MBA-IB, DIV-A

World Bank
Trade Finance
World Bank
Introduction & History
• Inception: Established in 1944, is headquartered in Washington, D.C.
• Importance: A vital source of financial and technical assistance to developing countries
around the world.
• Challenge :To reduce global poverty
• Mission: To fight poverty with passion and professionalism for lasting results and to help
people help themselves and their environment by providing resources, sharing
knowledge, building capacity and forging partnerships in the public and private sectors.
How does the World Bank Plan to achieve its goals?
• Has more than 10,000 employees in more than 100 offices worldwide.
• It is made up of two unique development institutions owned by 186 member countries.
International Bank for Reconstruction and Development (IBRD)
The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries
International Development Association (IDA)
IDA focuses on the world's poorest countries.
• Their work is complemented by that of the
– International Finance Corporation (IFC)
– Multilateral Investment Guarantee Agency (MIGA)
– International Centre for the Settlement of Investment Disputes (ICSID)
Six Strategic Themes
Objective and Function
• Provide assistance to developing and transition countries
• Promote the economic development of the world's poorer countries
• Finance the poorest developing countries whose per capita GNP is less than $865 a year
special financial assistance through the International Development Association (IDA)
The central mission of the World Bank is the alleviation of poverty, defined not only as a lack of
resources, but as a sense of powerlessness and the absence of basic security as well. The latter
two dimensions of poverty in particular are exacerbated when a nation's law and justice
institutions perform poorly and the rule of law is weak or nonexistent. While the elite can often
use wealth or connections to cushion themselves from the impact of a poorly performing legal
system, these alternatives are not open to the poor. They are the ones most vulnerable when the
rule of law is absent.
The World Bank's Comprehensive Development Framework, which guides the Bank in its work,
singles out the critical importance of an "effective legal and judicial system." It states that:
"Without the protection of human and property rights, and a comprehensive framework of laws,
no equitable development is possible. A government must ensure that it has an effective system
of property, contract, labor, bankruptcy, commercial codes, personal rights laws and other
elements of a comprehensive legal system that is effectively, impartially and cleanly
administered by a well-functioning, impartial and honest judicial and legal system."
The Banks undertakes analytical and advisory services, lending operations, training and capacity
building, and non-lending technical assistance in a vast area of trade-related areas, from trade
policy and standards to trade facilitation and logistics.
These activities focus on countries’ own reforms and complement the Bank’s Global Advocacy
activities to support a trade agenda that is conducive to growth and poverty reduction at the
multilateral, regional and country levels.

Millennium Development Goals based on five key factors

 Build capacity
 Infrastructure creation
 Development of Financial Systems
 Combating corruption
 Research, Consultancy and Training

Partnerships at work

• The adoption of the Millennium Development Goals (MDGs) in 2000 solidified an

historic global partnership to focus on reaching seven specific targets to reduce poverty,
 hunger, disease and illiteracy. The eighth goal, develop a global partnership for
development, identifies the means to achieve the other seven.

• These are examples of important global partnerships in which the World Bank
participates:

• Onchocerciasis Control Program (OCP)

• Successfully halted transmission of river blindness in 11 countries with a collective

population of 35 million.

• Consultative Group for International Agricultural Research (CGIAR)

• Created and promoted crop improvements in developing countries over the last 30 years
through a network of research centers.

• Global Environment Facility (GEF)

• Provides grants to developing countries to fund projects that benefit the global
environment and promote sustainable livelihoods in local communities.

• Consultative Group to Assist the Poorest (CGAP)

• Expands access to microfinance by the poor in developing countries through a

consortium of 28 public and private development agencies.

• Financial Sector Reform and Strengthening Initiative (FIRST)

• Provides flexible, practical assistance to developing countries to strengthen their financial

systems and adopt international financial standards.

• Global Water Partnership (GWP)

• Supports countries in the sustainable management of their water resources.

• Global Alliance for Vaccines and Immunization (GAVI)

• Seeks to protect public health worldwide through the widespread use of vaccines.

• The Carbon Fund

• Works to develop viable, flexible market mechanisms to reduce greenhouse gas

emissions under the Kyoto Protocol.

• Roll Back Malaria

• Coordinates the international fight against malaria, which kills more than 1 million
people a year, most of them children in Africa.
The bank offers two basic types of loans

 Investment loans: Support of economic and social development projects

 Development policy loans: Quick disbursing finance to support countries

Funding

• The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-
rated bonds in the world’s financial markets. The IBRD’s income is generated from its
lending activities, with its borrowings leveraging its own paid-in capital, plus the
investment of its "float".

