Tag Archives: World Bank

More synchronized action needed to tackle COVID economic crisis, IMF’s Georgieva says

By Andrea Shalal and Marc Jones

WASHINGTON/LONDON (Reuters) – The international community must do more to tackle the economic fallout of the COVID-19 crisis, the head of the International Monetary Fund said on Monday, publicly calling on the World Bank to accelerate its lending to hard-hit African countries.

Some of the key events of the virtual and elongated annual meetings of the IMF and World Bank take place this week, with the most pressing issue how to support struggling countries.

“We are going to continue to push to do even more,” IMF Managing Director Kristalina Georgieva said during an online FT Africa summit.

“I would beg for also more grants for African countries. The World Bank has grant-giving capacity. Perhaps you can do even more… and bilateral donors can do more in that regard,” Georgieva said in an unusual public display of discord between the two major international financial institutions.

No immediate comment was available from the Bank.

Georgieva last week said the IMF had provided $26 billion in fast-track support to African states since the start of the crisis, but a dearth of private lending meant the region faced a financing gap of $345 billion through 2023.

The pandemic, a collapse in commodity prices and a plague of locusts have hit Africa particularly hard, putting 43 million more people at risk of extreme poverty, according to World Bank estimates. African states have reported more than 1 million coronavirus cases and some 23,000 deaths.

G20 governments are expected to extend for six months their Debt Service Suspension Initiative (DSSI) which has so far frozen around $5 billion of poorer countries’ debt payments, but pressure is on the main development banks and private creditors to provide relief too.

HOLDING ONTO GOLD RESERVES

Georgieva said the Fund was also pushing richer member countries to loan more of their existing Special Drawing Rights (SDR), the IMF’s currency, to countries that needed support most, and was “very committed” to finding a way forward for countries like Zambia now needing to restructure their debts.

The United States has blocked Georgieva’s early call for issuance of more SDRs, arguing that it would benefit mostly richer nations, not the developing countries that need it most.

Pledges to the Fund’s Poverty Reduction and Growth Trust, which supports low-income countries, have totaled $21 billion to date, including $14 billion in existing SDR holdings, but more resources were urgently needed, an IMF spokeswoman said.

The IMF chief dodged calls by civil society groups for the IMF to sell off some of its extensive gold reserves, saying the Fund viewed them as an important “financial buffer.”

Profit from selling less than 7% of the IMF’s gold could fund cancellation of all debt payments by the poorest countries to the IMF and World Bank for the next 15 months, the UK-based Jubilee Debt Campaign said in a new report issued Monday.

The IMF said its gold reserve of about 90.5 million ounces (2,814.1 metric tons) was worth about $137.8 billion at the end of December, compared to its historical cost of $4.4 billion.

Georgieva said countries in serious trouble must restructure their debts as soon as possible.

“This is the message for all countries in debt distress… If debt is not sustainable, please move towards restructuring, the sooner the better,” she said.

Georgieva said transparency in lending was critical for all parties, and welcomed what she called “encouraging” statements by China to move toward a more consolidated view of the debts held by the Chinese government and other institutions.

“I believe that now is the moment in this crisis, to make … transparency paramount and mandated to the extent possible everywhere,” she said.

(Reporting by Marc Jones in London, and Andrea Shalal and David Lawder in Washington; Editing by Tom Arnold, Ed Osmond and Andrea Ricci)

Coronavirus may push 150 million people into extreme poverty: World Bank

WASHINGTON (Reuters) – The World Bank said on Wednesday that the coronavirus pandemic could push as many as 150 million people into extreme poverty by the end of 2021, wiping out more than three years of progress in poverty reduction.

Releasing its flagship biennial report on poverty and shared prosperity, the multilateral development lender said that an additional 88 million to 115 million people will fall into extreme poverty – defined as living on less than $1.90 a day -in 2020. The report said this could grow to 111 million to 150 million by the end of 2021.

That would mean that 9.1-9.4% of the world’s population would be living under extreme poverty this year, about the same as 2017’s 9.2% and representing the first rise in the extreme poverty percentage in about 20 years.

