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World Bank’s Fund for The Poorest Receives Almost $50 Billion in Record Funding

A final agreement was reached today on a US$49.3 billion funding package for the International Development Association (IDA), the World Bank’s fund for the poorest countries and a key actor in progress towards achieving the Millennium Development Goals.




Funding for the sixteenth IDA replenishment (IDA16) is up 18 percent on the previous round three years ago and follows pledges not only from traditional donors but also funding from within the World Bank Group and from current and former IDA borrowers.

“The funding pledges show support from an extraordinary global coalition of donors and borrowers which have come together to ensure that even in these difficult economic times we offer hope and opportunity to the world’s poor,” said World Bank Group President Robert B. Zoellick. “This strong level of support is a testimony to IDA’s relentless focus on results that bring improvements on the ground for poor people.”

The new compact is manifested in strong pledges from both traditional and new donors, contributions through pre-payments from countries that used to borrow interest-free loans from IDA and contributions from World Bank and IFC net income.

“With this robust IDA replenishment, we will have the ability to help immunize 200 million more children, extend health services to over 30 million people, give access to improved water sources to 80 million more people, help build 80,000 kilometers of roads and train and recruit over two million teachers,” Zoellick said.

The agreement marks the last opportunity for donors and poor countries to effectively use IDA funds to make more progress on reaching the Millennium Development Goals, which includes the internationally agreed target to halve poverty by 2015.  A total of 51 donors pledged to IDA16, which covers the period from July 2011 to June 2014.

“This strong response by donors also signals that development funding should not be viewed just as aid, but rather as an investment in the future, as we need developing country growth to ignite global growth,” said Ngozi Okonjo-Iweala, World Bank Managing Director and Chairperson of the IDA16 negotiations. “IDA can help ensure that development dollars benefit both the developing and developed worlds.”

Over the next three years, IDA will help 79 of the world’s poorest countries boost growth and overcome poverty by financing infrastructure, improving health services, educating children, and combating climate change. Special focus will be given to addressing gender issues and helping fragile and conflict affected countries in their quest for peace and development.  As in the past, Sub-Saharan Africa will remain a major focus of IDA support.

“This is very good news for the poor across the world, particularly in Sub-Saharan Africa, where IDA’s long standing support has already helped to achieve concrete results. We applaud the sense of solidarity expressed by the donor community through this significant replenishment,” said H.E. Bingu wa Mutharika, President of Malawi and Chairman of the African Union.

Donors and partners also endorsed special crisis funding from within IDA to help low income countries deal with the impact of natural disasters and severe economic shocks. The new Crisis Response Window will include a special allocation for Haiti as it continues to recover from the 2010 earthquake.

The funding pledges came after a series of meetings, with the final two days of talks in Brussels, hosted by the Government of Belgium.  Belgian Minister of Finance, H.E. Didier Reynders, and Minister of Development Cooperation, H. E. Charles Michel welcomed the outcome of IDA’s 16th replenishment and praised the effort made by donor countries in a difficult financial and economic environment.  The ministers acknowledged that with the success of this replenishment IDA will continue to play a significant role in the achievement of the Millennium Development Goals by the poorest and most vulnerable countries.

During negotiations, delegates recognized IDA’s track record over the past 10 years in helping save 13 million lives, immunizing over 310 million children, improving access to  water for more than 100 million people, and building or rehabilitating more than 100,000 kilometers of roads, helping poor people gain access to markets and services.

“These pledges will not only help improve the lives of 200 million people, they also represent a vote of confidence in IDA and its ability to maximize the development impact of scarce tax payers’ money,” said Axel van Trotsenburg, World Bank Vice President for Concessional Finance and Global Partnerships.

IDA provides an effective platform to coordinate donor efforts in poor countries and works in building capacity and institutions, which are essential for long term development.

IDA: The World Bank’s Fund for the Poorest

The International Development Association (IDA) is one of the world’s largest sources of aid. IDA provides support for health and education, infrastructure and agriculture, and economic and institutional development to 79 of the least developed countries—39 of them in Africa.  About 20% of IDA funding is provided as grants, the rest is in the form of interest-free, long-term credits. Nearly all of IDA’s credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period.

Since its inception in 1960, IDA has provided more than US $220 billion in support to low-income countries, averaging US $14 billion a year in the last two years and directing the largest share, about 50 percent, to Africa. IDA supports country-led development with funds that are predictable and not “earmarked,” meaning more sustainable results. IDA is ever improving its rigorous results measurement system, in place since 2002. IDA is a global leader in transparency and undergoes the toughest independent evaluations of any international organization. IDA puts a premium on efficiency and effectiveness and was ranked first in a recent evaluation of 40 multilateral and bilateral agencies. IDA is overseen by its 170 shareholder countries, creating opportunities for transfer of knowledge and expertise and ensuring a focus on results. IDA overheads are low; it is self-financed by a small service charge to clients.

