Working capital, trade finance: WB to support Covid-hit SMEs through IFC: Malpass

The World Bank is working in Pakistan through its International Finance Corporation (IFC) for creating working capital facilities and trade finance with the objective to support Small and Medium Enterprises (SMEs), affected badly by the Covid-19.

Responding to a question of Business Recorder, WB Group President David Malpass stated that the International Bank for Reconstruction and Development (IBRD) under the WB programmes also aim to provide quick response aid through government as they work to have a good support programme for the SMEs.

"As observed this is a big challenge as small businesses have lost their customers under massive strain and it's particularly a challenge in developing countries. In Pakistan and other places we working on the IFC, which is active in Pakistan, working to create working capital facilities and also trade finance facilities," he added.

One of the things that is breaking down in the world is trade finance, this is something the IFC is able to help, meaning that short-term financing needed to help them in import and exports.

The IFC has seen very strong growth in those programmes basically around the developing world and also working to create working capital, he added.

Having people with skills and be available as the recovery occurs is going to be the biggest assets, he said, adding, "we think around the world the biggest asset are the people, which means there will be recovery once the health consequences abate."

He added that with existing resources, fully leveraged and front loaded, we are able to provide $160 billion of financing over the next 15 months. The IDA will provide $50 billion of that total on grant and highly concessional credit terms.

"Our programme is based on three pillars: (i) protect the poorest and most vulnerable households; (ii) support businesses and save jobs, which IFC and MIGA are working with private sector clients to do by supporting trade and working capital lines; and; (iii) help developing countries implement emergency health operations and strengthen economic resilience."

"Our response has also been closely coordinated with development partners - governments, the private sector, the IMF and regional MDBs."

In order to act efficiently and achieve impact at scale, we invite parallel and co-financing and the use of World Bank-facilitated joint procurement of medical equipment and supplies.

With the recently concluded IBRD and IFC capital increases and the IDA19 replenishment, we are now better positioned to support our members with the initial response to the Covid-19.

"We are asked by the G20 to look at ways to extend the World Bank's support even further - and, with your agreement, we will do that expeditiously. In doing so, we need to protect the World Bank's financial capacity to provide sustained high levels of positive net flows.

You may know that the official name of the Development Committee is "the Joint Ministerial Committee on the Transfer of Real Resources to Developing Countries." It's imperative that we maintain IBRD's and IDA's financial capacity, credit rating and low cost of funding so as to be able to continue to transfer real resources to developing countries effectively and at scale."

Debt relief is a powerful, fast-acting measure that can bring real benefits to the people in poor countries. It's important that beneficiary countries use the additional resources to respond to COVID-19 and fully disclose their public sector financial commitments. The World Bank and IMF are being asked to monitor their disclosures and the use of the fiscal space created by the debt relief.