Revista-E

Loan supports Government in mitigating impact of global economic crisis and assists in Poland’s convergence with EU living standards

Washington, D.C. (TWB) - The World Bank’s Board of Directors today approved the Programmatic Policy Loan (PL3) of 1 billion Euro (US$1.3 billion equivalent) for Poland.  This is the third policy loan in a series of three lending operations for the country.

“The program of three lending operations totaling approximately €3 billion has been to support Government measures to mitigate the impact of the global crisis on households, workers, and business,” said Peter Harrold, World Bank Country Director for Central Europe and the Baltic Countries, “and to support Poland’s convergence with the European Union average living standards.”

Harrold emphasized that “We are glad that the program has already brought tangible results assisting the Government of Poland in such reforms as establishing education programs for five- and six-year olds, obtaining fiscal consolidation, and reducing pension fees. Poland has made impressive progress towards creating a modern, market-based economy, and we hope that with this last loan in the PL3 program we can further support fast economic growth and the Government’s reform plans.”

The policy loan series has supported a number of policy reforms crucial to maintaining Poland’s convergence to EU living standards.  Key reform initiatives include the:

• anti-crisis stability and development plan;

• reduction in the tax wedge;

• phasing out of early retirement pensions;

• amendment of the law on freedom of business operations; and

• new public finance act.

According to Jacek Dominik, Under-Secretary of State in the Ministry of Finance, “The first loan in the program (PL1) supported policy actions to strengthen public finance management, increase participation in the labor market, and improve the environment for doing business. The second loan (PL2) supported the governments’ ongoing reform plans, including in the social sectors to further improve the quality of service delivery. With the support of the third loan PL3 we hope to achieve more flexible regulations with respect to running a business by flexible redistribution of working hours for employees. As our top priority we also aim to introduce fiscal consolidation plan in order to strengthen financial sustainability in coming years. This loan is the result of our continued excellent partnership with the World Bank that benefits both sides through sharing of knowledge and experience. We hope that our mutual cooperation with the World Bank will continue.”

Like other countries in Europe, Poland faces the challenge of advancing economic reforms needed to stay competitive in a world of reduced capital flows and discriminating financial markets. It needs to bring about medium-term fiscal consolidation while safeguarding crucial social and infrastructure programs.  Reforms supported specifically by PL3 include:

• strengthening the service sector through streamlined rules and regulations;

• bolstering social reforms such as hospital corporatization and universal primary education at 6-years of age; and

• contributing to the robust social outcomes in the face of the economic slowdown through better targeted family benefits and greater flexibility in working hour adjustments.

“More than a year after the outbreak of the global financial crisis, Poland has managed successfully to shore up economic growth, strengthen financial markets and sustain social outcomes. However, as across the EU, the strength of the recovery remains uncertain,” said Thomas Laursen, World Bank Country Manager for Poland and the Baltic Countries.

“In order to regain strong growth and financial stability, the Government has to continue pursuing ambitious reform plans that include strengthening public finances, raising employment, and easing the business environment. We believe that our policy lending program of three loans has assisted Poland in advancing these objectives but the momentum needs to be sustained and where feasible accelerated. The World Bank stands ready to offer more of its lending and knowledge instruments to Poland which could either continue to focus on the same reform areas, or support new crucial targets such as, for example increasing energy efficiency and sustaining low carbon growth,” Laursen added.

Dubai (Revista E/TWB)  - The World Bank is offering a set of practical policy options for governments in the Middle East and North Africa confronted by the acute development challenges of citizens living in poor regions disadvantaged by geography.

A new World Bank report, Poor Places, Thriving People: How the Middle East and North Africa can Rise above Spatial Disparity, was launched today in Dubai, United Arab Emirates. The authors suggest the region can indeed raise living standards in geographic areas that are less economically developed with an informed mix of policy choices.

Washington (Revista E) - In the IMF’s World Economic Outlook, the IMF examines the different paths the recovery is taking in advanced and emerging economies. Chief Economist Olivier Blanchard discusses the challenges facing the global economy in the year to come.

Washington (Revista E) - The IMF announced today that the Greek government has asked the IMF to send a team to Athens for discussions that could provide the basis for financial assistance.

Poland (RevistaE) - Speaking at the Warsaw School of Economics, IMF Managing Director Dominique Strauss-Kahn said that while the recent financial crisis had exposed some weaknesses in Europe’s institutional framework, there is now an opportunity to strengthen integration and cooperation across the continent.

• The first of a two-loan program will protect poorest during the economic contraction

Washington (Revista E) - The World Bank’s Board of Executive Directors today approved the First Safety Net and Social Sector Reform Special Development Policy Loan for Latvia in the amount of Euro 100 million (US$ 143,9 million equivalent) to ensure that local governments have the resources they need to keep providing basic social services. This loan is part of the international financial support program led by the International Monetary Fund and the EU aimed at mitigating the impact of the global financial crisis and rapid economic contraction.

