The World Bank could mobilise US$80 billion to US$100 billion in funding over the next 15 months for countries hit hard by the war in the Middle East, eclipsing the US$70 billion it provided during the Covid-19 pandemic, the bank’s president, Ajay Banga, said on Tuesday.
That would include US$20 billion to US$25 billion in coming months through a crisis response window that allows countries to withdraw up to 10 per cent of funds earlier than planned from previously approved programmes, with another US$30 billion to US$40 billion that could come from repurposing existing programmes in about six months, he said.
he IMF on Tuesday cut its global growth outlook due to war-driven energy price spikes, offering a range of scenarios that all include lower growth and higher inflation. Absent the conflict, the IMF said it would have upgraded its growth outlook by 0.1 percentage point to 3.4 per cent.
If the war lasted longer and greater needs emerged, the bank would have to turn to its balance sheet and headroom to find additional funding to reach the US$80 billion to US$100 billion, Banga told an event hosted by the Bretton Woods Committee. That would come on top of the bank’s normal lending.
“I’m trying to create a toolkit that has a tiered response capacity, depending on how this continues, to at least be able to bring adequate firepower to do something about it,” he said.
The global economy can still recover rapidly from the shock of the Middle East war if the conflict ends in the next weeks, but the situation will be worse if it drags through the summer, Georgieva said in separate remarks to the same event.
Georgieva said the International Monetary Fund was in talks with countries hit hard by higher energy prices and supply chain disruptions to discuss their financial needs.
Both Banga and Georgieva urged countries to focus on narrowly targeted and temporary measures to ease the pain of higher energy prices, and to avoid broader energy subsidies that could wind up further stoking inflation. – REUTERS
