IFC pledges $3.8b to offset pandemic effects in South Asia, drive recovery

The International Finance Corporation has renewed focus on sustained investments in South Asia in a bid to protect the most vulnerable people and help companies maintain operations and jobs, says the global agency.

The IFC’s investments, it claims, continue to have a strong impact in the fiscal year 2021, while also spurring investments in renewable energy, affordable housing, and distressed assets resolution.

The IFC supports cover medical facilities, vaccines and supplies, and hard-hit micro, small, and medium enterprises (MSMEs), according to a news release issued on Tuesday.

In the midst of a difficult year with massive and ongoing social and economic disruptions caused by Covid-19, the multilateral lending agency committed over $3.8 billion, including mobilisation and short-term finance, in South Asia as of June 2021.

This has resulted in a record investment volume of over $14.9 billion in the last five years in the region, towards what IFC described as a green, inclusive, and resilient recovery.

In Bangladesh, IFC made total commitments of $791 million, an increase of almost 33 per cent from last year.

"The Covid-19 crisis has drastically impacted the region’s private sector, which has severely affected the region’s most vulnerable people,” said IFC's Vice President for Asia and the Pacific region, Alfonso Garcia Mora.

Covid-19 has laid bare the region’s existing vulnerabilities in the financial sector, disrupting businesses—particularly micro, small, and medium enterprises—and leaving so many people exposed, he said adding, “That’s why we’ve focused our attention on supporting moves to improve resilience on multiple fronts, as all indications are that the road to recovery will be long.”

IFC has pledged $590 million in Covid-response deals in South Asia—with additional deals worth over $100 million in the pipeline.

Its fast-track financial support has helped clients across sectors at a time when the economic fallouts of the pandemic have severely impacted market sentiment, says the release.

Further, IFC committed $353 million in climate finance and $490 million in IDA/FCS (International Development Association/Fragile and Conflict-Affected Situations) countries in the region.

IFC already provided financing and advisory support for the production of critical pharmaceutical products and medical equipment such as personal protective equipment (PPE) and vaccines.

The release mentioned that IFC will further focus on providing much-needed liquidity to private sector companies in the region so they can maintain operations, preserve, and create jobs.

“The impact of the pandemic coupled with the region’s vulnerability to climate change, has highlighted the need for a collaborative, resilient and climate friendly recovery that can withstand future shocks,” said IFC’s new Regional Director for South Asia, Hector Gomez Ang. “This is especially important for South Asia, which is home to three of the top five countries in terms of vulnerability to climate change globally.”

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