More Developing Countries Seek Financial Support From MDBs Due To COVID-19

KUALA LUMPUR, Nov 6 (Bernama) -- The challenge to manage the impact of the COVID-19 pandemic has triggered an increasing need of many developing countries, including Malaysia in seeking financial support from the Multilateral Development Banks (MDBs). According to the Economic Outlook 2021 report released by the Ministry of Finance Friday, this has led to the MDBs expediting the disbursement of loans and expanding concessional financial assistance through existing resources in supporting the reconstruction and development of member countries as well as mobilising resources for infrastructure and sustainable development. The report said that Malaysia is a member of these five institutions, namely the World Bank Group (WBG), the International Monetary Fund (IMF), the Asian Development Bank (ADB), the Islamic Development Bank (IsDB) and the Asian Infrastructure Investment Bank (AIIB). The forms of COVID-19-related assistance provided by these five MDBs are financial support programme, debt relief programme, trade finance, guarantees, technical assistance/policy advice and other initiatives, with WBG assistance amounting to US$160 billion, IMF (US$100 billion), ADB (US$20 billion), IsDB (US$2.3 billion) and AIIB (US$10 billion), according to the report. The report also revealed that in containing the spread of this virus, governments have imposed lockdowns, enforced business closures, limited international travels and restricted individuals from their usual physical and social activities which, unfortunately, led to severe economic disruptions. “To mitigate the socioeconomic impact of the pandemic and the containment measures, governments have implemented stimulus measures to protect lives and livelihoods as well as assisting businesses to remains afloat. “These stimulus measures include additional health expenditure as well as cash assistance, loan moratoriums, credit guarantees and tax incentives,” it said. However, it said the limited fiscal space of many governments may not be able to sustain the provision of the relief and recovery assistance for long due to the existing economic conditions amid the pandemic. “The adverse impact of COVID-19 on economies is evidenced in shrinking tax revenues, decreased gross domestic product (GDP) growth, volatile private capital flows, declining exports and falling remittances,” according to the report. -- BERNAMA