• The IDA obtains the majority of its funds from forty donor countries who replenish the
bank’s funds every three years, and from loan repayments, which then become available
for re-lending

Areas of operation

Members
S No. Total member countries in each institution Count
1 The International Bank for Reconstruction and 186
Development (IBRD)
2 The International Development Association (IDA) 169
3 The International Finance Corporation (IFC) 182
4 The Multilateral Investment Guarantee Agency 175
(MIGA)
5 The International Centre for Settlement of Investment 144
Disputes (ICSID)

The organizations that make up the World Bank Group are owned by the governments of
member nations, which have the ultimate decision-making power within the organizations on all
matters, be they policy, financial, or membership issues.
In the case the International Bank for Reconstruction and Development (IBRD), there are 186
member countries, nearly all the countries of the world. The International Development
Association (IDA) has 169 members, the International Finance Corporation has 182 members,
the Multilateral Investment Guarantee Agency has 175 members, and the International Centre for
the Settlement of Investment Disputes has 145 members.
Under the Articles of Agreement of IBRD, to become a member of the Bank a country must first
join the International Monetary Fund (IMF). Membership in IDA, IFC and MIGA are
conditional on membership in IBRD.
There is a Corporate Secretariat within the World Bank which coordinates the work of the
Bank’s shareholders and within that a Membership and Capital Subscriptions Team concerned
with new membership.
Member countries govern the World Bank Group through the Boards of Governors and
the Boards of Executive Directors. These bodies make all major decisions for the organizations.
Voting Powers

The World Bank and the IMF have adopted a weighted system of voting. According to the
Bank's Articles, membership in the Bank is open to all members of the IMF. A country applying
for membership in the Fund is required to supply data on its economy, which are compared with
data from other member countries whose economies are similar in size. A quota is then assigned,
equivalent to the country's subscription to the Fund, and this determines its voting power in the
Fund.
Each new member country of the Bank is allotted 250 votes plus one additional vote for each
share it holds in the Bank's capital stock. The quota assigned by the Fund is used to determine
the number of shares alloted to each new member country of the Bank.
The Membership and Capital Subscriptions Office of the Corporate Secretariat is responsible for
coordinating the process for members to complete their periodic capital increases in IBRD, IDA,
IFC, and MIGA. It provides advice on the procedures for subscribing to additional shares as
authorized under resolutions approved by the Boards of Governors, including required
documentation and capital subscriptions payments.

Overall Trade Lending FY 2003 – 2009

In this midst of the recent financial crisis, the World Bank has scaled up its support for trade-
related reform through analytical and advisory services, financial assistance, technical assistance,
and capacity building. In FY 2009, World Bank trade-related lending reached its highest level in
recent years, increasing from US$560 million in FY 2003 to US$3.4 billion at the end of FY
2009. Lending in FY 2009 has primarily been driven by a sharp increase in non-concessional
lending (IBRD projects), while concessional lending (IDA projects) has declined slightly from
last year.
Bank trade-related lending supported 34 projects in FY 2009, including 6 regional projects in the
Africa region. In terms of the number of projects, lending was driven mainly by projects in the
Africa, Latin America and Caribbean and Europe and Central Asia regions, at 35 percent, 20
percent and 18 percent, respectively. Lending to South Asia, the Middle East and North Africa
and East Asia and Pacific regions was comparatively less, with 9 percent each for these three
regions. In terms of value, in FY 2009, lending was the highest to countries in the Europe and
Central Asia and the African region. Trade-related projects this fiscal year mainly focused on
trade facilitation and market access, which comprised 68 percent of the value of the portfolio,
followed by projects with a focus on export development and competition and regional
integration.
India at world Bank
• The World Bank works in close partnership with India’s Central and State Governments,
aligning its strategies with the country’s own development agenda. It lays emphasis on
investing in people through better health and education, empowering communities to
participate in their own development, improving the effectiveness of government, and
promoting private sector-led growth to achieve the country’s development goals.
• Its four-year Country Strategy for 2005-2008 focuses on lending for infrastructure,
human development, and improving rural livelihoods. The Bank is increasingly focusing
on providing analytical reports on the country’s major development challenges, and
extending practical advice to policy makers by sharing good practices and experience
from within the country and abroad.

