VENICE, July 9, 2021 – Good afternoon. The recovery from the COVID-19 pandemic will require huge resources and coordination among development partners. Early in the pandemic, the World Bank Group set out to use aggressive financial programming and leverage to increase commitments as rapidly as possible. The goal we stated was for the WBG to commit $150 to $160 billion in resources in the 15 months from April 2020 through June 2021. We used a number of powerful financial programming and leveraging techniques toward that goal.
On the financial programming side: First, we fully depleted IDA18 by June 2020. Second, we heavily frontloaded IDA19 in its first year, as we will do so again in its second year. The result of this is the need for an unprecedented early IDA20 replenishment – to avoid a “cliff edge” – and we are very grateful to the support of our shareholders for the conclusion of a strong and successful IDA20 replenishment by December 2021. Third, we used multiple available tools to increase programming. We drew down IBRD’s $10 billion crisis buffer which we had set aside for contingencies, beyond the normal Sustainable Annual Lending Limits approved by our Board. We heavily frontloaded IFC and MIGA activity. And across the portfolio, we made use of restructurings, cancellations, and recommitments – including activating the Contingency Emergency Response Components we had with foresight built in to many our projects – to add to available financing.
Underlying all of this was substantial balance sheet leveraging. Thanks to recent capital increases for both IBRD and IFC, aggressive leveraging through bond issuance by IBRD, IDA and IFC, as well as MIGA reinsurance, and private sector mobilization, the combined WBG has been able to provide $157 billion in support to low- and middle-income countries over the last 15 months. This is a 60% increase over the previous 15 months, the fastest growth rate the WBG has ever achieved.
Altogether, the result is a WBG that forms a large, non-fragmented development platform that can respond to and prepare for crises. Our financing is based on world-class knowledge work, and deep country relationships and know-how in our country teams present on the ground around the world.
We strongly support leveraging donor resources to maximize commitments, respond to emergencies, and prepare for crises. Our leveraging techniques include $100 billion of bond issuance over the last 12 months, front-loading of the multi-year IDA replenishment, the maximum utilization of the IBRD capital cushion, the successful acceleration of shareholder subscriptions to the IBRD and IFC capital increases, and our outreach to new and re-engaging shareholders and donors.
We’ve added ‘crisis preparedness’ as a cross-cutting theme to IDA20. We are providing grants to countries that are most in need, including fragile and small states and are investing heavily in social safety nets and digital cash transfer programs. These are critical during crises, protecting women, children, and the disabled the most and helping build the infrastructure needed for digitalization, financial inclusion, and rapid crisis response.
Let me turn to debt transparency and sustainability, which are vital for development. First, we are continuing to enhance our International Debt Statistics database. We are focused on: (i) closing the reporting gap on contingent liabilities, with particular emphasis on SOEs; (ii) incorporating central bank deposits and currency swaps lines; (iii) expanding the Debtor Reporting System requirement to domestic public debt; and (iv) measuring collateralization of external public debt. Data sharing by both debtors and creditors enables debt reconciliation, a key for the debt restructuring process. I call on the G20 members to share their lending data and assist in the reconciliation exercise.
Second, we are actively implementing the Sustainable Development Finance Policy under IDA19 and will continue it in IDA20. This includes implementing concrete performance and policy actions known as PPAs for each IDA-eligible country, and rolling out an enhanced program of creditor outreach to promote stronger collective action, greater debt transparency and closer coordination among borrowers and creditors.
We’ve strongly supported the progress in Sudan that led to a HIPC Decision Point last month, and what will be the largest-ever debt relief package under the HIPC Initiative. With essential reforms in place and implemented, debt relief of over 90% of Sudan’s total external debt will free up resources to tackle poverty and improve social conditions. The World Bank is already actively re-engaged in Sudan, with operations approved for the Family Support Program, in close cooperation with other donors, and COVID-19 vaccine deployment, and we’ll do much more over the coming months and years.
We continue to strongly and actively support the implementation of the Common Framework, working closely with partners. It can play a critical role in resolving cases of unsustainable debt in a coordinated manner with private creditors. It has a sound analytical basis in the joint World Bank-IMF Debt Sustainability Analyses for Low Income Countries.
Combining transparency, higher concessional financing for IDA countries, robust domestic reforms, and implementation of the Common Framework for debt relief, offers a path to achieving debt sustainability, economic stability, and growth. The World Bank is fully supportive of these steps. We are working closely with the IMF on the implementation of the Common Framework.