The World Bank Group committed US$6.6 billion in fiscal year 2009 (July 1, 2008 – June 30, 2009) to South Asia, focusing especially on reviving growth and protecting the poor amid the global economic crisis. This is an increase of US$1.1 billion over the previous year.
The Bank Group invested in 89 projects to promote economic growth, fight poverty, and assist private businesses, including nearly US$2 billion in infrastructure financing, a critical sector to provide the foundation for rapid recovery from the crisis and job creation.
Much of the Bank’s support focused on helping South Asian countries cope with the impact of the global economic crisis. For example, the Bank provided US$500 million to support the Government of Pakistan’s program to regain and maintain economic stability and steer the economy back onto a higher growth path. In India, a US$400 million loan was extended to improve access to finance for India’s Small and Medium Enterprises (SMEs) which face serious challenges in accessing adequate and timely financing on competitive terms.
Globally, the World Bank Group committed US$58.8 billion in fiscal year 2009, up 54 percent from 2008 fiscal. Commitments from the International Bank for Reconstruction and Development (IBRD)—which provides financing, risk management products, and other financial services—rose sharply in FY09 to $32.9 billion for 126 operations, from $13.5 billion the previous year. Commitments from the International Development Association (IDA), which provides interest-free loans and grants to the world’s 79 poorest countries, totaled a record $14 billion in FY09, up 25 percent from US$11.2 billion in FY08.
Within South Asia, India is the largest borrower from IBRD and IDA, accounting for $2,242 billion. Pakistan is the second largest borrower with $1,609 million (IDA), followed by Bangladesh at US$1,096 million (IDA).

Key to the Bank’s strategy in South Asia is scaling up existing programs that are delivering results. For example, in fiscal year 2009 the Bank approved $250 million for the Pakistan Poverty Alleviation Fund (PPAF), a program the institution has supported since 2000. During this time, PPAF has facilitated the formation of 80,000 community organizations and provided 1.9 million micro-credit loans and 16,000 community infrastructure schemes. Similarly in Afghanistan, the Bank committed US$75 million to Afghanistan’s National Solidarity Program, a rural development initiative that has reached over 22,000 villages—about 68 percent of the rural population.

The International Finance Corporation (IFC), which makes equity investments, and provides loans, guarantees, and advisory services to private-sector business, committed close to US$1.2 billion in 47 projects in FY09 in South Asia. A third of the commitments this year were in infrastructure to support the acute financing needs of the sector in the region. A quarter of the program focused on the financial sector and the balance in manufacturing, agribusiness, health, and education sectors. In response to the scarcity of trade financing after the global economic slowdown, the region committed US$100 million in trade finance facilities to support local enterprises. As many as 15 projects in the region have a climate change component.

IFC’s strategy in the South Asia region supports inclusive growth by increasing access to infrastructure and finance, focusing on low-income, rural, and fragile regions and making climate change central to its work, targeting areas where IFC can make the biggest difference. Through its advisory work, IFC addresses critical areas such as business environment reform, sustainable supply chains, access to finance, infrastructure, energy efficiency, and clean production.

The Multilateral Investment Guarantee Agency (MIGA), the Bank Group’s political risk insurance agency, is also supporting development in South Asia. In Pakistan, MIGA guarantees totaling $1.74 million supported the establishment of Kashf Microfinance Bank (KMB) to make financial services available to the majority of unbanked population. Over the next five years, KMB will reach 1 million small depositors and 350,000 entrepreneurs through a network of over 100 branches across Pakistan. The network will be supplemented by 300 service posts closer to low income communities.

 IBRD and IDA Lending in South Asia (Amounts in millions of US dollars)