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World Bank and China Sign Loan Agreement on Wenchuan Earthquake Recovery Project

March 20, 2011

Beijing, March 20, 2009 – The World Bank and Chinese Government signed the loan agreement on the Wenchuan Earthquake Recovery Project  in Beijing today, witnessed by senior officials from the Ministry of Finance, National Development and Reform Commission, Sichuan and Gansu Provincial Governments, and the World Bank.
The US$ 710 million emergency loan, approved by the World Bank's Board of Executive Directors on February 12, comprises two provincial parts, US$510 million for Sichuan and US$200 million for Gansu. The focus is on the reconstruction of infrastructure such as roads, bridges, water supply, wastewater and solid waste, and health facilities in selected counties in both provinces, and, in the case of Gansu, also on the reconstruction of education facilities.

Vice Minister Li Yong of the Ministry of Finance commended the Bank for its response to the Wenchuan Earthquake. " In the aftermath of the Wenchuan Earthquake, the World Bank was among the first to express its condolence to the Government and people of China. And the Bank has swiftly mobilized about US$5 million grants to support post-earthquake reconstruction," he said. He also cited the workshop on international experience in post-disaster recovery organized by the Bank one month after the earthquake, and the policy advice on a range of issues such as cash allowances, health service, reconstruction of private housing and catastrophe insurance system.  " All this shows that China and the World Bank are strong and effective partners. It also reflects the long-term commitment of the World Bank as the largest global development institution to support developing countries," said Vice Minister Li.

"The Wenchuan Earthquake Recovery Project is significant for the World Bank because it is the largest emergency project in Bank’s portfolio," said James Adams, World Bank Vice President for the East Asia and Pacific Region. " It provides an opportunity for the World Bank to support China's request to access best international knowledge on disaster management and response, and to work together with the Chinese Government to gather experience and lessons learned that may be of help to other countries in the world."
The project took only four and a half months to prepare, among the fastest of emergency projects undertaken by the World Bank. "Project preparation started very soon after the earthquake occurred," said Vice Governor Wang Ning of Sichuan Province. " With great support from the Ministry of Finance and NDRC, we have worked closely with the World Bank team and completed preparatory work quickly and efficiently.  Now it is a critical time for post-earthquake recovery and reconstruction. Signing of the agreement is significant as it helps meet our financial needs, accelerate the reconstruction process, and quickly restore the livelihood of the peopled in the affected area."
Vice Governor Feng Jianshen of Gansu Province, the US$200 million from the World Bank to Gansu will " help restore production and livelihood of 5,264,800 people living in the earthquake-affected Longnan Municipality in Gansu. The money will be spent on the reconstruction of infrastructure and health and education facilities in seven hard-hit counties in Longnan, in line with the principles and objectives set in theNational Masterplan for the Rehabilitation and Reconstruction of Wenchuan Earthquake."   This loan forms part of the central government's financing package for the earthquake reconstruction, according to Kong Linglong, Director-General of NDRC's Capital Utilization Department.
The project is designed using a flexible framework approach. During project preparation, the Bank agreed on the general framework and principles with the central and the provincial governments, while the specific investments will be identified during project implementation. The first batches of sub-projects are already under preparation in both provinces.

Within 90 hours of the earthquake, the World Bank provided the Chinese Government with policy advisory note on international best practices in earthquake response, and an initial $1.5 million grant through the Global Facility for Disaster Reduction and Recovery (GFDRR). The grant helped to provide emergency tents and technical assistance for the reconstruction effort. The Bank also mobilized a team of international experts, many with experience in other recent earthquakes such as in Turkey and Pakistan, and brought them to Beijing to share experience with Chinese counterparts in the central and local government who are charged with planning the reconstruction efforts. The government's reconstruction masterplan reflects many of major lessons presented by experts from other countries, the Bank and the United Nations. The Bank has also provided a Global Environment Facility (GEF) grant of US$1 million to support assessment of potential chemical contamination from industries affected by the earthquake. The World Bank’s private-sector arm International Finance Corporation is helping small and medium-sized businesses in the Chengdu area get much-needed financing in the aftermath of the earthquake. Last December, World Bank President Robert B. Zoellick visited Beichuan and laid flowers in memory of the more than 80,000 who were killed or went missing in the May 12th Earthquake.

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