Energy shock hits markets: 27 countries ask for "crisis funds" from the World Bank

An internal World Bank document revealed that 27 countries have been rushing to put "crisis mechanisms" into effect, with the aim of quickly obtaining exceptional funding from the donor's existing programs, since the outbreak of the Iran war, which caused a sharp jump in global energy prices and the disruption of supply chains.

The official document, leaked by Reuters, showed that the protracted war has caused violent economic repercussions that have prompted developing and emerging countries to seek pre-arranged financing to hedge the recession.

Reuters Document

The leaked document showed that three countries have already received official approvals for the use of the new financing instruments since the start of the military conflict in the Middle East on February 28 , while the rest are still in the process of completing legal and technical procedures.

In its document, the World Bank declined to name the 27 countries or specify the exact total amount of money expected to be disbursed, stressing that the current turmoil has disrupted vital supplies and hit shipments of fertilizers and fuel needed for developing markets.

Funding Requests

Government officials in Kenya and Iraq have confirmed their joint pursuit of immediate and rapid financial support from the World Bank to deal with the immediate fallout from the regional war.

The African country of Kenya is facing an unprecedented rise in fuel prices domestically, while Iraq is suffering from a massive decline in oil revenues as a result of global export disruptions, making them at the forefront of the 101 countries that have the right to benefit from this emergency portfolio among the 101 countries that have pre-arranged channels with the bank.

Emergency Wallet

World Bank President Ajay Banga explained that the Bank's Crisis Response Toolkit will allow affected countries to benefit from immediate emergency financing to obtain amounts ranging from $20 billion to $25 billion through the Rapid Response option, which allows for the withdrawal of 10 percent of unused balances.

Banga pointed out that the bank has the ability to redirect parts of its investment portfolio to raise the total to $60 billion within six months, and reach about $100 billion in the long term through additional structural changes.

Escape from Criticism

International Monetary Fund (IMF) chief Kristalina Georgieva has predicted that about a dozen countries will seek short-term aid worth between $20 billion and $50 billion from the IMF, but informed sources confirmed to Reuters that actual requests recorded remained very small due to countries' adoption of a "wait and see" policy.

Development experts attributed the governments' preference for World Bank money over IMF terms, as the latter imposes tough austerity measures and harsh fiscal reforms that could exacerbate social unrest and protests in countries such as Kenya and elsewhere.

Sharp European Contraction and Stranglehold on Global Inflation

According to international economic sources, the international financial prudential plans come at a time when the global economy is facing increasing deflationary pressures for the third consecutive month of war, as factories and supply chains have suffered a sharp jump in basic production costs and evaporation of consumer sentiment.

The S&P Global Purchasing Managers' Survey Group (SPOA) recorded gloomy readings for April, noting that the 21 eurozone countries have been the hardest hit by the energy shock after the region's main index fell to 48.6 points (below the 50-point level separating growth and deflation).

The European inputs price index jumped to 76.9 points, proving that the financial burden on the manufacturing and services sectors has doubled, which has led the World Bank to predict a 24% rise in global energy prices in 2026, foreshadowing a severe wave of high prices that could rewrite the world's poverty and sovereign debt maps.