• CURRENT LENDING IN INDIA

TOTAL PER FISCAL YEAR, IN US DOLLARS
S No. Year Amount(in $)
1 2005 2,926,330,000
2 2006 1,416,000,000
3 2007 3,752,000,000
4 2008 2,154,000,000
5 2009 603,500,000

CURRENT LENDING IN INDIA

4000000000
3500000000
3000000000
2500000000
2000000000
1500000000
1000000000 Latest
500000000 Activities in
India
0
2005 2006 2007 2008 2009 •

Vector Borne Diseases, US$521 million, Jul 08

• Orissa Rural, US$82 million, Jul 08
• Elementary Education, US$600 million, May 08
• Power Systems, US$600 million, Mar 08
• Bihar Development, US$225 million, Dec 07
• Karnataka Tank, US$73 million, Sep 07
• HP Loan and Credit, US$200 million, Sep 07
• Rampur Hydropower, US$400 million, Sep 07
• Andhra Pradesh Rural Poverty Reduction, US$65 million, Jul 07
Impact of Projects
• A new beginning for girl child laborers in Andhra Pradesh
In Andhra Pradesh, child laborers and out-of-school children have been reduced from
some 40 - 45 % in 2000 to some 20% in 2008.

• INFRASTRUCTURE
- Mumbai Urban Transport Project (MUTP)
The MUTP is carrying out much-needed improvements to Mumbai’s rail and road
infrastructure.
•
 - Resettlement under MUTP
Resettling the displaced is an unprecedented exercise in improving the lives of the urban
poor.
•
- Building State Highways in Andhra Pradesh
A new inter-state highway linking Hyderabad with Chennai has brought prosperity to the
remote regions.
• RURAL DEVELOPMENT
- Reclaiming Saline Lands in Uttar Pradesh
Large tracts of saline lands in UP have been rendered fertile, boosting productivity and
raising farmers' incomes

- Better Crops, Higher Incomes in Dry Watershed Lands of Karnataka

Degraded lands have been brought under cultivation and farm yields have risen in the
drought-prone regions of Karnataka.

- Restoring Rain Water Reservoirs - Tanks - in Karnataka

Rural communities in the poorest and driest districts are restoring traditional rain water
reservoirs - known locally as tanks - to increase the productivity of their land.
•
- Computerizing Land Records in Karnataka
With World Bank assistance, 20 million land records have been computerized, benefiting
6.7 million farmers in Karnataka.
•
- Improving Agriculture in Assam
Tubewells and community-managed irrigation systems extend farming season in Assam,
farmers' incomes rise significantly.
•
- Reversing the Degradation of Natural Resources in the Lower Himalayas
Farmers in the lower Himalayan regions of Punjab, Haryana, Uttarakhand, Himachal
Pradesh and J&K have conserved soil and water, improved drinking water supply, and
built roads and bridges.
• RECONSTRUCTION
•
- Rebuilding After the Tsunami
Helping to rebuild lives and livelihoods after the 2004 tsunami.
• Examples of how people in India are working with the World Bank to transform their
own lives today and set the stage for a brighter future.

India: Tsunami Relief

Participation: When hundreds of thousands of tsunami survivors lost homes and
livelihoods in the Indian fishing villages of Cuddalore, no proof of ownership made
compensation seem impossible.
Activities in 2009
1. 2009 Development Policy Lending Retrospective

Resources
The 2009 Development Policy Lending Retrospective reviews the main features
of development policy operations (DPOs) approved by the Board between FY06
and FY09. Consultations in seven countries with a history of engagement with the
Bank through DPOs (Armenia, Benin, Burkina Faso, Colombia, Senegal,
Tanzania, and Vietnam), as well as with development partners and international
civil society organizations (CSOs) in Europe, informed the retrospective. The
report confirms the overall robustness of development policy lending as a flexible
and effective instrument to provide financing and policy advice that support a
country’s medium-term development goals. It also finds that DPOs generally
continue to be prepared according to Bank operational policy requirements and in
line with the good practice principles on conditionality. It has three main
messages.
• Flexibility. The flexibility embedded in DPOs has proved to be a valuable
feature, including in times of crisis. DPOs have supported country-
owned reforms aimed at achieving specific development results in a
broad range of countries with different needs—from middle-income
countries to fragile states emerging from conflict. DPOs have been
provided in the form of grants, credits, or loans, and have supported
borrowers in designing and implementing their medium-term »
development programs or have provided emergency financing to meet Read Report by theme
crises or exogenous shocks. Their increasingly programmatic nature has » Powerpoint: Customization,
enabled the Bank to respond more flexibly to changing country Flexibility and Results
circumstances and government priorities and stay aligned with country
»
processes, , thereby strengthening country ownership of reforms Development Policy
supported by the Bank. Operations - Frequently
Asked Questions , Nov. 10,
• Customization. DPOs have supported borrowing countries with both the
2009
“what” and the “how” of development. They have provided financing and
policy advice in areas where country authorities required expertise and » Development Policy Actions
technical knowledge. IBRD countries, for example, have demanded Database
DPOs that focus on single sectors or themes requiring specialized Bank » Podcast
knowledge—such as housing, energy, and climate change. In IDA »
countries, DPOs have served as a useful platform for dialogue, Useful Links
harmonization, and alignment around the key policy and institutional
reforms to achieve country goals. In both IBRD and IDA countries, the
majority of the operations have supported public sector governance reforms. To help governments respond
to crises and external shocks, DPOs offer a range of financing options tailored to client needs: the
catastrophe DPL with a deferred drawdown option (CAT DDO), improved features for the DPL with a
deferred drawdown option (DPL DDO), streamlined processing in a crisis situation, and supplemental
financing to support programs affected by unanticipated shocks.
• Results. DPOs remain focused on results. All Bank DPOs include a results framework that lays out the
country goals, the objectives of the operation, and the expected results of the program supported by the
Bank. The DPL Retrospective found that support through DPOs has led to positive results and outcomes in
the delivery of social services in health and education, for example, and in public financial management
(PFM). Results frameworks have facilitated the evaluation of DPOs, but their quality has varied. The Bank
will be looking at better ways to define the appropriate causality between the actions supported by the
operation and their expected results, and selecting appropriate, measurable indicators.

