International Financial Institutions’ Covid-19 Funding Rebounds in September but Remains below Earlier Levels

October 23, 2020

The CSIS Economics Program is tracking commitments, approvals, and disbursements by major international financial institutions (IFIs) to meet the massive financing needs generated by the Covid-19 pandemic and its economic fallout. These IFIs include the International Monetary Fund (IMF), World Bank Group, and major regional development banks. We also include select regional financing arrangements (RFAs), which, together with the IFIs, central bank bilateral swap lines, and individual countries’ foreign reserve holdings, comprise the Global Financial Safety Net (GFSN).

Based on data updated through October 19:

1. We estimate IFIs have approved $206.3 billion in Covid-19-related support since January 27, an increase of $23.5 billion since our last update on September 14. The IMF has approved $101.5 billion, including emergency assistance and precautionary lines of credit. The multilateral development banks (MDBs) combined have approved $103 billion. RFAs have approved a combined $1.8 billion. The pace of announced IFI funding approvals increased in September but remains below the pace from April-July.

2. The World Bank approved a $12 billion financing envelope for developing countries to purchase and distribute a Covid-19 vaccine. The announcement is part of the Bank’s existing institutional commitment of up to $160 billion to address the pandemic and represents the largest effort to date focused on the purchase and distribution of Covid-19 vaccines, tests, and treatment among MDBs. The European Investment Bank (EIB) has approved $194.1 million in financing for projects exclusively focused on Covid-19 vaccines and committed $5.6 billion to the “Global Goal: Unite for our Future” project, which aims to mobilize financing to ensure universal access to affordable coronavirus vaccination, treatment, and testing.

3. The IMF has approved $13.8 billion in Covid-19-related support since September 14. The new support is headlined by a $6.5 billion Extended Fund Facility (EFF) for Ecuador and a $6.2 billion augmentation of Colombia’s Flexible Credit Line (FCL) initially approved in May. The IMF also approved a second six-month tranche of debt service relief to 28 low-income countries under its Catastrophe Containment and Relief Trust (CCRT), allowing the disbursement of grants to cover $227 million in debt service falling due to the IMF. The relief comes as G20 finance ministers and central bank governors called for increased contributions to the CCRT in their October 14 communiqué.

4. Low-income countries continue to receive less financial support in absolute dollar terms and relative to their populations but higher support relative to the size of their economies. Using income classifications from the World Bank, we estimate IFIs and RFAs in our dataset have collectively approved $1.2 billion to 28 low-income countries since our last update on September 14. In total, low-income countries have received $10.2 billion from IFIs and RFAs in our dataset, accounting for 5 percent of total approved funding.

5. Regionally, the Americas remain the largest recipient of IFI approvals. IFIs have approved $84.7 billion in funding for the Americas (although most of the Americas funding is through IMF precautionary FCLs to Colombia, Chile, and Peru that have not disbursed), $43.9 billion for Africa, and $37 billion for Asia/Oceania. The source of funding varies considerably by region, with the bulk of support to the Americas and Africa coming from the IMF, while support to Eurasia and Asia/Oceania is predominantly from MDBs.

6. G20 finance ministers and central bank governors made IFI Covid-19 financing for low-income countries a focus in their October 14 communiqué, specifically calling for increased contributions to the IMF’s Poverty Reduction and Growth Trust (PRGT) and CCRT, and agreeing to extend the suspension on official bilateral debt service to low-income countries under the Debt Service Suspension Initiative (DSSI) another six months. They “encouraged” MDBs to provide net-positive flows to DSSI-eligible countries during the suspension period.

This analysis is based on IFI press releases along with additional information as provided by the institutions; any corrections and/or clarifications will be included in future updates. Our dataset of IFI responses is available for download here. Our previous analyses of IFI responses are available here.

CSIS methodology for estimating disbursements assumes full disbursement of emergency financing instruments as indicated by the financing institutions themselves. In the case of IMF and RFA lending, disbursements are based on press releases and correspond to actual disbursement schedules. However, disbursement schedules from other official sources, including many MDB operations, are often not included in public press announcements. For purposes of the attached data file, we assume full disbursement of such operations. This treatment, however, is likely to result in an overestimation of MDB disbursements. Starting with the October 2020 update, we report only headline approvals in the summary.

MDBs include the African Development Bank (AfDB), Asian Development Bank (AsDB), Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank Group (IADB), Islamic Development Bank (IsDB), Development Bank of Latin America (CAF), New Development Bank (BRICS Bank), and the World Bank Group (WB). RFAs include the Arab Monetary Fund (AMF), Chiang Mai Initiative Multilateralization (CMIM), Eurasian Fund for Stabilization and Development (EFSD), European Stability Mechanism (ESM), and Latin American Reserve Fund (FLAR). Country income group classifications reflect World Bank categories. The World Bank’s $12 billion financing envelope for Covid-19 vaccines is not included in our dataset as approved funding; we will add individual programs under this envelope as they are announced.

Stephanie Segal is a senior fellow with the Economics Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Joshua Henderson is a research intern with the CSIS Economics Program. Dylan Gerstel is a research associate with the CSIS Economics Program.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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