 1.3 Pakistan 105,624 0.90 13.4 Palau, Republic of 504 * Panama 7,550 0.06 * Papua New Guinea 13,050 0.11 1.1 Paraguay 11,419 0.10 0.4 Peru 16,473 0.14 2.2 Philippines 16,583 0.14 6.4 Poland 270,192 2.31 53.9 Rwanda 17,067 0.15 1.0 St. Kitts and Nevis 5,082 0.04 0.2 St. Lucia 24,503 0.21 0.2 St. Vincent and the Grenadines 2,214 0.02 0.1 Samoa 13,061 0.11 0.1 Sao Tome and Principe 6,414 0.05 0.1 Saudi Arabia 412,982 3.54 2,083.2 Senegal 31,337 0.27 2.2 Sierra Leone 14,367 0.12 1.0 Slovak Republic 23,909 0.20 9.7 IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 319 STATEMENT OF VOTING POWER, AND SUBSCRIPTIONS AND CONTRIBUTIONS (continued) June 30, 1999 Expressed in millions of U.S. dollars Subscriptions and Number of Percentage of contributions Member votes total committed Slovenia 18,956 0-16% S 3.0 Solomon Islands 518 * 0.1 Somalia 10,506 0.09 1.0 Sri Lanka 48,488 0.42 4.0 Sudan 22,484 0.19 1.3 Swaziland 12,773 0.11 0.4 Syrian Arab Republic 7,651 0.07 1.2 Tajikistan 20,568 0.18 0.5 Tanzania 35,867 0.31 2.2 Thailand 48,488 0.42 4.1 Togo 23,243 0.20 1.0 Tonga 11,380 0.10 0.1 Trinidad and Tobago 770 0.01 1.6 Tunisia 2,793 0.02 1.9 Turkey 77,253 0.66 80.9 Uganda 20,421 0.17 2.1 Uzbekistan 746 0.01 1.5 Vanuatu 13,821 0.12 0.2 Vietnam 11,681 0.10 1.9 Yemen, Republic of 33,296 0.29 2.0 Zambia 28,568 0.24 3.4 Zimbabwe 12,357 0.11 5.0 Subtotal Part II Members 3 4,430,815 37.96 3,224.6 Total-June 30, 1999 2}3 11,672,648 100.00% $96,261.7 Total-June 30, 1998 11,394,275 $95,055.2 i Indicates amounts less than $0.05 million or less than 0.005 percent. NoTEs 1. See Notes to Special Purpose Financial Statements-Note A for an explanation of the two categories of membership. 2. $512.3 million of Switzerland's subscription and contributions have not been included in the Statement of Sources and Applications of Development Resources at June 30, 1999 and June 30, 1998 since this represents the difference between the total cofinancinggrants of $580.1 million provided by Switzerland directly to IDA borrowers as cofinancing grants between the fourth and the ninth replenishments of IDA resources, and the July 1992 contribution by Switzerland of $67.8 million. 3. iMay differ from the sum of individual figures shown because of rounding. The Notes to Special Purpose Financial Statements are an integral part of these Statements. 320 THE WORLD BANK ANNUAL REPORT 1999 NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS NOTE A-ORGANIZATION, OPERATIONS records and reported in the financial statements of the AND SIGNIFICANT ACCOUNTING AND periods to which they relate. RELATED POLICIES Translation of Currencies Purpose and Affiliated Organizations IDA's special purpose financial statements are The International Development Association (IDA) is expressed in terms of U.S. dollars solely for the pur- an international organization established on Septem- pose of summarizing IDA's financial position and the ber 24, 1960 to promote economic development in results of its operations for the convenience of its the less developed areas of the world included in IDA's members and other interested parties. membership by providing financing on concessionary terms. IDA has three affiliated organizations, the IDA is an international organization which conducts International Bank for Reconstruction and Develop- its operations in the currencies of all of its members. ment (IBRD), the International Finance Corporation Applications of development resources and sources of (IFC), and the Multilateral Investment Guarantee development resources are translated at market Agency (MIGA). IDA, IBRD, IFC and MIGA are col- exchange rates in effect at the end of the accounting lectively known as the World Bank Group. Each of period, except Member Subscriptions and Contribu- these other organizations is legally and financially tions which are translated in the manner described independent from IDA, with separate assets and liabil- below. Income and expenses are translated at either ities, and IDA is not liable for their respective obliga- the market exchange rates in effect on the dates of tions. The principal purpose of IBRD is to promote income and expense recognition, or at an average of the economic development of its member countries, the market exchange rates in effect during each primarily by providing loans and related technical month. Translation adjustments relating to the revalu- assistance for specific projects and for programs of ation of development credits denominated in Special economic reform in developing member countries. Drawing Rights (SDRs) are charged or credited to IFC's purpose is to encourage the growth of produc- Cumulative Translation Adjustment on Development tive private enterprises in its member countries Credits. Other translation adjustments are charged or through loans and equity investments in such enter- credited to the Accumulated Surplus. prises without a member's guarantee. MIGA was Member Subscriptions and Contributions established to encourage the flow of investments for productive purposes among member countries and, in Recognition particular, to help developing member countries by Member Subscriptions and Contributions for each providing guarantees against noncommercial risks for IDA replenishment are recorded in full as Subscrip- foreign investment in its developing member coun- tions and Contributions Committed upon effective- tries. ness of the relevant replenishment. Replenishments Summary of Significant Accounting and Related become effective when IDA has received commit- Policies ments from members for subscriptions and contribu- tions of a specified portion of the full replenishment. Due to the nature and organization of IDA, these Amounts not yet paid in, at the date of effectiveness financial statements have been prepared for the spe- are recorded as Subscriptions and Contributions cific purpose of reflecting the sources and applications Receivable and shown as a reduction of Subscriptions of member subscriptions and contributions and are and shon asmmited. of recriptions not intended to be a presentation in accordance with and Contributions Committed. These receivables generally aeptedto accounting principles icdnce United come due throughout the replenishment period (gen- generally accepted accountng principles in the United erally three years) in accordance with an agreed matu- States or with International Accountmng Standards. rity schedule. The actual payment of receivables when These special purpose financial statements have been they become due from certain members is conditional prepared to comply with Article VI, Section 11 (a) of upon the respective member's budgetary appropria- the Articles of Agreement of IDA, and are prepared in ton processes. accordance with the accounting policies outlined below. The Subscriptions and Contributions Receivable are Certain reclassifications of the prior years' information settled through payment of cash or deposit of nonne- have been made to conform to the current year's pre- gotiable, noninterest-bearing demand notes. If the hentaveen. made o conorm t thereceivable is settled in cash, the cash is recorded in sentation. Cash and Investments Not Immediately Available for Basis of Accounting Disbursement, until such time as it becomes available in accordance with the replenishment agreement. The IDA's special purpose financial statements are pre- notes are encashed by IDA as provided in the relevant pared on the accrual basis of accounting. That is, the replen entared ovide isburelent effctsof ranactonsandothr eent ar reognzed replenishment resolution over the disbursement effects of transactons and other events are recognized period of the credits committed under the replenish- when they occur (and not as cash or its equivalent is ment and the cash received is recorded in Cash and received or paid) and are recorded in the accounting Investments Immediately Available for Disbursement. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 321 In certain replenishments, donors have had the option tary system and the repeal of the provision of the U.S. of paying all of their subscription and contribution law defining the par value of the U.S. dollar in terms of amount in cash before it becomes due and receiving a gold, the pre-existing basis for translating 1960 dollars discount. In addition, some replenishment arrange- into current dollars or any other currency disappeared. ments have incorporated an accelerated encashment The Executive Directors of IDA have decided, with schedule. In these cases, IDA and the donor agree that effect on that date and until such time as the relevant IDA will invest the cash and retain the income. The provisions of the Articles of Agreement are amended, related subscription and contribution is recorded at that the words "U.S. dollars of the weight and fineness the full undiscounted amount. The cash and invest- in effect on January 1, 1960" in Article II, Section 2(b) ments are recorded in Cash and Investments Not of the Articles of Agreement of IDA are interpreted to Immediately Available for Disbursement until the rel- mean the SDR introduced by the International Mone- evant due date, at which time the cash and invest- tary Fund as the SDR was valued in terms of U.S. dol- ments become available. The discount is recorded in lars immediately before the introduction of the basket Subscriptions and Contributions Receivable and method of valuing the SDR on July 1, 1974, such amortized over the projected encashment period. value being equal to $1.20635 for one SDR (the 1974 SDR), and have also decided to apply the same stan- Under the provisions governing replenishments, IDA dard of value to amounts expressed in 1960 dollars in must encash the notes or similar obligations of con- the oflvant amouts exprd of dollars. tributing members on an approximately pro rata basis. the relevant resolutions of the Board of Governors. As discussed in the previous paragraph, donors some- The subscriptions and contributions provided through times contribute resources on an advanced or an accel- the Third Replenishment are expressed on the basis of erated basis. IDA holds these resources until they the 1974 SDR. Prior to the decision of the Executive become available for disbursement on a pro rata Directors, IDA had valued these subscriptions and basis. Cash and Investments Not Immediately Avail- contributions on the basis of the SDR at the current able for Disbursement represents the difference market value of the SDR. between the amount contributed and the amount The subscriptions and contributions provided under available for disbursements on a pro rata basis. the Fourth Replenishment and thereafter are Transfers to IDA from IBRD are recorded as Sources expressed in members' currencies or SDRs and are of Development Resources and are receivable upon payable in members' currencies. Beginning July 1, approval by IBRD's Board of Governors. 1986, subscriptions and contributions made available for disbursement in cash to IDA are translated at mar- For the purposes of its financial resources, the mem- ket exchange rates in effect on the dates they were bership of IDA is divided into two categories: (13 Part made available. Prior to that date, subscriptions and I members, which make payments of subscriptions contributions which had been disbursed or converted and contributions provided to IDA in convertible cur- into other currencies were translated at market rencies which may he freely used or exchanged hy exchange rates in effect on dates of disbursement or IDA in its operations and (2) Part II members, which conversion. Subscriptions and contributions not yet make payments of ten percent of their initial subscrip- available for disbursements are translated at market tions in freely convertible currencies, and the remain- exchange rates in effect at the end of the accounting ing ninety percent of their initial subscriptions, and all period. additional subscriptions and contributions in their own currencies or in freely convertible currencies. Article IV, Section 2(a) and (b) of IDA's Articles of Certain Part II members provide a portion of their Agreement provides for maintenance of value pay- subscriptions and contributions in the same manner as ments on account of the local currency portion of the mentioned in (1) above. IDA's Articles of Agreement initial subscription whenever the par value of the and subsequent replenishment agreements provide member's currency or its foreign exchange value has, that the currency of any Part II member paid in by it in the opinion of IDA, depreciated or appreciated to a may not be used by IDA for projects financed by IDA significant extent within the member's territories, so and located outside the territory of the member long as, and to the extent that, such currency shall not except by agreement between the member and IDA. have been initially disbursed or exchanged for the cur- The cash paid and notes deposited in nonconvertible rency of another member. The provisions of Article local currencies for the subscriptions of Part II mem- IV, Section 2(a) and (b) have by agreement been bers are recorded in Restricted Cash and Notes. extended to cover additional subscriptions and contri- butions of IDA through the Third Replenishment, but Valuation are not applicable to those of the Fourth and subse- The subscriptions and contributions provided through quent replenishments. the Third Replenishment are expressed in terms of The Executive Directors decided on June 30, 1987 "U.S. dollars of the weight and fineness in effect on t J anuary. 