WASHINGTON (Reuters) - World Bank President David Malpass on Thursday suggested the Bank and donor countries should explore a possible supplemental replenishment of the International Development Association (IDA) concessional lending arm if the coronavirus crisis deepens.
In a letter to U.S. and international lawmakers, Malpass said the huge scale and depth of the new coronavirus pandemic had already rendered a record $82 billion IDA19 replenishment finalized in December too small to help crisis-hit countries.
But he rejected a call by over 300 lawmakers from around the world for the Bank and the International Monetary Fund to cancel the debt of the poorest countries, saying it was more important to preserve the Bank’s ability to be able to continue to provide grants or low-interest loans to those countries.
Malpass said the Bank was racing to provide emergency financing to developing countries and emerging market economies that have been hard hit by a record global downturn, plummeting oil and commodity prices, and weakening local currencies.
The crisis has triggered a global recession that could push as many as 60 million people into extreme poverty this year, he said, boosting the global poverty rate for the first time since the Asian financial crisis in 1998.
The Bank has pledged to disburse $160 billion through June 2021, and other multilateral development banks will provide an additional $80 billion, he said.
IDA, the Bank’s fund for the poorest countries, is usually replenished every three years, but Malpass said further funds may be needed. He gave no further details.
He rejected cancelling or suspending debt payments to the Bank, citing a study by the chief risk officers of 10 multilateral development banks that showed the negative impact would outweigh the short-term gain of such a move.
“Dependable access to global capital markets is vital and would be undercut by the proposed moratorium,” he said.
Reporting by Andrea Shalal, Editing by Franklin Paul and Sonya Hepinstall
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