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IMF lifts global growth forecast for 2021, still sees ‘exceptional uncertainty’



IMF lifts global growth forecast for 2021, still sees 'exceptional uncertainty' 1

By Andrea Shalal

WASHINGTON (Reuters) – The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021 and said the coronavirus-triggered downturn in 2020 would be nearly a full percentage point less severe than expected.

It said multiple vaccine approvals and the launch of vaccinations in some countries in December had boosted hopes of an eventual end to the pandemic that has now infected nearly 100 million people and claimed the lives of over 2.1 million globally.

But it warned that the world economy continued to face “exceptional uncertainty” and new waves of COVID-19 infections and variants posed risks, and global activity would remain well below pre-COVID projections made one year ago.

Close to 90 million people are likely to fall below the extreme poverty threshold during 2020-2021, with the pandemic wiping out progress made in reducing poverty over the past two decades. Large numbers of people remained unemployed and underemployed in many countries, including the United States.

In its latest World Economic Outlook, the IMF forecast a 2020 global contraction of 3.5%, an improvement of 0.9 percentage points from the 4.4% slump predicted in October, reflecting stronger-than-expected momentum in the second half of 2020.

It predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick later in the year and added policy support in the United States, Japan and a few other large economies.

It said the U.S. economy – the largest in the world – was expected to grow by 5.1% in 2021, an upward revision of 2 percentage points attributed to carryover from strong momentum in the second half of 2020 and the benefit accruing from $900 billion in additional fiscal support approved in December.

The forecast would likely rise further if the U.S. Congress passes a $1.9 trillion relief package proposed by newly inaugurated President Joe Biden, economists say.

China’s economy is expected to expand by 8.1% in 2021 and 5.6% in 2022, compared with its October forecasts of 8.2% and 5.8%, respectively, while India’s economy is seen growing 11.5% in 2021, up 2.7 percentage points from the October forecast after a stronger-than-expected recovering in 2020.

The Fund said countries should continue to support their economies until activity normalized to limit persistent damage from the deep recession of the past year.

Low-income countries would need continued support through grants, low-interest loans and debt relief, and some countries may require debt restructuring, the IMF said.

(Reporting by Andrea Shalal; Editing by Shri Navaratnam)

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Leon Black step downs as Apollo CEO after review of Epstein ties



Leon Black step downs as Apollo CEO after review of Epstein ties 2

By Mike Spector and Chibuike Oguh

NEW YORK (Reuters) – Leon Black said on Monday he would step down as chief executive at Apollo Global Management Inc, following an independent review of his ties to the late financier and convicted sex offender Jeffrey Epstein.

While Black, whose net worth is pegged by Forbes at $8.2 billion, will remain Apollo’s chairman, his decision to step down illustrates how doing business with Epstein weighed on the reputation of one of Wall Street’s most prominent investment firms. Black co-founded Apollo 31 years ago.

Apollo said it plans to change its corporate governance structure, doing away with shares with special voting rights that currently give Black and other co-founders effective control of the firm.

The independent review, conducted by law firm Dechert LLP, found Black was not involved in any way with Epstein’s criminal activities. Black paid Epstein $158 million for advice on tax and estate planning and related services between 2012 and 2017, according to the review.

Black, 69, said that although the review confirmed he did not engage in any wrongdoing, he “deeply” regretted his involvement with Epstein.

“I hope that the results of the review, and related enhancements … will reaffirm to you that Apollo is dedicated to the highest levels of transparency and governance,” Black wrote in a note to Apollo fund investors. He will step down as CEO no later than July 31.

Apollo co-founder Marc Rowan, 58, will take over as CEO.

Rowan has often kept a low-key profile compared with Apollo’s other co-founder, Joshua Harris, 56, and spearheaded many initiatives that turned Apollo into a credit investment giant, including the permanent capital base the firm enjoys through its ties to reinsurer Athene Holding Ltd.

The revelations of Black’s ties to Epstein took a toll on Apollo, which Black turned into one of the world’s largest private equity groups. Apollo executives had warned in October that some investors had paused their commitments to the buyout firm’s funds as they awaited the review’s findings.

Apollo shares are down 1% since the New York Times reported on Oct. 12 that Black paid at least $50 million to Epstein for advice and services, when most of his clients had deserted him.

Over the same period, shares of peers Blackstone Group Inc, KKR & Co Inc and Carlyle Group Inc are up 19%, 10% and 23%, respectively.

“We think a large number of (Apollo fund investors) took a ‘pause’, and we believe the outcome (of the review) and changes today will cause most of them to return to allocating to future Apollo funds,” Credit Suisse analysts wrote in a research note.

Apollo shares jumped 4% to $47.65 in after-hours trading on Monday.