1,90 (1960 dollrs. Folwn th bli. .. that settlements of maintenance of value, which January 1, 1960 YOU 60 YOollars). Following the aboli- would result from the resolution of the valuation issue tion of gold as a common denominator of the mone- on the basis of the 1974 SDR, would be deferred until 322 THE WORLD BANK ANNUAL REPORT 1999 the Executive Directors decide to resume such settle- The repayment obligations of IDA's development ments. These amounts are shown as Deferred credits funded from resources through the Fifth Amounts Receivable to Maintain Value of Currency Replenishment are expressed in the development Holdings. credit agreements in terms of 1960 dollars. In June 1987 the Executive Directors decided to value those Development Credits development credits at the rate of $1.2063 5 per 1960 All development credits are made to or guaranteed by dollar on a permanent basis. Development credits member governments or to the government of a terri- funded from resources provided under the Sixth tory of a member (except for development credits Replenishment and thereafter are denominated in which have been made to regional development banks SDRs; the principal amounts disbursed under such for the benefit of members or territories of members development credits are to be repaid in currency of IDA). In order to qualify for lending on IDA terms, amounts currently equivalent to the SDRs disbursed. a country's per capita income must be below a certain level and the country may have only limited or no Development Grants creditworthiness for IBRD lending. Development The Eleventh and Twelfth Replenishment Resolutions credits carry a service charge of 0.75 percent and gen- authorizes the use of Eleventh and Twelfth Replenish- erally have 35- or 40-year final maturities and a 10- ment donor funds to finance IDA development grants year grace period for principal payments. Develop- in the context of the Heavily Indebted Poor Countries ment credits are carried in the Special Purpose Finan- (HIPC) Debt Initiative. The net income transfers cial Statements at the full face amount of the from IBRD for fiscal years 1997 and 1998 also autho- borrowers' outstanding obligations. rizes the use of such funds for IDA development It is the practice of IDA to place in nonaccrual status grants. all development credits made to a member govern- Development grants are accrued by IDA upon their ment or to the government of a territory of a member commitment. if principal or charges with respect to any such devel- opment credit are overdue by more than six months, Heavily Indebted Poor Countries Debt Initiative unless IDA's management determines that the over- IDA participates in a multilateral initiative (the HIPC due amount will be collected in the immediate future. Debt Initiative) to ensure that reform efforts of coun- In addition, if loans by IBRD to a member government tries identified as HIPCs will not be put at risk by are placed in nonaccrual status, all development cred- unsustainable external debt burdens. Under the HIPC its to that member government will also be placed in Debt Initiative, creditors are to provide enhanced debt nonaccrual status by IDA. On the date a member's relief for those countries that have demonstrated good development credits are placed in nonaccrual status, policy performance over an extended period in order charges that had been accrued on development credits to bring their debt burdens to sustainable levels. As a outstanding to the member which remained unpaid part of this process, the HIPC Debt Initiative Trust are deducted from the income from development Fund was established on November 7, 1996, consti- credits of the current period. Charges on nonaccruing tuted by funds of donors including the IBRD, to help development credits are included in income only to beneficiaries reduce their overall debt, including IDA the extent that payments have actually been received debt. The HIPC Debt Initiative Trust Fund is adniin- by IDA. If collectibility risk is considered to be partic- istered by IDA. IDA has not contributed to the HIPC ularly high at the time of arrears clearance, the mem- Debt Initiative Trust Fund. ber's credits may not automatically emerge from nonaccrual status, even though the member's eligibil- Upon the signature of the HIPC Debt Relief Agree- ity for new credits may have been restored. A deci- ment between the member country and IDA, devel- sion on the restoration of accrual status is made on a opment credits identified for sale are written down to case-by-case basis after a suitable period of payment their estimated net present value. On the settlement performance has passed from the time of arrears clear- date, the estimated write-down is adjusted to reflect the actual difference between the cash received arLd the carrying value of the development credits sold. For In fulfilling its mission, IDA makes concessional loans the purposes of the HIPC Debt Relief Agreement, to the poorest countries, therefore there is significant IDA acts both in its own capacity and as Administra- credit risk in the portfolio of development credits. tor of the HIPC Debt Initiative Trust Fund. Management continually monitors this credit risk. However, no provision for credit losses has been estab- Investments lished because it is not practicable to determine such IDA carries its investment securities and related finan- an amount in view of the nature and maturity struc- cial instruments at market value. Both realized and ture of the credit portfolio. Should actual losses occur, unrealized gains and losses are included in Income they would be charged against IDA's Sources of from Investments. Development Resources. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 323 Interim Trust Fund Government and Agency Obligations: These obliga- The Interim Trust Fund, established by IDA's Board of tions include marketable bonds, notes and other obli- Governors in June 1996 as a part of the Eleventh gations issued by governments. Obligations issued or Replenishment, is administered by IDA to help fund unconditionally guaranteed by governments of coun- operations approved during the period July 1, 1996 to tries require a minimum credit rating of AA if denom- June 30, 1997, as well as certain additional operations mated in a currency other than the home currency of approved after July l, 1997. The development the issuer, otherwise no rating is required. Obligations resources of the Interim Trust Fund have a separate issued by an agency or instrumentality of a govern- legal, procurement and accounting status. Credits ment of a country, a multilateral organization or any financed by the Interim Trust Fund are made on the other official entity require a credit rating of AAA. same terms and conditions as those of IDA credits Options: Options are contracts that allow the holder with two exceptions. First, eligibility for procurement of the option the right, but not the obligation, to pur- under the Interim Fund Credits is extended only to chase or sell a financial instrument at a specified price nationals of countries that either have contributed to within a specified period of time from or to the seller the Interim Trust Fund or are eligible to borrow from of the option. The purchaser of an option pays a pre- IBRD or IDA. Second, the Interim Fund Credits are mium at the outset to the seller of the option, who approved by IDA's President after consultation with a then bears the risk of an unfavorable change in the committee of IDA's Executive Directors representing price of the financial instrument underlying the the donors and eligible borrowers. Effective Decem- option. IDA invests only in exchange-traded options. ber 31, 1997, procurement restrictions were lifted The initial price of an option contract is equal to the from SDR 700 million in Interim Trust Fund contribu- premium paid by the purchaser and is significantly less tions that were unallocated. Charges paid by borrow- than the contract or notional amount. IDA does not ers on Interim Fund Credits are received directly by write uncovered option contracts. IDA to compensate it for its services as administrator. These charges are included under Income from devel- Repurchase and Resale Agreements and Securities opment credits. The Interim Trust Fund is expected Loans: Repurchase agreements are contracts under to be terminated when the credits it financed have which a party sells securities and simultaneously been substantially disbursed. Upon termination, its agrees to repurchase the same securities at a specified assets and liabilities will be transferred to IDA. future date at a fixed price. The reverse of this trans- action is called a resale agreement. A resale agreement NOTE B-INVESTMENTS involves the purchase of securities with a simulta- As part of its overall portfolio management strategv neous agreement to sell back the same securities at a IDA invests in government and agency obligations, stated price on a stated date. Securities loans are con- time deposits and related financial instruments with tracts under which securities are lent for a specified off-balance sheet risk. period of time at a fixed price. Currencv Swaps: Currency swaps are agreements Short Sales: Short sales are sales of securities not held between two parties to exchange cash flows denomi- in the seller's portfolio at the time of the sale. The nated in different currencies at one or more certain seller must purchase the security at a later date and times in the future. The cash flows are based on a pre- bears the risk that the market value of the security will determined formula reflecting rates of interest and an move adversely between the time of the sale and the exchange of principal. IDA is authorized to enter into time the security must be delivered. currency swaps for periods not exceeding one vear, c c p p s ee Time Deposits: Time deposits include certificates of including covered forwards. deposit, bankers' acceptances, and other obligations Futures and Forwards: Futures and forward contracts issued or unconditionally guaranteed by banks and are contracts for delivery of securities or money mar- other financial institutions. ket instruments in which the seller agrees to make delivery at a specified future date of a specified instru- ment, at a specified price or yield. Futures contracts are traded on regulated United States and interna- tional exchanges. IDA generally closes out most open positions in futures contracts prior to maturity. There- fore, cash receipts or payments are mostly limited to the change in market value of the futures contracts. Futures contracts generally entail daily settlement of the net cash margin. 324 THE WORLD BANK ANNUAL REPORT 1999 A summary of IDA's investments immediately available for disbursement, by instrument, at June 30, 1999 and June 30, 1998 is as follows: In millions 1999 1998 Average Average daily Net gains daily Net gains balance (losses) balance (lossels) Carrying during the for the Carrying during the for the value fiscal year fiscal year value fiscal year fiscal year Government and agency obligations $ 3,306 $4,009 $(39) $ 3,152 $1,779 $15 Time deposits 2,467 3,356 - 3,572 3,789 Futures and forwards 1 * 3 * 3 (4) Currency Swaps 47 12 - 2 1 Options -(*) (*) - * (*) Resale agreements 32 245 - 362 426 Repurchase agreements and securities loans (2,336) (2,772) - (1,311) (831) _ Total $ 3,517 $4,850 $(36 $ 5,777 $5,167 $11 Shortsalesa $ (5) $ (1) $- $ (119) $ (4) $- * Less than $0.5 million, a. Included in Net receivable (payable) on investment securities transactions in the Statement of Sources and Applications of Development Resources. A summary of IDA's investments not immediately available for disbursement, by instrument, at June 30, 1999 and June 30, 1998 is as follows: In millions 1999 1998 Average Average daily Net gains daily Net gains balance (losses) balance (losses) Carrying during the for the Carrying during the for the value fiscal year fiscal year value fiscal year fiscal year Government and agency obligations $ 3,996 $ 3,792 $(61) $ 3,361 $ 2,798 $47 Time deposits 2,392 2,466 - 2,482 1,372 Futures and forwards 1 1 15 1 1 (*) Currency Swaps - 2 - 7 (*) Options - * * * (*) Resale agreements 65 150 - 513 203 Repurchase agreements and securities loans (1,765) (2,038) - (2,389) (1,161) _ Total $ 4,689 $ 4,373 $(46) $ 3,975 $ 3,213 $47 Short salesa $ (60) $ (14) $ - $ (82) $ (2) $- * Less than $0.5 million. a. Included in Net receivable (payable) on investment securities transactions in the Statement of Sources and Applications of Development Resources. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 325 A summary of the currency composition of investments immediately available for disbursement and not immedi- ately available for disbursement at June 30, 1999 and June 30, 1998 is as follows: In millions of U.S. dollars equivalent 1999 1998 Not Not Immediately immediately Immediately immediately available for availablefor available for availablefor disbursement disbursement Total disbursement disbursement Total Euroa $1,291 $1,296 $2,587 $2,461 $1,152 $3,613 Japanese yen 8 796 804 6 558 564 Pounds sterling 763 588 1,351 1,266 558 1,824 U.S. dollars 1,455 2,009 3,464 2,044 1,707 3,751 Total $3,517 $4,689 $8,206 $5,777 $3,975 $9,752 a. Effective January 1, 1999, the euro was introduced. For reporting purposes, holdings in the eleven national currencies that are considered sub-units of the euro have been aggregated with the euro and reported as euro, in both the current and prior year. For the purpose of risk management, IDA is party to a basic financial statements. For both on- and off-balance variety of financial instruments, certain of which sheet securities, IDA limits trading to a list of autho- involve elements of credit risk in excess of the amount rized dealers and counterparties. Credit limits have reflected in the Statement of Sources and Applications been established for each counterparty by type of of Development Resources. Credit risk exposure repre- instrument and maturity category. sents the maximum potential accounting loss due to The credit risk exposure and contract value, as applica- possible nonperformance by obligors and counterpar- ble of these financial instruments at June 30 1999 and ties under the terms of the contracts. Additionally, the Jue, of are given below: nature of the instruments involve contract value and J notional principal amounts that are not reflected in the In millions 1999 1998 Futures and Forwards e Long position $2,127 $ 995 i Short position 377 1,648 • Credit exposure due to potential nonperformance by counterparties 3 12 Currency Swaps * Credit exposure due to potential nonperformance by counterparties 48 10 NOTE C-MEMBER SUBSCRIPTIONS AND Subscriptions and contributions due at June 30, 1999 CONTRIBUTIONS were as follows: Subscriptions and Contributions Receivable: At June 30, 1999, receivables from subscriptions and contribu- In millions tions were $165 million ($2,500 million-June 30, 1998) of which $12 million ($2 million-June 30, Amounts initially due from 1998) was due and $153 million ($2,498 million- June30, 1998)wasnotyetdue. Julyl, 1998throughJune30, 1999 $12 June 30, 1998 and earlier * Total $12 * Less than $0.5 million. 