Washington, 24 September 1998 (RFE/RL) -- The financial crises in Asia and Russia presented major challenges to the World Bank group in the 1998 financial year, which ended June 30th, but the organizations say the crises showed each at its best.
The World Bank, it's private sector arm the International Finance Corporation (IFC) and it's Multilateral Investment Guarantee Agency (MIGA) issued their annual reports today in Washington.
The World Bank said it's lending in the European and Central Asian region, which includes Russia, totaled $5.2 billion, up slightly from the bank's lending there in 1997.
It amounted to about a quarter of all new World Bank lending commitments made during fiscal 1998. Even with the Bank's part of the international rescue package for Russia, Moscow no longer held the slot as the largest borrower. This year, Korea, China and Mexico moved well ahead in borrowing, mostly because of the Asian crisis.
In addition to dealing with crisis situations, the bank continued its broad efforts at assisting the transition process for the countries of Central and Eastern Europe and Central Asia.
The bank says it focused on reconstruction after conflicts, as in Bosnia, accelerating structural reforms, covering programs in most of these countries, supporting social safety nets, protecting the environment and improving energy efficiency.
The bank supported 69 different projects in the countries of the region with loans and technical assistance.
The International Finance Corporation said it's 1998 fiscal year was less concerned with the immediate effects of the Asian and Russian crises, but rather focused on making sure that its investments in the troubled countries would not be lost.
The IFC concentrates the money it puts into any country as investments in individual firms, acting as a catalyst to draw in far larger amounts of private capital.
The IFC's head, Jannik Lindbaek, told a press conference that so far the corporation's investments in Russia and the troubled Asian economies have not been materially affected. "Most are for the long term and our investors are looking much further down the road," he said. However, he acknowledged that if the Russian crisis continues for a long period, it will impact the agency's exposure.
To forestall any problem with that, Lindbaek said the IFC's contingency reserves have been increased significantly.
In the 1998 fiscal year, the IFC approved financing involvement in 75 projects in East and Central Europe and Central Asia totaling $1.4 billion and made commitments for future participation in another 57 projects valued at over $1 billion.
The third organization in the World Bank group, the Multilateral Investment Guarantee Agency, which provides financing guarantees or insurance for investments where private markets are not yet strong enough, continued to expand its involvement in Central and East Europe and Central Asia.
In its 1998 financial year, the agency issued $830.9 billion in new guarantees for 55 projects in 26 developing nations, including its first in Ukraine -- a $30 million guarantee to the Ukrainian Investment Fund.
Most of the countries of the region are members of MIGA, although Latvia, Tajikistan and the former Yugoslavia are still in the process of fulfilling membership requirements. World Bank Vice President for External Affairs, Mark Malloch Brown, said an internal reorganization of the bank carried out during the year played a major role in helping the entire bank group refocus on its primary goals of eliminating poverty, improving living standards and helping countries in crisis begin to rebuild.
World Bank Loans for Region in 1998
Following is a list of the number of loans (in parenthesis) and total values approved by the World Bank in financial year 1998 which ended June 30. The totals include loans from the International Development Association (IDA). which provides credits for the poorest countries at no interest but with a small annual servicing fee over 30 to 40 years:
All figures in millions of U.S. dollars:
Albania (6) 84.2 Armenia (6) 134.5 Azerbaijan (2) 90 Bosnia (8) 177 Bulgaria (2) 116 Croatia (3) 106.9 Georgia (5) 110.4 Hungary (3) 336.4 Kazakhstan (3) 545 Kyrgyzstan (2) 65 Latvia (1) 7.9 Macedonia (4) 77.5 Moldova (3) 125.9 Poland (3) 522 Romania (4) 130 Russia (3) 1,628.6 Tajikistan (2) 19.9 Turkey (4) 603.1 Ukraine (2) 216.4 Uzbekistan (3) 127
Total: (69) 5,224.2