The main objectives of the loan are:

-to protect vulnerable groups with emergency safety net support during the economic contraction

-to mitigate the social costs of fiscal consolidation, and

-to support important structural reforms in social sector programs.

“The Latvian government has implemented a significant decrease of the budget deficit and at the same time established a social security network that is planned for supporting socially vulnerable groups in society. The loan approved today will help us to achieve these goals – fiscal stability and social security. I am grateful for the support that The World Bank has provided us in establishment of a social safety net,” said Einars Repše, the Latvian Minister of Finance.

The proposed program of World Bank support will focus on measures designed to respond to household needs in the wake of Latvia’s severe economic contraction and to mitigate the social impact of fiscal consolidation by supporting implementation of the Government’s cross sector Emergency Social Safety Net Strategy. As necessary but difficult structural reforms are implemented, the Government is committed to alleviating the social costs of the transition to new financing and service delivery models in the education and health sectors, in order to ensure an adequate level of service provision is maintained across the country.

As part of this program, the World Bank will also start technical cooperation with the authorities to ensure close monitoring of how the emergency safety net measures are implemented and continued timely response to household needs. It will also review medium-term social sector issues.

“The main goal of the loan approved today is to provide financial assistance to the national government and to local governments so they can keep essential emergency programs running in the difficult times of the crisis,” said Peter Harrold, World Bank Director for Central Europe and the Baltic Countries. “In 2008 and 2009, we saw how the crisis hit the most vulnerable groups, so with this loan the World Bank will try to ensure that local governments have the resources they need to keep providing basic social services. This includes keeping pre-schools open, ensuring transportation to schools for students that need it, providing free medical care and medication for families with very low incomes, and paying social assistance benefits for the poorest people.”

This loan is the first of a proposed program of two loans focused on Safety Net Support and social sector reform. The program is part of the Special Development Policy Lending (SDPL) and technical assistance from the World Bank to the Republic of Latvia which is being delivered through two parallel vehicles:

- one supporting reforms to strengthen the financial sector (the Financial Sector Development Policy loan of EUR 200 million was approved by the World Bank’s Board of Directors on September, 22, 2009).

- and the other that this loan is a part of, providing support for an emergency safety net and social sector reform

“The Republic of Latvia is committed to managing a very painful but necessary fiscal adjustment in a responsible way that ensures critical services are provided to people in need,” said Truman Packard, World Bank Lead Economist in the Europe and Central Asia Region. “The government has made available a whole range of emergency assistance programs for households affected by the economic crisis. The first step that people need to take to get the assistance is to check with their local authority (local municipality) and find out whether they and their families are eligible for these programs. The main objective of the loan is to support local governments, who are closest to the people who have suffered the most as a result of the economic crisis.”

The loan will be signed on March 12, 2010, at the Ministry of Finance in Riga.

Washington (Revista E) - In its regular press briefing, the IMF  encouraged the Greek authorities to develop and implement reforms to boost productivity and growth.  Caroline Atkinson, Director of External Relations at the International Monetary Fund (IMF), issued the following statement in Washington:

“We welcome the substantial fiscal measures announced by the Greek authorities today. The authorities have put together a very strong fiscal package for 2010. The implementation of the fiscal program will be a crucial step forward in a multi-year process.

We also encourage the authorities to develop and implement soon significant reforms to boost productivity and growth, complementing the fiscal consolidation that is now underway. We stand ready to support the implementation of the authorities’ plans by sharing our technical expertise in these matters.”

Washington (Revista E) - In the International Monetary Fund’s regular briefing, Senior Advisor David Hawley said the IMF is ready to send another mission to Greece to offer technical assistance, if asked. Hawley stated that they welcome support for Greece from its European Union partners, and the IMF is prepared to offer expertise and support as necessary.

Denver (Revista E) - In light of the recent U.S. Supreme Court ruling that corporations can contribute to political candidates, University of Denver (DU) Daniels College of Business Professor John Holcomb, PhD. is available for comment and analysis. Prof. Holcomb has performed extensive research on campaign finance and corporate responsibility, as well as corporate governance and criminal liability.

Davos (Revista E) - 2,500 leaders from business, government and civil society are in Davos for the World Economic Forum Annual Meeting. The theme is a call to action for decision-makers to use the opportunity of the five-day Meeting to “Improve the State of the World: Rethink, Redesign, Rebuild”. Nicolas Sarkozy, President of France, will deliver the opening address in a plenary session following the traditional welcome by the Swiss President, Doris Leuthard. Leaders will participate in over 200 working sessions on topics including Haiti, the Millennium Development Goals, the environment and the economy.