News Items

Welcome to the IADF news room, which contains updated information and newsworthy items on the development community and municipal development funds.

USAID Conference: Innovative Water and Wastewater Financing Workshop for the Asia and Near East Region

March 15-17, 2004

Please go to www.waterfinanceane.org for information from this important conference.

World Water Week in Stockholm

The annual World Water Week, hosted by the Stockholm International Water Institute, was held in Stockholm from August 21-27 to create a capacity-building forum for innovation in water, sanitation, and other development areas, and to make these areas an international priority.

Approximately 1,300 participants from 100 different countries attended World Water Week. They came from a variety of backgrounds, including business, government, water management, academia, civil society, United Nations agencies, non-governmental organizations, research and training institutions, international organizations, journalism, and science.

Topics for discussion and presentation included integrated water resource management, sanitation and hygiene, sustainable development, trans-boundary water management, pollution control, governance, flood management, climatic variability, economic development and trade, conflict resolution, education, financing, gender, and more. Themes discussed during Water Week relate to other policy making and scientific water-related meetings on the local and international level.

The 2005 World Water Week focused on two approaches for meeting future water and sanitation needs. The soft path utilizes hygiene promotion, public education, and behavioral changes to decrease sanitary problems and diseases. This approach has been promoted through the Central American Handwashing Initiative, which is supported by USAID, UNICEF, the World Bank, and five countries in the region and has shown real results. The second approach, the hard path, includes improved water storage capacity to improve resilience to floods and droughts, improving economic growth.

Anders Berntell, Executive Director of the Stockholm International Water Institute, called for a balance between the building of large-scale infrastructure, such as dams, sewer systems, and piped water, and demand management, including capacity building, stakeholder involvement, and institutional development. He also stressed the importance of moving beyond infrastructure and institutions alone to deliver water, and to focus on the people and implement a people approach. Anders congratulated the participants for their active, respectful and successful debates and discussions.

The 2006 World Water Week will carry the theme of “Beyond the River: Sharing of benefits and responsibilities,” with a focus on moving past competition both between rural and urban sectors, and between upstream and downstream users, internationally and domestically, to create cooperation and sharing of responsibilities and benefits.

Asian Development Bank Approves New Initiatives

The Asian Development Bank (ADB) approved three new initiatives to become more client-orientated, responsive, and efficient, which are part of ADB’s Innovation and Efficiency Initiatives. The first new initiative will improve the Bank’s project financing capability to make it more consistent with current market practices by creating a new approach for cost sharing and expenditure eligibility. ABD will implement a more flexible approach to cost sharing limits and will expand their financing to include land acquisition, taxes and duties, bank charges, and other expenses eligible.

Additionally, a new financing modality concept, which is to be test piloted over three years, will provide alternative financing for development needs to ADB and its member countries. Also, a multitranche financing facility will enable long-term projects to be financed in staggered and structured multiple loans to minimize the negative effect of loans on client’s balance sheets and cofinancing capabilities.

The ADB seeks to expand into local currency lending, using bond issues and commercial swaps to reduce currency mismatches and to enable ADB to support capital market development.

National Wastewater Recycling Association Conference

The National Onsite Wastewater Recycling Association (NOWRA) will hold its 14th Annual Technical Education Conference and Exposition at the Cleveland Renaissance Hotel from October 10-13 in Cleveland, Ohio. This year’s conference will be largest held, hosting an exposition of equipment and products as well as educational and training sessions.

Hundreds of experts, technical professionals, and service practitioners in the wastewater industry will attend the conference, which will focus on vital wastewater infrastructure needs and the programs and projects addressing them. Guest speakers include Ohio’s governor, Robert Taft; Ohio’s Senator, George Voinovich; and Benjamin Grumbles, US EPA Assistant Administrator for Water. More details of the conference can be found on NOWRA’s website: www.nowra.org

Islamic Development Bank- Gambia

The Islamic Development Bank (IDB) is providing a $4.875 million loan to the government of Gambia to help finance its project, “Provision of 100 Water Points in 4-Divisions.” This project will focus on rural Gambia to improve access to drinkable water as well as to improve sanitary conditions.

The Department of State for Fisheries and Water Resources (DOSF) will act as the executing agency for the loan, which has an implementation period of 2005-2009. The project will be co-financed by a $0.610 million loan from the government of Gambia for a total project cost of $5.488 million.

Islamic Development Bank- Oman

The Islamic Development Bank (IDB) is providing a $60.2 million Istisna’a loan (a type of financing used by Islamic financial institutios) to the Ministry of Regional Municipalities, Environment, and Water Resources (MRMEWR) in Oman for its “Sewage Systems Project for Nine Cities.” The project will work to reduce the contamination of underground water resources by establishing sewage collection networks and sewage treatment facilities.

These steps will help prevent the negative effects of pollutants on human health and the environment. Oman’s major cities of Ibra, Rustaq, Saham, Ibri, Khasab, Sur, Sumail, Nizwa and Buraimi will undergo improvements through this project. The implementation period of the loan is 2005 to 2008. The project will be co-financed by a $123.1 million loan from the government of Oman.

World Bank- Mexico

The World Bank approved a $25 million loan to the government of Mexico for its “Modernization of the Water and Sanitation Sector Technical Assistance Project” to modernize the water and sanitation sector. About 55 percent of households connected to the water supply and sewage system receive poor quality service and intermittent supply. This project aims to address this issue of poor quality by inducing local authorities to improve the sector’s financial sustainability and efficiency.

Component One of the project seeks to assist the Federal and State governments to develop studies and activities aimed at the water and sanitation sector’s policy making and planning institutions. Component Two will help develop replicable and sustainable models of efficient and successful water supply and sanitation services by improving service and making institutional reforms.

The Comisión Nacional de Agua (CNA) will act as the implementing agency for the loan, which has a grace period of five years and a maturity term of fifteen years.

EBRD-Russia

The European Bank for Reconstruction and Development (EBRD) is providing a loan for the “Sakha Regional Municipal Services Development Program.” This program will work to finance the upgrading of heating and water systems in the Republic of Sakha and help them to reduce their operating costs.

EBRD is providing loans to the City of Yakutsk, the State Unitary Enterprise (the Vodokanal), and the State Unitary Enterprise of Communal and Housing Services (GUP ZHKH), totaling EUR 71 million. Funding is broken down into EUR 8.5 million to the City, EUR 10 million to Vodokanal, and EUR 28.4 million to GUP ZHKH. The Republic of Sakha, in which the borrowers are located, will provide a guarantee and will support the project.

This project will encourage financial reporting to help strengthen corporate governance standards for operating companies in the water and heating sectors.

The loan will finance technical cooperation up to EUR 3.0 million for design, procurement, and other implementation support. Grant financing will be procured to support further technical cooperation. EUR 350,000 will be sought for unit training and project implementation; EUR 800,000 will be sought for corporate development assistance to enhance commercial viability; and up to EUR 200,000 will be sought for the lender’s supervisor.