326 THE WORLD BANK ANNUAi. REPORT 1999 Subscriptions and contributions not yet due at June 30, (Serbia and Montenegro), are included under Payments 1999 will become due as follows: on Account of Pending Membership. NOTE D-TRANSFERS FROM IBRD inz millions In__________millions___________________________ IBRD's Board of Governors has approved aggregate Period transfers to IDA totaling $6,087 million through Jane 30, 1999 ($5,735 million-June 30, 1998). The aggre- July 1, 1999 through June 30, 2000 $108 gate transfers reported in the Statement of Sources and July 1, 2000 through June 30, 2001 21 Applications of Development Resources may differ July 1, 2000 through June 30, 2001 21 from the amount of aggregate transfers approved doe to Thereafter 24 exchange rate movements. Total $153 Of the aggregate transfers, $352 million in SDRs valued at June 30, 1999, which was approved by IBRD's Board of Governors on October 8, 1998, will be drawn down by IDA after all other resources available to IDA l'or Eleventh Replenishment: In June 1996 the Board of purposes of the Eleventh Replenishment have been Governors of IDA adopted resolutions authorizing the drawn down. The receivable of $354 million ($nil mil- Eleventh Replenishment of IDA's resources. The Elev- lion - June 30, 1998) from IBRD reported in the State- enth Replenishment, which provides IDA with ment of Sources and Applications of Development resources to fund credits and grants committed during Resources is different from the amount approved due the period July 1, 1996 to June 30, 1999, became to exchange rate movements. effective on February 12, 1998. The total amount of donor contributions pledged during this period, includ- NOTE E-DEVELOPMENT CREDITS ing supplementary contributions provided by certain Heavily Indebted Poor Countries members, is equivalent to SDR 6,929 million. Certain procurement restrictions apply to Eleventh Replenish- Total development credits are presented in the State- ment Credits financed by donor funds. As part of the ment of Sources and Applications of Development Eleventh Replenishment, an Interim Trust Fund con- Resources net of any write-down to their net present sisting of donor contributions pledged equivalent to value in connection with sales of IDA credits to the SDR 2,228 million has been established and is adminis- HIPC Debt Initiative Trust Fund (see Note I). tered by IDA. Overdue Amounts Twelfth Replenishment: On April 8, 1999, the Board At June 30, 1999, no principal installments or charges of Governors of IDA adopted a resolution authorizing payable to IDA on development credits, other than the Twelfth Replenishment of IDA's resources, which those referred to in the following paragraph, were over- will allow IDA to provide concessional lending of SDR due by more than three months. 15,343 million during the period July 1, 1999 to June 30, 2002. Of this amount, new contributions from At June 30, 1999, development credits made to or donor countries, including supplementary contributions guaranteed by certain member countries with an aggre- provided by certain members, will total SDR 8,640 gate principal balance outstanding of $4,213 million million. ($3,723 million-June 30, 1998), of which $222 mil- lion ($160 million-June 30, 1998) was overdue, were Membership: In February 1993 the Socialist Federal in nonaccrual status. At such date, overdue charges in Republic of Yugoslavia ceased to be a member of IDA respect of these development credits totaled $157 mil- due to the cessation of its membership in IBRD. Four of lion ($127 million-June 30, 1998). If these develop- the five successor Republics-Bosnia and Herzegovina, ment credits had not been in nonaccrual status, income the Republic of Croatia, the Republic of Slovenia and from development credits for the fiscal year ended June the former Yugoslav Republic of Macedonia-have 30, 1999 would have been higher by $35 million ($24 since become members of IDA. At June 30, 1999, the million-June 30, 1998 and $24 million-June 30, subscription and contributions allocated to the other 1997), which is net of charges received from such successor country, the Federal Republic of Yugoslavia members during the period. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 327 A summary of borrowers with development credits or guarantees in nonaccrual status follows: In millions June 30, 1999 Principal and Principal Charges Nonaccrual Borrower Outstanding Overdue Since With overdues Afghanistan $ 75 $ 17 June 1992 Comoros 71 1 December 1998 Congo, Democratic Republic of 1,212 124 November 1993 Congo, Republic of 163 4 November 1997 Liberia 102 21 April 1988 Myanmar 721 25 September 1998 Somalia 402 58 July 1991 Sudan 1,188 129 January 1994 Total 3,934 379 Without overdues Bosnia and Herzegovina 247 - September 1992 Syrian Arab Republica 32 - April 1988 Total $4,213 $379 Less than $0.5 million. a. Credits are in nonaccrual status due to overdues to IBRD. On July 27, 1997, the Syrian Arab Republic and IDA guaranteed by the Republic of Guinea-Bissau had been entered into an agreement covering, among other in nonaccrual status since December 2, 1998. things, the application of Syria's overdue principal and There was no effect on income as a result of develop- charges. Under this agreement, Syria paid all its over- due principal and charges bv October 31, 1997. ment credits coming out of non-accrual status during the fiscal year ended June 30, 1998. On August 4, 1998, the Central African Republic cleared its arrears and its development credits came out Fifth Dimension Program of nonaccrual status. As a result, income from develop- Under the Fifth Dimension program established in Sep- ment credits for the year ended June 30, 1999 tember 1988, a portion of principal repayments to IDA increased by $3 million, corresponding to income that is allocated on an annual basis to provide supplemen- would have been accrued in the previous fiscal year. tary IDA development credits to IDA-eligible countries that are no longer able to borrow on IBRD terms but On May 24, 1999, the Republic of Guinea-Bissau paid have outstanding IBRD loans approved prior to Sep- off all of its arrears and, as a result, its credits came out have In lace anpIDA-supported ofnoncra stts Deeomn crdt nd to or tember 1988 and have in place an IDA-supportedi of nonaccrual status. Development credits made to or structural adjustment program. Such supplementary 328 THE WORLD BANK ANNUAI. REPORT 1999 IDA credits are allocated to countries that meet speci- NOTE F-FAIR VALUE OF FINANCIAL INSTRU- fied conditions, in proportion to each country's interest MENTS payments due that year on its pre-September 1988 Investments: Since IDA carries its investments at mar- IBRD loans. To be eligible for such IDA supplemental ket value, the carrying amount represents the fair value credits, a member country must meet IDA's eligibility of the portfolio. These fair values are based on quoted criteria for lending, must be ineligible for IBRD lending market prices, where available. If quoted market prices and must not have had an IBRD loan approved within are not available, fair values are based on quoted mar- the last twelve months. To receive a supplemental ket prices of comparable instruments. The fair value of credit from the program, a member country cannot be short-term financial instruments approximates their more than 60 days overdue on its debt-service pay- carrying value. ments to IBRD or IDA. A summary of cumulative IDA credits committed and Development Credits: IDA's development credits have disbummarsed under cumulathive prAm fredom mtitd atne a significant grant element because of the concessional disbursed under this program from inception, at June nature of IDA's terms. Discounting the future cash 30, 1999 and June 30, 1998 is given below: flows from IDA's development credits using the stan- dard 10 percent discount rate of the Development In millions Assistance Committee (DAC) of the Organization for 1999 1998 Economic Cooperation and Development (OECD) provides an estimate for the grant element. Under the HIPC Debt Initiative, development credits identified Commitments $1,623 $1,590 for sale to the HIPC Debt Initiative Trust Fund are Less undisbursed 19 59 written down to their estimated net present value using Disbursed and currency specific Commercial Interest Reference Rates Disbutsedtanding (16041531 CCIRRs) published monthly by the OECD. Using the Outstanding $1I ,604 $ 1,531 six months average CIRR as a discount rate provides an alternative estimate for the grant element. Since IDA's development credits are denominated in U.S. dollars Guarantees and SDRs, the CIRR for each currency has been used Guarantees of development credit principal of $30 mil- to discount the corresponding future cash flows for lion at June 30, 1999 ($nil-June 30, 1998) were not each currency component of the development credits, included in the Total Resources Used for Development before being aggregated to provide the composite Credits. At June 30, 1999, no amounts were subject to results. call. The grant element calculations consider interest rates, Concentration of Income maturity structures and grace periods for the credits. They do not consider credit risk, portfolio seasoning, For fiscal year 1999, development credits to two coun- multilateral and sovereign credit preferences and other tries individually generated in excess of ten percent of risks or indicators that would be relevant in calculating total income from these credits, amounting to $62 mil- fair value. Estimating the impact of these factors is not lion and $137 million. practicable. IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 329 However, in both cases the estimated fair values of development credits outstanding are substantially lower than the $83,158 million reflected on the Statement of Sources and Applications of Development Resources at June 30, 1999 ($78,016 million-June 30, 1998), as shown in the following table. In millions of U.S. dollars equivalent June 30, 1999 June 30, 1998 DAC-based CIRR-based DAC-based CIRR-based fair value fair value fair value fair value Development credits outstanding $83,158 $83,158 $78,016 $78,016 Less grant equivalent 57,296 37,247 54,259 40,696 Estimated fair value of development credits outstanding $25,862 $45,911 $23,757 $37,320 Estimated grant element 69% 45% 70% 52% Discount Rates Used Discount Rates Used DAC 10.00% 10.00% CIRRs: Average of six months to June U.S. dollar 6.00% 6.71% -SDR 4.87% 5.68% NOTE G-NET MANAGEMENT FEE IDA receives charges paid by borrowers on Interim The following table shows the management fee, net of Fund Credits as compensation for its services as admin- IDA's share of income from pension plan and other pos- istrator, and pays a management fee to IBRD represent- tretirement benefits plans. ing its share of the administrative expenses incurred by IBRD. In millions 1999 1998 1997 Management fee charged by IBRD $518 $474 $488 Less IDA's share of income from pension plan and other postretirement benefits plans 150 252 72 Net management fee $368 $222 $416 During the fiscal year ended June 30, 1998, the status not qualify for off-balance sheet accounting. At June of the other postretirement benefits was reviewed by 30, 1998, these assets and liabilities were recorded on IBRD and it was determined that the assets and liabili- IBRD's balance sheet. As a result of this change, the ties associated with these postretirement benefits did 330 THE WORLD BANK ANNUAL REPORT 1999 management fee for the fiscal year ended June 30, projects, debt reduction operations for IDA members, 1998 was reduced by $133 million. technical assistance for borrowers including feasibility studies and project preparation, global and regional programs and research and training programs. These NOTE H-TRUST FUNDS ADMINISTRATION funds are placed in trust and are not included in the development resources of IDA. At June 30, 1999 and IDA, alone or jointly with IBRD, administers on June 30, ] 998, the allocation of trust fund assets by behalf of donors, including members, their agencies executing agent were as follows: and other entities, funds restricted for specific uses which include the cofinancing of IDA lending 1999 1998 Total Total ftduciary Number of fiduciary Number of assets trust fund assets trustfund (In millions) accounts (In millions) accounts IDA executed $1,059 712 $ 958 524 Recipient executed 782 674 479 