World Bank | Business Upturn

World Bank upgrades India’s growth forecast from 6.6% to 7% for FY25

Aman Shukla — Tue, 03 Sep 2024 07:06:17 +0000

India’s economy is doing well! The World Bank has increased its forecast for India’s economic growth in the current financial year, raising it to 7% from 6.6%. According to government figures released last week, the Indian economy grew by 6.7% in the first quarter of fiscal year 2024-25. The slowdown was attributed to reduced government expenditure during the national elections.

In spite of this, India remained the major economy with the fastest growth rate in the world, outpacing China’s 4.7% growth rate in the corresponding period.

Economic analysts believe that the slowdown will be short since declining inflation rates and heightened government spending are expected to boost GDP in the following months.

In comparison to the same period the previous year, the Gross Value Added (GVA), which economists believe to be a more accurate indicator of economic development, increased by 6.8% in the April–June quarter. This is a boost from the 6.3% GVA growth achieved in the previous quarter.

World Bank Group allocates over $40 Billion to accelerate climate action

Dimple Gehlot — Mon, 04 Dec 2023 11:33:57 +0000

By allocating 45% of its yearly financing to the fight against climate change, the World Bank Group is going above and beyond its initial targets. This is a significant increase, allocating over $40 billion for the fiscal year from July 1, 2024, to June 30, 2025, about $9 billion up from the original plans.

This higher goal exceeds the Bank’s 2021 commitment to complete 35% of climate-related projects by 2025; performance so far has averaged 36.3% since July 2022, ahead of schedule.

The World Bank’s increased climate commitment demonstrates its commitment to this objective, which was reinforced after it was recently granted an enlarged mandate to establish a world free of poverty on a sustainable planet. The World Bank Group’s programs prioritise protecting ecosystems and biodiversity, which benefits people and the environment alike, in addition to strengthening resilience and adaptation for those most impacted by climate changes.

The Bank will continue to provide adaptation measures for nations facing climate-related shocks and mitigation efforts to lower greenhouse gas emissions, addressing the underlying causes of climate change, in keeping with its commitment to leverage its financial resources for climate action.

The World Bank Group stands as a major global provider of funding and expertise for developing nations. Its five institutions are united in their dedication to alleviating poverty, fostering inclusive prosperity, and advancing sustainable development.

New World Bank Chief Ajay Banga gets optimistic about India’s growth

Kashvi Basu — Mon, 17 Jul 2023 17:01:56 +0000

The freshly appointed World Bank chief Ajay Banga on Monday said that he has been extremely optimistic about India than now, as the country remains the fastest growing major economy globally.

“I’m more optimistic about India today as a whole than I have been for a long time. The fact is that the world economy is in a difficult place,” Banga said in am event at the G20 event at Gandhinagar on Monday. According to him, India had outperformed what everybody has thought but it won’t mean there won’t be more challenges. The World Bank last month revised India’s GDP growth to 6.3% in FY24, down from 6.6% estimated earlier. It expects global growth to be around 2.1% during the same period. The Washington-headquarters institution attributed the slowdown in India to constrained private consumption due to high inflation. However, the World Bank expects the South Asian country to continue to be among the fastest-growing economies.

The IMF forecast that is the World Bank forecast are that the world will get a little challenging over the next year or so. Ajay Banga said in a speech that, “We can change destiny, that’s what we should think of right now. “

World Bank approves $255.5 million loan to improve India’s technical education

Dixita Hazarika — Sat, 24 Jun 2023 12:22:02 +0000

The World Bank’s Board of Executive Directors have approved a $255.5 million loan to help India improve the quality of its technical education and provide more career opportunities to students. Over the next five years, the project will support around 275 government-run technical institutions in selected states across the country, benefitting more than 350,000 students each year.

India, in terms of tertiary education has grown steadily from 29 million enrolled students in 2011-12 to 39 million enrolled students across 40,000 institutions in 2019-20. While India’s tertiary education sector is among the largest in the world, recent studies have observed increased gaps in both technical and non-technical skills such as reasoning, interpersonal communication, and conflict resolution.

The Multidisciplinary Education and Research Improvement in Technical Education Project will support the improvement of student’s skills and employability by focusing on better research, entrepreneurship, and innovation; and improve governance in technical institutions. Students will get access to upgraded curricula including emerging technologies in communication and climate resilience. They will also be benefiting from better internship and placement services, including opportunities to network with professional associations.

Auguste Tano Kouame, the World Bank’s Country Director for India said, “India has one of the largest and fastest-growing tertiary education systems in the world. The project will support the Government of India’s National Education Policy 2020, which calls for modernising this critical sector to better prepare students for emerging jobs and business opportunities.” She also added that improving the participation of females in technical education will receive special attention.

The project will support participating institutions to organize outreach programs providing prospective female students, parents, and guardians with more and better information on technical education program options, build sensitivity to gender issues, and address misconceptions about women’s capabilities in the science, technology, engineering and math (STEM) fields. Women students will also be encouraged to connect with mentors and alumni to promote completion of their course, and gain early exposure to the world of work.