This is the first regional scale, long-term municipal infrastructure loan in the Russian Far East, and so will likely serve as a model for future loans of its kind. Success counts on several factors, including: the use of funds toward communal services in remote northern settlements; commercialization of water and heating services in Yakutsk and northern settlements through tariff reform; and the use of an incentive-based Service Contract to restructure the operating companies that are providing services to the municipalities.

Asian Development Bank Strategy

The Asian Development Bank headquarters in Manila hosted a meeting July 28-29 with experts from ADB, various international organizations, and the seven Developing Member Countries (DMCs) to form ADB’s strategy for dealing with the challenges facing Asia’s cities. The Director General of ADB’s Regional and Sustainable Development Department, Bindu Lohani, addressed the attendees and stressed the need for the ADB to increase its infrastructure lending, as infrastructure needs currently outweigh financing levels. Asia has been experiencing rapid population growth, with its urban population tripling in the past fifty years. Approximately one third of Asia’s population lacks access to potable water, and half lack access to adequate sanitation. Lohani called for Asian cities to create goals and planned strategies for their futures.

It is estimated that $250 billion will be needed each year to meet urban infrastructure needs over the next 25 years. ADB expects demand to grow, especially in water supply and wastewater, transportation, and energy. To meet this demand, ADB must increase its investment, assist DMCs in policy reform, strengthen human resources, and encourage local autonomy and private sector involvement. Lohani pointed out that ADB needs to find ways of lending to local governments, as they carry the service responsibilities, even though financing currently tends to remain with the central governments.

As a part of its refocused strategy, ADB is reviewing its Urban Sector Strategy, a plan approved in 1999 to address urban development projects, investment plans, and projects. ADB’s infrastructure investment, which averages around $800 million a year from 2002 to 2004, makes up about sixty percent of its overall lending.

Asian Development Bank- China

The Asian Development Bank (ADB) has approved a US$55.8 million loan to Fuzhou, the capital of Fujian Province in the People’s Republic of China to help it reduce water pollution and protect water resources through various approaches. The project’s many goals include improving access to drinkable water, reducing water-borne diseases, and improving environmental conditions to improve overall living conditions and health standards. This project will expand the Yangli sewer system in eastern Fuzhou, will construct a Lianban sewer network on Nantai Island in southern Fuzhou, and will rehabilitate 13 inland creeks on Nantai Island for pollution control and flood protection. It will help the government improve its strategy for water resource management by implementing a capacity building and training component for the government.

From an environmental standpoint, the project will work to achieve targeted environmental standards by improving the water quality of the inland creeks and the Min River, which suffer from organic, nitrogen and phosphorous waste. The Min River, a major waterway that passes through Fuzhou, provides water for drinking, irrigation, and industrial processing. Rising pollution of the river, due to rapid growth and urbanization in the area, is a cause for concern, which the project will address. The environmental improvements will stimulate economic activity, encourage the creation of civic amenities, and promote Fuzhou’s image of an urban proponent of environmental improvement. In total, the project will construct about 264 km of sewers and rehabilitate 35 km of existing sewers. Fuzhou, a major industrial, cultural, and industrial center, has 1.85 million residents who will benefit from the project.

The Fuzhou municipal government is the executing agency for the project, which has a total estimated cost of $185.5 million. The ADB loan of $55.8 million covers about 30% of the cost. The loan has a 25 year term with a grace period of five years, and an interest determined by ADB’s LIBOR-based lending facility. The remainder of the project’s cost is made up of a $27.19 million loan from The Industrial and Commercial Bank of China and a $102.51 million contribution from the Fuzhou municipal government. Additionally, ABD is providing a $50,000 grant to fund a pilot demonstration activity to promote a clean river program for the urban poor of Nantai Island. The project’s expected completion date is December 2009.

USAID and JBIC

In October 2004, the United States Agency for International Development (USAID) joined with the Japan Bank for International Cooperation (JBIC) and the Development Bank of the Philippines (DBP), and signed a memorandum of understanding with the LGU Guarantee Corp. to jump start two long-term water-related schemes. The two schemes – named the Philippine Water Revolving Fund and the Municipal Water Loan Financing Initiative – fall under the Clean Water for People Initiative which is a joint endeavor by the governments of Japan and the United States to help improve the safe water supply and sanitation to the world’s poor, improve watershed management, and raise water output. This initiative represents the first collaboration between USAID and JBIC.

One of the schemes - the creation of a revolving fund – is expected to encourage funding from private financial institutions which have stayed away from investing in those water and sanitation projects of local government units and water districts. The revolving fund will encourage private sector investment by reducing the investment risk through a guarantee facility. Essentially, the water projects will be financed via an existing program of JBIC and DBP in which DBP funds up to 50% of the project costs while private financial institutions shoulder the other 50% that is then guaranteed by LGUGC through a USAID program.

The loan term for a project under the revolving fund is up to 7 years for private financial institutions and up to 15 for the DBP.

A total of PHP1.02 billion is available through the fund – equally allocated by the existing JBIC program and the LGUGC.

While the revolving fund can assist in providing a much needed funding source for water/wastewater infrastructure projects, there are still two key challenges to be addressed – the identification and development of eligible viable projects and the strengthening of private sector interest in the country’s water infrastructure investment opportunities through sectoral reforms and technical assistance.

Development Bank of Southern Africa

The Development Bank of Southern Africa (DBSA) approved a R78 million loan to the Ilembe District Council in KwaZulu Natal for improving the water and sanitation infrastructure in its local municipalities for domestic and commercial use. The Ilembe district is made up four municipalities: Ndwedwe, Maphumulo, KwaDukuza and eNdondakusuka, which will receive improved water and sanitation service.

Three reservoirs are to be built in the Sundumbuli area, water sanitation projects will be upgraded in the Sundumbuli area, and new officers in the Ilembe government will work on sustaining improved service locally. The Ilembe district’s 120,400 residents will benefit from improved water and sanitation access due to the project.

Asian Development Bank- China

A $100 million Asian Development Bank (ADB) loan will assist the province of Jilin in the People’s Republic of China (PRC) in improving its supply of drinking water and its wastewater management services. The Jilin Provincial Government is the executing agency for the project. This loan will go to work in several regions in a variety of projects.

The project, which is due for completion in December 2009, will benefit about three million urban residents. It will reduce waterborne diseases and will decrease household spending on water from private sources. Also, the project’s wastewater treatment should decrease water pollution into the rivers, which are highly polluted.

The project has a total estimated cost of $232.2 million. The Asian Development Bank’s loan of $100 million comprises 43% of the project’s cost. It has a grace period of five years and a 25 year term.

The municipal governments of Changchun, Liaoyuan, and Meihekou will finance $126.4 million of the project, and the remaining $5.8 million of the project’s cost will be financed with borrowing from the domestic Commercial Bank.