459 Total $1,841 1,386 $1,437 983 The responsibilities of IDA under these arrangements tion of the management fee charged by IBRD. During vary and range from services normally provided under the fiscal year ended June 30, 1999, IDA received its own lending projects to full project implementa- $5.6 million ($8.9 million-June 30, 1998, $11 mil- tion including procurement of goods and services. IDA lion-June 30, 1997) as fees for administering trust receives fees for administering trust funds as a reduc- funds. NOTE I-IMPACT FROM HEAVILY INDEBTED POOR COUNTRIES DEBT INITLATIVE Assistance under the HIPC Debt Initiative is provided IDA Development Grants by IDA by means of development grant funding in lieu At June 30, 1999, the cumulative position of IDA of credit funding and sales of development credits to development grants disbursed is as follows: the HIPC Trust Fund. In millions Source of Funds Transfers Eleventh Transfers Replenishment Total from IBRD Donor Funds Development grants disbursed Uganda $74 $ - $ 74 Mozambique - 149 149 Total $74 $149 $223 The total of development grants disbursed differs from to outstanding payables and exchange rate movements the Resources Funding Development Grants shown in the period between the date of approval and the on the Statement of Changes in Resources Used for subsequent transfer of the funds. Heavily Indebted Poor Countries Debt Initiative, due IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 331 Sales of IDA Development Credits Debt Service on Development Credits IDA sells specific development credits to the HIPC The HIPC Debt Initiative Trust Fund also services Debt Initiative Trust Fund for cash at a price equivalent selected IDA development credits as they come due to the net present value of the development credits, as over a period of vears. From inception through June 30, calculated using the methodology agreed under the 1999, $52 million for Uganda and $54 million for HIPC Debt Initiative. Following the signature of the Bolivia had been approved for this purpose by the HIPC Debt Relief Agreement the development credits HIPC Debt Initiative Trust Fund. These amounts are identified for sale are written down to their estimated not recorded in the Statement of Sources and Applica- net present value. The amount of this write-down is tions of Development Resources of IDA, as the HIPC shown as a reduction in Sources of Development Debt Initiative Trust Fund is a legally separate and sepa- Resources. The HIPC Debt Initiative Trust Fund can- rately administered entity. cels these development credits. At June 30, 1999, the cumulative position of the sales of IDA development credits under the HIPC Debt Ini- tiative is as follows: in millions Cash Reduction in Carrying Received Sources of Value (Net Development Present Resources Value) ______ Development credits sold Uganda $177 $84 $93 332 THE WORLD BANK ANNUAL REPORT 1999 REPORT OF INDEPENDENT ACCOUNTANTS ON SPECIAL PURPOSE FINANCIAL STATEMENTS DeloitteTouche Tolmtu (International Firm) 555 12th Street NW Washington, DC President and Board of Governors International Development Association We have audited the accompanying special purpose statements of sources and applications of development resources of the International Development Association as of June 30, 1999 and 1998, including the summary statement of development credits and statement of voting power, and subscriptions and contributions as of June 30, 1999, and the related special purpose statements of changes in resources used for heavily indebted poor countries debt initiative, changes in cumulative translation adjustment on development credits, changes in accumulated surplus, and cash flows for each of the two fiscal years in the period ended June 30, 1999. These special purpose financial statements are the responsibility of the International Development Association's management. Our responsibility is to express an opinion on these special purpose fnancial statements based on our audits. The special purpose financial statements for the International Development Association for the fiscal year ended June 30, 1997 were audited by other auditors whose report, dated July 28, 1997, expressed an unqualified opinion on those special purpose statements and included an explanatory paragraph which described the basis of accounting discussed in Note A to the special purpose financial statements. We conducted our audits in accordance with generally accepted auditing standards in the United States of America and Intemational Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying special purpose financial statements were prepared to reflect the sources and applications of development resources, operations, and cash flows of the International Development Association to comply with Article VI, Section I I(a) of the Articles of Agreement of the International Development Association, as discussed in Note A to the special purpose financial statements, and are not intended to be a presentation in conformity with generally accepted accounting principles in the United States of America or Intemational Accounting Standards. In our opinion, such special purpose financial statements referred to above present fairly, in all material respects, the sources and applications of development resources of the International Development Association as of June 30, 1999 and 1998, and the results of its operations and its cash flows for each of the two fiscal years in the period ended June 30, 1999 in conformity with the accounting principles described in Note A to the special purpose financial statements. This report is intended solely for the information and use of the Board of Govemors, management, and members of the International Development Association. However, under the Intemational Development Association's Articles of Agreement, this report is a matter of public record and its distribution is not limited. July 28, 1999 Beijing London Mexico City Moscow Now York Paris Tokyo Toronto IDA SPECIAL PURPOSE FINANCIAL STATEMENTS 333 INTERIM TRUST FUND SPECIAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Statement of Sources and Applications of Development Resources 336 Statement of Changes in Cumulative Translation Adjustment on Interim Fund Credits 337 Statement of Changes in Accumulated Surplus 337 Statement of Cash Flows 338 Summary Statement of Interim Fund Credits 339 Statement of Contributions 341 Notes to Special Purpose Financial Statements 342 Report of Independent Accountants on Special Purpose Financial Statements 345 335 STATEMENT OF SOURCES AND APPLICATIONS OF DEVELOPMENT RESOURCES June 30, 1999 and June 30, 1998 Expressed in millions of U.S. dollars 1999 1998 Applications of Development Resources NET RESOURCES AVAILABLE FOR DEVELOPMENT ACTIVITIES Cash and investments immediately available for disbursement Due from banks $ 8.7 $ 14.3 Investments-Notes B and D 935.8 390.3 944.5 404.6 Nonnegotiable, noninterest-bearing demand obligations on account of contributions 1,357.5 1,981.4 Other resources, net - 2.5 Total net resources available for development activities 2,302.0 2,388.5 RESOURCES USED FOR INTERIM FUND CREDITS (see Summary Statement of Interim Fund Credits, Notes D and E) Total Interim Fund Credits 2,653.4 2,285.5 Less undisbursed balance 2,145.0 1,954.5 Total resources used for Interim Fund Credits 508.4 331.0 Total applications of development resources $2,810.4 $2,719.5 Sources of Development Resources Contributions (see Statement of Contributions) Contributions committed $2,788.4 $2,730.6 Less contributions receivable-Note C 2.3 3.0 Less unamortized discount on contributions 1.5 1.9 Contributions paid in 2,784.6 2,725.7 Cumulative translation adjustment on Interim Fund Credits (see Statement of Changes in Cumulative Translation Adjustment of Interim Fund Credits) (11.7) (9.5) Accumulated surplus (see Statement of Changes in Accumulated Surplus) 37.5 3.3 Total sources of development resources $2,810.4 $2,719.5 The Notes to Special Purpose Financial Statements are an integral part of these Statements. 336 THE WORLD BANK ANNUAL REPORT 1999 STATEMENT OF CHANGES tN CUMULATIVE1 TRANSLATION ADJUSTMENT ON INTERIM FUND CREDITS For the fiscal years ended June 30, 1999, June 30, 1998 anid Juniie 30 1997 Expressed i77 n?i1ions ol' U.S. dollario 1999 1998 1997 Cumulative translation adjustment at beginning of the fiscal vear $ (9.5) $ 0.8 $ -- Translation adjustment for the fiscal year (2.2) (10.3) 0.8 Cumulative translation adjustment at end of the fiscal year $l11.7) $ (9. 5 $0.S STATEM/ENT OF CHANGES IN ACCUMULATED SURPLUS For the fiscal years enided June 30, 1999, June 30, 1998 and Juniie 30, 1997 Expressed in millions of US. dollars 1999 1998 1997 Income from investments-Note B $36.9 $ 14.4 $ 2.0 Amortization of discount on contribution advances (0.4) (0.3) (0. 1) Changes from operations 36. 5 14.1 1.9 Effect of exchange rate changes on accumulated surplus (2.3) (10.1) (2.63 Net changes 34.2 4.0 (0.73 Balance at beginning of the fiscal year 3.3 (0.7) Balance at end of the fiscal year S37. 5 $ 3. 3 S (0. The Notes to Special Purpose Financial Statements are an integral part of these Statements. IN I I.RI\I TRL SI Fi ND PPFQALI PR'(os1R FIXAN(CAI. S I ATRMFE\!S 337 STATEMENT OF CASH FLOWS For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997 Expressed in millions of US. dollars 1999 1998 1997 Cash flows from development activities Interim Fund Credit disbursements $(179.6) S(197.6) $(142.8) Cash flows from financing activities Net short-term borrowings - (22.0) 22.0 Donor contributions 682.5 579.8 164.0 Net cash provided by financing activities 682.5 557.8 186.0 Cash flows from operating activities Changes from operations 36.5 14.1 1.9 Adjustments to reconcile changes from operations to net cash provided bv operating activities Amortization of discount on contribution advances 0.4 0.3 0.1 Net changes in other development resources 1.3 (3.7) 0.2 Net cash provided by operating activities 38.2 10.7 2.2 Effect of exchange rate changes on cash and investments immediately available for dishursement (1.2) (9.3) (2.4) Net increase in cash and investments immediately available for disbursement 539.9 361.6 43.0 Cash and investments immediately available for disbursement at beginning of the fiscal year 404.6 43.0( Cash and investments immediately available for disbursement at end of the fiscal year $ 944.5 $ 404.6 $ 43.0 Supplemental disclosure Increase (decrease) in ending balances of Interim Fund Credits outstanding resulting from exchange rate fluctuations S (2.2) $ (10.3) S (.8 The Notes to Special Purpose Financial Statements are an integral part of these Statements. 338 THF WORLD BANK ANNUAL REPORT 1999 SUMMARY STATEMENT OF INTERIM FUND CREDITS June30, 1999 Expressed in millioins of U.S. dollars Percentage Total Undisbursed Credits of credits Borrower or guarantor credits credits outstanding outstanding Armenia $ 15.5 $ 8.7 S 6.8 1.34% Bangladesh 420.7 407.3 13.4 2.63 Bolivia 14.5 10.6 3.9 0.77 Bosnia and Herzegovina 84.5 19.5 65.0 12.78 Burkina Faso 43.9 38.8 5.1 1.00 Cambodia 52.7 46.0 6.7 1.33 Chad 24.1 - 24.1 4.74 China 313.4 261.8 51.6 10.15 Comoros 6.8 6.8 - - Cote dIlvoire 49.4 45.2 4.2 0.83 Egypt, Arab Republic of 68.9 63.4 5.5 1.08 Ghana 27.8 23.0 4.8 0.94 Guinea 24.1 22.6 1.5 0.30 India 698.3 684.6 13.7 2.69 Kenya 25.8 24.1 1.7 0.35 Kyrgyz Republic 42.8 - 42.8 8.42 Mladagascar 92.6 16.4 76.2 14.98 Malawi 11.6 9.9 1.7 0.34 Mali 99.6 90.9 8.7 1.70 Mozambique 92.5 - 92.5 18.19 Senegal 6.6 4.5 2.1 0.42 Sri Lanka 14.3 11.0 3.3 0.65 lIganda 121.0 78.0 43.0 8.45 Vietnam 277.8 249.8 28.0 5.51 Yemen, Republic of 12.3 10.7 1.6 0.31 Zimbabwe 11.9 11.4 0.5 0.10 Total-June 30, 1999a $2,653.4 $2,145.0 $508.4 100.(00 Total-June 30. 1998 52,285.5 $1,954.5 $331.0 NOTES a. May differfromn the sutm of indiuidualfignres shouwn because of rounding. The Notes to Special Purpose Financial Statements are an integral part of these Statements. INIERITI TRUSI FiTND SPECIAL. PURPOSF FINANCIAI STATEMIENTS 339 SUNMMARY SI'ATEMENT OF INT ERIM FIJND CREDITS (continued) June 30, 1999 APxyessed in nillions of S doilars Maturitv Structure of Interim Fund Credits Outstanding Period July 1, 1999 through June 30, 2004 July 1, 20(04 through June 30, 2009 87.6 July 1, 2009 through June 30, 2014 126.0 July 1, 2014 through June 30, 2019 87.4 July 1, 2019 through June 30, 2024 79.8 July 1, 2024 through June 30, 20279 62.5 Ju1ly 1, 2029 through June 30, 2034 43.3 July 1, 2034 through June 30, 2039 21.8 Total 8308.4 The N,otes to Special Purpose financial Statements are an integral part of-these Statements. 34(0 Ti--r iTR. W ) BANe Av<\I> RvPORT I1999 STATEMENT OF CONTRIBUTIONS June30, 1999 Evpre.,sed in miiillioo of U.S. dn11ars Co;uril'utioslls Donor deposited Argentina $ 4.6i Austra.lia Austria 35.5 Belgium 54 7 Botswana .D Brazil 0.5 Canada 148.6 Czech Republic 2.0 Denmark 48.2 Finland 20.9 France 271.1 Germany 301.4 Greece 1 . Hungary 2.7 Iceland 1.3 Ireland 6.0 Italy I)66.9 Japan 701.7 Korea, Republic of 0.2 Kuwait 6.0 Luxembourg 3. Mexico 4.6 Netherlands 21 () New Zealand 6O_2 Norway 66.2 Poland 1.2 Portugal 7.3 Russian Federation 1 (.8 Saudi Arabia 25. 0 Slovak Republic 1.4 South Africa 2.3 Spain 3 5.8 Sweden 103.6 Switzerland 62.2 Turkey 3.0 United Kingdom 286.( Total-June 30, 1999' $2,788.4 Total-June 30, 1998 52, 7,31.6 NOTES a. Mcvt differfr(on the sun of inditviductalfigures shiown zbec(ztse cof roun!dPting. The lNotes to Special Purpose Financial Statements are an integral part of these Statements, INTERIAf TU!sI FLND SPIu.