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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLDBANK Year in Review Year 1 Volume 2003 Annual Report Bank The World Letter of Operational Summary, Fiscal 2003 Transmittal IBRD This Annual Report,which (millions of dollars) covers the period from July 1, FY03 FY02 FY01 FY00 FY99 2002, to June 30, 2003, has Commitments 11,231 11,452 10,487 10,919 22,182 been prepared by the Of which adjustment lending 4,187 7,384 3,937 4,426 13,937 Executive Directors of both Number of projects 99 96 91 97 131 the International Bank for Of which adjustment lending 21 21 15 14 26 Reconstruction and Gross disbursements 11,921 11,256 11,784 13,332 18,205 Development (IBRD) and the Of which adjustment lending 5,484 4,673 4,393 4,924 10,002 International Development Principal repayments Association (IDA) in accor- (including prepayments) 19,877 12,025 9,635 10,398 9,972 dance with the respective Net disbursements (7,956) (769) 2,149 2,934 8,233 bylaws of the two institutions. James D. Wolfensohn, Loans outstanding 116,240 121,589 118,866 120,104 117,228 President of the IBRD and Undisbursed loans 33,031 36,353 37,934 44,754 51,372 IDA, and Chairman of the Board of Executive Directors, Allocable net income 3,050 1,831 989 1,582 1,263 has submitted this report, Usable capital and reserves 30,027 26,901 24,909 25,067 23,782 together with the accompany- ing administrative budgets Equity-to-loans ratio 26.6% 22.9% 21.5% 21.3% 20.7% and audited financial state- ments, to the Board of IDA Governors. (millions of dollars) FY03 FY02 FY01 FY00 FY99 Annual reports for the Commitments 7,282 8,068 6,764 4,358 6,967 International Finance Of which adjustment lending 1,831 2,443 1,828 682 1,542 Corporation, the Multilateral Number of projects 141 133 134 126 145 Investment Guarantee Agency, Of which adjustment lending 24 23 15 9 22 and the International Centre Gross disbursements 7,019 6,612 5,492 5,177 6,172 for Settlement of Investment Of which adjustment lending 2,795 2,172 1,280 860 1,214 Disputes are published separately. Principal repayments 1,369 1,063 997 920 814 Net disbursements 5,651 5,549 4,495 4,257 5,358 Credits outstanding 106,877 96,372 86,572 86,643 83,158 Undisbursed credits 22,429 22,510 20,442 20,833 22,249 Development grant expenses 1,016 154 — — — The World Bank Annual Report 2003 Volume 1 Year in Review Contents Message from the Chairman 2 The Board of Executive Directors 4 About the cover The World Bank Group 8 In Vietnam, where the majority of the poor live in rural areas, the Bank has reori- Chapter 1 Strategy and Action 11 ented lending toward decentralized, par- ticipatory projects targeted to the poorest Chapter 2 Overview of World Bank Activities in Fiscal 2003 27 areas. Such projects include small-scale infrastructure projects that rely on Chapter 3 Improving Development Effectiveness 45 community assessment of priorities and investments in rural roads and markets, Chapter 4 Thematic Perspectives 59 irrigation and water supply, and basic edu- Poverty Reduction and Economic Management 60 cation and health. Cover photo by Tran Thi Investing in People 65 Ho for the World Bank Photo Library. Toward Environmentally and Socially Responsible Growth 69 Supporting Private Sector Development and Infrastructure 73 Building Strong Financial Systems 78 Promoting Appropriate Legal and Judicial Systems 81 Note This is the first of two volumes that will be Chapter 5 Regional Perspectives 85 distributed as a set. The complete Manage- World Bank Regions, Country Offices, ment’s Discussion and Analysis, audited finan- and Borrower Eligibility 86 cial statements of the International Bank for Reconstruction and Development, audited Africa 88 financial statements of the International East Asia and Pacific 94 Development Association, and appendixes South Asia 99 are published in a separate volume as The Europe and Central Asia 104 World Bank Annual Report 2003: Volume 2, Latin America and the Caribbean 109 Financial Statements and Appendixes. This Middle East and North Africa 114 Annual Report is also available on the Internet at www.worldbank.org. Chapter 6 About the World Bank 119 All dollar amounts used in this Annual Report are current U.S. dollars unless otherwise List of Part I and Part II IDA Member Countries 181 specified. World Bank Web Sites 182 List of Boxes, Figures, and Tables 184 Index 186 Abbreviations and Acronyms 190 Photo, top right: World Bank Headquarters in Washington, D.C. Select World Bank Publications 192 Message from the President of the World Bank and Chairman of the Board of Directors During his visit to China in May 2002, Mr. Wolfensohn attended a ceremony to celebrate China’s joining the Development Gateway Foundation as a Founding Member. He also launched the China Development Gateway together with senior officials of the Chinese