World Bank- Vietnam

Vietnam’s Urban Water Supply Development project focuses on improving water and household sanitation services in towns and urban spaces, which will bring Vietnam closer to its goal of providing urban residents with access to 120-150 liters of sanitary water each day, by 2020.

This project has a total cost of $135 million, and the World Bank is providing an International Development Association (IDA) loan of $112.6 million. This credit will contribute to providing about one million Vietnamese with piped water. Implemented by the Ministry of Construction of Vietnam and Provincial Water Supply Companies, the project will have a duration term of 2005-2012.

U.S. Trade and Development Agency- Uganda

The U.S. Trade and Development Agency (USTDA) is providing a grant of $414,128 to the Ministry of Water, Lands and Environment (MWLE) of Uganda. USTDA promotes public-private partnerships for water and wastewater facilities in Uganda, and hopes to develop a public-private model. This USTDA grant will fund a feasibility study of the proposed Jinja-Njeru Water and Wastewater Project.

Several large Ugandan industries are located in the municipalities of Njeru and Jinja where the project will be focused. Nile Breweries, Ltd. wishes to participate in a public-private partnership model to develop new water and wastewater facilities.

MWLE will choose a U.S. contractor to do the feasibility study from the various U.S. firms that apply to do it. The study will examine the technical, legal, structural, and financial aspects of the proposed Jinja-Njeru Water and Wastewater Project.

For more information, please visit: http://tda.gov/USTDA/Press%20Release%20Archive/Press%20Releases/2005/July/July14_05Uganda.htm

World Bank- Honduras

The World Bank approved a $47 million specific investment loan to Honduras to create sustainable access to infrastructure services, such as water and sanitation and electricity to rural communities. The association of municipalities, at the local level will support the Government’s objectives for the project. Local and central institutions will become more capable of managing rural infrastructure as a result of the project.

World Bank- India

The Third Tamil Nadu Urban Development Project (TNUSP III), in India, received a $300 million loan through the World Bank’s International Bank for Reconstruction and Development (IBRD). This Project works to improve urban infrastructure as well as the institutional and financial structure of water management.

Component 1 of the project aims to support institutional and managerial improvements and changes, using technical assistance, workshops, and training to promote policy reforms and sustainable urban services delivery. Component 2 will support the development of improved water supply, waste water collection, solid waste management, storm water drains, and sanitation facilities.

The loan has a grace period of five years and a maturity period of twenty years.

European Bank for Reconstruction and Development- Russia

The European Bank for Reconstruction and Development (EBRD) approved a EUR 13 million loan to the Krasnodar Water Company (Vodokanal), a municipal unitary enterprise in Russia, to finance the Krasnodar Municipal Services Development Program. The City of Krasnodar will act as the Guarantor for the loan, providing a full financial guarantee.

The Krasnodar Municipal Services Development Program will aim to reduce operating cost and improve the water and waste water systems in the City of Krasnodar. The project will commercialize the Water Company by creating a Public Service Contract and a joint-stock company, improving business planning and financial reporting, and improving operating efficiency of the company. The project will use the best available international engineering practice to supervise the procurement, design, installation, and contracts phases.

Also, the project has environmental protection objectives. International Consultants will carry out an Environmental Analysis and Audit in the feasibility study.

World Bank- Nigeria

The World Bank approved a $200 million loan for the Second National Urban Water Sector Reform Project for Nigeria, planned for the states of Lagos and Cross River. The Project will improve the water treatment works’ ability to produce a reliable water supply in Lagos and will increase access to piped water networks in Cross River. Goals include adding household and standpipe connections, rehabilitating water systems, and increasing treatment capacity. Several components are included in the project.

The Rehabilitation and Network Expansion component targets the water authorities’ customers while the Service Sustainability component is to help utilities improve their efficiency and self-sustainability.

This project is acting on the observation of the effectiveness of private sector involvement in restoring financial sustainability. The Maturity term of the project is forty years, and the grace period is ten years.

Asian Development Bank- Cambodia

From June 23-24, a workshop took place in Phnom Penh, Cambodia to discuss the Asian Development Bank’s (ADB) water policy implementation and Cambodia’s progress in implementing the policy. The 50 attendees included members from Asian Development Bank projects, the Cambodian government, NGOs, academe, the private sector, and international organizations. Participants discussed strategies for increasing water access, improving management of water resources, and improving the regulatory framework in the country.

The ADB pledged its continued support of instituting reforms, and government representatives proposed three water sector initiatives: the Northwest Irrigation Sector Project, the Tonle Sap Strategy, and the Phnom Penh Water Supply and Drainage Project.

Participants completed two surveys to provide feedback on the success and performance of the ADB’s water policy, investments, and partnerships. The workshop is part of the ADB’s larger project of creating a Review of ADB’s Water Policy Implementation.

World Bank- Turkey

The World Bank approved a $275 million loan for a Municipal Services Project in Turkey. The project, which has three components, will supplement municipal level efforts at environmental improvement. The first component will be the Municipal Development component, for financing projects in the water, wastewater, and solid waste sectors. Iller Bank will bear responsibility for appraising and supervising these Sub-projects.

The Municipal Technical Assistance component will support planning, feasibility studies, document preparation, and construction supervision, and will be financed by a Sub-loan from Iller Bank. The third component, Iller Bank Institutional Strengthening, is responsible for providing Iller Bank with technical assistance for project implementation, and will finance auditing and operating costs.

Financed by Iller Bank resources and loan proceeds, this component will improve the financial and banking capacity of the Bank. The project has a maturity term of seventeen years and a grace period of five years.

World Bank- India

The Maharashtra Water Sector Improvement Project received a $325 million World Bank loan to help achieve its objectives of improving planning, development, and management of water resources and of improving irrigation delivery in the state of Maharashtra, India. Through its four components, the project aims to make sustainable improvements in the region.

The first component, Water Sector Institutional Restructuring and Capacity Building, will support the Maharashtra Water Resources Regulatory Authority (MWRRA), will restructure the existing Maharashtra Krishna Valley Development Corporation (MKVDC), the Water Resources Department (WRD), and the Water and Land Management Institute (WALMI), and will finance the establishment of an integrated computerized information system.

Improving Irrigation Service Delivery and Management, the second component, will support rehabilitation of irrigation in the Culturable Command Area by strengthening the safety of dams, implementing improved water management practices, and improving agriculture support services. It will also support the creation and sustainability of Water User’s Associations in selected irrigation schemes.

In its third component, the project will support Innovative Pilots for innovative irrigated agriculture, such as aquifer level groundwater management.

Support for the Project Preparation and Management at the state level comprises the fourth unit. This includes monitoring and evaluation of the project, and a joint information, education, communication campaign to create awareness of the project’s actions.

The government of India is the borrower while the Government of Maharashtra, Irrigation Department is the implementing agency. The project has a maturity term of twenty years and a grace period of five years.

