Bosnia and Herzegovina is an upper middle-income country which has accomplished a great deal since the mid-1990s. Today, it is an EU potential candidate country and is now embarking on a new growth model amid a period of slow growth and the global financial crisis.
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WASHINGTON, July 15, 2014 - The World Bank Group* provided $11.9 billion to Europe and Central Asia (ECA) during fiscal year 2014, aimed at reducing poverty and boosting shared prosperity in the regio... Show More +n. Of this, IBRD/IDA provided $5.6 billion of support to the region, IFC delivered $4.7 billion in commitments, and MIGA provided $1.6 billion in political risk insurance and credit enhancement coverage.World Bank – International Bank for Reconstruction and Development (IBRD) / International Development Association (IDA)Comprising 43 projects, the $5.6 billion of World Bank support to the region over the past fiscal year consists of $4.7 billion in commitments from the International Bank for Reconstruction and Development (IBRD)1 and $0.9 billion from the International Development Association (IDA)2. In addition, the Bank’s Europe and Central Asia region produced important research and analytical work about critical issues in the region this fiscal year. It also signed 36 Reimbursable Advisory Service agreements with 13 countries in the region for a total amount of $47 million. These agreements provide technical advice to pension and education systems reform, public sector governance and institutional capacity-building, planning and management of infrastructure investments, and other issues.“Europe and Central Asia was the region hardest hit by the 2009 global economic crisis, and remains the slowest to recover. Although a modest rebound has occurred since 2010, GDP growth grew just 2.2 percent in 2013, and is expected to be only 1.7 percent in 2014,” said Laura Tuck, World Bank Vice President for the Europe and Central Asia Region. “The World Bank supported clients’ needs over the past fiscal year with innovative, demand-driven operations. We also acted quickly and effectively to respond to urgent situations, such as the crisis in Ukraine, and the catastrophic floods in Bosnia and Herzegovina and Serbia in May.”The World Bank Group stepped up its assistance in Ukraine to help stabilize the economy and support the delivery of critical public services. In May 2014, the Board approved a total of $1.4 billion in IBRD loans, including two large investment operations to improve municipal service delivery and a $750 million multi-sector Development Policy Loan (DPL). In addition, the Board approved a $250 million IFC investment project in support of a poultry private sector company. These four projects are part of the World Bank Group’s overall assistance to Ukraine announced in March 2014, which aims to provide up to $3.5 billion by the end of 2014.In mid-May, Bosnia and Herzegovina (BiH) and Serbia were hit by the worst flooding in more than 120 years. By June 30, the World Bank had approved a $100 million credit for the Floods Emergency Recovery Project for Bosnia and Herzegovina to finance critical goods, such as fuel and electricity imports, as well as the reconstruction of local infrastructure. The project was prepared in record time in view of the dire situation in the country and is financed from the International Development Association’s (IDA) Crisis Response Window. The Bank is also working with the BiH authorities to strengthen flood protection and implement early warning systems, including through the $24 million credit for the Drina Flood Protection Project, which is improving flood management of the Drina River in and around the towns of Bijelijna and Goražde. This combined immediate response will support economic recovery in the affected areas. In Serbia, the Bank has contributed to the joint Government, EU, UN, and World Bank Recovery Needs Assessment that is underway, and is in the process of restructuring its roads rehabilitation project to prioritize roads sections damaged by the floods. The Bank is also preparing an emergency recovery loan, as requested by the Government, to address urgent needs.World Bank ECA StrategyThe ECA region’s strategy focuses on two main pillars: 1) competitiveness and shared prosperity through jobs, and 2) environmental, social, and fiscal sustainability, including through climate action. Governance and gender continue to be thematic priorities within interventions of both pillars. Increasing competitiveness and shared prosperity through jobs The Bank is supporting competitiveness and job creation in the region in many ways. It has increased access to finance for small- and medium-size enterprises in Bosnia and Herzegovina and Croatia; helped improve skills and increase labor market flexibility in the former Yugoslav Republic (FYR) of Macedonia; invested in infrastructure in Azerbaijan and Ukraine; strengthened financial sector regulations, the business environment, and policies conducive to innovation in FYR Macedonia and Serbia; and offered advice on innovation, trade, and logistics systems in Poland and Turkey.The Bank published several important reports on the region during the fiscal year. The report Back to Work: Growing with Jobs in Europe and Central Asia examines why unemployment in ECA is high and job creation is weak, despite impressive reform efforts in many countries of the region and a decade of strong economic growth before the 