WASHINGTON, November 19, 2020 —The World Bank Group Board of Executive Directors today approved a $40 million Economic Recovery Development Policy Loan (DPL) to support the Government of Eswatini to implement its program of reforms for economic recovery and ongoing efforts to mitigate the impact of the COVID-19 pandemic.
The COVID-19 pandemic created a severe shock to Eswatini’s economy, which was already struggling, leaving the Government with the dual task of responding to the crisis while also addressing underlying structural challenges. The World Bank Group forecasts that Gross Domestic Product (GDP) will contract by 3.5 percent in 2020 while extreme poverty (at US$1.90/day) will increase from 28.4 percent in 2019 to 29.9 percent in 2020. The pandemic has affected the incomes and livelihoods of thousands, including informal workers and the self-employed, worsening an already high pre-pandemic unemployment rate of 23%.
“With this operation, the World Bank will help Eswatini contain the spread of the virus and support firms to protect workers’ livelihoods in order to alleviate the impact of the pandemic, particularly on the poor and vulnerable”, says Marie Francoise Marie-Nelly, World Bank Country Director for Eswatini, Botswana, Lesotho, Namibia and South Africa. “It will also help the Government to stabilize the country’s fiscal position and improve its competitiveness to contribute toward securing the country’s future economic potential.
To support lives and livelihoods, this operation will help minimize the spread of the virus by supporting health measures to improve preparedness and strengthen mechanisms for the early detection and effective management of the COVID-19 disease. It will also support measures to provide financial relief to employees who have suffered a loss of earnings as a result of being temporarily laid off without pay. The operation will also support measures to enhance access to liquidity for firms through the COVID-19 Small and Medium Enterprise Relief Fund.
Furthermore, this operation will help the implementation of important reforms that the Government of Eswatini had initiated prior to the COVID-19 crisis. This includes the systematic reduction of fiscal arrears to the private sector, more transparent debt management and procurement processes, and the opening-up of the digital economy.
This DPL is the first of two planned operations that form part of the World Bank’s stepped-up support to the Kingdom of Eswatini to mitigate the impacts of COVID-19 and to generate a sustainable recovery. It complements the approval of $6 million in health emergency funding to prevent, detect and respond to the threat posed by the COVID-19 pandemic, and to strengthen national health systems to better respond to future emergencies.
World Bank Group COVID-19 Response
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. We are supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. The World Bank Group is making available up to $160 billion in financial support over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.