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To cope with the global economic crisis sparked by Russia’s war in Ukraine and resulting sanctions, the World Bank is putting together an aid fund larger than the one it assembled to deal with COVID’s worldwide infestation.
The bank is contemplating a $170-billion package that would be disbursed over 15 months.
The program would begin this month and extend through June 2023.
About $50 billion would be spent by August.
The bank’s board will discuss the plan in the next few weeks, according to a statement by World Bank president David Malpass, who noted that the scope of the plan surpasses the $157 billion the bank spent to soften the initial impact of the COVID War.
In March, the bank announced $3 billion in nonmilitary aid for Ukraine.
Malpass made the comments ahead of the bank’s spring meeting, which was held from 18 April to 24 April.
The bank also has cut its estimate of the world’s economic expansion this year from the 4.1 percent it forecast in January to 3.2 percent now, compared to 2021’s 5.7-percent growth.
The global slowdown is due to the 4.1-percent economic contraction the bank sees this year across Europe and central Asia, including Russia and Ukraine, Malpass said in a press briefing.
Ukraine’s economic output will plummet by 45.1 percent this year because of Russia’s invasion, the bank predicted; before the war, the bank’s analysts had expected Ukraine’s economy to expand dramatically in the years ahead.
Early this month, the bank projected Russia’s economic output to shrink by 11.2 percent this year.
The “three overlapping crises” of “COVID, inflation, and Russia’s invasion of Ukraine” will sharpen the debt crisis this year in low- and modest-income nations, he noted, as prices soar for energy, fertilizer, and food.
Rich nations have been slow to help debt-burdened countries restructure the $35 billion in debt coming due this year, he said.
“Countries are under severe financial stress,” Malpass warned. “Sixty percent of low-income countries are already in debt distress or at high risk of it.”
He called again on the Group of 20 nations—the world’s richest—to improve the so-called Common Framework structure the countries are using to reconfigure debts of countries in growing danger of default.
“Never have so many countries experienced a recession at once, suffering lost capital, jobs, and livelihoods,” Malpass said. “At the same time, inflation continues to accelerate, reducing the real incomes of households around the world, especially the poor.”
Developing nations’ debt has reached an average of 250 percent of GDP, a 5-year record, he noted.
“Most emerging markets and developing economies are ill-prepared to face the coming debt shock,” he said.
TRENDPOST: The World Bank has slashed its global growth forecast for this year by about 25 percent, a huge rise in pessimism, and sees a recession in much of the world.
TREND FORECAST: The World Bank’s forecast is for recession, but the catalog of economic woes it describes point to Dragflation, our Top 2022 Trend that sees prices continuing to inflate while nations’ economic output shrinks.