Annual Report

Highlights from Financial Year 2013 July 1, 2012 – July 30, 2013

Nordic-Baltic Constituency Office to the Board of the World Bank

September 2013

Foreword The past year at the World Bank Group has been characterized by change, following the election of President Jim Kim in July 2012. He initiated a process of defining ambitious corporate goals and formulating a strategy to deliver on them. During the Annual Meetings in 2012 President Kim received support from Governors for acceleration in progress towards the Bank’s core mission of eradicating poverty. At the Spring Meetings in 2013 two concrete goals were presented and endorsed: (i) end extreme poverty by reducing the number of people living on less than $1.25 a day to 3 percent by 2030; and (ii) promote shared prosperity by fostering income growth for the bottom 40% in every country. These goals are to be attained in an environmentally, socially and economically sustainable manner. Based on the twin goals and sustainability, the Bank commenced the formulation of an overall WBG Strategy that is to be presented to Governors endorsement at the Annual Meetings 2013. In parallel, a Change Process was initiated to provide the institutional support for the Strategy and to make the WBG more agile, more effective, better able to serve its clients and focused on results. A financial strategy based on the principles of financial sustainability and improved WBG efficiency will be finalized in the next stage. A reform of the Bank’s investment lending policies was carried out as one important element of increasing focus on results and solutions as well as reducing bureaucracy. Two other key processes initiated are reviews of the Bank’s safeguards and procurement policies. These reviews are expected to improve efficiency and effectiveness, accountability and results of the Bank’s engagement with clients. This year’s World Development Report (WDR) by the Bank – ”Managing Risk for Development (WDR 2014)” - will be released in advance of the Annual Meetings in October 2013. The main message of the report is that we should not reject changes that bring about opportunities but also risks. Instead we should prepare for them. Managing risks responsibly and effectively has the potential to help people in developing countries achieve security and progress. In November 2012, the WBG semiannual report on climate change gave an alarming message that risks will fall disproportionately on developing countries, should average global temperatures increase by 4%. In July 2013, the Board approved a new principles-based energy strategy focused on access to energy and sustainable energy. Improving and increasing the World Bank’s assistance to Fragile and Conflict-affected States has been high on the agenda in recent years. Last year both WBG private sector agencies– IFC and MIGA - developed special strategies and facilities to address enabling environment for business and to support private sector lead growth and job creation in FCS . Balance of the financial commitments of the different WBG agencies shifted during the last year. IFC’s total annual new commitments reached a record high of $24.9 bn in FY13, IDA with commitments reached USD 16.3 bn and new IBRD lending in FY2013 was at the pre-crisis level of USD 15.2 bn. Finally, even the Nordic-Baltic Office experienced change, with Executive Director Anna Brandt transferring her responsibilities to me in July 2013. On behalf of the NBO I would like to thank Anna for her valuable work during the past four years. On my own behalf I would like to thank all colleagues for a warm welcome. With such a committed team both at the NBO and in our capitals I am sure we will continue to make a strong and useful contribution to the work of the WBG. Satu Santala Executive Director for Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, Sweden

Contents

1. The World Bank Group………………………………………………………………………………………………………………………………..….1 2. The Change Process…………………………………………………………………………………………………………………………………..…...1

3. Toward a Sustainable Energy Future for All…………………………………………………………………………………………….……...3 4. Managing Risks for Development – World Development Report 2014…………………………………………………..……….4 5. Gender Equality and Gender Mainstreaming……………………………………………………………………………………………………4

6. The Bank’s Support to Africa…………………………………………………………………………………………………………………………….5 7. Fragile and Conflict Affected States: Doing Things Differently and Improving Effectiveness……………………….……6

8. IDA 17 Replenishment………………………………………………………………………………………………………………………………………7

9. IFC – New Leadership, Taking on the Most Difficult Market……………………………………………………………………………..8 10. MIGA – Expanding in Frontier Markets……………………………………………………………………………………………………….……8

11. Reforms to improve effectiveness, accountability and results…………………………………………………………………………9 11.1. Investment Lending Instrument Reform………………………………………………………………………………………………………..9 11.2. Bank’s Safeguard Review…………………………………………………………………………………………………………………………….…9 11.3. Bank’s Procurement Review……………………………………………………………………………………………………………………….10 12. Financial Issues………………………………………………………………………………………………………………………………………………11 12.1. IBRD and IDA………………………………………………………………………………………………………………………………..……………..11 12.2. IFC………………………………………………………………………………………………………………………………………………………………..11 12.3. MIGA………………………………………………………………………………………………………………………………………………………..….12 13. Important Knowledge Products………………………………………………………………………………………………………………………12 13.1. Turn Down the Heat: Why a 4°C Warmer World Must be Avoided……………………………………………………………..12 13.2. Doing Business Report…………………………………………………………………………………………………………………………….…..13 13.3. Global Monitoring Report 2013 – Rural-Urban Dynamics and the MDGs………………………………………………..…..13

Boxes • Box 1. Senior Level Appointments in FY13…………………………………………………………………………………………………………………………………………….2 • Box 2. Changes at the Senior Management Level………………………………………………………………………………………………………………………………….2 • Box 3. Implementation of WBG Integration of the Corporate Support Functions………………………………………………………………………………….3 • Box 4. MENA – Supporting Arab Transition Countries……………………………………………………………………………………………………………………………6 • Box 5. Changes in Access to Information Policy……………………………………………………………………………………………………………………………………10

Annexes A. The World Bank and the Nordic-Baltic Office at a Glance B. World Bank – Selected Financial Data for Financial Year 2013 C. IFC and MIGA - Selected Financial Date for Financial Year 2013

D. Regional Breakdown of New Commitments and Disbursements, World Bank, Fin. Year 2013 E. Results of World Bank Operations, Extracts from Corporate Scorecard F. Staff from Nordic and Baltic Countries in World Bank Group G. Procurement - Nordic and Baltic Countries

Abbreviations

AFR World Bank Africa Department/Region AMC Asset Management Company CAS Country Assistance Strategy CIF Climate Investment Funds CODE Board Committee on Development Effectiveness CPF Carbon Partnership Facility CSC Corporate Score Card CTF Clean Technology Fund DPL Development Policy Lending EAP World Bank East Asia Pacific Department/Region ECA World Bank Europe and Central Asia Department/Region ECOSOC United Nations Economic and Social Council FCS Fragile and Conflict-Affected States FIP Forest Investment Program FY Financial Year of the World Bank Group (1 July – 30 June) GAFSP Global Agriculture and Food Security Program GFRP Global Food Price Crisis Response Program GAP Gender Action Plan GCI General Capital Increase IBRD International Bank for Reconstruction and Development IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation IFI International Financial Institution ISN Interim Strategy Note IMF International Monetary Fund LAC World Bank Latin America and Caribbean Department/Region LIC MENA

Low Income Countries World Bank Middle East and North Africa Department/Region

MDB Multilateral Development Bank MDG Millennium Development Goals MDTF Multi Donor Trust Fund MIC Middle-Income Countries MIGA Multilateral Investment Guarantee Agency NBC Nordic-Baltic Constituency ODA Official Development Aid OECD Organization for Economic Cooperation and Development RE/EE Renewable Energy/Energy Efficiency REDD Reducing Emissions from Deforestation and Forest Degradation RSR Rapid Social Response SAR World Bank South Asia Department/Region SDN Sustainable Development Network SDPL Special Development Policy Loan SREP Scaling-up Renewable Energy Program TFMF Trust Fund Management Framework UN United Nations UNFCCC United Nations Framework Convention on Climate Change WAVES Wealth Accounting and Valuation of Ecosystem Services WBG World Bank Group

