27 Nations turn to World Bank after fresh energy market turmoil
Synopsis
World Bank emergency funds are drawing increased demand as 27 countries seek faster crisis financing access following fuel price increases and supply disruptions. Kenya and Iraq confirmed funding requests linked to inflation and weaker revenues. The World Bank said its emergency lending capacity could eventually approach $100 billion.
Twenty-seven countries are seeking World Bank emergency funds as fuel prices, supply disruptions and inflation pressures strain developing economies and increase demand for rapid crisis financing mechanisms.
Key Highlights
- Twenty-seven countries are seeking quicker access to World Bank emergency financing mechanisms.
- Kenya and Iraq confirmed requests linked to fuel costs and lower energy revenues.
- The Rapid Response Option currently covers 54 eligible countries under World Bank programs.
- The World Bank estimates financing capacity could eventually approach $100 billion.
A World Bank internal document indicates that the fund for emergencies is being in greater demand after 27 countries sought faster access to emergency financing and rising fuel prices and fertiliser shortages and supply disruption.
The requests follow global markets as they adjust to the latest disruptions stemming from the Middle East conflict that flared earlier this year. The World Bank document listed three countries that have already signed new emergency financing arrangements, and others are still working through approval process.
The World Bank did not make public the names of all countries involved or reveal the overall amount of the funding, which was being discussed.
Fuel Prices and Food Costs are Back in Focus
Kenya and Iraq vowed to seek World Bank emergency funds. Kenya has a rising cost of energy imports and inflation, while Iraq is coping with the uncertainty in energy markets and declining oil revenues.
The developments have been attracting attention due to the already stressed situation in fuel and fertilizer prices caused by disruptions in the supply chain during the Covid-19 period and the Russia-Ukraine crisis.
Despite the recent price declines from the previous peak, fertiliser prices are still higher than their pre-pandemic average levels, according to the latest Commodity Markets Outlook (CMO) report released by the World Bank.
There has also been a warning from food security agencies regarding ongoing food supply issues. WFP warned that increased transport and fertilizer prices could impact the production of some commodities in developing countries that rely on imports.
Emergency Lending Capacity grows
Emergency funding for a crisis is being requested from existing mechanisms in place for world bank funding to respond quickly in the event of an economic shock or natural disaster.
According to World Bank data, there are currently 101 countries that are eligible for emergency financing tools and 54 countries that are part of the Rapid Response Option program. Under the mechanism, the government may divert up to 10% of the World Bank's project funding resources in times of crisis.
In his opening remarks last month, World Bank President Ajay Banga indicated "emergency" tools and existing project balances that the institution can tap between $20 billion and $25 billion. The financing capacity could increase to $60 billion within 6 months and be expanded to potentially a larger $100 billion later in the process, he said.
IMF Watches for Wider Spillover
It has previously been reported that the managing director of the International Monetary Fund, Kristalina Georgieva, said up to a dozen countries would be seeking IMF help over the impact of rising energy prices and supply shortages, with $20 billion to $50 billion in requirements.
Reuters quoted Kevin Gallagher of Boston University's Global Development Policy Center, who stated some governments may opt for a loan from the World Bank rather than the IMF, as the latter's programs typically come with strict economic measures.
FAQs
Q1. Why are 27 countries seeking World Bank emergency funds?
The countries are facing rising fuel costs, supply disruptions and inflation pressure linked to unstable global energy markets.
Q2. How much emergency financing can the World Bank provide?
World Bank President Ajay Banga said emergency financing capacity could eventually approach $100 billion through existing funding tools and portfolio adjustments.
Q3. Which countries have confirmed requests for crisis funding?
Kenya and Iraq confirmed they are seeking rapid financial support due to fuel import costs and lower oil revenues.
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
