Watch the replay of the event here.
DAVID THEIS, WORLD BANK GROUP PRESS SECRETARY: Good morning, afternoon, or evening, depending on your time zone. I’m David Theis, the World Bank’s press secretary. Thank you for joining our virtual 2021 Annual Meetings press conference with World Bank Group President David Malpass.
Mr. Malpass will give brief opening remarks and we’ll turn to your questions. Incidentally, because he values transparency, you can also follow the World Bank Group President at DavidMalpassWBG. That's on Twitter @DavidMalpassWBG, and you'll find that on the chat, as well.
Thanks to those who’ve sent questions in advance, and we’ll be looking for more questions online in real time. We may edit for clarity or length, so appreciate your understanding.
Hope everyone’s keeping well.
DAVID MALPASS, WORLD BANK GROUP PRESIDENT: Hi everybody. Good morning from DC. It’s Wednesday and it must be DC at the Annual Meetings. I’m glad you are all able to join. We are in virtual Annual Meetings, with full run of meetings both on Monday and Tuesday.
I’ve already participated in meetings with the G24, Parliamentarians, and CSOs, the civil society organizations. I joined a meeting of the G20 Leaders yesterday on Afghanistan. I’ve also met with Secretary Yellen, John Kerry, the President of Colombia, and ministers from Mexico, Japan, and Korea. I’ve welcomed their strong and growing support for a successful IDA20. That’s important.
Throughout the week we will be discussing a broad range of development issues –the economic outlook, growth, vaccines, debt, climate, trade, among others.
As you know, the world is suffering from a dramatically uneven recovery. Inequality is worsening across country groups. Per capita income in advanced economies is growing nearly 5% in 2021, but that is compared to only 0.5% in low-income countries. The outlook remains grim for most of the developing world. There’s high inflation, there’s too few jobs, there’s shortages that extend to food, water, and electricity.
For example, due to the pandemic, the factory and port shutdowns going on, the bottlenecks in logistics and supply chains are worsening. We see sharp increases in the backlog of orders. Our estimates suggest that 8.5% of global container shipping is stalled in or around ports. That's twice as much as in January of 2020. These disruptions are placing sharp price increases on shipping fees, and the final costs of goods, and some of them will not be transitory. It would take time and cooperation of policymakers across the world to sort them out.
As we look at development, the pandemic is pushing up the poverty around the world. It's already pushed nearly 100 million people into extreme poverty. That's the added number in extreme poverty.
We’re witnessing a tragic reversal in development. The progress in reducing extreme poverty has been set back by years – for some, by a decade. And it’s vital that we address this head-on by redirecting policies in both the advanced economies and developing countries so that growth and investment are more widespread.
Our highest priority is to secure access to vaccines and speed up shots in arms. I chair the Multilateral Leaders Taskforce, which includes Kristalina [Georgieva, IMF Managing Director], Tedros [Adhanom Ghebreyesus, WHO Director-General], and Ngozi [Okonjo-Iweala, WTO Director General]. We had a good public discussion yesterday and we’ll soon be holding our fifth meeting of the Taskforce focused on matching the extensive pledges and trying to help actual vaccinations come out of the pledges that have been given by the advanced economies. There's got to be a way to close that deployment gap. The World Bank is able to finance the doses and the deployment, but there needs to be early deliveries scheduled, so we are urging governments that have sufficient doses to swap early deliveries to allow for vaccinations in developing countries and we are urging the finance ministers and health ministers of developing countries to enter contracts in order to get deliveries early, as soon as possible of vaccines. And we're working with countries also to reduce the hesitancy to encourage the vaccination of people. Our observation through the Task force, and through our country programs, is that when the countries are able to get vaccines, people are being vaccinated and the vaccination rate is going up consistently, when the supply is available.
The World Bank’s support for the poorest countries is at an all-time high. We’re working to help countries secure more doses and deploy them. I was in Sudan and Jordan, where I witnessed firsthand—this is now two weeks ago, seems like yesterday—vaccination efforts, and they are accelerating. I’m pleased, the World Bank now has 250 million[i] doses under contract with Bank financing. Those deliveries will be going on in the coming months, and that is very important to saving lives.
