The Middle East and North Africa region (MENA) is in a “critical” position with food and fuel as the Russia-Ukraine war continues to unfold, World Bank Managing Director of Development Policy and Partnerships Mari Pangestu told Al Arabiya TV channel.
“Our forecast team has been estimating that if we see high food and fuel prices last for six months to a year,” she said, “it could negatively impact growth.”
In the global context, “availability and affordability” of food is the UN-backed organization’s concern, according to Pangestu. However, she said that unlike the global food crisis in 2008, the World Bank official clarified that “we actually don’t have a shortage of production.”
“There’s sufficient production of… wheat, rice or other grain products,” she said.
She also said that the food issue goes beyond the Ukraine war.
“Food security and price drops are something that’s not going to go away even after we have resolved the current situation,” Pangestu said.
Earlier this week, U.S. Secretary of State Antony Blinken told Medi 1 that Russia’s war in Ukraine is affecting food supplies and energy prices around the world.
President of Ukraine Volodymyr Zelensky discussed with President of World Bank Group David Malpass an increase in the World Bank role in the stability of Ukraine’s financial sector and thanked for the provision of $350 million in financial assistance.
“Discussed with David Malpass the increasing role of the World Bank in the stability of Ukraine’s financial sector. The World Bank President noted economic stabilization, land reform and infrastructure projects in Ukraine. We are grateful for $350 million in financial support,” Zelensky wrote on Twitter on Saturday while in Munich.
The World Bank may provide the Ministry of Infrastructure of Ukraine with financing in the amount of $250 million for the modernization of the railway.
According to a report on the bank’s website, the project is intended to increase the efficiency and financial stability of JSC Ukrzaliznytsia.
Financing of the project may begin in FY2022, which ends on June 30 at the World Bank.
In addition, according to a posting on the bank’s website, it may also provide Ukraine with $400 million in financing for the Road Safety Facility.
The purpose of this project, as noted in the report, is to support the implementation of the Vision Zero concept in Ukraine (an international program to improve road safety and reduce mortality in road traffic accidents).
Financing of the project may begin in FY2023, which starts at the World Bank on July 1, 2022.
Finance Minister Serhiy Marchenko and World Bank Regional Country Director for Belarus, Moldova and Ukraine Arup Banerji have signed a loan agreement for EUR 300 million in order to continue implementing economic recovery projects, the Finance Ministry said.
“The loan is the result of structural reforms in the areas of demonopolizing key sectors of the economy, strengthening anti-corruption institutions, improving the work of land and capital markets, as well as improving the social welfare system,” the ministry said on its website on Monday.
As part of further cooperation between Ukraine and the International Bank of Reconstruction and Development, the World Bank Country Partnership Strategy for 2022-2025 is being developed. Its goal is Ukraine’s achievement of sustainable economic recovery and growth. The priorities of the strategy will be energy, agriculture, and transport system, the Ministry of Finance said.
Ukraine received its first loan from the IBRD in the amount of $350 million for the development policy in the field of economic recovery in June 2021.
Investment in physical capital and infrastructure without sufficient investment in human capital may not give Ukraine the expected dividends, World Bank Vice President for Europe and Central Asia Anna Bjerde has said in an exclusive interview with Interfax-Ukraine.
Bjerde welcomed the fact that policymakers have identified priority areas and recognized the need to mobilize investment. She said this, commenting on the government’s intention to stimulate investment in “growth points” – priority sectors.
She emphasized one important aspect that has not been particularly highlighted in the government’s plans – the importance of human capital. Education, skills, experience, innovation and public health together is, according to a study, the most important resource for sustainable economic growth. This is glue that brings together other factors of production, including physical capital and infrastructure, she added.
As reported, the government has identified five priority clusters that can have the highest multiplier effect for Ukraine: technological production, energy security, life safety, transport and the City of Craftsmen, or the development of local, unique industries. According to the government, stimulating these “growth points” with investments in the amount of $1 billion will give the highest multiplier effect and will lead to economic growth by 1-2% of GDP.
The World Bank’s Board of Executive Directors on June 30 approved a $212 million financing package for private joint-stock company Ukrhydroenergo for installation of hybrid systems for electricity production.
“The project will enhance the flexibility of the Ukrainian power system to help synchronize it with the European electricity grid and decarbonize the power sector,” the World Bank said.
The $212 million financing package includes a $177 million International Bank of Reconstruction and Development (IBRD) loan, a $34 million Clean Technology Fund (CTF) concessional loan, and a $1 million CTF grant for a new project in Ukraine.
“The World Bank’s financing will help mitigate technical risks associated with synchronizing Ukraine’s power grid with the European electricity grid and will help decarbonize it by facilitating greater integration of renewable energy,” the World Bank said.
