MR. MALPASS Hi Paulo, how are you?
MR: MASTROLILLI: Fine, fine. Thank you very much President Malpass. Thank you very much for this opportunity.
So tomorrow you will participate in the Finance Ministers and Central Bank Governors meeting of the G20, hosted by Italy. What is the most pressing message you would like to convey to the G20 in this very difficult time both for developed and developing countries?
MR. MALPASS: Yes, it's vital that we move quickly together on growth, on vaccines, and on the debt sustainability issues.
MR: MASTROLILLI: Talking to the Climate Ambition Summit, you said that poverty and inequality are the defining issue of our age and this is unfortunately true, both in poor and rich countries. What are the keys in, your opinion, to address particularly the inequality issue?
MR. MALPASS: Yes. From the standpoint of economic inequality – that needs to be addressed by more job creation for new people entering the job market, and by more fairness in the allocation of stimulus. Much of the current stimulus is going to people that already are part of the system. For example, much of the central bank stimulus goes to bond issuers. They're already part of the system. We need tools that help the benefits go to new entrants coming into the system, including people that live in the poorest of the developing countries.
In terms of climate – the inequality is also apparent. Many of the poorest countries don't emit very much greenhouse gases, so they need a different kind of support in terms of adaptation to the climate changes that are underway.
MR: MASTROLILLI: In fact, you also said that the global poor often suffer the most from climate events. What should be done to address the issue of climate change, in terms of encouraging and monitoring reduction of greenhouse gases emission and transitioning to a green economy, and why the green economy could be also an opportunity for development and economic growth?
MR. MALPASS: Yes. We need to recognize the connection between sound development policies and sound climate policies. That means that the NDCs, you know the Nationally Determined Contributions, for the poorer countries have to make sense in terms of their development and also their impact on the climate challenges. For example, countries that don't emit much in the way of greenhouse gases need to be focused on adaptation that maximizes the benefits to the people of the country, in the form, for example, of protection from flooding.
MR: MASTROLILLI: Almost a year ago the international financial institutions were forecasting solid world economic growth and then the pandemic hit. What exit do you foresee, specifically from the economic crisis created by COVID-19?
MR. MALPASS: Some of the countries are seeing a strong recovery now. That's going to help everyone else – we all benefit from that. But in order to actually have a resilient recovery, we need the growth to come from the poorer countries. One key element of this is on the debt side – to have the debt levels become more sustainable, that means they need to be lower. The debt levels are too high for many countries and so, we need to see sustainability of debt in order to allow the country's resources to go to education, and to health, and to climate – things that will build for the future.
MR: MASTROLILLI: The rollout of the vaccine in the developing countries is going slowly. The United States just announced their first contribution to COVAX. Is the slow rollout of the vaccine in developing countries an effect of vaccine nationalism and what should be done to solve this problem?
MR. MALPASS: We've been working hard on the vaccine rollout. It takes several steps. The country has to have the capacity to administer the vaccines. That takes a lot of preparation and that work is underway in quite a few countries. We also need more supply of vaccines. The World Bank is working on both parts of this. On the country programs, we did an assessment of 100 developing countries with regard to their readiness for the vaccination programs, which also include the communication efforts in the countries, so that people know what their options are in terms of being vaccinated.
We needed to do those assessments and now we have operations coming rapidly to the Board. I hope to have over $3 billion of committed vaccination funding by March and April. So, it's moving more quickly now because the vaccinations are being approved by the regulatory authorities.
Then I was going to mention the supply side, but back to you.
MR: MASTROLILLI: There are some estimates that say that the immunization, particularly in developing countries, will not happen before 2022. Are these a realistic estimate, or is possible to anticipate the global immunization?
MR. MALPASS: There are two factors. One challenge is the capacity of the countries to provide the vaccination, so it will take time. Even if you have them available, it will take time. The second challenge is getting enough vaccines available in the developing countries. I've advocated that the contracts that exists between the developed countries and the intermediaries – between the manufacturers, the advanced economies, and COVAX – there needs to be more transparency in the contracts, so that the developing countries can begin to actually get delivery schedules. Right now, it's unclear how much of the supply has already been contracted because their contracts are not public.
I wanted to mention the other side – World Bank is also working to increase the supply of vaccines, that means working with the manufacturers and the licensees. Now that more vaccines are becoming approved, we can accelerate that work to create more vaccine supply. But that work also is hampered because the contracts, the existing licensed manufacturers don't have clarity on their commitments to the various off takers – the intermediaries and the advanced economies. It will help the delivery schedules to have more clarity on the existing contracts, so that we can add additional supply and demand.