World Bank- Philippines

The World Bank approved a $64 million loan to finance the Manila Third Sewerage Project (MTSP) in the Philippines, which will work to improve the sewerage service delivery in metro Manila. The project will implement an integrated method of sewage management, septage management, institutional strengthening, and increased public awareness of water pollution and solutions to it.

Improvements made through the project will contribute to meeting the standards set in the 2004 Clean Water Act, which calls for decreasing water pollution. It also seeks to determine the financial and technical viability of new approaches to sewer management in Manila.

As a result of the project, sewerage coverage in the East Zone will increase from about eight percent in 2004 to thirty percent by 2010, and sanitation services will increase to covering one hundred percent in the East Zone. A population of about 3.3 million is expected to benefit from these improvements, which will be implemented in a five year period, 2005-2010.

The total cost of the project is estimated at $78.2 million. The maturity term of the project is seventeen years, and the grace period is five years.

World Bank- Bosnia and Herzegovina

The World Bank approved a Water Quality Protection Project for Bosnia and Herzegovina to support government efforts in reducing pollution from municipal sources into the Bosna and Neretva Rivers. The Global Environment Facility (GEF) is providing a grant of $8.9 million, and an additional $11.37 million in contributions from the borrower and others is expected. This project has several components, including the development of a Wastewater Improvement Plan and the foundation of a network of private and public institutions for wastewater treatment. It will also work to improve coordination between institutions in Croatia and Serbia and Montenegro in information sharing on monitoring and evaluation of water quality.

The project, which will be implemented between 2005-2010, will work to reduce river pollution, will finance the first stages of construction and rehabilitation of various sewer treatment plants, and will finance a study on the feasibility of the natural treatment of wastewater, training for project utilization, and financial management training.

Watershed Management Conference July 19-22 Williamsburg, Virginia

The Environmental and Water Resources Institute (EWRI) of the American Society of Civil Engineers (ASCE), is holding a Watershed Management Conference, titled “Managing Watersheds for Human and Natural Impacts: Engineering, Ecological, and Economic Challenges,” from July 19-22, in Williamsburg, Virginia. It is the ninth in a series of watershed management conferences, held every five years since 1965.

It will cover a range of topics, including stream and watershed restoration, the economics of watershed management, groundwater, and best management practices.

Participants are expected to include engineers, biologists, ecologists, hydrologists, attorneys, economists, government planners, and public officials.

Organizationally, the conference will have technical and poster sessions, workshops, trade exhibits, networking events, and a plenary session. The technical sessions cover a range of topics, such as river restoration, best management practices, CITY Green Computer Program, water quality management, groundwater, and low-impact development.

For more information and for registering materials, visit http://www.asce.org/conferences/watershedmanagement2005/

European Bank for Reconstruction and Development-Bulgaria

The European Bank for Reconstruction and Development (EBRD) approved a 190 million Euro loan to Sofiyska Voda AD (SV), a joint stock corporation in Bulgaria, which is responsible for water and waste water systems in the City of Sofia, Bulgaria.

The loan will co-finance SV’s five year capital expenditure program to finance the upgrade and rehabilitation of Sofia’s water supply systems and wastewater treatment plants. This loan will demonstrate how EU-ISPA grants can be effectively safeguarded for the public sector when the infrastructure is operated by a private company.

European Bank for Reconstruction and Development-Croatia

The European Bank for Reconstruction and Development (EBRD) is providing a 10 million Euro loan to Karlovac, in central Croatia, for the construction of a wastewater treatment plant. Nearly 80,000 people live in this region with practically no wastewater treatment facilities.

This loan will be granted to the Karlovac Water and Sewer Company, which will enter a service agreement with the city.

Croatia’s involvement in the European Union accession process has made it focus more on compliance with EU environmental requirements. Because of this process, Croatia is eligible to apply for grant funding from EU ISPA funds for the wastewater treatment plant project.

International Development Bank: "Towards a Transparency Culture"

The International Development Bank, the United Nations Development Program, and the governments of Guatemala and Norway will organize an international seminar, “Towards a Transparency Culture,” which will be held in Guatemala City, May 26-27. This seminar will focus on creating policies for cultures of transparency through culture, media, and education.

It will be opened by Guatemalan President Oscar Berger; Finance Minister María Antonieta del Cid de Bonilla; IDB Executive Vice President Dennis Flannery; and the Guatemalan Presidential Commissioner for Transparency and Anti-Corruption Hugo Leonel Maul Figueroa. The seminar’s organizers recognize the need for a culture of transparency in the development sector, and hope that the seminar, which includes participants from many international, national, and regional organizations, will promote this cause.

Participants will analyze international best practices and various transparency models. Examples of participants include former Chilean President Patricio Aylwin; the Vice President of Transparency International Rosa Inés Ospina Roblado; the Director of the Governance Institute in Canada Marc Saner; the IDB’s State and Civil Society Division Chief for Central America and Mexico Jorge Sapoznikow; the Representative of UNDP in Guatemala Juan Pablo Corlazzoli; and the Ambassador of Norway in Guatemala Rolf O. Berg

United Nations

The UN Commission of Sustainable Development presented its final statement on April 28, concluding that access to safe drinking water, basic sanitation and adequate shelter depends on the governments’ role in promoting it.

The Commission stated that water security must be achieved with investment in infrastructure and adept management.

“Water security is achieved when water underpins economic growth, rather than undermining it – or, in other words, when the net impact of water on growth is positive. The tipping point in achieving water security will be the acquisition of a ‘minimum platform’ of management capacity and infrastructure investment,” notes a recent World Bank report on “Water Security, Growth and Development.”

Investment in both infrastructure and management is needed for sustainable development. In countries with very little infrastructure, the investment should primarily be focused on building infrastructure. As infrastructure becomes more advanced, the investment focus should be shifted to developing institutions and management to support it.

Islamic Development Bank-Morocco

The Islamic Development Bank (IDB) approved a loan to help finance a Water Supply Project for Berrechild and Taza Rural Communities in Morocco on May 9, 2005. The project will improve living conditions and environmental conditions.

In Taza Province, the focus is on raising access rates to potable water in rural areas. In Berrechild Province, the project will focus more on expanding current water supply for urban and rural areas, with the long term goal of meeting projected water demand up to the year 2030.

The project has a total projected cost of $35.21 million, of which $5.13 million is being financed by the National Office for Potable Water (ONEP). IDB will finance the other $30.08 million. Of this, $9.94 million will be in the form of a loan, and $20.14 million will be in the form of a Istisna`a contract, a type of financing contract used for industrial and construction projects.

The project will span from 2005-2008, and The National Office for Potable Water will act as the executing agency.

Asian Development Bank

Istanbul, Turkey hosted the Asian Development Bank’s (ADB’s) 38th Annual Meeting of the Board of Governors, which lasted three days and included delegates from all of ADB’s 63 member countries (45 of which are in the Asian and Pacific region), such as business people, government officials from economic and finance planning departments, academics, ministers, investment bankers, journalists, and representatives from nongovernmental organizations.

