MODERATOR: Hi, everyone. My name is John Donnelly, I'm the Communications Advisor for President Jim Kim.
This audio briefing is on the record. President Kim will give a statement and then there will be time for your questions.
We will also email the statement to you after this call.
We'd like to get in as many questions as possible, so I'd ask that all of you get right to the point, and also President Kim has promised to do the same.
With that, let me turn this over to Jim Kim.
DR. KIM: Thanks, everyone. Thanks for joining the call. I look forward to seeing many of you in Washington, D.C. at the Spring Meetings next week.
And I thought I'd just give you a quick overview of what I see as the important aspects of the discussions that we are about to have and also give you a short statement on our views of the global economic picture.
At the World Bank IMF Spring Meetings, we will definitely have a full house, including as many as 140 finance ministers and heads of central banks, as well as 600 civil society representatives.
Our top priority for this meeting is simple and clear: We want to push the world to commit to ending extreme poverty by 2030 and also commit to boosting shared prosperity in countries worldwide.
Across the front of our building in Washington, across the front of the building of our private sector arm, the International Finance Corporation, IFC, the message is as bold as can be: End poverty.
I believe that we have an historic opportunity to end poverty within a generation. In order to meet this goal, we need economic growth in the developing world to accelerate beyond the already high rates of the past 15 years.
We need growth that helps women and young people and reduces inequalities, and we need developing countries to be able to weather shocks from food, energy, or financial crises.
And for this to work, we also need developing world leaders to focus on enacting policies towards this goal, to spur investment by the private sector that will create jobs in developing countries, and we must improve how we deliver services in key areas such as education and health.
We will be aligning our own goals with this strategy. Just yesterday, the Bank's Board discussed our country partnership strategy for India. It was the Bank's first country strategy that takes into account and focuses on these goals of ending poverty and boosting shared prosperity and then builds programs to help countries meet those goals.
We look forward to having these goals discussed and we hope endorsed by the Development Committee on Saturday.
During the Spring Meetings, we will talk quite a bit about these goals, like two events in particular. One is on Wednesday from 11:00 a.m. to noon, when our Chief Economist, Kaushik Basu and I, will lead a session called "Bending the Arc of Poverty."
A second event takes place on Friday, a week from today, also from 11:00 a.m. to noon, when I will be speaking with Secretary-General Ban Ki-moon in a session titled "Global Voices on Poverty."
Another major theme for these Spring Meetings will be focusing on education and issues affecting women and girls. We'll have several events on Thursday. Jack Lew and Valerie Jarrett from the United States Government, along with the heads of delegations from 12 other founding members of the Equal Futures Partnership and the European Commission will be joining me for a roundtable discussion on efforts to expand economic opportunities and political participation for women and girls.
Later, the Secretary-General Ban Ki-moon and I, will be meeting with education and finance ministers on Learning for All.
And in the early evening, film director Richard Robbins and actress Freida Pinto from the Slumdog Millionaire movie and other guests will kick off the screening of Girl Rising, a moving and uplifting documentary that tells the stories of nine extraordinary girls from nine countries.
Now, let me turn for a bit to the global economic situation, and after that I would be happy to take your questions.
There are important differences in our projections for the developed and developing countries.
In Europe, we are projecting GDP to contract by 0.2 percent this year.
We are also projecting that, in the second half of the year, the situation there will improve, and growth will resume in 2014 and 2015. This is important, given the high unemployment rates there.
The last figures estimated that the euro area unemployment rate at 12 percent, and in some countries like Spain, where I was last week, unemployment is above 25 percent and above 50 percent for those under 25 years of age.
As recent events in Cyprus demonstrate, the situation is still quite fragile and requires the attention of policymakers.
The situation in the United States, meanwhile, is better, with both the housing market and labor market improving, although the optimism associated to the gains since mid-2012 was tempered by last week's jobs report.
And we also know that there's remaining uncertainty over the deadlock in fiscal policy. The estimates we have for the impact of the sequester on U.S. growth for this year could be somewhere between 0.5 and 1.5 percent. Nonetheless, we still project that growth in the United States for the year will be at around 1.9 percent.
On the other hand, our economic forecast for the developing world remains bright.
The economies of the developing world are expected to expand by 5.5 percent this year, and we forecast that the growth will further accelerate to 5.7 and then to 5.8 percent in 2014 and 2015 respectively.