Studies have pointed to the need of improving India’s research and innovation linkages with industry and society. Out of 9,581 technical education institutions, only 504 have incubated at least one startup, and 525 founded two to four startups in the past two years. The project will be supporting research and innovation in sectors like climate change and sustainable energy.

According to Nina Arnhold and Namrata Tognatta, Task Team Leaders for the project,” The project will also help participating institutions strengthen their governance and internal quality assurance mechanisms by building their capacity for self-assessment, developing institutional quality policies, and preparing for accreditation. At the state level, the project will help set up quality assurance cells to support the country’s goal of providing greater empowerment and autonomy to educational institutions while also holding them accountable for delivering on learning and employability outcomes.”

This loan from the International Bank for Reconstruction and Development (IBRD) has a final maturity of 14 years including a grace period of five years.

World Bank holds India as one of the fastest growing economies, predicting its GDP growth to climb 6.3% in FY24

News Desk — Tue, 04 Apr 2023 10:44:16 +0000

In its assessment of global economic prospects, which was issued on Tuesday, the World Bank predicted that India will see a current account deficit of 5.2% and a rise of 6.3% in GDP. According to the findings of the research, “due to contraction in expenditure on the basis of slower income, it is expected that India’s GDP growth would decelerate to 6.3 percent in FY24.” Even if there are some signs that growth is slowing down, the economy of India is nevertheless resilient, as stated in the flagship report that is published every two years by the World Bank.

On the other hand, in spite of significant challenges posed by the international environment, the study found that India is one of the world’s only economies that is growing at the quickest rate in the entire globe. The study conducted by the World Bank indicates that India’s overall growth is still robust and is anticipated to be 6.9% for the whole year, with a real GDP expanding 7.7% year over year during the first three quarters of the fiscal year 2022–2023.

In the financial year 2024, it is anticipated that the current account deficit would amount to 5.2% of GDP. According to the study, the annual rate of retail inflation in India would decrease to 5.2 percent in FY24 from its current level of 6.6 percent. “The primary factor that contributed to growth was robust domestic demand, which was bolstered by robust consumer spending among higher-income groups as well as better governmental investment.” According to the findings of the study, despite this fact, the rise of low-income groups’ consumer expenditure trailed behind that of their income.

According to the annual book published by the World Bank, it is projected that slower consumer growth and challenging external conditions would place limits on the economic expansion of the Indian nation. According to the research, the withdrawal of financial aid measures connected to the pandemic is anticipated to result in an increase in borrowing rates as well as a slower rise in revenue.

World Bank chief David Malpass to step down by June-end

Aryan Jakhar — Thu, 16 Feb 2023 02:10:25 +0000

David Malpass, the World Bank’s chief executive officer, said Wednesday that he will step down by the end of June.

“After a good deal of thought, I’ve decided to pursue new challenges,” the 66-year-old was reported as saying in a bank statement after informing its board of his choice.

“This is an opportunity for a smooth leadership transition as the Bank Group works to meet increasing global challenges,” Malpass added.

During his four-year stint at the World Bank, the organisation faced worldwide crises like as the Covid-19 outbreak and Russia’s invasion of Ukraine, as well as an international economic slump.

In a statement, the bank stated that it had “responded promptly” to these issues, mobilising a record $440 billion in response to the epidemic.

“Under his leadership, the Bank Group more than doubled its climate finance to developing countries, reaching a record $32 billion last year,” the statement added, referring to Malpass.

In a note to staff seen by AFP, Malpass said: “Developing countries around the world are facing unprecedented crises and I’m proud that the Bank Group has continued to respond with speed, scale, innovation, and impact.”

Malpass worked for the US Treasury before becoming World Bank President.

Indian economy would grow at a strong 6.6% in FY24: World Bank

Aryan Jakhar — Wed, 11 Jan 2023 04:16:49 +0000

The World Bank projected on Tuesday that the Indian economy will grow at a robust 6.6% in 2023–24 (FY24), which is a slowdown from the estimated 6.9% growth rate in 2022–23 (FY23). The World Bank cited “limited spillovers” to Asia’s third-largest economy from a projected global slowdown as the reason for this projection.

The Bank of International Settlements said in its report titled Global Economic Prospects that the global economy is “dangerously close” to entering a period of contraction, predicting that expansion would slow dramatically in 2023 and reach its third-slowest pace in nearly three decades.

It is possible that the global economy will enter a recession if other adverse shocks occur, such as greater inflation, even stricter policies, financial stress, deeper weakness in key economies, or escalating geopolitical tensions. “This would be the first time in more than 80 years that two global recessions have occurred within the same decade,” it said. “This would represent the first time that two global recessions have occurred within the same decade.”

The expansion of the world economy is anticipated to reach 1.7% in 2023, while the economies of the Euro Area and the United States are anticipated to expand at rates of 0% and 0.5%, respectively, throughout the course of the year.

As a result of the removal of economic limitations, pent-up consumer spending in China is expected to be released in 2023, which will cause the country’s growth rate to accelerate to 4.3%.

It is anticipated that China will have expanded at a rate of 2.7% in 2022, making it the slowest pace since the middle of the 1970s (with the exception of the pandemic year of 2020).

