Borrower demand remains above pre-crisis levels, with total commitments of $189 billion since financial crisis hit
WASHINGTON, July 1, 2011—World Bank Group support to developing countries came in at $57.4 billion in fiscal year 2011, still above pre-crisis levels, with total commitments of $189 billion since the financial crisis took hold in 2008.
World Bank Group Commitments
*Preliminary and unaudited numbers as of July 1.
+Own account only. Excludes more than $6.4 billion in FY11 and $5.3 billion in FY10 in funds mobilized from other investors.
As developing countries emerged from the financial crisis in FY11 (July 1, 2010 – June 30, 2011), the Bank Group provided an estimated 712 loans, grants, equity investments and guarantees to promote economic growth, fight poverty, and assist private enterprise.
World Bank (IBRD and IDA) commitments for social protection—including safety net programs for the poorest and most vulnerable—are estimated to reach $4.1 billion in FY11. Financing for infrastructure, critical for job creation and future productivity, is estimated to reach $20 billion in FY11—46 percent of total lending. In particular, IDA support for infrastructure grew to $7 billion, both a record high and a 31 percent increase over FY10. FY11 also saw unprecedented financing of $1.4 billion for natural disaster management, critical for adapting to climate change and combating the high number of recent natural disasters.
"Over the past year, the World Bank Group clearly demonstrated our commitment to support growth and opportunity for our clients even as the reverberations from the global crisis still send shock waves through the world economy," said World Bank Group President Robert B. Zoellick. "As the multi-speed recovery takes shape, high and volatile food and fuel prices are stirring new challenges, putting vulnerable populations at risk. The World Bank is honing its focus on areas where we can add most value: targeting the poor and vulnerable; creating opportunities for growth; promoting global collective action; strengthening governance; and managing risk and preparing for crisis. We are doing all this while making the Bank a more transparent, accountable and results-driven institution."
During the fiscal year, food prices climbed to near their 2008 peak, and the World Bank estimates that rising food prices pushed about 44 million people into poverty since June 2010. To help address price volatility, the Bank saw a strong focus on food security in FY11, including:
- A first-of-its-kind risk-management product that will provide up to $4 billion in protection from volatile food prices by giving consumers and agricultural commodity producers better access to hedging instruments.
- Boosting financing on agriculture to some $6 to $8 billion a year from $4.1 billion in 2008.
- The Global Food Crisis Response Program (GFRP) is helping some 40 million people through $1.5 billion in support.
- The Bank is supporting the Global Agriculture and Food Security Program (GAFSP), set up by the World Bank Group in April 2010 at the G20’s request, to assist country-led agriculture and food security plans and help promote investments in smallholder farmers. To date, six countries and Gates Foundation have pledged about $925 million over the next 3 years, with $520 million received.
In FY11, commitments from the International Bank for Reconstruction and Development (IBRD) —which provides financing, risk management products, and other financial services to countries—reached $26.7 billion, nearly double the FY08 pre-crisis level of $13.5 billion. This follows the record $44.2 billion in FY10 and $32.9 billion in FY09, as the crisis peaked. Cumulative IBRD commitments since the financial crisis (i.e.: FY09-11) reached $103.8 billion. Fast-disbursing Development Policy Loans, many of which focus on reforms to improve governance and increase transparency, comprised nearly 37 percent of the overall total for FY11, down from 47 percent in FY09 and FY10 – at the height of the global financial crisis - but still above the average of 31 percent in the pre-crisis period of FY05-08.
Strong Results for the World’s Poorest
In the past decade, the International Development Association, the World Bank’s Fund for the Poorest, has helped people build a better future for themselves, their families, and their countries. For example, from 2000 to 2010, IDA assistance has resulted in:
Commitments from the International Development Association (IDA), the World Bank's Fund for the Poorest which provides low-interest loans and grants to 79 of the world's poorest countries, rose to a record $16.3 billion in FY11.
FY11 was the third year of implementation under the IDA15 Replenishment, which itself saw a record increase in development funding for IDA countries. Sub-Saharan Africa accounted for about half of the total IDA15 funding with IDA support focused on empowering and protecting the poor; strengthening institutions and governance; fostering gender equality; and addressing global challenges such as climate change.
During IDA15, IDA also expanded commitments to support regional public goods, including for water management, trade facilitation, and roads networks; approved $1.4 billion through the new pilot Crisis Response Window to mitigate the impact of the economic crisis and protect the poor; and strengthened its support for fragile states by providing $4.8 billion to these countries. IDA also boosted its support for countries facing natural disasters such as the rapid response to the Haiti earthquake of January 2010.
