Developing countries face a new challenge from the global financial crisis, which is rapidly becoming an unemployment crisis. The World Bank Group is helping with the financial rescue but believes that we must remain focused on the human rescue for the many millions left behind. The recent food and fuel crises have already pushed millions back into poverty and hunger. Sharply tighter credit conditions and weaker growth are likely to cut into government revenues and their ability to invest to meet education, health and gender goals, as well as the infrastructure expenditures needed to sustain growth. The financial crisis now threatens to shrink emerging markets' access to trade and investment, and each 1 percent drop in growth could trap another 20 million in poverty. Governments must keep their commitments to increase aid to the most vulnerable people.
Financing
- The World Bank is calling for developed countries to pledge 0.7 percent of their stimulus packages to a vulnerability fund for assisting developing countries that can't afford bailouts and deficits. The fund's three priorities would be: safety nets, infrastructure, and finance for SMEs and microfinance institutions. The monies in the fund could be steered through existing development actors, including bilateral aid agencies, the UN agencies, regional development banks and non-governmental organizations (NGOs).
- The Bank Group could substantially increase financial support for developing countries.
- IBRD could make new commitments of up to $100 billion over the next three years. This year lending could almost triple to more than $35 billion compared to $13.5 billion last year to meet additional demand from our developing country partners. In December 2008, the Bank approved $500 million for structural reforms in Ukraine to help mitigate the impact of the financial crisis. The Bank also agreed to help India with $3 billion in increased investment, as part of the Bank's new country strategy.
- Set up a new facility to speed $2 billion to help poorest countries by expediting approval processes for money from the $42 billion IDA 15 fund. Money to be used for safety nets, infrastructure, education and health.
-
Through IFC, we are ramping up support to the private sector through the launch or expansion of five initiatives.
-
Ensure trade flows: IFC is doubling its Global Trade Finance Program to $3 billion and is mobilizing funds from other resources. Japan has pledged $1 billion.
-
Bolster distressed banking systems: Launching a global equity fund to recapitalize distressed banks, where IFC plans to invest $1 billion over three years and Japan plans to invest $2 billion.
-
Keep infrastructure projects on track: IFC expects over three years to invest at least $300 million and mobilize at least $1.5 billion from other sources to provide roll-over financing and help recapitalize viable infrastructure projects —roads, ports, and transmission lines—facing financial distress through a new Infrastructure Crisis Facility. Germany has pledged 100 million Euros for the facility.
- Shift advisory support services: Refocusing existing advisory services programs help clients cope in the current crisis. IFC estimates a financing need of at least $40 million over three years.
- Support microfinance institutions: A new Microfinance Enhancement Facility will provide refinancing to more than 100 microfinance institutions in up to 40 of the world's poorest countries, reaching up to 60 million low-income borrowers
- MIGA is providing guarantees to foreign banks to help inject liquidity and bolster confidence in Ukraine's
and Russia's financial systems. It has also entered into an innovative contract with the African Development Corporation (ADC), to help facilitate up to $150 million of investments to region’s small and medium-sized businesses.
Advice
- We stand ready to partner with countries by providing technical analysis and advice. For example, we have diagnostic tools available to help countries move quickly if their banking systems experience problems.
- We are implementing crisis preparedness exercises for officials in emerging markets that may be affected by the financial turmoil.
- In the neediest countries, we continue to help through the Global Food Response Program and are developing an Energy for the Poor initiative.
Partnerships
- We are collaborating with the IMF and others to help country governments and the private sector through lending, equity investments, innovative tools, and safety net programs. A policy package for Hungary is underway, where the World Bank is ready to provide 1 billion euros as part of a program supported by the European Union and the IMF. The Bank also welcomed Latvia's agreement with the IMF on a policy package to address economic and financial vulnerabilities.
- The G7 is not adequate and we are proposing a new broader steering group to address major economic challenges.
- We also seek to strengthen collaboration among multilateral development institutions to support long-term economic growth that is consistent with the Millennium Development Goals.
|
|
|
RSS