The fiscal resources of international lending agencies such as the World Bank have been scaled up to help countries cope with the economic and social effects of the COVID-19 pandemic.
Through its Pandemic Emergency Financing Facility (PEF), the bank has allocated US$195 million to more than 60 countries. Just recently, Finance Minister, Winston Jordan revealed to the media that Guyana is in receipt of a US$1M grant under the PEF. The financial institution has also pledged to deploy US$160B in financial support over the next 15 months in more than 100 countries. This includes US$50 billion in grants and highly concessional loans.
Even as it is eager to provide this much needed financial assistance, the World Bank has sent a strong message to all governments collecting its aid, to ensure transparency is at the heart of all spending. Making this point a few days ago was President of the World Bank Group, David Malpass. The official stated that transparency should cover all financial commitments and debt-like instruments while noting that and efforts should be made to reduce the use of non-disclosure agreements and instances where the lender knows more than the people in the borrowing country.
Malpass said that these steps toward financing, liquidity and transparency are important and will help a lot. He noted however that it would not be enough. Making reference to one of the Bank’s most recent reports on Global Economic Prospects for 2020,
Malpass said it was found that a deep global recession is pending while adding that it would be accompanied by a collapse in global trade, tourism and commodity prices and extraordinary market volatility. Further to this, the World Bank Group President said that the pandemic will have severe and long-lasting socioeconomic impacts that may weaken long-term economic growth prospects, lower investment because of elevated uncertainty, and lead to the erosion of human capital.
With this in mind, Malpass said that policymakers can make a robust recovery more likely by maintaining private sector systems and infrastructure and allowing markets to allocate resources toward productive activities. Expounding further, he said that balance sheet stress imposed by the recession may reveal sovereign and corporate weaknesses. The official suggested that policymakers can resolve balance sheet related problems by ensuring transparency of financial commitments.
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