The 2019 extreme poverty rate was estimated at about 8.4% and had been expected to drop to 7.5% by 2021 before the coronavirus pandemic. The report said that without swift, substantial policy actions, a longstanding goal of cutting the rate to 3% by 2030 looked out of reach.

“The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty,” World Bank President David Malpass said in a statement, calling it a “serious setback to development progress and poverty reduction.”

The report found that many of the new extreme poor are in countries that have high poverty rates already, but around 82% of these are in middle-income countries, where the poverty line is defined as income of $3.20 a day for low-middle-income countries and $5.50 a day for upper-middle-income countries.

While extreme poverty has been concentrated in rural areas in the past, the World Bank report found that increasing numbers of urban dwellers have been thrown into extreme poverty as jobs dry up from coronavirus lockdowns and reduced demand.

Sub Saharan Africa has the highest concentration of those living on less than $1.90 a day, and could see an increase of over 50 million people by 2021 compared to pre-coronavirus estimates. About 42% of the region’s population could be living under extreme poverty by 2021 versus a pre-COVID estimate of 37.8%, the study showed.

The coronavirus also has stagnated “shared prosperity,” defined as growing income for the poorest 40% of a country’s population. The World Bank said that from 2012 to 2017, income rose for this group by an average of 2.3% in 74 of 91 economies for which data was available.

The COVID-19 crisis could now reduce income for the poorest 40%, increasing income inequality and reducing social mobility, the bank said.

To get back on a track of poverty reduction, countries will need collective action to control the virus, provide support for households and build more resilient economies once the pandemic subsides, the World Bank said.

“Countries will need to prepare for a different economy post-COVID, by allowing capital, labor, skills and innovation to move into new businesses and sectors,” Malpass said.

(Reporting by David Lawder; Editing by Andrea Ricci)

World Bank approves record $500 million to battle locust swarms

By Andrea Shalal

WASHINGTON (Reuters) – The World Bank on Thursday approved a record $500 million in grants and low-interest loans to help countries in Africa and the Middle East fight swarms of desert locusts that are eating their way across vast swaths of crops and rangelands.

Four of the hardest-hit countries – Djibouti, Ethiopia, Kenya and Uganda – will receive $160 million immediately, Holger Kray, a senior World Bank official, told Reuters. He said Yemen, Somalia and other affected countries could tap funds as needed.

“The Horn of Africa finds itself at the epicenter of the worst locust outbreak we have seen in a generation, most probably in more than a generation,” he said, noting the new coronavirus pandemic is exacerbating the crisis.

Locust swarms have infested 23 countries across East Africa, the Middle East and South Asia, the biggest outbreak in 70 years, the World Bank said. It threatens food supplies in East Africa where nearly 23 million people are facing food shortages.

See graphic:

The World Bank estimates the Horn of Africa region could suffer up to $8.5 billion in damage to crop and livestock production by year-end without broad measures to reduce locust populations and prevent their spread. Even with the measures, losses could be as high as $2.5 billion, it said.

Desert locusts can travel up to 150 km (95 miles) a day, sometimes in swarms as large as 250 km (155.34 miles) across, eating their own body weight in greenery.

In Kenya, the locusts are eating in one day the amount of food consumed by all Kenyans in two days, Kray said.

The new World Bank program will help farmers, herders and rural households by providing fertilizer and seeds for new crops, and cash transfers to pay for food for people and livestock.

It will also fund investments to strengthen surveillance and early warning systems to make the region more resilient over the medium- to longer-term, Kray said.

(Reporting by Andrea Shalal; Editing by Leslie Adler)

World Bank tells G20: Pandemic threatens food security of poor nations

By Andrea Shalal

WASHINGTON (Reuters) – The poorest countries in the world face food insecurity and malnutrition due to the coronavirus pandemic, a drop in foreign exchange earnings, export restrictions and the breakdown of supply chains, a senior World Bank official said on Tuesday.

Mari Pangestu, the World Bank’s managing director for development policy, underscored the need for global cooperation to avert food crises in the most vulnerable countries in remarks to an online meeting of agriculture ministers from the Group of 20 major economies.

“Refrain from imposing export restrictions and avoid unnecessary import barriers and build up of stocks,” she said, adding that global grain production and stocks were at near all-time highs, making restrictions unnecessary.

