“Mobilizing Resources in Support of the Implementation of the 2030 Agenda”
I would like to thank the UN Economic Commission for Europe (UNECE) for the invitation to join the sixty-seventh session of the Commission, on the occasion of UNECE’s 70th anniversary.
This gathering provides a unique opportunity for UNECE member states to develop a collective vision of the future of the region -- on the path towards sustainable development, and guided by the 2030 Agenda for Sustainable Development.
The World Bank Group is strongly committed to delivering on the 2030 Agenda and partnering with the UN System and other key stakeholders. Reflecting this commitment, the Bank Group created the unit that I lead, the Senior Vice Presidency for the 2030 Development Agenda, United Nations Relations and Partnerships, to coordinate the its efforts on the 2030 Agenda, with offices in DC, NY, and here in Geneva.
I am particularly pleased to be here today, not only because of the centrality of this discussion, but also because of the strong cooperation between the World Bank Group and UNECE on key areas of the SDGs, including: transport and infrastructure; road safety; climate change and sustainable energy; PPPs, including standards; and statistics on the SDGs.
We are close to the two-year anniversary of the Addis Ababa Action Agenda. In 2015, when the UN and the development banks met in Addis Ababa, we knew that to meet what are now called the global goals, the world had to move the discussion from ‘Billions’ in official development assistance to ‘Trillions’ in investments of all kinds: public and private, national and global, in both capital and capacity. ‘Billions to trillions’ was the shorthand we used to describe the scale of finance we needed.
A lot has happened in the last two years, and a lot more has to happen to realize that ambition. We can point to some progress, but there are also new challenges emerging.
In the Spring Meetings last week, one of the words we heard the most is “uncertainty,” and how this has increased in recent years. Indeed, the world is confronted with a number of uncertainties:
· Forced displacement is a global crisis affecting all of us.
· We are confronted with spillovers from conflict.
· Threats from pandemics, famine, and climate change put hard-earned development gains at risk.
· Inequalities are growing within countries.
· We are confronting major demographic changes, which can alter the course of development if not dealt with adequately.
· Global economic growth hit a significant low point last year. Investment growth fell to 3.4 percent from 10 percent on average in 2010.
· Despite stimulus in major economies and the beginning of moderate growth in 2017, rising trade protectionist policies put these gains at risk.
· There is uncertainty about policy direction in major economies, which can further constrain investment.
To succeed on the immense tasks ahead of us, we have to fundamentally change our approach to development finance. We believe that all development finance institutions should be working to crowd-in private capital through a set of principles that will maximize resources and benefits for the poor. We’re not there yet, but this is how we think we should proceed in order to get there.
First, for every project we support, we have to ask the question, “Can the private sector finance this on commercial terms?”
In 2006, the Government of Jordan was working with the World Bank Group to finance improvements to the Queen Alia International Airport in Amman. This could have been financed solely by public money, but the government was interested to see if they could bring in the private sector.
The Jordanian Government and the World Bank Group worked together to lay the groundwork for private investment. When IFC put an appropriate deal structure in place, and invested $270 million dollars of its own capital, we were able to attract enough commercial financing to cover the rest of the project.
The government contracted the airport’s operations to a French company, which pays Jordan an annual fee. It’s a genuine public-private partnership. Jordan receives 54 percent of the net revenue -- and they’re making money every year.
Second, we need to encourage upstream reforms, which requires working with governments to support policy regulatory adjustments that make projects commercially viable.
We are not talking about reviving an approach where the answer to poorly run public services, or unprofitable state-owned enterprises, was often an over-simplified attempt at privatization.
Today, we’re much more focused on whether the regulatory context provides incentives for efficient management, whether commercial principles are being applied consistently, and whether subsidies for services are transparent and focused on the poor – and ideally, funded without interfering with commercial viability.
Third, we have to use public or concessional finance in innovative ways to mitigate risk, and use blended finance to support private sector investment.
Our new tools include the $2.5-billion-dollar IDA Private Sector Window, part of our record $75-billion replenishment of IDA, our fund for the poorest nations. Among other things, it includes a Risk Mitigation Facility to provide project-based guarantees without sovereign indemnity, and a Local Currency Facility to mitigate currency risk when markets are not yet developed.
Ongoing efforts must be maintained to develop effective and efficient domestic resource mobilization policies to help generate economic growth.
This includes strong taxation and public financial management systems. The World Bank Group, IMF, OECD, and UN are working together to develop comprehensive toolkits to promote good practices across a variety of topics, including accessing comparable data for transfer pricing.
Domestic resource mobilization efforts are also often hampered by issues related to corruption and the illicit flow of finances. As noted in the Addis Agenda, governance and the rule of law are critical to tackle these illicit flows. The World Bank Group and the MDBs are supporting work in the area of governance, anti-corruption, and asset recovery, in particular through the partnership with the UN on the Stolen Asset Recovery Initiative (or STAR).
Another strategic priority for the development finance landscape and the World Bank Group is to address situations of fragility, conflict and violence, and forced displacement. Increasingly we are engaging earlier to reduce risks.
IDA will double resources to address fragility, conflict and violence, and provide $2 billion dollars to finance projects for refugees and host communities. This includes a provision for greater access to a private sector window for conflict-affected and fragile countries. But we also recognize that middle-income countries, which host substantial numbers of refugees, must also be supported with access to finance to meet the costs of their contribution to this global public good.
In summary, there is a great convergence of ideas to support the promise of the billions-to-trillions agenda, but the risks of sliding back are still there. We need stronger and deeper partnerships across the humanitarian and development spheres, between civil society, and the public and private sectors. There are ways for us to fulfill the commitments of the billions-to-trillions agenda, but it will take action from all of the relevant actors – and very soon -- if we are to stay on track to achieve the SDGs by 2030, and leave no one behind.