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1. The World Bank Group Strategy A core activity in FY13 was the formulation of a draft for the new corporate strategy for the whole World Bank Group (WBG). During the Annual meetings 2012 in Tokyo, Governors supported President Kim’s view that the Bank needs to further accelerate progress towards the Bank’s core mission of eradicating poverty and boosting shared prosperity. They agreed that the Bank needs to develop an overall strategy that focuses on impact, provides evidence-based assistance with integrated development solutions to its member countries, and promotes global public goods. To facilitate this, Governors supported a shift to focus on results and implementation, backed by HR reforms and stronger leverage of WBG synergies. The first priority, to identify overall corporate goals, was achieved at the WBG’s 2013 Spring Meetings. There, the Development Committee endorsed WBG action to: • end extreme poverty: reduce the percentage of people living on less than $1.25 a day to 3 percent by 2030;

and • promote shared prosperity by fostering income growth for the bottom 40% in every country. Ending extreme poverty and promoting shared prosperity must be achieved in an environmentally, socially and economically sustainable manner. A line of sight must be maintained between WBG activities and these ambitious goals. Governors at the 2013 Spring Meetings made clear that they expected these goals to be yardsticks for a more selective and results-oriented approach by the WBG. Therefore, from the Spring Meetings to the Annual Meetings 2013, work focused on formulating the necessary strategic framework. The process of formulating the strategy involved extensive staff input as well as Board engagement. The Strategy will be presented at the AMs 2013. Several events were organized in FY13 to assist in formulating the Strategy and to provide input for the Change Process: a Mirror Workshop in October 2012, a Leadership Forum in November 2012 and extensive interaction with field offices, “Follow the Sun” events, in January and June 2013. There was a strong willingness to engage staff both at Headquarter and field level to provide inputs. The Board had their first formal engagements when the first contours of the Strategy were formulated in June/July 2013. While the Strategy will be presented at the AM 2013 its operationalization is expected to be an ongoing process. The Nordic Baltic Office was strongly engaged in shaping the Strategy. The Constituency advocated the view that the Strategy should be implemented in an economically, socially and environmental sustainable manner and be carefully monitored. Environmental sustainability and gender equality must be integrated throughout the Strategy. Through Board discussions and various meetings with Senior Management our Constituency has influenced the way in which these issues as well as financial sustainability and efficient implementation have been included in the draft Strategy. 2. The Change Process In parallel to the formulation of the WBG Strategy a Change Process was initiated to provide the institutional support for the coming Strategy. In July 2012 President Kim initiated a change management process to make the WBG more agile, more effective, and better able to serve its clients. A diagnostic phase began in October 2012 and culminated in a large interaction with field offices, “Follow the Sun” event, in January 2013 – online video connection with the staff from all world regions to discuss changes needed in the organization in order it to become more relevant to the changing needs of its clients.

The Change Process responded to feedback on how and where the WBG should change. Based on feedback from staff, clients and stakeholders Management identified in February 2013 five priority areas: 1) Strategic focus; 2) Knowledge and Solutions; 3) Client Impact and Results, Accountability and Risk; 4) Leadership, People and

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Talent; and 5) Global Footprint. Change teams were identified for each area and they submitted their suggestions to Management in July 2013. Senior Management endorsed some 43 specific initiatives which would be developed over the next couple of years ranging from a new Systematic Country Diagnostic and Country Partnership Framework, over the establishment of Global Practices to improved HR performance mechanisms. The process should lead to a change in culture; driven by approaches like ‘the Science of Delivery’ and becoming a ‘Solutions Bank’. It is widely acknowledged that in the way ahead many of the proposals will require a radical change in the operational approach WBG takes. Better, and "smarter", risk management is one example. Changing from a culture of lending to a culture of results is another. The principle is that the WBG should be better to respond to clients’ needs, deliver solutions, making sure that the WBG get the right people in the right place at the right time, using the right systems. The Nordic Baltic Office has supported this change process and emphasized the importance of focusing on adequate results management systems and coherent and integral incentive systems. Box 1: Senior level appointments in FY13 Mr. Kaushik Basu was appointed as the Chief Economist and Senior Vice President on September 5, 2012. Basu, an Indian national has served as Chief Economic Adviser of the Government of India, Ministry of Finance. He also served as Chairman of Cornell’s Department of Economics and Director of Cornell’s Center for Analytic Economics and headed the Program on Comparative Economic Development. Mr. Bertrand Badre was appointed as WBG Managing Director for Finance and CFO in March 2013. Mr. Badre, a French national, served as Group Chief Financial Officer at Société Générale, and was previously a CFO of Crédit Agricole SA, Managing Director of Lazard and Advisor to President Chirac. The CFO position was elevated to Managing Director and is responsible for all internal financial functions and the General Services Department. Mrs. Keiko Honda was appointed Executive VP of the Multilateral Investment Guarantee Agency (MIGA) on July 15, 2013. Mrs Honda, Japanese national, the 6th head of MIGA in it 25 years, was a Director of McKinsey & Company She has extensive experience within global organizations—both private and public and also served on a Japanese government committees including the Council of Regulatory Reform. Mr. Jin-Yong Cai, a Chinese national with more than 20 years of experience in financial services was appointed Executive Vice President and CEO of IFC on August 20, 2013. Jin-Yong served as Participating Managing Director in Goldman Sachs Group and Chief Executive of Goldman Sachs Gao Hua.

Box 2: Changes at the Senior Management Level At the end of 2012 a World Bank Group Senior Management Team (SMT) to lead the organization was established. The members include: the WBG President, the Executive Vice President (EVP) of the IFC, the EVP of MIGA, the WB’s Managing Directors (MDs), Senior Vice President (SVP), the WB Chief Economist, the Senior VP for Change Management, the Senior VP and WBG General Counsel, and the WBG Corporate Secretary. Realignment of Managing Directors’ Responsibilities MD Mahmoud Mohieldin was made Special Envoy to coordinate the WBG agenda on MDGs and the Post-2015 process. He also coordinates WBG’s efforts to strengthen partnerships with multilateral development institutions and the G20, and leads WBG work on long-term finance and financial inclusion.