The World Bank predicted that a slowdown in the global economy as well as increased uncertainty would have a negative impact on the growth of exports and investments in India.

However, an increase in government spending on infrastructure and various business facilitation measures will attract private investment and assist the growth of industrial capacity. The pace of growth is anticipated to decelerate, dropping to 6.6 percent in FY23/24 before returning to its potential rate of somewhat more than 6 percent. It was also said that out of the seven main EMDEs (emerging markets and developing economies), it was anticipated that India would have the quickest economic growth.

In spite of this, the vast majority of analysts anticipate that India will either expand at a rate close to or below 6 percent in FY24, given the increasing global challenges.

According to the Bank, the shift toward more restrictive fiscal and monetary policies in several countries to address rising domestic and external imbalances and financing pressures is occurring at a time when growth is already slowing globally and output gaps are widening in several regional economies. This is because these countries are attempting to address rising domestic and external imbalances and financing pressures.

According to the report, “In India, it is expected that monetary and fiscal tightening over the forecast horizon will be less pronounced than in much of the rest of the (South Asia) region.” This is because adequate policy buffers have provided breathing room to support the ongoing recovery and boost public investment.

The multinational agency with its headquarters in Washington, DC, stated that India’s 9.7 percent GDP in the first half (April–September) of FY23 indicates a significant rise in private consumption as well as growth in fixed investment.

Recent projections made by India’s statistics agency indicate that the Indian economy will expand by 7% in FY23.

“Consumer inflation spent most of last year above the Reserve Bank’s upper tolerance limit of 6 percent, prompting the policy rate to be raised by 2.25 percentage points between May and December.” “India’s goods trade deficit has more than doubled since 2019 and was $24 billion in November, with deficits for crude petroleum and petroleum products ($7.6 billion) and other commodities (for example, ores and minerals at $4.2 billion) accounting for the widening,” it added.

According to the Bank, severe weather can also make it more difficult for many nations to put their macroeconomic plans into effect.

“For example, in India, more erratic monsoon rains have translated into more volatile food prices, destabilising households’ inflation expectations, undermining the ability to forecast inflation, and muddling the formulation of monetary policy,” it added.

World Bank lowers its estimate of China’s growth to 2.7%

News Desk — Tue, 20 Dec 2022 05:59:33 +0000

The World Bank reduced its China growth forecast for the year as the pandemic and weaknesses in the property industry affected the world’s second-largest economy, according to the news agency AFP.

The World Bank reduced its projection to 2.7% from 4.3% in June, according to an official statement. It also dropped its forecast for next year from 8.1% to 4.3%.

In a press release, the World Bank, “Economic activity in China continues to track the ups and downs of the pandemic — outbreaks and growth slowdowns have been followed by uneven recoveries.”

“Real GDP growth is projected to reach 2.7 percent this year, before recovering to 4.3 percent in 2023, amid a reopening of the economy,” it added, as quoted by AFP.

China dramatically dropped its zero-Covid policy last month, after three years of sudden lockdowns, mass testing, lengthy quarantines, and travel restrictions. However, commercial interruption has remained as the number of Covid cases has increased, and some limits remain in place.

“Continual adaption of China’s Covid-19 policy will be critical, both to manage public health concerns and to prevent additional economic dislocation,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea.

It went on to say that ‘chronic stress’ in the real sector, which accounts for roughly a quarter of yearly GDP, might have wider macroeconomic and financial impacts. It continued by stating that the hazards of extreme weather induced by climate change, as well as the broader global recession, posed a threat to growth.

The downturn in China comes as the global economy is hit by increasing interest rates aimed at tackling runaway inflation that has been generated by Russia’s war in Ukraine as well as global supply chain growls.

World Bank raises its forecast for India’s GDP growth in FY23

Aryan Jakhar — Tue, 06 Dec 2022 07:16:30 +0000

According to a report released by the World Bank on Tuesday, India’s economy will expand by 6.9% in the current fiscal year as a result of tighter monetary policy and rising commodity prices.

India’s growth domestic product (GDP) prediction has been raised from 6.5% to 6.9% for FY23 in the World Bank’s India Development Update, which also notes that India is well-positioned to combat global headwinds. The Bank reduced its forecast for the upcoming fiscal year from 7% to 6.6%.

The World Bank forecasts that inflation will be 7.1% in FY23 and noted that the decline in commodity prices may lessen inflationary pressures. Additionally, it stated that the Indian government was on track to meet its 6.4% fiscal deficit target. “India is affected by spillovers from the US, Euro area and China,” it said.

Commodity price increases and tightening monetary policies by central banks around the world have hurt India, just like they do its other global competitors. The World Bank is optimistic, meanwhile, that India will be significantly less affected by the global recession than other emerging economies.

According to the official figures provided last week, India’s GDP grew by 6.3% in the third quarter of this year, less than the 8.4% growth witnessed at the same time last year, as industrial production decreased and the base effect diminished.

The first quarter of India’s economy saw growth of 13.5%, and the second quarter’s growth was in line with expectations set by the Reserve Bank of India (RBI). The current fiscal year is expected to rise by 7%, according to the central bank.

