Billions poured into global fight against coronavirus

6 Mar 20

World financial institutions and governments this week rushed to provide billions of dollars to fight the coronavirus outbreak and support the economy.



Coronavirus image, by Studio Incendo

Earlier this week, the World Bank unveiled a $12bn package to assist countries coping with the health and economic impacts of the coronavirus outbreak.

It was followed by the IMF, which has made about $50bn available for low income and emerging market countries to deal with their own outbreaks, with $10bn available at zero interest for the very poorest, whose weak healthcare systems leave them at greater risk from the virus.

David Malpass president at World Bank Group said: “We are working to provide a fast, flexible response based on developing country needs in dealing with the spread of COVID-19.
Its financial package features funds from constituent organisations the International Development Association, the International Bank of Reconstitution and Development and the International Finance Corporation.

The package will consist of $8bn, which is new on a fast track basis. This comprises up to $2.7bn new financing from IBRD; $1.3bn from IDA, complemented by reprioritization of $2bn of the Bank’s existing portfolio; and $6bn from IFC, including $2bn from existing trade facilities.

“This includes emergency financing, policy advice, and technical assistance, building on the World Bank Group's existing instruments and expertise to help countries respond to the crisis."

World Bank’s fund will help developing countries strengthen health systems, including safeguarding people from the epidemic, strengthening disease surveillance, bolster public health interventions, and work with the private sector to reduce coronavirus' impact on economies.

Low interest grants tailored for lower income countries will be made available by the IDA, loans from IBRD for middle-income countries. The IFC will provide countries with the necessary support to continue operating and to sustain jobs.

The group’s support will prioritize the poorest countries and those at high risk with low capacity.

This follows an OECD study, which states that global infection could lead to recessions in both Europe and in Japan.

IMF managing director Kristalina Georgieva warned that, however quickly the virus is contained, global growth this year will drop below 2019’s level of 2.9% - a number already weakened by the US-China trade war.

She said about one third of economic losses will be direct – from loss of life, workplace closures and quarantines – whereas the rest will reflect lower consumer confidence and more cautious behaviour from businesses and financial markets.

On Friday, a study from the Asian Development Bank, found that the global impact of coronavirus could be as high as $347bn, or 0.4% of global GDP.

Earlier this week, China vice finance minister Xu Hongcai announced that $16bn would be allocated for virus prevention and control, in the wake of the coronavirus outbreak.

The US Senate passed a bill to allocate more than $8bn of emergency funds to tackle the virus. The package will provide more than $3bn for vaccine research and $2.2bn for prevention measures.

Australia has announced a $1bn health fund to tackle the virus. The fund will come 50/50 from state governments and central government, and is separate from other hospital funding agreements.

Italy and France and South Korea announced earlier this week they would inject €3.2bn, €260m and $9.8bn respectively into their economies and health services to alleviate the impact of the virus.

Irish Taoiseach Leo Varadkar, has announced a €3bn fund to tackle the spread of the disease. The fund includes a €2.4bn for a package of reforms for workers impacted by coronavirus, €435m to the HSE for increased health spending and €200m in liquidity funding for businesses.

Update made on 10 March to include information relating to the €3bn Irish coronavirus fund. 

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