I am glad to be with you today representing the World Bank Group to discuss Financing the SDGs.
Financing for Development is one of the key challenges we are facing today – to make sure we have the means to help countries protect development gains and achieve their goals by decisively tackling the impact of COVID-19.
We estimate that the pandemic could push over 100 million people into extreme poverty. We expect poverty rates to start to decrease again in 2021, but recovery to pre-crisis levels might take more than two years.
We are extremely concerned about the effect of COVID in some of the most fragile environments. Countries impacted by conflict and violence are experiencing their worst recession on record, with GDP contracting in some fragile countries by over 10% this year, pushing at least an additional 18 to 27 million people into extreme poverty in these countries in 2020 alone.
We are also seeing unprecedented levels of food insecurity. The number of people in acute food insecurity worldwide is expected to double to 265 million by the end of 2020, and it is compounding threats such as the locust outbreak across Africa, the Middle East, and South Asia.
COVID-19 is also exacerbating the drivers of fragility, conflict, and violence. Protests and violence have increased since March; including gender-based violence.
This is the operating environment and context in which we have to act quickly and step up our engagement.
The World Bank Group is making good progress towards reaching the $160 billion dollar target set over the 15-month period of April 2020 through to June 2021. As of early September, the Bank has committed $37.3 billion to the overall COVID-19 response, since the crisis started.
IFC, our private sector arm, deployed over 55 percent of its $3.5 billion Fast-track COVID-19 Facility to support existing private sector clients in IDA and fragile countries.
But it is not enough – what we had hoped would be a relatively short challenge has turned into a much longer one, and we are facing a new reality.
We still need to optimize our balance sheets, but also we need to mobilize more funds - especially grant financing to the poorest and most fragile countries that need our support. Clearly the public sector will be stretched to the extreme – and the private sector must remain viable, and to create the jobs that will aid in recovery.
This year marks the 60th anniversary of the International Development Association (IDA), which provides finance for the poorest countries on grant and highly concessional terms. We need IDA more than ever as the countries it serves are the most hit by the pandemic.
Innovations in IDA have resulted in 1 dollar of donor resources leveraging up to 3 dollars of commitments to development. Scarce aid dollars of donor countries can go much further than in the past.
We are also mindful of debt vulnerabilities especially in the poorest countries. Our focus on net positive transfers on highly concessional terms to client countries in FY21 means that for every $1 in debt service, IDA and IBRD would provide $11 in new commitments to IDA eligible countries.
The G20/Paris Club Debt Service Suspension Initiative (DSSI) is an important initiative that provides liquidity in the short term. We are hopeful we that there will be agreement in extending the initiative further into 2021, as well as broad participation by creditors.
Looking ahead, we will need to sustain these efforts, particularly for the poorest countries and this will require additional resources through the international community.
To offer a few closing thoughts on today’s discussion:
- We need to stay engaged with developing countries;
- We need to continue to engage through multilateralism, to leverage both the public and private sectors and do more together.
- We have to act and we have to act now. Not only on saving lives, protecting the vulnerable and poor especially in FCV but also protecting and creating jobs.
- We must always keep a strong focus on the long-term agenda, enshrined in the SDGS. We need to build back and build back better- this means climate change but also means other areas such as education.
- And last, we need to keep international solidarity alive.
And so, in solidarity with all our client countries and the international community, the World Bank is committed to doing all we can to help. Given the scale of the crisis and the required response, global cooperation and coordination is critical. Thank you