Pangestu told the ministers that concerted national actions, international cooperation and additional funding to shore up agricultural production could limit the risks of food insecurity and malnutrition.

“The G20 accounts for a large share of food trade and hence its actions will have significant global impact,” she said, urging G20 countries to ensure that supply chains for food continue to flow and to prioritize food and food-supply logistics as essential.

Food security emerged as a growing concern during last week’s virtual meetings of the World Bank and the International Monetary Fund with finance ministers from around the world.

In addition to the pandemic, which has triggered the deepest recession since the 1930s, the worst locust plague in decades is decimating millions of hectares of crops as it spreads across Africa, the Middle East, North Africa and South Asia.

Locust swarms have infested 23 countries, according to World Bank data. They have torn through large swathes of food crops in the Horn of Africa, where more than 24 million people are already “food insecure” and 12 million people are internally displaced, the Bank said in a recent blog posting.

The Food and Agriculture Organization of the United Nations estimates that 821 million people, or nearly 11% of the world population, are undernourished, the highest rate since 2011.

Pangestu said the Bank, which is making $160 billion available to respond to the pandemic over the next 15 months, is working closely with countries and international partners to monitor food supplies, and how the loss of income is impacting people’s ability to buy food.

She said it was critical to leverage community-based groups to distribute food, and implement social protection programs for the world’s poorest. Digital technologies could also help monitor harvest conditions and link producers with consumers.

Up to 80% of the workforce in some of the poorest countries are both producers and net consumers in the agricultural and food sectors, she said, underscoring the need to make food supply a priority.

“Let’s not repeat what happened in 2008 when trade restrictions amplified world food price spikes and caused 130-155 million more people to fall below the poverty line, especially in the most vulnerable countries,” Pangestu said.

G20 agriculture and food ministers agreed at a virtual meeting on Tuesday that emergency measures to contain the spread of the pandemic must not create “unnecessary barriers to trade or disruption to global food supply chains.”

(Reporting by Andrea Shalal, Editing by Franklin Paul and Paul Simao)

World Bank pandemic bond under pressure as coronavirus spreads

By Karin Strohecker

LONDON (Reuters) – A World Bank bond designed to deliver funding to help the world’s poorest countries to tackle fast-spreading diseases has lost half its value as the coronavirus outbreak in China has fanned fears that investors could face hefty losses.

After the 2013-2016 Ebola outbreak that ravaged Sierra Leone, Guinea and Liberia and killed at least 11,300 people, the World Bank launched bond and insurance instruments under its Pandemic Emergency Financing umbrella in 2017 to establish a mechanism that would speedily deploy funds where needed.

However, the World Bank’s two so-called pandemic bonds came under scrutiny after the second-worst Ebola outbreak on record.

The 2018 epidemic in the Democratic Republic of Congo raged for about a year and killed more than 2,000 people, but it failed to trigger the release of funds to help affected countries.

The bonds, issued by the World Bank’s International Bank for Reconstruction and Development (IBRD), offer investors high coupons in return for the risk of having to forgo some or all their money in the event of pandemic outbreaks of a number of infectious diseases, with the funds channeled instead to countries in need of aid.

With the coronavirus outbreak having infected more than 74,000 people and claimed more than 2,000 lives, prices for the IBRD pandemic bond with the highest investment risk – the Class B notes – have come under increasing pressure.

PRICE SLIDE

Losses to investors depend on the number of deaths and geographical spread. In the most extreme case, a global outbreak – defined as more than 2,500 deaths across more than eight countries with a certain number of fatalities in each country – will wipe out the bondholder’s entire investment.

Offer prices quoted by one broker have slipped as low as 45 cents in the dollar, while another is quoting 62.5 cents, market sources said. In the midst of the 2018 Ebola outbreak the bond traded at a little more than 70 cents.

“The market is clearly starting to price in a chance that the tranche most at risk could be affected,” said an investor who holds some of the World Bank’s pandemic debt.

“We all get the feeling that epidemics have become more and more frequent – we had SARS and Ebola and swine flu all within a short space of time.”

The bonds issued by the IBRD are not only aimed at providing relief for outbreaks of coronavirus or Ebola, but also for pandemics caused by infectious diseases such as Marburg, Crimean-Congo hemorrhagic fever or Lassa fever.