India’s annual retail inflation rate decreased to 6.77% in October, a three-month low, but some economists think it may still be two years before it reaches 4%, the middle of the RBI’s target range.

Nirmala Sitharaman will attend annual meeting of the World Bank and IMF in US

Aryan Jakhar — Mon, 10 Oct 2022 14:20:28 +0000

Nirmala Sitharaman, the Union Minister for Finance and Corporate Affairs, will go to the United States to attend the annual meetings of the World Bank and the International Monetary Fund (IMF), the Ministry of Finance announced on Monday.

On October 11, 2022, Nirmala Sitharaman will begin her official visit to the US. According to a formal statement issued by the Union Ministry of Finance, she would be present at the G20 Finance Ministers and Central Bank Governor (FMCBG) meetings, as well as the Annual Meetings of the International Monetary Fund (IMF) and the World Bank.

The Finance Minister will participate in bilateral discussions with a number of nations, including Germany, Mauritius, the UAE, Iran, Japan, South Korea, Saudi Arabia, Australia, Bhutan, New Zealand, and the Netherlands. The OECD, European Commission, and UNDP leaders and heads will also meet privately with the finance minister.

In a high-level discussion, the finance minister will separately meet with David Malpass, president of the World Bank, and US Treasury Secretary Janet Yellen to discuss issues of shared interest.

The Union Finance Minister will also take part in a fireside conversation at the prestigious Washington, DC-based non-profit Brookings Institution on “India’s Economic Prospects and Role in the World Economy.”

During her visit, Ms. Sitharaman will speak at the School of Advanced International Studies (SAIS), John Hopkins University, about India’s distinctive Digital Public Goods (DPG) story and the multiplier effects produced in India through the interconnections of “Technology, Finance, and Governance.”

The Union Finance Minister will participate in roundtable discussions with USIBC and USISPF on the topics of “Strengthening Investment and Innovation in India-US Corridor” and “Investing in India’s Digital Revolution” later in the visit.

The finance ministry stated that these talks with influential business figures and investors are intended to showcase India’s policy priorities and discuss ways to encourage foreign investment by highlighting India’s attractiveness as an investment location.

India’s FY23 GDP growth projection is reduced by the World Bank to 6.5%

Aryan Jakhar — Thu, 06 Oct 2022 15:55:53 +0000

The World Bank on Thursday reduced India’s projected gross domestic product (GDP) growth for the fiscal year 2022–23 from its earlier estimate of 7.5% to 6.5% due to concerns about a global recession in major industrialised nations.

The international banking organisation issued a warning that India’s economic outlook will continue to be hampered by the effects of the Russia-Ukraine war and a tightening of monetary policy globally.

“The spillovers from the Russia-Ukraine war and global monetary policy tightening will continue to weigh on India’s economic outlook: elevated inflation on the back of higher prices of key commodities and rising borrowing costs will affect domestic demand, particularly private consumption in FY2023/24, while slowing global growth will inhibit growth in demand for India’s exports,” it said in its latest update.

The World Bank research also stated that increased uncertainty and higher financing costs are likely to restrain the expansion of private investment.

The Reserve Bank of India (RBI) also reduced its forecast for the current financial year, from 7.2% to 7%, shortly after the World Bank cut its estimate of India’s growth.

Developing nations to face post-COVID fragility in financial sector: World Bank

Sathvika Chelakani — Tue, 15 Feb 2022 14:45:13 +0000

Some of the world’s poorest nations face a debt crisis drastically which will deeply complicate efforts to revamp from the economic recession impacted by the COVID-19 pandemic. More than 70 low-income nations are disguised of extra debt repayments of around $11 billion in this year, a hike of 45% since 2020 post a sharp projection in carrying last year.

“The risk is that the economic crisis of inflation and higher interest rates will spread due to financial fragility. Tighter global financial conditions and shallow domestic debt markets in many developing countries are crowding out private investment and dampening the recovery,” World Bank Group President David Malpass said

The World Bank highlighted its long term concerns about lack of transparency regarding Chinese lending and collateral debts in the sovereign debt sector, also alerted growing private sector risks in its recent World Development report.

The bank’s survey report emphasizes that 46% of small and medium-sized businesses in developing nations anticipated to slow down behind on debt payments in a period of six months, but the number was doubled in some countries, chief economist Carmen Reinhart told Reuters in an interview.

The COVID-19 has broadened inequality across developing nations. Addressing financial risks is significant to ensure that governments and financial institutions can stand for the recovery, including through investments in public services, such as health care and education,” the report said.

One of the four policy areas the report said necessitated urgent action is the increased levels of sovereign debt, with the other three being the management and reduction of loan distress, improvement in legal insolvency frameworks, and ensuring continued access to finance.

Terming the rise in sovereign debt due to the pandemic as “dramatic”, the report tells that the average total debt burden for low- and middle-income countries had increased by around 9% points of Gross Domestic Product (GDP) just in 2019-20 – the first year of the pandemic. However, the previous decade had seen an average increase of 1.9 percentage points.

