WASHINGTON — Using new funds, existing vehicles, and fast-track authorities, the World Bank and International Finance Corporation aim to get recently announced COVID-19 funding to the countries and companies that need it fast, to tackle immediate health needs, and also to address longer-term economic and social impacts.
“We’re definitely going to take more risk.”— Stephanie von Friedeburg, COO, IFC
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“These are indeed extraordinary times and every day we learn more,” said Stephanie von Friedeburg, the chief operating officer at IFC, adding that the needs and view of clients have changed even in the past week.
The World Bank is focusing its initial support on the most vulnerable countries as identified by World Health Organization risk and vulnerability assessments, but that is “obviously evolving,” said Dr. Muhammad Pate, World Bank’s global director for health, nutrition, and population.
Client countries, particularly in East Asia and South Asia, started reaching out to the World Bank for technical advice and financing even before it announced its $14 billion coronavirus funding package, he said. Now countries from across all regions are requesting financing to procure personal protective equipment, purchase other medical supplies, and build out health care or quarantine facilities.
The World Bank Group board is expected to approve the first round of funding through the fast track facility within the next week, but countries that need to order essential commodities can do so and be eligible for retroactive financing once the approvals come through, he said in an interview with Devex.
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Once this first set of projects is approved by the board, many responsibilities will be delegated regionally, with the exception of funding amounts above a certain level. The World Bank has received nearly 50 requests from countries to be included in that first set of projects that get sent to the board, and it continues to work with regional teams and leadership to pull together requests and prepare to implement them, Pate said.
The World Bank has committed $6 billion to respond to COVID-19, $4 billion of which is new money, and $2 billion is a reprioritization of existing funds, he said. Of the new money $1.3 billion will go to the International Development Association, the part of the World Bank that helps the world’s poorest countries and $2.7 billion will go to the International Bank for Reconstruction and Development.
“A global recession hurts the poorest and most vulnerable the most and we need to keep that in mind ... with COVID-19.”— Stephanie von Friedeburg, COO, IFC
As it rolls out this new funding, the World Bank is coordinating with other multilateral institutions, development banks, and donors, at both a global and national level, Pate said. Early in the response, the World Bank worked with WHO on the strategic response plan, which it is using as a framework for its funding. Since early February the bank has been coordinating with other MDBs to share information, and coordinate their approach, he said.
On Thursday senior management at the bank met with leaders of other MDBs to talk about the various funding announcements that were recently made and to coordinate so “we can have an approach that supports countries” and implements responses effectively, Pate said.
The bank is also working on operations and supply chains with WHO and other United Nations agencies to ensure that limited supplies can be distributed efficiently and quickly, he said. Addressing global supply chains and figuring out how to get the required commodities, equipment and reagents to where they are most needed amid all the closures and disruptions are among the key challenges faced by the World Bank, Pate said.
While the World Bank is focused on the health response at this stage, Pate expects that eventually countries will need funding to support vulnerable communities with other needs, including potential food support.
“A global recession hurts the poorest and most vulnerable the most and we need to keep that in mind as we think about our longer-term strategy for dealing with COVID-19,” von Friedeburg told Devex.
“We need to tackle the health issues and work through the systems to do that and we need to keep in mind the economies in our countries of operation, and in particular in the IDA and FCS countries, where we’re going to see more economic dislocation and the inability to create the jobs that are necessary for the economic growth that we need,” she said.
IFC is working to help the private sector respond to immediate economic shocks in the first phase of its response, which is aimed at helping client companies continue functioning as much as possible.
The next phase will think more medium-term helping to restructure those who were hardest hit, she said.
IFC looked to leverage existing platforms that already have good processes and connections in the response. Two of them are in the trade space — one aimed at supporting local financial institutions, so they can facilitate trade to maintain the flow of basic supplies and medical supplies, and another aimed at global financial institutions to provide financing to help trade between countries and ease challenges of products getting stuck along the way.
IFC is also using its working capital facility to help share risk with banks so they can lend to small and medium-sized businesses that are already feeling pressure due to the virus.
IFC also has a tool for businesses in specific sectors, including health care, where the corporation is providing financing to expand capacity or weather delays.
“We’re definitely going to take more risk,” von Friedeburg said, adding that IFC has confidence in the management teams and businesses it supports and believes that in the medium- to long-term they can succeed.
Using those tools to get money to SMEs in the poorest countries will be critical to addressing their needs, as will figuring out how to use the IDA private sector window on those facilities so eligible countries can have access to resources and liquidity quickly, she said.
A key part of the IFC’s new strategy is a commitment to develop a business line that will help create projects in the poorest countries, and that capacity “is more important than it was before because if we can make our upstream business viable, and create more projects faster we’ll be able to help some of those countries get back on their feet,” von Friedeburg said.
IFC is moving forward with hiring about 260 people for that business line, which will be built virtually until staff can be back in the office. The transition to teleworking has been fairly seamless with existing clients, but IFC is still working out how to help new clients, she said.
“This virtual working may actually reduce our global footprint and it's going to help us realize that we don’t all need to be in airplanes all the time so I think that’s a very positive outcome,” von Friedeburg said.
The greatest challenge for IFC is balancing its existing balance sheet and portfolio with its ability “to find business that will really push the economy forward as the COVID crisis expands and deepens in different countries,” she said.
“I already see the tension inside the organization and I think it's going to be important that we find that balance of how do we continue to do more with new clients in different situations as well as continue to help our existing clients.”