World Bank deploys US$29.1b to support LAC countries' COVID responseTuesday, August 03, 2021
WASHINGTON, United States (CMC)— The World Bank Tuesday said that it deployed a record US$29.1 billion to help Latin America and the Caribbean (LAC) respond to the coronavirus (COVID-19) pandemic that has severely damaged the lives and livelihoods of millions of people in the region.
The Washington-based financial institution said that since the start of the pandemic in April last year, through the financial year that ended in June 2021, the funds were used to fight the pandemic's health, economic, and social impacts, as well as support the region respond to challenges such as hurricanes and migration.
“This is the largest crisis response of any such period in the Bank Group's history,” the World Bank said, noting that the funds raised included a combined US$14.5 billion from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); US$10.8 billion from the International Finance Corporation (IFC) to promote private sector led sustainable development, and US$3.8 billion in guarantees by the Multilateral Investment Guarantee Agency (MIGA).
“Latin America and the Caribbean was the region hardest hit by the COVID-19 pandemic, with 20 per cent of global cases and a third of global deaths. The high infection rates and sharply contracting growth have had devastating social and economic impacts,” said World Bank Vice President for Latin America and the Caribbean (LAC) Carlos Felipe Jaramillo.
“Since the pandemic began, we have moved quickly to provide substantial new funding to help countries tackle the crisis and provide relief to the most vulnerable,” he added.
The World Bank said its financing and expertise this fiscal year focused on social protection, health emergencies, tests, vaccines and strengthening countries' health systems as well as record deployment of short-term finance during the first months of the pandemic to help the private sector stay afloat.
IFC, the private sector arm of the World Bank Group, committed US$10.8 billion in Latin America and the Caribbean, including five billion dollars in mobilization and two billion dollars in short-term finance driven by increased demand for fast-track financing for the manufacturing, agribusiness and services sectors, continued support for the financial industry and successful engagements to establish Public Private Partnerships (PPPs) in the region.
Since April 2020, when IFC kick started its COVID-19 response, IFC has committed close to US$3.2 billion in liquidity support in the region, which has helped expand lending to MSMEs so they can continue operations, worked with financial institutions to promote green financing, and supported export-oriented agribusinesses in region.
“IFC has been stepping up to offer innovative solutions to support sectors severely affected by the pandemic, with a focus on helping companies preserve jobs and ensuring that MSMEs can access financing,” said Georgina Baker, IFC Vice President for Latin America and the Caribbean, Europe and Central Asia.
“We also continue to open new paths to greening the region's financial system and promoting greater financial inclusion for women,” she added.
Almost 40 per cent of IFC's own account investments in the last fiscal year were aimed at financing climate-smart solutions.
MIGA, the world's largest political risk insurance provider, whose mandate is to help drive impactful foreign direct investment to developing countries, issued a little over US$3.8 billion in new guarantees in Latin America and the Caribbean over the 15-month period.
MIGA said its commitment to improving the lives of citizens in LAC, who have been especially hard hit by the COVID-19 pandemic, is strong with roughly half of all new MIGA guarantees in the financial year 2021 were issued in the LAC region.
MIGA supported eight new projects in eight LAC countries during the year, with 98.6 per cent of these new issuances were through MIGA's US$6.5 billion COVID-19 Response Programme.
It said an example of MIGA's efforts to deliver tangible development impact in the face of the pandemic is its first ever engagement in The Bahamas.
MIGA said it issued guarantees on loans extended to The Bahamian government. These loans will be used to modernize two public hospitals and provide financing to micro, small and medium enterprises.
“MIGA worked closely with governments, businesses, and financial institutions in LAC to deploy its guarantees and secure private foreign capital resources to complement efforts towards mitigating the social and economic impacts of the pandemic,” said MIGA Vice President and Chief Operating Officer S Vijay lyer.
“In addition to MIGA projects securing better health outcomes for citizens, FY21 projects in LAC contributed to expanding the credit available to small and medium enterprises, financing climate measures and building resilience,” lyer added.
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