I want to mention another couple of priorities and then turn to your questions. The debt challenges are confronting many countries. On Monday, we released the annual IDS [International Debt Statistics] report. And it showed a 12% increase in debt for the low-income countries, reaching $860 billion. We need new systems to push that along, because so many countries are in external debt distress or at high risk of it. We need a comprehensive approach, including debt reduction, swifter restructuring, and more transparency in order to make progress on this problem.
With the IDA20 replenishment in December, African heads of state have already called for donors to be ambitious in their support for IDA’s mission. The financing needs are urgent, they’ll remain elevated for years, and a successful IDA20 is vital. We’re moving toward the conclusion of the IDA20 fundraising effort in December in Tokyo. I met with the deputy finance minister [of Japan] yesterday. And we’re pleased with the progress—we’re very pleased with the strong support worldwide for a larger IDA20 replenishment.
Resources will be a topic this week. And we’ll also need active participation with the public and private sectors. I mentioned my meetings with parliamentarians, with CSOs, and we’re meeting regularly with foundations—indeed the whole international community in order to help bring the resources to bear on the range of challenges, including vaccines, debt, and of course climate change issues.
I have received a note. I must have said 250,000 doses, but I meant 250 million doses—a quarter of a billion doses are under contract by the World Bank that can get to countries through country financing programs. And we are working as hard as we can 24/7 to expand that number as soon as we can get doses and delivery schedules from the advanced economies and from the manufacturers.
Okay, with that I will be happy to take your questions. Thanks all.
MR. THEIS: Great. And plenty of questions on screen, already.
I see the first in is from Yolanda Morales of El Economista in Mexico. "Mr. Malpass, World Bank experts used to suggest to strengthen the efficiency of public spending to promote growth and support development. How do we make public spending more efficient in a country like Mexico?"
MR. MALPASS: Governance processes are important. How do you make your budget? Mexico has a system of elections that's welcomed by the world that allows there to be choices made by people through the system that can always be strengthened, as we see around the world. And then, governments and the system—the people's input into the spending, needs to be thinking about what's best for the people of Mexico. There's got to be a balance of health, of education—in particular, education at the primary school level is vital. The World Bank keeps track of the Human Capital Index, which one part of that is how many children by age 10 can read a basic story. Literacy is one of the most important building blocks for future growth and success for economies. There needs to be funding either in the public sector, the private sector, some way to get that moving. Teachers are vital. I just spoke on International Teachers Day, which was a week ago, on the importance of teachers in classrooms. So, that's just one of many, many priorities. Mexico and other countries need infrastructure, and some part of that is a public-private partnership where the public sector does an effective job of contracting.
I emphasize this whole range of good governance to have solid contracts, good choices. You know, I'm in Washington, D.C. today and I'm a U.S. citizen, I work for the World Bank. But I'm aware of the challenges facing the U.S. budget process. I started my career in government on the staff of the U.S. Senate Budget Committee in 1984. And those issues, the exact issues of Yolanda's question were paramount in 1984. How can the government spend efficiently, and it's a big challenge around the world. I just urge politicians and the people of countries to recognize that, when the governments make spending choices, it's coming from the resources that the people create. It should be used wisely. Thanks.
MR. THEIS: Thank you. And next question coming in from Fiona Harvey of The Guardian, who sent the question in advance. "I recently interviewed Lord Stern, former World Bank Chief Economist, who said climate finance provided to the developing countries by the World Bank should be doubled in the next few years. Will the World Bank commit to that?"
MR. MALPASS: We have a 35 percent target for all of our spending, for all of our commitments, which is a high target; it's aggressive. We're moving up from the 20s into the 30s and well, on average, we're committed to reaching 35 percent. That won't be the doubling that was mentioned, but it will be big increases in dollars because of the expansion of the World Bank commitments book.
