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World Bank Scales-up Support to Ukraine to Help Protect Low-Income Families

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The World Bank’s Board of Executive Directors approved today a loan to Ukraine in the amount of $300 million for the Second Additional Financing for COVID-19 Response under the Social Safety Nets Modernization Project. This additional financing will help strengthen Ukraine’s Guaranteed Minimum Income Program (GMI) to prevent around 1 million Ukrainians from falling into poverty due to the COVID-19 pandemic. It is the second Additional Financing under this Project, after $150 million were approved on April 30, 2020.

World Bank projections show that, due to the COVID-19 epidemic, poverty in Ukraine could increase by 4 percent, reaching around 23 percent by the end of 2020. The new funds will help finance Ukraine’s COVID-19 social protection emergency response by introducing fast cash transfers to individuals and households who have lost their jobs or income sources because of the pandemic. Poor households will receive benefits through the country’s GMI Program.The loan also supports scaling up Ukraine’s social protection over the next years. According to World Bank estimates, 60 percent of the Ukrainians who may fall into poverty because of the COVID-19 outbreak do not currently benefit from any existing social protection program.

“The World Bank support to Ukraine in these critical times, aimed at protecting the poor severely affected by the COVID-19 outbreak, has a significant anti-poverty effect,” said Arup Banerji, World Bank Regional Country Director for Eastern Europe (Belarus, Moldova, and Ukraine). “The social protection measures to be supported by the new loan would help the Government of Ukraine to finance social programs aiming to prevent around 1 million Ukrainians from falling into poverty.”

The ongoing Social Safety Nets Modernization Project and two additional financings (total of $750 million) are supporting Ukraine’s poverty reduction reforms and policies for protecting the poor, together with programs to systematically graduate families out of poverty. While the COVID-19 crisis has demanded fast emergency responses, such as expanding cash transfers, it has also highlighted the need for the country to improve the resilience of its social protection infrastructure and to develop systems that can deliver cash to people in a crisis. The second additional financing will support the introduction of online enrollment and the extension of electronic/digital payments. The new delivery system supported by the loan would significantly increase the resilience of the Ukrainian social safety nets to respond to future shocks, including economic crises and natural disasters.

The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. The WBG is making available up to $160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.

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Zero Waste Europe endorses ENVI Commitee decisions in RED III and ETS

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Today, the European Parliament’s Environment, Public Health and Food Safety (ENVI) committee voted on the Renewable Energy Directive (RED III) and the EU Emissions Trading System (ETS). Zero Waste Europe (ZWE) supports the decisions taken to help accelerate the transition to a circular economy in Europe.

RED  III (Renewable Energy Directive)

The ENVI committee has agreed to limit the use of mixed waste for the ‘renewable energy’ generation purposes. 

Mixed waste sorting & support schemes

The ENVI Committee is modifying the definition of biomass, removing the expression “fraction of” in reference to the waste,  and introducing a mandatory mixed waste sorting system. The two changes ensure that only non-recyclable biogenic waste will be used for renewable energy purposes. Moreover, waste incineration of biogenic waste (biowaste, paper, etc.)  can only be supported if separate collection, recycling,  and reuse obligations are fully met. 

For Janek Vähk, ZWE’s Climate, Energy and Air Pollution Programme Coordinator: “The change is very positive because, at incineration plants, the ‘biodegradable fraction of waste’  is always combusted with fossil-derived materials. This will put an end to generating renewable energy using a technology that is powered by a substance – mixed waste-  which is far from being renewable”. 

Recycled Carbon Fuel – RCF

The agreed text also improves the European Commission’s wording to limit the potential use of fossil waste-derived ‘recycled carbon fuels’ – such as plastic-to-fuels.  

In the proposed methodology to assess the greenhouse gas (GHG) emissions savings for recycled carbon fuel, the ENVI Committee has removed the reference to the concept of ‘avoided emissions’. The concept would have allowed plastic-to-fuels manufacturers to subtract emissions that are ‘avoided’ from alternative use, such as waste incineration, making it easier for those fuels to meet the 70% GHG savings threshold required, in the transport sector to contribute towards renewable energy targets. A recent study on plastic-to-fuels shows that plastic-derived fuels produce high exhaust emissions compared to diesel.  
 
Lauriane Veillard, ZWE Chemical Recycling and Plastic-to-Fuels Policy Officer said: “We welcome the committee decision to exclude ‘avoided emissions’ from the calculation rules for recycled carbon fuels.  From a ZWE perspective, supporting the development of RCF in the context of RED III would  have undermined the higher tiers of the waste hierarchy by discouraging ‘reduce and reuse’ behaviour”.  

