Thursday, September 22, 2011

Financial crisis: What the World Bank Is Doing

FACTS AND FIGURES The World Bank Group has committed $196.3 billion to its members since the financial crisis began in 2008. Global real GDP growth is projected at 3.2 % in 2011, and 3.6 % in 2012 , according to the Bank’s June 2011 Global Economics Prospect update. The Bank projects that, as developing countries reach full capacity, growth will slow from 7.3%  in 2010 to around 6.3% each year from 2011-2013. High-income countries will see growth slow from 2.7% in 2010 to 2.2% in 2011 before picking up to 2.7%  and 2.6% in 2012 and 2013, respectively.

What the World Bank Is Doing

Recovery from the global financial crisis remains fragile. Persistent risks to economic health include high unemployment, debt and low growth in developed countries, and access to financing for developing countries. In addition, food prices in 2011 are volatile and near their 2008 peak, and millions of people in the Horn of Africa are in urgent need of assistance as a result of devastating drought, conflict, and displacement.

Since the onset of the financial crisis in 2008, the World Bank Group has committed $196.3 billion to developing countries, including record commitments in education, health, nutrition, population, and infrastructure, providing much-needed investments in crisis-hit economies:  
  • ·   $106.3 billion from the International Bank for Reconstruction and Development (IBRD) – which provides financing, risk management products, and other financial services to mainly to middle-income countries.
  • ·         $47.1 billion from the International Development Association (IDA), the World Bank’s fund for the poorest countries.
  • ·         $37.1 billion from IFC, the largest provider of multilateral financing for the private sector in developing countries.
  • ·      $5.7 billion from the Bank Group’s political risk insurance arm Multilateral Investment Guarantee Agency (MIGA).

Throughout the crisis, the Bank Group has helped keep children in school, health clinics open, and microfinance loans flowing to women.  The Bank Group’s commitments for social protection for the poorest and most vulnerable—including school feeding and cash transfer programs, such as Mexico’s Oportunidades -- reached more than $9 billion in 72 countries  during fiscal years 2009-2011 (FY09-11). That figure is seven time the pre-crisis level of $1.2 billion.

To boost food security, the Bank has increased annual financing for agriculture to $6 to $8 billion a year, up from $4.1 billion in 2008. The Bank’s $2 billion Global Food Crisis Response Program, established in response to the 2008 food crisis, is now assisting 40 million people.  The Bank also set up the Global Agriculture and Food Security Program (GAFSP), at the request of the G20. Six countries and the Gates Foundation have pledged $925 million to boost country-led food security and agriculture programs over the next three years.
In July 2011, The Bank pledged to provide more than $500 million to assist drought victims in the drought-stricken Horn of Africa.  A $30 million grant to fight malnutrition and disease in refugee camps will come from a new “Crisis Response Window” established to respond quickly to emerging crises in low-income countries. Some $250 million from that fund is earmarked for the Horn of Africa.

And though growth has recovered in many developing countries, demand for Bank Group assistance remains high.  The World Bank Group committed $57 billion in fiscal year 2011, including $16.3 billion for the poorest countries, up from $14.5 billion in FY10. IBRD commitments, at $26.7 billion, are nearly double the FY08, pre-crisis level of $13.5 billion, and follows record commitments of $44.2 billion in FY10 and $32.9 billion in FY09, as the crisis peaked in developing countries.

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