Good morning. Thanks to all of you for joining this call.
I wanted to tell you how the World Bank Group is going to ramp up its support for countries in the Middle East and North Africa to help the people there and seize the opportunities of historic change to modernize their economies and build more open and inclusive societies.
We’re working closely with the IMF and the other multilateral development banks on an integrated approach to try to stabilize and then modernize the economies of the region. And these joint efforts will be the subject of the discussion we’ll have with the Group of Eight at the summit later this week in Deauville, France.
Ahead of that meeting, I wanted to announce up to $6 billion in new Bank support over the next two years for Egypt and Tunisia depending on the pace and depth of reform. Now the details are in a press release, that I believe you have but let me give you a brief outline now.
Taking Egypt first: we are planning $4.5 billion over the next 24 months as part of a potential package that would be connected to a separate IMF program, that would address the budget and the reserve shortfalls and reforms that help strengthen the credit and investment process.
The support of our $ 4.5 billion includes $1 billion for Egypt’s budget this year that would be linked to governance and openness reforms and a further one billion dollars available next year dependant on progress. And the balance of the $ 4.5 billion would be made up of investment lending for specific projects, financing for private businesses through IFC and political risk and guarantees.
For Tunisia, we’re planning a billion dollars in support for the budget and for investment projects.
That amount would be in addition to the $500 million that we already announced as part of a $1.2 billion package that also drew on the African Development Bank and European donors for a governance and opportunity program to support Tunisia’s efforts on freedom of association; access to information; transparency in public procurement; beneficiary participation in service delivery; and training of unemployed workers. And that $ 1.2 billion package is moving quite quickly and we hope to get board approval even in June – before the end of the fiscal year. And that would be fast disbursing money.
Tunisia will also benefit from support to its private sector from the IFC of up to about $400 million. And the Multilateral Investment Guarantee Agency hopes to provide guarantees of up to $100 million a year. In fact we’re working on a transaction as I speak on that.
The revolutions in the Middle East and North Africa offer great opportunities but also pose daunting challenges and risks.
This is illustrated by the release we’re also making today of new forecasts by the Bank that show a marked slowdown of growth in the region for this year. This is due significantly to a sharp drop in the Tunisian and Egyptian economies but also because of weaker growth elsewhere.
The new forecasts not only underscore the need for financial support for the region but also emphasize the centrality of sound policies. Money alone is not the answer.
The Bank is also releasing a paper in a couple of hours that will outline the four key building blocks for development in the region.
These include first strengthening the governance framework, for example, by opening government to the people.
It also includes tackling issues of economic and social inclusion; third, boosting job creation to overcome some 10 percent unemployment and, in the case of young people, about 24 percent unemployment; and fourth to accelerate private sector growth as the main engine for jobs and innovation.
This new multipolar world we live in means that no one has all the answers to address today’s development problems.
Egypt and Tunisia can learn from other developing countries how to structure social safety net programs that target the poor but don’t subsidize the rich.
So it’s time to move beyond the old paradigm about the North teaching the South, or the West teaching East. These are programs that other developing countries are bringing to the world; a world where the Middle East and North Africa can learn from Indonesia and Mexico rather than just the experience of Europe and the United States.
I hope that Deauville can recognize what the young people across the Arab world recognized before us: that policy is as important as money; that participation and voice matter to economies; that citizens are more than objects of policy; and that a quest for dignity and respect can underpin sustainable and inclusive development -- or spark revolution.
I’ll be pleased to answer your questions.