“During the pandemic, governments accumulated debt to finance current expenditures, but it came at the cost of limiting their ability to spend in the future, including on public goods such as education and public health. Under-investment in these services can worsen inequality and human development outcomes. High debt and lack of spending flexibility also limit the capacity of governments to cope with future shocks,” the report warned.

India’s general government debt has ballooned to around 90 percent of GDP from just over 70% in FY19. In the coming year, the central government prepared to borrow a record Rs 14.95 lakh crore from the market to meet its spending needs, over 40% more against FY22. However, it has targeted a fiscal deficit of 6.4% of GDP, which would represent a 280-basis-point low from FY21’s 9.2%.

New 2022 World Development Report recommends policy reforms that give governments an opportunity & roadmap to avert a global financial crisis & shift to a more sustainable world economy. https://t.co/o14Yd5s4UN #WDR2022 pic.twitter.com/czsMvhv96y

— World Bank Research (@wb_research) February 15, 2022

Pakistan faces its worst economic crisis in history as foreign debts mount up: Report

Cheryll Jain — Wed, 20 Oct 2021 09:33:10 +0000

Pakistan is now battling what is being estimated as the worst economic crisis ever witnessed by the country, an English-language newspaper The News Internation reported. As per the report, the country is facing mounting foreign debt which will make it liable to require gross external financing of USD 51.6 billion within a two-year period in order to fulfil its needs.

Within the two year period, Pakistan’s gross external financing requirement stands at USD 23.6 billion in 2021-22 and USD 28 billion in 2022-23, in spite of the Internation Monetary Fund’s cautious estimates.

To dispel the increasing risk of the crisis, Pakistan authorities are now in the works to make a last desperate attempt to reach a staff-level agreement with the IMF to tide over the external financing requirements.

The News International also reported that if the authorities are unsuccessful in striking a deal with the IMF under its current USD 6 billion Extended Fund Facility (EFF) during the ongoing discussions in Washington, this increasing gross external financing requirement will be further put at risk with the subsequent suspension of program loans from other multilateral creditors such as the World Bank (WB) and Asian Development Bank (ADB).

Recent analysis reports by the World Bank revealed that Pakistan is now one of the top ten nations with the highest foreign debt in the world. The reports also disclosed that the country’s foreign debt increased by over 8 per cent this year. Moreover, it suggested that the Imran Khan-led government had borrowed USD 442 million from the World Bank.

For now, the WB and the ADB will continue to lend project loans to Pakistan, but due to the decreased capacity of the country to implement such projects, the loan amount will be bleak. Furthermore, The News International reported that The credit rating agencies are expected to further lower the country’s ratings, making the generation of funds through the issuance of international bonds more costly.

Officer sources have stated that keeping in mind the country’s economic instability, the IMF had advised Pakistan to remove the distortions into the taxation system, pointing out that different GST exemptions and rates should be aligned with the standard rate of 17 per cent.

According to the recommendations made by the IMF, the standard GST rate of 17 per cent should be imposed on Petroleum Oil Lubricants (POL) products in the country. Similarly, the GST rate on fertilizer, tractors and other items should also be brought at the standard rate of 17 per cent.

However, Pakistani authorities are resisting such recommendations, claiming that it would further marginalize the neglected agriculture sector in the country.

India, World Bank signs $250 million project for safety of existing dams

Aayushi Singh — Wed, 04 Aug 2021 13:57:28 +0000

The Central Water Commission, the Government of India representatives from 10 states and the World Bank, had signed a $250 million project today, the project is for a long term dam safety program and for improving the safety and performance of the existing dams across various states of India.

This Second Dam Rehabilitation and Improvement Project would strengthen the dam safety, the DRIP-2 would be building dam safety guidelines, bring in global experience, and would also introduce innovative technologies. The dam safety management would be transformed by another major innovation of the project which would introduce a risk-based approach to it which would help to effectively allocate financial resources towards the importance of dam safety needs.

DRIP-2 would be implemented in over 120 states and at a national level through the CWC. The states where the project would be implemented are Maharashtra, Gujarat, Rajasthan, Odisha, Meghalaya, Kerala, Chhattisgarh, Madhya Pradesh, Manipur, Meghalaya. During the project implementation, other states might be added.

The Department of Economic Affairs, Additional Secretary, Ministry of Finance on behalf of Government of India, and the representatives of the State Governments and Mr Junaid Ahmad, Country Director of India on behalf of World bank signed the agreement.

The recently closed DRIP-1 is also included in the World Bank support to dam safety in India which would improve the safety and sustainable performance of 223 dams in six states of India and a central agency.

The other important measure that would be supported by DRIP-2 also includes flood forecasting systems and integrated reservoir operations which would contribute to building climate resilience, the DRIP-2 also supports the preparation and implementation of Emergency Action Plans to enable vulnerable downstream communities for the preparation and enhancement of resilience against the possible negative impacts and the risks of climate change, and it would also support the piloting of supplemental revenue generation schemes like the floating solar panels.