\ P.IR.sOSi- FINA\(:Ix\I[ S1ATlNIIFN1S 341 NOTES TO SPECIAL PURPOSE FINANCIAL STATEME1NTS NOTE A-ORGANIZATION, OPERATIONS accounting. That is, the effects of transactionis and AND SIGNIFICANT ACCOUNTING AND other events are recognized when they occur (and not RELATED POLICIES when cash or its equivalent is received or paid) and are recorded in the accounting records and reported in the Purpose financial statements of the periods to which thev The Interim Trust Fund (ITF) became effective on relate. November 14, 1996. Translation of Currencies The Interim Trust Fund, established by IDA's Board of Governors in June 1996, is administered by IDA to The Interim Trust Fund's special purpose financial help fund operations approved during the period July statements are expressed in terms of U.S. dollars solely 1, 1996 to June 30, 1997, as well as certain additional for the purpose of summarizing the Irsts orif Trust operations approved after July 1, 1997. The funds of Iund's fiancial position and the results of its opera- 1 - m rs 1 1 } 1 1 ~~~~~~tions for the convenience of its donors and other inter- the Interim Trust Fund have a separate legal, procure- ment and accounting status. Credits financed by the ested parties. Interim Trust Fund are made on the same terms and The Interim Trust Fund conducts its operations in the conditions as those of IDA credits with two excep- various currencies contributed to it. Development tions. First, eligibility for procurement under the resources are translated at market exclhange rates in Interim Fund Credits is extended only to nationals of effect at the end of the accounting period. Coontribu- countries that either have contributed to the Interim tions are translated in the manner described below. Trust Fund or are eligible to borrow from the Interna- Income and expenses are translated either at the mar- tional Bank for Reconstruction and Development ket exchange rates in effect on the dates of income (IBRD) or IDA. Second, the Interim Fund Credits are and expense recognition, or at an average of the mar- approved by IDA's President after consultation with a ket exchange rates in effect during each month. Trans- committee of IDA's Executive Directors representing lation adjustments relating to the revaluation of the donors and eligible borrowers. Effective Decem- Interim Fund Credits denominated in Special Drawing ber 31, 1997, procurement restrictions were lifted Rights (SDRs) are charged or credited to Cumulative from SDR 700 million in Interim Trust Fund contribu- Translation Adjustment on Interim Fund Credits. tions that were unallocated. Charges paid by borrow- Other translation adjustments are charged or credited ers on Interim Fund Credits, currently 0.75 percent on to the Accumulated Surplus. balances outstanding, are received directly by IDA to compensate it for its services as administrator Contributions The Interim Trust Fund is expected to be terminated Contributions to the lnterim Trust Funid are paid in when the credits it financed have been substantially cash and nunnegotiable, noninterest-bearing demanid disbursed. Upon tcrmination, its assets and hiabilities notes. The demand notes are encashed by IDA, on will be transferred to IDA. Voting rights in IDA on behalf of the Interim Trust Fund, on an approximatcly account of contributions made to the Interim Trust pro rata basis among donors, at reasonable intervals Fund will be allocated to contributors upon termina- over the projected encashment period (approximately tion of the Interim Trust Fund. seven years) to meet the lnterim Trust Fund's opera- tional commitments. Summary ofSigniftcantAccounting and Related Interim Trust Fund contributions are expressed and Policies are payable in contributors' currencies, freely convert- Due to the nature of the Interim Trust Fund, these ible currencies and SDRs. Contributions made avail- financial statements have been prepared for the spe- able for disbursement in cash are translated at market cific purpose of reflecting the sources and applications exchange rates in effect on the dates they were made of contributions and are not intended to be a presen- available. Contributions not vet available for disburse- tation in accordance with generally accepted account- ments are translated at market exchangc rates in effect ing principles in the United States or with at the end of the accounting period. International Accounting Standards. These special purpose financial statements have been prepared con- Interim Fund Credits sistent with Article VI, Section 11 (a) of the Articles of Interim Fund Credits finance specific development Agreement of IDA, and Section 2(e) of the Board of projects or programs. The policies, practices and pro- Governors' Resolution establishing the Interim Trust cedures governing the allocation of Interim Trust Fund Fund. resources, the selection and appraisal of projects or The Interim Trust Fund's special purpose financial programs to be financed out of such resources and the statements are prepared in accordance with the approval and administration of Interim Fund Credits, accounting policies outlined below. including the terms and conditions thereof are the same as those applicable with respect to development Basis of Accounting credits made under IDA's Eleventh Replenishment The Interim Trust Fund's special purpose financial with the two aforementioned exceptions. statements are prepared on the accrual basis of 342 TIHE WORI.D BANK ANN.\NAL REPORI 1999 Interim Fund Credits are denominated in SDRs and are included in IDA's income only to the extent that are to be repaid in currency amounts currently equiva- payments have actually been received by IDA. If col- lent to the SDRs disbursed. They are carried in the lectibilitv risk is considered to be particularly high at Special Purpose Financial Statements at the full face the time of arrears clearance the member's Interim amount of the borrowers' outstanding obligations. Fund Credits may not automatically emerge from Principal repayments of Interim Fund Credits will be nonaccrual status, even though its eligibility for new part of the resources of the Interim Trust Fund until it Interim Fund Credits may have been restored. A is terminated. decision on the restoration of accrual status is made on a case-by-case basis after a suitable period of payment It is the practice to place in nonaccrual status all a c Interim Fund Credits mnade to a member government performance has passed from the time of arrears clear- or to the government of a territory of a member if C principal or charges with respect to any such Interim Investments Fund Credits are overdue by more than six months, The Interim Trust Fund carries its investment secu- unless IDA management determines that the overdue ties and related financial instruments at market value. amount will be collected in the immediate future. In Both realized and unrealized gains and losses are addition, if loans by IBRD or development credits bv included in income from Investments. IDA to a member government are placed in nonac- crual status, all Interiimi Fund Credits to that mzemiber NOTE B-INVESTMENTS government will also be placed in nonaccrual status bv Interim Trust Fund resources are invested in time the Interim Trust Fund. On the date a member's deposits including certificates of deposit, bankers' Interim Funcd Credits are placed in nonaccrual status, acceptances, and other obligations. A summary of the charges that had been accrued by IDA, as administra- Interim Trust Fund's investment portfolio by instru- tor, on Interim Fund Credits outstanding to the mem- ment for Investments Immediately Available for Dis- ber which remained unpaid are deducted from IDA's bursement at June 30, 1999 and June 30, 1998 is as income from development credits of the current follAws: period. Charges on nonaccruing development credits In mnillionzs 1999 1998 Average Average daily Net gains daily Net gains balance (losses) balance (losses) Carrying during the for the Carrvinig during the for the value fiscal year fiscal year value fiscal year fiscal year Time deposits $933.8 $718.5 $- $39(.3 $286.9 $- A summary of the currency composition of Invest- NOTE C-DONOR CONTRIBUTIONS ments Immediately Available for Disbursement at At June 30, 1999, receivables from contributions were June 30, 1999 and June 30, 1998 is as follow7s: $2.3 million ($3.0 million-June 30, 1998), all of owhich were not yet due. Subscriptions and In mnillions of US. dollars, equivzalenlt contributions not yet due at June 30, 1999 will 1999 1998 become due as follows: Euroa $ 14.4 $ - In mnillions U.S. dollars 921.4 390.3 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Period Total $935.8 $390.3 July 1, 1999 through June 30, 2000 $0.8 a. Effective January 1, 1999, the euro was introduced. July 1, 2000 through June 30, 2001 0.8 For reporting purposes, holdings in the eleven Thereafter 0.7 national currenzcies tlhat are considered sub-nilnts of the eutro have been aggregated with the ezuro and reported as euro, in bot/i the current and prior year Thtal $2.3 INTERINI TRusrIN FIuN SPFCIAI. PURPOSE FINANCIAL. S T AT EhMEN-T-S 343 NOTE D-FAIR XVLUIE OF FINANCIAL INSTRU- the OECD. Using the average of six months to June NIENTS CIRR as discount rates provides an alternative esti- Investments: Since the Interim Trust Fund carries its mate for the grant element. The CIRR for the SDR navestments at marlzet valuc, the carrying amount rep- has been used to discount the future cash flows from :nvestmrncts at mar-ket value, the earnving amount rep- the ITF credits. resents the fair value of the portfolio. These fair values are based on quoted market prices, where available. The grant element calculations consider interest rates, The fair value of short-term financial instruments maturity structures and grace periods for the credits. approximates their carrying value. They do not consider credit risk, portfolio seasoning, Development Credits: Interimr Fund Credits which multilateral and sovereign credit preferences and other are denominated only in SDRs, have a significant grant risks or indicators that would be relevant in calculating element because of the concessional nature of ITFI's far value. Estimating the impact of thcse factors is terms. Discounting the future cash flows from ITF's not practicable. However, in both cascs the estimated Credits usin.g the standard 1 0 percent discount rate of fair values of development credits outstanding are sub- the Development Assistance Committee (DAC) of stantially lower than the 558.4 million reflected on the Organization for Economic Cooperation and the Statement of Sources and Applications of Devel- Development (OECD) provides an estimate for the opment Resources at June 30, 1999 ($331.0 million- grant element. Currency specific Commercial Interest June 30, 1998), as shown in the following table. Reference Rates (CIRRs) are published monthly by Jo millions of US. dollars equivalent June 30, 1999 June 30, 1998 DAC-based CIRR-based DAC-based CIRR-based fair value fair value fair value fair value Development credits outstanding $508.4 $508.4 $331.0 5331.0 Less grant equivalent 372.7 245.2 253.2 190.0 Estimated fair value of development credits outstanding $135.7 $263.2 5 77.8 $141.0 Estimated grant elcment 73% 48% 76% 57 1% Discount Rates Used Discount Rates Used DAC 10.00% 10.00% CIRR: Average of six months to June-SDR 4.87°,h 5.68% NOTE E-INTERIM FUND CREDITS gate principal balance outstanding of $65.0 million, Charges paid by borrowers on Interim Fund Credits, ($35.4 million-June 30, 1998) none of which were currentlv 0.75 percent of balances outstanding, are overduc, were in nonaccrual status, consistent with the ' . ~policies of IBRD and IDA by whieh- all Bosnia and directly paid to IDA as compensation for Its services as poceofBRanIDbywihllosaad administrator of the Interim Trust Fund. e Herzegovina debt to these organizations is in nonac- crual status. At June 30, 1999, Interim Fund Credits made to or guaranteed by Bosnia and Herzegovina with an aggre- 344 TiDi WORILD BANK ANNUAi. REPoRr 1999 REPORT OF INDEPENDENT ACCOUNTANTS ON SPECIAL PURPOSE FINANCIAL STATEMENTS Deloitt Touche Tbhmatu (international Firm) 555 12th Street NW /' Washington, DC President and Board of Governors International Development Association as Administrator of the Interim Trust Fund We have audited the accompanying special purpose statements of sources and applications of development resources of the Interim Trust Fund as of June 30, 1999 and 1998, including the summary statement of interim fund credits and statement of contributions as of June 30, 1999, and the related special purpose statements of changes in cumulative translation adjustment on interim fund credits, changes in accumulated surplus, and cash flows for each of the two fiscal years in the period ended June 30, 1999. These special purpose financial statements are the responsibility of the International Development Association's management as Administrator of the Interim Trust Fund. Our responsibility is to express an opinion on these special purpose financial statements based on our audits. The special purpose financial statements for the Interim Trust Fund for the fiscal year ended June 30, 1997 were audited by other auditors whose report, dated July 28, 1997, expressed an unqualified opinion on those special purpose statements and included an explanatory paragraph which described the basis of accounting discussed in Note A to the special purpose financial statements. We conducted our audits in accordance with generally accepted auditing standards in the United States of America and International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying special purpose financial statements were prepared to reflect the sources and applications of development resources, operations, and cash flows of the Interim Trust Fund to comply with Article VI, Section I I(a) of the Articles of Agreement of the Intemational Development Association, as discussed in Note A to the special purpose financial statements, and are not intended to be a presentation in conformity with generally accepted accounting principles in the United States of America or International Accounting Standards. In our opinion, such special purpose financial statements referred to above present fairly, in all material respects, the sources and applications of development resources of the Interim Trust Fund as of June 30, 1999 and 1998, and the results of its operations and its cash flows for each of the two fiscal years in the period ended June 30, 1999 in conformity with the accounting principles described in Note A to the special purpose fmancial statements. This report is intended solely for the information and use of the Board of Governors, the International Development Association's management as Adrrministrator of the Interim Trust Fund, and contributors to and borrowers from the Interim Trust Fund. However, under the International Development Association's Board of Governors' resolution establishing the Interim Trust Fund, this report is included in the Annual Report of the Executive Directors to the Board of Governors of the International Development Association and is therefore a matter of public record and its distribution is not limited. July 28, 1999 Beijing London Mexico City Moscow NewYork Paris Tokyo Toronto INTERIMI TRUST FUND SPECIAL PURPOSE FINANCIAL STATEMENTS 345 INDEX Acronyms, 352 Asia-Europe Meeting (ASEM) Coastal Power Khulea Ltd., Bangladesh, 60 Adaptable Program Loans (APLs), 17 Financial Crisis Response Trust Fund, Cofinancing operations. 