World Bank approves $160B fund to help countries fight COVID-19

WB extends financial aid

The World Bank has approved US$160 billion [AU$266 billion] in emergency assistance to emerging countries hit by the coronavirus pandemic, with vulnerable nations as its main priority.

The World Bank also announced on April 2 that the aid is a primary measure to help countries ameliorate the impact of the current global health threat. The aid will be spread over 15 months.

India, Pakistan, and Afghanistan among 25 vulnerable countries

As a response to the ongoing health crisis the whole world faces today, the World Bank has rolled out its plans including the first set of crisis projects involving a total of $1.9 billion, which is to be distributed in 25 countries.

World Bank Approves $160-billion Amelioration Fund to Help Countries Fight COVID-19

David Malpass, president of the World Bank Group, also emphasized the need to prioritize the hardest-hit and most at-risk countries.

“The World Bank Group is taking broad, fast action to reduce the spread of coronavirus. We already have health response operations moving forward in over 65 countries,” he said, adding that “the poorest and most vulnerable countries will likely be hit the hardest.”

India, with $1 billion worth of facility, will receive the highest sum among the 25 countries. It is followed by Pakistan ($200 million) and Afghanistan ($100 million).

The financial assistance is projected to support all countries’ need for medical supplies, the building of laboratories, treatment and isolation facilities, train personnel, as well as to aid poor households who can’t make a living due to city lockdowns.

The World Bank’s private sector arm, the International Finance Corporation, is also looking to provide monetary help for private businesses affected by the pandemic. The organization is reportedly offering a total of $8 billion. 

Suspension of repayments from developing countries

Malpass also urged rich countries to suspend debt repayment—particularly from 76 developing nations—saying it will provide “new financing to the most vulnerable countries to meet their healthcare demands.”

The total sum of debt is approximately $14 billion, which is already included in the $160 billion aid the World Bank has announced. 

On the other hand, although the G20 nations seemed to agree with the sudden suspension, each country involved should still negotiate individually. 

The suspension will be in effect beginning in May and will extend until June 2021. 

ADB estimates $4.1 trillion loss 

The Philippine-based Asian Development Bank (ADB) warned Friday that the global economy could lose a total of $4.1 trillion. The grim forecast is seen as a result of the coronavirus continuing to ravage all countries, including Europe and the U.S. 

World Bank Approves $160-billion Amelioration Fund to Help Countries Fight COVID-19

On a lighter note, ADB suggested that a shorter containment period could also cut the losses for up to $2 trillion. 

“No one can say how widely the pandemic could spread, and containment may take longer than currently projected,” said Yasuyuki Sawada, ADB chief economist, adding that “the possibility of severe financial turmoil cannot be discounted.” 

Asia’s economy is predicted with a slow growth of 2.2% and will be the slowest pace since the Asian financial crisis in 1988.

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