The World Bank is currently negotiating with 30 to 40 countries to discuss potential crisis assistance aimed at managing energy shocks and rising prices stemming from Middle Eastern conflicts, stated the organization’s president, Ajay Banga, in an interview with Reuters.
Banga noted that the global economy has shown considerable resilience, partly due to massive investments in artificial intelligence (AI) and adjustments in oil supply and demand. As a result, few countries have requested the initial $25 billion crisis funds made available by the World Bank at the onset of the war in late February.
However, a sharp increase in diesel and fertilizer prices, along with other challenges such as the impending weather effects of the “super El Niño” phenomenon, have intensified the difficulties faced by developing nations, Banga mentioned before the upcoming annual meetings of the International Monetary Fund and the World Bank.
Increased Demand for Assistance Expected
“There is pressure, so I believe that in the coming months, more countries will likely request a portion of that initial $50–60 billion,” Banga said, referring to the initial $25 billion plus an additional $35 billion that countries could access by reallocating resources from already approved World Bank projects.
“We will see, but we are prepared. We are engaged. We are in discussions with a number of them; you know, between 30 and 40 countries are in dialogue with us,” he added.
Many developing countries have been severely impacted by the sudden rise in energy prices and high-interest rates, which have increased borrowing costs at a time when their budgetary resources remain depleted from pandemic measures and inflation pressures following Russia’s invasion of Ukraine.
The World Bank estimates that developing nations will owe external creditors approximately $400 billion by 2026, with interest payments alone accounting for one-third of this total.
Potential for Increased Funding Beyond Pandemic Levels
Banga indicated that more countries have shown interest in redirecting existing projects rather than using the immediate crisis window to cover liquidity needs.
In the event of worsening conditions, the World Bank could provide up to $100 billion, surpassing the $70 billion allocated during the pandemic, he said.
Last month, the World Bank announced it attracted a record $112 billion in private capital for the year ending in June, compared to $69 billion the previous year and more than triple the total from 2022, before Banga, a former Mastercard CEO, took office.
This amount contributed to the $123 billion invested from the bank’s own resources that year, reaching a combined total of $235 billion, according to Banga, underlining the importance of leveraging all available resources, especially as Western nations have drastically cut official bilateral development aid.
“There is no one-size-fits-all answer when the world faces such challenges. What you need to do is find a way to make your coat from the fabric you have,” Banga remarked.