141-46 to Africa, 35 8, 48 (box) East Asia fiscal cris s, 142-43 to Europe and Central Asia, 71 Technical Assistance Grant, 47, 99 FY 1996-99, 141 table) to India, 61-62 Asia Growth and Recovery Initiative (AGRI), management oa, 146 to Latin America and the Caribbean, 48 (box), 53 by region, FY 1998-99. 142 (table), 83, 84-85 Asian Development Bank. 46 (box). 48 (box) 143 (figure) to Nepal, 58 Asian financial crisis. see East Asia fiscal crisis Special Program of Assistance for Africa. 143 Adljstment Loans, iii, iii (figure), 9 (box). Assessing Aid: Vl/hat V/orks. V/hat Doesnct and trends in. 141-43 10-11, 98 (table) Why/ 18-19, 136 (see also Trust funds) estimated payments to supplying countries Committee on Development Effectiveness (CODE) for foreign procarement under, 216 Bangladesh Strategic Compact and, 25 FY 1997-99. 97 (table) administrative reforms in. 62 Communitytrural development. 9 (boy) to Honduras, 81 (box) Coastal Power Khulna Ltd. and, 60 Compensation policy, Bank, 148 to Korea, 45-46, 46 (box) Dhaka Urban Transport Project 61 Comp ance Unit. Safeguard Policies and. 115 poverty-focused operations. 100 envircnmental health in, 61 (box) Comprenensive Development Framework (CDF), poverty reduction goals and, 99 primary education in, 58 , 2, 131 (see also Programmatic StructoralAdjust- urgent needs in, 63 African countries and. 33 ment Loan (PSAL); Special Structural Banking System Reform Project, Phi ippines, 46 Board of Executive D rectors and 26 Adjustment Loan (SSAL)) Bank of Thanland, Corporate Debt Restructuring human development ands 107-8 Administrative budget, 148-49 Advisory Committee of, 46 pilot programs, 6-7 (box) Africa, 30-41 Bank of Tokyo-Mitsubishi, 60 poverty reduction focus of, 96 Bank asstance to, ii, 8, 31-41 Basle Committee on Effective Banking Sipervi- Wolfensohn on, 4 capacity building in, 40 (box), 41 sioln, 125 Conflict, 121-22 comimitments, disbursements, transfers Board of Executive Directors, 24-29 Conflict Resolution SystemiNe1 2ork, 149 FY 1994-99, 34 (tabte) alternates to, xi lnResoPot-nfye dt cvare,1 countries eligible forWorld Bank borrowing, 30 appointed directors, xi, 193 Con(stantTr PstFundProgram (CTF),145-4 ecucation programs in, 111 Comprehensive Development Framework Consiltative Council for Women 94 environmental management in, 113-14 and, 26 estimated life expectancy at birth, 1955-2000, countrv/sector strategies and, 26 Consultatve Groips 39 (figure) ~~~~~~~~~~~~~~~~~~~~African meatings of, 33 39 (f/gure) elected directors and their voting power Fxterna Gsnder 02 human/social development in, 40-41 193-95 lending commitments. 34 (figure) financal capacity and, 26-27 on International Apricultural Research lending FY 1990-99, 33 (table) financia crisis response and, 25 (CGIAR), 120 operations approved, 36-37 (tab/e) HIPC nitiative and, 25-26 Corventon onffCiolm baIn Internaiona Business peace/stability promotion in, 38-40 Inspection Panel and, 27 Transactions, 104 private sector-led growth in, 35, 38 Strategic Compact and, 24-25 Corporate Debt Restructuring Advisory Commit- regional context, 30-31 voting power of. 193 tee, Bank of Thailand, 46 Special Program of Assistance for, 143 Bolivia. CDF pilot program in, 6 (box), 80 Corporate governance and restructuring, 126 (see a/so Sub-Saharan Africa) Brazil Ccrruption. see Ann/corruption mneasures Africa Competitiveness Report. 31 disease sirveillance/control in, 83 (box) C6te dlvoire, COF pilot program in, 6 (box) "Africa in the 21st Century," 33 East Asia fiscal crisis and. 77-78 Country Assistance Strategies (CASs), 4, 8-11 Africa Leve Database, 21 Pilot Program to Conserve Rain Forest in, 82 Board of Executive Directors and. 26 African Development Bank, 33, 89 Budget Committee, Strategic Compact and, 25 in East Asia and Pacific 51-52 African Vrtual University. 21, 41, 111 Business Partners for Development (BPD), 5 effectiveness of, 132-33 Agriculture projects approved, 155-59 gender integration into. 101 (see also Rural development) Cambodia ending/nonlending services, 8, 10 AIDS Campaign Team for Africa (ACTafrica), aid coordination in. 51 NlGOs and, 140 39 (box) anticorruption efforts in, 48-49 outcomes versus outputs in, 19 (see a/so HIV/AIDS) environmental protections n, 51 poverty reduction focus of, 96 Albania Capacity huilding poverty rediction standards of 97 Community Works Project and Social Fund, 71 in Africa. 40 (box) regiona emphases, 8 Rural Development Project, 70 Board of Executive Directors and, 26-27 Country Financial Management Assessments Alternates for country evaluation, 18 Latin America and the Car kbean 81 Board of Executive Directors, xi International Forim on, 141 Country Procurement Assessment Reports, Latin World Bank, 188-92 pension reform and, 112 America and the Caribbean, 81 Annual Report of Portfolio Performance, FY Capital markets and lending development, 125 Culture in sustainable development, 122 1998, 135 Caribbear. see Latin America and the Annual Review of Development Effectiveness Caribbean ,LAC) Dams, International Debate on, 119 (ARDE) 1998, 132 Centers for Disease Control and Prevention Danish Trust Fund on Governance Annual Review of Operations Evaluation (AROE) (U.S.), 59, 83 Cambodian anticorrupt on efforts ann, 49 1998, 133 Central America Debtor-creditor and insolvency regimes 126 Anticorruption measures, 103-4 Emergency Trust Fund, 79 (box) Debt Reduction Facility. 14 assistance on, 32 Regional Integrity Plan. 80 Debt relief, 13 in East Asia, 47 49 Central Asia. see Europe and Centra/ Asia (ECA) in Africa, 34 in Europe and Central Asia. 72 (box), 74 Chad Popuiation and AIDS Control Project, 40 (see also Adjustment Loans) in Latin America and the Caribbean, 80-81 China. dual-track reform in, 47 Development Committee Communiques progress in, 12 (box) Cini society partnershps wh. 4-5,139-41 for 58th meeting 231-33 WBI good governance programs and, 147 Civil Society Initiative, 140 for 59th meeting, 233-35 Argentina, East Asia financial crisis and, 77-78 Civil Society Thematic Team (CSTT), 140 Deve opment effectiveness, 95, 131-49 Arsenic Mitigation Water Supply Project, Clean Air Initiative in Latin American Cities, administrative budget, 148-49 Bangladesh, 61 (box) 82. 147-48 346 THE WORLD BANK ANNTLAL REPORT 1999 grievance process review. 149 Environmentally/soc ally sustainable develop- Gaza. see West Bank anrd Gaza knowledge building through WBI 146-48 vesit. 113-23 Gendei-inclusive/-equitable development. 10--2 NGOs and civil society partnerships. 139-41 erivirolimantal maragement. 113-16 George Foundation. 59 operations evaluation, 131-34 rural development, 117-20 Ghana partnerships, 137-39 soc al development, 120-23 CDF pilot program in, 6 (box) quaiity assurance. 134-35 Environmental Protection Agency, (U.S.) 59 Export Processing Zone (EPZ), 35 (box), 38 research. 136-37 Eritrea, ODF pilot program in. 6 (box) Trade and Inves:ment Gateway Prolect, 35 Development Grant Facility (DOF). 138 (box) Ethiopia, CDF pilot prograni in. 6 (box) (box), 38 Dhaka Urban Transport Project. 61 Europeati Bank for Reconstruction and Develop- Vision 2020 Program, 35 (box) District Primary Education Program (DPEP) 110 ment. 67 Global Compettive Cities Congress, 50 Dominican Republic, CDF pilot program in. 6 (box) European Commission Global Economrc Prospects 1999. 136 ASEM Financial Crisis Response Trust Fund Global Forum (or Corporate Governance, 1 2Z, East Asia and Pacific. 42-53 and. 8, 48 (box) Good governance DA-12 focus on. 12 anticorrupt on efforts in 47-49 MNA-MED Water Initiative and, 92 (box) Good practice in social policy. 25 Bane assistance to h. 8 43-53 Europe and Central Asia (ECA). 64-74 Governors, World Bank, 188-92 Bank staff decentralization in 44 (hoc) anticorruption efforts in. 72 (box). 74 Grievance Process Review Coivmittee, 149 commitments disbursements, transfers FY Bank assistance to, 8. 66-74 Growth, IDA-12 tocus on, 13 1994-99, 45 (table) commitments, disbursements transfers FY Gulf Cooperation Council (GCC). 94 countries eligible for World Bank borrowing, 42 1994-99. 66 (table) East Asia: The Road to Recovery 45 (box) countries eligible for World Bank borrowing. 64 Health, nutrition. and population (HNP) loans, 108 environmental management in 113 environmental management n, 73-74, 114 projects approved, 165-68 environmental safeguards for 50-51 EU accession and, 72-73 Health systems, Adaptable Program Loans for, f nancial and private sector development, 126 investrment climate in. 72 71, 83 Korea, Adsustment Loan to 45-46 46 (sox) lending commitments, 67 (fi/gre) Heavily Indebted Poor Countries (HIPC) Initiative, lending commitments, 44 (figure) lending FY 1990-99, 65 (table) 13 (figure), 14, 25-26. 105 (box) lenuing commitments, 44 (tablre) operations approved, 68-69 (table) Trust Fund, 146 Malaysian projects 46-47 portfolio performarice n, 74 HIV/AIDS malayicronom cprojesctunnq/stengthe 46n7 poverty alleviation/social protection, 70-71 in Africa, 40 microeconom c restructuringrstrengthen ngl regional context, 64-66 Intensifying Action Aga nst HIV/AIDS in operation appro 52-53 (table) structural reforms/emergency needs in. Afrca: Responding to a Development operations approved, 525tbe 6-6-7. 76 Crisis, 39 (box) Philippines projects, 46666.7Cni,3(bx Philippiones protect, 46 European Investment Bank. MNA-MED Water Ini- in South Asia. 58 regional content, 42-43 tiative and, 92 (box) Honduras structural adaustntent credit, 81 (box) relationship/port nership buildinig in. 51-53 European Observatory on Health Care Systems, 1 09 Haston developnient 9 (box), 95 107-13 'Social Crisis in East Asia' web site. 53 European Union (EU) education and. 110-12 social sector protection in, 49-50 oi coordinaton vith. 14 healtn nutrito I, and popuiation, 108-1') Thailand corporate restructuring. 46 ASEM Foinanci Crisis Response Trust Fsrd Indonesia crsis social impact. 107 (box) East Asia fiscal crisis, 102 and, 48 (box) lending. iii, 109 (figure) cofinancing/trust funds and, 142-43 Evaluatioir Capacity Development (ECD) 134 social protection, 112-13 Environmental Consequences of the East Evaluation scope. 18 socal protectin and other socia projects Asian A inancial Carsis, The, 51 Export Processing Zone (EP2). Ghana. 35 (box), 38 approved, 176-79 External Gender Consultative Group. 102 Human resources administration of, 148 Economic Commission for Africa. 33 Hurricane Georges, 79 (bos). 80 Economic Development Institute. see World Bank Einancia. crisis response Hurricane Mitci. 8,s14. 75. 79 (box). 80 Institute (VvBI) Board of c utive Dirricane and, 25 Economic Research Forum for the Arab Coun- Board of Evocative Directors and, 25 tries, Iran and Turkey. 94 social protection loans and, 112 ICICI Ltd.. 60 Educat on projects approved. 159-61 Fnancial sector development. iii, 123-31 Impact assessment, 136-37 Education Sector Strategy. 110 corporate governance and 125-26 Implementation Completion Reports, OED and, 133 Efftciency in World Bank assestance. 2 Financial Sector Assessment Program. 104,125 India Egypt knovledge services and, 130 CASS outcomes. 19 Principal Bank for Development and Agricul- long-term resource flows to developiog coun- District Primary Education Program (OPEP), tural Credit, 91 trots 1990-98. 124 (figaro) 110 Social Fund ill Prolect. 89 partnerships. 129-30 energy needs in, 61--62 Emergency assistance ri. 9 (box) private provision of infrastructure stimnulation human/social development in, 58 in Furope and Central As a. 66-67, 70 126-28 private sector in, 59-60 Employment policy Bank, 148 projects approved, 163-65 Tamil Nado Urban Development Prolect, 61 Environment risk and, 129 Uttar Pradesh Sodic Lands Reclamation II capacity bu iding and. 115 supervisory training, WBI and, 147 Project 57-58, 57 (box) East Asia and Pacific safeguards. 50-51 urban development, 128-29 Indigenous Knowledge for Development Imtia- Ervironmental Consequences of the East (see also Private sector development) tive. Africa, 41 Asian Financial Crsis, The, 51 Financial statements Indonesia Europe and Central Asia managenient of 73-74 IBRD. 265-306 aid coordination in. 51, 52 global coaicerns foi 115-16 IBRD mariagement's discussion and analysis, anticorruption efforts in. 48 health in Bangladesh and, 61 (box) 237-63 CASs Progress Report consensus, 16 IDA-12 focus on. 13 IDA special purpose. 