Washington, February 26, 2009 – Armenia and the Democratic Republic of Congo have become the first two countries benefitting from a special fast track facility set up by the World Bank Group to help the world’s poorest countries cope with the impact of the financial crisis.
The World Bank’s Board of Executive Directors has approved a package of three operations totaling $35 million for Armenia and a $100 million for the Democratic Republic of Congo, from the fast track facility, amid clear signs poor people in both countries are suffering from the crisis.
“Armenia’s economy has already been hard hit through slower direct investments, falls in remittances and commodity prices, with unemployment now rising,” said the Bank’s Managing Director, Ngozi Okonjo-Iweala. “This illustrates the clear case for the fast tracking of funding for local works and projects which can provide jobs this year.”
Remittances, estimated at US$1.6 billion estimated in 2008, accounted for nearly 20 percent of Armenia ’s GDP and are expected to decline sharply this year. The Bank has revised downwards the country’s GDP growth from double digit rates over the past decade to near zero in 2009.
The US$35 million for Armenia will help to create some 280,000 job days of employment in rural areas from road rehabilitation and investments in small-scale infrastructure.
“We’re already seeing the financial crisis taking a heavy toll on the poor in these countries. It’s poor people who will be hit hardest by this crisis and that only serves to highlight the obvious need to speed up assistance to help those who’ve lost their jobs or face uncertain times,” Okonjo-Iweala said.
Job losses have also been evident in the Democratic Republic of Congo due to cutbacks in the mining sector and slower investment activity. In mining areas around Katanga, the closure of small mines and cutbacks in larger operations has seen an estimated 200,000 people lose their jobs, with 1 million people indirectly affected.
A sharp slowdown in growth in the DRC is now expected this year, with growth prospects further undermined by renewed security risks in the eastern part of the country.
The US$100 million emergency grant from the International Development Association (IDA) Financial Crisis Response Fast Track Facility will help finance short term costs of importing essential goods and commodities, paying salaries of teachers in primary and secondary schools and the state water and electricity bills.
The IDA Fast Track Facility for the world’s poorest countries has been created with the aim of speeding up grants and long-term, interest-free loans to fund infrastructure, education, health and social safety nets.
The facility is expected to fast track an initial US$2 billion of IDA 15 resources, which provides US$42 billion to 78 of the world’s poorest countries over the next three years.