Washington:
The World Bank could mobilise $80 billion to $100 billion in funding over the next 15 months for countries hit hard by the war in the Middle East, eclipsing the $70 billion it provided during the COVID pandemic, the bank’s president, Ajay Banga, said on Tuesday.
That would include $20 billion to $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 $30 billion to $40 billion that could come from repurposing existing programs in about six months, he said.
Banga’s comments, on the sidelines of the spring meetings of the International Monetary Fund and World Bank, reflect growing recognition of the huge impact the war is already having on global growth and inflation, with developing countries likely to be hit the hardest.
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The 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 $80 billion to $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.
Banga, who met with the head of the International Energy Agency and IMF chief Kristalina Georgieva on Monday, stressed that it would take time for the energy market to settle down, even if the war ended and there was no more structural damage to energy infrastructure.
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.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
