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World Bank Heads for the Regions
The World Bank has passed a Partnership Strategy with the Russian Federation through 2010 in Washington last Thursday. Instead of cooperating with the Russian Federation, which it will now consider a future donor rather than a borrower, it will work with the Russian regions. It intends to provide up to three credits per year to subjects of the federation without federal guarantees and to choose six to ten regions where it will concentrate the majority of its programs.
Russian representative to the World Bank Alexey Kvasov told RIA Novosti news agency that Russia no longer needs loans from the Bank. World Bank representative in Russia Kristalina Georgieva stated that the new strategy was “innovative” for the Bank. Russia will be one of the first countries where the Bank will work with regional authorities in place of sovereign governments. The future loans will mainly be for “regional infrastructure” and will be made available to creditworthy regions. World Bank and International Finance Corp. programs will also support state investment, including loans to municipal bodies, investment in transportation, waterworks and garbage processing. Kommersant has learned that Tomsk Region Governor Viktor Kress is already in negotiations on the program with the World Bank.
Sub-sovereign loans are also being tried in Russia for the first time. In July of this year, the Bank granted bonded credit of 1 billion rubles to the government of Chuvashia. Minister of Finances of the Republic of Chuvashia Nikolay Smirnov told Kommersant that “That was the first time not only in the country, but in the world, that the World Bank credited a region and not the country as a whole.”
A number of regions have expressed interest in the new program. Tomsk Region is considering participating in a World Bank project for hydrocarbon trading under the Kyoto Treaty. “The largest march in the world is located in Tomsk Region,” Kress told Kommersant, referring to the 53,000-square-meter Vasyuganskoe Marsh. “We would like to make money on it.”
It is unknown so far how positively the Russian government will look on the new World Bank strategy. The experiment runs contrary to the government's recent tendency to increase financial pressure on the regions, and the Bank was cautiously critical in the text of the strategy of the unfinished reform of interbudgetary relations being carried out by the Russian Finance Ministry.
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All the Article in Russian as of Dec. 18, 2006
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