307-33 Municipal Innovations Project for. 49 (box) Latin Amer oa and tse Caribbean and. 82 Interim Trust Fund. special purpose. 336-45 Policy Reform Support Loans to, 51 Midd e East assd Northern Africa, 91-92 Flexibility in World Bank assistance, 2.16-17 Industry projects approved 168 Food and Agriculture Organization (FAO). Un ted InfoDev. Y2K ant. 15 (box) partnership strengtheninog. 11 Nations. 118 Infornation technology project approved, 179 priorities for 114-15 Food secarthy. 117-18 1sf rastructare Action Plani. 1 24-25 projects approved. 162-63 Foreign InvestmentAdvisory Service (FIAS), 125 Infrastructure Avant Management Protect South Anna management of, 59 Forests, management of, 119 Samoa. 47 INDF,X 347 nfras-ructure Deve opment Finance Cormpany, oy rnacr pLrposo and regior 217-18 > region. ii (figure) ccar itments. disbursements transoers ton for investmert lenooig. 215 lending by sector, i `figure) FY 1964 99 78 (table) for foreigrn/ical expenditures. 205 lending com nitments/dis cursements countr:es eligible for We- 3 Bark bo-rmvirg 75 education projects appsoved 159-61 1995 99. ii (ifiguri East Asia f sca cr SIS response by 77-78 electric pover and other energy projects ap- miringiother extract ve projects approved 169 ervironmercL of'. 82 1 ' 4 proved, 162 aut sector oaoeets approved. 169-72 finasc aI/juoria /public secsor eftrmsai, 80 env ronment pro ects approved 162-63 oil ard cas Droje0ts approved 172 trrast-ucture ft- poor. 61-82 esoimated paymerts to SUipp ying coLntnres payments lo supp yirg countr es Latin Amer can Center ot Adm n:ssration tor for toteigo procu'eenet unoro auset- to torego praoremrert 208- ii Deveoogmen'. 61 onet lerdorg. 216 000nd ng0 eom tmentse 78 (figare) 'inance proacts app'oved 163-65 to n1n proc tem4 nnbyddssYp- 1990-99.77(rabe) finarcia haighlictnos 152 payments t^ suppiying e :g b e borro3ing macroeconormi indicators FY -995-98 fmanc al staterments o1. 265-3''COlSre 3 oeg/oclpsue n 6(iue oauitriee for 'oteig/ coal gpccurement * iae health nutrition. and copu ation proseccs ap- n 206-8 cperations aoproved 84 85 (table, proved. 165 66 perfarnance-based a lcations. 13 povertv and natura iisaster n 78-80 industrv p'oects apsroveo. 168 projects approved -egoi0a context. 75-76 lending by rer yionaa i:figre) b o pu ee 225-30 soc al sec.or suaport in. 82-83 end ng by sects-. iii (figre) bh reaien 223-24 Learnirg a0c innovation Credit ,ending comm tmentsidisbursemetits pablic sector managemnent projec.s alpisvec. ftr Y ene 91 1995-99. Ppfigure) 172-76 Learn og and Irnovatior Loars (L Ls) i 17 lending/nonlendirg se'vices 0see WorldPank eesocc'soves in.152-53 coAt: a 35.38 managemenr's d scussion ano ana vsis 237-63 spec al surpose foiancial statemeits. 307-33 to Domisiican Republic. 80 minina/other extactive 3rojectso pprovec, 16 telecom urncasionsna formatsiorntechnology to Indonesia 49 (box). 51 mult.sector psojects approved 169-72 a oject approved. 179 to Latin Ame ica ard the Danrbbean. 82, 84-85 payments lo supplying countries for foreign -raosportatior projects appravede 179-82 LIBOR loan. 25 proc.rement 209-11 rrol;ttIrBRepen shoTentof, . 11-14 20 L thuairra poverty al eviation/socia proteation in. bygoodsdescripto0 212-14 ta/ae). 26-27 71 (box) payments tc sLpsyi0g eligible bsorr3wing urcan development projec's apsrovedr 82-85 Local-Leeiol/ stitonsStuo/ 122 countries to' foreorn ocal procurement. woater sLpDy/san tat on project approved. 185 206-8 Irnernational Deve oprment Goa s. 2 103 Mvtadagascar StructLral Adjustment Credit. 38 pub c sector rnaragermet projects approved. CDF nd 4 Maharashtra State Hea th Systems Pro ect. 58 t 72-785 socia protectio n ano other soc al projectsa0- daman develcprent anc. 107 Malaria hLman developorent and. '09 proved. 176-79 poverty -eosct'on and 96 97 Valaci Social Actior FPnc. 40 transportation projects approved. 179 82 Intenationa Finance Corpora.ior OFVC. xil 5 i xHlaloyso Poloc aod Homro Peources Qeve op- urban deve apment projects approveo, 182 85 jailt CASS .to. 8 meat (PHRDs grant to 46-47 water supply/sanitation proiects approved. 185 private sector ceve spment ard 60.88 120 N1arkt-based boar products 17 Interratoioal Centre for tr e Settlement of nves-- nternatioFal financia arch tectuae. 104 Mauritania Telecommunicat ans Sector ment DiesorsalICSVo.xii xs i nternat0i0a Parc far Ag:cltaral Devlopment Refcrr 125 International Conference on Lead Poisoning (IFADi. 118 Medterraoean Deve apirent Forum. Sec'nd. 94 Preven'ion and TreatmeEm. Bangalore International Monetary Fu6rd (IMF) Meso-American Bioloigca Dordor. 82 Irdia. 59 a d cocrd nation with 14 Mex co Internation0 Consortium for Cocoeration on the country vulnerab lity to cris s and, 133 CASs Progress Report consensus 16 Nile, 39 Finano a Sects' Assessment Progrom aid. 104 fsca cr sis. 102 International Development Associat 0n (iDA.I HPC Init at ve and 105 soar 186 Middle Easd and North Aft ca iMNA). 8 86-94 Xii-si. 10 11 lnternaional Task Force on Commodity Risk ag- cltu e/natura resources ir 91-92 African sector comm tments 34 (figure) Managerment :n Deve oping Countries. 138 Bank assistance to 8. 86-94 agriculture projects aoproved 155-59 nvestroent lensing i. iii (figure carom tments. d sbursemerts, transfers commitment a-horitv of. 152 FY 1994-99. 88 (rasle) commitment 'ee 153 Japanese >ast-Confl.ct Fund 8 c0 nrrunitv-based ems oymnent/wvorks o3- comulative lending joint Africa nst trte. 21 grams. 89 by cou0try. 219 22 Join' United Nations Programe onH ViAiDS courtvese gsio tfor Vos Sank borrcv!irg. 86 (UNA OS), 39 (fiare) 348 THE WOPt L BAN\K ANNUAI. RF.P0oRT 1 999 environmental nanagement n, 114 Pa;estinian Authority Power utilities growth/private sector development. 87-88 social/economic infrastructure and 90 (box) Africa 41 human cap tal developmant in. 89 Par American Healih Organization, 83 Coastal Power Khulna Lto.. Bangladesh, 611 institutional development in, 91 Parliamentarv CenTre, 62 electric power/other energy prolects ap- nomending services to. 93-94 Partial Cred t Guarantee. 17. 129 proved, 162 operations approved 93 (table) Partia rsk guarantee, 129 South Asia. 61-62 regional context, 86 Partnership Group 137 Prvate Enterprise Credit Support Project. sectoral ending comm tments FY 1994-99, Partnersh ps Philippines. 46 88 (figure) for Caiacity Bui ding in Africa, 40 (box), 41 Private investment. marg nal mpact o', sectoral lending FY 1990-99, 87 (tadle) GDF and 4 18 frygare; (see also MNA-MED Water Inirtative) with civil society 4-5 Private sector davclopment 9 (box) Millennium Science Initiative, 111-12 cofinancing operations. FY 1996-99 141 Afrca, 35 38 Miningaother extractive projects approved, 169 ntable) n ecatin. 112 Miyazawa Ki chi. 48 (box) development effectiveness and, 137-39 finance and. 123-31 Miyazawa Initiative, 8, 48 (box). 53. 99, 142-43 environment and, 116 know edge services ana, 130 MNA-MED Water Initiative. 92 (box) f nancial and private sector development lending, 123 (figure) Morgan Stanley Dean Witter. 60 129-30 partnerships 129-30 Morocco grant making and, 138 (box) portfolio performance. 130-31 CDF p[ ot program n, 6 (box) knowledge management and rura develop- promotion of, 124-25 growthiprnvate sector development, 87-88 ment 119-20 r sk and. 129 Polcy Reform Support Loan to, 89 (box) rwith multilateral development banks 105-6 urban development. 128-29 Mozambique, HIPC Initiative fcr 33-34 NGOs ard civ loac ety, 139-41 (see a/so Financialtsector development) Multiiatera deve opment banks (MDBs) Bank operations evaluation and, 134 Privatization and private capital f aws to infra- partnerships with, 105-6 "Paronersh ps for Deselcpmert Praposed structure (PPI) loans 127-28. 127 (table) Mu tf ateral nvestment Guarantee Agency Actions for the World Bank," 3 Procurement undeo Bank-f nanced projects, 206- (MIGA), Xio, X ii poverty reductionreconom c management 8, 209-11,212-14, 216 private sector deve opment and, 60, 88 and, 104-6 Programmatic Structural Adjustment Loan Multisector prouects approved. 169-72 (see also Nongov'ernrmenta organizations (PSAL). 16,25 Municipal lnnovations Project. Indonesia, 49 (NiGOs)) (see also Adjustment Loans) (box) Persooiel Comnmnittee. Smrateg c Coftpact and. 25 Program of Targeted interventions (PTIs), iii I Municipal Irtegrity Plan, Venezuela 80 Phiippines (figure), 99 (table). 155 aid coordmnat an in 51, 52 lending by region. 100 (figure) National Environmental Action Plans, 73-74 CASs outcomes, 19 ending by sector, 101 (figure) National Institutional Reviewvs. 103 Second Vocational Training Project n 49 Progress Report on Poverty Reduhtion (FY98). 96 Nat onal Integrty WVorkshops, 8C Policy and Human Resources Development Fund Proiecntmg Our Planet Secnring Our Future, Natural disasters (PHRD) (Japan) 145 115-16 ervironmentally/socially sustainab e develop- Pal cy-Based Guarantees 129 Prototype Carbon Fund. 116 ment and, 113 Policy Reform Support Loan (PRSL) to Morocco, Pue c Expenditure Reviews (PERs). 93 poverty and 78-80 82 89 (box) Pubic Finance Structural Aclustment Credit, Natural resource management post-conflict. Policy Research Report (PRR) on gender and de- Ba kans and 67 g (poxn veiopment 102 Public sector management NGO-World Bank operational collaboration, 139 Pollution Prevention and Abatement Handbook. 115 projectsoapproved, 172-76 FY 1987-99. 139 (table) Populationireproductive health services, 110 puo7C institution strengtnening, 103-4 NGO involvement, 140 (figure) Post-confl ct initiatives. 26-27 Nile Bas Initiative, 119 ( in Balkans. 67 Duality AseLrance Group (GAG). 18, 131,134-35 Nongovernmental organizat ons (NGOs). 4-5 Post-Conflict Fund (PGF). 16, 121-22 Duality n World Bank assistance, 2 139-41.155-86 Poverty development effectiveness and, 17-19 Nutrit on, human development and. 109-10 CDF and. 4 Europe and Central Asia 70-71 Researcn. development eftectiveness and, 1:36-37 Oil and gas projects approved, 172 global, 3 (box) Results-based management (RBM), 133 Online Soornebook for Decentralzat/on and Locan increase in, 2 Road and Highways Thematic Group, 130 Development, 120 natural dasaster and, 78-79 Romania Operations evaluation, 131-34 Poverty Assessments, 96 adaustment loans to 67, 70 Annual Pevierr of Oevelopment Effectiveness projects approved, 155-85 CDF plot program n, 6 (box) (ARDE) 1998.132 reductian elements, 5 Rura. development, ii., 9 /box) 117-20 development effectiveoess lessons of 17 socia development ann. 132 environmental degradation, 118-19 (box), 132-33 in South Asia. 57-58 food secur ty, 117-18 Evaluation Capacity Development (ECDO, 134 urban, 9 /box) projects approved 155-59 lessons from crisis, 132-33 World Bank focus on. ii, 5 Rural Water and Small Towns Themat c Operations Evaluation Department (1ED) 131 Poverty reduction/economic management 95, Group, 130 partnerships and, 134 96-106 wvide v shared grovwth, 117 renewal of, 133-34 adiustment lending and 99 Russ a sector and theivatic studies focus 133-34 Bank activ ties on. 96 Bank's loan portfo io and, 74 stakeholder partcipation n, 134 country vu nerability to crinses and. 102-3 fiscal criss in 74, 102 Organzation for Economic Cooperation and De- external partnerships and. 104-6 Structura Adusetment Loan III and. 67 velopment (OECD). 106 gender concerns, mainstreaming and, 101-2 Rwanda Community Re ntegratron and Develop- anticorruption measures of. 104 nternational financial architecture and. 104 ment Project 121 (box) poverty-targeted nterventions and. 100-101 Pacific. see East Asia and Pacific poverty work mainstreaming, 96-97 Safeguard Pohcies 115 Pakistan pub ic nst tutions and, 103-4 Samoa, Infrastructure Asset Management P'roject Structural Adjustment Loan to, 55, 62 (see also Program of Targeted fnterventions ir, 47 urgent needs in. 63 PTiFls Securities markets strengthening, 125 INiDEX 349 Senegal P lot Female Literacy Pro nct, 40 Techn cal Cooperation Program (TCP). 94 natura resources management in. 92 Single-currency loans. 17 Te ecommun cations project approvedo 179 soc al/ecoromic nfrastructu,e in 89 90 (hox) Sma I Grants Program. 141 Thailand nsee also Trust Fuor for taza and the Socia and Structura Policy Review (SSPR). 93 corporate restructur ng n 46 Anest Bank) Social Capital letative. 122 Soc al Investment Program Loan to. 49-50 Wlfeensohn James D . 2-3. 4. 33 116 Socal development 120 23 Thematic perspectives. 95-131 on cvil society. 139-40 conf ict and vinlence. 121 22 environmenta v/social v susta nab e develop- message from. xiv-xv culture in sustainable development. 122 ment. 113-23 World Bank methods and tools 120 f nance and orVate sector development. aid coord nation. 14 poverty reduction ann. 132 123-31 articorrupt on efforts ol.t f2 (box) social capital/lcval- enei institut ons 122 human development. 107-13 ass stance efforts. 2-21 Social Development IUnits. Souts Asia. 58 poverty reduction/econornic management. eudget by program of. 201 Social Flnd 11 Project. Egypt 89 96-106 CDF pilot programs. 6-7 (box) social incluson. 1 20-21 Toronto Internationa Leadership Center for Fi- Count-v Assistance Strategies nCASs). 1-1 socia principles 122-23 nancia SectorSupervision.21 125.t47 countFye ig blity for brrring from. 202 3 Social sector lendijng. 112-13 Trade and nvestment Gatevay Project. Ghana. oebt relief. 13-14 IDA-S 2 focus on. 12 Transparency development effect veness focus of. 1 7-t 9 CED on, 17 8. 17 (box) financia disc osure/business nformat on 126 financialcriosesand. 1hoe Socia Protect on lnoan to Breail 78 Transparency International. 62 financia nighligbts Solomon Isiands. 47V Wor.d Bank. 19. 21 global conntect 2 South As a0 54-63 Transportation projects approved. 