The establishment of the pilot Crisis Response Window for the remainder of the IDA15 period (January 2010-June 2011) responds to recent requests by the G-20 and the Development Committee for the Bank to explore the benefits of a new crisis response mechanism to protect low-income countries from crises. At the recent IDA15 mid-term review, donor and partner country representatives strongly supported the proposal.

“With the new financial support mechanism approved today, IDA will be able to provide additional financial support to mitigate the impact of this crisis on poor countries,” said World Bank Group President Robert B. Zoellick. “We must assist low-income countries in regaining lost ground to overcome poverty and achieve the Millennium Development Goals.”

Low-income countries have been hit by the crisis through declining external trade, remittances, and foreign direct investment flows, and many are already experiencing fiscal stress. “Governments are confronted with increased spending needs for social safety nets as falling revenues place constraints on expenditures for education, health, agriculture, and infrastructure,” said Axel van Trotsenburg, World Bank Vice President, Concessional Finance and Global Partnerships. “The new window responds to strong demand from IDA countries to protect core spending in these critical areas.”

The initial funding level of the pilot Crisis Response Window will amount to about US$1.3 billion from the redeployment of IDA internal resources, including set asides for arrears clearance and extraordinary investment income from IDA resources during fiscal year 2009 (July 2008-June 2009).

The duration for the pilot Crisis Response Window will be 18 months, ending in June 2011, with many of the programs expected to be implemented during the first half of 2010. The bulk of the resources will support the scale up of operations already in place or currently under preparation.#