The World Bank is planning $ 1.5 billion (£ 1.2 billion) in financial support for Ukraine to help maintain critical services as the country fights a new Russian attack in Vladimir Putin’s ongoing war.
The bank said the funds would be used to support the continuation of key government services, including salaries for hospital workers, old-age pensions and social programs for vulnerable people.
In addition to the $ 944 million in emergency funding already mobilized by the World Bank, the institution said it was preparing new funding to help key government services continue to function during the war.
Funding for $ 1.5 billion in investment projects includes $ 1 billion in support from the International Development Association, as well as $ 472 million in funding guaranteed by the International Bank for Reconstruction and Development.
Announcing the funds in a speech in Poland on Tuesday, World Bank President David Malpas said the organization provides immediate working capital for companies providing critical supplies to Ukraine.
“We are working to help Ukrainian refugees as they plan to return home, helping host communities as they receive Ukrainians, and helping many millions of IDPs in Ukraine who have lost their homes and livelihoods,” he said. .
Founded in 1944 to help Europe recover from World War II, the Washington-based organization includes Russia and Ukraine as members. Malpas, who met with Ukrainian President Volodymyr Zelensky in Munich on February 19, days before the war broke out, said the bank was “ready to help Ukraine rebuild when the time comes.”
The head of the Global Development Organization said he was analyzing the consequences of the ongoing war, including rising food and energy prices, which are expected to have a severe impact on low-income countries around the world. “[We are] preparing for a rapid response to a crisis that will provide targeted support to developing countries, “he said.
The World Trade Organization has lowered its forecasts for world trade growth for the year, saying the outlook for the world economy has been clouded since the start of the war on February 24.
With broad sanctions imposed by Western allies in response to Putin’s war, Russia’s economy is expected to fall into a deep recession. Former Russian Finance Minister Alexei Kudrin said the economy was set for the biggest contraction in economic output since 1994, when the country struggled to recover from the collapse of the Soviet Union.
The Kremlin’s economy and finance ministers are working on new forecasts, the state news agency RIA reported. “The official forecast will be for more than about a 10% contraction,” said Kudrin, who was Putin’s finance minister from 2000 to 2011, according to the report.
The World Bank said last week that Russia’s economy is expected to shrink by 11.2% this year, while Ukraine will experience a 45.1% decline due to the scale of the humanitarian crisis unleashed by the war.
However, the conflict is also leading to global disruptions, with rising prices for energy, fertilizers and food. Together, Russia and Ukraine account for more than a quarter of world wheat exports, with lower-income countries in the Middle East and North Africa being among the largest buyers.
Malpas warned that the war in Ukraine and the continuing blockade of Covid in China are affecting the recovery of the global economy from the pandemic.
Speaking ahead of spring meetings of the World Bank and the International Monetary Fund next week, he said poorer countries would find it harder to respond to shocks than richer Western countries.
“The consequences are exacerbating inequality as the war affects commodity and financial markets, trade and migration ties and investor and consumer confidence,” he said.