2. The Nordic Trust Fund

The Nordic Trust Fund –
A Knowledge and Learning Program for World Bank Staff on Human Rights
The World Bank contributes to the realization of human rights in different areas, e.g., improving
poor people's access to health, education, food and water; promoting the participation of
indigenous peoples in decision-making and the accountability of governments to their citizens;
supporting justice reforms, fighting corruption and increasing transparency of governments.
A program has been launched to develop a more informed view among Bank staff on how
human rights relates to the Bank’s core work and mission of promoting economic growth and
poverty reduction, and is being supported by a $20 million multi-year and multi donor Nordic
Trust Fund. This internal knowledge and learning program will support activities that
• capture and make available knowledge about how human rights relate to the Bank’s
analytical sector/thematic work,
• capture and make available knowledge about how human rights relate to the Bank’s
operational work including strategy, planning and implementation and,
• increase awareness among staff and management of how the Bank’s work and human
rights are related and how human rights aspects can be applied to the Bank’s work.
The Nordic Trust Fund [NTF]
The $20 million NTF has been established with agreed contributions from Denmark, Iceland,
Norway, Finland and Sweden.
Background
The program responds to the need for better internal knowledge and learning for Bank staff and
management to equip them to better understand how human rights relate to their work. The
program is intended to respond to three types of knowledge and learning needs within the World
Bank Group:
• Analytic. In the international community, the debate about the relationship between
economic development and human rights is intensifying and broadening, and many actors
argue that the two are directly linked. Bank staff and Management should have an up-to-
date basic understanding of the main features of the debate and of research in this area
and how it relates to their work.
• Operational. Many Bank-supported programs use or overlap with international human
rights standards and definitions, but they often do so without reference to the formal
framework of human rights as expressed in the Universal Declaration of Human Rights,
other internationally agreed human rights treaties, or specific commitments made at
regional and country level. Enhanced understanding among operational staff and
Management of how human rights relate to their work is needed.
• Staff demand for knowledge and learning. Bank staff are keenly interested in learning
more about human rights. A recent survey revealed that overall, staff view human rights
positively and think that they often deal with human-rights-related topics in their work,
but have little knowledge about formal and institutional human rights frameworks and
their role in the development process. The program would develop staff training modules
to raise staff awareness of and build their skills in this area.

Activities
Activities under the program will focus on support to World Bank teams in their work on
operational or analytical tasks. They must have a clear link to human rights and strong
knowledge and learning potential for a broader Bank audience. The program would not support
activities that fall outside of the Bank’s mandate or are prohibited by the Bank’s Articles of
Agreement. While the program is primarily a Bank-internal 'learning by doing' process based on
pilot projects, it can also involve activities in countries based on the expressed interest and full
endorsement from client government[s].
Monitoring and evaluation
This work will be guided by a Steering Committee comprised of Senior Management and chaired
by the Vice-President, OPCS. A framework for monitoring and evaluation will be developed for
reporting to the Steering Committee and donors on activities and progress in achieving the stated
objectives. A working level Advisory Committee and a Secretariat will be responsible for day-to-
day work.
Partnerships
The NTF will encourage collaboration and partnerships with other organizations. Outreach,
through dialogue and information exchange, will help to ensure that NTF activities: (i) draw on
the human rights expertise of other agencies; (ii) respect the specificity of roles and functions of
organizations and the division of labor between them, while seeking to identify the possibility of
workable areas of collaboration; and (iii) provide an avenue for the Bank to lend its expertise and
better define its own areas of comparative advantage in human rights considerations.
Development and Human Rights

