$27 Billion in Funding
Available for Countries of Emerging Europe
and Central Asia
WASHINGTON, January 25, 2012—The World Bank Group today announced
that it is making $27 billion in funding available over the next two years
for countries of Emerging Europe and Central Asia (ECA) impacted by the
“While the effects of the Eurozone crisis on the largest economies of
Western Europe receive most of the world's attention, the crisis is also
hurting people in emerging Eastern European countries, particularly the
poorest in Central and Southeastern Europe,” said World Bank President
Robert B. Zoellick. “The World Bank Group is expanding funding
available to the region so that those countries can rely on these resources
to weather the crisis.”
The Eurozone debt crisis is harming the ECA region through three channels
– finance, trade, and workers’ remittances – and the importance of each
channel depends on the individual characteristics of the countries.
"Because of their close links with the Eurozone, countries in Central
and Southeastern Europe are likely to face an economic slowdown in 2012,"
said Philippe Le Houérou, Vice President for Emerging Europe and Central
Asia at the World Bank. “The Bank’s additional assistance will
help countries maintain a sound macro-fiscal framework, pursue needed structural
reforms, ensure flow of credit to small- and medium-enterprises, and protect
the most vulnerable parts of the population through stronger and better
targeted social safety nets.”
The World Bank Group response in the ECA region will focus on: (i) structural
reforms and support for the private sector to keep investment, incomes,
and jobs growing; (ii) advisory and financial support to countries with
fragile banking systems; and (iii) protection of the most vulnerable through
strengthening social safety nets.
· The World Bank – International Bank
for Reconstruction and Development (IBRD) and International Development
Association (IDA) can increase lending in ECA to around
$16 billion in fiscal years 2012-2013 (FY12-13) – an increase of $4 billion
over two years relative to lending last year. This increase in lending
and associated advisory work would be linked to medium-term policy reforms
to enhance competitiveness, sound and sustainable fiscal consolidation
efforts, emergency support to avoid banking crises (including lines of
credit for trade and small- and medium-enterprises [SMEs]), and reform
of social safety nets to improve coverage, cost effectiveness, and sustainability.
· The International Finance Corporation
(IFC) investment and advisory program could reach $10
billion of commitments including mobilization in FY12-13. This would include
increased investment for IFC's own account of nearly $2 billion from current
levels. IFC’s response is driven by the importance of systemic banks in
ECA and will include: short-term financing and trade products to address
immediate liquidity concerns, mezzanine and equity investments to shore-up
capital shortfalls, strengthened SME financing to fill funding gaps, as
well as support for real sector clients.
· The Multilateral Investment Guarantee
Agency (MIGA) political risk insurance products are helping banks
in the region maintain funding to their subsidiaries in ECA. MIGA
is planning to increase its exposure in the region by $1 billion over the
next two years to support economic growth.
In parallel, the World Bank Group is also partnering with other multilateral
development banks to encourage Western European banks to stay in Eastern
Europe and not deleverage from the region. The World Bank Group,
along with other public sector officials from within the European Bank
Coordination "Vienna" Initiative, met in Vienna on January
16th with the aim to enhance the coordination of national policies
that could impact the economies of emerging Europe.
At that meeting, it was agreed that the international institutions
will assess the impact of the aggregate recapitalization plans by banks
on the host countries to identify systemic risks and advise on policy actions.
They also agreed to stand ready to provide external assistance and financial
support to banks in host countries within their mandate and balance sheet
capacities. They pledged to collaborate closely to maximize their impact.
World Bank Group Contacts:
IFC – Lotte Pang +90-212-385-2520
MIGA – Mallory Saleson +1-202-473-0844
World Bank – Kristyn Schrader-King +1-202-458-2736