WB to sharply cut funds for Asia
WB to sharply cut funds for Asia
SINGAPORE (AP): The World Bank plans to drastically cut loans to Asian countries this year, now that the region is recovering from its economic crisis, the bank's former top official in Asia said Thursday.
Over the past two years, the World Bank has lent roughly $20 billion to countries in the Asia-Pacific region, said Jean-Michel Severino, the bank's former vice president for East Asia and the Pacific.
Severino said the level of lending for this fiscal year, which begins in July, would be around $4 billion.
"Whether it will be a little more, or a little less, it's a bit too early to say," he told a news conference. He said this amount is approximately what the World Bank was lending to the region before the crisis.
"The very high level of lending is a big burden for (the World Bank's) own capital structure," Severino said.
He said the main cuts will be in the area of structural adjustments, which include budget support financing and balance of payment-related loans.
The main reason for the cuts is that many of the countries that suffered from the economic crisis in Asia are healthier economically and will not be asking for structural adjustment funds this year, he said.
South Korea will not need funds, and Malaysia will "definitely not" seek loans. Thailand is unlikely to request loans, and if the Philippines does, it will be "very little," he said.
Now that the region is stronger economically, the World Bank also plans to shift toward projects that were lower in its list of priorities, in areas such as the environment and infrastructure, Severino said.
But efforts must continue in the areas of financial restructuring and corporate governance, where reforms have not been completed yet, and to fight poverty, particularly in Indonesia, he said.
Severino completed his last day at the World Bank Tuesday after serving three and a half years as its top official in Asia.
He will return to the French finance ministry, where he formerly held a post as financial auditor.