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Global Community Makes Record $75bn Commitment to End Extreme Poverty

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  • Global Community Makes Record $75bn Commitment to End Extreme Poverty

A coalition of more than 60 donor and borrower governments have agreed to ratchet up the fight against extreme poverty with a record $75 billion commitment for the International Development Association (IDA), the World Bank’s fund for the poorest countries.

“This is a pivotal step in the movement to end extreme poverty,” World Bank Group President Jim Yong Kim said. “The commitments made by our partners, combined with IDA’s innovations to crowd in the private sector and raise funds from capital markets, will transform the development trajectory of the world’s poorest countries. We are grateful for our partners’ trust in IDA’s ability to deliver results.”

The funding, according to a release issued by the global body, will enable IDA to dramatically scale up development interventions to tackle conflict, fragility and violence, forced displacement, climate change, and gender inequality; and promote governance and institution building, as well as jobs and economic transformation -areas of special focus over the next three years. These efforts are underpinned by an overarching commitment to invest in growth, resilience and opportunity.

“With this innovative package, the world’s poorest countries – especially the most fragile and vulnerable – will get the support they need to grow, create opportunities for people, and make themselves more resilient to shocks and crises,” said Kyle Peters, World Bank Group Interim Managing Director and Co-Chair of the IDA18 negotiations. “IDA’s focus on issues like climate change, gender equality and preventing conflict and violence will also contribute to greater stability and progress around the world.”

Financing during the IDA18 replenishment period, which runs from July 1, 2017 to June 30, 2020, is expected to support: Essential health and nutrition services for up to 400 million people; access to improved water sources for up to 45 million people; financial services for 4-6 million people; safe childbirth for up to 11 million women through provision of skilled health personnel.

Others are: training for 9-10 million teachers to benefit 300+ million children; immunisations for 130-180 million children; better governance in 30 countries through improved statistical capacity; and an additional 5 GW of renewable energy generation capacity.

“IDA is writing a whole new chapter in the story of development,” said Dede Ekoue, IDA18 co-chair and Togo’s former Minister of Development. “Together with donors, working hand-in-hand with borrower governments, we are putting forward an innovative, ambitious and responsive package of support that gives hope to the poorest. These interventions will help transform the lives of billions of people living in IDA countries.”

To finance this groundbreaking package, IDA is proposing the most radical transformation in its 56-year history. For the first time, IDA is seeking to leverage its equity by blending donor contributions with internal resources and funds raised through debt markets. By blending concessional contributions from donors with its own resources and capital market debt, IDA will significantly increase the financial support it provides to clients.

“The innovative financing package offers exceptional value for money, with every $1 in partner contributions generating about $3 in spending authority,” said Axel van Trotsenburg, World Bank Vice President for Development Finance. “It is one of the most concrete and significant proposals to date on the Addis Ababa Action Agenda – critical to achieving the 2030 Sustainable Development Goals.”

The additional financing will enable IDA to double the resources to address fragility, conflict and violence (more than $14 billion), as well as the root causes of these risks before they escalate, and additional financing for refugees and their host communities ($2 billion).

Increased financing will help strengthen IDA’s support for crisis preparedness and response, pandemic preparedness, disaster risk management, small states and regional integration, the release noted.

Efforts to stimulate private sector development in the most difficult environments, at the core of job creation and economic transformation, will receive a major push in the form of a new $2.5 billion Private Sector Window (PSW).

The PSW, being introduced together with the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), will help mobilise private capital and scale up private sector development in the poorest countries, particularly in fragile situations. The funds will also help governments strengthen institutions, mobilise resources needed to deliver services, and promote accountability.

A total of 48 countries pledged resources to IDA; additional countries are expected to pledge in the near-term. The World Bank Group is continuing the tradition of contributing its own resources to IDA.

“One of the extraordinary things about IDA is that it brings different countries together to help the poorest. In this replenishment in particular, we’ve really seen that IDA is truly a global coalition,” said van Trotsenburg.

A total of 75 low-income countries are eligible to benefit from the IDA18 financing package.

The World Bank’s IDA, established in 1960, helps the world’s poorest countries by providing grants and low- to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.

IDA is a multi-issue institution, supporting a range of development activities that pave the way toward equality, economic growth, job creation, higher incomes, and better living conditions. Its work covers, for example, primary education, basic health services, clean water and sanitation, agriculture, business climate improvements, infrastructure, and institutional reforms.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Nigerian Oil Theft Escalates to 400,000 Barrels a Day, Exposing Systemic Corruption

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A recent report has revealed that Nigeria’s daily oil losses surged to 400,000 barrels as efforts to curb crude oil theft remain ineffective.

This escalation from 100,000 barrels per day in 2013 underscores the severe and worsening challenge facing the nation’s oil sector.

The report, produced by the public policy firm Nextier, is the result of several months of in-depth investigation.

It reveals a complex web of sophisticated networks involving powerful actors, foreign buyers, security personnel, transporters, and government officials.

This elaborate system facilitates the large-scale theft of crude oil, which has been a significant drain on Nigeria’s economy.

From 2009 to 2021, Nigeria lost 643 million barrels of crude oil, valued at $48 billion, due to theft. This loss represents more than half of the nation’s national debt as of 2021.

The situation has also severely impacted Nigeria’s ability to meet its OPEC quotas, which have dwindled from 2.5 million barrels per day in 2010 to just 1.38 million barrels per day.

The report, authored by Ben Nwosu, an associate consultant at Nextier, and Ndu Nwokolo, a managing partner at Nextier, paints a grim picture of the local dynamics fueling this crisis.