There is emerging recognition of the

importance of human rights to development cooperation at the international level, and the Accra
Agenda for Action notes that “[g]ender equality, respect for human rights and environmental
sustainability are cornerstones for achieving enduring impact on the lives and potential of poor
women, men and children. It is vital that all our policies address these issues in a more
systematic and coherent way.” In Accra, developing countries and donors agreed to “ensure that
their respective development policies and programs are designed and implemented in ways
consistent with their agreed international commitments on gender equality, human rights,
disability and environmental sustainability.”
A number of core principles that may guide development can be derived from international,
regional or domestic human rights instruments. These include participation, accountability, non-
discrimination and transparency. Incorporating a human rights perspective entails examining the
conditions of different groups, securing accountability for development processes and outcomes
and ensuring the inclusion and empowerment of groups affected by development, particularly
those who are marginalized, excluded or discriminated against.
3. Asbestos
4. Consultations
 Through consultations, the World Bank Group is
able to tap into a broad range of perspectives. It
strives to integrate comments and new ideas into
its operations, policies and final documents.
Consultations in client countries offer an
opportunity for dialogue in borrowers' native
languages. Increasingly, however, consultations
are held online instead of in the field. Using technology in this way expands the audience
available for comment and allows for broader input.
In either case, the objectives remain to capture the experience and knowledge of multiple
audiences such as government, civil society, academia, and the private sector; to give greater
voice to the poor; to increase the transparency of Bank processes; and to increase citizen
involvement in development decision making. Below is a selection of recent consultation
topics.
Consulations on Operational Policy
• For Feedback:2009 Development Policy Lending Retrospective
• Adjustment Lending to Development Policy Lending(2002-04)
• Conditionality(2007)
• Country Systems in Bank-Supported Operations(2007)
• Governance and Anticorruption (GAC)(2006-2007)
• GAC Implementation Plans(2007)
• Monitoring and Evaluation Policy(2006)
• Eligibility of Expenditures in World Bank Lending(2003-04)
• Use of Country Systems for procurement(2008)
• Volcker Report on Department of Institutional Integrity(2007)
• Whistle-blowing Policy(on-going)
Thematic Consultations/WDR
The World Bank's annual World Development Report (WDR) provides in depth analysis of a specific aspect of
development selected by the Bank's president. Each World Development Report team is led by a senior Bank
staff member who is supported by a team of staff and consultants, under the guidance of the Chief Economist.
In preparation of these reports, the teams meet with a wide range of academics, policymakers and
organizations from different parts of the world, seeking comments, advice and suggestions.
• Upcoming consultation: WDR 2009: Development in 3D(Density, Distance and Division)
• WDR 2008 - Agriculture for Development

• See all past reports and consultations on the WDR website

Country Strategy Consultation

To help increase the Bank's understanding of country conditions and concerns, and to promote
ownership of the Country Assistance Strategies by nongovernmental stakeholders, the Bank
encourages borrowing governments to involve civil society, the private sector, and other
stakeholders in inclusive strategy discussions(for example via workshops and roundtables).
See for example, CAS consultations in Albania and in The Philippines.

5.Investment Lending Reform

6.Focus on Curruption
7.AIDS
service helps clients develop well-prioritized, evidence-based, results-focused and
costed AIDS strategies and action plans
8.Climate Change
Strategic Framework on Development and Climate Change (SFDCC) — During the past fiscal year,
the SFDCC has been implemented to help mitigate the risks of climate change. Its aims are to:

• Support adaptation and mitigation in country-led development processes;

• Mobilize additional concessional finance for mitigation and adaptation;
• Facilitate the development of market-based financing mechanisms to minimize the cost of climate change
mitigation;
• Leverage private sector resources for mitigation of climate change;
• Support accelerated development and deployment of new clean energy technologies; and
• Provide policy research, knowledge, and capacity building for local stakeholders and policymakers to enable
sustainable growth and adaptation to climate impacts.
Climate Investment Funds (CIF) — The Climate Investment Funds comprise two funds, the Clean
Technology Fund (CTF) and the Strategic Climate Fund (SCF). Donor countries have pledged more than
US$6 billion so far.

Clean Technology Fund — The largest of the Climate Investment Funds, the CTF is intended to finance
clean energy investments that have the potential to bring about a transformation in the energy choices of
emerging and middle-income economies. During the past fiscal year, investment plans for three emerging
economies (Egypt, Mexico, and Turkey) were approved and another 11 plans in other countries are under
preparation.