2009 crisis.The report Shared Prosperity: Paving the Way in Europe and Central Asia suggests a new approach to development that combines the quest for economic growth with a concern for the inclusiveness of that growth.The region also launched its Diversified Development: Making the Most of Natural Resources in Eurasia report this fiscal year, produced in partnership with the Eurasian Development Bank. The report finds that having natural resources does not have to be a curse – it can be a blessing if countries ensure proper management of revenues, invest earnings in building up physical and human capital, and improve institutions.Environmental, social, and fiscal sustainability, including through climate actionThe Bank is supporting Armenia and Croatia in their efforts to improve the efficiency and fiscal sustainability of their safety net and pension systems. It is helping improve health care systems in Bulgaria, Croatia, Kosovo, Moldova, Romania, Tajikistan, and Uzbekistan. It is working to strengthen social cohesion by supporting community-driven development and social accountability in the Kyrgyz Republic and Tajikistan. In Romania, it is helping governments improve economic opportunities and public services for disadvantaged communities, including the Roma and unemployed youth.The Bank works with countries in designing and implementing reforms to improve the efficiency and fiscal sustainability of their pension, social protection, and health care systems. Its report Inverting Pyramid: Pension Systems Facing Demographic Challenges in Europe and Central Asia documents how pension systems in the region are facing increasing pressures from aging populations and a shrinking labor force, and countries require comprehensive, long-term, and socially sustainable reforms to pension systems so that they can protect the elderly poor and future generations.Climate adaptation and energy efficiency remain strategic priorities for Europe and Central Asia, the most energy-intensive region in the world. Greater energy efficiency delivers both environmental and economic gains. In Belarus, Bosnia and Herzegovina, and Turkey, the Bank is working to achieve these gains through policy reforms (such as energy pricing) and investments in both public infrastructure and private industry, including renewable energy and energy efficiency. Cumulative energy savings from the portfolio of Bank-supported projects in the region are equivalent to taking 1.4 million cars off the roads. The Bank is also working with client countries as they adapt to climate change. It is supporting improved water resource management (flood protection, water loss reduction, irrigation efficiency) in Kazakhstan; climate-smart agriculture (switching to more resilient crops) in Tajikistan; and improved institutional capacity for better weather forecasting and climate change monitoring in the Russian Federation. To facilitate the exchange of ideas and solutions for addressing climate change, the Bank holds an annual Central Asia Climate Knowledge Forum. The second forum, held in May 2014, concluded with a call from all five Central Asia countries for a regional program on climate resilience, to be prepared by the World Bank, in partnership with Central Asia countries and development partners. Additionally, the Reducing the Vulnerability of Albania’s Agricultural Systems to Climate Change reports examine the challenges and opportunities being created in the agriculture sector in Albania, the FYR Macedonia, Moldova, and Uzbekistan. International Finance Corporation (IFC)The International Finance Corporation (IFC) this year supported private sector development in ECA with $4.7 billion in commitments in 117 projects, including $1.2 billion in funds mobilized from its partners. IFC also delivered a solid advisory program worth $40 million with a focus on projects in IDA countries, fragile and conflict affected countries, and climate change.“IFC had another strong year in Europe and Central Asia as the weak economic performance in the Eurozone and political instability in parts of the region continued to affect many countries and businesses in the region,” said Tomasz Telma, IFC Director for Europe and Central Asia. “IFC’s efforts to support private sector development focused on helping small- and medium-enterprises, developing capital markets, tackling climate change, boosting food security by supporting agribusiness, and increasing private sector participation in infrastructure.”Highlights of IFC’s program addressing these regional priorities include:The region’s businesses received strong support through increased access to finance. IFC provided $1.1 billion of financing to banks for on-lending to smaller companies, including almost €150 million as equity investment in Raiffeisen Bank International to be channeled to small- and medium-enterprises (SMEs) via subsidiaries across Central and Eastern Europe.IFC continued to build and strengthen regional capital markets with several landmark deals, issuing the first foreign corporate bond in Armenia.IFC committed over $600 million in transactions addressing climate change.The region’s agribusiness sector received $400 million in commitments for projects aimed at boosting the region’s food production and increasing food security. This included the first $175 million commitment of IFC’s $250 million financial package to MHP, Ukraine’s leading poultry producer, which was raised amid challenging market conditions.With public