Thank you very much, Mohamed, for your remarks and for presiding over the Development Committee.
Good afternoon and welcome everyone to the 2023 Development Committee meeting.
I would like to welcome Kristalina and thank her for the strong leadership she brings every day to the IMF. Kristalina, I have sincerely valued our collaboration over the last four years through global crises. I am confident that the strong collaboration between the World Bank Group and IMF will continue in the years to come.
Global growth has slowed and is expected to be weak. Several factors are weighing on the second-half outlook: oil prices, banking-sector stress, persistent inflation pressures. The concern is that slow growth will persist for years for many developing countries, increasing the fiscal stress and debt problems. There is a combination of factors: weak investment, higher interest rates, and relatively weak growth in the advanced economies.
Looking to the big picture, I’ll mention two problems: first, the normalization of interest rates after an artificial decade near zero. A second major problem is that the available global capital is being absorbed by a narrow group of advanced economies that have extremely high government debt levels. This aggravates the crisis facing development, which has grown more urgent, and the situation has become more dire.
In the face of these challenges, we launched the Evolution Roadmap, and I am pleased to report that we have made good progress. The Development Committee Paper reflects the many discussions on our vision and mission, operating model, and financial capacity.
I would like to emphasize that this has been a collective effort of the Board, management, and staff.
Without detailing all the elements, let me highlight a few that provide a foundation for further evolution:
- The paper reaffirms that our goals of ending extreme poverty and promoting shared prosperity will remain at the core of the World Bank Group’s work. Progress toward these goals requires a stronger focus on sustainability, resilience, and inclusiveness.
- The paper reflects a commitment to enhance our operational model to strengthen our service to all clients. It contains proposals for strengthening the country engagement model with stronger analysis, including country-specific, regional, and global diagnostics; for supporting private sector development and private-capital facilitation and strengthening that support; for expanding our crisis response toolkit; for implementing a stronger “One World Bank Group” approach; and for exploring new results-based financing instruments.
- The paper also reflects important progress to boost our financial capacity, including through a revision of IBRD’s minimum Equity-to-Loan Ratio to 19 percent, a Hybrid Capital pilot for capital-market investors, and a scaled-up bilateral guarantee program. These initiatives can add up to $50 billion of financing capacity to IBRD over the next 10 years.
We look forward to engaging with all of you today and look forward to a work plan to continue to take the Evolution forward.
Before I hand back to you, Chair, I want to note that it has been an enormous honor and privilege to serve as President of the world’s leading development institution. Over the last four years, I have always emphasized that our job is to achieve good outcomes for people in developing countries, especially in these challenging times. I am proud that we have worked together to support inclusive and sustainable economic growth, and that we responded at scale with speed, innovation, and impact to the unfolding crises.
I want to sincerely thank the Governors for their support. My thanks to all our staff and Boards for the privilege of working with them every day for our clients, especially in the most challenging of times.