Thank you, Chair. Good afternoon, everyone. While global growth is bottoming out, I worry that the crisis is intensifying for many developing countries. Poorer countries face shortages of capital, energy, and fertilizer; and heavy debt burdens as interest rates rise.
The reversals in development indicators have been devastating. Hundreds of millions of people live without electricity, clean drinking water, and infrastructure. Reversals span education, health, nutrition, poverty, median income, and climate adaptation.
Many developing countries are facing the prospect of a multi-year period of slow growth driven by weak investment. They face a situation in which most of the available global capital is absorbed by a narrow group of borrowers that already have extremely high government debt levels yet face demographic declines and the reversal of the peace dividend of the 1990s.
Russia’s invasion of Ukraine has added significant new costs. To provide support, the World Bank has already mobilized $20.5 billion for Ukraine, of which nearly $19 billion has been disbursed.
The negative spillovers of the war are hitting developing countries hard in terms of currency devaluations and higher food prices. To help cope, the World Bank is providing a $30 billion food and nutrition security package, including $12 billion of new projects, which have all been committed ahead of schedule.
Restoring growth, including growth in median income, is critical to our mission of poverty alleviation, shared prosperity, and sustainability. I’ll offer several suggestions:
On trade and investment, we know many of the right directions. Governments should avoid imposing export restrictions in response to food and energy shocks. Non-tariff barriers are being raised, which will distort trade and slow growth. Subsidies should be targeted and time bound. We should also increase the support for people affected by conflict or food insecurity, particularly in low-income countries.
Fiscal consolidation is necessary and should be guided by credible medium-term frameworks, with a focus on reducing wasteful spending and inefficient agricultural and fuel subsidies.
The international community needs to help reduce the risk of debt crises in developing countries by supporting timely debt restructurings. This morning’s roundtable discussed possible directions to break the impasses.
Lastly, I’m pleased to report that the Pandemic Fund Secretariat is up and running. On February 3, the Fund launched its first call for proposals. The goal is to strengthen surveillance and early warning systems, laboratories, and the health workforce. I would like to thank you for your collective contribution to the Fund – 25 donors have contributed, including 15 who are G20 members, and my particular thanks to the United States and the European Union for their contributions.
Thank you again, Minister Sitharaman, for your wise opening statement and warm hospitality.
