The World Bank Group’s political risk insurance agency, the Multilateral
Investment Guarantee Investment Agency (MIGA), will continue to play a significant role in helping European and Central Asian countries by supporting lending to the real economy through private banking groups.
 
This is according to Izumi Kobayashi, executive vice president of MIGA, in a World Bank statement on July 24 2009.
 
"Countries in Eastern Europe and Central Asia continue to rely on private investment and foreign direct investment to overcome the financial crisis and restore economic growth," Kobayashi said.
 
"But with liquidity drying up, the risk appetites of international investors for projects in these economies dropped substantially. MIGA will continue to play a significant role in helping ECA countries by supporting lending to the real economy through
private banking groups."
 
The agency’s support is significant for building market confidence in these emerging economies in times of economic crisis, Kobayashi said.
 
The World Bank said that during Fiscal Year 2009, a period marked by the sudden onset of the global financial crisis, the World Bank Group committed $12.5 billion in support to its members and to private business in the Europe and Central Asia
(ECA) Region.
 
The World Bank Group commitments in ECA grew in fiscal year 2009 by 58 per cent, as financing was rapidly approved to help cushion the impact of the global economic crisis on the poor and to position countries for post-crisis recovery, the statement said.
 
Many countries in Europe and Central Asia had entered the crisis in a vulnerable position, the World Bank said.
 
"Relatively high current account deficits, elevated external debt levels, very rapid credit growth, and a consumption boom financed by foreign currency borrowing created vulnerabilities in Central and Eastern Europe (CEE), the Baltics, and some Commonwealth of Independent States (CIS), leaving several of them particularly exposed to the crisis."
 
On the other hand, sharp drops in commodity prices brought growth in economic
powerhouses of the eastern part of the Region (Russia and Kazakhstan) to an abrupt halt and hit the less well-off parts of the CIS very hard.
 
"After a decade of impressive growth and poverty reduction, the Region has now been severely hit by the global economic crisis," said World Bank Europe and Central Asia Vice President Shigeo Katsu.
 
"Risks have materialised into a full-blown crisis, faster and deeper than expected. A human crisis is looming in Europe and Central Asia, and countries are already losing the poverty gains made in recent years.
 
"We will continue supporting ECA countries by focusing on preserving jobs, protecting people, and stabilising the financial sector. Through these measures, countries can cushion the impact of the crisis and ensure they are in a better position to rebound afterward."
 
The World Bank Group consists of the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to members as well as analytical services, capacity building and technical services; the International Development Association (IDA), which provides interest-free loans and grants to the poorest countries; the International Finance Corporation (IFC), which makes equity investments and provides loans, guarantees and advisory services to private-sector business in developing countries; and the Bank
Group’s political risk insurance agency, MIGA.
 
"In middle-income countries, the Bank continued to provide a broad range of product lines addressing the diverse needs of this group in ECA." the World Bank statement said.
 
Among these were $800 million to support implementation of Turkey’s updated national electricity strategy and its ongoing program to reform the electricity sector, $2.125 billion in Kazakhstan to help upgrade a 1062km stretch of the international trade corridor linking China to Russia and Western Europe, $1.250 billion to support reforms in public finance management in Poland, $400 million to improve the condition and quality of roads and increase traffic safety along Ukraine’s main road network, $200 million to enhance social protection in Bulgaria, and $122.5 million to improve the competitiveness of Croatia’s Rijeka port as a Pan-European transport route. 
 
The Bank also supported a $78 million Partial Risk Guarantee for the privatisation of Albania’s Energy Distribution System Operator.