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MD Caroline Anstey’s portfolio included WBG-wide responsibilities for HR, IMT, and EXT/ IFC Corporate Relations, and she led the work to deepen synergies across the WBG and policy work through OPCS. To implement the change agenda, and address the areas critical to enhance the Bank’s effectiveness, the position of Senior Vice President for Change Management was created and Pamela Cox, then VP for East Asia Pacific (EAP) took the position. She was responsible for the entire change process and coordinated and sequencing and monitoring of all change initiatives; as well as the overall internal and external communications on the change agenda. In July 2013 it was announced that MD Caroline Anstey and SVP Pamela Cox will leave the Bank after the Annual Meetings 2013. From August 1, 2013 responsibility for WBG Strategy and Change process is transferred to Sanjay Prahdan. His position was changed from Vice President World Bank Institute, to VP Change, Knowledge and Learning. Managing Director Sri Mulyani Indrawati takes the responsibility of Chief Operating Officer. She is responsible for the matrix structure of thematic and regional entities; she will carry forward the formation of the Global Practices to replace the current organizational structure. OPCS is moved to report directly to the President. Box 3: Implementation of the WBG Integration of the Corporate Support Function

A new WBG Integrated Services (WBGIS) became effective July 1, 2013. It integrates three critical corporate support functions across the Bank Group: external affairs, human resources, and information technology. The purpose is to deepen WBG synergies by integrating the corporate support functions and thereby improving delivery to clients in a coordinated and effective manner. As a World Bank Group entity, WBGIS will provide critical services across the Bank Group and will support the forthcoming WBG Strategy. WBGIS will house the following integrated Vice Presidential Units – WBG External and Corporate Relations (ECR); WBG Human Resources (HR); and WBG Information and Technology Solutions (ITS). WBGIS will be launched on July 1, 2013 beginning with the integration of IFC and IBRD teams into the new ITS and ECR Vice Presidencies. HR integration becomes effective October 1, 2013, with staff joining the new organization as WBG staff on January 1, 2014.

3. Toward a Sustainable Energy Future for All In July 2013 the Board endorsed Toward a Sustainable Energy Future for All – Directions for the WBG’s Energy Sector – a paper setting out a principles based energy strategy for the WBG, focused on access to energy and sustainable energy. The Directions Paper is consistent with the WBG overarching goals of reducing extreme poverty to no more that 3% by 2030 and boosting shared prosperity in a sustainable way.

The energy specific goals were set out in the Sustainable Energy for All initiative for 2030, from which this paper is derived. The aims are to achieve universal access to modern energy, to double the rate of energy efficiency improvement globally and to double the share of renewable energy in the worldwide energy production.

The WBG approach to energy will be long-term and system-wide in order to enable governments to manage resources in an integrated way and to address developing countries needs for energy supply and demand simultaneously. The WBG will promote regional integration to develop cross-border energy markets delivering reliable and affordable energy.

Other guiding principles identified in the paper include an emphasis on improving the financial, operational, and institutional environment for the energy sector in countries to help stimulate private sector investment, and consulting with affected communities and civil society organizations, as well as industry. The WBG will only engage where it has a comparative advantage.

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The WBG will increase support for hydropower projects and intensify global advocacy. This includes encouraging developed countries and large emerging economies to lead efforts on pricing carbon, moving new technologies and other innovations to markets, and deploying them at scale.

The WBG will provide financial support for new greenfield coal power generation projects only in rare circumstances, such as meeting basic energy needs in countries with no feasible alternatives. It will also scale up the development of national and regional markets for natural gas, the lowest carbon intensive fossil fuel. Currently more than 84% of WBG lending for energy generation is in renewables, with the remaining 16% for natural gas projects.

Our constituency argued for supporting client countries to build climate resilient national and regional energy systems through sector-wide and regional approaches. We particularly welcomed the special focus on people who live in poverty in fragile and conflict-affected states to provide them energy services that are affordable, reliable and of good quality, as well as economically, environmentally and socially sustainable. 4. Managing Risks for Development – World Development Report 2014 The World Development Report (WDR) 2014 on Risk will be released in advance of the Annual Meetings in October 2013. The WDR Team has for over a year made extensive consultation and research in preparation of this report. A main message in the WDR is that in face of the turmoil of changes, the solution is not to reject the changes that bring opportunities as along with risks, but to prepare for them. Managing risks responsibly and effectively has the potential to bring about security and means of progress to people in developing countries and beyond. Risk management can be an important instrument for development and many opportunities and results are missed because necessary risks are not taken. The main messages of the WDR consist of four messages: 1. Growth and development can only occur by both confronting and managing risk and pursuing opportunity; 2. To increase resilience, it is essential to move from ad hoc responses to crisis to a systematic approach that balances preparation and coping with risk; 3. Identifying risks is not enough – the obstacles to risk management must also be identified, prioritized, and corrected through public and private action; 4. Risk management requires shared responsibility and action at all levels of society, from the household to the international community.

The WDR on Risk ties well in with the Change Process and new WBG Strategy. Two of the concrete proposals from the Change Process adopted by Management are directly linked to risk management and seek, on one hand, to instill and nurture a culture of informed risk management and, on the other, to establish an operational risk management framework focused on clients systems and results. The WDRs main message has moreover been reflected in the WBG Strategy. We were active in seeking an operational follow-up on the WDR including seeking to establish common definitions on risks and more emphasis on risk monitoring in project implementation. We also emphasized a coordinated approach with other international frameworks related to, among other things, disaster risk reduction. NBO has promoted the idea that the Change Process is a good opportunity to look at how flagship reports best support the comparative role of the Bank.

5. Gender Equality and Gender Mainstreaming The gender agenda is maintaining momentum and is continuously a World Bank Group priority. In September 2012, the Development Committee endorsed the annual report Update on the Implementation of the Gender Equality Agenda at the World Bank Group. In December 2012, the International Finance Corporation adopted gender as one of six cross-cutting strategic priorities, with an overarching goal of strengthening women’s roles as

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leaders, entrepreneurs, employees, consumers and stakeholders. In order to achieve this, IFC adopted a new gender strategy and instituted structural reforms to ensure enhanced attention and support for teams. Gender remains a special topic for IDA during the currently negotiated IDA-17 and will also be emphasized in the WBG Strategy. There is almost unanimity among the Board members on how to strengthen the gender agenda. There is also continued strong cooperation among ED offices to forward the agenda. The Nordic-Baltic Chair has played a central role in building this support and has continued to emphasize the importance of the WBG to mainstream gender across all operations and to focus on implementation and results. While a lot remains to be done, it is also clear that our work has had an impact on the level of attention that gender equality currently receives within the WBG. In terms of WBG corporate commitments the key targets have been met although there is a need for further deepening and greater attention to impacts and results on the ground. All country assistance strategies discussed in the past year were gender informed meaning that gender had been taken into account in at least one of the following: analysis, actions, and/or monitoring and evaluation. The total share of lending that was gender-informed rose from 83 to 98 percent between FY12 and FY13. Efforts to address lagging regions and sectors were ramped up and there has been a deepening of gender-informed lending across most regions and networks. As a follow up to the 2012 WDR on Gender Equality and Development the World Bank Group is preparing a report on Voice, Agency and Participation aimed to be finalized during FY14. It is expected that this report will contribute to strengthening women’s agency in the WBG work. During the year gender-based violence, a fairly new topic for the WBG, has been a theme that has featured more strongly within the WBG. 6. The Bank’s Support to Africa The Africa region receives the absolute largest amount of IDA funding compared to other regions. The total approved IDA and IBRD funding amounted to $7.4 billion in FY12 and $8.2 billion in FY 13 and is projected to amount to approximately $9.5 for FY14.The Great Lakes Region has been in focus during the year. On 22-24 of May 2013 World Bank President Jim Kim together with the UN Secretary General Bank Ki-moon visited the Democratic Republic of Congo (DRC), Rwanda and Uganda, pledging that the World Bank Group and the UN will work closely together towards peace, security and economic development for the Great Lakes region. During the visit President Jim Kim announced US$1 billion in proposed new funding to improve health, education, nutrition and other essential services, generate more cross-border trade, and fund hydroelectricity projects in support to DRC and the wider Great Lakes region. The proposed additional funding to the Great Lakes region includes $100 million for supporting agriculture and rural livelihoods for internally displaced people and refugees in the region; $180 million for improving infrastructure and border management along the Rwanda-DRC border; and $340 million for the Regional Rusumo Falls Hydroelectric Project which aims to benefit people in Burundi, Rwanda and Tanzania. In many African countries over the last few years, gains have not always translated into greater poverty reduction or gender equality. Therefore, in March 2013, two evidence-based initiatives were launched to step up the Africa region’s commitment to improve gender programs in Africa. The first is the Africa Gender Action Plan and the second is the Gender Innovation Lab. The Gender Innovation Lab is planned to bring scientific solutions through rigorous impact evaluations with the aim to transform how the WBG will identify development solutions and together the two initiatives will link scientific evidence to guide gender-related lending operations in Africa.