sector budgets strained, the development of public-private partnerships (PPPs) has been a priority for governments across ECA. IFC’s PPP advisory team is assisting the implementation of CASA-1000 in Central Asia, a transformational power transmission project to carry summertime hydropower surpluses generated in Kyrgyzstan and Tajikistan to Afghanistan and Pakistan.IFC supported development of transport and municipal infrastructure, including two new tramway lines in Izmir in Turkey, improvements of heating systems in Timisoara and Botosani in Romania, and the award-winning transaction to build a new modern terminal at the Zagreb International Airport in Croatia.IFC delivered impact in less-developed and frontier areas of the region, investing almost $600 million.Multilateral Investment Guarantee Agency (MIGA)During fiscal year 2014, the Multilateral Investment Guarantee Agency (MIGA) provided support for six projects with $1.6 billion in political risk insurance and credit enhancement coverage in Europe and Central Asia (ECA). Through these guarantees, the Agency continued to bolster the region’s financial sector – a strong focus for MIGA in ECA. MIGA’s landmark support to Hungary’s Exim Bank this year represented the first use of the Agency’s credit enhancement product for a bond issue. “Support to middle-income countries is an important pillar of MIGA’s strategy,” said Keiko Honda, MIGA’s Executive Vice President and CEO. “Projects MIGA insures in the region increase banks’ ability to lend, diversify the kinds of financial services available to people and businesses, and attract new capital sources to keep industry moving forward.”-----------------------------------------------------------------* The World Bank Group institutions contributing to this financial outcome are: the World Bank, which is made up of the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to middle-income countries; the International Development Association (IDA), which provides interest-free loans and grants to the poorest countries; the International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees, and advisory services to private-sector business in developing countries; and the Bank Group’s political risk insurance agency, the Multilateral Investment Guarantee Agency (MIGA).(1) IBRD provides financing, risk management products, and other financial services to countries.(2) IDA is the World Bank's fund that provides low-interest and interest-free credits and grants to 79 of the world's poorest countries. 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Ajka and Marina are united in their concerns about the future. Both see their generation as being in a unique predicament – reared in a post-war country and struggling to thrive in a new economic real... Show More +ity unknown to their parents, teachers, and mentors. Both of them also decided to transform their ideas into action, joining more than 100 young people around the country in entering the Tackling Youth Unemployment in Bosnia and Herzegovina: My Generation’s View Youth Essay Contest.The contest, which was jointly sponsored by IFC and the World Bank, and supported by the “Let’s Work” global partnership, asked interested participants to write an original 2,000 word essay that offered their perspective, focusing on the drivers of youth unemployment as well as specific recommendations on how to address these challenges. Recognizing that these young people are instrumental for the country’s future, this contest represented an opportunity to hear new ideas on policy reform and potential solutions to problems many of these young people will be addressing head on as the future leaders in Bosnia and Herzegovina.On May 9, both Ajka and Marina joined Lejla Ahmetagic, Enes Tinjić, Damir Kurtagić, and Nera Herceglić in Sarajevo as the authors of the winning essays of the contest. Although each author presented their own, unique angle on the challenges of youth unemployment and proposed different solutions, many common themes emerged from all of the essays. Each winner highlighted, in one way or another, a need to reform the country’s education system – particularly improving linkages between education and the skills needed to enter the labor market. Stimulating entrepreneurship and creating an economic environment conducive to growth and investment were also key actions recommended by the young authors.Beyond the strong analysis of the country’s problems and the innovative solutions posed by these representatives of their generation, the common message that also emerges from their words is one of hope – hope for a better future, hope that some of their ideas take hold, and, above all, hope for a job to match their skills and education.“I have optimism for the future,” says Lejla Ahmetagic, “but it involves hard work. Our generation knows how to fight and we deserve to be involved in making decisions for this country.”---------------------------------------------------------------------------------------------------INFOGRAPHIC: Youth Unemployment in South East EuropeView this image in full resolution. Show Less -
