European Union Strategy for the Danube Region (EUSDR) -- A World Bank Perspective High-level Meeting on Financing Belgrade, September 27 th, 2010

Belgrade, May World Bank welcomes regional initiative and will endeavor to support Regional/ Trans-boundary programs tend to generate special benefits: Better prioritization of investments (eg. trade) Economies of scale (eg. power production) Addresses connectivity (eg. transport) Least-cost investments at regional scale Reduces negative externalities (downstream effects) Identifies win-win investments Allows to integrate protection and productive uses Builds mutual trust EU Strategy for the Danube Region 2

However, adds complexity (and implementation risk): At end of day, country must confirm priority (Parliament, MoF, Sector Ministry, …) and commit its resources for investment and for recurrent budgets Often mis-match between national and regional priorities (eg. wastewater vs. water supply; transport and navigation interests, etc.) Need to synchronize implementation time-line between countries From Strategy to Implementation Strategy Belgrade, May

EU Strategy for the Danube Region 2009 WB Independent Evaluation Report: benefits can be reached if program well prepared and managed WB can contribute experience, eg. from –Greater Mekong Sub-Region: road transport, hydropower, power trade, fisheries and nature, flood management, labor mobility –Nile Basin: hydropower, irrigated agriculture, ecosystems –E Africa: Zambezi hydro, Regional Telecoms Facility –S and C America: trade, rivers and aquifers, etc. Belgrade, May

WB Operational Experiences 1.Over past decade fiscal absorption capacity was low Finance is not limiting factor, implementation capacity is ! 2.Need more robust prioritization of investments –Across national budget, among sectors (eg. road vs. shipping) –Strategic action plan with high-priority next steps (not: dream list) 3.Need more investment realism bankable propositions –Cut costs, then cut them again –Rigorous economic and financial feasibility analysis –Proper safeguards: social and environmental –Procurement, designs, permits … adequate preparedness? –Financial and institutional sustainability – secure 100% O&M budget Belgrade, May

How could WB collaborate? 1.WB will be willing to collaborate at level of the initiative Will consider making available staff resources and TA 2.WB can bring comprehensive set of capacity building and knowledge products : –Policy analysis and advice, Public Expenditure Reviews –Multi-stakeholder Dialogue platforms –Management and investment strategies –Analysis on trade-offs between productive and protective investments (nature values) –Robust planning under climate change scenarios (eg. work with Sava and International Danube River Commissions) –Support for fiscal and administrative reform Belgrade, May

How could WB collaborate? 3.WB ready to consider how its finance can further support EUSDR investment program is agreed through 5-year Country Strategic Partnership with MoF in lead In most country programs, already substantial investment that would fit EUSDR Blend of grant and loan most effective WB is complementary to EIB and other financiers (eg. Roads packages in Serbia) Belgrade, May

How could WB collaborate? Strategic priorities 1.Support national development (based on CPS ) 2.Assist country to meet EU acquis or prepare for EU accession, e.g.: –Croatia, BiH: Establish Pay Agencies to receive agricultural funds –Croatia, BiH: Strengthening for Natura 2000 and Water Management –Bulgaria, Croatia: strengthen implementation capacity in selected sectors –FYR Macedonia, Croatia and others: prepare for Environmental Chapter (especially Water Framework Directive) –Romania: Functional Review of sectors Belgrade, May

How could WB collaborate? Strategic priorities 3.Make arrangements to help absorb Structural Funds and IPA funds, eg. –Poland: Odra Flood Protection ( ): 505M -- 1/3 CEB, 1/3 EU Cohesion funds, 1/3 WB funds –BiH: Sava Navigation, Neretva River Basin Mgmt –Serbia: IPA 2011 R&D and Innovation Project ; Multi-donor TF –Etc. 4.EUSDR offers new framework and opportunity to achieve this Belgrade, May

Thank you Hvala ! Belgrade, May