In addition, we can add to that through private sector mobilization, ways to bring in the private sector, and I think also people should recognize, in addition to the spending by the World Bank, which is at record levels and moving higher and it's—the World Bank alone spends more than half of all of the multilateral development banks. It's a big number, already, but we should also put heavy emphasis on the results. The key thing for countries and for climate change progress is to identify large greenhouse gas emitters and help them reduce their emissions. The results of the projects—and one other point I'll make, David—I know people want to focus on how much did you spend, but I want to focus also on what did you get; what were the results for it? Because otherwise, it's a lot of talk about spending, but not that much about the results. We should talk about the results.
Then, I think we also have to talk about the project pipeline to achieve those results. We are working with countries on their NDCs [Nationally Determined Contributions], which are important. And then, how does each country, the developing countries that we work with, how do they set up their economic plan so that it incorporates climate change in that? And then, how does it actually have projects to decommission coal plants or to use cleaner fuels than what they're using? A lot of the developing world is burning bunker fuel in order to make electricity, with no plan to terminate those contracts. That's an immediate challenge. It's not so much the money as what are the results that you're seeking to achieve, and is the country on board? Do they have a plan to do it, and how does the whole world help them? The World Bank can help design that, and we're doing that with our new country climate development reports. Thanks.
MR. THEIS: Thank you. A question now coming in from Ghana, from Julius Kofi Satsi with Business Finder newspaper.
In view of the many opportunities available to Sub-Saharan Africa as mentioned in our latest Africa Pulse, what is the World Bank's willingness and readiness to support countries in Sub-Saharan Africa, especially Ghana, to fully take advantage of opportunities presented by climate change and to support climate private sector investment?
MR. MALPASS: Thanks for that question. Those are core areas of World Bank’s mission—the mission is to reduce poverty and increase shared prosperity. That means median incomes should be going up. Unfortunately, they are lagging way behind the advanced economies. We have this inequality problem. Core to making progress on that is improving the private sector capabilities of countries including Ghana, working with governments to identify the strengthening that could be done that brings in new investment. And a chunk of that new investment can come into climate-related issues. There needs to be efficient, clean energy and plants so that there can be more electricity with less carbon dioxide emissions. That's a core goal of the greenhouse gas reduction agenda. And also land use, and ways that there can be protection of biodiversity, which acts as a carbon sink.
We're working throughout Africa in practically every country, on the climate agenda alongside the development agenda, recognizing that countries in order to be fully engaged, countries are going to need to see development as part of their outlook.
That means a lot of thought. World Bank can help supply the global knowledge for that, and leadership by the countries in moving in a good direction. That means toward cleaner fuels. That means toward a plan that gets expanded electricity access. Clean water access is actually a critical part, and water itself is a critical part of the climate agenda, because in many cases and countries, there are subsidies that are being done for economic activity that's harmful to climate efforts. And this is very clear in the water area where crops are grown in areas that may not be the best for that kind of crop and it misuses the water; and water itself, for example, flooding of rice crops causes a large emission of methane. This whole dynamic of the world needs to be thought through from the standpoint of bringing together development and climate change. Thanks.
MR. THEIS: Thank you very much. Next question coming from Gabriel Yin of CGTN in China: "How does the World Bank see the role of young people in global climate action? And how is the World Bank empowering the youth to take climate action? Thanks."
MR. MALPASS: Thanks. Incentives are really important country by country. So one of the challenges that we're facing, if you identify any problem that's going on in climate action, it's that huge subsidies are going in the wrong direction by countries. They're subsidizing fossil fuels, they're subsidizing the mining of coal and the burning of coal. They're subsidizing farmers that are digging up carbon sinks in order to plant crops that are subsidized by their governments for export.
A starting point for this, is to identify the subsidies in countries. Also, I think we need to look at the price of carbon, at taxation of carbon, and also some kinds of systems so that there's incentives that go in the right direction. Young people are aware of incentives, so there's a joint action so people can understand what the challenge is. That's good, but people wake up in the morning and they react to incentives that are within their country structure, and I think there's a huge amount of progress that needs to be made in that area.
