News Service from House Harris

US: World Bank to help on infrastructure projects

WASHINGTON, April 25 AP - The World Bank says it will help poor countries struggling through the severest global economic crisis in decades by providing more than $US55 billion ($A76.99 billion) for roadbuilding and other infrastructure projects left in limbo because capital investment has dried up.

The initiatives announced by the bank on Saturday are expected to create jobs and lay the foundation for future economic growth and poverty reduction.

Assistance will be global, the bank said, but Africa is expected to see a large proportion of the investments, given the sizeable needs on the continent.

In launching the new initiatives, World Bank President Robert Zoellick said: "As developing countries are facing the trials of the global economic crisis, it is vitally important that economic stimulus packages in the developed world are accompanied by support for those who cannot afford multi-billion bailouts."

Zoellick's announcement came as the bank and its sister institution, the International Monetary Fund, were holding their spring meetings in Washington.

The bank's Infrastructure and Recovery and Assets Platform will provide $US45 billion ($A62.99 billion) of the $US55 billion ($A76.99 billion) total and the Infrastructure Crisis Facility (ICF), set up by the bank's private sector arm, will make $US10 billion ($A14.0 billion) available for lending.

Germany and France are founding partners of the ICF, with France contributing $US1.3 billion ($A1.82 billion) through its development bank Proparco and Germany supplying $US660 million ($A923.85 million) through its development bank KfW.

France's Finance Minister Christine Lagarde, who took part in Saturday's signing ceremony, said: "These public-private partnerships in the infrastructure sector are a key component not only of the immediate response to the crisis but also of long-term economic growth."

She said that in addition to providing funds France would also make available its "long-standing expertise" in infrastructure projects.

Germany's Development Minister Heidemarie Wieczorek-Zeul said: "As sources of funding dried up, infrastructure projects have been left high and dry. And yet they are needed as key elements of development. Services such as water, sanitation, energy, transport and telecommunications are vital in the fight against poverty."

The bank said the global financial crisis has depressed investment in infrastructure projects, particularly in developing countries. The total yearly financial gap for infrastructure investments, including maintenance, in developing countries could range from $US140 billion ($A195.97 billion) to $US270 billion ($A377.94 billion) depending on their economic growth rate.

Infrastructure projects are widely recognised as key to job creation and laying the groundwork for future productivity and growth.

Zoellick estimated that in Latin America, 200,000 to 500,000 jobs could be generated for every $US1 billion ($A1.4 billion) governments spend on road maintenance projects.

The initiative follows a tripling in lending to $US12 billion ($A16.8 billion) announced earlier in the week to support health, education and other safety net programs in poor countries. The goal of both World Bank efforts is to ensure "we don't repeat the mistakes of the past", Zoellick said at a news conference on Thursday.

During previous financial crises in the 1980s and 1990s, governments in developing countries were forced to cut spending on infrastructure and social programs, he said.