WASHINGTON, April 16, 2020—World Bank Group President David Malpass today delivered the following remarks at the IMFC virtual meeting:
“The World Bank has been focused on taking fast, broad-based action, especially for the poorest countries. By the end of April, we expect to have COVID-19-related projects in 100 countries, and we are taking steps to provide unprecedented financing to help countries respond to the crisis.
We thank our shareholders for the capital and funding that you provided for IBRD, IDA, IFC, and MIGA. I invite and urge your early subscriptions. This will help materially with the COVID-19 response. We very much appreciate yesterday’s subscription by the United States, which increased the subscribed capital of IBRD by nearly $9.8 billion.
I strongly welcome the G20’s announcement yesterday to allow the IDA countries that request forbearance to suspend repayment of official bilateral credit on May 1st. Having the commitment and agreement of all official creditors is a huge achievement and I commend all involved.
Kristalina and I championed the debt initiative, and we’re committed to taking all the possible steps to support it. Commercial creditors would be expected to provide comparable treatment. The World Bank will be providing massively scaled up and frontloaded net transfers to IDA countries on highly concessional terms and the IMF has its own highly impactful initiatives.
This is a powerful, fast-acting initiative that will bring real benefits to the people in poor countries. Beneficiary countries will use the additional resources to respond to COVID-19 and will fully disclose their public sector financial commitments. The World Bank and IMF are being asked to monitor their disclosures and use of the fiscal space created by the debt relief.
This type of broad debt and investment transparency is a high priority for development and recovery from the crisis. It is especially urgent in the context of COVID-19, and the low-for-long interest rate environment that Kristalina described in her remarks earlier today.
It is critical to create the principles of transparency that will reverse the huge capital outflow from developing countries and make debt and investment more productive. Many difficult steps are needed to provide debt transparency and improve the quality of investment. To name just five:
- Disclosure of loan contract terms and payment schedules;
- Full disclosure of the stock of public and publicly guaranteed debt, SOE liabilities, and debt-like instruments;
- Steps by borrowers to request relief from excessive confidentiality clauses in order to proceed with transparent data reporting;
- Effective and prudent use of collateral and liens in sovereign borrowing; and
- Insistence that borrowers and lenders avoid violations of legal requirements of other creditors, such as negative pledge clauses.
Transparency will help bring in new high-quality investment, with an increasing amount from private sector investors. Short-term financial instruments will be critical in providing working capital and trade finance. IFC’s programs in this area are growing fast during the crisis. The World Bank Group can help by borrowing long-term while lending the short maturities that are so vital to new companies and new market entrants. Yesterday, IBRD borrowed $8 billion in a 5-year global benchmark bond offering investors a yield of 0.7%. It’s the largest ever U.S. dollar denominated bond issued by a supranational, with an orderbook that reached $12.5 billion from 190 investors. I also commend the many central banks that are developing facilities to provide short-term financing to relieve some of the inequality burden on small companies caused by the massive maturity mismatch inherent in central banks’ large long-term portfolios.
To conclude, I am certain that substantial progress on the crisis has been made this week from many different angles and that this fast action to provide support during the crisis will help during the downturn and strengthen the recovery.