World Bank Group President Ajay Banga warned at the Spring Meetings in Washington that the economic effects of the Middle East conflict — particularly energy supply disruptions — will outlast any ceasefire, and outlined a three-tier response framework totalling up to $80 billion.
Banga said even if fighting stopped immediately, it would take time for global supply systems to stabilise, particularly where energy infrastructure has been damaged. He cautioned that the current disruption should not be treated as a brief episode.
The Bank’s response plan has three tiers. An immediate tranche of $20-25 billion can be mobilised “almost immediately” through crisis response clauses in existing projects. If the conflict extends to six months, repurposed programmes could bring the total to $50-60 billion. An extended crisis scenario of 15 months or more would see up to $80 billion deployed with a full balance-sheet review.
Banga stressed this is not grant money and countries must be mindful of fiscal constraints.
The warning is significant for Sri Lanka, whose delegation is at the Spring Meetings to conclude its IMF 5th and 6th review. The country could potentially access World Bank crisis response funds if the energy disruption extends, supplementing its existing $2 billion partnership framework.
With Fitch data showing the energy shock already appearing in March inflation figures and oil prices remaining elevated due to the Hormuz disruption, Banga’s assessment suggests developing nations face a prolonged period of economic strain regardless of how quickly a diplomatic resolution is reached.