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Major reports and strategies produced during the year include a ten year strategy to support the development of social protection systems in Sub-Saharan Africa Managing Risk, Promoting Growth, Developing Systems for Social Protection in Africa (2012-2022). The Report Forest Trees and Woodlands in Africa argues that Africa’s forests have often been narrowly viewed as a source of export revenue from industrial timber and a global public good but that in reality, forests play broader roles as sources of jobs and livelihoods and as providers of ecosystem services of importance for increasing economic and social resilience including combating climate change. The report Africa Can Help Feed Africa: Removing barriers to regional trade in food staples, says that Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region. During the fiscal year the Nordic-Baltic Office took active part in the Board discussions on a number of new World Bank Country Assistance Strategies/Interim Strategy Notes, for example the ones for Benin, Burundi, the Democratic Republic of Congo, Ethiopia, Malawi, Mali, South Sudan, Zambia, Zimbabwe. Box 4: MENA – Supporting Arab Transition Countries Since early 2011 the World Bank Group has been working with Governments and Civil Society in the MENA Region to facilitate the momentous transition and expectations stemming from the changes in the region collectively referred to as ‘The Arab Spring’. Although belonging to the same region, individual country challenges are varied and specific to each. In some of the countries the situation remains highly fluid and uncertain, as demonstrated by ongoing developments. The Banks strategy for the Region, focusing on four main drivers, Job creation, Sustainable growth, Economic and Social Inclusion, and Strengthened Governance remains relevant despite the continuing turmoil. It has to, however, be reconciled with the high level of uncertainty and the huge expectations of both Governments and local populations. Flexibility and acceptance of risk will remain key in the execution of programs and assistance strategies. NBO has urged the Bank to complete full and comprehensive Risk Analyses with concrete mitigation measures, including improved flexibility in project design as well as improved contingency planning as part of overall engagement in the region. The Banks extensive engagement with Civil Society in the region should be particularly lauded, as it is an important part of prioritizing governance and inclusion. 7. Fragile and Conflict Affected States: Doing Things Differently and Improving

Effectiveness Improving and increasing the World Banks activities and assistance to Fragile and Conflict-affected States (FCSs) has been high on the agenda in recent years, in particular following the World Development Report 2011: Conflict, Security, and Development. Operationalization of the report recommendations has inspired the Bank to do things differently in FCSs and enhance effectiveness of the work. This has led to overall performance gains of the Banks FCS Portfolio. In order to further enhance these efforts, FCSs is a special theme in the current IDA-17 round like it was in the previous one. The establishment of the Nairobi Hub in 2012 to better help countries in conflict has had positive effects as well, with the hub supporting FCSs in various ways through analytics and flow of knowledge. Enhancing effectiveness is an important part of the ongoing change process to implement the new World Bank Group strategy.

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The implementation of WB reforms related to FCSs is being tracked in five key areas : 1) Reform of Human Resources policies and practices, including incentivizing staff work in FCSs; 2) More agile Bank policies to enable greater flexibility and speed in the implementation of operations in FCS, including reform of investment lending and reviewing procurement processes; 3) Enhance FCS financing to reduce poverty and support sustained institutional reform, in particular through a revised allocation framework in IDA; 4) Integrating WBG strategies to better address the drivers of conflict and fragility and build on the synergies among IDA, IFC and MIGA, including through fragility analysis and the development of joint business plans; and by 5) Building a community of practice to encourage learning, both within the Bank and with outside actors. Based on the analysis of the progress the monitoring will be deepened if necessary.

Last year both WBG organizations working with the private sector continued to increase their focus on FCSs: IFC has created the special FCSs initiative in its’ budget and, in addition, set the aim that investments in FCS would increase by at least 50% above FY12 levels by FY16. MIGA has also establishes the Conflict Affected and Fragile Economies Facility.

8. IDA17 Replenishment The financing for the International Development Association (IDA) is secured through three-year replenishments. The current round of replenishment negotiations is the 17th since the founding of IDA and is particularly challenging in light of the current global economic environment. At the same time, a successful replenishment is vital, both to maintain momentum for IDAs and IDA client country achievements and to meet and mitigate the challenges stemming in part from the challenging global economic environment. Negotiations started in Paris in March of 2013 and continued in Nicaragua in the beginning of July. The overarching theme of the IDA17 replenishment, “Maximizing Development Impact”, underscores IDA’s role in supporting the poorest countries in the world in achieving the World Bank Groups twin goals of ending extreme poverty and boosting shared prosperity in a sustainable manner. To achieve these goals IDA needs to be sufficiently agile and flexible to be able to respond to a rapidly changing global landscape and leverage its resources to meet increasing and varying demands. In addition to the overarching theme, IDA17 has four special themes. Three (Gender, Climate Change and Fragile and Conflict-affected States) are continued from IDA16 as they require continued emphasis, scale-up, integration into programming and follow-up to implementation of agreed measures. A new IDA special theme of Inclusive Growth has been agreed to as well, focusing i.a. on jobs, financial inclusion and natural resource wealth management, emphasizing the need to identify and support country specific strategies and solutions. Particular challenges and opportunities for the future of IDA arise from the financing requirements and the expected graduation of several IDA countries, including large countries with a significant proportion of poor provide. Provisions may thus need to be made for transitional support to some graduating countries and the possible introduction of concessional partner loans as a financing modality of IDA should also be linked to the exceptional needs of these major graduations. This transitional support will need to be developed in the context of the World Bank Group as a whole, in particular between IDA and IBRD. The same applies to the overarching theme and the special themes, thus the result of the IDA17 Replenishment will need to be closely aligned with the evolving new Strategy for the World Bank Group as a whole. IDA17 Replenishment negotiations will continue in Washington in October and are expected to conclude mid-December of 2013 in Moscow.

