WORLD BANK

ROBERT-ZOELLICK
Prsident since July 2007

Introduction

The World Bank is one of the worlds largest sources of funding and knowledge for

developing countries. India is one of our oldest members, having joined the
institution at its inception in 1944.

In India, the World Bank works in close partnership with the Central and State Governments.

It also works with other development partners: bilateral and multilateral donor organizations, nongovernmental organizations (NGOs), the private sector, and the general publicincluding academics, scientists, economists, journalists, teachers, and local people involved in development projects

THE WORLD BANKS PLAN OF ACTION IN INDIA

The World Bank's work plan in India is spelt out in its Country Strategy

(CAS). The Country Strategy for India is closely aligned with India's own
development priorities and describes what kind of support and how much can be provided to the country over a period of around four years.

The Country Strategy for India for 2009-2012 is aligned with the
government's Eleventh Five Year Plan. It focuses on helping the country to fast-track the development of much-needed infrastructure, support the

seven poorest states, and respond to the financial crisis

The strategy foresee total proposed lending of US$14 billion for 2009 - 2012. As private financing dries up

in the wake of the global financial crisis, the Bank has

agreed to provide an additional US$ 3 billion as part

of the total financing envelope of US$ 14 billion

LENDING TO INDIA

At the end of June 30, 2010, the World Bank group had 75 active projects in the country. The net commitment for these projects was about $21.4 billion. New lending in FY10 (1 July 2009- 30 June 2010) amounted to $9.3 billion

Commitments as on June 30, 2010 (FY10): $21.4 billion

Commitments

FY05

FY06

FY07

FY08

FY09

FY10

New Lending

2.9

1.4

3.7

2.7

2.3

9.3

Total Commitments (Active Projects)

12.8

11.3

14.3

13.8

14.9

21.4

Total No. of Active Projects

64

56

67

60

61

75

World Bank to Support Bihar Governments Initiative to Rebuild Flood-Affected Areas with $220 million

The 2008 floods in the Kosi basin affected about 3.3 million people in five districts of Bihar. About one million people were withdraw from and about 460,000 people were given temporary shelter in relief camps.

Thousands of families dependant on farming lost land due to siltation, with massive damage to housing and infrastructure.

An already helpless rural population lost whatever little they owned, falling even deeper into poverty.

The new project aims to help Bihars flood-affected people by

supporting the reconstruction of about 100,000 houses, and the rebuilding of 90 bridges and 290 kilometers of rural roads.

Of the total cost of $259 million, Government of Bihar would

contribute $39 million for the project.

The cost per house will be Rs. 55000 ($1200) with an additional

cost of Rs. 2300 ($50) for a toilet and Rs. 5000 ($110) for solar
powered lighting.

In cases where beneficiaries do not own land, the Government of

Bihar will provide additional assistance of Rs. 5000 ($110) for the
people to buy the land.

Project Details:
The project has five key components: Owner Driven Housing Reconstruction - To reconstruct the damaged houses of about 100,000 households using an owner driven reconstruction model. Reconstruction of Roads and Bridges To restore connectivity by reconstructing damaged roads and bridges. About 2.2 million people are expected to benefit from the construction of about 90 bridges and culverts on the state highway and major district roads, as well as from the reconstruction of about 290 km of rural roads. Strengthening Flood Management Capacity To strengthen Bihars capacity for overall flood forecasting and the management of flood-erosion.

Livelihood Restoration and Enhancement - To help

build social and financial capital, and restore and

expand the livelihood opportunities of the affected

people.

Improving Emergency Response Capacity To provide contingency funding for works, goods and services required to respond in case of future calamities.

India's transfer of funds data until third quarter of 2009

India's Prime Minister's Economic Advisory Council which suggest that remittance flows to India will grow strongly in the 2009/10 fiscal year (which runs from April through March). Inward private transfers reached $27.5 billion in the first half of the current fiscal year, a 4.3 percent increase on a year on year basis . The PMEAC predicts that India will receive $30 billion in the second half of the fiscal year, which will take the annual figure to over $57 billion, a nearly 30 percent increase over the previous fiscal year.

Global Finance and the role of the World Bank

International Financial Institutions

The role of the World Bank as provider of economic and development data and intelligence, provider of infrastructure project financing and structural adjustment lending, and of investment risk cover.