Both of the bonds are often closely held and largely illiquid. Filings show that the riskiest of the two <XS164110150=>, maturing on June 15, is held by asset managers including Baillie Gifford, Amundi and Oppenheimer.

The second of the bonds – a $225 million issue <XS164110117=> – is also exposed to a coronavirus outbreak but considered less at risk because its different trigger criteria means bondholders face a loss of 16.7%.

UNDER FIRE

For all the good intentions and the prospect that a payout to poor countries might be on the cards, the bonds remain under fire for failing to deliver sufficient or timely aid.

One point of contention is the length of time before a payout is triggered. In the case of a coronavirus outbreak for the Class B notes, this is 84 days from when the World Health Organization (WHO) publishes its first “situation report”. In the current outbreak, that would be in mid-April.

Think tanks and some policymakers say the focus should be on shoring up healthcare systems and early detection facilities in vulnerable parts of the world that are already overburdened with cases of Ebola, measles, malaria and other deadly diseases.

“The money for these bonds could have been better spent in providing the WHO with funds or help strengthen healthcare provisions in poor countries at risk,” said Bodo Ellmers, director of sustainable development finance at Global Policy Forum, an independent policy watchdog.

“It was an ideology-driven idea to get the private sector involved in humanitarian and emergency finance – and I think we have to say this has failed.”

The World Bank declined to comment.

(Reporting by Karin Strohecker; Editing by David Goodman)

Russian economy seen growing from 2017 onwards: World Bank

A man walks in front of the Novokuibyshevsk refinery near the city of Samara, October 28, 2010. REUTERS/Nikolay Korchekov/File Photo

MOSCOW (Reuters) – Russia’s oil-dependent economy is expected to grow from 2017 onwards, supported by higher global crude prices and oil production rising to new post-Soviet highs, the World Bank said on Tuesday.

The international lender said it expected Russian gross domestic product to grow by 1.3 percent in 2017 and by 1.4 percent in 2018 and 2019, following two years of economic contraction.

Greater oil earnings would “positively influence consumer and investor sentiment, leading to a recovery of domestic demand and modest economic growth in 2017-19,” the World Bank said in a semi-annual report.

It said its latest growth forecasts were based on the assumption that crude prices would average $55 a barrel this year, $60 in 2018 and $61.5 in 2019, and that an OPEC/non-OPEC agreement to restrict output was extended.

It cited International Energy Agency data as forecasting that Russia’s oil output would rise to 11.38 million barrels per day (bpd) this year and 11.54 million bpd next year, due to rising production by small- and medium-size energy companies.

The World Bank said rising consumption and a recovery in investment activity would drive Russia’s economic growth, citing the 2018 soccer World Cup that Russia is set to host as giving a potential boost to public investment.

Inflation is forecast to stabilize near the central bank’s target of 4 percent, but Russia’s longer-term growth prospects are constrained by low productivity, it added.

In November the World Bank forecast the Russian economy would grow 1.5 percent this year.

(Reporting by Andrey Ostroukh; Editing by Alexander Winning)

World Bank ready to help Venezuela if asked: Latam chief

Venezuelan flags are seen during an opposition rally in Caracas, Venezuela, April 8, 2017. REUTERS/Christian Veron - RTX34Q8A

By David Lawder

WASHINGTON (Reuters) – The World Bank Group stands ready to assist Venezuela, a member and shareholder of the institution, if the government asks for help in dealing with a punishing economic crisis, the bank’s top executive for Latin America said.

Jorge Familiar, World Bank vice president for Latin America and the Caribbean, told Reuters in an interview on Monday that the bank has had no engagement with Venezuela since it paid off past loans in 2008 under the late former President Hugo Chavez.

But Familiar said the bank’s officials have been intensely watching growing shortages of food and medicine this year as the oil exporting country sinks deeper into recession, sparking violent protests.

Familiar said that the multilateral lender would be ready to develop an engagement program for Venezuela, but it would need to be “invited” to do so by President Nicolas Maduro’s government.

“As with all shareholders of the institution, if the situation were to arise, we would be ready to engage with Venezuela,” Familiar said. “What we would need is for them to call us.”

