27 Countries Seek Emergency Financing from the World Bank Due to Iran War

SadaNews - Reuters reported that, according to an internal document it has seen, 27 countries have begun activating crisis mechanisms to quickly access financing from current programs at the World Bank since the outbreak of the war in Iran, in light of widespread economic repercussions that included rising energy prices and disruptions to global supply chains.

According to the document, the "crisis toolkit" launched by the bank allows countries to utilize available funds under existing programs through pre-arranged financing mechanisms that expedite access to liquidity in times of emergency.

The document did not disclose the names of the countries involved or the expected total amount of financing required.

It showed that three countries have already agreed to new tools since the start of the war on February 28, while the other countries continue to complete the necessary procedures to benefit from these mechanisms.

Iraq and Kenya

Officials in Iraq and Kenya confirmed that they are seeking rapid financial support from the World Bank to cope with the effects of the war, including rising fuel prices in the African nation and the sharp decline in Iraqi oil revenues.

Both countries are among 101 countries that have access to pre-arranged financing tools, including 54 countries that have signed on to the "rapid response option" that allows the use of up to 10% of unused funding from existing programs.

The document stated that the war has caused a sharp increase in energy prices and led to tensions in global supply chains, as well as hampering the delivery of vital fertilizer shipments to developing countries, increasing pressure on economies that are already suffering from financial crises and high inflation.

Crisis Response Tools

World Bank President Ajay Banga said last month that the bank's crisis response tools will allow countries to benefit from emergency financing, available project balances, and rapid disbursement tools to access between $20 billion and $25 billion.

Banga added that the bank could also redirect parts of its financial portfolio to raise total support to $60 billion within six months, with the possibility of making long-term adjustments that could increase the total to around $100 billion.

In the same context, International Monetary Fund Chief Kristalina Georgieva said she expects about 12 countries to submit requests for short-term assistance ranging from $20 billion to $50 billion, although three informed sources confirmed that the number of actual requests remains limited.

Reuters quoted one source as saying that "countries are certainly in a wait-and-see mode."

Kevin Gallagher, director of the Global Development Policy Center at Boston University, said countries prefer to turn to the World Bank rather than negotiating with the IMF, because fund programs "usually require austerity measures that could exacerbate social unrest," especially in countries like Kenya.

Source: Reuters