These investment plans are prepared in collaboration with client countries, regional development banks,
and other stakeholders, and include individual large-scale low-carbon projects that employ innovations in
technology. The projects proposed under the CTF vary from wind power generation to improved public
transport and power evacuation for new renewable energy projects.

Scaling up Renewable Energy Program (SREP) — The objective of the SREP, a Strategic Climate
Fund component, is to pilot programmatic approaches in low-income countries to initiate a change to low
carbon energy pathways by exploiting their renewable energy potential to offset fossil-based energy
supply. Steps to put the SREP into operation will be taken once a minimum funding level of US$250
million for the program is met.

9.
Low-Income Countries Face Long Recovery -- Serious Challenges
Require More and Better Support
Poorest countries face $11.6 billion shortfall in critical core spending, with sharp drops in trade, capital flows,
remittances, and tourism; despite efforts to date, further action is needed

WASHINGTON, September 16, 2009 — While the global economy is showing tentative signs of
recovery, 43 low-income developing countries are still suffering the consequences of the global recession,
which highlights the need to increase support to the poorest countries dealing with economic volatility and
crisis, the World Bank said.

In a paper prepared for the upcoming G-20 meeting in Pittsburgh, the World Bank said that as a result of
the crisis 89 million more people will be living in extreme poverty, on less than $1.25 a day, by the end of
2010. The global recession has also put at risk $11.6 billion of core spending in areas such as education,
health, infrastructure and social protection in the most vulnerable countries.

“The poor and most vulnerable are at greatest risk from economic shocks— families are pushed into
poverty, health conditions deteriorate, school attendance declines, and progress in other critical areas is
stalled or reversed,” said World Bank Group President Robert B. Zoellick. “The poorest countries may
not be well represented on the G-20, but we cannot ignore the long-term costs of the global downturn on
their people’s health and education.”

“InterAction is pleased that the World Bank continues to insert the needs of the world’s poorest nations
into the G-20 conversation,” said Samuel A. Worthington, President and CEO of InterAction, the
largest coalition of U.S.-based non-governmental organizations focused on the world’s poor. “The G-20
countries must rapidly implement the London Summit pledge of $50 billion dedicated for low-income
countries to aid them in designing and implementing the policies and social safety nets most developed
nations have already established.”

Despite strong international efforts to cushion the impact of the global recession on Low-Income
Countries, the paper states that low-income developing countries continue to suffer the consequences of
the food, fuel and financial crises, and the poorest countries will need additional assistance to confront
and move beyond the global recession.

The paper recommends coordinated policy action by the G-20 and others in the following areas:

• Agriculture: The food crisis is not over in poor countries, and addressing food security in Low-Income
Countries will require raising productivity and incomes of the world’s poor farmers. The paper calls on
the G-20 to endorse the pledge of $20 billion at the G-8 summit in L’Aquila, Italy, for agricultural
development, with firm details on how country commitments will be met, delivery will be
operationalized with national ownership, and results and effectiveness will be assessed.
• Small- and Medium-Sized Enterprises (SMEs): SMEs are critical to the resumption of growth in Low-
Income Countries. The paper argues the G-20 should actively support scaled up efforts to expand
finance for SMEs. The World Bank Group plans to double its mobilization of finance for SMEs by
2013 to $15.5 billion.
• Crisis Response Facility: The current crisis—and others that will occur—highlights the pressing need
for a Crisis Response Facility to ensure that quick and effective assistance can be provided to Low-
Income Countries following shocks. Failure to address this need could jeopardize the progress
achieved in many poor countries based on recent strong reform efforts, and instead lead to costly
reversals.
Since the onset of the food and fuel crises nearly two years ago and the subsequent financial crisis and
global recession, donors and development agencies have mobilized significant additional resources for
Low-Income Countries. However, low-income developing countries have been hit hard by crises not of
their making, and face daunting challenges that jeopardize years of progress in combating poverty.

The paper notes that several economic shocks resulting from the financial crisis are taking a severe toll
on the poorest countries, including:

• Trade: Low-Income Countries have been hit hard by the downturn in global trade, with export
market demand estimated to have dropped by between 5 and 10 percent in 2009.
• Private Capital Flows: Net private capital flows to the poorest countries declined significantly to
$21 billion in 2008 from $30 billion in 2007 and are projected to drop further to $13 billion in 2009.
• Remittances: The sharp deterioration in economic conditions has led to significant declines in
workers’ remittances to Low-Income Countries, which are anticipated to fall by between 5 and 7
percent in 2009, recovering only modestly in 2010.
• Tourism: Many Low-Income Countries, particularly small island states, depend heavily on
tourism for foreign exchange and jobs, in both the formal and informal sectors. Worldwide tourism
receipts declined by 8 percent between January and April 2009, continuing the sharp falloff
recorded during the second half of 2008.
The crisis is slowing dramatically the steady progress achieved in reducing global poverty, notes the
paper. In Cambodia, 62,000 garment workers have lost their jobs in this key sector for the economy, with
women making up 90 percent of this workforce. Falling copper prices led in 2008 to the laying off of one
quarter of Zambia’s mining workers.

