The World Bank Group works with countries in Europe and Central Asia to help improve people's lives and achieve shared prosperity in a variety of ways, including through financial lending and analytical and advisory services. Our work aims to help countries achieve better competitiveness, more inclusive growth, and to adapt to climate change and improve energy efficiency.
Read More »
WASHINGTON, November 21, 2014 — The World Bank’s Board of Executive Directors today approved a US$40.5 million financing to the Republic of Moldova for the District Heating Efficiency Improvement Proj... Show More +ect, which will fund investments aimed at improving the efficiency of the district heating services in Chisinau.Although Moldova is dependent on imports to meet its energy demand, inefficient energy use in Moldova is leading to higher energy costs for both industries and residents, posing a serious bottleneck to growth and competitiveness. Moreover, the electricity and heat generation infrastructure are obsolete and deteriorating.The inefficient and worn-out district heating system, as well as disconnections by wealthier consumers, have led to high heat tariffs for the less well-off in Chisinau. Tariff levels have reached the limit of affordability for almost all residents in Chisinau and are having a disproportionately high impact on the vulnerable population. Surveys show that heating expenses alone have taken up more than 10 percent of monthly expenditure for all income groups. The poorest population spends up to 26 percent of their monthly expenditure on heating.“For many years old infrastructure and heavy financial losses have blocked progress in the municipal heating sector. This project is a chance to develop a modern and efficient heat supply network for ordinary residents of Chisinau,” says Alexander Kremer, World Bank Country Manager for Moldova.The Corporate Restructuring Plan, approved by the Government of Moldova on November 13, 2013, envisioned the merger of 3 companies (Termocom, CHP-1 and CHP-2) into a new company that will provide district heating services in Chisinau. The project aims to improve the operational efficiency and financial viability of the new company, by upgrading its infrastructure and management.The project will benefit the population of Chisinau at large through increased efficiency of the district heating sector and increased reliability of district heating services; and the Moldovan district heating sector stakeholders, including the new heating services company, as well as Moldovagaz and Chisinau-Gaz.***Since Moldova joined the World Bank in 1992, over US$1 billion has been allocated to 49 projects in the country. Currently, the World Bank portfolio includes 8 active projects with total commitment of US$235.2 million. Areas of support include regulatory reform and business development, education, social assistance, e-governance, healthcare, agriculture, environment, and others. The International Finance Corporation has invested US$233 million in 24 projects in various sectors, and the Multilateral Investment Guarantee Agency has provided guarantees totaling US$95 million. Both institutions are members of the World Bank Group. Show Less -
IBRD Loan: US $40.5 million Terms: Maturity = 35 years, Grace = 5 yearsProject ID: P132443Project Description: The objective of the project is to contribute to improved operational efficiency and... Show More + financial viability of Newco and to improve quality and reliability of heating services delivered to the population of Chisinau.For more information, please visit: District Heating Efficiency Improvement Project Show Less -
‘Macroeconomic policies should respond to the new environment. It is important to continue managing of credit and wage growth as they were deemed to be significant causes of instability in the past,’ ... Show More +stressed Sebastian Eckardt, World Bank Senior Economist for Belarus.In a Special Focus Note on Turning around the Utility Sector, the World Bank outlines the importance of optimization of utility sector tariffs in line with the Government’s strategy to increase Belarus’ energy independence and promote efficient use of energy resources. Despite nominal increases, residential gas, electricity, and district heating tariffs have not kept pace with rising production costs, undermining financial viability of the utility sector. Moving tariffs to full cost recovery could result in cumulative fiscal and quasi-fiscal savings equal to about 2.5 percent of GDP. The World Bank suggests that these savings could be reallocated to different use, including targeted social assistance to mitigate the social impact of increased tariffs on poor and vulnerable households, for investments in energy efficiency, or to allow for reductions in industrial utility tariffs.“It is important to have a consistent and comprehensive plan of structural reforms to boost productivity and make non-commodity exports more competitive. We believe that appropriate policy decisions today could reshape the long-term trajectory of the economy. The Bank works with the Authorities closely to advise on the design and implementation of structural transformation in a sustainable and inclusive manner,” stressed Mr. Young Chul Kim, World Bank Country Manager for Belarus.Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled US$1.14 billion. In addition, grant financing totaling US$25 million has been provided to programs, including those with civil society organizations. The current investment lending portfolio includes five operations for a total amount of US$648 million. Show Less -
