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Former U.S.S.R./ Europe:World Bank Says 1996 Another Busy Year

  • Robert Lyle

Washington, 26 September 1996 (RFE/RL) -- The World Bank says it made commitments of more than $4 billion to the countries of East and Central Europe and the former Soviet Union in the financial year which ended June 30th.

In its annual report released today in Washington, the bank says that it underwrote 61 projects in the nations of the region in fiscal 1996, nearly equal to the 1995 total, and actually disbursed a record $3.7 billion.

More importantly, the bank says, it worked to increase the effectiveness of the projects it underwrote by increasing supervision by 12 percent. That caused the number of operations with unsatisfactory progress reports to decline in 1996. It says six such projects with difficulties, were restructured and are now on track.

The bank's Managing Director of Operations, Gautam Kaji, says that having a project or loan declared unsatisfactory does not mean it has failed, but rather that it has not met the bank's expectations. In every single case, he says, the problem project was still financially profitable.

"Usually, the problem had to do with legal or administrative problems within the country or with the borrower's unfamiliarity with bank policies and procedures," he told reporters.

Kaji says the bank also now audits projects as they are implemented, so it can correct problems before they become serious.

Another change in bank policy in the past year, says the annual report, is the increasing number of projects that are using "community approaches" to reduce the social cost of restructuring.

In Ukraine, for example, the report says the bank is supporting a pilot project designed to mitigate the social and environmental impact of the government's decision to close coal mines.

The project draws heavily on local miners to test ways to close mines safely and to find ways to assist out-of-work miners seeking employment elsewhere. The lessons from this pilot project will be used to build future support for coal-sector restructuring throughout Ukraine and other countries of the region.

The bank says it has also started country portfolio performance reviews, it completed eight this year with nations in transition. During a review with Russia, for example, says the annual report, "important bottlenecks" were resolved on one project, performance indicators and key targets were established, and corrective actions were agreed to improve the pace of implementation of the project.

By the end of the financial year, the report says, the Russian project "met or exceeded the expectations for improvements."

The bank says that it is critical to have broad local support for the transition process as well as specific projects. "Social consensus is critical to sustain the ability of the economic transition, and the bank is increasingly listening to and seeking advice from non-governmental organizations (NGOs), community groups, local governments, public service providers, trade unions, the academic community, and the growing private sector," the report says.

It notes that in Armenia, the Social Investment Fund project aims to promote self-help and community solidarity. Based on lessons learned from a pilot NGO project, communities "identify eligible micro projects base on their priorities, manage the implementation of their micro project, select contractors and supervisors and devise a plan for maintaining the facility after completion."

In a similar vein, the bank says it is sponsoring seminars in the Krygyz Republic, Ukraine, and Macedonia, to teach parliamentarians and a broad range of civil society about transition issues.

Working to support the development of social support networks, the bank says it has ensured that affected communities receive adequate information about what is happening when there are massive job loses. It says that incentives and financial support was provided, for example, to more than 50,000 workers leaving troubled enterprises in Romania, as well as to workers in Kazakhstan, Kyrgyzstan and Macedonia. In countries as diverse as Hungary and Kazakhstan, the bank says, it is also enabling workers "not only to collect unemployment compensation but also to receive counseling to facilitate their search for other jobs."