The paper describes how the World Bank Group stepped up its financial assistance to help developing
countries mitigate the impact of the crisis over its past fiscal year. For the World Bank Group as whole,
the result has been record levels of activity—with $58.8 billion committed in FY09 to support countries hit
by the global crisis, a 54 percent increase over the previous year, and a record high.

10.Food Crisis
In response to the severity of the food crisis and the need for prompt action, the World Bank Group set up the Global
Food Crisis Response Program (GFRP) in May 2008 to provide immediate relief to countries hard hit by food high
prices. The Bank response has been articulated in coordination with the United Nations’ High-Level Task Force on
food security. Through its response, the Bank is supporting the implementation of the joint Comprehensive
Framework for Action (CFA).

• The World Bank Group increased GFRP to $2 billion in April 2009 to provide immediate relief to countries
hard hit by food high prices. GFRP was created in May 2008 to reduce the threat high food prices and
rising agricultural production and marketing costs pose to the livelihoods of the world’s poor. The money
is used to feed poor children and other vulnerable groups, provide for nutritional supplements to
pregnant women, lactating mothers, infants and small children, to meet additional expenses of food
imports or to buy seeds for the new season.
GFRP has approved $1,167 million out of $1,195.4 million in 35 countries as of December 3, 2009. An additional
$28.4 million is being earmarked for programs in four countries. $852 million has been disbursed.
GFRP is disbursing funds to Afghanistan ($8 million), Bangladesh ($130 million), Benin ($9 million), Burundi ($10
million), Cambodia ($5 million) Central African Republic ($7 million), Comoros ($1 million) Djibouti ($5 million),
Ethiopia ($275 million), Guinea ($10 million), Guinea-Bissau ($5 million), Haiti ($10 million, $5 million), Honduras ($10
million), Kenya ($50 million, $5 million), Kyrgyz ($10 million), Laos ($3 million), Liberia ($10 million), Madagascar ($10
million, $12 million), Mali ($5 million), Moldova ($7 million), Mozambique ($20 million), Nicaragua ($7 million), Nepal
($36 million), Niger ($7 million), Philippines ($200 million), Rwanda ($10 million), Senegal ($10 million),Sierra Leone
($7 million, $3 million), Somalia ($7 million), Southern Sudan ($5 million), Tanzania ($220 million), Tajikistan ($9
million), Togo ($7 million), Yemen ($10 million), and West Bank and Gaza ($5 million).

Project Status: Global Food

Crisis Response Program

Grant funding has also been made available through several external-funded trust funds in support of the full range of
interventions available under the GFRP. A Multi-Donor Trust Fund, which received a contribution of AU$50 million
from the Australian government in the fall of 2008, has allocated funds for operations in Senegal, Cambodia, the
Pacific Islands, Vietnam, Zimbabwe, and Sierra Leone. The Russian Federation has also allocated $15 million for the
Kyrgyz Republic and Tajikistan, through the Russia Food Price Crisis Rapid Response Trust Fund, which became
operational in April 2009. The European Commission has allocated EUR 48.5 million for projects in Ethiopia, Gambia,
Guinea-Bissau, and Kenya, and pledged an additional EUR 62.3 for projects in Honduras, Mali, Benin, the Kyrgyz
Republic, Laos and Yemen. As of August 2009, MDTF-funded operations were approved for Cambodia ($8 million),
Senegal ($8 million) and Zimbabwe ($7 million), and $6.25 million for Tajikistan was approved under the Russia Trust
Fund.

