The world is experiencing unprecedented challenges from COVID-19—the coronavirus pandemic—that could erase development gains for many countries. The pandemic has profoundly impacted human capital, including lives, learning, basic well-being, and future productivity. The crisis has also severely tightened external financing conditions for countries across the income spectrum, disrupting trade, supply chains, and investment flows. Multilateral cooperation is needed to contain the pandemic and mitigate its health, social, and economic consequences.
These were key messages from the Development Committee, a ministerial-level forum of the World Bank Group and the International Monetary Fund, in a communiqué issued at the institutions’ Spring Meetings, which were convened online for the first time ever.
The committee, which represents 189 member countries, noted that the Bank Group is uniquely positioned to tackle these complex issues and to play a leading role in the response through its lending, investments, knowledge, and convening capacity. With the pandemic requiring decisive, collective action and innovation, the committee encouraged the Bank Group and the IMF to continue helping all country clients, in partnership with UN agencies, international financial institutions, and bilateral partners.
In his remarks to the committee, World Bank Group President David R. Malpass underscored that “If we don’t move quickly to strengthen systems and resilience, the development gains of recent years can easily be lost.” He added that, while the pandemic’s effects are global, “This crisis will likely hit the poorest and most vulnerable countries – and people – the hardest.”
Emphasizing the need for fast, broad-based action, Malpass reported that the Bank Group’s COVID-19 programs are underway in 64 developing countries and expected to reach 100 countries by the end of April. He outlined three main aims of coordinated efforts across the World Bank, IFC, and MIGA: to protect the poorest and most vulnerable households, to support business and save jobs, and to help developing countries implement emergency health operations and strengthen economic resilience.
Both the committee and Malpass noted that member countries’ strong support has placed the Bank Group in a better position to help countries tackle COVID-19. Malpass said, “With existing resources, fully leveraged and front loaded, we are able to provide $160 billion of financing over the next 15 months.” He added that this total includes $50 billion through grants and highly concessional credit from IDA, the World Bank’s fund for the poorest countries.
The week also saw an announcement by the G20 finance ministers that official bilateral creditors will allow the IDA countries that request forbearance to suspend their debt service payments, beginning May 1. This move had been championed by the Bank Group and the IMF; as Malpass remarked at the press conference after the Development Committee meeting, “It is a powerful, fast-acting initiative that can bring real benefits to the poor.” The committee called on private creditors to participate in the initiative on comparable terms. They also asked the Bank Group and IMF to review the debt challenges of middle-income countries and explore solutions to fiscal and debt stress in those countries on a case-by-case basis. Both the committee and Malpass emphasized that efforts must help enhance the transparency of developing countries’ debt.
The actions being taken reflect the scale of the challenges posed by COVID-19, which Malpass called “an unprecedented crisis, with devastating health, economic, and social effects felt around the world.” He and the committee expressed their sympathy for the human toll and their support for those on the front lines of the pandemic. They also stressed that by acting now, the Bank Group can help countries shorten the time to recovery and lay the foundations for growth and higher living standards for all.
Above all, the urgent response to COVID-19 reflects the Bank Group’s long-term commitment to helping all client countries reduce poverty, broaden prosperity, and achieve their development goals. As the committee put it, “It is only by rebuilding stronger and better that these goals can be achieved.”