24 September 2008
The World Bank Group (WBG) loans to countries in Europe and Central Asia (ECA) increased by 30% between FY07 and FY08.
During FY 2008 (which ended on June 30), the World Bank Group (WBG) gave US$8 billion in loans for projects in Europe and Central Asia – compared to US$6 billion in FY2007. By far the largest jump in funding was by the IFC: in FY2007 it lent US$1.79 billion and in FY2008, US$2.68 billion – a growth of nearly 50%.
The World Bank cited the worldwide increase in food prices as one of the major reasons for the expansion and growth in its loans. An indicator of this was a quick approval of four food crisis-related projects in Kyrgyzstan and Tajikistan. However most of the Bank’s lending remained in the infrastructure sector, primarily in countries with strong extractive industry components. For example, the region’s top two borrowers per volume in FY2008 were Azerbaijan and Turkey.
Some of the major and environmentally sensitive projects supported by the IFC include the Vostok project; aiming to construct new oil wells, a gas processing plant and other infrastructure in central Russia (a loan of US$50 million was approved in December 2007) and the massive Enerjisa Enerji Üretim A.Ş. project in Turkey, with a goal to build a natural gas-fired thermal power plant and ten hydroelectric plants in order to address Turkey’s growing energy shortage. The Turkish project was approved for a sum of US$825 million in March of 2008.
The recent publication of the 2008 edition of Transparency International’s annual Corruption Perception Index (CPI), demonstrates that WBG loans are not conditioned on a low level of corruption. Azerbaijan, for example, has seen a steady decline in its CPI since 2006. Similarly, the CPI for all Central Asian states – with the exception of Kazakhstan – has experienced a visible trend of decline or stagnation over the years. The same trend can be seen in Russia, where the CPI has fallen to its lowest levels in years. Notable exceptions include Georgia and Turkey; two countries that have seen dramatic and constant improvement in the area of corruption and are at the same time recipients of significant levels of IFI loans.
IFC-approved projects in the latter half of 2008 (after the end of FY2008) indicate that FY2009 might be yet another record-breaking year. Projects such as Jambyl Cement LLP, approved for a loan of US$180 million in August of 2008 to construct a new cement plant near Kazakhstan’s Lake Balkhash, will likely pose additional challenges and concerns for civil society groups in the ECA region as well as around the world. As the WBG’s involvement in large-scale projects in the region grows, so does the need for greater transparency and accountability, both for the Bank and the host governments.
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