IMF, World Bank to prioritise vaccine access to end pandemic

Aryan Jakhar — Wed, 02 Jun 2021 07:15:22 +0000

After kicking their massive lending powers into overdrive to help the nations hardest hit by COVID-19 last year, the International Monetary Fund (IMF) and the World Bank are now focusing on getting vaccines to poor countries to keep the pandemic from derailing the global economic recovery.

IMF’s managing director Kristalina Georgieva is spearheading a US$50 billion joint effort with the World Health Organization to expand vaccine access, particularly for impoverished nations that have struggled to get the crucial jabs.

Georgieva will on Friday (Jun 4) present the proposal, which was unveiled late last month and backed by the World Bank and World Trade Organization, to finance ministers from the G7 wealthiest nations during a meeting in London.

Early in the COVID-19 crisis, the IMF and World Bank warned the pandemic would set back poor countries’ progress, causing increased inequality and a resurgence of poverty.

Now, the Washington-based lenders are sounding the alarm that unequal access to vaccines will prolong a pandemic that has already killed more than 3.5 million people worldwide.

Low-income countries have received less than 1 per cent of the doses administered to date, resulting in a “dangerous divergence” in economic fortunes, Georgieva warned.

As a result, it will take years for some countries to claw their way back to pre-pandemic levels. Economies in Latin America and the Caribbean will not regain their previous per-capita income until 2024, the IMF projected.

“ALL THE FIREPOWER”

The IMF and the World Bank “early on understood that the crisis and the economic recession … would be very broad and very deep”, said Homi Kharas, an economist at the Brookings Institution.

They pushed the G20 and private creditors to suspend debt payments for dozens of low-income countries.

“That was the first major step in ensuring that the pandemic didn’t trigger a debt crisis that could have long term consequences,” Kharas said in an interview.

The IMF itself extended direct debt relief to 29 of its “poorest and most vulnerable members”, doubled its emergency funding limits and tripled its concessional resources.

“The IMF stepped up as never before, lending some US$110 billion to 84 countries since the start of the pandemic,” fund spokesman Gerry Rice told AFP.

“Lending to sub-Saharan Africa in the first year of the pandemic was 13 times the annual average.”

Meanwhile, the World Bank has committed over US$108 billion during the pandemic in more than 100 countries to respond to “the fastest and largest crisis” in the institution’s history, the bank’s chief of operations Axel van Trotsenburg said.

“We are using all the firepower we have,” he said in an email.

However, critics note that help for middle-income countries has lagged.

“These countries, including many in Latin America, had really been almost left to themselves, to their own devices,” since they are not eligible for the debt service suspension initiative nor the low-cost loans available to the poorest countries, Kharas said.

ON THE TABLE

Georgieva herself recently recognized the need to review lending criteria to reach these economies, but the priority now has moved to the effort to immunize at least 40 per cent of the world’s population by the end of the year and at least 60 per cent by the end of 2022.

In the bid to ramp up vaccination programs, “the World Bank has made US$12 billion available … and expects to have projects for around US$4 billion in 50 countries by mid-year”, van Trotsenburg said.

But observers are pressing the institutions to do more, faster.

“The issue with the World Bank is their rate of execution,” said Adnan Mazarei of the Peterson Institute for International Economics, who added the financing to date is “still a small amount”.

Since the start of the pandemic, the IMF “did a very, very good job of quickly putting out some money” with few conditions, he said. But now the fund needs “greater strategic clarity” on the vaccination goal.

Still, the US$50 billion plan is a good sign, and the IMF and other organisations should push to “make sure it is on the table” at the two-day G7 meeting concluding Saturday, Mazarei said.

He notes US President Joe Biden’s administration already has shown more support for the multilateral initiatives than his predecessor, including one to boost the IMF’s allocation of its reserve currency – Special Drawing Rights – by US$650 billion.

That proposal is expected to be approved in the coming weeks.

World Bank lends India $105 million with 17 years maturity to improve West Bengal waterways

Divya Joyce — Wed, 06 Jan 2021 07:27:56 +0000

The World Bank has committed a $105 million loan for a project to improve the inland water transport infrastructure in West Bengal, the finance ministry said.

The agreement was signed by Dr C S Mohapatra, Additional Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India; Shri Rajdeep Dutta, Deputy Resident Commissioner, on behalf of the Government of West Bengal; and Mr Junaid Ahmad, Country Director, India on behalf of the World Bank.

The West Bengal Inland Water Transport, Logistics and Spatial Development Project will facilitate passenger and freight movement across the Hooghly river; undertake spatial planning to improve accessibility in the Kolkata Metropolitan Area; enhance the quality of life of its residents, and contribute to the growth of the state’s logistics sector.

Dr C S Mohapatra Additional Secretary, Department of Economic Affairs, Ministry of Finance stated, “The Inland waterways are now emerging as a cost-effective and an environmentally friendly option for passenger and freight movement. This project will help improve the river transport infrastructure in West Bengal and help in the economic development of the state by connecting the hinterland with markets and job centres in Kolkata’s Metropolitan Area”.

“This operation will allow the state to invest in Kolkata’s economic productivity by making its waterways and ferry services part of an efficient and safe urban mobility strategy,” said Mr Junaid Ahmad, World Bank Country Director in India.

