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World Bank Document Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CENTRAL ASIA IN EUROPEAND THE WORLDBANK BEYOND TRANSITION he Europe and Central Asia region’s 28 countries* face diverse challenges ranging from meeting EU accession requirements to establishing viable Tpublic institutions and rebuilding shattered societies after wars and natural disasters. The World Bank is working with each of these countries as a partner in advancing their development. The World Bank is committed to pursuing the Millennium Development Goals agreed at the UN General Assembly in September 2000. The most important of these goals is to eradicate extreme poverty and hunger, which is crucial in a region that has gone through traumatic changes over the past decade. With a focus on achieving concrete results, the World Bank is concentrating on three broad areas: • Building the climate for investment and growth •Promoting an efficient and accountable public sector • Ensuring social and environmental sustainability The ECA region encompasses both middle- and low-income nations whose shared experience of the transition from plan to market sets them apart from other regions. While there has been remarkable progress in many countries, poverty, inequality and unemployment remain high, making the World Bank’s poverty reduction mission critically important. *As defined by the World Bank, the ECA region includes: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russian Federation, Serbia and Montenegro, Slovak Republic, Slovenia,Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan. Slovenia moved from borrower to donor status on March 17, 2004.The World Bank maintains a separate assistance program in the Province of Kosovo (Serbia and Montenegro), which is under temporary administration by the United Nations according to UNSC 1244. Contents Challenges over the first 15 years 4 Vision for the next 10 years 7 Improving the climate for investment and growth 9 Promoting an efficient and accountable public sector 18 Ensuring human development and environmental 27 sustainability World Bank contacts 46 Business opportunities 52 1 BEYOND TRANSITION: THE WORLD BANK IN EUROPE AND CENTRAL ASIA About the World Bank Group Founded in 1944 the World Bank Group* is one of the world’s largest sources of development assistance, providing $18.5 billion in loans to its client countries in fiscal 2003, running from July 2002 to June 2003. The World Bank Group works in more than 100 devel- oping economies and is owned by 184 member countries whose views and interests are represented by a Board of Governors and a Washington-based Board of Directors. Together known as the World Bank, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) provide loans and development assistance to middle-income countries and less creditworthy poorer countries. The IBRD raises money for its development program by tapping the world’s capital markets, and IDA—through contributions from wealthier member governments. * The World Bank Group has five parts, of which three are distinct affiliates—the Inter- national Bank for Reconstruction and Development (IBRD), the International Develop- ment Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of Investment Disputes (ICSID). IFC, MIGA and ICSID are affiliates. From the Crimean coast of Ukraine (pictured here) to the Danube wetlands of Romania, the region has rich natural ecosystems, many of which the World Bank and its partners are helping to protect. 2 The World Bank in Europe and Central Asia New European Union (EU) member states: The World Bank has updated a partnership framework to provide support during the initial phase of EU membership to the eight new member states of the ECA region (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia). EU candidate countries: World Bank assistance increasingly focuses on assisting them in meeting the requirements of the EU acquis communautaire* as well as addressing broader develop- ment needs (Bulgaria, Croatia**, Romania and Turkey). Western Balkans: The strategy has evolved from post-conflict stabilization and reconstruction to structural reform, institution- al development and integration into Europe (Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro). Kazakhstan, Russian Federation and Ukraine: With the deep- ening of reforms in the larger economies of the Commonwealth of Independent States, the World Bank is providing advisory and, selectively, financial assistance for improving the business environment, boosting public sector reform and mitigating social and environmental risks. Other CIS countries: The World Bank is working with the inter- national community to accelerate growth and reduce poverty by providing advice and financial support for sustainable recovery and stability (Armenia, Azerbaijan, Belarus, Georgia, the Kyrgyz Republic, Moldova, Tajikistan, Turkmenistan and Uzbekistan). * The acquis are the laws, rules and regulations governing the EU. ** To be confirmed by EU Council in June 2004. 3 Challenges over the first 15 years Emerging from the transition recession The ECA region has undergone dramatic economic, social and political change over the past 15 years. For most of the 480 million people in the region’s 28 countries, the transition from central planning to open mar- ket has been protracted and at times painful. Many countries saw sharp declines in economic activity and trade—and in the well-being of their people. Nevertheless, all of the region’s economies grew between 2002 and 2004. Economic performance in Russia and the Caspian basin has been bolstered by huge reserves of energy and mineral resources. The prospect of joining the European Union was an anchor for reforms in the better performing states of Central Europe. And the promise of integration has fostered peace and reconciliation in Southeast Europe. Inequality has increased sharply since 1990. Rising poverty and unemployment have taken a toll, with Southeast Europe and the CIS countries among those hardest hit. In Russia and Ukraine, Southeast Europe, and Central Asia the spread of HIV/AIDS and TB is a major concern. Yet spending on health and education has dropped. And the environment requires attention, with the legacy of natural resource exploitation and polluting industries left over from central planning still evident. The low-income CIS countries were profoundly affected by the breakup of both the Soviet Union and its common economic space. They have the highest incidence of poverty, the deepest institutional weakness- es, and the greatest debt burdens of all the ECA countries. They also have the potential to gain significantly from regional cooperation and natural resource development. 4 CHALLENGES OVER THE FIRST 15 YEARS Support from the World Bank Over the past decade and a half the World Bank has committed $53.4 bil- lion for programs and projects, leveraged by $10 billion in co-financing. With 318 active projects, the current portfolio is $15 billion, roughly 20 percent of the World Bank’s global portfolio. The World Bank conducts a wide range of analytical and advisory activities in the region, from region- al studies of HIV/AIDS to firm level surveys measuring progress in the fight against corruption. The break-up of the Soviet bloc and the economic and social transition has been painful for many countries. However, the mostly peaceful nature of the transition and the now broad recovery gives hope for the future. By helping governments follow through with second phase reforms, the World Bank can help ensure better opportunities for future generations. 5 CHALLENGES OVER THE FIRST 15 YEARS Millennium Development Goals* 1. Reduce extreme poverty and hunger—Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day (or, in the ECA region, under $2.15 a day) 2. Achieve universal primary education—Ensure that, by 2015, children everywhere will be able to complete a full course of pri- mary school 3. Promote gender equality and empower women—Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education no later than 2015 4. Reduce child mortality—cut by two-thirds, between 1990 and 2015, the under-five mortality rate 5. Improve maternal health—reduce, by three-quarters, between 1990 and 2015, the maternal mortality ratio 6. Combat HIV/AIDS, TB, malaria, and other diseases—Have halt- ed, by 2015, and begun to reverse, the spread of HIV/AIDS 7. Ensure environmental sustainability—Integrate the principles of sustainable development into country policies and reverse the loss of environmental resources; halve, by 2015 the proportion of people without sustainable access to safe drinking water; and, by 2015 achieve a significant improvement in the lives of at least 100 million slum dwellers 8. Develop a global partnership for development * From the United Nations Millennium Declaration, endorsed by Heads of State and Gov- ernments in the U.N. General Assembly on September 8, 2000. 6 Vision for the next 10 years he ECA region has a large unfinished development agenda—from sustaining the recovery that began
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