It highlights the involvement of multiple small-scale artisanal actors, who are often supported by local political and security forces. These local actors contribute to the creation of underground economies, further complicating efforts to curb theft.

Environmental hazards are another grave concern. Illegal refining processes, characterized by uncontrolled heat and poorly designed condensation units, have led to numerous explosions. Between 2021 and 2023 alone, these operations resulted in 285 deaths.

Despite these dangers, illegal refineries continue to thrive due to economic necessity and systemic corruption.

Nigeria’s four refineries, which have a combined capacity of 445,000 barrels per day, are currently operating at only 6,000 barrels per day due to mismanagement and corruption.

This shortfall forces the country to rely heavily on imported refined products, further exacerbating the situation.

Massive corruption in oil importation and subsidies has led to billions of naira being unaccounted for between 2016 and 2019.

Moreover, the government’s inability to support modular refineries has perpetuated reliance on illegal operations.

Security forces are often implicated in the theft, providing protection for a fee. Although recent measures, such as the destruction of illegal refineries, have offered temporary relief, these efforts have been short-lived.

New illegal operations quickly emerge, perpetuating the cycle of theft and corruption.

The authors of the report emphasize that addressing this complex issue requires more than punitive measures. They call for a comprehensive approach that tackles the root causes, including the need for effective governance and economic opportunities for affected communities.

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Brent Crude Falls Amid Anticipation of China’s Industrial Output Report

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Brent crude prices fell on Monday, reversing some of last week’s gains as traders anxiously awaited the release of key economic data from China, the world’s largest importer of crude oil.

After climbing 3.8% last week — the first weekly rise in four — Brent crude edged down toward $82 a barrel. Similarly, West Texas Intermediate (WTI) crude was trading near $78 a barrel.

The market’s attention is now focused on China’s scheduled release of industrial output and crude refining figures for May, which are expected to provide crucial insights into the economic health and energy demand of the country.

China’s oil refining — known as crude throughput — is anticipated to be flat or even decline this year for the first time in two decades, excluding the downturn experienced in 2022 due to the COVID-19 pandemic. This projection is based on a survey conducted by Bloomberg among market analysts.

In 2023, China processed a record volume of crude oil as demand rebounded, but signs of robust supply and persistent concerns over Chinese demand have kept oil prices trending lower since early April.

The situation was further complicated by OPEC+’s recent decision to increase output this year, which initially unsettled the market. Key members of the cartel have since clarified that production adjustments could be paused or reversed if necessary.

“Crude has room for growth,” said Gui Chenxi, an analyst at CITIC Futures Co. “The third quarter is typically the peak season globally and should drive oil processing and demand higher.”

Market participants are keenly watching the forthcoming data, as any indications of weakening demand could weigh heavily on prices.

Conversely, stronger-than-expected industrial activity could support prices and offset some of the recent bearish sentiment.

The ongoing uncertainty has led to cautious trading, with investors reluctant to make significant moves until more concrete information is available.

This cautious approach underscores the delicate balance the oil market is trying to maintain amid fluctuating global economic signals.

As the world’s top crude importer, China’s economic performance is a key barometer for global oil demand. The data expected from China will not only influence immediate trading strategies but also provide longer-term market direction.

In the meantime, the oil market remains on tenterhooks, reflecting the broader uncertainties in the global economy.

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Fed’s Decision to Hold Rates Stalls Oil Market, Brent Crude Slips to $82.17

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Oil prices faced a setback on Thursday as the U.S. Federal Reserve’s decision to maintain interest rates dampened investor sentiment.

The Federal Reserve’s announcement on Wednesday indicated a reluctance to initiate an interest rate cut, pushing expectations for policy easing possibly as late as December. This unexpected stance rattled markets already grappling with inflationary pressures and economic uncertainty.

Brent crude, the international benchmark for Nigerian crude oil, saw a drop of 43 cents, or 0.5% to $82.17 a barrel, reflecting cautious investor response to the Fed’s cautious approach.

Similarly, West Texas Intermediate (WTI) crude oil also slipped by 46 cents, or 0.6% to settle at $78.04 per barrel.

Tamas Varga, an analyst at PVM Oil, commented on the Fed’s decision, stating, “In the Fed’s view, this is the price that needs to be paid to achieve a soft landing and avoid recession beyond doubt.”

The central bank’s move to hold rates steady is seen as a measure to balance economic growth and inflation containment.

The Energy Information Administration’s latest data release further exacerbated market concerns, revealing a significant increase in U.S. crude stockpiles, primarily driven by higher imports.

Fuel inventories also exceeded expectations, compounding worries about oversupply in the oil market.

Adding to the downward pressure on oil prices, the International Energy Agency (IEA) issued a bearish report highlighting concerns over potential excess supply in the near future.

The combination of these factors weighed heavily on investor sentiment, contributing to the decline in oil prices observed throughout the trading session.

Meanwhile, geopolitical tensions in the Middle East continued to influence market dynamics, with reports of Iran-allied Houthi militants claiming responsibility for recent attacks on international shipping near Yemen’s Red Sea port of Hodeidah.

These incidents underscored ongoing concerns about potential disruptions to oil supply routes in the region.

As markets digest the Fed’s cautious stance and monitor developments in global economic indicators and geopolitical tensions, oil prices are expected to remain volatile in the near term.

Analysts suggest that future price movements will hinge significantly on economic data releases, policy decisions by major central banks, and developments in geopolitical hotspots affecting oil supply routes.

 

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