The project will cover the five most populous districts of southern West Bengal, including its urban agglomeration — the Kolkata Metropolitan Area (KMA) where around 30 million people or one-third of West Bengal’s population live.

“Importantly, given Kolkata’s strategic location, the project is also ensuring that the metropolitan area emerges as a transport and logistics hub for the sub-region, leveraging the EDFC and connecting to the north-east and the land-locked countries of Nepal and Bhutan,” he added.

The Hooghly River, a distributary of the river Ganga, in Kolkata separates the Kolkata port from its large consumption centres, which are, its wholesale market and its vast hinterland comprising among others the entire North East of India and two landlocked neighbouring countries namely, Nepal and Bhutan.

West Bengal’s ferries can provide an efficient, flexible mode of public transport for both passengers and freight, saving on operating costs and travel time when compared with road journeys.

In the first phase, the project will enhance the capacity and improve the safety of the Inland Water Transport system; including rehabilitating existing jetties, buying new ferries with enhanced design; and installing electronic gates in 40 locations.

In the second phase, it will support long-term investments for passenger movements, including in terminals and jetties; improve the design of the inland water transport vessels; ensure night navigation on the most hazardous and trafficked routes and crossing points, and encourage the private sector to invest in Ro-Ro vessels that will allow easier movement of trucks across the Hooghly river.

The $105 million loan from the International Bank for Reconstruction and Development (IBRD), has a maturity of 17 years, including a grace period of seven years.

IFC and IFC EAF invests Rs 556 crore in Provident Housing Ltd

Sarthak Yadav — Thu, 17 Dec 2020 13:58:53 +0000

IFC and IFC EAF (Emerging Asia Fund) are said to invest Rs 556 crore in Puravankara Ltd’s affordable housing platform for four projects.

IFC which is a member of the world bank group and IFC EAF both have partnered with the Puravankara Group to invest in the development of up to four residential projects under the housing brand “Provident” a Puravankara group subsidiary.

Two project sides out of four are revealed as Kochi and Bengaluru with a saleable area of 4.5 million sq ft. About 4,000 housing units will be built in the next five to seven years, while other projects will come to light by 2021.

“IFC, together with IFC Emerging Asia Fund, will invest up to Rs 556 crore (about USD 76 million) in special purpose vehicles set up by Puravankara Group. This will comprise of an investment of Rs 240 crore (about USD 33 million) by IFC and an equal amount by EAF, along with a loan of Rs 76 crore (about USD 10 million) from IFC,” the company said.

Puravankara group MD Ashish Puravankara said, “This strategic partnership aims to address the growing demand for housing in India by providing customers with affordable quality homes.”

“IFC’s investment supplements Provident’s own investments in both existing and new developments. Provident’s use of pre-cast technology will see an acceleration in both time and superior quality homes. We hope this is the beginning of a long-term relationship with IFC,” he added.

The Kochi project will be designed as per IFC’s green building certification system, EDGE (Excellence in Design for Greater Efficiencies).

Jun Zhang, Country Head India said, “In a post-COVID world, the housing sector can play a key role in India. Financing affordable and green housing can protect jobs, preserve livelihoods, and address climate change while restarting economies.”

Bengaluru-based Puravankara is based out in Bengaluru and has 40 million square feet of projects, completed and delivered; around 20 million square feet of projects are under development. The total land assets of the company stands around 65 million square feet.

Provident Housing Ltd, a wholly-owned subsidiary of Puravankara, has launched over 20 million square feet across the cities of Bengaluru, Mangalore, Chennai, Coimbatore, Hyderabad and Goa of which close to 10 million square feet has been completed and delivered. Additionally, close to 8 million square feet is planned for new launches in the coming quarters.

Chief Economist of the World Bank says that it will take 5 years for a full recovery after the Pandemic

Aditi Swarup — Thu, 17 Sep 2020 10:15:44 +0000

World Bank’s Chief Economist Carmen Reinhart spoke in a remote conference held in Madrid.

In the conference, she spoke about the impact of the COVID-19 pandemic on the economies of the world. She said that while there may be a quick turnaround once the lockdown restrictions are lifted across the globe, a full recovery might take as much as five years.

She said that the impact of the pandemic will be felt differently by people. The poorest in rich countries will be the most affected and the poorer countries will be harder hit than the richer ones.

She also said that the recession caused by the pandemic will last longer in some countries compared to others.

Government appoints new executive directors to Word Bank and Asian Development Bank

Apurva Khairnar — Mon, 14 Sep 2020 13:00:51 +0000

The Appointments Committee of the Cabinet (ACC) has approved appointments of new executive directors to the World Bank and Asian Development Bank (ADB) on Monday.

Rajesh Khullar, a 1988 batch Haryana cadre IAS officer has been appointed to the World Bank as executive director and Sameer Kumar Khere, a 1989 batch IAS officer of the Assam-Meghalaya cadre and additional secretary in the economic affairs department of the finance ministry is appointed as the executive director at Asian Development Bank. The appointments are made for a period of three groups.

