The ways in which international organizations help countries respond may define not only the future trajectory of the pandemic, but also the duration of the current economic crisis and the direction of the world’s eventual recovery. IEG has studied the responses to past crises and identifies five lessons to help both countries and the World Bank Group address the social and economic impacts of the coronavirus.  

Governments the world over face a familiar, if more urgent, issue similar to past crises: how to “flatten the curve” of economic and social decline and “steepen” the curve of subsequent economic recovery when government budgets, the private sector, and households are all under stress at the same time. Developing countries face these challenges with far fewer resources and more vulnerable populations.  

Five lessons 

For the World Bank Group to be effective in supporting client countries cope with the social and economic crises caused by the pandemic, IEG’s crisis-related evaluations suggest that it needs to pay attention to five lessons from the past: 

SpeedandFlexibility.jpg1. Speed and flexibility. The speed of response is of essence in these situations, as is Bank Group flexibility to adjust its programs, resources, and portfolios to support clients’ most urgent needs.  With the COVID-19 crisis unfolding much faster than the global financial crisis of 2008, this cannot be overemphasized. In fact, it appears that the Bank Group has learned this lesson: over 90 countries benefited from Bank Group support by May 1, 2020, with additional country support programs underway, barely two months after the outbreak intensified around the world. Development Policy Financing(DPF), which provides fast-disbursing budget support to client countries,  is typically the World Bank’s workhorse instrument in responding to crises because it is flexible in terms of policy focus and adaptability to different situations (e.g., standalone, programmatic, and DPF with deferred-drawdown option), and large amounts of cash can be transferred to client governments very quickly. So, it is not surprising that the Bank Group has quickly scaled up DPF support to client countries, along with other support modalities.

Criticality.jpg

2. Criticality. In a crisis, there is no time to address the full range of complex reform issues that may be needed in normal times. Instead it is important to focus on the most critical issues. In this crisis, that is likely to include Bank Group interventions focused on urgent priorities with short-term impact: support for public health; budget support for social safety nets; and budgetary and financial sector support for economic recovery. This is also likely to include intensive policy dialogue and assistance to help governments shift their budgetary priorities in response to crisis needs.

foresight.jpg3. Foresight It is not just about money. While it is critical to provide financial support and relief in the short term, it is also important to think beyond the immediate needs to recovery for the long term. That often requires focusing on select, critical policy and institutional reforms that can begin to be implemented during the crisis and extended in the recovery period to help “build back better” systems and strengthen crisis preparedness for the future. And because we now know that the world will have changed after the crisis in important ways, including how people interact, travel, work, and engage in a myriad of collective endeavors, it is important to think outside the box now on how future preparedness might look like and how it might need to differ from the past for greater effectiveness. Some countries may need to rethink their development strategies in view of these tectonic changes in the internal and external economic and social environment.

FocusonPeople.jpg4. Focus on people – especially those in poverty. During economic crises, it is often necessary to focus on businesses and banks who are at the forefront of the economic impact, but the fact is that all crises are human crises. The COVID-19 crisis began as a public health crisis. So, focusing interventions to maximize their positive impact on the poor and vulnerable is imperative. Indeed, early Bank Group response providing urgent financing to client countries in the first two months of the crisis was concentrated on many of the poorest countries.  Given the dire warnings of hunger,  food insecurity and a rise in extreme poverty in the most vulnerable client countries, the Bank Group should be at the forefront of the fight to preserve past gains on poverty reduction and human development while working to rebuild social protection and economic systems after the crisis for more rapid recovery.

Coordination.jpg5. Coordination. The Bank Group is most effective in crises when it also coordinates effectively with its development partners. This helps the World Bank leverage its knowledge, global footprint, policy dialogue, and financial firepower with development partners on the urgent and immediate goal of helping countries cushion the impact and better prepare for recovery.  It also requires sound monitoring and evaluation based on evidence to ensure transparency and accountability. This is a clear and consistent lesson from past crises. It relates not only to collaboration with the International Monetary Fund and other multilateral agencies, but also with major donor countries, the Group of G-7 and G-20 countries (G-20), and regional development banks. On May 1, 2020, a new debt relief initiative for the poorest countries was announced. 

If the World Bank Group heeds these lessons and acts in a concerted fashion, with speed, criticality, foresight, focus on people and poverty, and coordination with partners, it will be in a strong position to help its client countries deal with and ultimately overcome the COVID-19 crisis. 

For more on IEG’s resources on the COVID-19 crisis and past crises, see our Lessons Library

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Comments

Submitted by Judith Pearce on Thu, 05/28/2020 - 15:15

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This is all very positive. However, there are many, many cautionary tales from previous emergency situations that also need to be taken into account....Think about Ebola and apply those lessons to WBG responses to Covid-19, e.g.,
How could/should the WBG address the risks of:
- fraud (e.g. contractor claiming expertise they don't have)
- corruption (e.g. contractor paying bribes to govt officials to win/inflate costs of contracts)
- extortion (e.g. supplier threatens to withhold supply unless additional off the books payments are made)
- nepotism, (e.g. companies owned by first family members suddenly become the conduit for medical aid/contracts) and
- expired/fake drugs making their way into the system, etc.
By the time allegations of wrongdoing get to INT, the horse has left the stable. Without actively identifying and guarding against potential integrity weaknesses, the development impact of each and every project the WBG supports to fight Covid-19 is at risk. Yes, we need to be agile, but not at the expense of development impact and longer term reputational damage to the WBG.
It would be very useful for TTLs developing projects if you could publish lessons learned in the corruption space from past WBG emergency responses, and recommendations to mitigate those risks. It also would be helpful in a future evaluation to assess to what extent those earlier recommendations were taken into account, and to what effect. Thanks.

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