Prime Ministers, Secretary-General Guterres, Managing Director Georgieva, Excellencies. I’m very pleased to be here today to see you all again in the discussion of development finance. After months of meetings, I understand that your working groups are finalizing a menu.
I’d like to update you on the World Bank’s development finance actions during this part of the pandemic.
The pandemic is hitting developing countries especially hard. Our data shows that over 100 million people could fall into extreme poverty this year with an additional increase in 2021, potentially bringing the number of additional people living in extreme poverty to 150 million.
The negative impact on health and education may last decades. 80 million children are missing out on essential vaccinations, and over a billion children are still out of school. The World Bank’s 2020 Human Capital Index and report shows that the poorest communities are the hardest hit.
Our first goal in the COVID response was for the World Bank to take broad, fast action early and to provide large net positive flows to the world’s poorest countries. We put in place emergency COVID support programs in 111 countries, and we are making good progress toward the announced 15-month target of $160 billion in surge financing, much of it to IDA countries and to private sectors through IFC’s Trade Finance and Working Capital support programs.
For many of the poorest countries, unsustainable levels of public sector debt have become an enormous obstacle to development. Debt service crowds out the spending needed to tackle the pandemic’s human tragedy; and the overhang from the stock of debt blocks new investment.
Together with the IMF, we are making progress on debt transparency and relief. Our Debt Service Suspension Initiative (DSSI) has opened some fiscal space for participants, but the relief so far is too shallow to provide light at the end of the debt tunnel. Commercial creditors are not participating in the moratorium, draining the financing provided by multilateral institutions. Also, some major official bilateral creditors are not fully participating, causing a further drain in resources. An added impediment is the lack of transparency in major contracts.
We’re working to extend and broaden the debt moratorium and lay the foundations for debt reduction and would welcome the UN’s vocal support for full participation by all official bilateral creditors, including national policy banks.
Vaccinations will be a critical step in the recovery process. We’re working to expand our fast-track COVID programs to include financing for the purchase and distribution of vaccines. Using grants, credits, and concessional funding, we will help prepare early to finance low- and middle-income country that don’t have access. In addition to our sizeable resources for countries, our COVID-response programs are readily expandable through co-financing, and we invite your participation. The goal is to alter the course of the pandemic and help set countries on a path toward a more resilient recovery that builds new livelihoods.
Countries will also need to prepare for a different economy post-COVID, by allowing capital, labor, skills and innovation to move into new businesses and sectors.
At the upcoming virtual World Bank-IMF Annual Meetings, we will have a chance to discuss all these issues including human capital, climate, digital development, and additional steps on debt reduction.
If we take action early with the large creative programs and sources of financing I’ve described, we can help countries, as Kristalina puts it, build FORWARD better and stronger; a greener, smarter, and more equitable economy, and I look forward to working with each of you on these important tasks.