ZWE calls on the European Parliament to improve the wording. in its upcoming vote in September. to fully exclude the use of fossil-based fuels in the Renewable Energy Directive.

ETS  (EU Emissions Trading System)

The ENVI committee has proposed the inclusion of municipal waste incineration under the EU ETS. This means that, from 2026,  these highly climate polluting facilities will have to pay an ETS carbon price (fee) per each tonne of fossil CO2 they emit. This additional cost of incineration will act as an incentive for waste prevention and recycling, which will then become more competitive (i.e. less costly) than incineration.  Moreover, additional jobs will be created since recycling and waste prevention activities are more labour-intensive than waste incineration. 

Janek Vähk, ZWE’s Climate, Energy and Air Pollution Programme Coordinator: “The proposed inclusion of incinerators is extremely positive as the doubling of fossil CO2 emissions from those facilities have gone unnoticed and unaddressed for decades”. 
 
A recent report shows that one-third of the CO2 emissions from the plastics system are caused by incineration of plastic waste. The inclusion of incinerators is needed to incentivise plastics circularity and waste prevention, and to reduce CO2 emissions (see  ZWE’s report on ETS). 
 
Nevertheless, the ENVI committee is only  proposing to include incinerators from 2026 after conducting a review in 2024 to consider potential measures to avoid ‘unintended consequences’ of the inclusion.

Janek Vähk added: “From ZWE’s perspective, the late inclusion and the review are not justified. Shipping and landfilling of waste are both well regulated and have specific targets such as landfill minimisation and pre-treatment obligations.  These rules will be further tightened with the current review of Waste Shipment regulation and the Waste Framework Directive“.

“The inclusion is of fundamental importance to allow the EU climate and circularity goals to be successfully met. We hope that the European Parliament will support the ENVI committee position in its upcoming vote in June  by supporting the inclusion of  municipal waste incinerators in the EU ETS”. 

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Lao PDR: Economic Recovery Challenged by Debt and Rising Prices

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While sectors of the Lao economy are beginning to recover from the slowdown caused by COVID-19, the country faces stiff challenges associated with long-standing macroeconomic imbalances, according to the World Bank’s latest economic update for the Lao People’s Democratic Republic.

Increasing public debt levels and rising global prices are endangering macroeconomic stability and threatening living standards, according to the Lao PDR Economic Monitor — Restoring Macroeconomic Stability to Support Recovery.

Laos’ economy is forecast to grow by 3.8 percent in 2022, up from an estimated 2.5 percent in 2021, provided that ongoing debt renegotiations are successful and that strict COVID-19 containment measures do not return. The country currently enjoys a trade surplus and continues to attract foreign investment. The energy and mining sectors have been buoyant, while agricultural and manufacturing exports are supported by strong external demand and higher commodity prices. A gradual recovery is also expected in domestic services.

However, inflation reached 9.9 percent in the year to April 2022, up from under 2 percent last year, while long-term job losses and business closures caused by the spread of COVID-19 continue to put pressure on household incomes. With prices rising faster than earnings, many low-income families are at risk of falling into poverty, especially in towns and cities.

“Problems caused by two years of lockdowns and restrictions for COVID-19 are now being compounded by rising prices, especially for fuel and food, partly because of the war in Ukraine and the rapid depreciation of the kip,” said World Bank Country Manager for Lao PDR Alex Kremer. “For Laos, because of government debt and poor revenue collection, the situation is particularly challenging. The top policy priority is therefore to increase public revenue by reviewing tax exemptions.”

Public debt levels have increased considerably since 2019, increasing to 88 percent of GDP in 2021, with the energy sector accounting for over 30 percent of the debt stock. Foreign currency reserves remain low.

The report recommends restoring macroeconomic stability, chiefly by increasing both revenue collection and spending efficiency. The country also needs to strengthen debt management and transparency, to improve the stability of the financial sector through legal and regulatory tools, and to scale up targeted cash transfers to the poor.

The latest Lao Economic Monitor also looks at Laos’ gradual transformation from a land-locked to a land-linked country through infrastructure development, and suggests several reforms that could reduce the risks and maximize the benefits of the large investments being made in roads, rail, and logistics parks. These reforms include building connecting roads to ensure that farmers and businesses can access new infrastructure, making border crossings more efficient, and improving the business environment to attract investment and generate jobs. Laos should also promote sectors where it has a comparative advantage, for example, in high-value added manufacturing goods, agricultural products, and nature-based tourism.

