World Bank in talks with dozens of countries about crisis aid

The World Bank is engaging in talks with 30 to 40 countries regarding potential crisis aid to address energy shocks and price increases caused by the Middle East war, according to its president Ajay Banga. While private capital investments have surged globally, they have not benefited low-income nations as much. The global economy has shown resilience, partly due to significant AI investments and supply-demand adjustments for oil, preventing many countries from seeking the initial $25 billion in crisis funds made available since the war began in late February.

However, rising diesel and fertilizer prices, along with the looming super El Nino weather effect, are exacerbating challenges for developing countries. Banga anticipates more countries will seek assistance from the first $50 to $60 billion in funds, including a potential $100 billion if the situation worsens. Many developing countries are grappling with high external debt obligations and increased borrowing costs due to surging interest rates, further straining their fiscal resources.

The World Bank estimates that developing nations owe $400 billion in external creditors by 2026, with interest payments making up one-third of the total amount. To tackle these issues, the bank is exploring various strategies, such as repackaging existing projects, tapping retooling opportunities, and making available up to $100 billion in funds.