What is the objective of the Floods Emergency Recovery Project?The Floods Emergency Recovery Project is a key element of the World Bank Group’s immediate response to the devastating floods that took p... Show More +lace in Bosnia and Herzegovina in May 2014. The Project objective is to meet critical needs and restore functionality of infrastructure essential for public services and economic recovery in affected areas in the aftermath of the worst flooding to hit the country in recorded history.The higher level objective to which the project seeks to contribute is to restore Bosnia and Herzegovina to a growth path following the floods. While the economic impact of the floods is yet to be fully assessed, short-term growth prospects are expected to be compromised. Nonetheless, international experience suggests the resumption of growth, albeit from a lower base, once reconstruction gets fully underway. This project will ensure that such reconstruction does get underway and set a basis for resumed economic growth.What will this project finance?The project will finance emergency disaster recovery goods, and the rehabilitation of key public service infrastructure such as transport, energy, and rural development.The Project consists of three components:The first component, $40 million for emergency disaster recovery goods, will finance the purchase of goods urgently needed during the recovery phase, including:Logistical goods, like water, land, and air transport equipment; spare parts; and communications equipment.Reconstruction goods, such as construction materials, construction equipment and industrial machinery (including trucks, dozers, excavators), and prefabricated houses.Emergency and medical supplies and equipment - food and water containers, chemicals and equipment for water purification and sanitation of land, buildings, and other structures, basic food commodities, cleaning and hygienic supplies, mud and water pumping equipment, equipment and furniture for emergency shelters and accommodations, moisture removal equipment, emergency vehicles and supplies, and waste management and disposal equipment.Goods relating to energy and power, like petroleum and fuel products, power purchases, power transmission and distribution equipment, mining equipment and pumps to remove water from mines, controls, monitoring and measurement equipment, emergency power generators, and other electrical equipment.Agricultural equipment and immovable productions systems such as greenhouses, milking parlors and auxiliary installations, sorting and packaging equipment, inputs such as seedlings for perennial crops, orchards, and wine yards, as well as seeds and fertilizer for reseeding of fields - but not pesticides. Concentrated animal forage and fodder stocks that were destroyed by floods will also be provided, as well as livestock.Any other good or commodity deemed essential for recovery, as agreed in advance by the Association.The second component, $57 million for the rehabilitation of key public infrastructure, will finance the rehabilitation or reconstruction of high priority, public service delivery infrastructure in the worst-affected areas. This component is designed under a framework approach in which activities will be identified in a demand-driven manner, based on the on-going Recovery Needs Assessment. The project will put particular emphasis on Rural Development, Energy, Transport, and Water and Sanitation activities, however, other public services (education, health) will be considered on a case-by-case basis.The third component, $3 million in support for project implementatio and capacity building, will finance the management of the Project and any support needed for the identification and implementation of sub-activities. The component will also provide technical assistance and capacity building to help ensure future improved disaster resilience.Who will implement the Project?Given the importance of delivering quick results, implementation will be based on existing structures, mechanisms, and capacities built up through on-going World Bank projects (agriculture/rural development, irrigation development, flood protection, and forestry) within the line ministries for agriculture, forestry, and water management. The project activities will, therefore, be implemented by existing Project Implementation Units (PIUs) in each entity, with the RS Unit also responsible for the Brčko District part of the project. The PIUs will work in close coordination with other line Ministries, under the overall guidance of a Steering Committee*. The project will be implemented over the period of four years.How will investments be prioritized?The project will establish the eligibility criteria for allocation of resources to the most affected areas. The Project’s Operations Manual will outline the detailed eligibility criteria based on the findings from the Recovery Needs Assessment. The multi-sectoral Steering Committee will review proposals from local governments and ensure that the proposed subprojects are also in line with the priorities outlined in the Recovery Needs Assessment and availability of funding from other sources. Ministries of finance are expected to play a key role in guiding the operations of the Steering Committees, and have a final say on allocation of resources between the sectors.Furthermore, most local governments have community consultation mechanisms developed to prioritize capital investments. These mechanisms are expected to be utilized in identifying subprojects to be financed under this project.How will proper use of funds be ensured?All World Bank projects are implemented under strict fiduciary and safeguard policies, assuring that the funds provided by the Bank are used only for the intended purpose.What are the financing terms, and how will the funds be allocated?The