On Tuesday, Familiar said that there would be many steps required before a World Bank loan to Venezuela could be discussed, including re-establishing a dialogue with government officials and providing technical assistance and analysis.

“We are far off from lending to Venezuela,” he said. “We could have a conversation that would start on the analytical front.”

Last year, the World Bank approved $2.5 billion in new credit lines for Peru to backstop the country’s financial plans amid falling revenues as commodity prices slumped.

The credit lines carry reform requirements under World Bank programs to support improvements in public expenditure management, public education and to streamline the formation of new private companies.

Familiar said Peru was meeting benchmarks for that program.

Venezuela was the outlier on Tuesday when the World Bank released its latest economic forecasts for Latin America and the Caribbean, predicting that regional growth would turn positive, to 1.5 percent in 2017 as recessions end in Brazil and Argentina, after a regional decline of about 1 percent in 2016.

The World Bank forecast that Venezuela’s growth would fall by 3.1 percent in 2017 after a spectacular 12 percent drop in 2016. It forecast that Venezuela would start to recover by 2018, with 0.6 percent growth amid firmer oil prices, but lag far behind regional growth of about 2.5 percent for 2018.

(Reporting by David Lawder; Editing by Dan Grebler)

Drug resistance in people and animals may push millions into poverty

The mcr-1 plasmid-borne colistin resistance gene has been found primarily in Escherichia coli, pictured.

By Alex Whiting

ROME (Thomson Reuters Foundation) – If drug-resistant infections in people and animals are allowed to spread unchecked, some 28 million people will fall into poverty by 2050, and a century of progress in health will be reversed, the World Bank said on Monday.

By 2050, annual global GDP would fall by at least 1.1 percent, although the loss could be as much as 3.8 percent – the equivalent of the 2008 financial crisis – the Bank said in a report released ahead of a high-level meeting on the issue at the United Nations in New York this week.

The rise of “superbugs” resistant to drugs has been caused partly by the increased use and misuse of antibiotics and other antimicrobial drugs in the treatment of people and in farming.

“We cannot afford to lose the gains in the last century brought about by the antibiotic era,” Tim Evans, the World Bank’s senior director for health, nutrition and population, told the Thomson Reuters Foundation.

“By any measure, the cost of inaction on antimicrobial resistance is too great, it needs to be addressed urgently and resolutely,” he said.

Greater quantities of antibiotics are used in farming than for treating people, and much of this is for promoting animal growth rather than treating sick animals, economist Jim O’Neill said in a report in May commissioned by the British government.

The O’Neill report estimated that drug-resistant infections could kill more than 10 million people a year by 2050, up from half a million today, and the costs of treatment would soar.

LIVESTOCK

Farmers too will be greatly affected. The bank estimates that by 2050, global livestock production could fall by between 2.6 percent and 7.5 percent a year, if the problem of drug resistant superbugs is not curbed.

“Investments are urgently needed to establish basic veterinary public health capacities in developing countries,” Evans said.

Improved disease surveillance, diagnostic laboratories to ensure a disease is identified quickly, inspections of farms and slaughterhouses, training of vets, and oversight over the use of antibiotics are also needed, he said.

The U.N. Food and Agriculture Organization (FAO) estimates 60,000 tonnes of antimicrobials are used in livestock each year, a number set to rise with growing demand for animal products.

One of the most important ways to curb the spread of drug resistant microbes in food is to promote good farming practices, said Juan Lubroth, chief veterinary officer of FAO.

“I think this is where we can do most of our prevention – better knowledge on hygiene, vaccination campaigns, so these animals do not get sick and need antimicrobials (drugs),” Lubroth said in an interview from Rome.

Public demand for food that is uncontaminated, and better training of health professionals – doctors and vets – are also vital to help contain the problem, he added.

Hospitals and pharmaceutical companies also need to do more to treat their waste, he said.

The World Bank estimates that an investment of some $9 billion a year is needed in veterinary and human health to tackle the issue.

“The expected return on this investment is estimated to be between $2 trillion and $5.4 trillion … or at least 10 to 20 times the cost, which should help generate political will necessary to make these investments,” Evans said.

