Expecting a major global recession due to the coronavirus pandemic, the World Bank on Friday said that its estimates suggest a much deeper economic downturn than the 2007-09 Great Recession.
World Bank President David Malpass said while the tragic impacts of the COVID-19 pandemic are being felt globally, this crisis will likely hit the poorest and most vulnerable countries and people the hardest.
IDA countries, which are home to two-thirds of the world's extreme poor, will be severely affected, Malpass said in his address to the Development Committee during the annual Spring meeting of the International Monetary Fund and the World bank.
The International Development Association (IDA) is the part of the World Bank that helps the world's poorest countries.
Beyond the health impacts from the COVID-19 pandemic, we are expecting a major global recession. Our estimates suggest a much deeper global downturn than the Great Recession, given the declines in production, investment, employment, and trade, Malpass said.
Since emerging in China late last year, the coronavirus pandemic has turned the world upside down, forcing half of humanity indoors and crippling the global economy.
Taking fast and broad-based action to address the challenge, he said that the World Bank has so far financed COVID-19 programs in 64 developing countries and will have 100 countries underway by the end of April.
The bank is able to provide USD 160 billion of financing over the next 15 months and the IDA will provide USD 50 billion of that total on grant and highly concessional credit terms, he said.
Malpass said that the program is based on three pillars: protect the poorest and most vulnerable households; support businesses and save jobs, which International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) are working with private sector clients to do by supporting trade and working capital lines; and help developing countries implement emergency health operations and strengthen economic resilience.
Noting that debt relief is a powerful, fast-acting measure that can bring real benefits to the people in poor countries, Malpass said that it is important that beneficiary countries use the additional resources to respond to COVID-19 and fully disclose their public sector financial commitments.
The World Bank and IMF are being asked to monitor their disclosures and the use of the fiscal space created by the debt relief, he said.
Malpass warned that if the international community does not move quickly to strengthen systems and resilience, the development gains of recent years can easily be lost.