ABD has made positive recent changes, including the creation of an Integrity Division to improve transparency and anti-corruption, the creation of a Results Unit to monitor implementation of agendas, the creation of an Office of Regional Economic Integration, and plans to create an independent risk management unit.

During the meeting, Governors concluded that despite recent strong growth in Asia and the Pacific, economic and social inequality remains an issue, and economic challenges must be met to enable future growth in the region. The Governors discussed how ADB should address such pressing issues as fostering economic growth, addressing Asia’s major infrastructure needs, supporting accountable governance, and promoting the private sector as a promoter of economic growth.

Governors recommended that ADB further foster regional cooperation, economic integration, and efficient financial integration, work with governments and the private sector to meet infrastructure needs, streamline procedures for financial assistance, develop new lending instruments, ensure that its products and services are cost-competitive, and promote an increased private sector role. They stressed the need for ADB to implement internal reforms and improve its transparency and accountability.

In his closing address on May 6, 2005, Haruhiko Kuroda, the ADB President, pledged ADB’s commitment to reaching internal institutional improvements, reducing poverty in the Asian and Pacific region, and meeting the Millennium Development Goals.

The 39th Annual Meeting of the Board of Governors is to be held in Hyderabad, India, May 4-6, 2006; and the 40th Annual Meeting is to be held in Kyoto, Japan.

Environmental Protection Agency

The Environmental Protection Agency is giving communities the opportunity to apply for free technical assistance to help them learn practices for developing and meeting their goals. EPA wants to focus on the transition from principles to practice, to create real results.

The Development, Community and Environment Division in EPA’s Office of Policy, Economics, and Innovation is accepting applications from communities looking for either assistance with policy analysis, including reviewing state and local codes, transportation policies, etc., or with public participatory processes, including alternatives analysis, visioning, etc.

Selected applicants will receive assistance from a team of multidisciplinary experts organized by EPA and other national organizations. For information and materials on applying, go to http://www.epa.gov/smartgrowth/sg_implementation.htm.

Water Week Forum 2005

The World Bank hosted a Water Week Forum March 1-3 in Washington, DC, with the theme of “Water Security: Policies and Investments.” It had 850 participants from the World Bank and its external partners.

The forum covered ways the World Bank can assist countries with investing in infrastructure and with developing an institutional framework for borrowing. Participants discussed water supply, sanitation, water resources management, and irrigation, among other water-related topics. It also looked at the future direction of the Bank, and determined that its future lies in focusing on development at a local level.

AfricaSan

AfricaSan, a joint venture of WSP-Africa, the Water Supply and Sanitation Collaborative Council, and South Africa’s Department of Water Affairs and Forestry, works to bring attention to sanitation as a form of alleviating poverty. The AfricaSan East meeting was held February 1-3 in Addis Ababa, Ethiopia, and included 65 participants who discussed case studies and the needed factors for successful sanitation promotion. The AfricaSan West & Central meeting, held in Ouagadougou in February, studied the effectiveness of sanitation initiatives, assessed the sanitation demand, and created points for follow-up action.

World Bank

International experts in development recommended that successful management of water resources needs an integrated approach, with development in regulations, institutions, demand management, and stakeholder participation. They agreed that water supply and sanitation problems negatively effect a nation’s other social indicators, such as economic growth.

Carlos M. Jarque, manager of the IDB’s Sustainable Development Department stressed the importance of small enterprises and microenterprises providing water services to peri-urban and rural areas to create financially sustainable programs. He also pledged IDB’s future support for water and sanitation projects to help reach the Millennium Development Goals of 120 million more people with access to drinking water and 140 million more people with access to basic sanitation by 2015.

The IDB has a history of water and sanitation support, with $38 billion in financing for water projects in the past 44 years.

USAID

In observance of World Water Day 2005, the U.S. Agency for International Development (USAID) announced that over 9.5million people now have better access to clean water and approximately 11.5 million people have access to adequate sanitation because of President Bush's U.S. Water for the Poor Initiative.

This program improves fresh water management in over 70 developing countries. USAID is ahead of target to meet its commitment of providing $970 million for the initiative over three years.

Over one billion people on the planet lack adequate access to clean and safe water, and over two billion are without appropriate sanitation facilities. Others have access to clean water, but because of improper storage and handling it later becomes unsafe.

"Both long-term improvements in infrastructure and immediate safe-water solutions to treat and safely store water at the household level are critical," said USAID Administrator Andrew S. Natsios. "Innovative private sector financing for water and sanitation programs are key to both short and long-term solutions. USAID is leveraging these public and private investments to guarantee that water, an essential building block for civilization, is available to all."

Private corporation and government alliances are being used to support many of these programs. Since 2002, USAID has invested $1 billion in over 290 alliances in 98 countries, which is matched by over $3 billion in private funds.

In addition to water supply, USAID is supporting key hygiene programs that have a major public health impact. These programs advocate hand washing, the proper use of latrines, water disinfection and safe storage at the household level. USAID supports efforts to make sure water is safe to drink in development, conflict and emergency situations, such as the tsunami affected areas or in the rebuilding of Iraq.

Asian Development Bank-Maldives

The Asian Development Bank approved a $20 million grant from its Asian Tsunami Fund and a loan of $1.8 million from the Asian Development Fund to aid the Maldives in repairing infrastructure damaged by the December 2004 tsunami.

The tsunami created about $470 million in damage, which is equivalent to about 62% of the gross domestic product, with tourism and housing suffering from the largest direct damage.

The ADB assistance will have a $6.5 million quick disbursing component to meet general rehabilitation and construction expenses, as well as a $15.3 million grant component to rehabilitate high-priority infrastructure, facilities, equipment, and working capital. This includes the sectors of water supply, sanitation, and solid waste management, transportation, power, fisheries, and agriculture.

A joint needs assessment, which received input from the government, private sector, nongovernment organizations, and civil society targeted priority projects for rehabilitation.

The project, which is to be executed by the Ministry of Finance and Treasury, is due for completion in March 2007.

Asian Development Bank-Vietnam

The Asian Development Bank approved a technical assistance grant of $950,000, from the Japan Special Fund, for a project to improve water supply and sanitation in the southern Central region of Vietnam.

This grant, funded by the Government of Japan, will create a design for the project to improve supply in 10-20 small and medium towns in one of the poorest areas of Vietnam.

To ensure a demand-driven aspect, the project will include a participatory approach with workshops and meetings with stakeholders to encourage wide-spread participation and support.

The project will assess the capacities of water supply and sanitation providers, and will provide for new water supply systems, rehabilitation and improvement of existing systems, and sanitation improvements, such as drainage, sewage disposal, and solid waste management.

Compliance with social and environmental safeguards is a priority. The project, which is to be executed by the Ministry of Construction, will be carried out over eight months, ending in October 2005.

