Thank you Mamta.
I’m pleased to be with all of you this morning to discuss the importance of “Investing in Human Capital for a Green, Resilient, and Inclusive Recovery” from the COVID crisis.
As Mamta briefly laid out, COVID-19’s impacts on human capital has been extensive in all countries of the world and unless these are addressed urgently, there is a risk that some damage will become permanent.
In opening this Conclave, I would like to highlight three important measures for your reflection:
- First, investing in people;
- Second, efficient expenditures and good governance; and
- Third, freed up fiscal space.
Let me start with investing in people: In the short run, countries should work to protect people who have suffered disproportionately during the pandemic. Priority areas include making sure that students, especially girls, can go back to school, that people with health issues other than COVID can access healthcare, that young children are properly nourished, and that people who lost jobs and income earning opportunities can get back on their feet.
Over time, countries will need to address their long-standing deficits in human capital accumulation. For example, regarding education, countries will need to find ways to enroll some 258 million children who were out of school before the pandemic. Most of these out-of-school children were girls, and we can’t leave them behind.
Turning to my second point, the importance of efficient expenditures and good governance to optimize value for money.
In most cases, achieving these human capital priorities will require actions from more than one sector. High-level leadership and effective coordination will be required to avoid fragmentation of spending across sectors.
With the advance of technologies, we can reimagine how government services can be delivered, in a “people-focused” way.
A technology platform could help government target people in need of help that traditional instruments have not been able to identify, such as migrant workers in India. Tools such as digital ID and mobile payments could open access to credit, land and cash benefits to the marginalized, including poor women and their families.
Let me turn to my third and last point – how to secure resources for human capital priorities. Perhaps one of the most acute challenges facing countries today is to find enough fiscal space for priority public spending, especially for human capital investments.
Many countries will have to go through a painful period of fiscal consolidation and will need to do so with careful rebalancing of the need to achieve a sustainable fiscal posture, which is important for long-term growth, and the immediate need to protect expenditures that are essential to basic service delivery for human capital development – such as school operating budgets or funds for child vaccinations.
Prioritizing human capital investments during fiscal adjustments means cutting less productive items. This would be a hard choice and these choices vary from one country to another. For some, energy subsidies may be a candidate. These tend to be costly, often help the non-poor more than the poor, and encourage reliance on environmentally harmful fossil fuels. Globally, countries spend 0.6 percent of their GDP on energy subsidies, and there is ample room for reducing this kind of expenditure.
Countries such as Egypt and Indonesia, among others, have taken bold steps to reduce energy subsidies and fund cash transfer programs that are well-targeted to the poor as well as other social spending.
Some countries simply don’t have a sufficient revenue base for the expenditure needs, at least in the short run. These countries will need to improve their revenue systems in ways that support growth and investment; and, in the meantime, international financial assistance is needed to help fund priority expenditures, including human capital investments.
The World Bank Group will continue to collaborate with the IMF, the G20 and other international partners to find sustainable solutions to the pressing problem of managing the debt distress that some countries are now under. We also hope to tackle the long-term problem of finding sustainable financing for key policy priorities, including human capital investments.
Thank you again for joining this Conclave—as an opportunity to exchange country experiences, and for your leadership on the human capital agenda. This agenda is critical to alleviating extreme poverty and boosting shared prosperity; and it is even more critical now to lay the foundation for a resilient recovery. I’ll turn it back now to the Chair.
Related Link: Human Capital Project