As a development institution, the World Bank supports two broad goals in South East Europe: (i) poverty reduction and (ii) economic and social development, the latter in support of the countries ambition to join the Europen Union. The central vehicle for supporting the national reform program of each country is the so-called Country Assistance Strategy (CAS). Based on an assessment of the country's priorities, past portfolio performance and creditworthiness, the CAS sets strategic priorities and determines the level and composition of financial and technical assistance that the Bank seeks to provide the country. The framework for poverty reduction and economic growth are the countries’ own Poverty Reduction Strategy Papers (PRSPs), developed by the government through a participatory consultation procedure.

In terms of financial assistance, over the period 1999-2005, the World Bank has been supporting the region through wide range of development projects, collectively amounting to approximately US $5.9 billion. These projects are directed towards a number of sectors, including: infrastructure and energy, private sector development, poverty reduction and economic management, social sectors, rural development and the environment.

Fig 1. World Bank Lending to South East Europe since 1999 (US$ Millions)

Fig 2. Lending Commitments of the World Bank's Active Portfolio in South East Europe by Sector as of June 2005 in US$ Millions
Total US $ 3.2 billion

In February 2004, the World Bank published a Regional Framework Paper (pdf, 5.4 MB). This paper complements an earlier paper on this subject 'The Road to Stability and Prosperity in South Eastern Europe' - which outlined a comprehensive approach to regional development and integration in South Eastern Europe - by providing a regional framework for the formulation of individual World Bank Group country assistance strategies (CAS), with the objective to ensure that World Bank programs have the greatest impact both at the country and regional level. Specifically, this paper identifies areas of activity, consistent with the CAS priorities and the World Bank's comparative advantage, where there exist cross-border externalities, economies of scale, or opportunities for " scaling up " successful interventions across borders, and thus where interventions may need to be coordinated across countries to fully realize their potential benefits. This paper also aims to identify opportunities to encourage regional cooperation within the ambit of World Bank activities. In fact, despite remarkable progress over the last few years, and somewhat greater country ownership of regional initiatives, the legacy of past conflicts and the still unfinished sovereign arrangements of the region continue to limit cooperation among the countries of South Eastern Europe.

Published in March 2000, the World Bank 'Regional Strategy Paper - The Road to Stability and Prosperity in South Eastern Europe' outlined four main areas for action:

• moving rapidly towards trade integration with the EU and within the South East European region itself, and creating a stable, transparent and non-discriminatory environment for private sector development;

• fostering social inclusion and social change within the region

• improving institutional capacity and governance structures, and strengthening anti-corruption efforts in the region; and,

• investing in regional infrastructure to integrate the region physically with the rest of Europe and within itself, while at the same time protecting the environment.

A regional approach also allows for adequate prioritization of regional infrastructure investments in South East Europe. Moreover, regional cooperation is a critical component within the Stabilization and Association Process, as it is an integral part of preparation for integration of the countries of SEE into European Structures. In other words, this process essentially extends the EU's own philosophy to the western Balkan region, that deeper cooperation with neighboring countries is a route to national as well as regional stability and growth and that such cooperation serves the mutual interests of all countries concerned.

In Bulgaria and Romania European Commission and the World Bank continue to cooperate closely to assist countries in meeting remaining EU accession “conditions” which are primarily related to shortcomings in areas of legal and judiciary reform, fight against corruption and overall effectiveness of public administration. Also, both institutions cooperate closely to ensure that policy advice and lending support to both governments are consistent.

Country Assistance Strategies
The Country Assistance Strategy (CAS) normally takes a three-year focus on Bank activities and is developed in cooperation with the government and, often, with civil society. CASs for larger countries are revised more frequently, some annually. It is not, however, a negotiated document. Any differences between the country's own agenda and the strategy advocated by the Bank are highlighted in the CAS document.

Although the activities of the Bank are different in scope and size in each of the eight countries / regions of SEE, there are four key underlying priorities in the CAS in SEE:

• maintaining macroeconomic stability;

• improving governance and strengthening institutions by building efficient and inclusive public institutions; 

• promoting sustainable private sector growth and improving the business environment; and,

• fostering human development.

Poverty Reduction Strategy Papers
At the 1999 Annual Meetings of the World Bank Group and the IMF, low income countries agreed to prepare participatory poverty reduction strategies, which should provide the basis of all World Bank and IMF concessional lending. These strategies, called Poverty Reduction Strategy Papers (PRSPs) describe a country's macroeconomic, structural and social policies and programs to promote growth and reduce poverty, and associated external financing needs. There are five core principles underlying the development and implementation of poverty reduction strategies. The strategies should be:

• country-driven – involving broad-based participation by civil society and the private sector in all operational steps; 

• results-oriented – focusing on outcomes that would benefit the poor; 

• comprehensive in recognizing the multidimensional nature of poverty; 

• partnership-oriented – involving coordinated participation of development partners (bilateral, multilateral, and non-governmental); 

• based on a long-term perspective for poverty reduction. 

PRSPs are prepared by governments through a participatory process involving civil society and development partners, including the World Bank and the International Monetary Fund (IMF). Within this framework, World Bank assistance in South East Europe is has several common elements:

• For all countries, World Bank assistance is directed to four key priorities for growth and poverty reduction: 

• macro stability, private sector development, human development and governance;

• Selective interventions in infrastructure and environment: responding to country-specific needs to complement the focus above; and,

• Lead role in mobilization and coordination of external aid: either in collaboration with the EC or on its own (for Moldova).

In South East Europe, interim PRSPs have been adopted by Macedonia in November 2000 and Serbia and Montenegro in April 2002. Albania adopted a General Poverty Reduction Strategy (GPRS) in November 2001 and a PRSP was drafted in March 2002 for Bosnia and Herzegovina:

Albania
Poverty Reduction Strategy Paper - Annual Progress Report, January 23, 2006
Poverty Reduction Strategy Paper Annual Progress Report, July 21, 2004
Poverty Reduction Strategy Paper Progress Report, June 16, 2003
Supplement to the Poverty Reduction Strategy Paper, May 20, 2002
Poverty Reduction Strategy Paper, November 30, 2001
Interim Poverty Reduction Strategy Paper, May 3, 2000

Bosnia and Herzegovina
Poverty Reduction Strategy Paper-Mid-Term Development Strategy, April 27, 2004

Macedonia, former Yugoslav Republic of
Poverty Reduction Strategy Paper, Interim Version, November 10, 2000

Moldova, Republic of
Poverty Reduction Strategy Paper Annual Evaluation Report 2005, May 26, 2006
Poverty Reduction Strategy Paper, December 8, 2004
Poverty Reduction Strategy Paper Preparation Status Report, April 24, 2002
Interim Poverty Reduction Strategy Paper, April 21, 2002
Interim Poverty Reduction Strategy Paper, November 15, 2000

Serbia and Montenegro
Poverty Reduction Strategy Paper - Progress Reports, April 26, 2006
Poverty Reduction Strategy Paper, May 4, 2004