| | Shigeo Katsu (left), World Bank's
VP for Europe and Central Asia &
Aivar Soerd, Minister of Finance,
Estonia, at the signing. | | Lithuania-signing.JPG | Shigeo Katsu; Svein Aass, Executive
Director; Zigmantas Balcytis, Minister
of Finance, Lithuania.
Photos by Caroline Suzman. |
Washington DC, September 18, 2006 -- Estonia and Lithuania, two upper middle-income countries, moved from IBRD borrower status to donor partner on Sunday, at an official signing ceremony held during the World Bank and International Monetary Fund Annual Meetings in Singapore.
The two Baltic countries are the third and fourth countries to forgo World Bank lending in the Europe and Central Asia region. Slovenia and the Czech Republic graduated in 2004. Countries do not have to fulfill specific criteria to graduate. Although the World Bank has guidelines stating that governments with a Gross National Income per capita of $5,685 or higher may want to initiate the graduation process, the decision is unique for each country and is based on overall development status. In the Europe and Central Asia Region (ECA), upper middle-income economies include: Croatia, Czech Republic, Estonia, Hungary, Lithuania, Poland, Russia, Slovak Republic and Turkey.
Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Georgia, Kazakhstan, Romania, Serbia and Montenegro, Turkmenistan and Ukraine are considered lower middle-income countries.
The Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan are considered low-income countries. Slovenia, which graduated from World Bank lending in 2004, is a high-income country.
Classification by income does not necessarily reflect development status. |
According to the World Bank's development indicators, Lithuania had an average per capita income of about $7,210 in 2005. Estonia's was $9,100. The meetings produced a renewed commitment by the Development Committee (the highest policy making body of the World Bank and IMF) to support the role of the World Bank in middle-income countries. Some of them, like Estonia and Lithuania, "will eventually graduate from IBRD lending," recognized the communiqué, but middle income countries are home to 70% of the world's poor and "still face major challenges."
The meetings, which attract the world’s finance and development ministers, also made news in Turkey: Thanks to IMF reforms the country now has a greater voting share in the institution. China, South Korea and Mexico also received greater voice. Other issues included a proposed World Bank strategy for promoting good governance and cracking down on corruption, progress toward achieving the Millennium Development Goals, scaling up development assistance to the world’s poorest countries, a Clean Energy and Investment Framework, and debt and trade deals. For more details, see the Bank's main story on the Development Committee's strategy. Read also President Wolfowitz Makes Strong Case for World Bank 's Role in Middle Income Countries (March 2006). "Middle income and emerging market countries (MICs), partner countries of the IBRD,
are home to 70% of the world’s poor. They constitute an extremely diverse group of countries.
While many of them have made dramatic improvements in economic management and
governance over the past two decades, as a group they still face major challenges of poverty
reduction and development and in their contribution to provision of important regional and
global public goods. We strongly endorsed the statement of the Bank’s corporate role and
mission to eradicate poverty in its partnership with MICs. We reviewed the Bank’s proposals to strengthen the IBRD’s value-added and engagement in response to the evolving and diverse needs of middle-income countries. We recognized that as MICs develop they will eventually graduate from IBRD lending. We also noted that in parallel, in implementing its medium-term strategy, the IMF is making efforts to adapt, better focus, and enhance its engagement with emerging market countries. We welcomed the Bank’s proposals to deliver better and more flexible country partnership strategies reflecting diverse country circumstances; to reduce the cost of doing business with the Bank by streamlining internal Bank procedures; to simplify loan pricing and make its products more competitive; to develop new ways to help countries facing external shocks; to increase provision of fee based expert services, unbundled from lending; to continue to work towards scaling up Bank Group lending to sub-national entities within frameworks agreed with national governments; and to better exploit synergies between the different arms of the Bank Group within their respective mandates. Increasing the use of country systems where mutually agreed and verifiable standards are in place to ensure effective execution is an important part of this agenda for scaling up development impact. We encouraged the Bank to give greater emphasis to issues of regional and global concern in areas where it has a comparative advantage. We also called for deeper cooperation between the Bank, regional development banks and other development partners in their engagement with MICs, and encouraged the Bank to develop a menu of options to respond to country demand-driven initiatives for targeted blending of concessional donor support with multilateral development bank loans in cases of market failure or where there are affordability issues." --Extract from the Development Committee communiqué of September 18, 2006 |
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