World Bank approves $723 million in loans, grants for Ukraine
On Monday, The World Bank approved $723 million in loans and grants for Ukraine offering badly needed state budget support to the country.
It was approved by the Board of Executive Directors. It is important as Ukraine is facing invasion by Russia. In the Statement given by the World Bank, The program contains a $350 million loan complement to an existing World Bank loan.
Also, it is supplemented by approximately $139 million in guarantees from the Netherlands and Sweden.
There exist some other countries as well, which are providing grants, including Iceland, Latvia, Lithuania, Britain, and Denmark. They are providing $134 million in grants. On the other hand, Japan is financing $100 million of grants.
The World Bank also approved a supplemental budget support package for Ukraine. It is called the Financing of Recovery from Economic Emergency in Ukraine.
What is the World bank –
The World Bank Group is an international organization that is associated with the United Nations. It was mainly developed to finance the projects to augment the economic growth of countries that are members of the United Nations. The headquarters of the World Bank is situated in Washington D.C.and it is the largest bank that supports developing countries with financial aid.
The main motive of the World Bank is to provide economic growth to developing countries by giving financing, advice. This organization acts as a medium through which countries can fight against poverty and other issues related to the economy.
It works closely with the International Monetary Fund (IMF) and the World Trade Organization to provide financial aid to developing countries.
The World Bank is an organization that provides financial assistance to countries all around the world, to fight problems like poverty. To support the development of the economy of any country the world bank gives low-interest loans and grants.
The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) are all parts of the World Bank (MIGA).
World Bank’s Support-
Many countries have participated in the cause to help the people of Ukraine after the Russian invasion.
Almost $134 million in grants has been included by countries like Britain, Denmark, Lithuania.
The speaker of the World Bank has said that the funds will be transferred to the Ukrainian government in the next few days.
According to the announcement, the loan will aid President Volodymyr Zelensky’s government in providing “essential services to Ukrainian citizens, such as wages for hospital staff, pensions for the aged, and social programs for the poor.”
In a conflict, there is no winner. In armed wars, the loss of life, livelihood, and property is unavoidable, and the economic consequences will last for a long time, leaving people homeless and destitute. Covid19’s fury is still wreaking havoc on us.
Russia – Ukraine conflict-
The Russo-Ukrainian War is a conflict between Russia and Ukraine, that is still ongoing. It’s been almost 2 weeks since the invasion of Russia on Ukraine. According to the current situation, the United States has said that they will repeal the Russian’s trade relations after the invasion of Ukraine.
President Joe Biden announced that the United States will reduce Russia’s trade status and prohibit the import of Russian alcohol, seafood, and vodka.
The Russian invasion of Ukraine was started on February 24, though shows no indication of letting off.
Impact of Russian invasion on Ukraine’s Economy-
After the Russian invasion of Ukraine, the economy of many countries has gone for a toss, the financial markets of the countries are in uncertainty and geopolitical risks.
The multidimensional sanctions on Russia have impacted the increased fear of redistribution of foreign direct investment.
The sanctions of disjoint Swift, not only affect the entrepreneurs in Russia but are also affecting the other economies that have trading systems with the country.
External sector disturbances and tremors swiftly overload domestic stock markets due to the active association of a significant number of foreign institutional investors (FIIs).
On March 7, the BSE Sensex fell to its lowest level ever. The index was down to 14. Also, the NSE-Nifty was down to 15863. There will remain uncertainty in the market because of the war but the market will come to the same point as it was before the conflict.
Impact of the Russian-Ukraine on the Global Economy-
Increasing prices of commodities, broad financial sanctions, and the possibility of a restriction on Russian energy imports following its invasion of Ukraine threaten to stymie a global economy still reeling from the Covid-19 pandemic. They’re also making it more difficult for central banks to prepare to phase out easy money.
Inflation is such a bad condition for any country as the situation hasn’t been seen in decades. The dollars value is getting more and more as compared to the other countries and the investors are going towards the U.S. Dollars for safety.
Last week, Fed Chairman Jerome Powell told congressional officials that Russia’s invasion of Ukraine was likely to raise inflation and that at next week’s meeting, he would propose a quarter-percentage-point interest-rate hike, effectively ending speculation about a larger, half-percentage-point hike.
The World Bank Group is taking immediate actions to support the people of Ukraine and to support them in this tough situation of violence and disruption.
The bank has said that it will continue to help Ukrainian people and it will provide another package for Ukraine worth $3 million in the upcoming month. Ukraine’s neighboring countries are also helping the people of Ukraine by taking them in. The Ukrainian refugees are mostly women and children. To support them the amount is exceeded to $1.7 million.