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9. IFC – New leadership, Taking on the Most Difficult Markets A big part of the WBG change and strategy process was elevating the significance of private sector development in the center stage of development, and improving the cooperation between IFC and the rest of the WBG. IFC’s strategy and budget process are recognized and IFC’s management has been adequately involved in the WBG change teams. IFC’s CEO, Jin-Yong Cai, had a first year on the job. According to his vision, WBG and IFC need to offer complex solutions to fundamental problems in less developed countries in key areas (infrastructure being one example) in order to remain relevant, going beyond project financing philosophy. IFC has to figure out its value proposal to the Middle Income countries soon, believes Mr Cai, adding that it has to more than offering financing. Infrastructure in Africa has emerged as the fastest growing business for IFC. For the first time, infrastructure investments in Africa for FY13 exceeded $ 1bn benchmark, concentrating mostly to the power sector. The same trend is expected to continue. IFC also started to systematically report on climate change and gender performance through its portfolio, implying that the topics have been internalized as horizontal operational priorities. Following its’ development mission, IFC has named involvement with Fragile and Conflict Affected Situations as a new priority. It has assigned two IFC directors (one for investments, one for advisory) to guide the mainstreaming of FCS into IFC’s operations, and has appointed a Global FCS Coordinator, supported by a small team. FCS special initiative budget has been created and includes support for knowledge management and critical operations, such as the additional expense of security for team missions to Iraq and funding for early scoping for investments in the SME sector in Côte d’Ivoire. IFC envisages that investments in FCS would increase by at least 50% above FY12 levels by FY16, and AS would continue to grow strongly with the aim of reaching over 20% of the total AS program by FY16 (up from 18% in FY12). 10. MIGA – Shift to more challenging markets The demand for MIGA’s services remains strong. As the economic growth in the high-income countries remains slow, investors are paying more attention to faster growing markets in developing countries. This drives a strong demand for MIGA’s risk-mitigation products. FY2013 was the third consecutive year of record high new issuance of guarantees as the gross new issuance reached the level of USD 2.8 bn. 82% of new guarantees are focused on at least one of the four priority areas identified in MIGA’s business strategy; IDA countries, conflict affected countries, complex projects, and South-South investments. Total gross and net exposures1 continued the growth trend by reaching the amount of USD 10.8 bn and USD 6.4 bn on June 30, 2013, compared to USD 10.3 bn and USD 6.3 bn respectively at the end of FY2012. MIGA’s portfolio is gradually shifting from the Europe and Central Asia towards more challenging markets in Sub-Saharan Africa (SSA). There has been growing activity in Sub-Saharan Africa (SSA), accounting for 54% of total new issuance. New operations launched in IDA-eligible countries represents 74% of financial volume of new issuance confirming the growing focus on the greater potential for development impact. Net exposure in the Europe and Central Asia region decreased by 7.9% during FY2013 as a number of contracts from MIGA’s FY2008-09 Financial Sector Initiative did mature. These developments also affects portfolio development sector wise as the share of the financial sector is decreasing and the amounts of guarantees in the industrial sector are growing.

1 The difference between gross and net exposure is the amount that is reinsured by MIGA.

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A new initiative has evolved to expand MIGA’s activities in fragile and conflict-affected states. The Board of MIGA approved the establishment of a Conflict Affected and Fragile Economies Facility. The facility will use donor contributions and guarantees to provide initial loss layer to insure investment projects in difficult contexts. Canada and Sweden have become the first partners contributing to the facility. 11. Reforms to improve effectiveness, accountability and results 11.1. Investment Lending Instrument Reform In October 2012, The Board approved a reform of the Investment Lending instrument as part of the Bank’s modernization agenda to improve development effectiveness. Earlier parts of the Investment Lending Reform agenda included among other things introducing a new Operational Risk Assessment Framework (ORAF) and enhancing implementation support. The Bank has consolidated the policies and procedures governing Investment Financing, the main lending vehicle available to clients to support specific investments ranging from infrastructure to social safety nets to judicial reform. Investment Finance was the Bank’s original financing instrument for making loans for post-World War II reconstruction in Europe in the late 1940s. Over time, the lending policy has evolved, resulting in a maze of 30-some policy and procedure statements that have now been consolidated into a single coherent policy. While largely a consolidation effort, the new policy introduces a few changes to better respond to client needs. One of the key changes is extending the rapid response option used when countries face natural disasters or conflict to small states and fragile countries. Another change relates to how economic analysis is done that will maintain the mandatory nature and rigor of the analysis while taking into account the country and sectoral considerations. Our constituency was strongly supportive to the reform, but also asked for and received assurances from Management that this review would not have unintended consequences for the Inspection Panel’s ability to assess harm from Bank applying OP/BPs inadequately, and Bank’s responsibility when it comes to undertake supervision and implementation support of projects. 11.2. Bank’s Safeguard Review The World Bank's environmental and social safeguard policies are a cornerstone of its support to sustainable poverty reduction. The objective of these policies is to prevent and mitigate undue harm to people and their environment in the development process. These policies provide guidelines for the Bank and borrower staffs in the identification, preparation, and implementation of programs and projects. After an evaluation of the safeguard policies in 2010, Management agreed to undertake a comprehensive update of the Bank’s safeguards policies. Two years later, Management presented an Approach Paper, which set aside 24 months for the review, and a timetable which divides the process into three phases: 1) a global review of good practices and lessons learned; 2) presentation of a draft integrated framework and 3) presentation of a second draft integrated framework and policy recommendations for approval. A central part of the review is the level to which the policies shall be extended to cover the following new and so-called emerging issues: Human Rights; Labor and Occupational Health and Safety; Gender; Disability; Free, Prior and Informed Consent of Indigenous Peoples; Land Tenure and Natural Resources and Climate Change. Phase one went ahead as planned with elaborate consultations until the summer of 2013 when it became more and more apparent that the ongoing Strategy-process in the WBG took precedent and would influence the direction the review would take. In June 2013, more than 40 proposals for changes were endorsed; among them

10

a decision to move to one set of policies and sustainability principles across the WBG. The argument was that the current lack of consistency and separate approaches (the Bank using Safeguards and IFC and MIGA using Performance Standards) confuses and frustrates clients, increases transaction costs, results in lost business opportunities by limiting the ability to work together and undermines WBG credibility. This delayed the process. The review team have now been given more time for consultations, analysis and formulation before a first full draft proposal for an Integrated Framework is to be presented for review and endorsement in early 2014. 11.3. Bank’s Procurement Review The World Bank’s procurement policy governs how clients acquire works, goods, and services under projects financed by the Bank, and the roles and responsibilities of the Bank and clients in that process. The Bank embarked on the first ever comprehensive review of its operational procurement policy and procedures in early 2012. The Phase I of the review was started by conducting wide external consultations. The external consultations took place between May 2012 and February 2013 with participation of more than 2,000 representatives of government, implementing agencies, Multilateral Development Banks, other development partners, civil society, private sector, academia, and public procurement experts from 96 countries. Consultations with the government authorities and representatives of the business community in our region took place in Copenhagen June 26, 2013. Based on the inputs from consultations and additional analysis carried out by the Bank, it is proposed to put in place a new framework to guide procurement in Bank operations. The framework would comprise a vision and guiding principles, a strategy for implementation, and amended operating policies and procedures that govern procurement in the Bank’s principal financing instrument, investment project finance. The ambition of the new framework is to suggest moving away from the traditional transaction approach for ensuring the compliance with the procurement policies to the approach driven by risk management that would involve close cooperation with clients in building their own procurement systems and capacity. The Phase II of the review will take place in the second half of 2013 and will continue throughout 2014. The specific proposals for amending the policy and procedures, as well as the new management structure will be put in place during the Phase II. Our constituency supports the proposed approach of taking a greater focus on clients’ institutions and systems, as the Bank's work or rather, its “procurement footprint”, is likely to be felt on a greater scale and be more sustainable. A greater role of the Bank in strengthening local practices is a positive direction, especially when openness and transparency of practices and processes is ensured. Our constituency is paying particular attention to the issues of sustainability (particularly labor rights) and value for money and is working to ensure that these themes are well considered during the review of the Bank’s Procurement Policy.

