The World Bank Group is strategically engaged with European Union (EU) member states, helping them to sustain progress on ending poverty and promoting shared prosperity and supporting them in their convergence process with the EU. Read More »
As a global multilateral institution, the World Bank Group engages with its upper-middle income and some high-income country members who are also members of the European Union (EU). Bank Group engagement is most active in countries that joined the EU in the 2000s, including Bulgaria, Croatia, Poland, and Romania.
Bank Group support to EU member states is based on close collaboration with the European Commission (EC) and complements EU funding that EU member states receive to reduce European regional disparities. Those regions whose GNI per capita is less than 90 percent of the EU average will continue to receive significant funds for convergence over the EU’s 2014-2020 programming period (€322 billion is available across all EU member states over this period).
Bank Group support is focused on helping select countries in the less developed regions of the EU more efficiently absorb and effectively implement EU Cohesion Policy funds, and meet national targets under the Europe 2020 strategy. Designed around smart, sustainable, and inclusive growth—with a strong emphasis on job creation and poverty reduction—Europe 2020 includes ambitious goals at EU and national levels in the areas of employment, innovation, education, social inclusion, and climate action/energy efficiency.
In line with the World Bank Group Strategy, the objective is to support EU member states in sustaining progress toward the goals of ending extreme poverty and promoting shared prosperity in a sustainable manner. The Bank Group works to ensure that fewer people in these countries are at risk of poverty and social exclusion and that the income growth of the bottom 40 percent of the population is not constrained. Several EU member states value the Bank Group as a trusted, long-term development partner, one that is also able to provide assistance during times of distress; for instance, following the 2008 financial and Eurozone crisis, several EU “graduate” countries returned to borrow from the Bank.
Underpinning the Bank Group Strategy is the Bank’s strategy for Europe and Central Asia. It hones in on issues of particular relevance for the region, including competitiveness, social inclusion, and climate action, with cross-cutting themes of gender and governance.
Bulgaria, Croatia, Poland, and Romania remain active World Bank (IBRD) borrowers. Over fiscal years 2010-2013, the Bank committed around $9.5 billion across the four countries, ranging from approximately $4.8 billion in Poland to $119 million in Bulgaria. Through a mix of financial instruments (investment loans, development policy loans, results-based financing, and guarantees), Bank support has focused on strengthening public sector management and public finances, improving health and education sector outcomes, reforming social protection and promoting social inclusion, addressing competitiveness, and exploiting green growth potential.
The Bank is engaged in a substantial program of knowledge and advisory services in EU member states, often in a two-way knowledge partnership. The Bank provides access to financial and knowledge and advisory services and, together with EU member states, develops solutions to complex development challenges. The knowledge partnership frequently centers around “second generation” reform challenges, including addressing such challenges as aging populations, pensions, tertiary education, life-style diseases, social inequality, competitiveness, trade and tax policy, financial literacy, urbanization, and green transport.
Countries around the region, particularly EU candidate and pre-accession countries, are interested to learn from the experience of EU member states as are countries further afield. In partnership with EU member states, the Bank facilitates intra- and inter-regional knowledge exchanges. For instance, the How-to of Innovation, Technology and Entrepreneurship Conference connected policymakers from the Middle East and North Africa with counterparts in Eastern Europe for a peer-to-peer learning event on innovation and technology.
Reimbursable Advisory Services
In response to demand and leveraging EU funds, the Bank’s portfolio of reimbursable advisory services (RAS) in EU member states has grown rapidly over the past several years. RAS arrangements allow for the provision of knowledge and advisory services beyond what the Bank’s administrative budget or trust funds can provide. In many EU member states, RAS have focused on EU convergence. In Romania, for example, 12 functional reviews were undertaken in two phases providing recommendations to strengthen public administration effectiveness and efficiency in several sectors in line with Romania’s Europe 2020 strategy.
Some EU member states that no longer borrow from the Bank, such as the Czech Republic, Hungary, Latvia, and Slovenia, have also engaged the Bank in RAS. Such engagements have helped EU member states address issues ranging from public sector governance to social protection to finance and private sector development to green growth.
Through a mix of lending and knowledge and advisory services, the Bank is supporting EU member states to meet their complex development challenges in key areas related to poverty reduction and promoting shared prosperity. Bank support has focused on strengthening public sector management, improving health and education sector outcomes, reforming social protection and promoting social inclusion, addressing competitiveness, and exploiting green growth potential. The Bank is increasingly providing knowledge and advisory services to EU member states on a reimbursable basis and facilitating the sharing of EU member states’ knowledge.
Reforms supported under the DPL-DDO program aim to improve public financial management to enhance the efficiency of public spending and revenue raising capacity; improve governance of energy sector SOEs to generate savings and attract private capital to modernize plants and increase their competitiveness; and enhance fiscal sustainability of public health care through reduction of unjustified outlays and reallocation to preventive care and health promotion programs. With the drawdown option, the program contributes to the Government’s fiscal buffer without requiring actual disbursement of funds.
This public finance development policy loan was structured around three pillars: (i) consolidating public finances to ensure a steady decline of the fiscal deficit to stabilize and reduce public debt over the medium term; (ii) strengthening fiscal institutions to ingrain a prudent fiscal stance (including at the subnational level) over the medium term; and (iii) advancing long-term fiscal reforms to secure the sustainability of social spending in view of Poland's demographic challenge.
The objective of this project is to improve the overall performance of the social assistance system by strengthening performance management, improving equity and administrative efficiency, and reducing error and fraud.
This note outlines how the railway sector, which underwent deep reform to prepare for entry to the EU transport market, can become a greater engine of growth and railway companies more efficient and competitive.
A Bank-supported Mine Closure, Environment and Socio-Economic Regeneration Project assisted with the closure of several mines in an environmentally sustainable manner and helped those affected find new jobs and access services.
Over 600 participants from various organizations, including the Bank, think tanks, research centers, public institutions, and others got together to discuss the most burning issues on the climate change agenda.
Responding to Requests for Reimbursable Advisory Services
With its accession into the EU, the Bank’s role in Bulgaria has transformed from major financier to knowledge partner, with an MOU that allows the Government to use EU funds for Bank knowledge and advisory services.
Romania Functional Reviews.
The Government of Romania, in agreement with the European Commission, requested functional reviews of the Romanian public administration through reimbursable advisory services with the Bank—functional reviews were undertaken in several areas, including:
This conference, organized by the Bank in cooperation with CzechInvest and the Korean Development Institute, brought policymakers from the Middle East and North Africa to learn hands-on from experiences of countries in Eastern Europe; a ‘Quck Note’ highlights the importance of such peer-to-peer learning.