Netherlands

The Dutch Public Sector Agency, rated AAA/Aaa/AAA, has increased by EUR 250 Million the EUR 1 Billion with a coupon that is based on the French TEC10 (Taux de l’Échéance Constante à 10 ans) as published daily by the Agence France Tresor minus 100 Bps, July 25, 2020 issue, originally launched on October 25, 2004. This first increase brings the total outstanding amount to EUR 1.25 Billion.

This new tranche has an issue and re-offer price of 97.16%. Settlement date is January 31, 2005, plus 6 days accrued interest. This tranche will be fungible with the original issue 40 days after settlement.

The issue will be listed in Country-region Luxembourg. Lead manager is Calyon.

IDB-Guyana

The Inter-American Development Bank today announced it has offered Guyana a grant of up to US$200,000 to support the government’s relief efforts in the wake of recent flooding caused by the heaviest rains in more than a century.

The floods have hit the capital, Georgetown, and other districts on the Atlantic coast, forcing hundreds of families from their homes and resulting inextensive damage to property.

In addition to the emergency grant, the IDB and the Guyanese government are exploring the possibility of using resources from the existing portfolio – which includes soft loans for roads, bridges, electricity and water – to finance infrastructure rehabilitation work in theaffected areas.

South Africa

The Development Bank of Southern Africa (DBSA)will on January 12, 2005, handover a cheque of R1 400 000 for relief aid to communities in the KwaZulu-Natal Midlands region that were victims of recent floods. Heavy rains destroyed homes, bridges, roads, clinics, schools and other infrastructure, and displaced almost 20 000 people in the municipalities of Msunduzi, uMgungundlovu and uMzinyathi.

Luther Mashaba, DBSA Executive Manager: SA Operations, says the Bank will work hand-in-hand with the three municipalities and the KZN provincial government in providing emergency relief to affected communities.

“The DBSA, as a key development partner to the municipalities, has proactively engaged these municipalities to help bring relief to affected communities. We will also continue to engage the provincial government on disaster management planning to enable a more capacitated provincial response in the future,” says Mashaba.

This is not the first time that the Bank will be helping disaster-stricken communities in the province. In November last year it provided assistance to Uthungulu and Umkhanyakude district municipalities in with about R500 000 after heavy rains also caused major damages.

DBSA KZN Regional Manager James Ndlovu says the funds provided by the DBSA will be used to buy tents, blankets and mattresses for the displaced families, as well as to finance the emergency rehabilitation and repair of damaged infrastructure.

He also says the municipalities will be expected to provide the Bank with progress reports on their disaster relief programmes,which will be used as a basis for the identification of further support initiatives in these areas in respect of infrastructure provision.

Mashaba will hand over the R1 400 000 cheque to mayors of the three municipalities at a ceremony to be held in Durban at which the KZN MEC for Local Government, Housing and Traditional Affairs, Mike Mabuyakhulu, is expected to be the keynote speaker.

The DBSA contributes to development by providing finance and expertise to improve the quality of life of the people of southern, mainly through the provision of infrastructure.

India

The Asian Development Bank (ADB) has approved a loan of US$250 million for a Multisector Project for Infrastructure Rehabilitation in Jammu and Kashmir, India.

The project is the first major intervention in the State by a multilateral aid agency in recent times. It will restore existing infrastructure facilities and services in two key infrastructure sectors, the urban and transport sectors. More specifically, the urban sector component will cover water supply and drainage systems in Srinagar and Jammu, while the transport sector component will finance the rehabilitation of roads and bridges throughout the State.

The project will also support capability building of a newly established nodal agency, the Economic Reconstruction Agency, responsible for the effective management of externally funded projects in the State.

Located in the northernmost part of India, the State holds great economic and business potential, having a landmark tourist destination and a successful horticultural and agricultural production industry. Besides that potential to be tapped, the overall socioeconomic environment needs improvement.

The economy of the State lags far behind other similar states in India. The condition of roads has deteriorated and many bridges have been damaged. Public services such as water supply and drainage are in poor condition. There is an urgent need to restore infrastructure and services in order to improve living conditions in urban and rural areas, thus contributing to the turnaround of the state economy.

Earlier this year, the Government of India requested ADB to provide financial assistance for the restoration of essential infrastructure in the State on an urgent basis as part of normal lending operations. ADB responded immediately by establishing a project team in April 2004 to initiate preparation and processing of the proposed Project.

Investment needs for the rehabilitation and development of infrastructure in the State are huge, estimated to amount to more than $4 billion. They need to be addressed in a programmatic manner, starting from this Project, which will address the most urgently needed rehabilitation of infrastructure, together with the establishment of a necessary institutional set up for project management. Consideration also needs to be given to the provision of subsequent infrastructure projects in key sectors such as urban, road and power.

In the transportation sector, potential subprojects under the project include the rehabilitation of about 1,500 kilometers of deteriorated roads under the jurisdiction of the Public Works Department, and about 80 damaged and weak bridges, located in 14 districts. The project will boost the mobility of people in the state and pave the way for increased trade with other states, ultimately contributing to poverty reduction.

A rundown water distribution system has led to erratic service, high water losses, and poor coverage. The influx of migrants over the years to the cities of additional pressure on the existing water supply systems, creating health hazards. Rehabilitation of water supply systems in Srinagar and Jammu would benefit 1.5 million people.

Drainage is also a major problem. Due to worn-out dewatering pumps and lack of maintenance of drains, there is large scale clogging in the cities, especially in low-lying areas. The rehabilitation of cities' drainage systems would significantly improve the level of sanitation of these two cities, benefiting 1.02 million people.

Unless attended to now, the deterioration of the State's existing assets will get to the point where the only way forward will be their total reconstruction from scratch, which is both expensive and disruptive," says Shunso Tsukada, an ADB Principal Transport Specialist/Mission Leader. "This Project will save money later but, more important, it will raise the quality of life of people now."

ADB's loan, which covers 70% of the total project cost of $358 million, comes from its ordinary capital resources. The loan carries a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based lending facility.

The Government of India and the State Government will contribute $108 million toward the project's total cost. The State Government and ERA are the executing agencies for the project, which is due for completion in December 2009.

As part of the programmatic approach, a follow on project for the urban sector in the State has been programmed for 2006 for possible ADB financing. To facilitate the preparation of this follow on project, a $500,000 technical assistance grant funded by the Government of the United Kingdom accompanies the project.

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members -45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

Chile

The World Bank approved a $50.26 million loan for Chile to increase the effective and productive use of infrastructure services in poor rural communities.

“Expanding infrastructure services into hard-to-reach, dispersed rural populations is key to ensure that all Chileans enjoy a basic standard of living and benefit from income generating opportunities that can help them rise out of poverty,” said Axel van Trotsenburg,World Bank Country Director for Argentina, Chile, Paraguay and Uruguay. “Specifically, the project will beneficiate the half a million Chileans in rural areas who live in poverty and who is many cases lack basic services.”

