Tracking funding to the Covid-19 response: Multilateral commitments and disbursements

There have been many announcements of funds to help countries manage the health and economic consequences of Covid-19, but how much is actually on its way (committed) and how much has arrived (been disbursed)? The Centre for Disaster Protection's first assessment of financial flows from multinational institutions shows that, as at 22 May, a total of US$39 billion has been committed. The funds committed are substantial, reflect new money in some cases, and are being disbursed. All within three months of the first one hundred reported cases in a low- or lower-middle-income country. Much good news.

The scope of our work: what money are we tracking?

We are looking at funds committed and disbursed by the International Monetary Fund (IMF), the World Bank, regional development banks, and as part of the United Nations Covid-19 Global Humanitarian Response Plan (GHRP). In the case of the first three, we have accessed data directly from institutional financial reporting. We are only able to aggregate what has been reported and are aware that we are missing loans from two of the regional banks (the African Development Bank and the Inter-American Development Bank) as well as some additional finance added to existing World Bank loans (both World Bank and International Finance Corporation (IFC)). Data on GHRP flows is provided by the UN’s Financial Tracking Service – we are collaborating with Development Initiatives to better understand this particular piece of the puzzle.^[1]

The good news: funding has been significant and timely

As at 22 May, a total of US$39 billion has been committed by international institutions to help countries manage Covid-19. Most funds have been committed by the IMF (US$21 billion) and the World Bank Group (US$11 billion). US$6 billion has been committed by Asian Development Bank (ADB) and US$1 billion has been committed through the UN GHRP. Nearly all of this – 97% – has been in loans, about 23% of which on concessional terms from the IMF and World Bank. This is a considerable amount of funding given the first one hundred cases in a low or lower-middle income country were reported less than three months ago.^[2]

Figure 1: Commitments to Covid-19 response by international organisations (US$ millions)

Source: Centre for Disaster Protection, based on institutional financial reporting and the UN’s Financial Tracking ServiceNote: Commitments current as of 22 May 2020.

The biggest single commitment outside of this multilateral system is the suspension of debt payments on bilateral debt that was agreed to by G20 countries for 77 of the world’s poorest countries. Lack of transparency makes it hard to quantify the value of bilateral debt but it looks like this would amount to about US$9.6 billion were all G20 countries to follow through on the commitment.

The speed on the commitment side is largely mirrored on the disbursement side. Debt payment suspension (in the form of loan re-payment holidays) provides immediate additional fiscal space to governments allowing them to spend on other emergent needs such as health system strengthening and transfers to households. New IMF loans are disbursed in a one-time payment within six months of signing. Over half of the World Bank loans had started disbursing in April across all regions including sub-Saharan Africa and South Asia. There is less consistency in terms of the status of the funding reported in the UN GHRP – i.e. whether it is money on its way or arrived – but in some cases it reflects money that has arrived, which suggests disbursement is underway.

There are indications that much – but not all – of this is new money. Whilst emergency loans from the IMF are more clearly new money, the World Bank is lending from its existing capital, so a key question is whether the new loans represent additional lending or repurposed loans? Covid-19 funds being lent to the world’s 76 poorest countries (countries that borrow on concessional terms from the International Development Association (IDA) part of the World Bank) is being financed through currently unused IDA resources. Countries that borrow on less concessional terms from the International Bank of Reconstruction and Development (IBRD) part of the World Bank were able to access additional unused IBRD capacity for lending. A good way to assess the level of additional money is to look at overall flows compared to ‘normal’.

Is there room for improvement?

The picture so far is positive, but there is room for improvement. Part two of this blog considers to what extent the funding targets economic losses over poverty increases, the challenges presented by loans as a mechanism, and the role of grants and concessional funds.

A version of this blog was originally published by the Centre for Disaster Protection.

Resources on full results, methodology and datasets are also available.

Over the next few months, the Centre for Disaster Protection will be tracking humanitarian and development funding directed at helping low- and middle-income countries manage the health and economic costs of Covid-19. Future publications by the Centre will examine many of these issues in more depth, and highlight specific countries where needs appear to be great, but funding for response is low.

The author list in this blog has been randomised using the author randomisation tool on the American Economic Association website.