Melania Trump Club

Thursday, June 2, 2011

World Bank revises Kenya’s growth down

NAIROBI - Kenya must improve urban infrastructure for rapid economic growth, the World Bank said Thursday in its June 2011 Kenya Economic Update.

"Kenya is at the beginning of a major transformation that will shape its development prospects for decades to come," Johannes Zutt, World Bank Country Director for Kenya is quoted as saying. "Every year, Kenya's population grows by about one million people, who are healthier, better educated and moving to cities. With improved urban infrastructure and connectivity, particularly through the port of Mombasa, Kenya's new entrepreneurs will increasingly find new paths to prosperity."

The report focuses on the need for Kenya to expand and modernize the port of Mombasa as well as to strengthen the competitiveness of its coastal cities, which are Kenya's gateway to the thriving markets on the Indian Ocean. It should also improve the infrastructure within and between Mombasa and Nairobi, Kenya's gateway port.

Kenya could become a middle income country in the next decade if its economy grows at 6% a year, the report said.

In the short-term, the Kenyan economy will need to navigate through another economic storm and manage rising inflation caused by higher food and fuel prices,” said Ms Jane Kiringai, the bank’s senior economist.

She was speaking in Nairobi during the launch of the institution’s 4th edition Kenyan economic update, ‘Turning the Tide in Turbulent Times: Making the most of Kenya’s demographic change and rapid urbanisation.’

The projection comes a few days after fellow Bretton Woods Institution, International Monetary Fund (IMF), revised its projection from 5.7 per cent to 5.4 per cent.

Analysts at PineBridge Investments revised their growth projections to 4.5 per cent from 5 per cent, while their CfC Stanbic Bank counterparts have cut it to 4.3 per cent from 5.4 per cent.

The revised growth estimates by the WB and other analysts are, however, faster than the government’s 3.5 per cent and 4.5 per cent projection announced by Planning Minister Wycliffe Oparanya last month.

They are understandable, since the country is grappling with an inflation that has been rising for the last seven months to stand at 12.95 per cent in May, fuelled by high international oil prices in the face of a weak shilling and food shortage.

This has forced the Central Bank of Kenya to try supporting the shilling and tame inflation by withdrawing Sh3.2 billion from the economy.

The minister of planning and Vision 2030 Wycliffe Oparanya had earlier projected a lower GDP growth of between 3.5 and 4.5 per cent for this year, citing similar factors but said proposals such as higher strategic oil and food reserves could be used to stabilise long-term growth.
Finance minister Uhuru Kenyatta, however, has differed with his planning counterpart and projected a 6.1 percent economic growth rate for the year.

World Bank loaning Brazil $6B for social programs

BRASILIA --The World Bank is set to nearly double its financing in Brazil to $6 billion in the coming fiscal year to support development projects and continued economic growth in the country, World Bank President Robert Zoellick said Wednesday.

Speaking to journalists ahead of scheduled meetings with Brazilian authorities this week, Zoellick said lending to Brazil could rise from an average of $3 billion currently, and that more than half of the new financing would go to projects in the country's less-developed Northeastern region.

Brazil President Dilma Rousseff has made eradicating extreme poverty in Brazil the cornerstone of her social programs. Details on her poverty program are expected to be released Thursday.

Brazil’s government says 16 million people live in extreme poverty in the nation, surviving on $45 a month.

Zoellick says the World Bank promise of loans up to $6 billion is double what the Bank has provided to Brazil on average in the past.

Zoellick and World Bank Brazil Director Makhtar Diop said the bank was hoping to take advantage of a virtuous cycle in the Northeast to continue stimulating development there.

"For the first time ever the Northeast region is growing at a faster pace than the rest of the country, so we need to help reinforce this trend," Diop said.

The World Bank officials said the financing would go to help support critical infrastructure and social projects, including education programs, particularly by helping overcome existing fiscal constraints for states in greater need. In addition, they said they hoped to stimulate greater market development and more competition in the region.

