ISLAMABAD, Sept 18: The World Bank Group extended loans, credits, grants, equity investments, and guarantees totalling over $5.5 billion to South Asia in fiscal year 2008.

The funding supports 79 new projects designed to overcome poverty and boost growth through practical plans enhancing the business and investment environment and empowering poor people, says a statement of the bank.

Contributing to this strong support was $1.491 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products and other financial services; $2.756 billion from the International Development Association (IDA), $1.26 billion from the International Finance Corporation (IFC), and $36.6 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the group’s political risk insurance agency.

“Last year posed profound economic, political and social challenges for countries in South Asia and the world,” said Isabel M. Guerrero, World Bank vice-president for South Asia.

“The increase in world fuel and food prices, especially for rice and wheat, the two main staples in South Asia, has had a dramatic impact on poor people. Globally, the World Bank group committed $38.2 billion in fiscal year 2008, up 11 per cent from fiscal year 2007. An important contribution during the fiscal year was the bank group’s response to the food price crisis. It created a $1.2 billion rapid financing facility with the first grants approved in FY08.

More funds have subsequently been approved in the current financial year, including a $8 million grant for Afghanistan, which supports the rehabilitation of around 500 small, traditional irrigation schemes, which are critical to the recovery of the country’s agriculture sector.

“In a year that saw rising food and fuel prices become the harsh new reality, the $38.2 billion provided by the World Bank group to developing countries helps create development solutions so people can have the opportunity and means to improve their lives,” said World Bank Group President Robert B. Zoellick.

India was the largest borrower from IBRD and IDA, accounting for $2.154 billion, or nearly 10 per cent of total lending from these two institutions. Within South Asia, Bangladesh was the second largest borrower with $753 million, followed by Pakistan at $545 million, and Nepal at $380 million.

Many of the bank’s projects in the last fiscal year supported existing programmes that are delivering results. The bank extended additional financing of $75 million to the Pakistan Poverty Alleviation Fund, which has touched the lives of more than 2.5 million people in about 5,000 villages.

Looking ahead in South Asia, the bank will focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the region’s investment climate, such as weak infrastructure, red tape, and corruption. It will also deepen its engagement in states where poverty is increasingly concentrated, such as Orissa and Bihar in India and Sindh in Pakistan. IBRD lending in the past year focused on helping South Asia close its infrastructure gap, often cited as the greatest constraint to foreign investment.

IFC’s investment commitments in the South Asia region were $1.26 billion for 37 projects in FY08, and it mobilised an additional $28 million through structured and secure ties products. This year IFC enhanced its portfolio in the infrastructure sector, from 22 per cent to 30 per cent for South Asia as a whole.

—APP