Technological change and entrepreneurialism are important. I was in, as I mentioned, Sudan and Jordan, I was also in the West Bank, and met, in each place, with young people, with entrepreneurs, and their ideas. And one I'll just mention is the world is changing because of digitalization. I think this should have, and it should be designed, so that it's very positive from a climate change aspect. People, young people, are doing that. They recognize that. And so, to the extent that we can have digitalization penetrate more, it helps across the board from the economic growth standpoint, because it has so many side positive effects in terms of the information people have available, their ability to interact with the global system, all that's improved, in general, in a carbon-friendly way.
MR. THEIS: Thanks very much. Great. Next question is from Egypt. We've got Doaa Abdelmoneim from Ahram Online. "What kind of support has the World Bank been expending to the MENA Region, including Egypt, to boost health systems and make them more resilient to shocks like COVID-19?"
And a related question from Jafar Sadaqa to Palestine News Agency: "Just wondering about your recent visit to the Region. Thanks."
MR. MALPASS: Got it. Thanks.
A core part of it is our COVID-19 response program. What we did in March and April of 2020 was design a new fast-track system within the World Bank that can push through a lot of programs. So, we've reached the point where we have nearly 150 programs around the world, including heavily in the MENA Region that allows the provision of health care basics that are financed by the World Bank through grants and through very low interest rate loans. That extends even, for example, to Iran where we work with the United Nations so that they can supply health care needs into Iran, but it's particularly in the rest of the MENA Region.
We do vaccination programs in many of the countries, and we've worked with and encouraged Egypt in contracting. But we have programs in Jordan and others where they have, the World Bank, has helped finance vaccines. That's true with Lebanon; they were one of the early ones. It was problematic to try to have a system that was fair and equitable to distribute the vaccines once they've been brought under contract. I just mention those two and in the West Bank, where I was maybe one week ago—and this is on Twitter, you can read some of the remarks that I made in meetings that I had—very interesting set of meetings. One project site that I visited there was the water treatment facility in Hebron, which is interesting because it can help the West Bank save money, and it can help save money because that wastewater is being treated now as it moves into Israel. So, it's being treated by Israel, and if it can be treated more in the West Bank, you get cleaner water in West Bank and a reduction in costs. It's a cost-effective kind of a project.
I also met with Israeli officials in Jerusalem. It was very interesting as, well, in both Jordan and in Israel, the countries would like to see the West Bank doing better economically. There's a lot of fiscal challenges and debt challenges in the West Bank and also in Jordan that can be met by stronger country programs. External resources are important. Jordan, if I can turn to that, is working with the Syrian refugee inflow that came in, and they're providing flexible—they're providing a system, and World Bank working very closely with Jordan to help provide a social safety net and a system of work permits that can operate even as people are receiving some benefits through the government systems. There's a recognition of the burden on Jordan, of the refugee challenge, of its responsiveness, and of a global responsibility to try to help with that situation. The World Bank is helping with that.
In Egypt, we're working on various country programs that would increase the productivity. Egypt faces challenges in the agriculture sector, in the logistics sector, in the tourism sector, in electricity, that they're making progress on, that we're working with them on, and I think there can be more focused effort that will extend to health care, as well.
MR. THEIS: Thank you very much.
And the next question we have in from Lalit Jha, from the Press Trust of India. Lalit asks, "What is your impression of India's economy and recent steps taken by the Government of India to reform, and how has the pandemic impacted India's poor? Thanks."
MR. MALPASS: Thank you. India was hard hit by the waves of COVID and that's unfortunate. They responded with a huge production of vaccines, and there's been progress on the vaccination effort, but we have to recognize the hit that COVID caused on the Indian economy, and especially on the informal sector of the Indian economy, which is large.
The World Bank must have put out a new GDP forecast for India. I don't have it with me, but the Indian economy is recovering, and we welcome that. It's going through to the other side of the COVID—of the latest wave, and so that's good. But India, like other countries, is hit hard now by the supply chain disruptions and by the inflation that's been rising in the world. I guess I'm giving the general mixed view that there's progress but not enough. And India faces huge challenges of integrating more people into their economy and to the formal sector economy, and raising the earnings of people.
