World Bank Group Says $27 Billion Available to ECA Countries Affected by Eurozone Crisis
January 25, 2011 - The World Bank Group has announced that it is making $27 billion in funding available over the next two years for countries of Europe and Central Asia (ECA) affected by the Eurozone crisis. “The World Bank Group is expanding funding available to the region so that those countries can rely on these resources to weather the crisis,” said World Bank President Robert B. Zoellick.
As part of this effort, IFC’s investment and advisory program could reach $10 billion of commitments, including mobilization in FY12-13. This could include increased investment for IFC's own account of nearly $2 billion from current levels should market need arise and through an adjustment in product mix. The World Bank can increase lending in ECA to around $16 billion in FY12-13 – an increase of $4 billion over two years relative to lending last year and the Multilateral Investment Guarantee Agency (MIGA) is planning to increase its exposure in the region by $1 billion over the period.
“Countries in ECA are vulnerable to continued turbulence in Eurozone markets with the impact felt by many companies and individuals,” said Dimitris Tsitsiragos, Vice President, Eastern and Southern Europe, Central Asia, Middle East, and North Africa. “We continue to provide strong support to banks and businesses in the region and, in case of market need, are ready to ramp up our program with a focus on supporting economic growth and job creation.”
IFC’s response is driven by the importance of systemic banks in ECA and will include: short-term financing and trade products to address immediate liquidity concerns, mezzanine and equity investments to shore-up capital shortfalls, strengthened SME financing to fill funding gaps, as well as support for real sector clients.
Overall, the World Bank Group response in the ECA region will focus on: (i) structural reforms and support for the private sector to keep investment, incomes, and jobs growing; (ii) advisory and financial support to countries with fragile banking systems; and (iii) protection of the most vulnerable through strengthening social safety nets.
The World Bank Group is also partnering with other multilateral development banks to encourage Western European banks to stay in Eastern Europe and not deleverage from the region. The World Bank Group, along with other public sector officials from within the European Bank Coordination "Vienna" Initiative, met in Vienna on January 16th with the aim to enhance the coordination of national policies that could impact the economies of emerging Europe.