Thank you very much, Prime Minister Mia Mottley (and Chair of our Development Committee).
Welcome everyone. Before I jump in, I’d like to recognize Minister Azucena Arbeleche. She will take on the role of Development Committee Chair after today’s conclusion. Welcome, and I look forward to working with you.
I would also like to acknowledge that Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, is with us virtually as an Observer. Ngozi will be joining me later this morning for a discussion about trade and economic recovery – I hope many of you can join us online for that.
And I would like to recognize Kristalina Georgieva, Managing Director of the IMF. She hosted very interesting IMFC meetings yesterday, and I’m hoping we can continue the thoughtful discussions today in the DC.
This Committee is a key voice for development and developing nations. Today’s meeting occurs in a time of upheaval – in terms of medicine, economics, finance, politics and governance, social interaction and worker mobility, and our relationship with climate and the environment. Each topic is deeply challenging for countries around the world.
We’ve had extensive discussions this week, and indeed this year, on these challenges. This week, I’ve participated in lengthy discussions in the G24, G20, G7, and IMFC, with G20 Leaders on Afghanistan, the Coalition of Finance Ministers for Climate Action, and others, and I met with many finance ministers. Each of the discussions focused on problems and possible solutions, but I’m afraid that progress is still slow.
The reality is that there’s been a stark reversal of development gains. Development is going backwards on poverty, median income, education, nutrition, security and many other areas. A failure to address these would leave us with a decade of regrets.
I want to discuss three topics – the World Bank Group’s response, the DC papers, and the resource needs for developing countries, including IDA. And then hear your comments.
I’m halfway through my term as President of the World Bank Group. We’re working within the World Bank Group to focus on actions and knowledge that contribute to development solutions.
I’m proud of our response to the COVID-19 crisis. From April 2020 through June 2021, we committed more than $157 billion – it was the largest crisis response and fastest growth in our history. Our support for the poorest countries is at an all-time high, including grants and highly concessional loans to countries eligible to borrow from IDA.
On COVID-19 and vaccines, we worked closely with the Board to develop and implement a fast-track approach that has helped nearly 150 countries tackle the health emergency. We’re providing financing for COVID-19 vaccines in 61 countries and currently have 250 million doses under contract with World Bank financing. We’re pleased to partner with COVAX, AVAT, the African Union, and UNICEF on our shared priority to accelerate the purchase and deployment of vaccines in developing countries.
Over the summer, Kristalina, Ngozi, Tedros and I launched the Multilateral Leaders Taskforce that has furthered these efforts. While helping countries address the pandemic crisis, we’re also working to facilitate green, resilient, and inclusive development and growth.
On debt, in March 2020, Kristalina and I called for a debt moratorium that the G20 endorsed. The G20 created the DSSI and the Common Framework, which we’re working hard with the IMF to implement. Key in this process is debt transparency and sustainability, debt reconciliation, and a sense of speed. Under Carmen Reinhart’s [WBG Senior VP & Chief Economist] leadership, the International Debt Statistics – IDS – report, which was just released on Monday, shows that low-income country debt rose 12% to a record $860 billion.
There remain huge amounts of work to be done to achieve debt sustainability and transparency. Under Indermit Gill [WB VP for EFI] and Ayhan Kose’s [WB Chief Economist & Director of the Prospects Group] leadership, the Bank has generated vital reports that are important additions to the knowledge base, including Global Economic Prospects (GEP), Global Waves of Debt, and an upcoming flagship report on debt transparency. Now is the time for countries and people to be detailed and look for solutions on debt.
On climate, we’ve outlined a powerful new path forward using the World Bank Group’s Climate Change Action Plan (CCAP) for 2021-2025. The CCAP focuses on integrating climate and results, achieving the maximum impact from climate finance, and improved diagnostics and data. The way to achieve impact is to prioritize interventions; create a just transition from coal; and focus on adaptation. The CCAP does these through diagnostics and work with the IMF and other partners on climate action.
But there is much more to be done. The COVID-19 crisis has affected every aspect of commercial and social activity. Developing countries have made extraordinary efforts to keep economic activity going during the pandemic, but they face grave challenges: climate change, debt, inequality, and vulnerabilities to future shocks. Per capita income is expected to grow nearly 5% in advanced economies in 2021, but only 0.5% in low-income countries. That is the reverse of what we want in order to narrow the inequality gap.
The World Bank is looking at ways to address all these areas. The two DC papers – on preparedness and financing – highlight the need to act forcefully to address challenges posed today by the pandemic and the criticality of pursuing green, resilient and inclusive development or GRID, as we call it.
First on Prevention, Preparedness, and Response. The ability to prevent, prepare for, and respond to crises is particularly limited in IDA countries, countries in fragile and conflict-affected situations, and small island developing states. To meet the increased financing needs, the World Bank front-loaded IDA resources. IDA, and the ability to front-load it, proved to be one of the best preparation measures for the global crisis.
The World Bank Group will continue to scale up its support to countries, both on the public and private side, and manage future crises. This will entail:
- flexible, rapid and front-loaded financing for the most vulnerable countries, populations and businesses;
- supporting improved monitoring of health, natural, financial and other risks; and
- emphasizing coordination, both at the country and global levels, through stronger partnerships.
IFC will continue to deploy targeted funding, enhanced portfolio management and active monitoring, and seek feedback from the private sector to continuously update its response to crises. This will provide valuable input for defining policies. It’s also critical that IFC has doubled its trade finance. MIGA will also continue its work in these areas.
Preventing crises, being prepared for them and fostering a durable recovery will require a long-term approach – adapted to individual countries’ priorities and needs.
Second on Financing for Green, Resilient, and Inclusive Development. The companion DC paper on GRID financing details several avenues of support for recovery and longer-term development.
I want to stress that the paper shared with you on GRID financing is also tightly linked with and reflects the CCAP, which as I just mentioned, sets out our goals on climate change adaptation and mitigation. Climate is also a special theme for IDA20.
Many developing countries are aligned on GRID but are facing massive fiscal and financial constraints, alongside escalating demands from their populations hard-hit by the impacts of COVID-19 and other compounded crises. So, ensuring the participation of the private sector wherever possible to prioritize scarce public financing, including by using the Cascade approach, will be key.
Given the Bank’s country-based business model, there will be differentiated approaches across countries tailored to the country context and development needs, expanding on the role of the Bank Group in fostering incentives and client demand for interventions. Financing is a key element, particularly for affordable energy transition.
At the same time, we have defined an approach focused on helping to mobilize domestic resources, private capital, official public finance and knowledge at scale, including developing options to further step up our institutional role in leveraging climate finance.
I and all of us at the World Bank Group thank shareholders for their support. We’re working toward an ambitious and successful IDA20 expansion, and hoping for stepped up contributions from donor countries. We’re looking forward to the final IDA20 replenishment meeting in Tokyo in December. Importantly, IDA is able to pull together special and cross-cutting themes of donors and recipients in developing countries.
Axel van Trotsenburg [WB Managing Director of Operations] is the IDA20 co-chair and here with me today. We’re all working hard to achieve the best possible outcome on IDA. I should mention a key feature of IDA, which is leveraging and IDA’s ability to turn donations into almost 4 times the resources that go to the world’s poorest countries. It’s our goal to raise $100 billion for IDA20 – and remember that it’s a 3-year replenishment cycle, so donors only need to provide $7-8 billion per year, which is a small ask for the huge benefit that IDA provides for growth and development.
With that, I look forward to today’s discussion. Thank you.