MR: MASTROLILLI: Italy, the G20 host, has a new government led by Prime Minister Draghi. What should the Italian government do in order to make the country more dynamic and competitive and be part of the solution of the global economic slowdown we were talking about?
MR. MALPASS: This is the big question that always faces Italy of how to change the labor rules, how to change the internal licensing process to allow more flexibility within the Italian private sector. Enabling the private sector would allow Italy to prove that its people are some of the most productive people in the world, if they can find space within the regulatory structure.
Mario Draghi is a world expert in the issue of how you encourage financing to small businesses, so that they can get a start. Small businesses are critical, because they hire the new workers and they create the new products. That's going to be one of the challenges, not just for Italy, but for all of the advanced economies, and also for the developing countries – how do you allow credit to go to new entrants? That includes women run businesses, that includes businesses that didn't exist five years ago. It's vital that those businesses be given a chance,
MR: MASTROLILLI: The immigration from Africa is a significant problem for South European countries like Italy, Spain, Greece, France, both for the security issue related to the instability of transit countries like Libya, and for the impacts on their economies. What solution does the World Bank suggest to the issue of migration, particularly from Africa to Europe?
MR. MALPASS: Yeah. Thanks. And I want to come back to my previous answer and mention also the importance of the effectiveness of government spending, which I know is an issue within Europe as a whole, so that also is a challenge as the new Prime Minister takes over.
MR: MASTROLILLI: Yes, this is of course related also to the European Union–
MR. MALPASS: Exactly right. As new funds become available, it will be vital that they be used as effectively as possible for the recovery.
MR: MASTROLILLI: In which way they could be more effective.
MR. MALPASS: Yes. With regard to migration – we have substantial programs in the fragile, conflict violent states that are in the Sahel and extend into North Africa. We have to have ways to let more stable economies in the Sahel. We're working closely with Chad, with the IMF, on a debt reduction program that would help in Chad. I'm very pleased with the progress that we made in Somalia and in Sudan. I don't know if you saw, but Sudan has unified its exchange rate, which is going to be very helpful because they had a difficult situation with a special exchange rate that was used by the government, but it blocked some of the development of the country, so it's been good to have them unify and stabilize the exchange rate. That may help address some of the migration challenges.
The critical step is for these countries - the countries, in general, south of Italy – to have as strong a job creation for young people as they can, because that helps the people stay at home and create new things in their countries of origin.
MR. MASTROLILLI: You are mentioning the issue of government spending before. There are significant resources that are coming from the European Union to Italy and to other countries. What is the most effective way to invest this money to promote growth?
MR. MALPASS: I think investment should be made in a transparent way so that people see what the contracts are and what the benefits to the people are. That's a starting point there for good investment policies that are designed to help to help future growth. And that differs country by country. I don't have a detailed sense of where Italy can best spend that money. I think it should always be done in a way that meets the future growth needs of Italy in terms of infrastructure, in terms of climate, in terms of absorption of some of the immigration that has occurred.
MR. MASTROLILLI: In many countries, women have been hit hardest with COVID-19 lockdowns, what should government do to address this issue?
MR. MALPASS: Yes. We just issued our Women, Business and the Law report yesterday, and it notes some of the progress being made in some of the countries toward a regulatory environment that enables women to fully participate in the economy. One of the challenges for some of the developing countries, there are prohibitions on travel by women, which need to be stopped, and change those rules. There are prohibitions on education – the number of years that girls can stay in school, which needs to be stopped – so that girls can have a full education. From the regulatory standpoint, there's some countries where women can't own businesses and where women can't receive inheritances. Those practices need to be stopped and progress made that enable women to hold assets, to participate in the economy, to receive a full education if she wants, and to be more fully included in the economy.
MR. MASTROLILLI: And also, COVID-19 has pushed as many as 150 million people into extreme poverty. The rise of hunger is been one of his most tangible effects. What should the international community do to address the issue of food insecurity?
MR. MALPASS: This is an urgent problem; it needs several steps. One is to supply food immediately to those that are near starvation. In some parts of the world, they are suffering so massively that they need direct delivery of food. We work with a number of partner organizations including UNICEF and other parts of the UN family on that.
Then, with regard to the supply of food, there needs to be systems that allow the farmers to choose crops that are going to be effective in their own environment. Because, in some parts of the world, farmers are guided into certain crops that don't end up being the most productive. There has to be a good connection between the agricultural choices and also the climate choices that are involved. That means using water as effectively as possible to grow crops that are nutritious. One of the problems some countries face is the production of too much rice, and rice is expensive from the environmental standpoint, because it releases carbon dioxide as it's growing and because it uses scarce water resources. Some countries should be reducing the subsidies for rice and allowing the agricultural community to produce more nutritious crops.
