World Bank in crisis-aid talks with 30-40 countries, Banga says

World Bank President Ajay Banga said the lender is in talks with 30 to 40 countries about potential crisis aid, as energy shocks and price increases triggered by the war in the Middle East weigh on developing economies. In an interview with Reuters, he said the discussions were taking place ahead of this week's annual meetings of the International Monetary Fund and World Bank. Few countries have so far sought a share of the initial $25bn in crisis funds the bank made available when the war began in late February.

Banga pointed to a sharp spike in diesel and fertiliser prices and the looming super El Niño weather effect as factors adding to the challenges facing poorer countries. He said more governments may come forward for a slice of the first $50bn to $60bn, made up of the initial $25bn plus another $35bn that countries can tap by diverting resources from already approved World Bank projects. If the situation worsens, the bank could make as much as $100bn available, he added, exceeding the $70bn disbursed during the COVID-19 pandemic.

Developing countries owe external creditors about $400bn in 2026, with interest payments alone accounting for one-third of that total, according to World Bank estimates. Many have been squeezed by higher energy prices and interest rates that raised borrowing costs at a time when fiscal coffers remain depleted by pandemic-era measures and the inflation spike that followed Russia's invasion of Ukraine.

The bank attracted a record $112bn in private capital in the year to June, up from $69bn a year earlier and more than triple the 2022 total before Banga, a former Mastercard CEO, became president. That came on top of $123bn invested from the bank's own resources, for a combined $235bn. Upper-middle-income countries including Argentina and India accounted for $50bn of the private capital, while lower-middle-income countries such as Bangladesh and Angola took $37bn, and low-income countries drew roughly $3bn. Latin America and the Caribbean saw the largest regional increase at $36.3bn, followed by Africa with $22bn, Europe and Central Asia with $21.3bn and South Asia with $19.2bn.

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 on initiatives to address high debt levels, including efforts to boost domestic revenue collection. Debt-for-development swaps have been set up for Angola and Ivory Coast and a portfolio-based guarantee for Argentina, with 14 or 15 more projects in the pipeline to help countries swap higher-priced old debt for newer-priced debt backed by guarantees, with the savings aimed at education, healthcare, water or nature programmes. He added the bank would announce new initiatives this week aimed at giving micro-, small- and medium-sized businesses access to private capital.