World Bank Group deploys over $157b to fight Covid

Dubai - The global economy is expected to expand 5.6 per cent in 2021.

The World Bank Group has deployed over $157 billion — its largest-ever crisis response yet — to fight the impact of the Covid-19 pandemic on health, economic and social fronts during the past 15 months.

This “unprecedented level of support” represents an increase of more than 60 per cent over the 15-month period prior to the pandemic, the bank said on Monday.

The World Bank’s Group’s announcement of its critical financial support came a few days after a similar decision taken by the executive board of the International Monetary Fund for a $650 billion expansion in resources to support economically vulnerable nations in their fight against Covid.

World Bank Group President David Malpass said the Washington-based institution has committed or mobilised a record $157 billion in new financing since the start of the pandemic, “an unprecedented level of support for an unprecedented crisis.”

"We will continue to provide critical assistance to developing countries through this ongoing pandemic to help achieve a more broad-based economic recovery," he said.

Malpass said the World Bank Group has proven to be a rapid, innovative, and effective platform to support developing countries as they respond to the pandemic and strengthen resilience for future shocks.

"But we must still do more," he said, adding that he remains deeply concerned about the limited availability of vaccines, which are critical to saving lives and livelihoods, for developing countries.

According to a bank statement, support to countries from the International Bank for Reconstruction and Development totalled $45.6 billion, including drawing down IBRD's $10 billion crisis buffer in addition to the board-approved sustainable annual lending limits.

Grants and zero or low-interest loans to the world's poorest countries from the International Development Association (IDA) amounted to $53.3 billion. To meet increased financing needs, the World Bank fully used all the remaining IDA18 resources in fiscal 2020 and frontloaded about half of all the three-year envelope of IDA19 resources in FY21, it said.

In February 2021, IDA donor and borrower country representatives agreed to advance IDA20 by 12 months to enable continued surge financing in the coming years, it added.

Over the same 15 months, the International Finance Corporation (IFC), the World Bank Group's private sector development arm, reached a record high of $ 42.7 billion in financing, including short-term finance ($10.4 billion) and mobilisation ($14.9 billion), 37 per cent of which was in low-income and fragile and conflict-affected states, the release said.

The Multilateral Investment Guarantee Agency (MIGA), whose mandate is to drive impactful foreign direct investment to developing countries, issued $7.6 billion in new guarantees over the same 15-month period since the onset of the pandemic, of which 19 per cent supported projects in IDA countries and fragile settings, it said.

On July 9, IMF Managing Director Kristalina Georgieva said the new $650 billion support, the largest such expansion in the history of the 190-nation lending institution, would be a “shot in the arm for the world.”

To put the size of the funding expansion in context, the IMF approved a $250 billion boost in SDR reserves following the 2008 financial crisis.

It is a reversal of the stance taken by the Trump administration and it began in February when the Biden administration got behind the effort.

Eric LeCompte, executive director of the religious-affiliated development group Jubilee USA Network, said that the IMF action would allow developing countries to immediately receive more than $200 billion in support.

“Wealthy countries who receive emergency reserves they don’t need should transfer those resources to developing countries struggling through the pandemic,” LeCompte said. — issacjohn@khaleejtimes.com