IMF & WORLD BANK: the two sister institutions

IMF

IBRD + IDA + IFC +MIGA

2715 employees cooperative credit union with 185 member countries providing quotas whose total reach > US$300 billion. Crisis prevention and shortterm financing of temporary balance of payments problems with macro-economic stabilization programs Technical assistance Loans outstanding: $45 billion

10,000 employees 185 shareholder countries The Bank leverages its AAA rating to issue long-term global bonds in the capital markets Eligible countries: $1065>GDP<$6055 IBRD finances structural reform and infrastructure investments 12-15 years AID finances countries with GDP <$1065 over 35/40 years WBs capital reaches US$189 billion Annual Loans = US$29 billion

World Bank Group

IBRD: set up in 1945; 184 member countries; cumulative lending:

US$394 billion; US$11 in 2004 in 40 countries; lending (12-20/3-5); Capital: US$189 billion. Loans to low and middle-income countries

IDA: 1960; 164 members; GNP per capita<$965; cumulative

lending= US$151 billion, about US$9 billion in annual interest-free credits in 2002-2003 in 55 countries. Concessional lending (35-40/10) Target countries: 81 poorest countries home to 2.5 billion people

IFC: 1956; 176 member countries; portfolio : US$23,4 billion,

including $7 billion in syndicated credits. 2004 commitments: $5 billion in 217 projects in 65 countries!

ICSID: 1966, 139 member countries. 130 cases registered including

26 in 2003

MIGA: 1988, 167 member countries; cumulative guarantee issued:

US$13,5 billion; US$1,36 billion of annual guarantees in 2004
M H BOUCHET/CERAM (c)

World Bank Group

The WB borrows in the world capital markets and lends medium to long-term credit for structural adjustment and for investment projects. The IFC was set up in 1956, it helps promote private sector growth in developing countries The IDA was established in 1960 to provide financial assistance to the poorer developing countries that cannot meet the Banks commercial terms. (0.5%) The Bank commits about US$18 billion every year and disburses about US$14 billion. Net disbursements, however, reach only between US$1 and 2 billion per year. Cofinancing operations: senior creditor status = US$1 billion

The IBRD in the World Bank Group

World Bank (1944)

makes

LT loans to countries to enhance sustainable economic development alleviates external debt burden maintains profit-oriented objectives
loans

are not subsidized

engages

in co-financing agreements to extend economic impact (catalytic role)

The IBRD Organization

The World Bank is a truly global institution 184 countries, all members of the IMF (precondition) Established in 1945, as part of a new framework for international cooperation (Bretton Woods Conference, New Hampshire, July 1944) The 24-member Board represents the 184 member countries and is made up of 5 appointed and 19 elected Executive Directors Cumulative lending as of 2004= $394 billion Lending in 2004: $11 billion in 37 countries Capital to Assets ratio= 1

Cooperative

institution owned by its members who subscribe to its capital. The amount of shares each member is allocated reflects its quota in the IMF. Members pay in a small portion of the value of their shares, the remainder is callable capital (only be paid should the IBRD be unable to meet its obligations) Subscribed capital= US$189 billion

The World Bank Group and the IBRD

Capital Share and Country Voting Power USA= 13,91% Japan= 10,92% Germany= 7,02 UK= 5% France= 4,34% Belgium-Turkey (12 countries) = 4,45%

M H BOUCHET/CERAM (c)

Regional

IBRD-IDA
18%

Lending

distribution
27%

2004

13%

LAC Africa Meast South Asia East Asia Eurasia

20% 17% 5%

Annual lending program (IBRD/IDA)

in US$ million

25000 Loans 20000 15000 10000 5000 0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

4 types of guarantees

Transfer restriction coverage protects against losses arising from an investor's inability to convert local currency (capital, interest, principal, profits, royalties, or other monetary benefits) into foreign exchange for transfer outside the host country. Expropriation coverage offers protection against loss of the insured investment as a result of acts by the host government that may reduce or eliminate ownership of, control over, or rights to the insured investment. War and civil disturbance coverage protects against loss due to the destruction, disappearance, or physical damage to tangible assets caused by politically motivated acts of war or civil disturbance, including revolution, insurrection, and coups d'etat. Terrorism and sabotage are also covered. Breach of contract coverage protects against losses arising from the host government's breach or repudiation of a contractual agreement with the investor.

Toward a mutually-fruitful partnership between the World Bank Group and the Private Sector

1. Products and Services

a. Procurement Information

World Bank lending generates about 40,000 contracts worth approximately $25 billion annually to firms worldwide. Loans are made to governments and government agencies, which are responsible for procurement. The World Bank issues standard bidding documents, supports borrowers in developing procurement capacity, disseminates information on procurement matters, and maintains liaison with the business community through periodic conferences and monthly business seminars.

b. Project Finance Instruments

Guarantees of private debt : In addition to MIGA's coverage for equity and equity-related investments, the World Bank offers debt-specific guarantee products, including partial guarantees of private debt. By covering risks the market is unable to bear, the Bank's guarantee can open new investment opportunities for businesses. A partial risk guarantee protects lenders against payment defaults arising from non-performance of sovereign contractual obligations of a project, transfer risks, and certain major force events.

c. Financing for Small- andMedium- size Enterprises

Both the World Bank and IFC have developed special facilities to enhance access to international credit by entrepreneurs for micro-, small-, and medium-size enterprises. The "Extending IFC's Reach" initiative promotes private investment in selected regions and countries where difficult conditions have constrained IFC activity. A Small Enterprise Fund is used to invest in projects with total costs between US$250,000 to US$5 million and primarily provides debt financing but will also have the flexibility to make equity and quasi-equity investments and to provide local currency guarantees.

