World Bank IMF and Dev Agencies | |
World Bank IMF and Dev Agencies | |
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Thursday, July 16, 2020 / 11:57 AM / By World Bank/ CFi /
Header Image Credit: Ecographics
As people in developing countries around the world faced multiple
crises, including the COVID-19 pandemic, the World Bank Group worked to respond
quickly with technical and policy advice, and scaled up financing targeted to
the poor and towards improving development outcomes.
World Bank Group support rapidly adjusted to help countries fight the
pandemic by focusing on four priorities: saving lives threatened by the
pandemic; protecting the poor and vulnerable; securing the foundations of the
economy to shorten the time to recovery; and strengthening policies and
institutions for resilience based on transparent and sustainable debt and
investments. To support these emergency programs, World Bank Group financing
was significantly scaled up, reaching $74 billion in commitments.
Financing deployed, together with technical and policy advice and
analytical support, is helping countries address health and economic impacts of
the pandemic, maintaining countries' private sector, aiding nations with food
insecurity due to locust swarms in Africa and the Middle East, and combating
widening inequality, among other key priorities.
"As developing countries face an unprecedented health, social and
economic crisis that is jeopardizing decades of development progress, we have
been working intensely on fast, broad actions to limit the harm and help
countries prepare for recovery so they can rebuild better and stronger than
before," said World Bank Group President
David Malpass. "We've been focused on helping countries overcome
the pandemic with programs that reinforce healthcare systems, protect the
poorest households, maintain the foundations of the economy, fight inequality
and ensure a resilient and sustainable recovery."
World Bank Group Commitments Fiscal Years 2020 and 2019 (in
U.S. billions) |
||
World
Bank Group |
FY20* |
FY19 |
IBRD |
28.5 |
23.2 |
IDA |
30.4 |
21.9 |
IFC |
11.2** |
8.9** |
MIGA |
3.96 |
5.5 |
TOTAL |
74.1 |
59.5 |
* Preliminary
and unaudited numbers as of July 10.
**Long-term
finance from IFC's own account. Excludes funds mobilized from other investors
of $10.8 and $10.2 billion in FY20 and FY19, respectively. It also excludes
short-term finance of $6.5 billion in FY20 and $5.8 billion in FY19.
Over the fiscal year, which ended on June 30, the World Bank worked to
further realign its delivery model for efficient coordination of work across its
regions and global practices. The Bank's new operational model, which came into
effect on July 1, 2020, places country-driven development at the center of the
delivery model, while strengthening thought leadership on development issues of
critical importance to sustainable growth and poverty alleviation.
In addition, in FY20 the World Bank Group worked with the IMF to call on
official bilateral creditors to grant debt relief to the world's poorest
countries: those eligible for International Development Association (IDA)
financing. The G20 agreed on a coordinated approach, and private creditors were
also called on to contribute to the initiative. The Debt Service Suspension
Initiative (DSSI), which came into effect on May 1, frees up resources for the
poorest countries to respond to the COVID-19 pandemic and encourages debt
transparency and sustainability.
Malpass added, "Even before the COVID-19 crisis hit, we were calling for greater attention to the debt issue in poor countries, and the DSSI paves the way for long-overdue action to increase debt and investment transparency and sustainability. We were able to contribute to a significant improvement in debt transparency over the fiscal year with the G20 endorsement and the launch of a website showing the creditor country composition of projected annual debt service payments for all 73 countries eligible for relief under the initiative. Transparency of all government financial commitments and investments is a key step in creating an attractive investment climate and could make substantial progress this year to deliver better outcomes for people in developing countries."
Support to middle-income countries from the International Bank
for Reconstruction and Development (IBRD) rose to $28.5 billion in
FY20, up from $23.2 billion in the previous fiscal year. Loans and grants to
the world's poorest countries from the International Development
Association (IDA) were $30.4 billion during FY20.
The 19th replenishment of IDA, in December 2019, secured an
$82 billion financing package for the 74 poorest countries in the world to
be deployed over a three-year period.
The bonds of IBRD, IFC and IDA, which are rated Aaa/AAA, fund these
organizations' operations, including programs that promote inclusive growth and
policy reforms to create more opportunity for people. IBRD issued $75 billion
in FY20, IFC $11 billion and IDA $5 billion.
A significant share of World Bank (IBRD and IDA) financing
in FY20 was dedicated to help countries fight the COVID-19 pandemic. Within
this financing, between March and the end of June, the World Bank approved $6.3
billion for emergency health support in 108 countries, including 33 fragile and
conflict-affected countries and 22 small states. Health projects totaling $3.8
billion used an innovative, fast track Global COVID-19 Health Multiphase
Programmatic Approach and are helping to finance health equipment, personal
protective equipment (PPE), and training. An additional $2.5 billion was
redirected to fight COVID-19 from the portfolio of operations under
implementation.
The World Bank continued to deploy resources toward key priorities.
Aside from COVID-19 health emergency projects, whose main purpose was to help
fight the spread of the pandemic, 73 percent of Bank financing helped address
gender gaps and 31 percent contributed climate co-benefits - estimated at $17
billion. Investments in human development doubled to $20 billion, and lending
to countries affected by fragility, conflict and violence (FCV) reached $10
billion in FY20.
The International Finance Corporation (IFC), the Group's private sector arm, committed and mobilized a total of $22
billion in long-term finance - an almost 15 percent year-on-year increase - including $11.1 billion invested on its own account. In addition, short-term
financing commitments, including trade finance, totaled $6.5 billion, a 12
percent increase as compared with FY19. IDA-eligible and fragile countries
accounted for 25 percent of IFC's own account long-term finance commitments and
climate business for 29 percent. IFC also committed $1.7 billion in new
long-term finance for financial institutions specifically targeting women.
In March, IFC established an $8 billion fast-track COVID-19 crisis
response facility to help developing countries and firms cope with the fallout
from the pandemic. As of the end of the fiscal year, $3.5 billion from the
facility had been used to support banks and companies in developing countries.
With insolvencies looming across the developing world, IFC is now preparing
phase two of its COVID-19 response, which will consist, among other things, of
helping to restructure and recapitalize viable financial institutions and
companies on their path to recovery.
In FY20, IFC began to operationalize its strategy to create markets by
working "Upstream", which entails identifying reforms, contributing to policies
leading to private sector development, and generating bankable projects in
developing countries. As client countries of the World Bank Group face a
difficult recovery, and with private investment heavily subdued, the Upstream approach
will be critical to attract investors back into the most vulnerable markets.
In addition, there has been a large increase in IFC's social bonds,
while the signatories to the Impact Principles grew since the advent of
COVID-19, demonstrating investors' increasing interest in impact in addition to
return.
In FY20, the Multilateral Investment Guarantee Agency
(MIGA), whose mandate is to help drive impactful foreign direct
investment to developing countries, issued nearly $4 billion in new guarantees,
helping mobilize $7.33 billion in total financing. Nearly 42 percent of MIGA's
guarantee program over the fiscal year supported projects in IDA countries and
fragile settings, and over 20 percent contributed to climate change adaptation
or mitigation, including multiple low-carbon energy projects in Africa. In
response to the COVID-19 pandemic, MIGA launched a $6.5 billion fast track
facility to help investors and lenders tackle the crisis. To date, MIGA has
provided $2.1 billion for projects to mitigate the impact of the crisis in
emerging markets and developing economies.
The World Bank Group will continue to focus on providing support to
countries to address the health and economic impacts of the pandemic, while
maintaining a line of sight on their long-term development vision. In March
2020, the Group announced that it can provide up to $160 billion over a 15
months period ending June 2021.
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