It called for rapid response to the spreading financial crisis and said additional support to the private sector was critical for employment, recovery and growth. The G-20 Summit is slated for this weekend and is to be attended by a strong Indian delegation, headed by Prime Minister Manmohan Singh. Others who would be particpating in the Summit include Finance Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
The theme of the Summit is 'Financial Markets and World Economy.' The World Bank Group said its International Bank for Reconstruction and Development (IBRD) could make new commitments of up to 100 billion dollars over the next three years.
This year, lending by IBRD could almost triple to more than 35 billion dollars compared to 13.5 billion dollars last year.
''This increase in financial support will protect the poorest and most vulnerable from harm, support countries facing big budget short-falls, and help sustain long-term investments upon which recovery and long-term development will depend,'' a release said.
At the same time, the World Bank lowered its growth forecast for developing country economies to 4.5 per cent for 2009, compared to a previous projection of 6.4 per cent, due to a combination of financial turmoil, slower exports and weaker commodity prices.
It expected high income country economies to contract by 0.1 per cent next year while the world economy ekes out only one per cent growth.
''Leaders meeting on Saturday, Nov 15 to discuss the global financial crisis must not lose sight of the human crisis. As always, it is the poorest and most vulnerable who are the hardest hit,'' said World Bank Group President Robert B Zoellick.
''The response to this crisis must be global, coordinated, flexible and fast. While the challenges need to be addressed at the country level, it is more critical than ever that the international community acts in a coordinated and supportive way to make each country's task easier.''
The Bank said sharply tighter credit conditions and weaker growth are likely to cut into government revenues and their ability to invest to meet education, health and gender goals, as well as the infrastructure expenditures needed to sustain growth. Current estimates suggest that a one per cent decline in developing country growth rates pushes an additional 20 million people into poverty. Already 100 million people have been driven into poverty as a result of high food and fuel prices.
''The global financial crisis, coming so soon after the food and fuel crises, is likely to hurt the poor most in developing countries,'' Mr Zoellick said.
''Working with the IMF, UN agencies, regional development banks and others, the World Bank Group is helping both governments and the private sector through lending, equity investments, innovative new tools, and safety net programmes,'' he said.
Apart from expanded lending, the World Bank Group is also working to speed up grants and long-term, interest-free loans to the world's 78 poorest countries, 39 of which are in Africa.
Donors last year pledged 42 billion dollars for the International Development Association, the World Bank's fund for these countries.
The Bank is working with the poorest countries to accelerate this support as needed, especially in those countries which had plans to enter capital markets, or are under stress from falling commodity prices, slower export demand or lower remittances.
In addition to helping cash-strapped governments, the World Bank Group is ramping up its support to the private sector through the launch or expansion of four initiatives by the International Finance Corporation(IFC), its private sector arm.
Combining IFC funds and money mobilised from various sources, including governments and other International Financial Institutions, these new IFC facilities are expected to total around 30 billion dollars over the next three years and address problems experienced by the private sector due to the global financial crisis.
-- Expanded trade finance programme: IFC plans to double its Global Trade Finance Programme from 1.5 billion dollars to 3.0 billion dollars. The trade guarantees issued under the programme will have an average tenor of six months, thereby supporting up to 18 billion dollars for short-term trade finance over the next three years. The expanded facility would benefit participating banks based in 66 countries, including some of the world's 78 poorest countries.
The programme offers banks partial or full guarantees covering the payment risk in trade related transactions.
-- Bank Recapitalisation Fund: IFC plans to launch a global equity fund to recapitalise distressed banks, as more bank failures would further damage economic activity, thus worsening poverty in developing countries. IFC expects to invest one billion dollars over three years with at least two billion dollars provided by other investors.
-- Infrastructure Crisis Facility: This new IFC facility would provide roll-over financing and help recapitalise existing, viable, privately-funded infrastructure projects facing financial distress.
IFC expects over three years to invest a minimum of 300 million dollars and mobilise between 1.5 billion dollars and 10 billion dollars from other sources.
-- IFC Advisory Services: To address the mounting needs of clients, IFC is refocusing existing advisory services programmes, including banking for small and medium enterprises, leasing, microfinance, housing, investment policy and promotion, and business operation and regulation--to make them better geared to helping clients in the current crisis. IFC estimates a financing need of at least 40 million dollars over three years.
The World Bank Group's political risk insurance arm, the Multilateral Investment Guarantee Agency(MIGA), supports developing country financial sectors by providing guarantees to foreign banks that help inject much-needed liquidity into these markets.
MIGA's planned support to such projects in Ukraine and Russia is expected to bolster confidence in the financial system in these countries. Similar guarantees are expected in Eastern Europe and Africa.