Perspectives

World Bank to Aid Syrian Neighbors

The_World_Bank_Group

Image Courtesy of Victorgrigas

The World Bank plans to put together a financial assistance package for countries that are accommodating refugees from Syria. Officials note that there is a substantial financial burden being borne by Jordan and Lebanon, and they are currently discussing getting help from rich countries from the Gulf Nations.

Syrian Crisis

Millions of refugees are now in many countries around the Syrian border, with the largest number in Turkey. The World Bank explains, however, that the problems arise from smaller economies hosting an equally large number of refugees, such as Jordan and Lebanon. They note that these smaller economies face a considerable and greater financial strain.

Colin Bruce, senior adviser to the World Bank president, attended a conference regarding the initiative, stating, “It’s actually quite significant for countries like Jordan, for Lebanon and for Turkey, and some estimates put that at about 1.1 – 1.4 percent of GDP.”

He added, “We recognize that for many of these countries, there’s a cost associated with hosting with refugees and they need to be compensated.”

The arrangement has the World Bank making loans to Lebanon and Jordan, with aid donors covering at least some of the interest costs.

For the Global Public Good

Syrian Refugees

Image Courtesy of Mstyslav Chernov

Originally, rules forbid the World Bank from making grants to middle-income countries, such as Lebanon. Unfortunately, the governments are unwilling to borrow from the bank to cover the cost of refugees, and this leaves a huge funding gap for the countries hosting over four million Syrians.

The rules also specific that the loans be granted to low-income economies; this, compounded by the two countries’ seeming unwillingness seems to put a hole on the World Bank’s plan.

To address this, the Bank proposes to be the sole provider of loans while aid donors ease the financial burden the middle-income countries may experience. Analysts say that this isn’t exactly a direct way of helping as a grant would, but it does make a significant difference in the long run. The G7 are among the likely contributors, being among the largest developed economies around the Gulf States and smaller European nations.

Colin Bruce further reiterated the Bank’s stance, “We are quite prepared to enter into that dialogue with our shareholders as to how we support the compensation of countries, and in particular the middle-income countries that do not have access to concessional resources, and that’s the conversation that is taking place.”

Bruce added that the Bank is equally mindful that refugees and migrants could have a positive economic impact over the longer term. It wants to advise governments about policies that would generate a dividend from hosting displaced people.