WASHINGTON, June 2, 2020—World Bank Group President David Malpass today delivered the following remarks at the Nordic Baltic Governors virtual meeting:
I’d like to thank Geir for his work on the World Bank Board and especially thank Minister Andersson for hosting this meeting. It is great to be meeting with this group of Governors. On the one hand, I was looking forward to being in Stockholm with all of you before heading to St. Petersburg for the International Economic Forum. On the other hand, this is a cost-efficient, low-carbon format and I bet a lot can get done.
We’re trying to work productively with client governments, the IMF, other development banks, the UN, the private sector, civil society and donors. The Nordic and Baltic countries are well-known for the innovation and focus needed to recover from global crises and I’m sure that will be the case this time.
I had the pleasure of meeting some of you in Reykjavik for last year’s Governors’ meeting before being selected as President of the World Bank Group. I recall discussing many important topics –including fragility, jobs, climate, gender, energy, and structural reforms. We should discuss those, but much of my focus today is on the pandemic – a severe health crisis and deep global recession causing unprecedented societal impacts. Let me assure you that World Bank Group staff around the world, including in many of the most fragile countries, are working day and night to find specific paths to better development outcomes in an effort to build back better than before.
I would be remiss not to express deep appreciation to the Government of Sweden for hosting the historic IDA19 replenishment last December. I had the pleasure of meeting Ministers Andersson and Eriksson at the meeting in Stockholm.
With the help of forward-leaning donors like the Nordic and Baltic countries, we mobilized an historic $82 billion replenishment including $53 billion for Africa. The needs are even greater. If countries find they can effectively use the existing IDA resources and also the benefits of co-financing and the May 1 debt moratorium, it may make sense for donors and the World Bank to explore a supplemental IDA replenishment.
The World Bank Group is fully focused on helping countries address the pandemic. We are implementing COVID-related programs in over 100 developing countries, home to more than 70 percent of the world’s population. Our COVID-19 response has been the fastest and largest emergency response in World Bank Group history.
We are working hard to reach 1 billion poor people around the world through social safety nets and community and local government channels.
- In the short-term, the focus will be on income and food security support, enhancing access to basic public services such as water and sanitation, and a continuation of essential economic activity during lockdowns in urban slums and poor rural areas.
- In the medium term, the emphasis will move to employment and productive inclusion for households and small and micro-informal enterprises and maintaining the private sector.
Looking ahead, we are working to deploy as much as $160 billion in financing by June 2021. IDA will provide $51 billion of that total on grant and highly concessional credit terms.
Our climate expertise offers critical lessons for countries to not only build back better, but greener. We are on track to meet or exceed our climate co-benefits target of 28%, despite the ongoing pandemic. This translates into billions of dollars annually, where we will support climate adaptation and mitigation for our client countries.
I would like to highlight a few immediate priorities in no particular order: 1) ensuring food security, 2) strengthening health systems, 3) supporting vaccine development, 4) focusing on climate action, 5) maintaining the private sector, and 6) making digital advances in connectivity.
I was pleased to read an op-ed that was written by the Norwegian Governor Ulstein last month on food security. I’m glad we are on the same page.
Millions of people in East Africa are facing a triple crisis, the health emergency, the global recession, and locust swarms that are threatening food security and livelihoods. We recently approved and began the implementation of a $500 million regional program focused on the locust crisis to ensure food security and maintain rural livelihoods.
Many of the world’s poor rely on natural resources for their livelihoods. In the immediate term, the World Bank supports communities through quick, labor-intensive support in fisheries, forestry, tourism and ecotourism.
Strengthening health systems is central to our immediate response and our longer-term sector support. Ecuador is a good example, where our $20 million program finances medical supplies and will double the capacity of intensive care units.
We are working with partners to ensure equitable access to vaccines, diagnostics and therapeutics, notably for the most vulnerable. We support Gavi and CEPI in vaccine development, and we will work closely with the Global Fund and others to support distribution if a vaccine becomes available.
With the next phase of COVID-19 response projects focusing on countries’ longer-term social stability and economic growth, we will see more climate-informed Development Policy Financing (or DPFs) where climate actions, such as shifting to cleaner transport and low-carbon energy, are core parts of economic recovery packages.
Regarding our work with the private sector, the IFC has been instrumental in our response. Countries affected by fragility, conflict and violence may be cut off from financial markets and global supply chains. IFC is providing $8 billion in fast-track financial support to existing clients. This helps sustain economies and preserve jobs by, for example, creating trade finance to avoid supply chain disruptions in ports. This is crucial for food security in countries and regions affected by fragility, conflict or violence.
Digital advances in connectivity enhances the continuity of critical public services such as health care, mobile payments, food delivery, and e-commerce.
The success of digital and related technology adoption depends on having the right supportive policies in place. Governments need to ensure enough market competition, better entrepreneurial and worker human capital, and better physical infrastructure. We support client countries with these areas through support for electrification, access to finance, and expanded coverage of social protection.
On a more global level, I’m deeply concerned with rising levels of debt and the lack of transparency. This is particularly worrisome in the poorest countries, especially in Sub-Saharan Africa. Even before the COVID-19 crisis, we witnessed the largest, fastest, and most broad-based increase in debt ever in these economies. The coronavirus pandemic has made this challenge even more urgent.
We took an important step last month with the debt service suspension initiative. We’re calling it DSSI. Kristalina and I championed it and the G20 endorsed allowing the world’s poorest countries to suspend repayment of official bilateral credit from May 1. It is a powerful, fast-acting measure that can bring real benefits to people in poor countries. The increased transparency that is at the core of the initiative will help bring in new high-quality investment, with an increasing amount from private sector investors.
The commercial creditors of governments also need to support sovereign debt reduction efforts. We encourage client governments and their commercial creditors to work together to agree on comparable terms.
The World Bank Group will be providing massively scaled up and frontloaded positive net transfers to IDA countries on highly concessional terms, and the IMF has its own highly impactful initiatives. A moratorium on debt service to MDBs doesn’t make sense because it would interfere with the debt issuance that funds the flows and would reduce the net positive transfers, the opposite of what we’re trying to do.
Your timely contributions to the IBRD and IFC capital increases play a major part in supporting these net transfers.
IDA is expected to commit over $50 billion in fresh resources over the coming year on grant and highly concessional credit terms, primarily through front-loading up to $35 billion of IDA19 for the next financial year. This means that for every $1 in debt service, IDA will provide over $12 in new commitments by June 2021. Furthermore, half of active IDA countries already receive all, or half of their IDA resources on grant terms, which carry no payments at all.
It’s important that beneficiary countries use the additional resources to respond to COVID-19 to save lives, support the poor and vulnerable, support firms and jobs, and lay the foundations for a strong recovery. The World Bank Group and IMF will support their efforts and help monitor the use of the fiscal space created by the debt relief.
I welcome your views on how we can all help in bridging the short and medium-term investment needs and achieve longer-term sustainable development factors.
Thank you again, Governors, for your support. I look forward to our open discussion.