IFC, the largest provider of multilateral financing for the private sector in developing countries, again provided a record amount of financing to businesses in developing countries, helping the private sector create jobs, strengthen infrastructure, improve agricultural efficiency, and confront other development challenges. Preliminary and unaudited data as of June 30 indicate IFC invested about $18.7 billion in 513 projects in FY11, reflecting an estimated project value of around $100 billion. In FY10, IFC investments totaled $18 billion. IFC investments have more than doubled in the past five years.
The most recent figures include about $12.3 billion in commitments made on IFC’s own account and some $6.4 billion mobilized from other investors. Resources mobilized from other investors included $448 million invested through funds managed by IFC Asset Management Company, or AMC, a wholly owned subsidiary of IFC that acts as an independent manager of third-party capital. Total expenditures by IFC Advisory Services are expected to be about $300 million.
IFC continued its strategic focus on the poorest countries and regions, and post-conflict areas. IFC’s new commitments in FY11 in the 79 countries eligible to borrow from IDA totaled about $4.4 billion. Around half of all IFC projects, and about more than 60 percent of Advisory Services project expenditures, were in these countries. IFC investments in Sub-Saharan Africa totaled about $2.1 billion. Preliminary results as of June 29 show that our clients provided about 2.2 million jobs in 2010 and made about $104 billion in loans to small and medium enterprises.
"IFC is working with the private sector to find solutions for the world's greatest challenges, especially poverty," said IFC EVP and CEO Lars Thunell. "Private investment is bringing much needed resources to enhancing food security, developing supplies of clean energy, and addressing the needs of poor people living in developing countries, including the least developed places."
IFC’s work in FY11 again included pioneering projects that address economic uncertainty and increase opportunity. In the Middle East and North Africa, for example, IFC and the Islamic Development Bank launched a program that will mobilize as much as $2 billion to promote Education for Employment, a vital project in a region where youth unemployment runs over 25 percent. In Turkey, IFC is helping the country use renewable energy to meet its growing demand for power. It structured its largest-ever syndication—a €700 million financing package for Enerjisa Enerji Uretim. IFC also provided essential support to the G20’s new Financial Inclusion Initiative, an effort aimed at enhancing access to finance for small and medium enterprises.
A More Open, Transparent, and Accountable World Bank Group
In FY11, the World Bank Group continued to work to make to make its research and operations more open, transparent and accountable.
The Bank Group’s political risk insurance arm, the Multilateral Investment Guarantee Agency (MIGA) issued $2.1 billion in guarantees—a historic high. The agency continues to see a return to a more diversified portfolio across regions and sectors.
"In large part, MIGA’s success this year is due to the recovery in foreign direct investment from financial-crisis lows—and this is indeed a great story for development," said MIGA’s Executive Vice President Izumi Kobayashi. "Paired with historic amendments to MIGA’s convention that expanded the pool of investments we can insure, this year’s results demonstrate that MIGA is delivering on our mission to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives."
Commitments to sub-Saharan African countries—the Bank’s top priority—were at $9.4 billion in FY11, down from crisis levels of $13.85 billion in FY10 and $9.9 billion in FY09. FY11 commitments to Africa included $7 billion from IDA and $56 million from IBRD; $2.1 billion from IFC; and $243 million in MIGA guarantees for projects in the region.
Currency, interest rates, and commodity prices have been volatile, and the impact of natural disasters has become more severe in recent years. As a result, the World Bank continues to engage with countries to improve risk management strategies and offer financial products that can help reduce their vulnerabilities. The volume of risk management transactions executed by the Bank on behalf of client countries this year to manage the volatility of currency and interest rate was $5.6 billion. In addition, the Bank provided advisory services on public debt management to 38 countries, as well as financial products that meet our member countries’ risk management objectives.
The World Bank Group continued to help clients mitigate natural disaster and weather-related shocks. For example, IBRD’s credit line for catastrophes, the Catastrophe Deferred Drawdown Option (Cat DDO) was instrumental in helping Colombia respond quickly to emergency relief and reconstruction needs after the country’s worst rainy season in decades. The CAT-DDO tries to address the issue of moral hazard related to post disaster financing; it provides incentives to client countries to engage in pro-active disaster risk management. Two new countries, Peru and El Salvador, also signed Cat DDOs with the Bank in this fiscal year.