The World Bank is in discussions with 30 to 40 countries about potential crisis aid to help them manage energy shocks and price increases triggered by the war in the Middle East, its president, Ajay Banga, told Reuters in an interview.
Banga said the global economy had proven fairly resilient, in part due to big AI investments and adjustments in supply and demand for oil, which meant that few countries had sought the initial $25 billion in crisis funds that the World Bank had made available when the war began in late February.
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However, a sharp spike in diesel and fertilizer prices and other factors, including the looming super El Nino weather effect, were adding to challenges facing developing countries, Banga said in an interview ahead of this week’s annual meetings of the International Monetary Fund and World Bank.
“There is pressure, and so I think maybe over the coming months, more countries will come for some slice of that first $50 to $60 billion,” Banga said, referring to the initial $25 billion plus another $35 billion that countries could tap by diverting resources from already approved World Bank projects.
“We’ll see, but we’re ready. We’re engaged. We’re having conversations with a number of them, you know, 30 to 40 countries are in dialogue with us,” he said.
Many developing countries have been hit hard by the spike in energy prices and high interest rates that have increased borrowing costs at a time when their fiscal coffers are still depleted by measures taken during the COVID-19 pandemic and the spike in inflation following Russia’s invasion of Ukraine.
World Bank estimates show that developing countries owe external creditors about $400 billion in 2026, with interest payments alone comprising one-third of the total.
Banga said more countries had shown interest in retooling existing projects than in tapping the immediate crisis window to address their liquidity needs. If the situation worsened, the Bank could make available as much as $100 billion in funds, he said, exceeding the $70 billion disbursed during the pandemic.
The World Bank last month announced that it attracted a record $112 billion in private capital in the year ended June versus $69 billion a year earlier, and more than triple the 2022 total before Banga, a former Mastercard CEO, became president.
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That was on top of the $123 billion invested from the bank’s own resources for that year, for a combined $235 billion, Banga said, underscoring the importance of tapping all available resources, especially at a time when Western countries have sharply cut official bilateral development aid.
“There is no one answer that fits when the world has these kinds of issues. What you need to do is figure out how to cut your coat to suit your cloth,” Banga said.
Banga said he expected further gains in private capital flows in coming years, aided by expanded political risk guarantees from the bank’s Multilateral Investment Guarantee Agency, growth in local currency financing, and continued work on regulatory reforms that made it easier for foreign investors.
The private capital jump was biggest in projects in upper-middle-income countries like Argentina or India, which accounted for $50 billion of the private capital, and lower-middle-income countries including Bangladesh and Angola, which accounted for $37 billion. But more work was needed to boost the roughly $3 billion in private capital flowing to low-income countries.
“In the smaller countries, it hasn’t multiplied enough, and there are challenges,” he said, noting the bank would announce some new initiatives this week aimed at ensuring micro-, small- and medium-sized businesses also had access to private capital.
Banga said private capital growth was also regionally spread, with the largest increase seen in Latin America and the Caribbean, which accounted for $36.3 billion of last year’s total, followed by Europe and Central Asia with $21.3 billion, South Asia with $19.2 billion and Africa with $22 billion.
The top 10 recipient countries were Brazil, India, Turkey, Romania, Nigeria, Argentina, South Africa, Bangladesh, Mexico and Chile, the Bank said.
Banga said the World Bank and IMF were working together to address the high debt levels plaguing many developing countries through a series of initiatives, including efforts to boost countries’ domestic revenue collections.
The Bank had already set up some debt-for-development swaps for Angola and Ivory Coast, and a portfolio-based guarantee for Argentina, and was working on over a dozen more projects.
“We’ve got 14 or 15 in the pipeline, helping them rotate out higher-priced old debt for newer-priced debt with our guarantees,” with the difference then targeted at education, healthcare, water, or nature programs, he said.
