World Bank ‘ready’ to provide funds for COVID-19 vaccine
Mr. Faris Hadad-Zervos
The World Bank has made available more than US$315 million in funding support to Sri Lanka this year so far for COVID-19 work while it is also ready to provide funds to the country when a vaccine is available, the bank’s new Country Director Faris Hadad-Zervos said on Thursday.
In an email interview with the Business Times, Mr. Hadad-Zervos, Country Director for the Maldives, Nepal and Sri Lanka who is currently visiting Sri Lanka, said that they are discussing with the government “ways to adjust the existing portfolio further to better align with government priorities and adapt to emerging development needs”.
Most of the funds for COVID-19 work came from the bank’s current portfolio in Sri Lanka which consists of 19 ongoing projects, with a total commitment value of $2.363 billion, of which $1.51 billion remain undisbursed. He said much of the funds were repurposed (taken from other ongoing projects) to meet the government’s COVID-19 challenge.
Quoting World Bank figures, he said Sri Lanka’s economy is expected to contract by 6.7 per cent in 2020, with all key drivers of demand affected; exports, private consumption and investment due to the pandemic.
Asked about bank financial support for Sri Lanka to purchase the vaccine when one is available, he said: “Sri Lanka has sent a formal request to express interest in joining the global COVAX initiative—a platform that is coordinated by the GAVI (Global Alliance for Vaccines and Immunization). All countries participating in COVAX, regardless of income levels, will have access to the COVID-19 vaccines once they are developed. The aim is to help participating countries vaccinate up to 20 per cent of their populations, including essential and frontline workers (3 per cent) and high risk and vulnerable people (17 per cent). The exact amount of financing Sri Lanka will receive through the COVAX facility will depend on the total fund mobilized by the facility.”
Mr. Hadad-Zervos, who is based in Kathmandu, said his first visit Sri Lanka has been a productive one with “meetings with the leadership, senior government, civil society, private sector and thought leaders from throughout the spectrum lead me to one conclusion: Sri Lanka’s vast potential for sustainable growth and shared prospect is realizable, and the WB and other development partners can continue to play a key role in walking this path alongside our client”.
On the total funding available to the world by the bank for COVID-19 related work, he said the bank is delivering urgent support to more than 100 countries, home to 70 per cent of the population, with projects that deliver scale and impact. “This is part of record financing of up to $160 billion the World Bank Group is making available over a 15-month period ending June 2021. This is tailored to the health, economic and social shocks countries are facing and includes $50 billion of new concessional transfers from IDA,” he said.
World Bank support to Sri Lanka
Faris Hadad-Zervos is the new Country Director for Maldives, Nepal and Sri Lanka for the World Bank (WB). Prior to this, he served as the World Bank Country Manager for Nepal and Country Manager for Malaysia.
In this interview with the Business Times, he responds to questions:
1) What are the main takeaways based on your first visit to Sri Lanka as the new World Bank Country Director for Maldives, Nepal and Sri Lanka?
It has been a very productive visit to Sri Lanka. The meetings with the leadership, senior government, civil society, private sector and thought leaders from throughout the spectrum lead me to one conclusion: Sri Lanka’s vast potential for sustainable growth and shared prospect is realizable, and the WB and other development partners can continue to play a key role in walking this path alongside our client. Over the next weeks and months, we will work closely with our clients from across Sri Lanka’s institutions to align our programme to the country’s development narrative. The good news is that we are already largely aligned in this regard, and across many sectors.
2) What is World Bank’s funding for 2020 to Sri Lanka and has it changed this year owing to the COVID-19 pandemic?
We are closely working with the government to find ways to support the emerging needs and priorities. The current portfolio in Sri Lanka consists of 19 ongoing projects, with a total commitment value of US$2.363 billion, of which $1.51 billion remain undisbursed. In response to the COVID pandemic, we leveraged the existing portfolio and repurposed a significant portion to support the Government’s effort to address the COVID’s impact (see more details under the next question). Providing urgent needs for Personal Protective Equipment (PPE), supporting vulnerable groups with temporary cash support, improving COVID-19 protection measures on public transport, facilitating tele-education for school children, and providing digital solutions to improve delivery of public services are some of the examples. We are currently discussing with the government ways to adjust the existing portfolio further to better align with government priorities and adapt to emerging development needs.
3) Is there a new commitment from the World Bank to Sri Lanka this year purely based on responding to the COVID-19 challenges? If so what is this amount and in what areas will this be allocated to?
The COVID-19 pandemic has had a strong negative impact on education, health and poverty. The immediate impact of the COVID-19 was on the health sector, which needed to build capacity for detection and treatment of affected individuals, and for protection of the population. Education institutions have been closed for lengthy periods and multiple times, leading to potential learning loss. The WB has responded in multiple ways through new and on-going operations.