IFC has established several programs to assist entrepreneurs develop business proposals and raise financing for projects. To meet the financing needs of the enterprises, the programs catalyse funds from local and foreign banks, private investors, and investment funds. The Consultative Group to Assist the Poorest (CGAP) is a multidonor effort to systematically increase resources for micro enterprises. It provides governments, donors, and practitioners with a vehicle for structured learning on how to reach the poor with sustainable financial services. CGAP also funds sound micro finance institutions, with the objective of helping them achieve commercial viability.

e. Other Products and Services

In addition to providing products, services and business opportunities to the private sector, the World Bank enters into various types of partnerships with private sector organizations.

f. Investment Marketing Services

MIGA's Investment Marketing Services Department provides technical assistance to public and private sector investment intermediaries in developing member countries and transition economies. This assistance is designed to help client countries attract and retain foreign direct investment (FDI). More than ninety developing and transitional countries have benefited from capacity building, investment facilitation and information dissemination assistance from IMS.

2. Business Partnership Center

The Business Partnership Center (BPC) is a central contact point for business inquiries about the Bank Group's products and services. The BPC also works in partnership with leading business organizations around the world.

Focal Point for Business Inquiries: The BPC acts as a referral service and hot line, directing incoming inquiries (via phone, fax, and e-mail) to appropriate staff within the Bank Group for action. It also disseminates general information on Bank Group products, services and special initiatives of interest to businesses. Partnerships with Business Organizations: The BPC is establishing partnerships with leading business organizations around the world (such as chambers of commerce and federation of industries) to disseminate information about the Bank Group's private sector activities.

INTERNATIONAL TRADE AFTER THE CRISIS

Sebastian Saez Senior Economist International Trade Department World Bank

CONTENTS

CRISIS CHARACTERISTICS WHAT WE LEARNT FROM THE CRISIS FUTURE TRENDS AND THEIR IMPORTANCE FOR THE REGION

CRISIS CHARACTERISTICS
Sudden, severe and synchronized collapse (Richard Baldwin, 2009)

Sudden, collapse

severe

and

synchronized
Exports Growth by Region

Imports Growth by Region

Source: World Bank, Global Monitoring Report, 2010.

COMMERCIAL CHARACTERISTICS OF THE CRISIS

Commercial channels transmission

EVOLUTION OF RAW MATERIAL PRICES

Source: World Bank, Global Economic Prospects, Summer, 2010

Source: World Bank based on WTO data, Global Monitoring Report, 2010.

WHY HIGH SENSITIVITY OF TRADE TO CHANGES IN INCOME

Changes in trade-GDP elasticities from 1.5-2 to 3+ (Freund, 2009) Severity: trade composition versus GDP Synchronization Specific situation of service trade

Source: R. Baldwin, The Great Trade Collapse: Causes, Consequences, and Prospects, 2009

They were quite generalized.

Number of restrictive and liberalizing measures

Source: World Bank based on WTO data, Global Monitoring Report, 2010.

DEVELOPING COUNTRIES HAVE STARTED MOST OF THE PROTECTIONIST ACTIONS

Investigaciones Iniciadas1Q 2007 - 1Q 1Q Investigations initiated 1Q 2007 20102010 (a nivel de productos) (at product level)
50 45 40 35 30 25 20 15 10 5 0 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010
Initiated by developed economies Initiated by developing economies

Source : Bown, Chad P. (2010) Temporary Trade Barriers Database, May, available at http://econ.worldbank.org/ttbd

DEVELOPING COUNTRIES HAVE ADOPTED MOST OF THE PROTECTION ACTIONS

NewNuevas Medidas Adoptadas 1Q 2007 1Q 2010 measures adopted 1Q 2007 - 1Q 2010
35 30 25 20 15 10 5 0 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010
Imposed by developed economies Imposed by developing economies

Source : Bown, Chad P. (2010) Temporary Trade Barriers Database, May, available at http://econ.worldbank.org/ttbd

EVALUATING THE COMMERCIAL RESPONSES

Some countries have adopted liberalizing actions: Mexico, Malaysia and other. Trade facilitation actions. Reduction in taxes affecting trade and exports. Many of the protection actions adopted are found in industries that traditionally make use of contingent protection. (Messerlin, 2009) But we should see how the situation evolves and maintain monitoring as was done during this period.

TRENDS
Higher growth is expected in the Asian region.
Latin American-Asian trade has grown strongly over the last few years, but it represents less than 15% of total exports.
Strategy to increase exports to this region

Higher and growing trade fragmentation: port nodes are organized around main trade flows that do not go through Latin America
The crisis may strengthen the integration of regional blocks: In 2010, 9 new regional agreements were notified to the WTO; In 2009, 20 agreements were notified to the WTO. In recent years, agreements have increasingly included services trade. In the region this is a little developed topic