Good morning ladies and gentlemen, distinguished guests, Mr. Secretary-General, Mr. ECOSOC President. It’s an honor to address all of you on behalf of World Bank Group President, Dr. Jim Yong Kim.
Nearly two years have passed since the meeting in Addis Ababa. Likewise, the adoption of the 2030 Agenda for Sustainable Development, and the Paris Agreement under the UN Framework Convention on Climate Change are in their second year of implementation.
The 2015 agreements were historic milestones, and are now influencing the process of policy making to find sustainable solutions to today’s development challenges.
The UN ECOSOC Finance for Development Forum is a critical platform to monitor progress on our commitments to finance efforts to achieve the SDGs—and to end extreme poverty. We are honored to be an active part of the Inter-Agency Task Force and to have contributed to the Progress Report.
There is no doubt that the Addis Ababa conference helped start a joint conversation within the World Bank Group and other Multilateral Development Banks on how, as International Financial Institutions, we could contribute to the enormous task of financing the SDGs by helping mobilize the financial resources to achieve them.
Official Development Assistance (or ODA), which in 2016 was $143.3 billion (including humanitarian assistance and in-donor refugee assistance), remains critical, particularly for the poorest nations—but it will never be enough to reach the SDGs. In contrast, in 2014 UNCTAD estimated the annual investment gap to reach the SDGs to be $2.5 trillion in developing countries.
In order to help finance the vast needs of the 2030 Agenda we suggested that, in addition to the consideration of the ‘Billions’ in official development assistance, to move to ‘Trillions’ in investments of all kinds: public and private, national, and global.
To achieve the SDGs, Multilateral Development Banks (MDBs) needed to change the way they work and fundamentally change the approach to development finance.
And we have made some progress.
First, the World Bank Group’s fund for the poorest nations, the International Development Association, had a record replenishment of $75 billion, to be committed over the next three years to the neediest countries. It will emphasize the special themes of gender, fragility and violence, jobs, and economic transformation, climate change, and governance.
Additionally, IDA is now able to mobilize additional financing from the markets by leveraging its balance sheet, generating a 50 percent increase in resources available for these countries and themes.
Second, even in ODA-dependent countries, domestic resources are often significantly greater than international flows. Domestic resource mobilization is a major area of focus for the World Bank Group.
Analysis suggests that in many lower-income countries have the potential to increase their tax revenue by at least 2-4 percent of GDP, without compromising fairness or growth. Raising additional revenues would allow developing countries to fill financing gaps and aid dependency. We are working closely with the IMF and other multilateral development banks to increase the effectiveness of domestic resource mobilization, developing a tax policy assessment framework and increasing the voice of developing countries in the global discussion on tax issues.
We are working with the OECD and G20 on ways to limit the erosion of the tax base through illicit financial flows, and the shifting of profits to low-tax jurisdictions. We are also providing technical assistance to support local authorities and to enhance their effectiveness for delivery and efficiency in municipal budget and finance.
Third, the World Bank Group is continuing to invest in knowledge and programs to deal with the challenges and opportunities associated with global public goods, such as climate action, crisis response (pandemics, refugees, famine), and infrastructure finance.
For example, our new Global Crisis Response Platform addresses a variety of global threats, including climate change and natural disasters, fragility and conflict, new pandemics, the effects of refugee crises, and macroeconomic and financial market shocks to support host countries for refugees, such as Jordan and Lebanon.
In response to the ongoing threat of food insecurity and famine, at the World Bank Group we are working toward an overall financial package of more than $1.8 billion from IDA, which includes existing operations of over $870 million.
We are forming new partnerships, including the cooperation with UNICEF, WHO, UNDP, and ICRC, other national and international NGOs, and the private sector to help us reach those in otherwise inaccessible areas. We are also creating a new platform – The Food Insecurity Monitoring and Action Platform – as part of our Global Crisis Response Platform.
The Global Infrastructure Forum, another Addis initiative, celebrated its second year and the MDBs, among others, agreed to work together to support sustainable infrastructure investment, including for project preparation, enhanced quality, attracting private capital, and joint definitions and methodologies to measure private investment.
Finally, we are crowding-in the private sector, whenever possible, combining this with our technical and local knowledge to make that capital work for those who need it most. We have begun to apply systematically across the World Bank Group what we call a “Cascade” approach when assessing new investments. This approach seeks to first mobilize private sector finance. Where risks remain high, we’ll use guarantees and risk-sharing instruments. We will also work with governments on regulatory and policy reforms to improve project bankability and feasibility. And only where market solutions are not possible would official and public resources be used.
This is a profound departure from the conventional lending practice, and it is absolutely essential if we are to reach the trillions necessary to finance the SDGs.
What emerged from Addis Ababa was indeed a consensus that private capital was essential for development, but with a clear mandate: to build a country-led process which serves the best interests of poor countries and poor people, aligned with our core values of access, inclusion, and equality.
I don’t want to miss this opportunity to emphasize the importance of data for effective decision making, and for using our financial resources wisely. Quality data is critical for the SDGs and for effective implementation, and many countries and people suffer from a lack of information or even misinformation. The World Bank Group’s new SDGs Atlas, which was launched in April, is a useful tool to track progress on achieving the SDGs.
To effectively support the financing for development agenda we all need to deepen our ability to mobilize all resources outside of traditional ODA. It is our hope that this Forum will put us on a path to use our collective knowledge, skills, and resources, to finance the achievement of the SDGs – and to end extreme poverty.
Thank you very much.
