Senior Vice President, World Bank Group
Remarks at UN ECOSOC Forum on Financing for Development
April 24, 2018
Your Excellencies, Distinguished Guests, Ladies and Gentlemen. I am delighted to be here today on behalf of the World Bank Group and I want to thank you Madame President for your leadership and for the Under-Secretary-General of UN-DESA for his coordination of the Inter-Agency Task Force report.
I want to share with you today six important messages, plus an additional linked message.
First, ODA remains critical for development. The World Bank Group welcomes strong donor commitments as reflected in rising ODA-figures and reversal of the downward trend of funding for LICs.
Secondly, this past Saturday at the World Bank Group Spring Meetings, we managed to have a great day for sustainable development and a great demonstration of the unity behind the Sustainable Development Goals. It’s an excellent example of how the world can get together through 189 shareholders, all of them are UN Member States, to agree on a package of measures that include a $13 billion paid-in capital increase and through the leveraging exercise and through financial innovation, that will have a capacity of over $100 billion a year from fiscal year 2019 through 2030 benefitting all of the World Bank Group members across all spectrums of income, and with a focus on gender and in partnerships with the private sector. This is more than money, it’s a symbol of our interconnected world and the primacy of sustainable development.
This capital increase will greatly strengthen the institution’s financial ability to support the 2030 Agenda and the SDGs, and allow for greater responsiveness to risks to global stability and security, particularly in poorer countries and fragile states.
Third, with regard to the public sector, it’s not enough to talk about ODA. We also need to take domestic resource mobilization very seriously. In fact, for most countries, DRM is the largest resource available to fund their national development plans. A country’s ability to mobilize domestic resources and spend them effectively—at the national, sub-national and municipal levels—lies at the crux of financing for development.
The World Bank Group, together with the IMF, OECD, and UNDESA, co-organized the first Platform for the Collaboration on Tax conference, which put more emphasis on tax collection and better public expenditures coordination at the national and local levels. I am also pleased that the UN Tax Symposium, which took place this past January, was a success and helped advance the DRM agenda on its many fronts, from improving tax to GDP ratios, to reducing illicit financial flows, to improving expenditure.
Fourth, a vibrant private sector is a powerful driver of jobs and innovation, and helps grow developing country economies. In this regard, the World Bank Group is helping attract private sector solutions in the most challenging sectors and countries.
The World Bank Group has introduced a Maximizing Finance for Development (MFD) approach to systematically assess and leverage all sources of finance, expertise, and solutions to support developing countries’ sustainable growth. It extends and shapes our involvement – Bank, IFC, and MIGA - by asking a number of cascading questions that ensure the World Bank Group does not crowd out the private sector, but instead brings it in.
The approach is guided by the Hamburg Principles, adopted by the G20 in 2017. We are pleased to see in the Progress Report a solid discussion of this approach which we are currently operationalizing in 10 countries. I also wish to note that we showcased the MFD approach at a well-attended event hosted by the PGA this past February which resonated very well across the UN.
In support of the FFD agenda, through the MFD approach, the World Bank Group is employing innovative ways to mitigate risk, and arrange blended finance to support private sector investment. This is especially relevant in in fragile and conflict-affected situations, where the financing needs are the greatest and the where it is estimated that 60 percent of the world’s poor will be living in 2030.
We are doubling the work we are doing in fragile and conflict-affected states, but we are also realizing that the World Bank Group does about $60- to $65 billion dollars of business every year. It is a drop in the bucket that cannot solve complex global challenges such as the refugee crisis, pandemics, famine, climate change, etc. We must find ways of leveraging others.
This Progress Report does a good job of highlighting innovative development finance in the International Development Cooperation chapter. Let’s continue to closely monitor these innovative financing mechanisms, which also include SDG-linked bond issuances and guarantee instruments, and see how much the MDB community can mobilize together.
Fifth, and I cannot say it better than the IMF Managing Director who I’d like to quote from this past weekend who warned shareholders at the IMF Committee meeting in Washington D.C. about the dangers of the accumulation of public debt. We need to take this very seriously. We are now 10 years after the 2008 financial crisis and as bad as it was in developing countries, it’s implications will not compare to the 30-year-old crisis of debt. It’s a stern but important warning from the IMF, who informs us that to public debt to GDP has increased from 33 percent to 47 percent since 2013, two-fifths of low income countries are at risk of debt distress, up from one-fifth in 2013. And it’s not just about public debt, but when there is a crisis, corporate debt is part of the overall implications of the country. There needs to be greater coordination between public and corporate borrowing.
The sixth message is on the Science and Technology, Innovation, which is an important element of the Financing for Development conversation. There is no doubt in my mind that the Addis Ababa Action Agenda not only spurred the World Bank Group to think more innovatively at finance, but it also made us look at technology more systematically and strategically to support sustainable development and the SDGs.
As a global development organization, we have now begun to better understand the opportunities and threats of disruptive technology to help countries achieve the SDGs. In this context we have developed a corporate strategy in line with many of the issues highlighted in this chapter, to engage governments and people, coordinate development partners, and mobilize the private sector to do three main things—the three B’s:
· Third, we will Broker disruptive technology, data, and expertise to solve development challenges and manage risks through collaborations (i.e. with partners such as Airbnb, Amazon, GSMA, and LinkedIn).
The additional message I want to share with you is beyond financial aspects. We need to take much seriously the importance of human capital and investments in education and in health, and in matters relating to the wellbeing of people, which are powerful drivers of productivity and growth.
That is why we launched last week the Human Capital Project, a new initiative to develop an international metric for human capital in new ways. We hope this index will create the political space for national leaders to prioritize transformational human capital investments in their own countries.
In closing, let me reiterate the World Bank Group’s continued commitment to the follow-up to the Addis Ababa Action Agenda. It is critical that each country and all institutions continue to make progress on the commitments made in Addis to increase finance for the SDGs, with a special focus on technology and human capital.
We look forward to building on our already strong partnership.