South Asia Fast Facts, Countries eligible for World Bank borrowing

South Asia’s growth rate has remained substantially positive, averaging 4.2 percent of gross domestic product for calendar 2002, despite the recent global economic slowdown, adverse weather patterns, and political instability in the region. This figure, however, masks some variations in performance among the eight South Asian countries.

During fiscal 2003 the South Asia region saw the peace process in Nepal and Sri Lanka advance and witnessed continued engagement by the international community in Afghanistan. In Bangladesh encouraging progress has been made on governance reforms since the general elections of 2001. Pakistan’s military government held elections for the first time since 1999 and a coalition government was formed.

In Afghanistan reconstruction and development efforts are moving forward, but security concerns in parts of the country and in major cities remain an obstacle. In Nepal, notwithstanding a ceasefire agreed to between the government and Maoist insurgents in January 2003, the political landscape has remained highly fluid with the dissolution of Parliament in October 2002 and two changes in government since that time. In Sri Lanka an evolving peace process between the government and the Liberation Tigers of Tamil Eelan has enabled the country to move ahead with much-needed reforms in the war-ravaged areas to the north and east.

Although there is no clear consensus on a uniform methodology to measure poverty rates across the region, Bank-sponsored analytical work in Bangladesh, India, Nepal, Pakistan, and Sri Lanka is paving the way toward a better understanding of recent poverty trends. In Bangladesh the recent Poverty Assessment and the government’s Interim Poverty Reduction Strategy Paper show that the pace of poverty reduction has picked up considerably during the 1990s. Likewise, a broad consensus has emerged that India has made substantial progress in poverty reduction during this period, but more attention is needed to address disparities, especially between states, if the country is to achieve the MDGs. In Pakistan a new Poverty Assessment presented extensive data on poverty and concluded that the country needs to close its social gap in order to enhance its ability to grow over time.

WORLD BANK ASSISTANCE

The Bank’s work in South Asia is rooted in five interrelated strategic objectives that are central to delivering on the institution’s overarching mission. These are poverty reduction, fiscal stability, governance, HIV/AIDS and related diseases, and issues of water. Intermediate goals underpinning these objectives include improved macroeconomic management, improved governance, a strengthened private sector investment climate, improved access to basic services for the rural and urban poor populations, progress on human development, stronger management of the natural environment, and reduced risk and vulnerability for poor people. Bank lending is guided by the principal strategic drivers and is based on an extensive program of analytical work in the form of reports, workshops, policy notes, and ongoing policy dialogue. Lending for fiscal 2003 was $2.9 billion. Priorities were support for reform and investments in infrastructure, agriculture, health, education, and rural development. Additional Bank activities in the region included ongoing commitments to postconflict and emergency reconstruction efforts in Afghanistan and Sri Lanka. (See box 5.4.)

BUILDING THE CLIMATE FOR INVESTMENT

A strong and healthy investment climate is a priority across the region, and improving governance is a prerequisite for this. Enabling the private sector to fully contribute to economic development is also essential. Analytical work, lending operations, and policy dialogue are aimed at developing a favorable investment climate that is sustainable over time.

The World Bank report, Bangladesh: Improving Governance for Reducing Poverty, published in January 2003, suggested that governance reforms should be prioritized.

The Bank’s Board discussed a Country Assistance Strategy (CAS) progress report for Nepal that linked the level of the Bank’s available resources to the pace of reform in the country. A $16 million Financial and Technical Assistance Project is expected to help the country modernize its aging banking system. Sri Lanka’s efforts to secure a lasting peace received support from a credit to help the government implement a $15 million Economic Reform and Technical Assistance Project to invigorate the economy and expand the role of the private sector. Building on this, a $125 million Poverty Reduction Support Credit is helping improve Sri Lanka’s overall investment climate for facilitating growth led by the private sector. Similarly, in Bangladesh a $300 million Development Support Credit is helping improve the investment climate and ease governance constraints on private sector investment.

The improvement of roads and other travel infrastructure is a critical component for the Bank’s work in South Asia because it has a major effect on poverty reduction—reducing transportation costs and increasing access to markets, education, and healthcare. Infrastructure projects in Afghanistan, Bangladesh, India, and Nepal are under way, providing much-needed investments that will help reduce transportation costs and facilitate access to basic health and education services by poor people. India’s $488 million Uttar Pradesh State Roads Project will help upgrade 3,500 kilometers of the state’s existing road network.

