On March 3, 2020, the World Bank announced the availability of up to $12B in immediate support for COVID-19 response. On March 17, the Boards of the World Bank and the IFC, the Bank’s private sector arm, increased this amount to a total of $14 billion under a fast track facility:
- $6B to support governments. This comprises up to $2.7 billion new financing from IBRD; $1.3 billion from IDA, complemented by reprioritization of $2 billion of the Bank’s existing portfolio. The use of these resources will depend on country needs but the Bank expects that these will be used primarily for the initial health response:
- Preventing and limiting local transmission, through laboratory equipment, improved surveillance systems, and training of front-line responders.-
- Goods and services such as gloves, masks, and portable ventilators.
- Building or expanding clinical care facilities, such as refurbishing intensive care units or inpatient facilities in hospitals and preparing quarantine facilities.
- Building systems for real-time community-based disease surveillance and through proactive, evidence-based citizen engagement.
- Strengthening collaboration for research and response to facilitate the development of vaccines, therapeutics, and other measures.
- $8B from the IFC to work with commercial bank clients to expand trade finance and working capital lines and to directly support its corporate clients — with a focus on strategic sectors including medical equipment and pharmaceuticals — to sustain supply chains and limit downside risks. The IFC is using four financing vehicles to achieve this:
- $2 billion from the Real Sector Crisis Response Facility, which will support existing clients in the infrastructure, manufacturing, agriculture and services industries vulnerable to the pandemic. IFC will offer loans to companies in need, and if necessary, make equity investments. This instrument will also help companies in the healthcare sector that are seeing an increase in demand.
- $2 billion from the existing Global Trade Finance Program, which will cover the payment risks of financial institutions so they can provide trade financing to companies that import and export goods. IFC expects this will support small and medium-sized enterprises involved in global supply chains.
- $2 billion from the Working Capital Solutions program, which will provide funding to emerging-market banks to extend credit to help businesses shore up their working capital, the pool of funds that firms use to pay their bills and compensate workers.
- $2 billion from the Global Trade Liquidity Program, and the Critical Commodities Finance Program, both of which offer risk-sharing support to local banks so they can continue to finance companies in emerging markets. This new component was initiated at the request of clients and approved on March 17.
Following this announcement, during the first week of April, the Board of the Bank started approving the first individual transactions under the new facility. The first group of projects, amounting to $1.9B for 25 countries was approved on April 2nd and new operations are moving forward in over 40 countries using the expedited process.
In addition to the development of new projects, the Bank is redeploying resources in existing World Bank financed projects worth up to $1.7B. This is being done primarily through the rapid disbursement of contingent additional financing components in existing loans.
More recently, the World Bank has announced that it is prepared to deploy up to $160B over the next 15 months to support COVID-19 measures that will help countries respond to the immediate health consequences of the pandemic and to bolster economic recovery.
Therefore, it is expected that in the coming weeks, the Bank will be working with its clients to expedite the preparation and implementation of projects under the initial $14 billion facility focusing on the current acute phase of the health crisis. It is expected that additional resources of up to $160B will be programmed as as the COVID-19 crisis evolves and the specific health and economic recovery requirements of each country becomes clearer.
In addition to its financing, the World Bank has been playing an active advocacy role in different international fora, including the G20, to highlight the need to take other concerted action to address COVID-19, including:
- Provide debt relief to the poorest countries: The World Bank President highlighted to the G20 Ministers of Finance on March 23rd that the crisis will likely hit hardest the poorest and most vulnerable countries and called for official bilateral creditors of the poorest countries to provide debt relief, allowing the countries to concentrate their resources on fighting the pandemic. The first step proposed would be to suspend all repayments of official bilateral credit until the World Bank and the IMF have made a full assessment of their reconstruction and financing needs.
- Facilitate continued global trade flows: The Bank has also made several statements (G20 Trade ministers meeting, Financial Times op-ed, etc.) emphasizing the importance of keeping trade open, particularly with respect to critical medical supplies, food or other key products necessary to address COVID-19.