Britain the only country to meet the needs of world's poorest during the pandemic, says World Bank

Date Added: October 23, 2020 12:12:34 AM
Author: Sutra Web Directory
Category: Regional: United Kingdom

The World Bank says richer countries, with the exception of Great Britain, are not stepping up to help poorer countries in the face of the pandemic. 

The World Bank's managing director of operations, Axel van Trotsenburg, said that the contributions from higher-income governments have been "flat or declining", a marked difference from what happened during the 2009-2010 financial crisis. 

"With the notable exception of the UK, which has been an absolute leader, the contributions by governments have been much more flat or declining," he told The Telegraph. 

"We saw the greatest generosity ever... during the depths of the financial crisis. We need that again. We cannot think that we can solve the problem in OECD countries alone. If you leave the poor countries out, it will not solve this problem.

"We have to look at the human face of this crisis, then realise that it would be a very good investment indeed if we could continue supporting these countries during this difficult time," he added.  

The UK, the world's sixth biggest economy in 2019, pledged $3.8bn to the world's poorest countries via the World Bank's International Development Asosciation (IDA), in April this year, eclipsing Japan, the United States and France. 

The World Bank's financial reserves come from several sources - from funds raised in the financial markets, earnings on its investments, fees paid in by member countries, contributions made by members and from the borrowing countries themselves, when they pay back their loans.

However, the World Bank itself has also faced criticism for the speed of its response, with a paper from the US-based Center for Global Development (CGD) last week suggesting that the organisation is not responding quickly or dramatically enough to the scale of the crisis caused by Covid-19. 

The World Bank has pledged up to $160bn to client countries, starting quickly in spring this year.  But CGD said that, for example, while lending has accelerated, with loan commitments up 118 per cent year on year, actual disbursements - payments of money to the countries themselves - has only increased by 31 per cent. 

The co-author of the paper, CGD senior fellow Justin Sandefur, said: "The bank is doing more than it did during the global financial crisis for the poorest countries, but in the global financial crisis, the poorest countries came out relatively unscathed, because they were not as integrated into the New York or London credit markets and so on.

"Now, the magnitude of the shock in lower income countries is several fold larger - and they are getting a bit more money out of the World Bank. Relative to the scale of the crisis, this is sort of a pittance." 

For its part, the World Bank said it is providing "large net positive flows" to the world's poorest countries - meaning the countries are getting more money than they are currently paying to service their debts. 

It said it was making "rapid progress" in directing financing to client countries, including a recent $12bn pledge to ensure that vaccines are available equitably around the world.  It added that it had already committed $43bn, or 41 per cent of the $104bn capacity indicated in March for the 15 months from April 2020 to June 2021: $25bn to the poorest countries, and $18bn to middle-income countries. 

In the financial crisis in 2009-11, World Bank financing totaled $149bn, mainly to middle-income countries. Around $15bn went to the poorest countries.

Mr van Trotsenburg said an increasing amount of the financing this time was via grants rather than loans - which only come from the international community rather than the private sector, making commitments from countries even more important.

Regarding loans, he said making sure debts were fair for all involved was important, while ensuring that long-term development did not fall by the wayside as focus turned to the immediate crisis. 

"There are always national interests, but we have to find the balance. The World Bank was created to find unity and not division and so we are deliberately looking at where are the commonalities, where can we move forward," he said. 

"This is going to be important: only together will we be able to make a difference." 
~ Via Telegraph