News from 2020-07-14 / KfW Development Bank
KfW’s involvement in the Federal Ministry for Economic Cooperation and Development’s Emergency COVID-19 Support Programme
What is the scale of KfW’s financial commitment in fighting the consequences of the pandemic and where is this money coming from?
As it has done domestically, the Federal Government is also very much counting on KfW in international cooperation during this global crisis. We currently estimate that KfW Development Bank can provide up to EUR 5 billion to support the Federal Ministry for Economic Cooperation and Development’s Emergency COVID-19 Support Programme 2020. This amount includes reallocated funds from ongoing programmes, additional budget funds from the recently-adopted supplementary budget and our own loan funds for FC development and promotional loans. This year, a total of around 60% of the additional coronavirus funds from the Federal Ministry for Economic Cooperation and Development budget have been made available to KfW-financed projects. And it won’t just be a flash in the pan: the German Federal Government has already announced billions of additional budget funds in the next year, of which the majority are once again due to be implemented through KfW.
When will implementation of these measures start?
We responded to the crisis very swiftly. Some of the measures have already commenced, and the remaining projects will start in the coming weeks and months. The activities should allow for improvements both in healthcare and in social security, and aim to stabilise the public and private sectors. We thus want to cushion the immediate health-related and economic consequences of the corona pandemic and strengthen resilience for future pandemics.
How long will it take to disburse the money and to achieve specific improvements in the countries?
Time is an especially critical factor in this pandemic. This is why we want to pay out all of the additional Federal Government budget funds this year, to make tangible improvements in our partner countries very fast.
Which countries will benefit from the support?
The corona pandemic has a global dimension. Our corona programme this year includes around 140 individual projects which span the entire regional spectrum of FC exposure. As is the case with our regular portfolio, the measures focus — in accordance with Federal Government priorities — on Africa and the Middle East. However, projects in Asia, Southeastern and Eastern Europe and Latin America are also receiving financing.
Does KfW just provide financial assistance? Are there other ways to assist partners through advice and actions?
As is the case in FC overall, the role of KfW Development Bank is not just restricted to distributing funds. We support our project partners in designing, preparing and implementing useful development projects. And the Emergency COVID-19 Support Programme has also benefited from our experience in domestic promotional business, for instance when there was a need to expand existing credit lines for private SMEs to provide liquidity at short notice. We have contractually agreed support of this type with, for instance, our long-term partner, the Central American development bank BCIE.
Does KfW’s corona aid interlink with the EU?
The European Commission is also relying even more heavily on KfW during the corona crisis. In the short term, existing funds to promote SMEs in Africa, Southeastern Europe and the MENA region were topped up and the cooperation between the EU and KfW on the new European guarantee instrument is also due to expand substantially over the course of this year.
Is KfW well placed to meet these extra challenges? Will it still be able to maintain its high standards in terms of quality and sustainability?
We have only suggested projects to the Federal Ministry for Economic Cooperation and Development and to the EU which can be implemented quickly and with a manageable amount of extra work, but which are nonetheless high quality. We were also able to coordinate some measures with the Federal Government to simplify processes. Nonetheless, it will of course become a challenge to implement everything by the end of the year while continuing to look after our usual portfolio as planned, especially under the conditions imposed due to coronavirus, including working from home to some extent and heavy restrictions on business travel. Our experiences over the past few months have shown me, however, that everyone in KfW Development Bank is very aware of the special responsibility that we have to the Federal Government and partners in this situation, and I’m confident that we will be able to do this justice.