But given our projections and uncertainties in the high-income countries, we are closely monitoring the economic situation in the developing world.
I will stop there and take your questions.
OPERATOR: Thank you. We will now begin the formal question and answer session. If you’d like to ask a question please press star one. To withdraw a question, press star two. Once again, to ask a question, please press star one.
OPERATOR: One moment for the first question.
Sandrine Rastello, of Bloomberg, your line is open.
BLOOMBERG: Yeah, hello, thank you for this call.
Just a quick couple of questions. There's going to be a G-20 as part of these meetings next week, and you're usually part of it. What do you expect to be the main topics?
We had heard about, you know, currency war at the last G-20 in February. What do you expect to dominate the talks?
Second question, a few months ago, you had announced you were providing technical assistance to Greece. There were talks in other Eurozone countries. I wanted to see where the Bank--how the Bank was doing, what was the latest?
DR. KIM: Okay. Hi, Sandrine, thanks for your question.
Unlike last G-20 meeting, there is no burning crisis issue. You know, we went right into that session when there was a lot of unfortunate talk about currency wars.
But from my perspective, that G-20 meeting was extremely helpful, and it was helpful in the sense that it provided us a platform to actually talk about how to deal with this issue, and I think we came out of that meeting in a very positive way in the sense that we all agreed that, as long as monetary easing was focused on responding to domestic exigencies, for example, monetary easing related to demand in terms of targeting an inflation rate or targeting unemployment, these things were all agreed across the table as perfectly legitimate things to do. So, we came out of that meeting with an agreement on where we were going.
And because Japan is clearly, for example, in this case, targeting inflation rates, there was widespread agreement, and I think we avoided any further difficulties.
So, there's no burning issue coming into this particular G-20. I'm sure that we will have discussions about what's been happening in Cyprus. But unlike last time, there's not that kind of a crisis situation, but I think last meeting was a tremendously positive example of why these meetings with the G-20 are so important.
And in terms of the second question, you know, we are very engaged with Greece, and right now most of our work is focused on helping the Greeks improve their business environment, and so far that is the only European country that we are working in.
But as ever, we stand ready to provide any kind of technical assistance to any countries in the world who would like it.
OPERATOR: Howard Schneider of The Washington Post, your line is open.
WASHINGTON POST: Thanks. Just one thing, Dr. Kim.
Your headline goal of ending poverty in 2030 sounds very dramatic, but in fact, that's the trend poverty has been on for the last, what, 25 years now or something like that. So, is this really as big a deal as it seem? Rather than bending the arc, it just seems like you're continuing a trend that's got a lot of its own natural inertia behind it.
DR. KIM: Thanks for that question.
Our team here are the ones who track the trends in poverty in the world globally. And what happened over the last 25 years was truly remarkable, but we would never have been able to have poverty--if not for the efforts particularly of China. You know, China lifted more people out of poverty through economic growth than any country has ever done in the history of the world.
So, the thing that we are all very concerned about is that we may have picked a lot of the low-hanging fruit in terms of lifting people out of poverty. And so, a lot of the more difficult places remain.
We know that, if we are to make progress and continue the path down to three percent, we've got to make tremendous new efforts, especially in South Asia and in Sub-Saharan Africa.
And so, every indicator that we have told us that the curve, rather than going continually down at one percent decline a year was going to begin to deflect upwards, because as we got into fragile and conflict-affected states and to Sub-Saharan Africa, into the poorest states in India, the poverty eradication effort was going to become much, much more difficult.
So, think of the task this way: we went from 42 percent or so to 21 percent in 25 years. If we're to get poverty below three percent by 2030, we will have to cut it in half once, cut it in half twice, and then cut it in half almost a full third time in order to get there.
So, you know, everyone knows the saying that the last mile is always the most difficult. We're not even close to the last mile, yet, but as we get closer, the eradication task is going to get much more difficult.
OPERATOR: Oliver Grimm of Die Presse, your line is open.
QUESTION: Yes, hello.
I have a question concerning the ongoing euro crisis, and particularly Cyprus. There are many people who argue that, given that the financial sector in Cyprus is now more or less imploding and that this was the biggest industry that Cyprus had, that more or less the economy there has to reinvent itself.
What will be your prescription, having dealt with many other countries in dire situations around the world? How would you suggest that Cyprus should go about rebuilding its economy in a more sustainable way?
DR. KIM: Thank you for your question, Oliver.