The Infrastructure for Territorial Development Project aims to improve the livelihood of rural communities in the regions of Coquimbo, Maule, Bío Bío, Araucanía, and Los Lagos by improving the provision of infrastructure services, including water supply, sanitation, roads, Information Communications Technology (ICT), and electricity, in the context of participatory territorial planning.

In particular, the project will help:

Elaborate territorial development plans with active participation of local stakeholders, and a strategic and integrated vision of infrastructure subprojects and productive potentialities;

Upgrade about 1,000 km of existing secondary rural roads, paths, bridges and foot bridges to improve transportation accessibility;

Rehabilitate and build water and sanitation facilities in rural communities;

Improve quality of conventional electricity services, off-grid and renewable energy solutions, such as generators, solar panels and wind turbines;

Enhance connectivity to the telecommunications access network for schools, municipalities, micro enterprises, health centers, and communities; and

Finance consultant services to strengthen community-based structures for managing and sustaining the infrastructure services.

The $50.26 million fixed-spread loan has a repayment period of 6.5 years, including 4.5 years of grace.

People's Republic of China

The Asian Development Bank (ADB) today approved a US$300 million loan to build an important section of the national highway in Gansu province in the poor northwestern region of the People's Republic of China(PRC).

The project will connect the two growth centers of Lanzhou, the capital of Gansu province, and Xi'an, the capital of Shaanxi province, byconstructing a 231-kilometer expressway across hilly and mountainous terrain, from Luohandong to Dingxi.

Also to be built are the associated access roads, interchanges with toll stations, tunnels, bridges, administrative stations, and service areas. To improve access to remote poor areas, the project will upgrade 470 kilometers of local roads.

The project will contribute to economic growth and poverty reduction in the province by lowering the cost of transport,relieving traffic congestion, and improving access to market opportunities and social services," says Makoto Ojiro, an ADB Principal Project Economist.

Better transport links are necessary to improve economic efficiency, foster domestic and international trade, and facilitate efficient economic growth."

Remote and isolated in a harsh natural setting, Gansu province is one of the least developed provinces in the PRC. About 1.6 million people, or 36% of the total population in the project area, live below the poverty line.

One of the reasons for the high level of poverty in the province is slow economic growth, partly because of inadequate infrastructure. Despite considerable investments in the road sector, the road network is still inadequate, and does not provide efficient access to markets and social services such as education and health.

The PRC Government is committed to reducing poverty through transport infrastructure investment and in its 10th Five-Year Plan (2001-2005), total investments are expected to reach about CNY1, 800 billion, almost double that of the previous five years.

Since 1991, ADB has provided 29 loans, totaling nearly $5.3billion, to finance about 3,900 km of road development, together with 7,100 km of associated local road networks. Of these projects, 18 have been completed and are open to traffic.

ADB's loan, which will cover 34% of the total project cost of $882 million, comes from its ordinary capital resources. It carries a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based lending facility.

The Ministry of Communications will contribute $195.3 million toward the project cost, and $123.3 million will come from the Gansu Provincial Government. The China Development Bank will provide co financing worth $263.4 million.

The Gansu Provincial Communications Department is the executing agency for the project, which is due for completion in December 2009.

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 -45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

Brazil

The World Bank today approved a $4.8 million loan to the state of Amapá, in Northern Brazil. The Amapá Sustainable Communities Project’s goal is to support Amazon-specific approaches to reduce urban and rural poverty through measures that are environmentally sustainable, economically efficient and socially equitable. It will support the government’s efforts to: Reduce rural poverty through better access to social services, basic infrastructure, environmentally-sound productive activities, and credit; Reduce urban poverty by focusing on economic and social development in low-income neighborhoods; Integrate socioeconomic development and environmental conservation at the local level through Municipal Development Fora; Create social capital through strengthened community organizations, capacity-building, and stakeholder participation in decision-making and responsibility for managing public resources; and Develop empowerment through training, participation of minority groups, and environmentally-sensitive decision-making.

The project will reinforce state policies designed to improve human welfare, protect the environment and decentralize decision-making. “The state of Amapá has shown good governance in many areas, including environment and natural resources management, promotion of sustainable development, and economic and fiscal management,” said Vinod Thomas, Director for Brazil and Vice President of the World Bank. “This project adds to the government’s efforts of enhancing the quality of life of its inhabitants, promoting social capital and creating opportunities, particularly for the very poor in rural and urban areas.”

The project aims to benefit 198,000 citizens of Amapá living in poverty, including groups at greatest risk such as river dwellers, extractivists, female-headed households, indigenous communities, and Afro-Brazilians living in informal quilombos.

“Amapá is an interesting challenge for the Bank given the richness of its environment and the diversity of its population with many indigenous peoples groups and communities of African descendents,” said Maria-Valéria Pena, World Bank project manager.

This IBRD fixed-spread loan has a repayment period of 15 years, with a seven-year grace period.

Argentina

The World Bank today approved a US$200 million loan for Argentina to improve the provision of infrastructure services in the Province of Buenos Aires.

“The provision of better infrastructure services supports the Government of Buenos Aires strategy to reactivate the province’s economy and strengthen its regional competitiveness, while alleviating poverty and increasing social equity,” said Axel van Trotsenburg, World Bank Country Director for Argentina, Chile, Paraguay and Uruguay. “This Project is the Bank’s first direct loan for infrastructure investments to a province in and represents a strategically important milestone in our dialogue with sub-national authorities in the country.”

The Buenos Aires Infrastructure Sustainable Investment Development Project supports key investments in the road sector to enhance the Province’s productivity, high social priority projects in the water, sewerage and drainage sectors targeted towards areas of low income and high vulnerability. The project to be executed over the period 2005-2008, will improve the provision of infrastructure services in the province within a framework of fiscal responsibility as a means of supporting the return to a sustainable path of economic growth, to alleviate poverty and increase social equity. The project will support roads and water, sewerage and drainage works and help strengthen the productive potential of the economy and affect the living conditions of vulnerable and poor people.

The project will specifically:

Rehabilitate high priority segments of the provincial road network, removing critical bottlenecks, and implementing a sustained and cost-efficient maintenance program to reduce transport costs and improve the Province’s overall competitiveness. The program includes (i)rehabilitation works in high priority provincial roads along the interurban primary paved network, (ii) widening provincial roads that connect industrial zones with production and consumption centers, (iii) rehabilitation of access roads to some ports and localities and enhance intersections in high-traffic roads, and (iv) implementation of a maintenance program for provincial roads.

Expand the provision of water and sewerage services to approximately one half million low income people living within the Greater Metropolitan Area of Buenos Aires, in areas of high sanitary and/or environmental vulnerability.Financing under this component in respect of a given operator will become available once said operator has met the relevant eligibility criteria which include a renegotiation agreement that helps ensure the sustainability in the provision of water and sewerage services.

