World Bank in talks with 30-40 countries for crisis aid
What's the story
The World Bank is currently engaged in discussions with 30 to 40 countries for potential crisis aid. The move comes as a response to the energy shocks and price hikes resulting from the ongoing conflict in the Middle East. Ajay Banga, President of the World Bank, revealed this during an interview with Reuters.
Economic resilience
Global economy showing resilience
Despite the ongoing crisis, Banga believes the global economy has shown a fair amount of resilience.
He attributes this to major AI investments and adjustments in oil supply and demand.
However, he also noted that only a few countries had sought the initial $25 billion in crisis funds made available by the World Bank when the conflict broke out in late February.
Economic challenges
Rising costs making life difficult for developing countries
Banga emphasized that rising diesel and fertilizer prices, along with other factors like the impending Super El Nino weather phenomenon, are making life difficult for developing countries.
He said there is pressure on these nations and predicted that more of them might seek a share of the initial $50-$60 billion in crisis funds over the coming months.
Financial strain
Developing countries facing rising borrowing costs
Developing countries have been severely impacted by rising energy costs and high interest rates, which have increased their borrowing costs.
This comes at a time when these nations are still dealing with the fiscal impact of COVID-19 measures and inflation spikes after Russia's invasion of Ukraine.
The World Bank estimates that developing countries will owe external creditors some $400 billion in 2026, with interest payments alone accounting for one-third of the total.
Capital influx
World Bank attracts record $112B in private capital
The World Bank recently announced that it attracted a record $112 billion in private capital for the year ending June.
This is a significant jump from the $69 billion it attracted last year and more than three times the 2022 total.
The bank also invested $123 billion from its own resources for that year, bringing the total to an impressive $235 billion.