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World Bank boosts support for developing countries
12 Nov '08
5 min read
In addition to helping cash-strapped governments, the World Bank Group is ramping up its support to the private sector through the launch or expansion of four initiatives by the IFC, its private sector arm. Combining IFC funds and money mobilized from various sources including governments and other International Financial Institutions, these new IFC facilities are expected to total around $30 billion over the next three years and address problems experienced by the private sector due to the global financial crisis.
They include:
Expanded trade finance program: IFC plans to double its Global Trade Finance Program from US$1.5 billion to US$3.0 billion. The trade guarantees issued under the program will have an average tenor of six months, thereby supporting up to US$18 billion for short-term trade finance over the next three years. The expanded facility would benefit participating banks based in 66 countries, including some of the world's 78 poorest countries. The program offers banks partial or full guarantees covering the payment risk in trade related transactions.
Bank Recapitalization Fund: IFC plans to launch a global equity fund to recapitalize distressed banks, as more bank failures would further damage economic activity, thus worsening poverty in developing countries. IFC expects to invest US$1 billion over three years with at least US$2 billion provided by other investors.
Infrastructure Crisis Facility: This new IFC facility would provide roll-over financing and help recapitalize existing, viable, privately-funded infrastructure projects facing financial distress. IFC expects over three years to invest a minimum of US$300 million and mobilize between US$1.5 billion and US$10 billion from other sources.
IFC Advisory Services: To address the mounting needs of clients, IFC is refocusing existing advisory services programs—banking for small and medium enterprises, leasing, microfinance, housing, investment policy and promotion, and business operation and regulation--to make them better geared to helping clients in the current crisis. IFC estimates a financing need of at least US$40 million over three years.
The World Bank Group's political risk insurance arm, the Multilateral Investment Guarantee Agency, supports developing country financial sectors by providing guarantees to foreign banks that help inject much-needed liquidity into these markets. MIGA's planned support to such projects in Ukraine and Russia is expected to bolster confidence in the financial system in these countries. Similar guarantees are expected in Eastern Europe and Africa.
They include:
Expanded trade finance program: IFC plans to double its Global Trade Finance Program from US$1.5 billion to US$3.0 billion. The trade guarantees issued under the program will have an average tenor of six months, thereby supporting up to US$18 billion for short-term trade finance over the next three years. The expanded facility would benefit participating banks based in 66 countries, including some of the world's 78 poorest countries. The program offers banks partial or full guarantees covering the payment risk in trade related transactions.
Bank Recapitalization Fund: IFC plans to launch a global equity fund to recapitalize distressed banks, as more bank failures would further damage economic activity, thus worsening poverty in developing countries. IFC expects to invest US$1 billion over three years with at least US$2 billion provided by other investors.
Infrastructure Crisis Facility: This new IFC facility would provide roll-over financing and help recapitalize existing, viable, privately-funded infrastructure projects facing financial distress. IFC expects over three years to invest a minimum of US$300 million and mobilize between US$1.5 billion and US$10 billion from other sources.
IFC Advisory Services: To address the mounting needs of clients, IFC is refocusing existing advisory services programs—banking for small and medium enterprises, leasing, microfinance, housing, investment policy and promotion, and business operation and regulation--to make them better geared to helping clients in the current crisis. IFC estimates a financing need of at least US$40 million over three years.
The World Bank Group's political risk insurance arm, the Multilateral Investment Guarantee Agency, supports developing country financial sectors by providing guarantees to foreign banks that help inject much-needed liquidity into these markets. MIGA's planned support to such projects in Ukraine and Russia is expected to bolster confidence in the financial system in these countries. Similar guarantees are expected in Eastern Europe and Africa.
World Bank
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