Bank support: The WB was one of the first development partners to provide support to the Government of Sri Lanka for its COVID response by approving on April 2, 2020 the COVID-19 Health Emergency Response and Health Systems Preparedness Project of $128.6 million (COVID-19 Fast Track Facility of $35 million and IDA transitional funds of $93.6 million). Mostly using funds repurposed from other ongoing projects, the project was topped up on June 22, 2020, with additional $88.96 million (including $1.72 million grant), largely to support cash transfers to the most vulnerable people (elderly, disabled, chronic kidney patients). The Social Safety Net project was restructured and $45 million was disbursed in early May 2020. In addition, Contingency Emergency Response Components (CERC) were used in four of the ongoing projects, allowing part of the funds (totaling $56 million) to be reallocated to support COVID response activities for food security, education, transport and ICT.
4) In such a case, is there also a SL government financial commitment that has to be made to be eligible to these new funding sources?
Project financing by the WB is demand-driven and reflects the priorities, ownership and execution of Government or related institutions. If the government seeks support from the WB, each project proposal will be appraised for its own merit based on soundness of project design and expected development impact. There is no financial commitment that has to be made by the government to be eligible for these loans, other than the commitment to repay the loan as per the agreed loan agreement. Policy-based financing or so-called budget support reflects the policy directions of the Government, and usually focused on the overall macroeconomic and fiscal framework. At the end of the day, and irrespective of the project, this is Sri Lanka’s money and subject to country priorities.
5) What is the new total commitment (across the world) that the WB is making this year/2021 in tackling the pandemic and what percentage is this for South Asia?
Globally, the World Bank Group (WBG) response is taking a broad, fast action to help developing countries and the world’s poorest people during this unprecedented crisis. Especially given the economic and health impacts of COVID-19 that is reversing progress in the fight against poverty. Some highlights below:
- We are delivering urgent support to more than 100 countries, home to 70 per cent of the population, with projects that deliver scale and impact.
- This is part of record financing of up to $160 billion the WBG is making available over a 15-month period ending June 2021. This is tailored to the health, economic and social shocks countries are facing. It includes $50 billion of new concessional transfers from IDA, with built-in debt relief for countries at risk of debt distress.
- As we deploy targeted resources to address COVID-19, we are working to ensure these investments support a robust, sustainable and resilient recovery.
- In addition to ongoing health support, the WBG will emphasize transparency, social protection, poverty alleviation, and policy-based financing to make sure COVID assistance gets to the people who need it most and are hit the hardest in this crisis.
We are putting knowledge and data at the centre of our operations; to help governments make vital decisions informed by the best and latest research.
We are providing $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines, tests, and treatments.
In South Asia, we are working with countries across the region on readiness for vaccination programmes. In addition, programme support for over $600 million is currently under discussion and we expect more requests in the coming weeks.
6) What are the World Bank’s expectations/targets in economic growth for SL this year?
Sri Lanka’s economy was already not yet at its full potential before the COVID-19 pandemic. After growing by 2.3 per cent in 2019, the economy contracted by 1.6 percent y-o-y in the first quarter of 2020. Against this backdrop, the COVID-19 health crisis is believed to have impacted economic activity further and severely since the first quarter. High frequency indicators suggest that growth has faltered in the second quarter, due to impeded economic activity and subdued global demand. Moreover, the closure of airports to tourists since April brought tourism activity to a standstill. In this context, the economy is expected to contract by 6.7 per cent in 2020, with all key drivers of demand affected: exports, private consumption and investment.
7) Will there be World Bank funding available to SL when a vaccine is available and allocated for this purpose?
Sri Lanka has been more successful than other SAR countries in containing the pandemic, but there are new infection clusters. Sri Lanka has sent a formal request to express interest in joining the global COVAX initiative—a platform that is coordinated by the GAVI (Global Alliance for Vaccines and Immunization). All countries participating in COVAX, regardless of income levels, will have access to the COVID-19 vaccines once they are developed. The aim is to help participating countries vaccinate up to 20 per cent of their populations, including essential and frontline workers (3 per cent) and high risk and vulnerable people (17 per cent). The exact amount of financing Sri Lanka will receive through the COVAX facility will depend on the total fund mobilized by the facility.
The WB has committed to make US$12 billion available globally to support COVID-19 vaccine procurement and distribution in IDA and IBRD countries. Should the Government of Sri Lanka request, we stand ready to support the government in filling the financial gap with additional resources required to procure and roll out the vaccination programme, including system strengthening and targeting in identifying the most vulnerable populations that should be prioritized for vaccination. In order to be prepared, we are in the process of working with our government counterparts, in close collaboration with other development partners, notably WHO and UNICEF, to assess readiness and cost of the vaccination program and identify potential financing gap. The WB has developed and made available a tool called VRAF (Vaccine Readiness Assessment Framework). Our team is working on the ground to get ready to respond to any request that may come.