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NEW for WB/IMF annual meetingsIs the World Bank’s COVID Response Big Enough, Fast Enough?
We scraped >1/2 million transactions from the Bank's website to judge.
Blog: https://www.cgdev.org/blog/new-data-show-world-banks-covid-response-is-too-small-too-slow
Paper: https://www.cgdev.org/publication/world-banks-covid-crisis-lending-big-enough-fast-enough-new-evidence-loan-disbursements
with @duggan_julian
@Morris_ScottA & G Yang
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Why are we worried about the speed of World Bank response?
Well, the Bank's own projections show global poverty is rising for the first time in 2 decades -- and many poor countries have little or no fiscal space to respond.
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Well, the Bank's own projections show global poverty is rising for the first time in 2 decades -- and many poor countries have little or no fiscal space to respond.
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Meanwhile, World Bank President David Malpass (Trump's nominee) has dropped hints he's going to drag his feet -- and wants to make COVID relief conditional on "structural reforms".
Here's Malpass:
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Here's Malpass:
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We see evidence of that foot dragging.
In February, the World Bank announced it would lend or grant $160 billion for COVID relief by June 2021 -- but right now, we find the Bank is on track to actually disburse only HALF that amount.
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In February, the World Bank announced it would lend or grant $160 billion for COVID relief by June 2021 -- but right now, we find the Bank is on track to actually disburse only HALF that amount.
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Why is the WB being so slow?
One reason is that unlike during the 2008-09 crisis, the WB has not pivoted to using its "development policy lending" instrument -- which can be disbursed quickly as general budget support.
It should!
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One reason is that unlike during the 2008-09 crisis, the WB has not pivoted to using its "development policy lending" instrument -- which can be disbursed quickly as general budget support.
It should!
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A positive point for the World Bank: relative to the 2008-09 crisis, the acceleration in IDA lending -- for the poorest countries -- appears to be faster this time. (Opposite is true for IBRD.)
Compare trajectories here:
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Compare trajectories here:
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However, the poorest countries were relatively spared in 08-09 GFC. Not this time. So relative to the crisis -- e.g., relative to the forecast decline in growth -- the Bank's response looks fairly paltry right now.
Red: forecast growth decline.
Blue: WB response as % of GDP.
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Red: forecast growth decline.
Blue: WB response as % of GDP.
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Finally, the World Bank has taken a lot of flak for boasting about its COVID lending -- while refusing to join the G20's debt standstill (aka DSSI) and freeze loan repayments from the same countries.
So we had a look at *net* flows to the World Bank.
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So we had a look at *net* flows to the World Bank.
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For the most part, poor borrowers are receiving quite a bit more in new loans than they're paying back to the World Bank right now. But there are exceptions (in red).
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Evaluating the WB's argument that by collecting on debts now it preserves its AAA credit rating and retains the ability to lend more is beyond our scope -- but would be more credible if the Bank showed clearer signals of, um, actually lending more.
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