Also as part of the effort, the officials said the bank would provide support for stalled public-private partnerships in the region.

"We need a quality legal framework," said Diop. "If you don't have a good legal framework for public-private partnerships, they don't advance."

Zoellick said that bringing equitable financing initiatives to countries like Brazil is important to maintain a recent global growth trend in which nearly half of all growth has been produced in developing countries.

"For example, Brazil has done very well recently with commodities, but commodity booms tend not to last forever," he said. "It will be very important for Brazil to develop other sectors such as services and manufacturing."

The World Bank currently has $13.3 billion in outstanding disbursed loans to Brazil, for projects in 19 of the country's 27 states.

Regarding possible rebalancing of power at the World Bank in the context of bringing greater voice to developing countries at the institution, Zoellick said he believed the process would happen as a natural trend over time.

"Over the longer term, these will be questions for the shareholders to determine," he said.

He admitted that the presidency of the institution might also eventually be handed to a representative from a developing country as qualified candidates emerged.

"What we can do for now is try to advance people through the ranks, and depending on the international politics involved maybe they will be chosen," he said. "That's the best way I can try to help prepare for these types of changes.

C40 Cities

Large Cities Climate Leadership Group, also known as the C40 Cities (and originally as the C20 Cities) is a group of cities working to reduce urban carbon emissions and to adapt to climate change. It believes it has an important role to play as cities contain around 50% of the world population, consume 75% of the world's energy, and produce 80% of its greenhouse gases. The group's secretariat is based in London.
The group was founded after a meeting of delegations from 18 cities at the October 2005 World Cities Leadership Climate Change Summit, organised by the Mayor of London, Ken Livingstone.
On August 1, 2006, the group signed a memorandum of understanding with the William J. Clinton Foundation's Climate Initiative, under which the Clinton Foundation will provide technical and communications support.
The group held their first summit in 2005 in London and their second in 2007 in New York. At the second summit, 13 cities joined the group. The third summit was on May 18–21, 2009 in Seoul. New York City's Mayor Michael Bloomberg serves as the chair for C40 Cities. The 2011 summit was from May 31st to June 2nd in São Paulo.

World Bank to Help Cities Control Climate Change

World Bank and the C40 Cities Climate Leadership Group (C40) are to join forces to accelerate climate-related investments in many of the world's largest cities.
New York City mayor and C40 chairman Michael Bloomberg said that the partnership would make it easier for city authorities to access finance for low carbon and climate adaptation initiatives from the World Bank and other lenders.

World Bank President Robert Zoellick and former President Bill Clinton announced the new partnership during the opening session of the C40 Large Cities Climate Summit.

All three say the partnership will help cities to finance projects aimed at reducing carbon emissions while also supporting growth.

“The leaders of C40 Cities — the world’s megacities — hold the future in their hands,” Bloomberg said. “This unique partnership with the World Bank will help solve many of the problems that cities face in obtaining financing for climate-related projects, both from the World Bank and other lenders.”

According to the World Bank, C40 cities account for 8 percent of the global population, 12 percent of global greenhouse gas emissions, and 21 percent of the world’s global gross domestic product.

C40 member cities have a total population of more than 300 million and produce 12 percent of global greenhouse gases and 21 percent of global economic activity. Of the 42 cities that participated in the research, more than half have adopted emissions-reduction targets, and nearly two-thirds have taken steps to address climate change.

Nearly half reported that they were already dealing with the effects of climate change, including rising sea levels and higher average temperatures.

The cities reported more than 4,700 specific actions they have taken in the last five years to reduce emissions or adapt to climate change. Among those are converting buses to running on natural gas or hybrid-electric systems, recovering organic waste from landfills, retrofitting public buildings to make them more energy efficient and switching to less energy-intensive street and traffic lights.

“Some actions are quite comprehensive,” Mr. Bloomberg said. “Many others are seemingly more modest, although as mayors we all recognize that large victories almost always result from many small steps.”

Still, he added, “there’s a great deal more that we can do.”