Box 5: Changes in Access to Information Policy In 2013 the Bank’s Access to Information Policy was reopened because it emerged that there was a technical mistake in the initial policy approved. It foresaw that for Board minutes of Executive Sessions and Restricted Executive Sessions, the proposed schedule provided for declassification of the records after 20 years, while at the same time the schedule for declassifying verbatim transcripts of all Board meetings (including Executive/Restricted) was only 10 years. The policy also ensured that the Board had a prerogative to determine the declassification schedule of information, which meant that any individual Executive Director could restrict the access. The proposed modification suggests that (i) documents of Regular Sessions will remain eligible for declassification 10 years after the date on the document in accordance with the AI Policy; (ii) the Board’s prerogative to restrict

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access to these transcripts and statements will only be effective up to a maximum of 20 years after the date on the document (iii) in the context of Board meetings or Board Committee meetings held as Executive Sessions and Restricted Executive Sessions, records will be eligible for declassification 20 years after the date on the document in accordance with the AI Policy; these transcripts and statements will not be subject to the Board’s authority to exercise a prerogative to restrict access. This change ensured more transparency in comparison to the previous version of the policy, as the Board's prerogative to determine the declassification schedule of information is now limited to 20 years. Importantly, Regular Sessions remain eligible for declassification in 10 years. 12. Financial Issues 12.1. IBRD and IDA Demand for IBRD lending is back to the pre-crisis level. New IBRD lending in FY2013 was at the level of USD 15.2 bn compared to USD 20.6 bn in FY2012. This brings the demand for IBRD loan products back to pre-crisis levels. In terms of regional distribution the highest share of new commitments in FY2013 went to Latin American and Caribbean region as in two previous years (see Annex B). The allocable net income remained stable. The FY13 allocable net income is USD 968 mn compared to USD 998 mn in FY12. This amount will, according to the proposal for the World Bank Governors’ decision at the 2012 Annual Meetings, be split into three portions: USD 621 mn will be transferred to IDA, USD 200 mn will be transferred to the Surplus Account, and a residual of USD 147 will be transferred to the General Reserve. Loan Loss Provisioning was affected by a non-accrual event. Effective July 16, 2013, all loans made to or guaranteed by one of client countries were placed into non-accrual status. As a result, IBRD had to make additional loan loss provisioning of USD 81 mn. The IBRD business and financial model will be revisited as part of the strategic reform process. In the near term, IBRD’s income will remain robust due to prudent investment strategies. However, the placements expire gradually and cannot be repeated in the current low interest rate environment. Thus, the medium to longer-term income projections are subject to higher uncertainty. Lending to five countries is capped by the so-called Single Borrower Limit that sets the maximum exposure to IBRD’s largest client countries (in terms of population and size of economy). It was agreed to sustain the maximum level of exposure at the level of USD 16.5 bn, except for India at USD 17.5 bn for FY2014. In the meantime it is envisaged to proceed with the review of approach taken. Our Constituency agrees that there is a need to review different elements of Bank’s business and financial model as part of the ongoing strategic reform process. The review should aim both at strengthening the Bank financially and to ensure the relevance of its services to the different client groups. In FY2013, IDA commitments reached USD 16.3 bn, compared to USD 14.8 bn last fiscal year. IDA reported a funding position of 79% (as of June 30, 2013). 12.2. IFC IFC’s business volumes in FY13 reached above the projected levels, indicating that there is both demand for IFC products and an ability to find investment opportunities. While in general the year marked a slowdown in IFC’s main operations markets, IFC’s results still outperformed the main Emerging Market Indexes. IFC’s total annual commitments reached a record high of $24,9 bn in FY13. Commitments from own account were $18,4 bn; mobilization amounted to $6,5 bn and the number of projects is at 388. 47% of the projects were assigned to IDA countries. IFC’s Advisory Services program with clients grew to $231 mn, of which 65% of work

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had been conducted in IDA countries. IFC’s Asset Management Company had by the end of FY $5,5 bn worth of assets under its management. IFC’s FY13 net income was $1.01 bn, down from $1,33 bn in FY12. Based on that and existing rules, IFC’s fell short in fulfilling its commitment to IDA 16, leaving $90 mn to be contributed from next year’s income. Coming years are likely to be challenging for IFC. Income expectations for the coming years are moderate. Expecting IFC to continue providing to IDA at the same levels of $1 bn is rather optimistic. 12.3. MIGA MIGA’s net premium income has grown; however, the gains are offset by an increase in reserves. FY2013 net premium income was USD 66.3 mn, which is a 10% increase from the previous year. MIGA issued USD 2,8 bn in guarantees in FY13, USD 0.1 bn more than in FY2012. However, the expansion of the business as well as shifts in the portfolio risk composition (e.g. increased activities in Fragile and Conflict-affected Situations and reduced activities in better rated economies) resulted in a record high increase in net reserves for claims (USD 56.7 mn in FY2013, compared to USD 37.3 mn in FY2012). This increase in net reserves, along with additional pension account expenses, offsets gains from growing operational income and as a result MIGA has to record a net loss of US$ 4.3 mn. The efficient use of MIGA’s capital allows for reaching more challenging markets. MIGA employs the concept of “economic capital” to measure its portfolio risk. The capital utilization is measured by the economic capital to operating capital ratio. By the end of FY2013 the ratio has reached 44%, compared to 41% at the end of FY2012. This signals more effective use of capital as the Agency expands its business.

13. Important Knowledge Products 13.1. Turn Down the Heat: Why a 4°C Warmer World Must be Avoided In the report “Turn Down the Heat: Climate Extremes, Regional Impacts, and the Case for Resilience,” launched in June 2013, scientists looked at the likely impacts on three vulnerable regions - Sub-Saharan Africa, South Asia, and South East Asia - if the world continues on its current trajectory and warms by 2 degrees Celsius over pre-industrial times by mid-century and continues to become 4°C warmer by 2100. The report is a result of contributions from a wide range of experts from across the globe. It has been written by a team from the Potsdam Institute for Climate Impact Research and Climate Analytics, was commissioned by the World Bank’s Global Expert Team for Climate Change Adaptation and received insightful comments from number of scientific peer reviewers. The report reveals how rising global temperatures are increasingly threatening the health and livelihoods of the most vulnerable populations. It builds on the previous report in the series, Turn Down the Heat: Why a 4°C World Must Be Avoided, which concluded that the world will likely warm by 4°C by the end of the century This latest report also describes the risks to agriculture and food security in sub-Saharan Africa; rise in sea-level, bleaching of coral reefs, and devastation of coastal areas in South East Asia; and fluctuating rain patterns and food production impacts in South Asia. The report, prepared by the Potsdam Institute of Climate Research and Climate Analytics, synthesizes the current peer-reviewed literature and supplements it with computer modeling, finding that future impacts across the regions are potentially devastating. The report helped pave the way for a more prominent role for science in the Doha Climate Change Conference-negotiations; it got 50 mn. social media mentions and a lot of coverage in media such as Financial Times and the Economist.

