World Bank to send $1.5 billion support package to Ukraine as food, energy prices spike

The World Bank is preparing a $1.5 billion support package for war-torn Ukraine and plans to aid developing countries struggling to keep up with surging food and energy prices, World Bank President David Malpass said on Tuesday.In remarks at the Warsaw School of Economics in Poland, Malpass said the bank was helping Ukraine provide critical services, including paying wages for hospital workers, pensions and social programs. Russia invaded Ukraine in February.”The World Bank was created in 1944 to help Europe rebuild after World War Two. As we did then, we will be ready to help Ukraine with reconstruction when the time comes,” Malpass said.Malpass said the package was enabled by Monday’s approval of $1 billion in International Development Association (IDA) aid by donor and recipient countries, along with a $100 million IDA payment to neighboring Moldova.A World Bank spokesperson said that in addition to the $1 billion in funding from IDA’s 19th replenishment round, the bank’s main concessional lending arm, the International Bank for Reconstruction and Development (IBRD) would provide $472 million in loan guarantees.The plan still needs full approval by the bank’s board of directors in the coming weeks, the spokesperson said, adding that the aid would allow Ukraine to continue “essential government services during the war.”The World Bank on Sunday forecast that the war would slash Ukraine’s economic output this year by 45%, as half of the country’s businesses are closed, maritime exports are cut off and much productive capacity is destroyed.The aid comes on top of about $944 million in fast-disbursing financing approved by the World Bank last month, which also includes donor country contributions. That package includes $350 million in budget support financing from the IBRD.Malpass has previously said the bank was working on about $3 billion in total near-term aid for Ukraine.He said the World Bank was analyzing global impacts of the war, including the spike in food and energy prices, and is “preparing a surge crisis response that will provide focused support for developing countries.” The spike in food prices needs immediate attention, with Malpass adding that for every one percentage point increase in food prices, 10 million people are expected to fall into extreme poverty.”The rich can afford suddenly expensive staples, but the poor cannot. Malnutrition is expected to grow, and its effects will be the hardest to reverse in children,” Malpass said.Senior economic officials from World Bank and International Monetary Fund member countries will meet in Washington next week, where spillovers from Russia’s invasion will be the dominant topic of discussion, including an expected IMF downgrade of its economic growth outlook.Russia calls its actions in Ukraine a “special operation.”Finance ministers and central bank governors from the Group of 20 major economies are expected to hold a potentially contentious meeting, which U.S. Treasury Secretary Janet Yellen has threatened to boycott if Russian officials attend.