In Afghanistan the $108 million Emergency Transport Rehabilitation Project aims to support the government by removing transportation bottlenecks and promoting the rehabilitation of the highway and aviation networks. Among other things it has done, the $42 million Emergency Public Works and Community Empowerment Project has provided for rehabilitation of the Salang Tunnel, which covers a critical section of the highway connecting the city of Kabul to eight provinces. The tunnel is also the only entry point to Kabul for humanitarian aid and other goods, as well as for refugees returning from the North. In Pakistan a second generation of adjustment loans to provincial governments was approved, including the $100 million Sindh Province Structural Adjustment Credit to support the Sindh’s economic reform program, and the $90 million Poverty Reduction and Economic Management Credit to the North-West Frontier Province in support of the province’s economic and social reform program.

EMPOWERING POOR PEOPLE

Central to the Bank’s work in the region is South Asia’s poverty reduction strategy: to ensure that opportunities for improved livelihood are widely available across the entire spectrum of society and to remove constraints that exclude people from participating in development and sharing its benefits. Empowerment activities take place in both analytical and advisory services and lending. The Bank focuses on two areas: promoting education and health for all, and supporting pro-poor rural development.

The Bank’s strong support for the social sector focuses on promoting gender equality. In rural development the District Poverty Initiative Project in the Indian state of Andhra Pradesh is approaching a new phase, with expansion from the initial six districts to cover the entire state and with a sharper focus on the poorest and most vulnerable communities. The $150 million Andhra Pradesh Rural Poverty Reduction Project has a component that promotes residential schools to ensure girls’ enrollment. In Bangladesh the Bank’s $18.2 million Social Investment Program Project targets excluded and vulnerable groups, particularly the poorest of the poor and women, through institutional development at the local level and the promotion of village organizations, with assistance from civil society and not-for-profit organizations. Additionally, the Bangladesh Development Support Credit is helping improve the management of public sector expenditure by supporting policies to improve overall financial management and procurement and strengthen public sector accountability. In Sri Lanka the Poverty Reduction Support Credit will support actions to strengthen governance in the public sector, accelerate rural development, and improve the welfare system. In Nepal the Bank is assisting the government to implement its strategy of transferring education, health, irrigation, and water supply facilities to community management through investment projects.

GLOBAL PRIORITY: HIV/AIDS

South Asia today accounts for approximately 4.1 million people living with HIV/AIDS. Although the infection rate in the general population is still low, in absolute numbers India has one of the largest HIV-positive populations in the world. Other countries in the region are characterized by a low prevalence among the general population but significantly higher rates among subpopulations engaged in high-risk behaviors.

Recognizing that Sri Lanka and Pakistan have a small window of opportunity to prevent nationwide epidemics, the Bank approved two projects in fiscal 2003 to build on the success of its ongoing program in other South Asian countries. In Sri Lanka the National HIV/AIDS Prevention Project ($12.6 million) will concentrate on prevention and on reducing stigmatization among vulnerable populations. Pakistan’s National HIV/AIDS Prevention Project ($37.1 million) is designed to prevent HIV from becoming established in vulnerable populations and from spreading to the general adult population, while also avoiding stigmatization.

In addition to lending, the Bank facilitates dialogue among countries in the region to share lessons learned, good practices of intervention, and research strategies. The Bank also supports cross-country collaboration for tackling such issues as migration and human trafficking. The World Bank Institute (WBI) has been providing capacity-building support to the region through face-to-face and distance learning programs. In fiscal 2003 WBI conducted a wide range of learning programs on various topics, including “AIDS and Strategic Communications,” which was a training course for journalists covering HIV/AIDS in the South Asia region. Other capacity-building activities focused on fiscal decentralization and local governments and on agricultural trade and the World Trade Organization.

Also Available:

Table 5.3: World Bank Lending to Borrowers by Theme and Sector
Figure 5.5: IBRD and IDA Lending by Theme
Figure 5.6: IBRD and IDA Lending by Sector