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The WBG’s also prepared a report on Adaptation to a Changing Climate in the Arab Countries, also released shortly before the Doha-conference. The report is the first using modeling and data to address climate change impacts throughout the Arab world. Strong local ownership with many local authors, and the critical outlooks, contributed to huge interest in the region. 13.2. Doing Business Report The Doing Business Report 2013 was published on October 2012. The report measures important factors for establishing, running and closing a small to medium size local business in 185 member states of the WBG. Our Nordic-Baltic Constituency countries were within the top 30 places with minor variations in rankings. Amongst European emerging economies Georgia has made substantial progress during recent years by reaching the ninth place in the ranking in 2013. Amongst African economies, Rwanda has been pioneering in terms of improving its ranking by 26.5% compared to 2013. 2013 was marked by the 10th anniversary of the Doing Business Report as well as by attempts to review the approach to the report to respond to criticism by some shareholders and CSOs. The critique was mainly pointing to adverse effects of aggregated country ranking for ease of doing business, the narrow focus of the report on the monitoring of a limited set of reforms, the lack of correlation between findings in the report and inflows of foreign direct investments, the narrow sample of data used, as well some methodological issues. The President established an Independent Expert Panel to Review the Doing Business Report. The Panel came up with a report in June 2013, and made a number of recommendations such as reviewing the approach to the aggregated country ranking, widening the data collection, and improving the methodology. One of the recommendations of the Panel was to bring the Doing Business Report in closer alignment with other development economics analytical work performed by the Bank. Following the recommendations, the President assigned the Bank’s Chief Economist to take the lead on further reforms of the report and on preparations of the next editions. Meanwhile, it was decided that the Doing Business Report 2014 will be prepared according current methodology and published as planed in October 2013. While our Constituency recognizes the merits of reviewing the tool, we remain a strong advocate of the Doing Business Report. We believe that with the analysis and country rankings, it works as a guide and benchmarking instrument for many governments of countries around the world, and for smaller economies in particular. The report, and the country rankings, are strong motivators for governments because it leads to international public recognition for the reforms they have done to improve business regulations. Even more importantly, it attracts the attention of foreign investors. The Doing Business Report is an important instrument for the World Bank Group to promote private sector development and serves as an important tool in the number of country engagements. The Report owned by the World Bank Group and hence it is multilateral and impartial. We should not underestimate the importance of the World Bank Group and its convening power when initiating a globally recognized assessment of business environments. This is one flagship product that makes the World Bank Group’s efforts to involve the private sector in dealing with development challenges visible. 13.3. Global Monitoring Report 2013 – Rural-Urban Dynamics and the MDGs The Global Monitoring Report 2013, prepared jointly by the World Bank and the IMF, with consultations and collaborations with regional development banks and other multilateral partners, was released on 2 May 2013. The report examines rural-urban disparities in the achievement of the MDGs and how urbanization, if managed well, can contribute to the attainment of these goals. The report calls for an integrated strategy to better manage the planning-financing formula of urbanization. While the report provides information about the differences in progress toward the MDGs across geographical

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areas and recognizes that urban populations are better off than their rural brethren, it is also clear that unregulated urbanization can cause migrants and urban poor to end up in slums where fulfillment of the MDGs lags behind. It also argues that the sequencing of actions is tailored to local conditions when it comes to the degree of urbanization and rural-urban differences in MDG outcomes. The rural-urban spectrum ranges from small towns to large cities. The general experience is that poverty is lowest in the largest cities and considerably higher in smaller towns. The MDGs reflect the basic needs of all citizens, and governments should aim to meet them fully in both urban and rural areas. However, resources are scarce, so priorities must be set and trade-offs made. On progress towards the MDGs the world is reported to have met four global MDG targets. New estimates confirm the 2012 reports that MDG 1.a Reducing the $1.25-a-day poverty rate (2005 purchasing power parity) was reached in 2010, falling below half of its 1990 value. The world also met part of MDG 7.c Halving the proportion of people without safe access to drinking water, in 2010. MDG 7.d To improve significantly the lives of at least 100 million slum dwellers by 2020, was also achieved. Finally, the first part of MDG 3.a Eliminate gender disparity in primary education, was accomplished in 2010. Global progress on the full MDG 3.a Eliminate gender disparity in primary and secondary education is close to being on track.

Annex A: The World Bank and the Nordic-Baltic Office at a Glance

The World Bank was established in 1944 primarily to help rebuild Europe after the Second World War. Today, the Bank’s mission has shifted to help reduce poverty in the developing world through economic and social development and reconstruction. The Bank is formally one of the UN specialized agencies, entirely with its own autonomous financing and decision-making, with 188 member countries as shareholders. Along with the rest of the development community, the World Bank focuses its efforts on supporting countries in the challenge to reach the Millennium Development Goals (MDGs) by 2015. The World Bank Group consists of five separate organizations: IBRD and IDA provide low-interest loans, interest-free credit, and grants to developing country governments; IFC promotes private sector investment by co-investing with equity and loans to companies in developing countries as well as providing advisory services, both to companies and the public sector; MIGA provides guarantees against political risk to investors in and lenders to developing countries; and ICSID settles investment disputes between foreign investors and their host countries.2 The World Bank's highest decision making body is its Board of Governors, representing member countries as government shareholders. The Governors, generally finance and development ministers from all member countries, meet once a year for an annual meeting, jointly with the International Monetary Fund (IMF) and twice a year at a 25 member Development Committee meeting providing political guidance for the Bank. The daily decision making is delegated from Governors/Ministers to 25 Executive Directors, representing one or several of the 188 shareholders in the Executive Board. The Nordic and Baltic countries are represented at the Board by one Executive Director (ED). The ED is assisted by the Nordic Baltic Office (NBO) where the following persons worked during the time covered by the report: Executive Director Anna Brandt (Sweden) until July 1, 2013, Satu Santala (Finland), after July 1, 2013 Alternate Executive Director Giedre Balcytyte (Lithuania) Senior Advisor Markus Sovala (Finland) Senior Advisor Anna Ferry (Sweden) until July 1, 2013, Paul Tharaldsen (Norway) after July 1, 2013 Senior Advisor Andzs Ubelis (Latvia) Advisor Peter Ellehoj (Denmark) Advisor Mart Kivine (Estonia) Advisor Fridrik Jonsson (Iceland) Advisor Sara Gustafsson (Sweden) from July 1, 2013 Sr Executive Assistant Betsy A. Barrientos Program Assistant Susan Giebel The Nordic Baltic Executive Director is a member of the Committee on Development Effectiveness (CODE). The Alternate Executive Director is the member of the Subcommittee on Development Effectiveness.

2 The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID).

Based on operating income 2.04% 2.77% 2.21% 1.59% 6.39% Based on net (loss) income (1.73) 2.44 (2.88) 8.35 3.97

qEquity-to-Loans ratio e 26.98 28.59 29.37 34.28 37.62

Annex B: World Bank – Selected Financial Data for Financial Year 2013

In millions of U.S. dollars, except ratio and return data which are in percentages Lending

2012

2011

2010

2009

2008

Commitments a $20,582 $26,737 $44,197 $ 32,911 $ 13,468 Gross disbursements b 19,777 21,879 28,855 18,565 10,490 Net disbursements b 7,798 7,994 17,230 8,345 (2,129)

Reported Basis

Income statement

Operating income c

$ 783

$1,023

$ 800

$ 572

$ 2,271 Board of Governors-approved transfers (650) (513) (839) (738) (740) Net (loss) income (676) 930 (1,077) 3,114 1,491

Balance sheet

Total assets $338,178 $314,211 $282,137 $277,008 $231,965 Net Investment Portfolio 35,119 30,324 36,114 38,210 23,008 Net loans outstanding 134,209 130,470 118,104 103,657 97,268 Borrowing portfolio d 133,075 122,501 119,775 103,568 88,284 Total equity 36,685 39,683 36,261 38,659 39,973

