In the global fight to alleviate poverty and raise living standards, 2022 is likely to be one of the worst years in decades. Real median income has declined further in many countries, and the tragic reversals in development during the pandemic have worsened. Our June Global Economic Prospects report highlighted the risk of stagflation and the concentrated harm to the poor. Inequality is a prominent destabilizer, with global capital and income allocated primarily to high-income countries through their fiscal, monetary, and regulatory policy choices. Inequality is expected to worsen in coming years, leaving development goals out of reach for many.
The World Bank Group is responding to these challenges with speed, clarity, scale, and impact. We’ve committed two consecutive surges of financing, analytical work, advocacy, and policy advice to support people, preserve jobs, and restore growth—first, $150 billion in response to the COVID-19 pandemic, and now a 15-month $170 billion response to the food crisis as well as the war in Ukraine and its spillover effects. Since the start of the pandemic through fiscal 2022, the Bank Group has provided over $14 billion to help more than 100 countries respond to the health impacts of COVID-19 and vaccinate their people.
In fiscal 2022, IBRD committed $33.1 billion, including support for more than 45 middle-income countries. This includes $300 million to help Türkiye scale up private sector investment in geothermal energy. IDA committed $37.7 billion for grants and highly concessional loans to over 70 countries, including $645 million to support food system resilience and emergency response in Burkina Faso, Cameroon, Mali, Mauritania, Niger, and Togo. I welcomed our IDA partners’ agreement in December 2021 to advance the IDA20 replenishment by one year. Their record three-year contributions of $23.5 billion will anchor IDA’s financing of $93 billion for fiscal 2023–25 and help the poorest countries address urgent priorities—including jobs and economic transformation, human capital, the reversal in learning and literacy, gender, climate change, and fragility, conflict, and violence (FCV)—and move toward restoring growth.
Despite challenging economic headwinds, IFC provided strong support to the private sector with commitment volumes totaling $32.8 billion (including mobilization) in fiscal 2022, building on $31.5 billion of investments in fiscal 2021 and focusing on maximum impact. As banks cut back on trade finance, IFC is stepping in to keep import/export businesses operating despite the constraints they face. In fiscal 2022, IFC’s commitments reached $9.7 billion in trade finance, the highest level ever; nearly 75 percent of this was invested in IDA countries and countries affected by FCV. In one example, Coris Bank in Burkina Faso received IFC trade finance to import rice from various countries.
MIGA issued $4.9 billion in guarantees to help countries achieve their development goals. These efforts will provide some 15 million people with new or better electricity service and enable $1.9 billion in loans, including to local businesses. MIGA remained focused on its strategic priorities, with 85 percent of its projects in fiscal 2022 dedicated to countries affected by FCV, IDA countries, and climate mitigation and adaptation.
Fragility, conflict, and violence are rising in much of the world, including Afghanistan, Ethiopia, the Sahel, and Yemen. In Ukraine, the war has led to lives, homes, and livelihoods being lost, millions of refugees, and infrastructure destroyed. The costs of reconstruction are already in the hundreds of billions. As of August 2022, we have mobilized and facilitated the transfer of $13 billion in emergency financing, with more than $9 billion already disbursed to help Ukraine finance critical government services and lessen the human and economic impacts. This includes a $1.5 billion World Bank package, including $1 billion in exceptional support from IDA, to help pay wages for government and school employees. Bank Group support also extends to countries that are hosting Ukrainian refugees.
With the increase in energy and food costs and Europe’s huge unmet demand for natural gas, developing countries are facing new strains on people and economies. The sudden spike in food prices threatens to worsen political and social tensions in many developing countries, with devastating impacts on the poorest and most vulnerable. In parts of Eastern and Southern Africa, for example, about 66 million people are at risk of a food emergency or famine. In May 2022, we announced support for a global response to the food security crisis, with up to $30 billion in financing through August 2023, including $12 billion in new projects, to cushion the effect of higher prices and boost agricultural production and supply. The response builds on our experience from the last food price crisis and incorporates our data and analytical work, including the Commodity Markets Outlook. And in July 2022, I joined leaders of the IMF and UN agencies in calling for urgent action to improve global food security by providing quick support to the vulnerable, facilitating trade and international food supplies, boosting production, and investing in climate-resilient agriculture.
The disruption of energy supplies is lowering growth, especially for economies that depend on fuel imports. Higher prices for natural gas and shortages are putting fertilizer supplies and crop yields at risk, destabilizing electricity grids, and increasing the use of heavily polluting fuels. The world urgently needs to increase the supply of energy and massively expand reliable access to electricity in poorer countries. This will require major new investments in cleaner energy, energy efficiency, and electricity grids and transmission. The fundamental realignment of Europe’s energy sources away from dependence on Russia requires major increases in electricity generation from natural gas, hydropower, geothermal, and nuclear power to provide a less carbon-intensive baseload to maintain and expand electricity grids.
Climate change and extreme weather are steadily increasing their pressure on economies and societies, particularly in fragile settings. The Bank Group’s Climate Change Action Plan 2021–25 seeks to integrate climate and development, identify and develop the most impactful projects to reduce greenhouse gas emissions and adapt to climate change, increase direct financing throughout the Bank Group. It will provide avenues for the global community to provide the huge flow of new grant funding needed for global public goods in poorer countries. Innovative financial tools, such as green bonds and the Wildlife Conservation Bond we launched in March 2022—the first of its kind—will need to expand. The Climate Change Action Plan has also introduced a new core diagnostic: Country Climate and Development Reports. As of the end of July 2022, we had published the first of these reports for Türkiye, Vietnam, and the G5 Sahel region. I’m also pleased that, with this annual report, we are introducing much greater transparency in the Bank’s climate disclosures.
A major consequence of the current crises is the huge buildup in government debt. For many of the poorest countries, the debt burden is unsustainable or at high risk. Deep debt reduction will be necessary to allow new investment and growth. We work closely with the IMF and other partners to help countries strengthen their transparency, governance, and accountability—all key steps in debt sustainability. We also continue to call on official and private sector creditors to participate quickly and fully in efforts to reduce debt stocks. Under current creditor-country policies, expected debt payments by the poorest countries to their creditors in 2022 and 2023 will greatly exceed all the development assistance available to these countries. Our World Development Report 2022 examines polices to mitigate interconnected financial risks and steer the world toward a sustainable and equitable recovery.
I was pleased to welcome many colleagues back to our offices this year. We continue to adapt our work model to protect staff health and well-being while recognizing the value of physical interaction in delivering high-quality results for clients and career development. The Bank Group’s anti-racism task force continues our important work to fight racism and racial discrimination within our institution and in countries where we work. I remain committed to fostering a culture of openness and trust and improving diversity and inclusion across the organization, also through our task force on workplace culture.
The crises affecting our client countries are deep-seated, but I am confident we can make a difference. To meet these challenges, we must draw on the innovation and dedication of our staff, the strength of our partnerships, and the resolve of the global community. The World Bank Group remains committed to helping countries overcome these challenges and work toward a more resilient and sustainable future.
President of the World Bank Group and Chairman of the Board of Executive Directors