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Ukraine war squeezes food supplies, drives up prices, threatens vulnerable nations

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Bread from a WFP-contracted bakery is delivered to hospitals in Kharkiv, Ukraine. © WFP

Kicking off a three-day meeting on Friday on the fallout from Russia’s invasion of Ukraine and its wider impact on food and energy prices, the head of the UN agriculture agency outlined key ways for governments to help safeguard global food security.

Under the theme Securing Global Food Security in Times of Crisis, QU Dongyu, Food and Agriculture Organization (FAO) Director-General, told agriculture ministers from G7 wealthy nations gathered in Stuttgart, Germany, that the most significant threats stem from conflict, and the associated humanitarian impact, together with multiple overlapping crises.

“Crisis represents a challenge for food security for many countries, and especially for low‑income food import dependent countries and vulnerable population groups,” he said.

A grim overview

Based on the Global Food Crises Report released on 4 May, last year around 193 million people in 53 countries/territories were officially in the Crisis phase, or worse (IPC/CH Phase 3 or above).

Other 2021 data revealed that 570,000 people in four countries were in the category of Catastrophe phase (IPC/CH Phase 5).

Just over 39 million in 36 countries faced Emergency conditions (IPC/CH Phase 4); while just above 133 million in 41 countries were in IPC/CH Phase 3. A total of 236.2 million people in 41 countries were living in Phase 2 conditions.

“Price increases always have food security implications, particularly for the poorest,” Mr. Qu reminded.

Emergency and recovery

On top of already “high prices driven by robust demand and high input costs” resulting from COVID-19 recovery, the FAO chief noted Ukraine and Russia as important players in global commodity markets, explaining that uncertainty surrounding the war has prompted further price increases.

Wheat, maize, and oilseed prices have surged in particular.

At 160 points, the FAO Food Price Index reached its highest level ever in March, averaged 158.2 points in April and remains today at a historical high.

Mr. Qu said FAO’s proposed Food Import Financing Facility would be an important tool for easing the burden of rising food import and input costs, potentially benefitting 1.8 billion people, across 61 of the most vulnerable countries.

A balancing act

Since the start of the conflict in February, export forecasts for Ukraine and Russia have been revised down as other market players, notably India and the European Union, have increased exports.

“This partly compensated for the exports ‘lost’ from the Black Sea region, leaving a relatively modest gap of about three million tonnes,” said the FAO chief.

He observed that wheat export prices surged in March, continued to edge upwards in April, and will likely “remain elevated in the coming months”.

He also called on governments to “refrain from imposing export restrictions, which can exacerbate food price increases and undermine trust in global markets”.

Wheat dependency

Turkey, Egypt, Eritrea, Somalia, Madagascar, Tanzania, Congo, Namibia and other countries dependent upon Ukraine and Russia for wheat have been greatly impacted.

Mr. Qu said that these States need to identify new suppliers, “which could pose a significant challenge, at least in the next six months”.

Fertilizer reliant

At the same time – with levels ranging from 20 to more than 70 per cent – Brazil, Argentina, Bangladesh, and other nations, are reliant on Russian fertilizer for their crops.

While Africa overall accounts for only three to four per cent of global fertilizer consumption, Cameroon, Ghana and Ivory Coast are amongst the most vulnerable countries, relying heavily on Russian supplies.

“We need to assure that key food exporting countries have access to the needed fertilizers to assure sufficient food availability for the next year,” said the top FAO official, encouraging all countries to improve fertilizer efficiency, including through soil maps and improved application.

Assisting Ukraine

To support farmers’ access to crop and livestock in the immediate and medium‑term, FAO has developed a Rapid Response Plan for Ukraine, which outlines three key actions.

The first is to maintain food production through cash and inputs for cereal crops in October, vegetable and potato production in the spring, and harvest support in July and August, for the upcoming winter crop.

Secondly, the plan advocates for bolstering agrifood supply chains, value chains and markets through public-private partnerships that provide technical support to household level and smallholder producers.

And finally, it stresses the importance of ensuring accurate analyses of food security conditions and needs as they evolve.

Coordination ‘indispensable’

“Coordinated action for Ukraine within this group is indispensable to facilitate the smooth functioning of global food markets and thus to secure food supply for all,” said the Director-General

“FAO stresses the need to support the continuity of farming operations within Ukraine; while supporting agrifood value chains”.

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