Khullar has earlier worked as a joint secretary in the finance ministry and Khare has been in the multilateral division in the finance ministry.

The Asian Development Bank has now appointed Takeo Konishi as its new country director for India. He will oversee the implementation of Asian Development Bank’s India Country Partnership Strategy 2018-2022.

India not likely to be affected by World Bank’ Ease of Doing Business report

Chittesh Dalmia — Sat, 29 Aug 2020 08:46:41 +0000

India’s ease of business ranking by World Bank (WB) would not affect the commercial environment in the country.

On Thursday, the WB said it has paused publication of the Doing Business (DB) report due in October and is undertaking a review of the data changes in the last five reports after discovering a number of irregularities.

“We will act based on the findings and retrospectively correct data of countries that were most affected by the irregularities,” it said.

The World Bank’s reports were pulled up in controversy in the past with former chief economist Paul Romer resigning from his post in January 2018, claiming that the methodological changes in compiling the report led to a downgrade in socialist Chile’s ranking.

India benefitted from methodological changes, Kaushik Basu who supervised the reports during 2012-16 as the chief economist of WB had said,

“For example, when India moved from 142 to 130 between 2014 and 2015, the DB team and I computed that only four of the 12 positions that India had climbed reflected changes India had made, with the remainder attributable to changes in the DB methodology,” Basu wrote in an article published on Project Syndicate in February 2018.

India’s ranking improved from 142 in 2014 to 63 in 2019, under Prime Minister Narendra Modi making concentrated efforts to improve its business competitiveness in the country.

Kaushik Basu defended the reports, “Although there were aspects of the DB rankings I did not like, I do not find the charges of data rigging to be credible. Having personally supervised much of the process, which involves a very large team compiling economic data from around the world, I can vouch for the multiple layers of checks and balances in place,”.

NITI Aayog CEO Amitabh Kant recently said that India aims to be among the top 50 countries by 2021.

World Bank Group halts release of ‘Doing Business’ report over data irregularities

News Desk — Fri, 28 Aug 2020 03:04:48 +0000

In a significant move, the World Bank Group has ‘paused’ the publication of the “Doing Business” report after irregularities have been reported with respect to changes to the data used in the report.

A World Bank statement said, “A number of irregularities have been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports, published in October 2017 and 2019. The changes in the data were inconsistent with the Doing Business methodology.”

The bank announced to conduct a “systematic review” and “assessment of data changes” that occurred subsequent to the institutional data review process for the last 5 ‘Doing Business’ reports.

It also asked the independent Internal Audit function of the World Banl Group to perform an audit of the processes for data collection to protect data integrity.

“The publication of the ‘Doing Business’ report will be paused as we conduct our assessment,” the statement added.

COVID-19 pandemic may push 100 MILLION people into extreme poverty, says World Bank Chief

News Desk — Fri, 21 Aug 2020 00:38:48 +0000

World Bank President David Malpass warned the COVID-19 pandemic is likely to drive as many as 100 million people back into extreme poverty.

Earlier, the bank estimated that 60 million people would fall into extreme poverty owing to the COVID-19 outbreak.

During an interview with AFP, Malpass said the situation makes it “imperative” that creditors reduce the debt amount held by poor countries at risk.

The economic and social fallout has sprung not only from the deadly virus but also from the lockdowns that halted business activity around the world.

$750 million from World Bank to COVID-19 wreaked MSMEs as Stimulus

News Desk — Wed, 01 Jul 2020 12:55:46 +0000

$750 million from World Bank was given to COVID-19 wreaked MSMEs. The International financial crisis reminiscent of the days of the Great Depression and the 2008-09 recession. It has seen international bodies like World Bank swing into action to rescue the countries. Which have been hit by the crisis. This as almost the entire globe is reeling under the blow of the pandemic.

Now, in an emergency to the augmenting crisis. $750 million from World Bank has propelled support for the Medium, Small, Micro, Enterprises (MSMEs). As this sector, in particular hit the worst of all. Firstly the sector’s nature requires communication and transaction on a ground level. Even under circumstances like the one we are currently a part of. Adding to that, this aforementioned sector, and the entities involved in it, had already been dealing with copious amount issues, even before the pandemic hit the world. Therefore, this approval of the infusion of $ 750 million would provide a wiggle room to the industries in this sector.

World Bank Comes At Aid

In a statement to the Economic Times, Junaid Ahmad, World Bank Country Director in India. said that, “The MSME sector is central to India’s growth and job creation and will be key to the pace of India’s economic recovery, post-COVID-19”.

Here, also laid emphasis on the need for Non-Banking Financial Corporations (NBFCs). To make the easing of pressure on these organization swifter and smoother. The World Bank, to date in the wake of the crisis has committed an amount of $ 2.75 billion. In order to financially espouse the dropping curve of Indian industries. It was only in April, that World Bank announced the amount of $ 1 billion. One of its attempts to help the struggling economy. It later followed it up with another Billion in the month of May.

Apart from this, the World Bank has also helped other countries like Georgia. A country in the intersection between Europe and Asia. With a loan of $ 50 million dollars in the past few months.