Hong Kong, 19 September 1997 (RFE/RL) - The nations of Central and Eastern Europe and Central Asia were collectively the largest borrowers from the World Bank during its 1997 financial year that ended June 30.
In its annual report on operations for the year, released today in Hong Kong, the bank said that it and the International Development Association --its affiliate dealing with the poorest nations-- together approved 67 new projects for the region totaling over $5 billion.
Russia was the largest single borrower from the region and the second largest national borrower overall from the bank. It received commitments from the bank of over $1.7 billion.
The bank has said it was prepared to lend as much as $6 billion to Russia over the next several years.
China was the bank's single largest borrower for the financial year, borrowing nearly $2.5 billion in 1997.
For the region, Ukraine was the second largest borrower, winning commitments totaling just under $1 billion. The bank said that was a tripling of what Kyiv had borrowed in the previous year, a reflection it said of the government's beginning to implement reforms across a wide front.
The bank noted that it had also starting programs in Bosnia for the first time, primarily reconstruction projects undertaken within the framework of the international donors rescue operation.
World Bank President James Wolfensohn told a press conference earlier in the day that the bank was putting as much as 80 percent of its loans to Russia in the social security sphere.
The annual report shows that the social sector was the largest single area of lending by the bank in the region, totaling about 19 percent.
But the report also showed that loans that crossed several sectors took the largest share at 24 percent. Agriculture got 15 percent of the loans to the East and Central Europe and Asian area, and electric power and other energy projects accounted for 10 percent of World Bank loans in 1997.
The rest of the bank's lending to the region in the 1997 year went to finance and mining, followed by oil and gas, education, health and public sector management.
Trailing at about one percent of all World Bank lending to the region were things like water and sanitation and urban development.
The bank's report commented that the nature of its relationship with the nations of Central and Eastern Europe was changing, focusing more now on their preparations for joining the European Union and dealing with pension reform.
The report says that pension reform has "moved into the mainstream of public sector reform in the region." It says there is a real need because many pay-as-you-go pension schemes now account for 10 to 15 percent of a country's GDP (gross domestic product, a measure of the size of a economy) and are financed by high payroll taxes.
However, says the bank's report, these systems are supporting an increasing number of pensioners while being supported by a declining number of contributing workers. It says they drain public resources through an increasing deficit and fail to provide security for the elderly.
The report says that in Croatia, Hungary, Latvia and Poland legislative work to reform the pension system has proceeded to an advanced stage, and in Kazakhstan and Russia the process has started.
The bank says it is helping countries design and launch new mixed-pension systems that include a fully funded and mandatory portion.
The bank also says its strategy for lending to former Soviet countries in 1997 was to focus on bolstering and sustaining broad economic growth. It has also put a major emphasis on providing technical assistance in a broad range of financial areas.
It noted, for example, how it had provided training in banking and finance to about 350 people from the CIS, who then in turn worked with trainer teams and had ultimately trained more than 2,000 banking and finance practitioners.