While the U.S. government is rightly focusing on the dramatic impact of COVID-19 domestically, it is imperative that we also be ready to respond to the global devastation this virus will leave in its wake. The International Monetary Fund’s (IMF) managing director, Kristalina Georgieva, recently stated, “Investors have already removed $83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded.” Just as the United States did in the aftermath of World War II, relying on international institutions must be an essential part of a U.S.-led response. The World Bank Group (WBG), with U.S. leadership, can be an important part of the rebuilding effort.
The WBG has the necessary resources to be an integral part of what happens next, once the novel coronavirus is under control. During the 2008 financial crisis, the International Bank for Reconstruction (IBRD) nearly tripled its lending to middle-income countries. The IBRD, along with its sister institutions — the International Development Association (IDA), which offers concessional financing to the world’s poorest nations, and the International Finance Corporation (IFC), which works with the private sector — are poised to assist in what will be an extremely difficult and complicated response to the present economic and social crisis.
In the near term, the WBG is part of the international call- to-arms against COVID-19. Specifically, it is providing $14 billion to help the most needy countries with the health and economic impact of the virus. In addition, WBG President David Malpass and the IMF’s Georgieva successfully urged the G-20 nations to suspend bilateral credit payments from the poorest nations. For its part, the WBG is also working in 52 countries on coronavirus-related work. The IFC is working with over 300 companies, and the WBG is also working with the private sector to help countries procure materials needed for COVID-19 response.
The immediate crisis eventually will pass, but its aftermath could be equally destructive unless there is a global strategy for rebuilding. For example, the plight of refugees and displaced persons will become unmanageable without near- and long-term help. A recent Washington Post article underscores the magnitude of the problem with the staggering numbers of refugees and displaced persons who will be particularly vulnerable to the COVID-19 pandemic — 3.6 million in Yemen, 900,000 in Libya, 1.6 million in Iraq and 11 million Syrians, a number that has grown throughout that nation’s civil war.
The WBG has stepped up its commitment to help refugees and their host communities. It will do so through IDA19, as it did with IDA18. Last December the WBG pledged $2.2 billion for three years as part of this effort. In addition, the World Bank’s Global Concessional Financing Facility (GCFF) makes concessional financing available to middle-income countries hosting large numbers of refugees. It will increase its funding efforts.
The IDA long has been a resource to help the world’s poorest nations. IDA19 replenishment completed in December will continue its work with these nations in a number of different ways, including assisting their health care sectors. While this financing package of $82 billion over three years is not sufficient to manage a problem as broad and deep as the one now facing the international community, it can act as both an anchor and catalyst to the USG and other governments as part of their response to the crisis and its aftermath.
Recently, the WBG announced a strategy for dealing with global fragility, conflict and violence (FCV) that must be a focus of future development efforts. This strategy, a first for the WBG, is illustrative of the kind of approach that should be intensified if the global community is to recover from its present calamity. The strategy serves as a guide for how to handle acute development issues. It is an essential tool for what to do during and after the COVID-19 crisis.
The United States should take full advantage of institutions such as the WBG as part of its important global leadership role. In a thoughtful article in Foreign Affairs, Kurt Campbell and Rush Doshi make the clear case for what the U.S. must do: “In the current crisis, Washington can still turn the tide if it proves capable of doing what is expected of a leader: managing the problem at home, supplying global public goods, and coordinating a global response.” The WBG can play an important and useful role for the U.S. as it lives up to this call for action.
William C. Danvers recently retired as a World Bank Group Special Representative for International Relations. He previously was deputy secretary general of the OECD, and worked on national security issues for 35 years in the executive branch, on Capitol Hill, for international organizations and the private sector.