Horst Köhler’s Scenario: A More Open IMF

In his first press conference since receiving international support as nominee managing director of the IMF, Horst Köhler, president of the European Bank for Reconstruction and Development, said in Washington that he would work to make the Fund more open. "My intention is to have an open dialogue with the public and with private advocacy and aid groups," he said. The IMF should focus more on crisis prevention by monitoring conditions and advising countries, and should continue to demand economic conditions in exchange for loans. Earlier, Köhler conferred with Stanley Fischer, the acting managing director of the Fund, as well as with members of the Bank’s board and US Treasury Secretary Lawrence H. Summers. Köhler said Fischer had agreed to remain as deputy.

New Chief Economist at the Bank: Nicholas H. Stern

The World Bank has appointed Nicholas H. Stern as Senior Vice President, Development Economics, and Chief Economist. He will start at the Bank in late Spring. Stern replaces Joseph Stiglitz, who served as the Bank’s Chief Economist from 1996 until last month. Stern is leaving his professorship at the London School of Economics. From 1994–99 he served as Chief Economist and Special Counselor to the President at the European Bank for Reconstruction and Development. Stern has published extensively on such issues as public finance and enterprise reforms in China, the role of the state, and ownership and taxation in transitional economies.

World Bank to Lend China $7 Billion in Next Three Years

New World Bank Vice President for East Asia and Pacific Region Jemal-ud-din Kassum is visiting China from March 14 to 19, 2000. It is his first official visit to the region after taking up the post on March 1. The Bank so far has supported 220 projects in most of the provinces for a total of more than $30 billion. One hundred ten of these projects are still under implementation, making China’s portfolio by far the largest in the Bank. Given China’s improved financial situation and increased use of domestic resources, Kassum forecast that the World Bank’s lending program over the next three years might be in the range of $5 billion to $7 billion. Much of this financing would involve support for infrastructure development and water conservation programs, concentrated in the poorer inner and western provinces, as well as for urban and environmental projects largely in the more developed eastern areas.

Vietnam Asked to Prepare Comprehensive Development Framework

World Bank President James Wolfensohn, during his visit in Vietnam, on February 23 addressed 350 senior representatives of the government, donors, private sector, NGOs, and the academic community in Hanoi. "To restore Vietnam’s role as a potential tiger will require that the domestic private sector be liberated and the confidence of the foreign investors be rebuilt. It will require that access to market knowledge and technology be expanded," he said. One way of moving forward, he suggested, would be for the government to convene a coalition of partners — from the state and private sectors, academia, and the international community—to help clarify the prerequisites of rapid, poverty-reducing growth. With almost 30 million Vietnamese still below the poverty line, he said, the preparation of a Comprehensive Development Framework is urgent. The World Bank President signed two aid projects worth $135.7 million. Since resuming lending to Vietnam in November 1993, the World Bank has made commitments of $2.4 billion in financial assistance and disbursed $1 billion. Last year, it provided $318 million in assistance.

e-CAS Will Simplify Staff’s Work

An electronic tool to assist in preparing Country Assistance Strategies, dubbed "e-CAS," has been proposed by Joanne Salop, vice president of Operations Policy and Strategy. e-CAS aims to lower costs and increase the benefits of preparing country assistance strategies by streamlining access to information. This would give country teams more time for dialogue, professional analysis, and participation. e-CAS could have important corporate side-effect benefits, too, such as more accurate costing of the strategy program, better tracking of implementation, and better access to the strategies by Network, IFC, and MIGA colleagues who are not on the country team. e-CAS would give staff electronic access to Bank Group information, and Bank Group "offerings" in different sectors and along various product lines. e-CAS also would include an electronic partnerships menu, with links to what other donors and partners are doing in a particular country or sector, so that staff can better determine programming options. There would also be a module for calculating the cost of a proposal. Once the country assistance strategy document had been completed, e-CAS would be "frozen" electronically and an implementation module would begin to track the program as it developed.

IMF to Decide on Loan Program for Ukraine after Audit

Deputy Prime Minister Yuriy Yekhanurov said on February 21 that the IMF will decide whether to unfreeze its $2.6 billion loan program for Ukraine after an audit of the National Bank. The audit was ordered after the Financial Times alleged that in 1997 and early 1998 the National Bank dressed up its reserves in order to qualify for continued credits from the Fund. It also secretly invested its reserves in risky ventures against the advice of IMF officials. Ukraine needs additional funding to cope with $3.1 billion in loan payments due this year.

Six Balkan Countries Sign $145 Million Deal

To reduce trade and transport costs and combat smuggling, Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, and Romania signed an agreement on February 10 in the Macedonian capital, Skopje. They are to set up a committee to deal with the World Bank’s trade and transportation program in Southeast Europe. "The program will represent the first regionally linked project in support of the Stability Pact," the Bank said, referring to the EU-sponsored economic and political treaty for the Balkans. The program will be financed by IBRD loans of about $38 million and IDA credits of about $30 million. The United States will provide $9 million in grants. The beneficiary governments would contribute about $18 million. The EU is expected to provide grants of about $50 million.

Czech Restructuring Needs Enabling Legal Environment

Despite encouraging changes to the bankruptcy law, the Czech Republic has to do more to establish a legal environment that can contribute to successful restructuring of the corporate sector, World Bank economist Roberto Rocha told the CTK news agency. "In addition to the improvements in the bankruptcy and foreclosure laws, it is also necessary to amend some other laws, primarily in the field of taxation, that would boost both court and out-of-court settlements," says Rocha. The World Bank is also calling for a restructuring strategy for small and medium-sized firms which maximizes the involvement of the private sector, either through sales of loans or through outsourcing arrangements. The Czech Parliament amended the Bankruptcy Act in January, strengthening the position of creditors and cutting off bad managers and owners from cash-flow.

World Bank’s On-Line Pension Primer

http://www.worldbank.org/pensions

The World Bank published an online primer on pension reform on March 1, designed to help policymakers transform unwieldy and unsustainable pension systems into modern social safety nets that can protect the aged and contribute to economic productivity. "It’s not just a dry text book. It links worldwide experience in a dynamic manner with implementation on the ground," said Robert Holzmann, director of Social Protection at the Bank. The primer addresses issues including financing the transition from pay-as-you-go to multipillar pension systems, designing a market and regulatory structure to facilitate pension reform, and the rules and international practice of pension provision.

Recent World Bank Loans to Estonia, Latvia, Tajikistan, Bulgaria, Romania, and Slovenia

A $25 million transport loan for Estonia will address road traffic safety problems. Estonia joined the World Bank in 1992 and its commitments so far total $138 million for 8 projects (approved on March 16).

A $40.41 million Programmatic Structural Adjustment Loan will support Latvia’s efforts to speed up the economy and improve its public sector performance. Latvia joined the World Bank in 1992 and commitments so far total about $355.41 million for 17 operations (approved on March 16).

A $5.4 million credit to Tajikistan for a Primary Health Care Project will help replace the current health care system. Tajikistan joined the World Bank in 1993 and commitments so far total about $190 million for 11 projects (approved on March 7).

A $50.1 million equivalent (euro 49.5 million) Environment and Privatization Support Adjustment Loan will support Bulgaria’s environmental policies, including the harmonization of environmental legislation with EU requirements. Bulgaria joined the World Bank in 1990 and commitments so far total about $1.2 billion for 20 projects (approved on February 24).

A $11 million loan for an Agricultural Support Services Project in Romania will support the transfer and exchange of agricultural knowledge and information to farmers and agro-businesses. Romania joined the World Bank in 1972 and commitments since 1990 total about $3.5 billion for 27 projects (approved January 27).