World Bank Group: Unprecedented Crisis Could Push Up to 60 Million into Extreme Poverty
WASHINGTON – The World Bank Group today announced its emergency operations to fight COVID-19 (coronavirus) have reached 100 developing countries – home to 70% of the world’s population. Since March, the Bank Group has rapidly delivered record levels of support in order to help countries protect the poor and vulnerable, reinforce health systems, maintain the private sector, and bolster economic recovery.
This assistance, the largest and fastest crisis response in the Bank Group’s history, marks a milestone in implementing the Bank Group’s pledge to make available $160 billion in grants and financial support over a 15-month period to help developing countries respond to the health, social and economic impacts of COVID-19 and the economic shutdown in advanced countries.
“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,” said World Bank Group President David Malpass. “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.”
Of the 100 countries, 39 are in Sub-Saharan Africa. Nearly one-third of the total projects are in fragile and conflict-affected situations, such as Afghanistan, Chad, Haiti, and Niger. The International Finance Corporation<https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/CCCB1EAC6F61E32C8525852E0068124B?OpenDocument> (IFC) and Multilateral Investment Guarantee Agency<https://www.miga.org/press-release/migas-65-billion-fast-track-facility-help-investors-lenders-tackle-covid-19> (MIGA) have also fast-tracked support to businesses in developing countries, including trade finance and working capital to maintain private sectors, jobs and livelihoods.
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. 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.”
The Bank Group’s operational response will strengthen health systems, support the poorest households, and create supportive conditions to maintain livelihoods and jobs for those hit hardest. Country operations will deliver help to the poorest families through cash transfers and job support; 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.
The Bank Group’s operations in 100 countries aim to save 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. The Bank Group’s health response addresses emergency containment and mitigation needs for COVID-19, including strengthening countries’ health systems to treat severe cases and save lives. Establishing and supporting efforts in fragile and conflict-affected situations is a priority, given the rapidly growing number of cases in some of these countries.
Disbursement is already underway on $20 million to Senegal<https://www.worldbank.org/en/news/press-release/2020/04/02/world-bank-approves-20-million-for-senegal-to-fight-covid-19> and $35 million to Ghana<https://www.worldbank.org/en/news/press-release/2020/04/02/world-bank-group-supports-ghanas-covid-19-response>, which includes funding to strengthen disease surveillance systems, public health laboratories, and epidemiological capacity for early detection. A $20 million IDA grant was approved for Haiti<https://www.worldbank.org/en/news/press-release/2020/04/01/world-bank-approves-us20-million-grant-to-support-covid-19-response-in-haiti> that aims to enhance testing, minimize spread through contact tracing of confirmed cases, and provide laboratory and protective equipment for health care staff.
Scaling up social protection: The Bank Group is leveraging countries’ existing social protection systems to help families and businesses restore income, preserve livelihoods, and compensate for increasing prices and unexpected medical expenses. These safety nets will need to be augmented with safe, direct food distribution, accompanied by key information on nutrition, social distancing, and hygiene.
In Uzbekistan<https://www.worldbank.org/en/news/press-release/2020/04/24/uzbekistan-to-receive-world-bank-emergency-financing-to-combat-covid-19>, a $95 million financing package includes funding for cash support to low-income families and one-off unemployment benefits, while in Tunisia<https://www.worldbank.org/en/news/press-release/2020/04/30/world-bank-makes-us35-million-available-to-support-tunisia-through-coronavirus-covid-19-crisis> $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<https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/CCCB1EAC6F61E32C8525852E0068124B?OpenDocument>, which aims to keep companies in business and preserve jobs. Close to 300 clients have requested support, and the facility may be oversubscribed. 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<https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/financial+institutions/priorities/global+trade/gtfp>, 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.
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.
In Pakistan<https://www.worldbank.org/en/news/press-release/2020/04/02/world-bank-fast-tracks-support-for-covid-19-coronavirus-response-to-pakistan>, the first consignments of personal protective equipment (PPE) – including masks, gloves, protective suits, gowns, coveralls, shoe covers, goggles, and face shields – have already been delivered to doctors and paramedics. This assistance is part of a larger package that includes $25 million for emergency cash transfers to poor and vulnerable households. On April 23, the World Bank approved $100 million for the Philippines<https://www.worldbank.org/en/news/press-release/2020/04/23/philippines-world-bank-approves-usd100m-to-support-covid-19-emergency-response> to procure materials including PPE, essential medicines, test kits, and key equipment such as mechanical ventilators, cardiac monitors, and portable x-ray machines. In Iraq<https://www.worldbank.org/en/news/press-release/2020/05/12/world-bank-deploys-us336-million-in-emergency-response-to-help-iraq-face-the-coronavirus-outbreak>, the World Bank redeployed $33.6 million to help finance the supply of essential equipment and supplies and strengthen intensive care unit (ICU) capacity at public hospitals.
The Bank Group is helping countries access critically needed supplies and equipment, for example, by identifying interested suppliers and negotiating prices and conditions.