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Gov't Clears US$5.4 Bln WB Loan

The government has approved the World Bank's US$5.44 billion lending agenda for China for 2009-11 fiscal year, according to the National Development and Reform Commission (NDRC).

The bank may provide further support for the post-quake reconstruction in Sichuan province and surrounding regions, said a senior official of the Bank.

The World Bank lending package will cover 41 projects in the next three years, said an NDRC statement on Thursday. The bulk of the loans will go to the less developed central and western regions, which will take in 72 percent of the loans, according to the statement.

"We concur with China's strategy that more support would be needed for the western and central regions given the disparity of development between the coastal regions and these regions," said Elaine Sun, acting China country director of the World Bank.

"However, World Bank will continue to support projects with innovative ideas in the coastal regions," she told China Daily.

Urban construction and environmental projects will account for the largest proportion of the loans, or 31.4 percent. Energy efficiency projects will take 20 percent.

Since 2005, about 75 percent of World Bank projects have come with an environmental objective, Sun said. "In our view, the most severe domestic issue is resource scarcity and environmental degradation. This is the most obvious area for enhanced World Bank support."

One of the candidate projects, the Small Towns Project, is in Sichuan Province, which suffered the massive 8-magnitude earthquake in May. But Sun said it had been added to the plan last year and is not a new project proposed in response to the earthquake.

"World Bank has been working closely with NDRC and the Ministry of Finance on the potential support for post-quake reconstruction work," she said.

"We expect to receive some new project proposals from the government for World Bank's support to the reconstruction work in Sichuan, Gansu, and Shaanxi once the government has completed the reconstruction plan."

The Chinese government and World Bank have had annual discussions on three-year rolling lending program since the 1990s. The last one was held in May, covering the 2009-11 fiscal year (July 1, 2008 to June 30, 2011).

The agreement with the government during the 11th Five-Year Plan period (2006-10) is that World Bank should work on an annual lending program of US$1-1.5 billion, according to Sun.

"However, the size and timing of approval by the World Bank board for individual projects may change in the process of preparation of these projects," Sun said.

China and the World Bank may make necessary adjustments based on the pace of project preparation and final needs assessment, she added.

(China Daily July 25, 2008)

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