Washington, DC – A leaked internal document has revealed an unprecedented financial mobilization within international institutions. Since the outbreak of the war against Iran, 27 countries have activated and implemented emergency crisis mechanisms. These mechanisms allow them immediate access to urgent funding packages from existing World Bank programs and portfolios to address the severe economic repercussions of the conflict.
Rapid response tools to counter supply chain disruptions
The document, issued by the World Bank’s internal research department, did not disclose the names of all the developed countries or the precise total amount of funds likely to be requested and injected into the markets. A World Bank spokesperson declined to comment on the data.
The document indicated that three countries have already secured approval for the new financing instruments since the outbreak of the conflict in the Middle East on February 28. The remaining countries are still in the process of completing the legal and technical procedures.
This emergency move came after the war cast a dark shadow over global energy markets, causing severe disruptions to international supply chains and hindering the delivery of essential fertilizers and commodities to developing countries. In this context, government officials in Kenya and Iraq emphasized their urgent need for financial support. The African nation is grappling with soaring fuel prices, while Iraq is facing a dramatic and alarming decline in vital oil revenues due to the shipping lane crisis.
Billions in aid and an escape from IMF austerity
These affected countries are among 101 countries with access to pre-arranged financing tools for use during disasters. This includes 54 countries that have signed up to the “rapid response option,” which allows them to draw on up to 10% of their approved but unused financing.
World Bank President Ajay Banga confirmed last month that the bank’s toolkit allows countries to access emergency financing. He indicated that they could access between $20 billion and $25 billion and that portions of the portfolio could be redirected to raise the total to $60 billion over six months. There are also long-term plans to reach $100 billion.
In contrast, IMF Managing Director Kristalina Georgieva predicted that around 12 countries would seek short-term assistance ranging from $20 billion to $50 billion. However, informed sources confirmed weak demand for the IMF. They described the countries’ stance as “wait-and-see.”
Kevin Gallagher, director of the Center for Development Policy at Boston University, attributes countries’ preference for the World Bank to their desire to avoid the IMF’s stringent conditions and austerity measures. These conditions could exacerbate the social unrest and turmoil currently experienced by countries like Kenya.