total cost of the project is US$100 million, to be financed entirely through an IDA Credit from the Crisis Response Window. The following terms will apply: maturity of 25 years, a grace period of 5 years, a 1.25 interest charge, and with principal repayable at 3.3 percent per annum for years 6-15 and 6.7 percent per annum for years 16-25.The funds will be allocated equally between the two entities at 47.5 percent, and 5 percent for the Brčko District.What is an International Development Association (IDA) – Crisis Response Window?One of the priorities outlined as special themes within IDA16, is strengthening the capacity of IDA countries to deal with exogenous natural or economic shocks. To address the impact of such crises in a timely, structured, and transparent way, and provide additional financing to respond to the crisis, a separate Crisis Response Window (CRW) has been created within IDA16. The primary objective of a CRW is to provide IDA countries with additional resources that will help countries respond to severe economic crises and major natural disasters, and return to their long-term development paths.In case of natural disasters, the CRW would target events that are exceptionally severe. Financing from the CRW shall be part of a concerted international response, and it shall only be accessed as a last resort. Therefore, while all IDA countries could potentially be eligible for CRW support, actual access to CRW resources would be linked to country-specific circumstances (e.g. magnitude of crisis impact, access to alternative financing sources, etc.). The final decision on CRW financing should be made by the World Bank’s Board of Executive Directors based on evidence of the severity of crises and absence of alternative support mechanisms.*Note: Both entities and Brčko District are in the process of setting up coordination mechanisms for the floods recovery response. Assuming that those mechanisms are put in place in a timely manner, they could serve as the steering committees for this project. If not, an ad-hoc project steering committee will be put in place in each. Show Less -
WASHINGTON, June 30, 2014 – The World Bank Group’s Board of Executive Directors today approved a US$100 million credit for the Floods Emergency Recovery Project for Bosnia and Herzegovina (BiH), to me... Show More +et critical needs and restore the functionality of infrastructure essential for public services and economic recovery in affected areas in the aftermath of the worst flooding to hit the country in documented history. The project was prepared in record time in view of the dire situation in the country and will be financed from the International Development Association’s (IDA) Crisis Response Window resources.This project will target areas that were hit hardest by the devastating floods. Preliminary evidence shows that the largest impact from this disaster was on livelihoods, housing, transport, agriculture, and energy. Given the magnitude of the damage caused by flooding and subsequent landslides, the project is designed to support efforts by local and entity governments to quickly re-establish public services to pre-flood levels. The project will also support the Government’s on-going economic recovery initiatives, in particular in the agriculture sector.In addition to this project, the World Bank is working on several other fronts to ensure the provision of a comprehensive package of support for BiH as it recovers and rebuilds from the physical and economic devastation. Notably, the Bank is participating in a systematic recovery needs assessment, led by the BiH authorities and supported also by the European Union and the United Nations. The assessment will provide a basis for developing effective rehabilitation measures for infrastructure and services in the affected areas. The World Bank is also considering the restructuring of existing projects in its BiH portfolio to meet reconstruction needs.While immediate recovery needs are the top priority of this project, the World Bank also stands ready to work with the BiH authorities to scale-up flood protection and implement early warning systems. The recently approved Drina Flood Protection Project is a good example of the type of work that could be scaled-up, as it addresses the need to prevent future flooding.As emphasized by Laura Tuck, World Bank Vice President for Europe and Central Asia, “The Floods Emergency Recovery Project will finance critical goods, such as fuel and electricity imports, as well as the reconstruction of local infrastructure. This immediate response, combined with the Drina River Flood Protection Project, will support economic recovery in the affected areas, and will help restore Bosnia and Herzegovina to a growth path following the floods.”The World Bank portfolio of active projects in BiH now includes 14 operations totaling approximately US$578.6 million. Areas of support include agriculture, environment, energy efficiency, health, social safety and employment, local infrastructure, and private sector development. Show Less -
IDA Credit: US $100.0 million equivalentTerms: Maturity = 25 years, Grace = 5 yearsProject ID: P151157Project Description: The objective of the project is to meet critical needs and restore functional... Show More +ity of infrastructure essential for public services and economic recovery in floods affected areas.For more information, please visit here: http://www.worldbank.org/en/country/bosniaandherzegovina Show Less -