(Reporting by Alex Whiting, Editing by Ros Russell.; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women’s rights, trafficking, corruption and climate change. Visit http://news.trust.org)

China to relocate 2 million people this year in struggle to banish poverty

A homeless woman is seen on a cold winter night near Beijing South Railway Station in Beijing

BEIJING (Reuters) – China, fighting to stamp out poverty, will this year move more than two million of its poorest citizens from remote, inland regions to more developed areas, an official of the cabinet, or State Council, said on Tuesday.

The mass relocation of people is a strategy targeted at lifting 10 million citizens out of poverty by 2020, state news agency Xinhua has said.

Some of the villagers will move to areas with better social services, such as schools and hospitals, while others in remote areas will move to places with better roads and water supply, the official, Liu Yongfu, told a briefing.

The numbers would be stepped up gradually and may eventually hit 3 million, added Liu, who heads the cabinet’s Leading Group Office of Poverty Alleviation and Development.

“We will talk it over with the localities and accumulate some experience, after that we will increase step-by-step,” he said.

Despite two decades of rapid economic growth, poverty remains a huge issue in China, mainly in rural areas, where a lack of jobs drives out adults, leaving behind children and the elderly, often with limited access to schools and healthcare.

China’s poor, who make up about 5 percent of a population of nearly 1.4 billion, live mostly in the countryside, and earn less than 2,300 yuan ($362) a year, government and state media say.

In March Premier Li Keqiang promised a boost of 43 percent in funding for poverty relief programs. Last October, the cabinet said China aimed to lift all its 70 million poor above the poverty line by 2020.

In December, Li urged local authorities to provide housing, healthcare, schooling and employment for relocated citizens.

Since kicking off market reforms in 1978, China has lifted more than 800 million people out of poverty, but it remains a developing country and the reforms are incomplete, the World Bank says.

(Reporting by Megha Rajagopalan; Editing by Clarence Fernandez)

World Bank says Russia crisis to send poverty to highest in decade

Russian Money in Register

By Alexander Winning

MOSCOW (Reuters) – Russian poverty rates will return to 2007 levels this year as the economy continues to contract and inflation reduces people’s purchasing power, the World Bank said on Wednesday.

The international lender’s comments add to the view that it is ordinary Russians who have borne the brunt of the country’s economic crisis, as the blow for many firms has been cushioned by the weaker rouble and state aid.

The number of poor people in Russia will rise to more than 20 million out of a population of over 140 million, the World Bank said, the largest increase in poverty since the 1998-99 crisis that included a sovereign debt default.

Birgit Hansl, lead Russia economist for the World Bank, said the government would find it difficult to combat rising poverty because of a sharp fall in budget revenues stemming from the oil price collapse. Global prices for oil, Russia’s main export, have fallen to under $40 per barrel from over $115 in June 2014, while the economy has also been hit by Western sanctions imposed over Moscow’s role in the Ukraine crisis.

“It’s clear the fiscal space is very small to continue with social expenditure increases,” Hansl told a news conference.

Among ways to help ease poverty, she said social expenditure could be better targeted, including by means testing.

Mikhail Matytsin, a World Bank poverty economist, said the crisis had also driven a dramatic shift in consumption patterns.

The World Bank sees private consumption falling by 3 percent in 2016 in Russia after a decline of over 9 percent in 2015, a far sharper slump than during the 2008-09 global financial crisis.

“This is a new adjustment to the (economic) shock,” Matytsin said, saying households had cut back most on durable goods such as cars and domestic appliances.

The World Bank now sees private consumption recovering only very modestly and stabilizing at growth levels of around 2 percent from 2018. Before the latest economic downturn, private consumption in Russia had been rising at around 6 percent each year, Hansl said.

In its latest Russia economic report, the World Bank downgraded its growth forecasts to a contraction in gross domestic product of 1.9 percent this year and tepid growth of 1.1 percent in 2017.

It previously saw a contraction of 0.7 percent in 2016 and growth of 1.3 percent in 2017. It said its weaker forecasts reflected its new assumption that the oil price would average $37 a barrel in 2016, rather than the $49 forecast previously.

The World Bank said serious structural reforms, which it has long said are needed to ensure sustainable economic growth in Russia, were not likely before the 2018 presidential election.

(Editing by Jason Bush and Catherine Evans)