World Bank's commitment to South Asia : Newsletter - Nov.-Dec. 2008
The World Bank Group extended loans, credits, grants, equity investments, and guarantees totaling over US$ 5.5 billion to South Asia in fiscal year 2008. The funding supports 79 new projects designed to overcome poverty and boost growth through practical plans enhancing the business and investment environment and empowering poor people.
Of this India was the largest borrower from IBRD and IDA, accounting for US$ 2,154 billion, or nearly 10 percent of total lending from these two institutions. Within South Asia, Bangladesh was the second largest borrower with US$ 753 million (IDA), followed by Pakistan at US$ 545 million (IDA/IBRD), and Nepal at US$ 380 million (IDA). Many of the Bank’s projects in the last fiscal year supported existing programs that are delivering results.
Contributing to this strong support was: US$ 1.491 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products and other financial services; US$ 2.756 billion from the International Development Association (IDA), which provides interest-free loans and grants; US$ 1.26 billion from the International Finance Corporation (IFC), which makes equity investments and provides loans, guarantees, and advisory services to private-sector business in developing countries; and US$ 36.6 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the group’s political risk insurance agency.
“Last year posed profound economic, political and social challenges for countries in South Asia and the world,” said Isabel M. Guerrero, World Bank Vice President for South Asia. “The increase in world fuel and food prices, especially for rice and wheat, the two main staples in South Asia, has had a dramatic impact on poor people. As demonstrated by our large funding program in the last fiscal year, we remain deeply committed to helping the countries in the region overcome these urgent challenges. At the same time, I am heartened to see that strong growth continues to bring tangible results in the fight against poverty.”
IBRD lending in the past year focused on helping South Asia close its infrastructure gap, often cited as the greatest constraint to foreign investment. To help address the problem, the Bank provided a US$ 400 million loan for the Rampur Hydropower Project in the state of Himachal Pradesh that will provide renewable, low-carbon energy to India’s overstretched northern electricity grid. It also extended a US$ 600 million loan to the Power Grid Corporation of India, backed by a guarantee from the Government of India, designed to increase reliable power exchange between states.
Globally, the World Bank Group committed US$ 38.2 billion in fiscal year 2008, up 11 percent from fiscal year 2007. An important contribution during the fiscal year was the Bank Group’s response to the food price crisis. It created a US$1.2 billion rapid financing facility with the first grants approved in FY08.
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