WASHINGTON, March 27, 2020—The World Bank Group today released the following remarks made by Bank Group President David Malpass this morning via videoconference to the International Monetary and Financial Committee, a body which advises and reports to the IMF Board of Governors on the supervision and management of the international monetary and financial system:
“I’d like to give you an update on the actions by the World Bank. The team has been working very hard and in good coordination with many of you and we welcome your input.
Early last week, the Board approved a $14 billion fast track facility for immediate COVID health care needs. We have emergency operations for 60 countries already underway and more to come.
I’m submitting the first 25 projects to the Board today totaling nearly $2 billion. Board approval is expected next week, with implementation beginning immediately thereafter.
In parallel, I am submitting today a new framework that will allow management approval for most COVID projects, and I expect operations in over 30 more countries to begin implementation in coming weeks.
I’ve hosted, with Kristalina, regular meetings to coordinate with other MDBs and encourage co-financing by them and bilateral agencies to expand these operations quickly. I invite your help with prompt robust co-financing of these 60 COVID projects.
In addition to these sizeable new operations, we are working with 35 countries to redirect existing projects to COVID, with almost $1 billion of that already approved.
The IFC is a full partner in this by supporting private sector sustainability and participation in health care. It is providing more than half of the initial package, including vital short-term working capital and trade finance, and is already working with over 300 companies to finance them. After much work by Secretary Mnuchin, I expect the near-term authorization of the IFC capital increase.
Beyond the health impact from the pandemic, we expect a major global recession. I presented a $160 billion response to the Board on Wednesday. This will finance support operations over the next 15 months tailored to the nature of the shock the country is facing. We’ll have a strong poverty focus in these operations, with an emphasis on policy-based financing and protecting the poorest households and the environment.
Poorer countries will take the hardest hit, especially ones that were already heavily indebted before the crisis. We are ready to frontload IDA19 by up to $35 billion and identify additional resources, but to achieve debt sustainability, many countries will need debt relief. This is the only way they can concentrate any new resources on fighting the pandemic and its economic and social consequences.
Earlier this week, the IMF and World Bank issued a joint call for all official bilateral creditors to suspend debt payments owed to them from IDA countries that request forbearance. We’re ready to work with both debtors and creditors, make an assessment of the financing needs, and work on debt relief or restructuring. The new SDFP program, part of IDA19, will strongly incentivize IDA countries to make their debt more transparent.
Our preliminary estimates suggest that official bilateral debt service payments alone in these countries total almost US$14 billion in 2020, including interest and amortization payments. Less than US$4 billion of these are to Paris Club members, so it will be critical to have broad and equitable participation of all official bilateral creditors to make a difference. Often, NPV reductions and participation by commercial creditors will be needed.
Kristalina and I are working quickly to flesh out an approach to debt relief. We plan to present it to Governors in time for the Spring Meetings in April and would welcome your strong support and the endorsement of your governments.
In sum, I can assure that, to fight the crisis, we will be using all tools available to us across all of our institutions, IBRD, IDA, IFC and MIGA.”