You know, let me just make a couple of comments about Cyprus.
First, we don't work in Cyprus, and that's one point.
The second point is the World Bank doesn't provide prescriptions. Even though I am trained as a medical doctor, one of the things that we are very committed to doing is not providing prescriptions.
I think for us the Cyprus situation is important in several ways.
First, one of the things that we have to note is that when we first began to understand the scale of the crisis in Cyprus, many people said, "Oh, my goodness, this is it, there's going to be contagion. The entire Eurozone could be in trouble." And over time, the Eurozone was able to absorb this crisis.
Now, this is awful for the people of Cyprus. We understand that and we feel tremendous compassion for the difficulties that the people of Cyprus are going to go through, but I think the fact that the Eurozone has been able to weather this crisis is very important.
I think the other issue that it really points out is that the European leaders have reestablished their commitment to a banking union, and I think that is really important. If this illustrates anything for us, it's the importance of a banking union in Europe.
Now, having said all that, if the Government of Cyprus would like to work with the World Bank, you know, we do have a lot of experience in working in countries that have gone through crises like this.
You know, South Korea, in the late 1990s was no longer a World Bank country, but because of their crisis, the World Bank did go back in and we feel that we were able to be helpful, mostly because we've got so much experience dealing with these kinds of situations in countries all over the world.
OPERATOR: Lesley Wroughton, of Reuters, your line is open.
REUTERS: Yes, hi, Dr. Kim, a couple of questions.
The one is I was wondering if you were hoping that the Governors in the Development Committee were actually going to vote on your proposal on the 2030 goal. That was one, because that is not clear.
The second one is one of the big issues at this meeting is the debate over how and when developed--sorry, central banks in developed countries should start withdrawing the monetary stimulus.
As you know, a lot of the emerging markets in developing countries have complained that the low rates have pushed a lot of the capital flows into their economies.
Now, there is a concern that that could unravel and that investors could withdraw a lot of that capital, which would then make, I guess, things a lot--well, it would make things a lot more uncertain.
Do you think that the growth in developing countries is so sustainable that it wouldn't really make a difference that there is this ongoing push and interest in developing countries by investors?
DR. KIM: Well, thanks very much, Lesley.
So, at the Development Committee, what we are hoping is that the Governors will endorse. They don't actually vote.
But if we get a strong endorsement from the Governors for our strategy of ending poverty and boosting shared prosperity, we're going to go on to present a real strategic plan that would cut across the World Bank Group.
And the reason that is so important is because the different parts of the World Bank Group, the International Finance Corporation, our private sector wing, MIGA, our political guarantee agency, and the Bank as we normally think of it, the IBRD and IDA, for a very long time, they have coexisted, but they haven't really worked well together.
So, for the first time in history, we are proposing to put together an integrated strategy for the three groups.
Now, the reason that is so important is because one of the things we understand, especially if you think about the post-2015 agenda for the world, there is just no way that we are going to be able to achieve what we want to achieve for the developing countries if we think about it just in terms of what we can do with official development assistance.
And so, one of the things we are trying to do is to send a very strong signal to the world that this integration across public and private sector, including political guarantees, is the right way to think about our overall aspirations.
And so, the strategy that we are going to be developing is really going to tackle that issue very directly, and we have had many discussions with leaders in the UN system about this. So, we've got to think beyond ODA in taking the next step. And we hope that this notion of ending poverty and boosting shared prosperity will take us there.
Now, in terms of the spillover effects, you know, at the last G-20 meeting in Moscow, we talked about this. And of course, as you can imagine central bank Governors and finance ministers from the developing world talked at length about the potential spillover effects of many high-income countries engaging in monetary easing.
And so, what we found is that, despite all the monetary easing, that developing country economies have been very resilient, thus our projections of the continued growth.
Now, you know the point was made, of course, that if every single country engages in massive monetary easing, there are a number of downside risks, bubbles, for example, but also spillover effects on developing country economies. And so, the agreement at the last G-20 meeting was to watch this very carefully, but our own team has found that the developing country economies have been remarkably resilient and, as developed countries economies return to growth, again, that opens up markets for products and goods from the developing world.
So, we're watching it but so far the story has been fairly positive.
OPERATOR: Our last question comes from Patrick Welter of FAZ.
Your line is open.
FAZ: Hello, President Kim. I have one question.
