At least 70 percent of sub-Saharan African economies have approached the World Bank for loans to finance their budget shortfalls as the Covid-19 crisis batters the continent.<\/p>\n\n\n\n
The global lender on Wednesday revealed that most countries across the globe are faced with extremely limited financing options amid the pandemic.<\/p>\n\n\n\n
\u201cBetween 70 \u2013 80 percent of sub-Saharan African economies have applied for budget support financing,\u201d World Bank country director for Kenya, Felipe Jaramillo<\/a> responded to a question during a virtual press briefing.<\/p>\n\n\n\n \u201cPart of the World Bank\u2019s role is to be there for economies when capital markets are closed,\u201d he added.<\/p>\n\n\n\n The bank projects Africa\u2019s economy to contract by 2.1 percent (-ve growth) from an optimistic standpoint and to shrink by as much as 5.1 percent in the worst case scenario.<\/p>\n\n\n\n But the situation is not limited to Africa. Several economies in Latin America, Asia, Middle East and Eastern Europe have applied for the World Bank\u2019s budget lifeline, according to Jaramillo.<\/p>\n\n\n\n Previously under normal circumstances, the global lender would receive between 40-50 country budget support applications per year, but the number has now exploded within just two months.<\/p>\n\n\n\n Besides wreaking havoc on international trade, taps have closed in international capital markets \u2013 limiting access to syndicated loans and Eurobond markets. Most governments have traditionally resorted to the above options to finance shortfalls and build projects, owing to the instrument\u2019s flexibility.<\/p>\n\n\n\n But times have changed and countries have found themselves in uncharted territory where demand has skyrocketed yet financing options have nosedived.<\/p>\n\n\n\n