LAMP is designed to advance real estate cadaster creation, improve registration of services, strengthen capacity to support the planning sector, and further develop the permitting process in Montenegr... Show More +o.Since the project’s inception in 2008, more than 9,000 people have participated in debates on spatial and urban planning, helping to ensure that the concerns of all stakeholders are taken into consideration during project implementation and that the outcomes are as inclusive as possible. These efforts are helping to decrease illegal construction and ensure that buildings – especially public ones – are built according to code, thereby better serving the needs of everyone.“I see improvement – both in the situation in general, as well as in people’s awareness,” said Dejan, following a recent meeting of the working group. “Through direct communication among the networks of Non-Governmental Organizations (NGOs), almost half of the people with disabilities in Cetinje had a voice in the planning process,” he continued.In six years of implementation, the LAMP project has helped bring about a reduction of more than 88% in the construction of illegal buildings – and as a result, increase significantly the number of buildings that Dejan and other people with disabilities can now access more easily.“Every time a new public building is made accessible, I feel that our needs are being reflected,” concludes Dejan.The youth of Cetinje have also benefitted. Last year, a day care center for young people with disabilities opened in the town, with support from the local municipality, the Ministry of Social Care, and the United Nations Children’s Fund (UNICEF). The center accommodates up to 25 young people between the ages of 3 and 27 years, and provides help with their everyday needs.The construction of the day care center, the huge reduction in illegal construction, and the enforcement of laws on spatial planning and construction of structures for accessibility are all highly positive developments for Cetinje, and ultimately for Montenegro.The active participation of people like Dejan Tmusic in working groups that continue to influence these activities is also proof that a single voice, when multiplied several times over, can truly make a difference – for an individual, a community, and an entire country. Show Less -
Interviewed by Leszek Baj 2014-11-12Civil law contracts are abused, and their prevalence results mainly from lower labor costs rather than from a non-typical nature of work assignment as such. This le... Show More +ads to labor market duality, i.e. a situation where alike jobs are divided into better and worse ones. Leszek Baj: You used to work in Turkey. Now you are the Manager of World Bank Office in Warsaw. What are your first impressions from Poland?Marina Wes: I relocated to Poland in August. My family and I came here by car. The first things that struck me was the number of people who were selling some produce by the side of the road: fruit, mushrooms. My first impression was that the people were poor. But I soon realized that they were simply very industrious. Another observation I have is about bureaucracy, in a broad meaning of the word – it still remains an issue, despite some progress in curtailing the red tape. I was surprised how much trouble it took me to get Internet connection in the house. In Turkey it was easier. Bureaucracy and protracted procedures – e.g. in getting construction permits – have been long known as Poland’s weakness for many years. One can clearly see that looking at Doing Business ranking, for instance.In the latest edition of the report Poland was ranked at a very good, 32nd position in a group of 189 economies, but indeed it was ranked 137th in the category of getting construction permits. This shows that there still is a lot to be done if you want to maintain fast economic growth in the longer term.What else is there to be done?Let’s take labor market activity of Polish people, for example. Itis very low. Reforms are needed to make labor market more flexible and to boost employment and labor market activity. Some people say that our labor market is quite flexible because of civil law contracts, inter alia, which are sometimes referred to as ‘junk contracts’. I’d rather we didn’t refer to civil law contracts as ‘junk contracts’. Economists use the term of an ‘atypical contract’. Such contracts are used in many countries and they are b applicable to work assignments of unusual or irregular nature, for example assignments limited in time or focused on a specific task, such that can be done outside of the workplace and at different hours.Having said that, I admit you have a point here: in the Polish context, civil law contracts frequently have little in common with these assumptions. According to the research done recently in the World Bank, civil law contracts are abused, and their prevalence results mainly from lower labor costs rather than from atypical nature of work assignment as such. This leads to labor market duality, i.e. a situation where alike jobs are divided into better and worse ones, which has unfavorable economic and social implications.In that case, what is the alternative?To be able to answer that question one should first consider the counterfactual - what would have happened if such contracts were not used in Poland. Would the people who are hired under civil law contracts be hired based on the Labor Code, or would they become unemployed? Or, perhaps, the grey economy would expand.If such contracts were to be abolished, it might turn out that negative