Looking at your strategy of the--not at the strategy but on the goal to reduce poverty--to end poverty [unclear] 2030, do you have any idea how much money you would need for that? Would you need some kind of capital increase at the World Bank?
DR. KIM: Well, you know, one thing that's for certain is that there is no way that the World Bank itself is going to end poverty by 2030.
Let me just give you a quick example. I was just in India, and of course we are very focused on India because there are still 400 million people in India living in absolute poverty, somewhere north of a third of all the people living in extreme poverty.
Moreover, I visited a state, Uttar Pradesh, that is home to 200 million souls and they--just that state is home to eight percent of the people in the world living in the world in absolute poverty.
The Indians told me that they have a $1 trillion infrastructure deficit over the next five years. And from their calculations, the best that they're going to be able to do is to support about 50 percent of the public money, and the other 50 percent has to come from private sources.
So, if we are to end poverty by 2030, we have to think differently. We have to think about making sure that we encourage countries to do as much as they can in social development assistance, because there are so many things that we are not going to be able to crowd in private capital to support, but if we make the best possible use of the official development assistance we do get and then bring in private sector resources to build the kind of infrastructure we need, that will lead to job creation, which will be the most important aspect of lifting people out of poverty.
So, the World Bank can’t do it by itself and it is really for us--right now, it is really not an issue of capital adequacy, it is an issue of making sure that the entire world is focused on this target.
And then, for us, it's a matter of using the capital we have, both in the public and private sector to put in place the kind of transformational projects that will lift people out of poverty.
We're going to be a big part of it, but also we are going to be a small player in terms of the amount of money that actually goes in.
We think that our comparative advantage is going to be to help bring in other kinds of investors so that we can see the kinds of transformational impacts that we'd like to see.
OPERATOR: Once again, to ask a question, please press star one.
Lesley Wroughton at Reuters, your line is open.
REUTERS: Sorry, Dr. Kim, I have a follow-up.
I was wondering if you have any update for us on the IDA discussion, and what kind of sense you have--and how your 2030 goal will actually fall into those discussions and how they will affect them.
The second one is I was wondering if you had any comment or you thought that the U.S. is looking at reforming its food aid program and which would look at giving cash vouchers to people instead of food. I think one of the most interesting things is how this is actually going to rely more on local producers to give the food to people in need as opposed to shipping it from faraway places.
Any comment on that?
DR. KIM: Hi, Lesley, thank you.
As you know, Lesley, it's still early days in terms of our IDA discussions. I participated in the meeting of IDA Deputies in Paris, and the really good news coming out of that meeting was that the IDA Deputies very strongly endorsed our twin goals of ending poverty and boosting shared prosperity, and they also very strongly endorsed what we are doing right now which is to ensure that a large chunk of our private sector money from the IFC goes directly into IDA countries.
We think that this notion of linking IDA to IFC and boosting economic growth, especially in fragile and conflict-affected states, which is of course a huge focus of IDA.
So far, the signals that we're getting are very positive. I think the Deputies have been very supportive of both the things that we are doing inside the World Bank Group and of IDA as a whole, but we don't really know where we're going to end up on that quite yet.
In terms of food aid, you know, this is a huge issue for us and we invested $9.3 billion last year in agriculture and food security, and we work very closely with USAID.
Once again, I think it is still early days in that discussion, so I don't have any particular comment on it, but let me just say I think one of the really important things that's happened over a long period of time is that we understand that food security is not about just responding to crises and shocks. Food security is about everything from making sure that people have food to eat tomorrow in a crisis to ensuring that there is a robust agricultural sector.
And I’d even go further than that. I think one of the things that we're recognizing is that agriculture can be one of our most important weapons in tackling climate change, because plants are the only thing that really naturally take carbon from the air and put it back into the ground, we think there are all kinds of exciting things that we can do, especially in developing countries, where we improve agricultural yield--in other words, have more food coming out of the ground while, at the same time, having an impact on climate change.
You know, USAID, like all of us, are really trying to embrace these new understandings of the importance of the connection between everything from climate to agriculture to food security.
And we are standing by and watching as this debate unfolds, but there is this new understanding of the importance of linking these areas, and USAID has been a critical part of that discussion.
OPERATOR: There are no further questions at this time.
DR. KIM: Thank you very much everybody and I look forward to seeing you at the Spring Meetings.
OPERATOR: This concludes today’s conference call, thank you for your participation.