Finance a series of drainage projects in urban and periurban areas to mitigate the effects of flooding, which cause significant losses to poor households, industries and commercial activities by interrupting transport and other services.

Build a strategic framework for provincial development and strengthen the institutional capacity in the public entities involved in project execution. Specifically it aims at building up a strategic framework to facilitate economic development, competitiveness, and foster employment.

“With 50% of the people lacking access to potable water and only 25% being connected to proper sewerage system, it is key to implement this loan to improve the provision of basic services and enhance living conditions in the province,” said Maria Marcela Silva, World Bank co-task manager for the project. “The project also tackles inadequate urban and drainage planning lead that generates recurring flooding problems in urban areas with high social and economic costs.”

Executive Directors discussed the general situation in Argentina and recognized the strong economic growth and progress in reducing poverty and creating employment. They emphasized the role of the overall economic policy environment, and stressed the importance of an adequate macroeconomic framework and, in this context, Argentina’s program with the IMF. They also noted that while disbursements under investment operations can proceed normally, conditions for new disbursements under approved Bank adjustment operations have not been met yet.

Numerous Executive Directors expressed concerns about the lack of progress in the renegotiation process of public services contracts.They stressed that a framework for public services (I) be fair, transparent, and viable, (ii) support private sector investment and development of productive capacity by taking into consideration the cost of capital and rates of return on investment and enabling the private sector to retain decision-making over investment, (iii) support competition in each sector; and (iv) set clear and predictable rules on how tariff setting is to be determined.

Several Executive Directors also noted the need for re-engagement with creditors on mutually acceptable terms and emphasized that fair and transparent restructuring of the debt is essential to private sector development and improvements in the investment climate.

The US$200 million single-currency, fixed spread loan has a repayment period of 12 years, including four years of grace.

Russia

Hansabank’s Council approved the increase of the share capital of Hansabank’s future banking subsidiary in Russia to EUR 81 million.

Hansabank signed a purchase agreement of the Russian Kvest bank in Moscow in September of this year. Closing of the transaction is subject to receiving regulatory approvals. Hansabank will pay approximately 3.4 million US dollars (2.8 million euros) for 100% of the bank’s shares. After closing of the agreement Hansabank will raise the share capital of the bank to the above mentioned level. The Estonian Financial Supervisory Authority has already given Hansabank its approval for the said acquisition. In the nearest future Hansabank will submit an application also to the Russian Central Bank.

Hansabank Group expanded to the Russian market in 2002. According to the strategy approved this year, the Group will operate in the Moscow, St. Petersburg and Kaliningrad regions and focus on serving its Baltic, Scandinavian and Russian corporate clients.

India

USTDA is financing a study on Pool finance structure for market access by Urban Local bodies in Tamil Nadu. Centennial Group (A US based company) has been selected to conduct the study. A seminar was organized by TNUIFSL on 30/01/04 where in the experience of US Bond Bank were shared with the participants. Presentations were made by Mr. William Streeter MD, Fitch Ratings / Global Project Finance, Dr. A. Pellegrini, Director Centennial Group, Mr. James T Gebhardt Chief Finance Officer, New York State Environmental Facilities Corporation and Mr. Seth G Coulter, Assistant Director of Investment and Loan Administration. The participants included investors, Merchant Bankers and Rating agencies.

India

Manmohan Singh, India’s prime minister, on Tuesday urged foreign investors to contribute to $150bn worth of planned infrastructure spending, an appeal likely to further strain relations with his government’s communist party allies. Mr Singh told a business summit between India and the Association of South East Asian Nations (ASEAN) that the country’s economic growth relied on substantial increases in domestic and foreign investment in physical infrastructure.

India’s ailing airports and railways need more than $55bn in capital investments, alongside $75bn in power, and $25bn in telecommunications, Mr Singh said. “We will make every effort to promote such investment and to create a climate conducive for investors and entrepreneurs.”

Such statements are a further sign of the government’s resolve to pursue economic reforms despite opposition from communist parties, which support Mr Singh’s multi-party coalition from the outside. Relations between the government and the communist bloc appear increasingly tense. Both sides clashed last week over plans to raise the foreign equity ceiling in the telecom sector from 49 to 74 per cent, part of several industry reforms championed by P. Chidambaram, the finance minister.

Communist parties have opposed raising foreign direct investment levels in telecoms, citing concerns over national security. They have argued for a “Chinese strategy” to mandate foreign telecom carriers to enter into local joint ventures.

New Brunswick, Canada

Under a new unconditional grant announced by Finance Minister Jeannot Volpé, New Brunswick municipalities will receive funding increases totalling about $21 million over the next four years.

Under the new mechanism, the municipal unconditional grant pool in 2005 will total $62.8 million; in 2006, $65.3 million; in 2007, $66.6 million, and in 2008, $67.9 million. For 2005 and 2006, municipalities with above-average tax bases per capita will retain their 2004 unconditional grant level. Municipalities with below-average tax bases per capita will receive additional funding corresponding to how far below the average they are.

In 2007, all 103 municipalities will see a 2 per cent increase from their 2006 unconditional grant level, and in 2008, they will see a further 2 per cent increase. The minister said a special payment will be provided to ensure that any municipality that received a one-time special grant in 2004 does not see its overall funding level fall relative to 2004.

Volpé said the provincial government provides municipalities with financial support in many more ways than the unconditional grant. For example, he said, municipalities are eligible for millions in funding from various government programs for infrastructure projects, official languages, economic development, highways and emergency services.

Municipalities are being notified of the results of the new mechanism. The unconditional grant pool for local service districts for 2005 will remain at the 2004 level of $3.2 million. The necessary legislation to implement this funding mechanism will be introduced during the fall session of the legislature.

Philippines

Land Bank of the Philippines President and CEO Gary B. Teves announced on November 10, 2004 that LANDBANK successfully completed the competitive auction of two pools of non-performing assets to two investors, Deutsche Bank-Cargill Financial Services International, Inc. and J. P. Morgan.

LANDBANK's non-performing loan (NPL) ratio will be drastically reduced from approximately 14% to single digit-levels (approximately 8%). The gross face value of the assets sold is approximately P13.5 billion Philippine Pesos (equivalent to US$241 million). The portfolio sold was composed of two pools of non-performing loans.

Thirteen bidders registered to participate in the sale, each paying a non-refundable registration fee of US$30,000. These entities performed their due diligence since early September. Five bidders submitted conferring bids, each paying the US$2 million bid deposit.

Ernst & Young Transaction Advisory Services, Inc. serves as LANDBANK's financial advisor for this sale. The transaction process followed global best practices and were patterned after similar transactions done in Japan, Korea, Thailand and Taiwan. Both the Asian Development Bank (ADB) and the International Finance Corporation (IFC) have provided letters of support for the transaction. These multilateral agencies will make available financing to the winning bidders.