World Bank loans may cross $2 bn this year

The World Bank may extend a $2-billion loan this financial year and is likely to resume funding to the health projects, earlier held up due on corruption allegations.

"The World Bank had lent $1.6 billion in the last financial year, while this year it is likely to be well above $2 billion," said Michael Carter, country director of the World Bank. The Bank had lent about $2.9 billion in 2004-05.

Carter said, "The rise in interest rates and oil prices is likely to slow down India's economic growth for the next few years."

Internal factors, however, may help the country offset the negative impact of interest rates and oil prices, he added.

High fiscal deficit is also likely to inhibit long term growth. But the government had taken the right initiative to gradually reduce it, Carter said.

"Discussions to resume lending to three health projects are on. These were held up on corruption charges," the country director said. The World Bank is likely to make an announcement in this regard soon.

The World Bank had postponed funding to three projects, including the crucial second phase of a child health programme, citing possible fraud and corruption in procurement of medicine.

The three projects held up are the second reproductive and child health programme (RCH), the second national tuberculosis control project and the Karnataka health systems project.