Performance Ratios

Return on equity

Fair Value Basis

Income statement

Net (loss) income e

$ (4,679)

$ 1,704

$ (870)

$ (225)

$ 1,135 Net (loss) income excluding Board of Governors-

approved transfers (4,029) 2,217 (31) 513 1,875

Balance sheet

Total assets $336,167 $313,188 $281,969 $275,269 $233,089 Net Investment Portfolio 35,119 30,324 36,114 38,210 23,008 Net loans outstanding 132,198 129,447 117,936 101,918 98,392 Borrowing portfolio d 133,073 122,482 119,761 103,550 90,828 Total equity 34,676 38,679 36,107 36,938 38,553

Performance Ratios

Return on equity Based on net (loss) income excluding Board of Governors-approved transfers (10.79)% 5.87% (0.09)% 1.46% 5.28%

Equity-to-Loans ratio 25.95 28.99 29.97 35.00 36.71

a. Commitments include guarantee commitments and guarantee facilities. b. Amounts include transactions with the International Finance Corporation (IFC), capitalized front-end fees and interest. c. Operating income is defined as Income before fair value adjustment on non-trading portfolios, net and Board of Governors- approved transfers. d. Net of derivatives. e. Fair value net income on a comprehensive basis comprises net income on a reported basis, additional fair value adjustment on the loan portfolio, and

changes in AOCI.

Annex C: IFC and MIGA – Selected Financial Data for Financial Year 2013

Annex D: Regional Breakdown of New Commitments and Disbursements, World Bank – Financial Year 2013

IBRD Commitments and Gross Disbursements

Annex E: Summary of the Corporate Scorecard

Annex F: Nordic and Baltic Staff in the WBG Staff Distribution by Organization

IBRD IFC MIGA GEF

Core Other* Temporary Core Other* Core Core Other* Total

Denmark 32 12 2 12 4 - 1 2 65 Estonia 3 - - 1 - - - - 4 Finland 18 7 1 5 - - - 3 34 Iceland 2 1 - 1 - - - - 4 Latvia 8 - 1 1 - 1 - - 11

Lithuania 5 1 3 2 - - - - 11 Norway 17 8 1 4 - - - - 30 Sweden 29 10 4 9 - 1 - 3 56

Grand Total 114 39 12 35 4 2 1 8 215

* Includes externally funded appointments, Junior Professional Associates (JPA), Special Assignments, and Staff Exchange Program participants

Staff Distribution by Grade Level Grades Denmark Estonia Finland Iceland Latvia Lithuania Norway Sweden Total GC-GD - - - - - 1 - 2 3

GE (eg Analyst) - - 1 1 - 1 2 2 7

GF (eg Economist/Specialist)

9 - 10 - 4 - 4 11 38

GG (eg Sr Economist/Specialist) 31 2 13 1 5 5 14 21 92

GH (eg Lead

Economist/Specialist) 19 2 6 1 1 - 6 9 44

GI (eg Manager, Director) 1 - 1 - - - - 2 4

GJ (eg Vice President) 1 - - - - - - 1 2

GK (eg Executive Vice President)

- - - - - - - - -

UC (eg externally funded, JPAs)

2 - 2 1 - 1 3 4 13

ETC/ETT 2 - 1 - 1 3 1 4 12

Grand Total 65 4 34 4 11 11 30 56 215

Grades GA-GD refer to administrative and office support positions with specialized functions in a given unit. GE-GK refer to professional-level positions responsible for a variety of operational tasks (e.g. participating as a full member of a multi-disciplinary team; undertaking assignments of project preparation, appraisal and supervision in field of expertise). ETT refers to Extended Term Temporary (ETT), who is hired at levels GA through GD for a minimum of 12 months. This term is renewable and is subject to a lifetime maximum of two years. ETC refers to Extended Term Consultant (ETC), who is hired at level GE and above for a minimum of 12 months. This term is renewable and is subject to a lifetime maximum of two years.

Consultant Services Civil Works GoodsDenmark $13,012,636 $32,006,678 $45,019,314 0.31%Estonia $282,604 $282,604 0.002%Finland $3,592,348 $96,863 $3,689,211 0.03%Lithuania $1,163,247 $10,655,067 $11,818,314 0.08%Latvia $184,120 $184,120 0.001%Norway $2,350,748 $2,350,748 0.02%Sweden $18,840,456 $21,616,451 $40,456,907 0.28%

Constituency Totals $39,426,159 $10,655,067 $53,719,992 $103,801,218 0.72% Bank-wide Total $1,643,915,931 $8,561,632,861 $4,285,434,917 $14,490,983,709Constituency % of Total 2.40% 0.12% 1.25%

Consultant Services Civil Works GoodsDenmark $20,169,518 $616,801 $11,353,113 $32,139,432 0.22%Estonia $771,060 $771,060 0.01%Finland $6,248,971 $2,826,521 $9,075,492 0.06%Lithuania $937,360 $951,018 $1,888,378 0.01%Latvia $223,920 $223,920 0.002%Norway $1,690,314 $770,074 $2,460,388 0.02%Sweden $5,783,876 $23,174,239 $12,546,214 $41,504,329 0.28%

Constituency Totals $35,825,019 $24,742,058 $27,495,922 $88,062,999 0.60%Bank-wide Total $1,606,011,608 $8,668,988,640 $4,331,538,134 $14,606,538,382Constituency % of Total 2.23% 0.29% 0.63%

Consultant Services Civil Works GoodsDenmark $10,041,024 $204,454,978 $4,893,661 $219,389,663 2.30%Estonia $281,469 $2,025,175 $2,306,644 0.024%Finland $3,972,816 $4,073,482 $8,046,298 0.08%Lithuania $109,347 $12,581,231 $1,614,967 $14,305,545 0.15%Latvia $880,217 $880,217 0.01%Norway $191,176 $2,085,396 $2,276,572 0.024%Sweden $11,092,915 $13,011,070 $24,103,985 0.25%

Constituency Totals $26,568,964 $230,047,279 $14,692,681 $271,308,924 2.84%Bank-wide Total $1,407,599,230 $6,403,369,922 $1,728,995,384 $9,539,964,536Constituency % of Total 1.89% 3.59% 0.85%

Fiscal Year 2013FY Total Percentage of

WB Total

Annex G: Nordic and Baltic Countries Procurement DataFiscal Years 2011-2013

Percentage of WB Total

Percentage of WB Total

FY Total

FY TotalFiscal Year 2012

Fiscal Year 2011

*Iceland was not awarded any major contracts during this period.These figures capture only contracts awarded above WB's prior review thresholds under IDA-IBRD investment lending operations. Therefore, the data in these reports should be used only as a proxy. Also note that the nationality of the fi rms considered in this reports indicate place of registration of the firm, which may or may not be the actual nationality of the firm. For instance, if Siemens (DK) wins a contract, then the database show it as a Danish award, although Siemens i s of course German.

Overall Results Fiscal Years 2011-2013 Constituency

Total Denmark Estonia Finland Lithuania Latvia Norway Sweden Country Total $296,548,409 $3,360,308 $20,811,001 $28,012,237 $1,288,257 $7,087,708 $106,065,221 $463,173,141 Average of WB Totals (%) 0.77% 0.009% 0.05% 0.07% 0.0033% 0.02% 0.27% 1.20%