The World Bank on Sept. 9 pulled the plug on an oil pipeline agreement with Chad after long-standing tensions with the government over failed promises to spend the oil profits on programs for the poor. In a statement, the World Bank said Chad prepaid the outstanding balance of USD65.7 million under the USD140 million loan deal on Sept. 5 following talks with the government of President Idriss Deby, Reuters reported. The impoverished central African country is expected to earn about USD1.4 billion in oil revenues this year. The pipeline was one of the World Bank’s biggest investments in Africa and billed as a test case for how Africa’s oil wealth could benefit the poor if spent properly.
US action to rescue mortgage giants Fannie Mae and Freddie Mac is welcome, John Lipsky, first Deputy Managing Director at the International Monetary Fund (IMF), said Sept. 9. The move should help to underpin the housing market, the banking system, and the broader economy, Lipsky said. He also said further collaborative action will be needed in future. Joint actions to relieve stress in short-term funding markets were “entirely appropriate,” he added. Greater cross-border coordination is needed to detect, manage and resolve financial stress, and more political will is needed to drive this forward, Lipsky said.
Governments around the world pushed through a record number of reforms over the past year, with Eastern Europe and Central Asia continuing to be the most active, the World Bank said in its latest business climate study. In its sixth annual Doing Business report, the Bank’s International Finance Corp. (IFC) recorded 239 reforms across 113 economies in the 12-month period that ended in June, up from 200 reforms in 98 economies in the same period a year before. “Reforms are becoming, in a sense, much more global, much broader,” said Penelope Brook, IFC Director, Financial and Private Sector Development Vice Presidency, and the report’s team leader, in an interview with Dow Jones. “What we find is that countries that are very actively reforming in general, as part of reforming in the areas that Doing Business measures, tend to be relatively attractive to investors,” she said.
A joint team of officials from the Asian Development Bank, the European Bank for Reconstruction and Development, the European Commission, the European Investment Bank, the UN, and the World Bank Group begins a Joint Needs Assessment mission in Georgia. This assessment, led by the World Bank and carried out from September 8-21, responds to a request from the Georgian government to identify priority areas and financial requirements needed for post-conflict recovery and reconstruction.
Ivory Coast could reach a decision point on getting debt relief under a program for poor countries by the end of the year and then clear over USD 3 billion of external debt by mid-2009 if upcoming International Monetary Fund (IMF) assessments show progress in economic reform, the World Bank said. An IMF mission is expected to carry out a review later this month to assess progress toward a decision on Ivory Coast qualifying for the Highly Indebted Poor Country (HIPC) debt relief initiative.
A telecommunications entrepreneur wants to bring high-speed Internet access to the developing world by launching a constellation of satellites targeting Africa, the Middle East, Latin America and other regions long plagued by inadequate digital connections. The undertaking, dubbed “a big pipe in the sky,” is expected to cost about USD 650 million. It has initial backing of about USD 60 million from several investors, including Google Inc., Liberty Global Inc., HSBC Holdings PLC and Allen & Co. Executives from these companies sit on the board of the new company, called O3b Networks Ltd.
The World Bank’s Board of Executive Directors approved an additional USD 50 million to assist the Mexican Government in strengthening savings and credit institutions in the rural sector. This project comes about as support to the Public Saving and Credit Law approved in 2001. The Law combined legal and regulatory reforms with public investment to create and strengthen the capacity of the savings and credit institutions in the rural sector, as well as the regulatory agencies that supervise them. Currently, the World Bank supports Mexican authorities in this area through the Savings and Rural Finance Project, which is now in its second phase of implementation.