179-82 governors/aternates on. 168-92 Bank assistance to. H.6 8 55--63 Trust Fund for Gaza and the West Bank Ass s-HIC nt arise 13 (fiourei civil society of. 63 tance. 93 (table/ 155 IDA-12 11-14 20 (table) 26-27 commitments, disbursements. transfers soc al orotection and other socia sector endieg highlights. ii ii FY 1994-99. 56 (table) projects approved, 179 new lending commitments. i countries eligiblefor World Bank onrrowing. 54 urbar development projects approved. 184 officerst f 196 energy needs n. 61-62 vatersuoply/san.ration proJects approved. 185 offices of. 197 200 environmental management in 59. 113 (see also West Bank and Gaza) openness/transparency of 19. 21 Gateway Termcnals L mited Project, 60 Trust funds 141 -46 Partnerships for Deve opmntc Proposed good governance/institutional strengthening, Consultant Trust Fund Program (CTFi 145 46 Actions for the World Bank." 3 62-63 contributions/d sbursements of FY 19959-99. performarce-aase IDA allocations. 3 human/social development in. 58-59 144 (figure) povery reduction 3 (box). 5 lending comm tments, 55 (figure) disbursements of. FY 1998-99. 145 (table) pnver-v reduct on examp es 9 (box) lending FY 1990-99, 56 (table) H PC Trust Fund, 146 prooects approved by purpose 225-30 operational effectiveness in. 63 management of, 146 projects approved by region 223-24 operations approved 62 (table) Po icy and Hurman Resources Development responsiveness to c ient needs 15-17 poverty programs in, 57 58 Fund iPHRD) (Japan), 145 sectoral lending FY 1990 99. 10 (table, private sector in 59-61 trends n 144-45 in tvventy-first centurV. 21 regional context. 54-55 (see also Cofnancing operations) c,en sites. 350 51 social assessments. FY 1994. 1996, 1998. Tunisia Wolfensohn vesior for, 2-3 58 (figl)re) growth/prvote sector development. 87-88 Y2K. tS (box) urgent needs in. 63 Social and Structural Policy Review in g93 see also Board of Execvtitie Directors Inter- Special Finoneal Operations 126 Turkey. povertyrenvironment projects in. 73 (box) natonal Bank for Reconstruction and Specia Program of Assistance for Africa (SPA) Development (IBRD): International De- 33 Ugrd loiopmnnntAaeociation yDA,r WAorld Spec al Repurchase Faci ity Support Loan to DF pilot prograa n 6-7 (box) arbnk Group, Argentina. 76 HIPC et~atv vsor, 34 we Itd Bone nrotup, xiWIl1913 Special Struictural Adjustment Loan (SSALj, 1 6. UNE:oi omsinfrAuc.3 Wodd Bank nsttuite (WBI), 19, 131 25 UhN Econmic Ceommisesn for Afica. 33 knovOedge building throigh. 146-48 to Lat n America and the Caribbean (LAC) 77. /rban deveopmen, iii 126-29 Wor d Bank Learning Network 21 80 lending. 128 (`fgure) World Conservation Union (IUCN). 119 (see also Adjustment [oans) proJects approved. 182-85 World Dvvelopment Indicatots (WDI). 106 Sr Lanka Lrban poverty. 9 ,bev Vlorld Dovelopment Report (WDR) administrativ reforms in. 63 199861999 136 private sector development n 60 Vaccines. human development and. 109 t99912000--Enteringtce21stCeDnture. The Staff development, Bank. 149 Vietnam Changong Development Landscape 128 Stakeho der participation in evaluation. 18 CASS outcomes. 19 2000,12001 19. 58 100 01 Strategic Compact. 2 CODF p ot program i. 7 (box). 47 World Health Otranization 83 admi nistrative budget and 148-49 Regulatmon on Fiscal Publicaion. 48 World Links for Developnnent Program. 111 Board of Executive Directors and. 24-25 'Vil age rumers on' Program. South As a. 16 World Trade Organization (WTO). 106 efficiency goals 18 progress on, 135 (box) Water Yaounde Declarat on 116 Russian banking col apse and. 74 nianageit ent of, 118-19 Year 2000 (2K) computer prol em 15 (box) Sub-Saharan Africa. accounting for growth in. sanitation and. 127 Yemen 1995-97. 31 (table) supplt/san tation projects approved. 185 Country Assistance Strategy (CASs). 93 West Bank and Gaza educat on programs in. 111 Tamil Nadu Urban Development Project, 61 CDF pilot program in. 7 (box, Pujb ic Sector Management Adjustment Cred t Technical assistance (TA) odlustment lending nvestmen' Gusarantee Trust Fond. 88 91, 93 -94 and 99 350 THE WORILD BA\K ANNt!AI. RFPOR 1 999 WORLD BANK WEB SITES Africa http://wwxv.worldbank.org/afr Agriculture http://www.worldbank.org/agriculture Annual Meetings 1999 http://www.imforg/external/am/1999 Annual Reports http://www.worldbank.org/html/extpb/annrep/ Anti-Corruption http://wwwxvworldbank.org/anticorruption Calendar of Development Events http://xvwwv.worldbank.org/html/extdr/extcs/agenda.htm Comprehensive Development Framework http://wsvxv.worldbank.org/cdf Contacting the World Bank http://wsvxv.vorldbank.org/html/extdr/gen.htm Country Assistance Strategies http://wx-.vw.worldbank.org/btml/pic/cas Data and Statistics http //wwwworldbank.org/data Development Goals http://www.worldbank.org/data/dev/devgoals.html Development Ness's http:/,/wwwvNvworldbank.org/html/today Disclosure of Information http://xsxvw.worldbank.org/html/pic/Dp.root.htm Early Childhood Development http://wwwv.worldbank.org/children East Asia and Pacific http://vwwwworldbank.org/eap Economics http://www.worldbank.org/economics Education and Technology http://xvxvw.worldhbank.org/education Emerging Markets Database http://wsvxsuifc.org/emdb Energy http://wvww.sworldbank.org/html/fpd/energy Environment http:/www.vsvworldbank.org/environment Europe and Central Asia http://www.worldbank.org /eca Evaluation and Safeguards http://WWW.worldbank.org/evaluation Foreign Investment Advisory Service http://vsvw.fias.net Finance http ://wsvwworldbank. org/finance Frequently Asked Questions http://wwvs.worldbank.org/html/extdr/faq/faq.htm Gender http://svswsw.worldbank.org/gender Global Development Finance http://vvww.worldbank.org/prospects/gdf99 Global Distance EducationNet http://www.worldbank.org/disted Health, Nutrition, and Population http://wvwsv.worldbank.org/hnp Heavily Indebted Poor Countries Initiative http://wsvwxv.orldbank.org/hipc HIV/AIDS and the WA'orld Bank http://#svwsvsvvorldbank.org/aids International Bank for Reconstruction and Developmnent http://www.svorldbank.org /ibrd International Centre for Settlement of Investment Disputes http://xvxw.wworldbank.org/icsid International Development Association httpw://ww.worldbank.org/ida International Finance Corporation http://wvxvw.ifc.org International Monetary Fund h:tp://wvww.imf org InfoDev (Information for Development) http://wxvxvwworldbank.org/infodev InfoShop (Public Information Center) http://wsvw.worldbank.org/html/pic/PIC.html Inspection Panel http://www. worldbank.org/html,/ins-panel Latin America and the Caribbean h:tp://svww.worldbank.org /lac Microfinance - Sustainable Banking for the Poor http://wsvwv-esd.vorldbank.org/html/esd/agr/sbp Middle East and North Africa h:tp://wvwwv.worldbank.org /mena Millennium http://xvxvxv.xvorldbank org/2000 Multilateral Investment Guarantee Agency http://wwvwA.miga.org Mining http //www.worldb ank.org/html/fpd/mining Nongovernmental Organizations/Civil Society http://vvwwwworldbank.org/ngos Organizational Chart - Vorld Bank http://wxv.wvworldbank.org/html/extdr/orgchart.htm Participation http://svvww.worldbank. org/participation Post-Conflict Reconstruction http://xvxvwv.orldbank.org/postconflict Poverty Reduction/PovertyNet http: //wssvw.worldbank.org/poverty Private Sector Development http //www.worldbank.org/privatesector Procurement in Bank-Financed Proj ects http://www.worldbank. org/html/opr/procure/conten:cs.html Public Sector http://wwsvsworldbank.org/publicsector Publications http://w.xvxv.svorldbank.org/publications Research http://wvvw.svorldbank.org/research Resource Mobilization and Cofinancing http://wxvA.worldbank.org/rmc Rural Development http://www.worldbank.org/rural Social Developmenit (Social Assessment) hlttp://svsvsvwsorldbank.oi-g/socialdevelopment Social Protection http://wwssvworldbank.org/sp South Asia http://wwsv svorldbank.org/sar Spring Meetings 1999 http://sw vsvsimf org/external/spring/l 999 Strategic Compact http://vwww.worldbank.org/html/extdr/backgrd/ibrd/comsum.htm Telecommunications & Informatics http //www.worldbank.org/html/fpd/telecoms Transport http://www.worldbank.org/html/fpd/transport U.N. System of Organizations http://wxvxv.unsystem.org LJrban Development http:/,/isvsvs. ss'orldbank.org/urban World Bank Institute http://wwwv.worldbank.org/wvbi World Development Indicators bttp://svAvw.worldbank.org/data/wsdi World Development Reports http://Nwww. wvorldbank.org/wAdr NVorld Development Sources http://wvww-wds.worldbank.org Y2K (Year 2000 Initiative) http://svvwvworldhank.org/y2k WORLD BANKWEB SITES 351 ACRONYMS THE WORLD BANK ANNUJAL REPORT 1999 AfDB African Development Bank JEXIM Export-Import Bank oiJapan AIDS Acquired Immune Deficiency Syndronie LAC Latin America and the Caribbean APL Adaptable Program Loan Lll. Learning and Innovation Loan ASEM Asia-Europe Meeting (Trust Fund) MIGA Mlltilateral Investment Guarantee Agency CAS Country Assistance Strategy NEINA M,'Iiddlc East and North Afirica CDF Comprehensive Development Framework NEAP National En iron mental Action Plan CG Consultative Group NEDA Netherlands Development Assistance CIDA Canadian International Development Agency ODA Official Development Assistance CIS Commonsvealth of Independent States OECF Overseas Economic Cooperaticon Fund CODE Committee on Development Effectiveness OECS Organization of Eastern Caribbcan States DAC Development Assistance Committee OED Operations Evaluation Depar-tment DGF Development Grant Facility PACT Partnership for Capacity Building mu Africa EAP East Asia and Pacific P1 IRD Policy and Romani Resources I )eseloprlent EBRD European Bank for Reconstruction and PPI Private Provision of infrastructure Development PTI Program of Targeted Interventions ECA Europe and Central Asia QAC Quality Assurance Gretn ESAF Enhanced Structural Adjustment Facility SATI- Structural AdjUtsrment L-oani EU European Union SAS South Asia FAO Food and Agriculture Organization of the SDR Special Drawving Rights United Nations SPA Special Program of Assistance (fo- Africa) FIAS Foreign Investment Advisors' Service TA Technical Assistance GEF Global Environmental Facility 0N LUnited Natinols HIPC Heavily Indebted Poor Countries UNDP UJnited Nations Devel'opment Prograumen IBRD International Bank for Reconstruction and Development U,NESCO Ulnited Nations Educational, Scientific and ICSID International Center for the Settlement of Cultural Organization Investment Disputes UNICEF United Nations Children s FuLnd IDA International Development Association UTSAII) United States Acency for International IDF Institutional Development Fund Devclopmen WBI Wor-ld Bank Institute IFAD International Fund for Agricultural Development WDR WVorld Development Report IFC International Finance Corporation WHO World Health Organization ILO International Labor Organization WTO World Trade Organ ization IMF Internationlal Mlonetary Fund WWF World Wide Fun d lor Natu re ILF Interim Trust Fund 352 TOiEWORLD BANKANINtUAl REIPORT 1999 Ediltor Man9rama Gotur Offie af theVice President, Externaj Affairs, World Bank Prqpect9ssistant Nisha Chatani, Offtice oiftheVice Piiesident lxternal Affairs Wor|d ank Design Book and coverdesign joyce Petruzzelb, Graphic Design Untt, Worlid Bank Design co9rdination Beni Chibber Rao GraphrP Design Untt, WorldBank Typograplhr and chart destgir rhe Word Express, Inc Product£on Mark Ingebeteen Office of the Pu*lisher External Affairs. World Bank Editorial consultanti 11thleenA Lynch Photo c'red its cover photo World gank page xti, ktchete lannacciWorld-13ktk page 5 Mat'ten Van Nteuwkoop/Air1d Barrk page 32, copyright 0 1993 Corei (torpQration page 38 Pam Flory page 47 HaThanh HoangrWord 6ank page 50, Curt Carnemark/Yorld lank page 54 RayWiltinlWorld Bank page' 60 Uttar Pradesh land DevelopmnentCorporation page 70 Ana Gjokut2fA%rtd Bar page 73 Cuneyt OkanlWold Bank page 79 Jdsef S Trommer/orlid Eaek page 82 L'tin America arnd the Cafibbean RegioimWorld Bank page 90 Wael Hanbali page'9 1, Curt CarnmarWWorld $arkt page f2, Xuan minh page 108 Curt Carnemark/WorIl Bank, page I1 4, DWernerWorlt- Bank pag,e W,C urt Carnemark/World1 Bank TheWorld Bank InfoShop The infoShop carres all World Bank publications and operational documents and a wide selection of non-Bank titles on development topics Full reference services help users access project documenlts databases and a variety af other informoation Several "InfoStations' allow public access to theWorld Bank Intranet pages Information is also available on all World Bank Public Information Centers/Libraries in several local offices worldwide Web site http //www worldbank org/html1pic/PIC html Address 701 Eighteenth Street, NW, Washington, DC Hours, Monday-Friday, 9 30 a m to 5 30 p m Email. pic@workIbank org Phone (202) 458-5454,fax (202) 522-1500 copyrtght 4T2000 The World Bank Group PIC Europe in Pars at 66 avenue d lena, 75116 Paris France, 18 IS H Street-N W YWashngton,DC 2033 USXA 40 69 30 26 (phone), 40 69 30 69 (fax), ppans@worldbank org All rights reserved PtCTokyo Fukoku Seimet Bldg t 0-F, 2-2-2 Uclh saiwai-cho, Manufactured i -the United States ofAnerica biPyoda-kujcey IP%Ojpati, 3597-676 Xphone, 3,597-6695 ®), ISSNd*2452942 WkYo1 World6atn org [SBN "2113-4353'X The World Bank Mission To fight poverty with passion and professionalism for lasting results. To help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. To be an excellent institution that is able to attract, excite, and nurture committed staff with exceptional skills who know how to listen and learn. 1818 H Street N.W Washington, D C. 20433, U.S.A. w 0 Telephone: (202] 477123 R N Facsimile: (202) 477-6391 L : Telex: MCI 64143 Worldhank D MCI 248423 Worldbank Internet ww s\sorldbank.org B E-mait: books@Cwarldbank.org A N, 1 4lll 34:ll | 5 3\ K 9 780821 343531 Our dream is a world free of poverty ISBN 0-8213-43 3-X