The government's been focused on that. I went to India in late 2019 and saw changes that were being made that were quite positive in terms of the banking system, the financial system, the civil service system, and India was looking for ways to improve the clean water, the water situation, which is very important in India for child nutrition and for improving nutrition because clean water is one of the most important starting points for life. I'll mention that, and this is a huge, giant challenge for the world's biggest democracy. Thanks.
MR. THEIS: Thank you very much.
And our next question comes in from Cameroon, actually, from Houzer Ngoupayou of Libertepresse. "Mr. President, beyond COVID-19, the economy is suffering from real and constant damage. Have you thought of measures to save companies in difficulty? And if so, what are they?"
MR. MALPASS: This is particularly relevant, given the supply shock. One of the things hurting the world right now is the companies that were small companies in logistics—you can think truck drivers, small trucking companies—many went out of business in the pandemic. That's really challenging, because it's hard to form one of those businesses. You need to put together some equipment, some contacts, meaning who's your route, who do you work with?
One of my first jobs in the 1970s was with a trucking company, and setting up that system is one of the biggest challenges in economics because computers haven't been as good at doing it. People have to be involved and you have to bring them back to work. I went on on that because in May of 2020 we recognized this was going to be a big problem. IFC took some particular changes in its operation to expand its trade finance business. One of the challenges within logistics is how do you do import/export transactions if the banks are closing down that route. The correspondent banks were closing down and trade finance was closing.
IFC was able to double that business rapidly, I think, in 2020 and into 2021. We're continuing that program in MIGA, now. MIGA and IFC are working on a joint—or have launched—are doing transactions in a joint MIGA/IFC trade finance operation. Credit to small- and medium-sized businesses is also vital in all of this.
And one of the things that we are attempting and working to expand is to have systems or have a transaction possibility that will help banks exit some of their loans, some of their safer loans, and that allows the banks to take on more small- and medium-sized business loans. If I can digress a minute, this is a giant problem in the advanced economies, because the central banks are using bank loans in order to buy long bonds that are safe bonds. It's the opposite of the direction that we need to go in order to improve small business finance. In the developing economies, we're trying to go in the other direction of having banks be able to sell or to reduce their safe loans, and that creates space on the balance sheet of the bank to find small business loans, which are the lifeblood of job growth for these economies. Thanks.
MR. THEIS: Great, thank you. Pivoting now to Morocco, we have a question from Hicham Benjamaa of La Vie Eco. "The populations of developing countries have been hit hard by the consequences of COVID-19 and assistance created by their governments have been minimal or even nonexistent. What lessons should developing countries draw from this health crisis, particularly on the social level?"
MR. MALPASS: This is a little bit like that very first question on how do governments spend money well, and especially when the world descends. The number one thing is vaccinations for COVID, or is climate change, where the country is looking and seeing, wait, we have these huge social needs in terms of the general health care system, maybe vaccinations for other diseases. Those have declined because people are not having as much connectivity. They don't go to the rural health clinic as much as they did in the past, and they miss their vaccines, and children have missed vaccines.
I really want to urge people in developing countries to do their checklist of nutrition, of range of vaccinations. And if COVID vaccinations are available, that too.
Another area that I mentioned, David, in my opening was the debt situation. Starting in March of 2020, I called for and was joined by Kristalina of the IMF, Georgieva, to ask for a moratorium on debt. The G20 adopted a debt suspension initiative in April of 2020, and then deepened it with the Common Framework late in 2020. But this is not creating as much fiscal space as the countries need. The debt burdens are high, unsustainable, as I mentioned the IDS data that came out early this week by the World Bank, shows the dramatic increase in debt levels and the unsustainability problems.
These are major challenges facing the country, because it takes up fiscal space. I really want to urge us to move forward more on the Common Framework, find more ways to make it effective.
I'll be meeting with the G20—I guess today—finance ministers, and it's an important discussion in the G20 of how to make the Common Framework more effective so that there can be more fiscal space in countries for the range of good spending that they need to undertake. That's a wide range: nutrition, education, health, infrastructure, climate, climate-related activities toward cleaner fuel and toward adaptation in countries that are facing climate change challenges, and 12 more—you know, 50 more high-priority items for people in poor countries.
