The Former Yugoslav Republic (FYR) of Macedonia is an upper middle-income country that has made great strides in reforming its economy over the last decade. More efforts are still needed to generate economic growth and improve living standards for all.
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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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World Bank presents its FYR Macedonia Green Growth Country AssessmentSKOPJE, June 25, 2014 — The World Bank today presented its FYR Macedonia Green Growth Country Assessment, a report that aims to def... Show More +ine the outlines of a green growth path and the initial steps for the country along that path.According to the World Bank’s recent Inclusive Green Growth: The Pathway to Sustainable Development flagship report, green growth is ‘growth that is efficient in its use of natural resources, clean in that it minimizes pollution and environmental impacts, and resilient in that it accounts for natural hazards and the role of environmental management and natural capital in preventing physical disasters.’According to the Green Growth Country Assessment presented today, while most countries might agree that such growth is a worthy goal, determining what a green growth path might mean for a particular country is a significant challenge. Green growth can be defined more precisely, as economic growth with more sustainable use of natural resources (minerals, water and clean air, and biodiversity), with proper consideration of mitigation of greenhouse gas emissions; with attention to adaptation to a changing climate; and with more focus on innovation and green jobs to enhance benefits flowing from the technological innovation and new industries spurred by a shift to green growth.This report takes a practical approach to identifying specific challenges and opportunities FYR Macedonia faces in building its green growth future and presents them in a form useful for decision makers. The report addresses mitigation, adaptation, and the most immediately challenging resource sustainability issue – clean air. “In Macedonia, the World Bank is doing something special,” says Erika Jorgensen, Task Team Leader of the Program and co-author of the Report. “We are approaching Green Growth in a rather comprehensive way, and developing methodology to understand not what is there today, but thinking what is going to happen in 40 years in the country.”The Macedonian economy continues to evolve, with ongoing programs of structural reforms to improve growth and competitiveness, and with growing alignment with Europe. The country’s momentum towards Europe is already requiring it to focus more on environmental issues.This Green Growth Country Assessment for FYR Macedonia defines a green growth path to 2050, focusing on climate action. “For this program with Macedonia, as for most countries, the centerpiece of green growth is climate action,” says the World Bank’s Country Director for Southeast Europe, Ellen Goldstein. “The World Bank firmly believes that climate change is a fundamental threat to development and the fight against poverty.”According to the report, while addressing today's economic challenges, policymakers need to keep the long-term in mind, both the likely impact of a changing climate on water, agriculture, and infrastructure, and growing obligations to mitigate greenhouse gas emissions, especially from energy and transport. These considerations are particularly important for decisions on long-lived infrastructure such as power supply, irrigation, or urban streets, water distribution, and sewers. Innovative modeling of water, as a constraint on growth as the climate becomes warmer and drier, quantified the tough tradeoffs that will be needed to balance competing demands from agriculture, the power sector, and municipalities and industry. A greener energy sector demands aggressive energy efficiency measures while bolstering supply security and reducing greenhouse gas emissions. Show Less -
Much has changed in the Former Yugoslav Republic of Macedonia since it first entered into a new partnership with the World Bank in 1994 - three years after gaining independence. This initial partnersh... Show More +ip, forged through $80 million in financing to help the country’s economy stabilize following inflation of 230% in 1993, led the way for much needed economic recovery and laid the foundation for a strategic partnership that has lasted for two decades and counting.“Compared to 15-20 years ago, I see a big difference. I was a child back then. Macedonia faced a lot of turbulence and many changes, which affected all of us. My parents lost their jobs and switched to working in agriculture,” recalls Slavche Atanasovski, 32, who, like his parents, has continued to farm after finishing university.Today, Macedonia is committed to a path of increased European integration and the World Bank Group continues to act as a strong partner, working side by side with the country as it moves toward accession into the European Union (EU) – and toward creating better living standards for all Macedonian citizens.“I am trying to make some investments, but there are also expenses," says Atanasovski "I really hope that Macedonia is facing a better future." Show Less -
The water system was paid for through a sub-loan to the local municipality, as part of the government-run program, termed “the Municipal Services Improvement project.”“Now we can rest and do something... Show More + else. Before, we couldn’t because we had to collect water and we lost a lot of time. It was very hard,” says Bozana Lazarova, who also lives in Chanaklija with her children and grandchildren.Under the World Bank-supported project, more than 30 municipalities across FYR Macedonia have signed loans for investments in high-priority areas, such as water supply, energy efficiency, sanitation and other public services. Show Less -
In addition to developing high value-added manufacturing through attracting investment and scaling-up export promotion, the sector-specific reforms are helping to restructure the FYR Macedonia’s agric... Show More +ulture sector through improving agricultural land management, and better targeting of incentives for agriculture producers.Farmer Slavche Atanasovski used a government grant to purchase a new tractor which he says allows him to produce more. “We have to be equal to other countries, and produce more so that prices will be competitive with other markets. A basic way of achieving this is through better machines and equipment,” he says.Improving the efficiency of trade logistics through facilitating the transport of goods at border crossings and increasing export-readiness of the transport industry are also a focus of the reforms, supported under the Development Policy Loans on Competitiveness. Show Less -