Mr. Clinton, in discussing ways to reduce climate-altering gases, highlighted the need to curb landfill and animal waste emissions to control methane gas.

“The world could push back for 20 years the most destructive consequences of climate change and give us 20 more years to figure out what to do with carbon if we could make a dramatic reduction in methane and black carbon, which is largely caused by the burning of charcoal and wood for food and the flaring of natural gas,” he said.

Mr. Clinton suggested that closing landfills and capturing methane as a power source “would solve a public health problem, give massive amounts of land back to cities, you would put huge numbers of people back to work. The financing has not been available for these things because they are looked at as eyesores, not gold mines.”

Mr. Bloomberg took a swipe at federal lawmakers for dragging their feet on addressing climate change.

“Mayors can’t just talk about goals for the year 2050, which some congressmen in the United States want to set as a goal,” he said. “Cities are where you deliver services. Federal governments and state governments sit around talking and passing laws or recommendations that don’t have any teeth.

Vietnam tells state firms to sell dollars

inflation has hit 20 per cent and rising, the trade deficit is widening and the first signs of financial distress are appearing in the real estate sector. But the worst of Vietnam’s latest bout of macro-economic instability is behind it, according to the World Bank.

At a briefing in Hanoi on Thursday, Deepak Mishra, the World Bank’s lead economist in Vietnam, argued that the country was now “on a declining path of instability”.

The World Bank, which has around $8bn of outstanding loans in Vietnam, argued that confidence was returning thanks to the successful (thus far) implementation of the government’s crisis-busting package of monetary and fiscal tightening and anti-dollarisation measures, known as Resolution 11.

For the first time in 37 months, US dollars are being sold by banks for less dong (Vietnam’s currency) than the official exchange rate set by the central bank, Mishra noted. And spreads on Vietnam’s sovereign bonds have narrowed to below emerging market averages.

So far, so good. But, given Vietnam’s reputation for what one analyst previously called “whack-a-mole” economic policy, the key question about Resolution 11, which was introduced in February, has always been whether the government will stay the course.

With prices soaring, Vietnamese householders are unwilling to give up their extensive personal holdings of dollars, which they see as a safe-haven. This has forced authorities to turn to the extensive reserves held by some government-controlled firms in a bid to boost the State Bank of Vietnam's coffers, Long said.
"This is really a serious issue in Vietnam now," he said.
Central bank reserves can be used to support a weak currency.
Vietnam has been spending more on imports than it earns from exports, with the trade deficit reaching about $6.6 billion in the first five months of the year, up 23 percent from the same period of 2010.
In February Vietnam announced a 9.3 percent devaluation of the dong, which is good for exports but has also driven up imports costs.
Economists say the central bank wants to avoid further devaluation.
Long said the exact amount of Vietnam's foreign exchange reserves is a secret but it could be as low as about $10-15 billion, which is below the ideal range of about $20 billion to $25 billion.
State firms typically buy and sell foreign exchange at the official rate, which on Thursday was 20,638 dong to the dollar, against up to 20,650 on the black market.
World Bank officials said Thursday the official and unofficial rate gap has narrowed, in one sign that government measures are helping to restore economic stability.
But the Hanoi Young Business Association said in a report last week that workers, consumers and companies are "losing confidence in the home currency and existing monetary, foreign exchange and banking policies."
Some state firms have already been selling their dollars so it was unclear what additional benefit would accrue from the central bank's directive, said Deepak Mishra, the World Bank's lead economist in Vietnam.
Similar efforts in the past were not strictly implemented and led to only short-term results, he said.
There has been a "biased allocation of funds to inefficient state-owned conglomerates," the Hanoi Young Business Association said.
Problems at state-owned firms were dramatically illustrated at shipbuilder Vinashin, which government inspectors accused of "rampant and inefficient investment" that left debts of about $4 billion at the end of 2009.
Lao Dong newspaper reported the inspectors' findings on Thursday.
It said that since 2006 Vinashin had signed 85 contracts worth 58,224 billion dong ($2.8 billion) but fulfilled only 15 of them.