WB commits $1.9b to cut recession impact

The World Bank (WB) pledged to lend out a total US$1.9 billion during 2008 and 2009 fiscal years to help Bangladesh ward off the impact of the global economic crisis, according to a new study.
The study by Independent Evaluation Group, an agency responsible for watching the bank, said in 2009, the Washington-based lender's commitment from its soft-lending arm amounted to $1.1 billion, while it was $0.8 billion in 2008 financial year.
The actual disbursement during the period totalled $1.1 billion, the IEG assessment estimated.
Bangladesh saw its growth rate wipe out by 0.68 per cent due to the global crisis as the economic growth pared back to 5.73 per cent in 2009 fiscal, down from 6.42 per cent in the pre-crisis fiscal year of 2007.
The bank estimated that the economic downturn left an estimated 50 million more people in extreme poverty last year and some 64 million more will fall into that category by the end of 2010 across the globe.
"Even in a financial crisis, the WB needs to support the crucial requisites for long-term results-fiscal and debt sustainability, structural reforms, environmental and social sustainability, and actions to reduce risks related to climate change," the IEG said in its report.
In 2009-10 fiscal, the bank also channelled $130 million in development policy loans to support Bangladesh's efforts to minimise the impact of food crisis and improve the social safety nets.
The International Finance Corporation (IFC), the bank's private sector lending arm, was also active in Bangladesh to help the nation cope with the global crisis.
The corporation's investment in six areas reached $164 million from fiscal 2009 through the third quarter of 2010.
Vinod Thomas, who heads the IEG, said: "The World Bank Group's response has fitted the nature of the crisis-which called for a fiscal expansion to compensate for sharply declining trade and private capital flows. The financing from the WB and other IFIs (international financial institutions) has helped in the worldwide effort to avert what might have been a harsher global downturn."
"The ensuing challenges are with emerging fiscal imbalances, higher debt levels and financial sector vulnerabilities-and with ensuring that the increase in spending produces sustainable results."
The World Bank disbursed a record US$80.6 billion during 2009 and 2010 fiscal years to respond to the global economic crisis-more than any other international financial institution.
The IEG's evaluation sought to achieve three objectives: support the most vulnerable, maintain long-term infrastructure investment and sustain the potential for private sector-led growth.
-FE