“We continue to follow these events closely and will evaluate how Apollo addresses its issues,” the California State Teachers’ Retirement System, one of the largest U.S. public pension funds and an Apollo investor, said in a statement.

Epstein was found dead at age 66 in August 2019 in a Manhattan jail, while awaiting trial on sex trafficking charges for allegedly abusing dozens of underage girls in Manhattan and Florida from 2002 to 2005. New York City’s chief medical examiner ruled that the cause of death was suicide by hanging.


Black previously said he had paid millions of dollars to Epstein, but the exact size of his payments was revealed for the first time on Monday. Beyond the $158 million in payments, Black made two loans to Epstein totaling $30.5 million in early 2017.

Dechert said in its report that Black’s social ties with Epstein, who built his fortune by endearing himself to powerful figures in high society, went back to the mid-1990s.

Epstein won Black’s trust by resolving an estate tax issue for him in 2012 potentially worth at least $500 million, the report said. He ended up advising Black on various aspects of his personal financial affairs, from his family office and airplane to his yacht and artwork.

Black believed that Epstein provided advice over the years that conferred between $1 billion and $2 billion in value to him, according to the Dechert report. Black said in his note to investors that he had paid Epstein a fee equivalent to 5% of the value he generated on an after-tax basis, and not tied to hourly rates.

Black and Epstein’s relationship deteriorated after Epstein failed to repay $20 million of the loans and Black refused to pay tens of millions of dollars in fees that Epstein demanded, according to the Dechert report.

They severed ties in October 2018, according to the report. Black knew Epstein had been convicted in Florida a decade earlier for soliciting prostitution from a minor, the Dechert report said, but there was no evidence suggesting Black had knowledge of the other alleged crimes before they were publicly reported in late 2018, culminating in Epstein’s July 2019 arrest.

On Monday, Black pledged $200 million toward “initiatives that seek to achieve gender equality and protect and empower women,” as well as helping survivors of domestic violence, sexual assault and human trafficking.

Apollo said it would pursue a “one share, one vote” corporate governance structure that would do away with shares with special voting rights. It said the move could qualify it for listing on the S&P Global indices.

Apollo also said it would seek to give its board more authority to oversee its business, eroding the power of its executive committee led by Black.

The board will be expanded to include four new independent directors, including Avid Partners founder Pamela Joyner and physician and scientist Siddhartha Mukherjee, Apollo said. Apollo co-Presidents Scott Kleinman and James Zelter will join the board and take on increased responsibility running day-to-day operations.

Apollo had about $433 billion in assets under management as of the end of September.

(Reporting by Mike Spector and Chibuike Oguh; Additional reporting by Lawrence Delevigne and Jessica DiNapoli in New York; Editing by Sonya Hepinstall, Leslie Adler and Kim Coghill)

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EU sees no cliff-edge ending for COVID fiscal stimulus



EU sees no cliff-edge ending for COVID fiscal stimulus 3

BRUSSELS (Reuters) – European governments will not need to abruptly end fiscal support for their economies after the pandemic, top officials said on Monday, noting that any withdrawal of stimulus would be carried out gradually and only once the economy has recovered.

Euro zone public debt rose sharply during 2020 and is likely to exceed 100% of GDP this year as governments borrow to help individuals and businesses survive lockdowns.

The higher debt raises concern about how to deal with it down the road and when to start cutting it again, since the EU last year suspended its rules limiting budget deficits and debt, known as the Stability and Growth Pact (SGP).

EU finance ministers are to discuss when to reintroduce any borrowing limits in the second quarter of this year.

“I believe it important that finance ministers debate and reach a common understanding on the appropriate fiscal stance by the summer. This can then serve as guidance for the preparation of their draft budgetary plans for 2022,” the chairman of the euro zone’s group of finance ministers, Paschal Donohoe, said on Monday.

“To avoid any misunderstanding, let me stress that this is not about an imminent withdrawal of fiscal stimulus,” he told the economic committee of the European Parliament.

“We all agree that our immediate priority is to shield our citizens, in particular younger cohorts and those most exposed to the crisis. There must be no cliff-edges,” he said.

Joao Leao, the finance minister of Portugal which holds the rotating presidency of the EU and therefore sets the agenda for EU finance ministers’ work until June, was equally cautious.

“We should not withdraw stimulus too early. We need to make sure the suspension clause for the SGP remains in force at least until we return to pre-crisis economic figures,” he told the committee. “We need to make sure jobs are maintained as well as the production capacity of companies.”

He said first cash from the EU’s 750 billion euro post-COVID economic recovery programme should reach the economy in the first half of the year.

“Real funding should be getting to the economy before the summer or in early part of the summer,” he said.

(Reporting by Jan Strupczewski; Editing by Giles Elgood)

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