government. The past year has been one of extraordinary global all, HIV/AIDS, water and sanitation, and health. Work- anxiety and uncertainty, including the continuing eco- ing with our partners in these areas we have learned a nomic slowdown, the conflict in Iraq, and the impact number of lessons that can be applied going forward. of a new disease, sudden acute respiratory syndrome First, support must be based on country-driven pro- (SARS). In this context it is more important than ever grams set in a sound policy environment. Second, that we work with our development partners to redou- where the right policy environment exists, the interna- ble efforts to reduce world poverty. tional community needs to be ready to provide the The pledges made at the International Conference additional support to help countries meet their targets. on Financing for Development at Monterrey in March Third, resources must reach countries in the right 2002 underscored the importance of the collective form—that is, aligned with their budget cycles, untied effort needed to attain the Millennium Development from donor-driven imperatives, and with simplified Goals (MDGs), including the goal of reducing poverty and harmonized donor procedures. Meeting the MDGs by half by the year 2015. The Monterrey Consensus not only will require more development assistance but provides a framework of actions and accountabilities also will require that assistance to be used even more for all parties, developed and developing countries effectively. alike. All are agreed that we must now focus on imple- The approach embedded in the Comprehensive De- mentation and augment the impact of our collective velopment Framework (CDF) and Poverty Reduction efforts. Strategy Papers (PRSPs) helps us all respond to the For the World Bank this has translated into a special challenge of improving development effectiveness— focus on implementation in four priority sectors that and that approach is increasingly taking root in many are key to meeting some of the MDGs—education for of the poorest countries. We also have begun to better 2 The World Bank Annual Report 2003 understand how the CDF principles can be applied in world, more than 1.2 billion people lack access to safe middle-income countries to address issues of poverty water, and nearly twice as many do not have improved and equity. In addition, we are making special efforts to sanitation. Given the scale of the needs, the World assist the group of low-income countries that suffers Bank Group, with the support of our Board and in from weak policies and governance, including those partnership with many other development actors, will with long-standing conflicts. Without progress in those increase our investment in infrastructure. And through countries, the MDGs will not be met. our focus on policy reform and capacity building we In partnership with others, the Bank’s support to will aim to leverage additional financial support from the poorest countries has included debt relief through both public and private sources. the Heavily Indebted Poor Countries (HIPC) Initiative. Our actions must lead to development that is sus- Over time this will reduce debt stocks and debt-service tainable. The World Summit on Sustainable Develop- burdens by an estimated $40 billion from all creditors. ment held last year in Johannesburg, South Africa, em- In the past year our own internal review of HIPC has phasized the need to move toward a sustainable future, indicated that there are areas where we can improve combining environmental responsibility with social the initiative even further—and action is under way to equity. The Bank Group will continue to take fully into implement the changes. The 13th Replenishment of consideration the effect of our development programs the International Development Association (IDA-13) on future generations. agreement to provide grants to the poorest and debt- Strengthening our partnerships has become a core vulnerable countries is also a significant step forward. objective of the Bank in recent years. Two principles Monterrey underscored the central importance of have been key in our search for better coherence and trade in attaining the MDGs. At the Doha meeting on cooperation. First, in the interests of efficiency and ef- trade last year, the international community made fectiveness the Bank has sought to work increasingly a commitment to collective action that holds the closely with all relevant partners, deferring to their promise of truly integrating trade with development. work and judgments in areas where they have compar- As we approach the halfway mark of the Doha Round, ative advantage. Second, at the country level we have the challenge of translating that commitment into con- stressed the principle that all partners must align be- crete results looms large.