• Boosting overall agricultural lending to $12 billion over the next two years, up from $4 billion in 2008, as
announced in April 2009. This includes nearly doubling lending to Africa from $450 million to $800 million,
and to Latin America from $250 million to $400 million, and supporting over $1 billion in new projects in
agriculture and rural development in South Asia.
• IFC invested more than $1.4 billion in FY08 in agribusiness supply chains. More than 40% of its projects
were in IDA countries, with investments in Sub-Saharan Africa reaching $116 million. For FY09, IFC has
invested $893 million as of February 2009, with investments in Africa reaching $109 million for
distribution and storage, grain milling, plantation rehabilitation, and trade finance.
 • Tripling investments in safety nets and other social protection programs in health and education to $12
billion over next two years, as announced in April 2009.
• Establishing Agriculture Finance Support Facility to expand rural finance through a $20 million Bill &
Melinda Gates Foundation contribution, as announced in June 2009. The Facility will increase access to
financial services, such as savings, credit, payments and insurance.
• Working to help countries develop financial market insurance products and risk management strategies
to ensure increased capacity to respond to future prices increases, such as weather derivatives and crop
insurance.
In September 2008, Malawi became one of the first countries to use the Bank's new weather derivative financial
product. Index-based weather derivatives help transfer risks to the financial markets. Payments are triggered by
adverse weather events according to pre-specified conditions. The Bank is also supporting weather index insurance
initiatives isThailand, Bangladesh, Senegal, Burkina Faso, Kenya, Jamaica and potentially Fiji. In Indonesia, the Bank
and IFC are completing a feasibility study on a crop insurance pilot for maize small farmers.

• Integrating national level agricultural risk management strategies into new country operations in Morocco,
Malawi, Mozambique, Haiti, Belize, Grenada, and Jamaica.
• Engaging in policy dialogue with more than 40 countries to help them address the crisis.
• Through the HLTF Secretariat, the Bank is working through existing country-level coordination mechanisms
and regional initiatives such as the Comprehensive African Agriculture Development Program (CAADP) to
identify opportunities and constraints in CFA implementation on the ground. The focus is on 27 least-
developed, most vulnerable countries, 22 of which are being supported by the Bank’s GFRP.

MAIN ACTIVITIES OF WORLD BANK

The World Bank offers a wide range of lending and non-lending solutions to meet the world's
development challenges.
INVESTMENT AND DEVELOPMENT POLICY OPERATIONS
Investment operations focus on the long-term (5 to 10 years) and finance goods, works and
services that support economic and social development projects. These investment projects
encompass a broad range of sectors - from agriculture to urban development, rural infrastructure,
education and health.
Development policy operations typically run from one to three years, and provide quick-
disbursing external financing to support government policy and institutional reforms. Originally
designed to provide support for macroeconomic policy reforms, development policy loans,
credits and grants now focus more on structural, financial sector and social policy reforms -
improving, for example, the management of public resources, the functioning of the judiciary or
promoting good governance.
In all the projects it finances, the World Bank takes its responsibility to shareholders, donors and
investors seriously. The Bank works diligently to make sure that procurement for projects is
conducted appropriately, so that loan and other funds are used for their intended purposes.
BANKING PRODUCTS
The World Bank promotes an efficient use of financial resources through traditional and
innovative financial services, including the use of adequate risk mitigation tools. The
International Bank for Reconstruction and Development (IBRD) offers eligible member
countries access to a full menu of banking products and services for risk management, and
flexible solutions for managing currency, interest rate and commodity risk exposures.
The banking products provide ample flexibility to customize terms like repayment schedules,
currency selection, including local currency, and interest rate fixity.
• World Bank Treasury: Banking for Growth
TRUST FUNDS AND GRANTS
Trust funds are financial and administrative arrangements the World Bank has with an external
donor that leads to grants, credits, loans or guarantees for high-priority development needs, such
as technical assistance, advisory services, debt relief, post-conflict transition and co-financing.
Trust funds are accounted for separately from the Bank's own resources.
The Bank also provides grants that are either funded directly or managed through partnerships.
Most grants are designed to encourage new ideas, approaches and solutions to development
problems; organizations working together; and participation by stakeholders at national and local
levels.
• Trust Funds
• Development Grant Facility
• IDA Interest-Free Credits and Grants
GUARANTEES
The World Bank Guarantee program meets the growing need many commercial lenders have for
products that lesson political risk, when they consider financial investment in developing
countries where there is an extra element of risk.
The Bank's basic objective in offering guarantees is to pull together private capital for investment
projects on a "lender of last resort" basis. The Bank's presence in these transactions is seen by
investors as a stabilizing factor, because of the World Bank's long term relationship with the
countries and the policy support the Bank provides to the governments.
• Guarantees
NON-LENDING ACTIVITIES
The World Bank's vast research, analytical and technical capabilities are a vital part of the Bank's
contribution to development. Use of these services can help member governments adopt better
policies, programs and reforms that lead to greater economic growth and poverty reduction.
Products range from reports on key economic and social issues, to policy notes, to knowledge-
sharing workshops and conferences.

World Bank Group Members

 M
IB I I
I
Member R F D ICSID
G
D CA
A

Afghanistan

Albania

Algeria

Angola

Antigua and Barbuda

Argentina

Armenia

Australia

Austria

Azerbaijan

Bahamas, The

Bahrain

Bangladesh

Barbados

Belarus

Belgium

Belize