And we're also working with the locust problem in East Africa that remains a severe threat to the food supplies both for the animals and food supplies for people. And so that, that remains a high priority.
And I wanted to also mention in this, the importance of cross border trade within the agriculture sector. There still exist tariff barriers for the transport of food across borders that cause great inefficiencies. For example, Nigeria blocks or has a very high tariff barrier on imports of rice from its neighbor Benin, which is harmful to people on both sides of the border. And there are many other examples of inefficiencies within the agriculture sector, that can be remedied.
I’m sorry, I can go on, but fertilizer is another high priority to allow farmers to use the fertilizer that's most appropriate for their crops, that's sustainable from a climate standpoint, and that’s useful from a productivity standpoint. In some countries, the government guides the fertilizer makers based on historical contracts that have a tendency or that that run the risk of benefiting the government or the fertilizer manufacturers, rather than the farmers. And that, I think, needs to be reconciled or improved – those practices need to be improved substantially.
MR. MASTROLILLI: I have two final questions, if possible. The first one is about the issue of debt, you mentioned before. Should the G20 extend the current moratorium in official debt service payment by the poorest country? And what should be the role of China on the issue of international debt considering that about 65% of the debt is now owed to Chinese creditor agencies.
MR. MALPASS: I think an extension of DSSI will be helpful, but it hasn't been as broad an impact as had been hoped. The private sector didn't participate in it and, in many parts of the world, the China Development Bank (CDB) has not been participating. Those problems reduce the effectiveness of the DSSI. So, I hope that it will be extended, but also extended in the context of broader participation by the creditors.
Also, I think it should be extended in a way that's supportive of the common framework. The G20 common framework needs to be implemented in a way that helps countries achieve debt sustainability. So those two working together I think can be more effective than they have currently been utilized.
We're working closely with the IMF on ways to help support the implementation of the common framework. And it's being applied in various countries, mostly in Africa, so far. And I'm hopeful that we can find techniques that utilize the common framework in order to create more sustainable debt burdens for the poorest countries. So far, progress has been slow, but I think there's still room to make substantial progress. One area that I think is also of interest is the use of the benefits. As a country benefits from the DSSI moratorium and from the common framework, the debt relief provided there - the country should have more resources for health, education, and also for climate. And I think those can be linked in a way that's very supportive of the people of the country.
MR. MASTROLILLI: A final question: during a conversation at the Council on Foreign Relations in January, you were asked what kind of relationship do you expect with the Biden administration. Of course, considering that you were named by the Trump administration, you say that you expect a good relationship. What are the issues on which the World Bank and the new US administration can cooperate more effectively?
MR. MALPASS: Yes, I was proposed by the previous US administration. But as you know, I was selected by the shareholders of those of the World Bank. We've started a good relationship with the Biden administration and with the US government, as a whole. That includes a focus on the dual mission of the bank – that poverty reduction and shared prosperity are goals that the Biden administration shares for development. And I also recognize that the World Bank's been doing a huge amount on climate. I think that will receive strong support from the US government as it forms its external policies. I've had very good interaction with officials in the Biden administration, and so I look forward to building very good relationships there.
MR. MASTROLILLI: Well, President Malpass, thank you very much. It was very interesting. And of course, I wish you all the best because the work that you're doing now is even more important in this particular difficult time.
MR. MALPASS: Thank you. And you know one thing we didn't discuss, but it's the role of Italy and the G20. Because Italy holds the G20 presidency this year, the World Bank Group as a whole is strongly supporting Italy in those efforts. And we look forward to working with Italy all year on its G20 presidency.
MR. MASTROLILLI: Is there any anything specific that you would like to be addressed?
MR. MALPASS: Italy has had a very ambitious agenda that extends to climate change, to development, to migration. And so those are certainly important. And Italy is well positioned to take leadership on debt issues and also on the challenges facing cross border payments systems and debt resolution processes in the developing world. These are key steps to get strong recoveries for developing countries, which of course will benefit Italy substantially, if that can be achieved. So, that will be on the agenda tomorrow for the finance ministers and central bank governors to think about ways to be as supportive as possible on the interface between the advanced economies and the developing economies through the payment system and through the banking relationships that that can be improved.
MR. MASTROLILLI: Perfect, thank you very much.
MR. THEIS: Thanks, Paolo.
MR. MALPASS: Thank you.