The World Bank Group (WBG) says as many as 60 million people in the world could be pushed into extreme poverty due to the shutdown of advance economies as a resulted of the outbreak of the Covid-19 global pandemic.
“The pandemic and shutdown of advanced economies could push as many as 60 million people into extreme poverty – erasing much of the recent progress made in poverty alleviation”, says World Bank Group President David Malpass, in a press release issued on May 19, 2020.
Due to this, the WBG, as part of broader effort to mitigate the impact of the Covid-19 pandemic on the global economy and health systems, has announced an emergency assistance operations to reach 100 developing countries, who together houses 70 percent of the world’s population.
This assistance, which amounts $160 billion in grants and financial support, is the largest and fastest crisis response in the Bank Group’s history, according to the WBG.
In a press release, the WBG says emergency operations marks a milestone in implementing the Bank Group’s pledge to help developing countries respond to the health, social and economic impacts of COVID-19 and the economic shutdown in advanced countries.
“The World Bank Group has moved quickly and decisively to establish emergency response operations in 100 countries, with mechanisms that allow other donors to rapidly expand the programs. To return to growth, our goal must be rapid, flexible responses to tackle the health emergency, provide cash and other expandable support to protect the poor, maintain the private sector, and strengthen economic resilience and recovery”, said World Bank Group President David Malpass.
When the initiative was birthed
On April 16 this year, at a virtual gathering of G20 Finance Ministers, WBG President disclosed plans by the bank to established Covid-19 related projects, worth $160 billion, in about 100 poorest countries across the continent.
The project is intended to span a period of 18 months, starting at the end of April, 2020.
The goal of the WBG, in this regard, is to help developing countries implement emergency health operations, protect the poorest households and save jobs and businesses.
All of this, according to the WBG, will shorten the time to broad based, sustainable economic recovery.
Aim of the project
The WBG, in the said May 19, 2020 press release, says the operations is targeted at saving lives, protect livelihoods, build resilience, and boost recovery by strengthening health systems, monitoring, and prevention, particularly in low-income countries and in fragile and conflict-affected situations.
Again, the operational response, according to the WBG, will strengthen health systems, support the poorest households, and create supportive conditions to maintain livelihoods and jobs for those hit hardest.
Country operations, the WBG statement added, will deliver help to the poorest families through cash transfers and job support as well as maintain food security, nutrition and continuity of essential services such as clean water and education; target the most vulnerable groups, including women and forcibly displaced communities, who are most likely to be hit hard; and engage communities to support vulnerable households and foster social cohesion.
“The scale and speed of the Bank Group’s response is critical in helping countries mitigate the adverse impacts of this crisis and prioritize the human capital investments that can accelerate recovery”.
Of the 100 beneficiary countries, the WBG says 39 of them are in Sub-Saharan Africa while nearly one-third of the total projects are in fragile and conflict-affected situations, such as Afghanistan, Chad, Haiti, and Niger.
Disbursement of the financial support aspect of the emergency operation has already began with $20 million going to Senegal and $35 million to Ghana, which includes funding to strengthen disease surveillance systems, public health laboratories, and epidemiological capacity for early detection.
Similarly, a $20 million International Development Association (IDA) grant was approved for Haiti that aims to enhance testing, minimize spread through contact tracing of confirmed cases, and provide laboratory and protective equipment for health care staff.
Also Uzbekistan been given, a $95 million financing package which includes funding for cash support to low-income families and one-off unemployment benefits, while in Tunisia $100 million is being reallocated from the existing portfolio to help finance additional social benefits and grants to small and medium-size enterprises.
Supporting businesses and preserving jobs
The International Finance Corporation (IFC) continues to implement its $8 billion fast-track financing facility, which aims to keep companies in business and preserve jobs.
For far, close to 300 clients have requested support, but the WBG warns the facility may be oversubscribed.
However, building on this effort and market demand, IFC aims to provide $47 billion in financing to developing countries over 15 months.
Cumulative COVID-19 related commitments under IFC’s Global Trade Finance Program, which supports small and medium-sized enterprises involved in global supply chains, have totaled 1,200 transactions across 33 countries for $1.4 billion, with 51% of this volume in low-income and fragile countries, according to the statement.
According to the press release, the Bank Group’s support through grants, loans and equity investments will be supplemented by the suspension of bilateral debt service, as endorsed by the Bank’s governors.
“Procuring medical equipment and supplies: Many developing countries import most, and in some cases all, of the medical supplies critical for fighting COVID-19, leaving them extremely vulnerable to supply disruptions and export restrictions”.
Also, it added that the IDA-eligible countries that request forbearance on their official bilateral debt payments will have more financial resources to respond to the COVID-19 pandemic and fund critical, lifesaving emergency responses.
“The bilateral debt-service suspension being offered will free up crucial resources for IDA countries to fund emergency responses to COVID-19,” said Malpass. “Nations should move quickly to substantially increase the transparency of all their governments’ financial commitments. This will increase the confidence in the investment climate and encourage more beneficial debt and investment in the future.”