The World Bank Group got the go-ahead on a new strategy aimed at repositioning itself to better tackle its two goals: ending extreme poverty by 2030 and boosting shared prosperity. The strategy aims to more efficiently and effectively leverage finances, technology, and talent to provide customized development solutions for client countries. In a communiqué at the close of the Annual Meetings, the Development Committee said it “strongly endorsed” the plan. The committee said the Bank Group has an important role to play “in delivering global development results, supporting countries with their specific development challenges, and helping them eradicate poverty and build resilience to future financial, economic, social, and environmental challenges.” Read the communiqué and article.
A new paper updated the Development Committee on the gender equality agenda at the World Bank Group. In the past year, all of the Bank’s country assistance strategies were “gender-informed,” and the total share of gender-informed lending rose from 83% to 98% between FY12 and FY13. This translates into a dollar figure of almost $31 billion, notes the paper.
Europe and Central Asia
Nearly three years ago, a large delegation was pulling in front of a newly-renovated kindergarten building in the village of Cucuruzeni, Moldova to unveil a long-awaited addition for its 2,000 inhabitants. Newly planted flowers and the fresh smell of paint constantly reminded me that this was more than just a World Bank-financed project -- it marked the beginning of better education for children of the community.
Two weeks ago, as I was driving north of Moldova’s capital Chisinau, our driver veered off on an unpaved eight kilometer stretch of road. The dusty, bumpy ride would take me back to Cucuruzeni, after three years.
My anticipation did not go unrewarded. The building was spotless. I stopped in front of a dozen smiling, and curious three- and four-year-olds, excited to see visitors. Three years ago, this would have been out of the ordinary for me. Now, as the father of a 2.5-year-old son, I am in a kindergarten five times a week. This visit, however, was special.
A recent regional study that focused on Roma and non-Roma in nearby communities from five Eastern European countries finds between 28 and 45 percent of Roma children attend preschool in four of the five study countries. However, the Roma preschool rate jumps to 76 percent in Hungary, where targeted policies have been in place; and this is about the average for non-Roma preschool rates across the five countries. Hungary’s experience offers promise because surveys show that preschool matters greatly to completing secondary school and staying off social assistance.
The debate over how to ensure good health services for all while assuring affordability is nothing new.
However, it has recently acquired new impetus under the guise of Universal Health Coverage (UHC). Discussions around UHC are contentious and as Tim Evans recently pointed out, “a lot of the discussion gets stuck on whether financing of the system will be through government revenue, through taxes, or through contributions to insurance.”
I landed in Chisinau on a short flight from Frankfurt a mere two years ago. I immediately liked this vibrant and cosmopolitan city built with white limestone and awash with greenery, and remember thinking that it has the potential to attract scores of tourists. But tickets to fly into Chisinau were expensive in 2011.
I also recall so vividly my first trip through the Moldovan countryside shortly after. An amalgam of bright green leaves on walnut trees contrasted the yellow of the sunflowers that grow in fields with some of the most fertile soil in the world. I was immediately struck by the immense potential that Moldova holds in agriculture.
Good things have happened since then.
Since our most recent Russia Economic Report (RER) just four months ago, the World Bank revised its 2013 growth outlook for Russia – down from 3.3 percent to 2.3 percent. This downward revision in May represents a decline in our projections by 1.0 percentage point compared with March, and 1.3 percentage points compared with October 2012.
As an economist dealing with energy efficiency on a daily basis, I have studied and written about its benefits for several countries. But it was not until recently that I got around to looking into it at home.
It all started with my work with the World Bank’s energy efficiency agenda, particularly after the G8 Forum asked the Bank in 2006 to prepare a “Clean Energy Investment Framework”. Soon thereafter, we supported a series of low carbon country case studies in India, South Africa, Brazil, Mexico, and China. A number of clear messages were delivered to us, including: “our priority is economic growth and poverty reduction”.
So how were we to get the best of both worlds – a reduction in the trajectory of greenhouse gas emissions (like carbon dioxide) and continued economic growth?
Sovereign difficulties have divided financial markets in the Euro area, thereby increasing differences in bank lending rates across countries. Policy makers in both Brussels and Frankfurt are concerned about an uneven transmission of policy interest rate cuts by the European Central Bank (ECB) to bank lending rates across the region.
Based on this situation, a key question stands out: is the link between official, market, and retail interest rates broken?
When markets are functioning properly, interest rates on loans follow the policy rate in a uniform way across countries (granted with some lag). But, in the context of the ongoing crisis, markets became somewhat irresponsive – resulting in ECB rate cuts being unevenly passed on to borrowers across Euro-area countries. This uneven distribution has meant that those countries facing greater financial difficulties had to endure tougher financing conditions than those facing fewer difficulties – as exemplified when comparing Spanish and Italian retail rates to the much-lower French and German ones.
So far, the economic literature has been relatively robust in arguing that government bond yields or credit default swaps (CDSs), given their stability, do not exert much influence on the way banks set their interest rates for their clients. However, the crisis has shown that because of the interconnectedness of central bank and sovereign balance sheets, developments in sovereign markets affect retail interest rates.
How has this played out in the EU11 countries? Have retail interest rate decreased in those countries where central banks reduced their policy rates? Or, was this a reaction on downward movement of CDSs?
Figure 1. Interest rates on new lending to enterprises (in Percent) and CDS spreads (in basis points) in selected EU11 countries
The problem with the World Bank’s 20th anniversary in Kyrgyzstan last November was that everybody else’s party had happened already.
There has been a blur of speeches, gala concerts, jazz bands, canapés, toasts and traditional performances as one embassy after another feted twenty years of partnership with the Kyrgyz Republic. The same guests, speeches, and – truth be told - probably the same canapés.
We had to do something different. So, as we celebrated the last 20 years of our work in Kyrgyzstan (which have been quite good), we toasted the next 20 years as well.
Just six months ago, in the previous South East Europe Regular Economic Report (SEE RER) covering the six Western Balkan countries of Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, and Serbia (SEE6), we looked at the double-dip recession in this region, and structural policies needed for recovery.
Now, we are happy to report that recovery is, indeed, under way in each of these countries. In 2013, the SEE6 region is projected to grow 1.7 percent, thus ending the double-dip recession of 2012. Electricity, agriculture, and even some exports are helping with this rebound of output. Kosovo is leading the pack with a growth rate of 3.1 percent, with Serbia (which accounts for nearly half of the region’s GDP) expected to grow by 2 percent on the heels of increased FDI, exports, and a return to normal agricultural crops. (In 2012, by contrast, agricultural output in Serbia dropped 20 percent on account of a severe drought). Albania, FYR Macedonia, and Montenegro are all expected to grow by between 1.2-1.6 percent. Rounding out this group is Bosnia and Herzegovina – with expected growth of 0.5 percent.
So, are things finally looking up in the Balkans? Not exactly.
Figure 1: SEE6 Unemployment Rates, 2012
Source: LFS data and ILO. Kosovo’s tentative data suggest unemployment as high as 35 percent.