consequences outweigh the positives. In many regions in Poland, especially those with relatively low labor productivity and in the absence of regionally differentiated minimum wage, civil law contracts make it possible to legally hire people who might otherwise be jobless. The way to go is not to abolish civil law contracts, but to reduce the gap in costs generated for the employer by civil law contracts vs. Labor Code contracts. In that context, is it a step in the right direction to impose social security contribution payments on civil law contracts?It is the right step, albeit insufficient. When civil law contracts are charged with social security contribution, the gap in costs between civil law contracts and regular employment contracts may be diminished. This will help fight the abuse, at least to an extent. We also need measures to simplify the Labor Code and make it more flexible, so that employment contracts are more attractive to employers. In the Netherlands, where you come from, or in Germany there is very low unemployment. What can you tell us about flexibility of those labor markets?Labor market in the Netherlands is flexible in the sense of part time work, which makes it easier to combine work with family life and maintain a good work-life balance. In Germany, which struggled with the issue of high unemployment for quite a long time, they have recently introduced so-called mini jobs, which enhance flexibility of employment. In the UK there are ‘zero-hours’ contracts which also give significant degree of flexibility to the employer. Whether we like it or not, greater flexibility of the labor market is unavoidable due to globalization and accompanying competition. Show Less -
Economic GrowthKazakhstan is experiencing slower economic growth in 2014 due to negative supply- and demand-side effects. Kazakhstan’s real GDP growth slowed from 6 percent in 2013 to 4 percent in the... Show More + first nine months of 2014. This was caused primarily by lower output in the oil industry, weaker external demand for Kazakhstan’s metal products by China and Russia, and weaker domestic demand. Private consumption, in particular, was hit hard by the negative wealth effect after the tenge devaluation in February 2014, a tightening of lending conditions for consumer loans, and the delayed impact of the slower growth in real wages in 2013.Macroeconomic PoliciesThe Kazakh authorities are using expansionary fiscal and monetary policies to stimulate domestic demand.Immediately after the tenge devaluation, amid early indications of an economic slowdown, the government launched an economic support program for 2014-15 of one trillion tenge, equivalent to $5.5 billion. To fund the program, the government tapped the Oil Fund and also issued $2.5 billion worth of Eurobonds and plans to increase borrowing from international financial institutions.To restore trust in the tenge and stimulate lending, the monetary authority has worked to stabilize the exchange rate, increase supply of tenge liquidity, and address scarcity of long-term tenge funding and high dollarization in the banking system.Medium-Term Prospects and RisksAn uncertain global economic environment and regional geopolitical tensions pose risks to Kazakhstan’s economic outlook. The country’s GDP growth is expected to be about 4.1 percent in 2014 before gradually rising to 5.5 percent by 2017, driven mainly by larger oil production. Oil output is projected to increase after off-shore oil production comes on-line in 2016/17.Risks to Kazakhstan’s short-term outlook may emerge from a further slowdown in metal production and metal processing industries in the country, and from investor sentiment and greater risk-aversion, particularly in response to the Russia-Ukraine crisis. Moreover, as global demand for oil slackens, a further softening of oil prices may also undermine Kazakh consumer and business sentiments and potentially increase pressures on the tenge.Social ProtectionIf the economic slowdown starts to have a negative effect on the labor market, the government has instruments in place to mitigate the impact on the most vulnerable people in the population. Current social assistance and employment support programs may need to be scaled up, if additional funding is available from the Oil Fund, or from a reprioritization of budget spending.To improve the efficiency and effectiveness of support programs, it is recommended that the government better target households in need and ensure time-bound assistance. For the economy to become more resilient, the authorities will need to further develop human capital by improving training and educational outcomes.Structural ReformsThe Kazakh government has identified a set of reforms that are expected to help diversify the economy and expand the non-oil sector. The authorities have adopted a new package of measures to attract foreign direct investments to the economy, including investment subsidies, tax incentives, and an improved visa regime and business services to investors.The government has launched a major program of support for the development of small- and medium-sized enterprises. Efforts are also underway to improve the national regulatory and governance framework that would enhance the transparency and efficiency of economic transactions, facilitate private sector participation, and improve service delivery to the population. Ongoing reforms in customs administration and the courts are part of its reform agenda.The report also includes special topic sections on dollarization and the non-observed economy in Kazakhstan. Show Less -