I think the world should help by focusing on more resources—IDA is a critical part of that—and by debt relief, the Common Framework is a critical part of that. And then, by countries doing—and the private sector bringing in huge amounts of new resources in order to fight these problems. Thanks.
MR. THEIS: Thank you for that answer, which actually goes to the next question, which was from George Wiafe of Joy FM in Ghana. So, the next question that we will close with is actually one that touches on what you were just talking about, but perhaps in a little more detail from Maoling with Xinhua. "You mentioned the pandemic would mean setbacks in poverty reduction, especially in low-income countries. How can the World Bank support those countries' efforts, and are there enough resources?"
MR. MALPASS: Yeah, thank you. And that's really good to close on. It's not just poverty; it's the backsliding on women, on vulnerable, on children. These are tragic setbacks due to the pandemic and due to the global slowdown and the closures and now due to supply chain disruption and inflation, and debt among those.
The World Bank is responding with resources. In the 15 months ending in June of 2021, we committed $157 billion of financing that helps countries. A lot of it, a chunk of it, is in grants. There's a lot that's zero interest rate loans and very low interest rate loans to help countries have better development outcomes. That's the core mission of the Bank. And we use the tool—and I want to again reiterate the importance of IDA within this. It's replenished normally every three years. We accelerated that because of COVID. We're doing a hurry-up, that is vital for helping countries with vaccines, with their health care systems, and with poverty reduction.
Now, let me turn to the bigger core of that question. We're talking about a reversal of development and one part of that is the poverty numbers are going up. And how can the World Bank interact with that? Well, we can identify country by country where the reversals are occurring; it's broadly around the world. And then try—what we can do is identify ways that the world can do better on these problems.
I've done that in my Sudan positioning speech. I'll be speaking today at the G20; also, tomorrow at the IMFC meeting. You know, we've got the Annual Meetings of the IMF and the World Bank this week, which is bringing together finance ministers from around the world, and also world leaders. And I think the world should be asking leaders, how can this be done better? Why are so much of the resources going to the upper end? Why is median income going down, not up? And what aspect do policies play? If I can—I'll criticize and then compliment.
To criticize, we've got a system that's clearly guiding resources toward the upper end; that's the central bank system and that's also the fiscal systems of the advanced economies. Those need to be rethought and changed in a way that allows growth by small-, medium-sized businesses. People that are looking for a new job, get them placed in the new job, especially in developing countries. In Jordan, where I was a week ago or so, the youth unemployment is nearly 50 percent. There needs to be a system of global, of international finance that is better suited toward people getting jobs in the poorest countries, in order to reduce the poverty rate. And then, in the developing countries themselves, better policies in order to allow state-owned enterprises to be less dominant, that's—we talked about Egypt a little earlier. That's a major challenge. The economy is dominated by state-owned enterprises. And we worked to try to say, can there be boundaries? Can there be oxygen for new businesses to set up, because they'll be the ones that create the most jobs and bring down the poverty rate.
I'm going on a little bit David, but I think there are—on the positive side, I met recently with new presidents from many countries that are really working to change their country. I met with the President of Tanzania that needs to really dig out of the COVID pandemic and move forward. I met with the new President of Ecuador—in 100 days, they were able to vaccinate those that wanted to be vaccinated, by allowing the vaccines to go to companies. And then, the employer had a huge self-interest in order to have the people of the country be—their employees be vaccinated. It accelerated the vaccination process using the incentive structures of the country. There's a self-interest of businesses in having their employees be vaccinated when they want them to be vaccinated. That's one powerful tool, and we could think about that worldwide. If we can harness incentives in the right direction, that will give us a way forward out of this reversal in development.
Thanks very much.
MR. THEIS: Thank you, David, very much. And this will conclude our press conference, today. In case you missed it at the top, you can also follow David Malpass on Twitter @DavidMalpassWBG. And he posts long form opinion pieces on LinkedIn: David R. Malpass.
Thank you all very much. Have a great day and good meetings.
MR. MALPASS: Thank you.
[i] President Malpass misspoke and initially referred to 250,000 doses. The correct number is 250 million.