World Bank Group President David Malpass
High-Level Event on Financing for Development in the Era of COVID-19 and Beyond
Washington, D.C., United States
WASHINGTON, May 28, 2020—World Bank Group President David Malpass today delivered the following remarks at the United Nations’ High-Level Event on Financing for Development in the Era of COVID-19 and Beyond:
“I’d like to acknowledge the UN Secretary-General, Heads of State and all the fellow panelists and Excellencies who are participating in today’s UN event. I’d particularly like to commend Kristalina Georgieva, Managing Director of the IMF, for her leadership, energy and results. Our two institutions, the IMF and the World Bank Group, are working closely together on financial and economic challenges, including – and especially – those affecting the world’s poor.
The reduction of extreme poverty and the achievement of shared prosperity and faster, sustainable growth is the mission of the World Bank Group. Our offices around the world, including in many of the most fragile countries, are working on a daily basis with the IMF to find specific paths to better development outcomes.
I encourage everyone participating today to look for active steps they can take to help in this effort. A lot of energy has gone into discussing development goals in this forum. I worry that many of the goals are not being met, and I would like to see much more focus, time and energy spent on taking action.
Beginning in March, the World Bank Group launched exceptional financing to respond to COVID-19. We aimed to achieve fast, broad action around the world, recognizing that COVID-19 needs to be addressed everywhere. Last week, we were able to announce a milestone – we have emergency health operations approved and up and running in over 100 developing countries. We’ve also imbedded in this program a framework for finance that almost all of your organizations and countries can access to directly address the health emergency. We invite your co-financing and parallel financing through these programs.
Building on this first response, we are undertaking new support programs that, in coming weeks, will help developing countries overcome the pandemic and reclaim focus on growth and sustainable development. We committed early in the crisis to providing large additional financial resources for the world’s poorest countries during this difficult time.
These steps won’t be enough, given the combination of a severe health crisis, a deep global recession and unprecedented societal impacts. Our programs are working to address as many of these problems as we can, and I invite you to join in these efforts with additional financing. Our April estimates showed that the pandemic, and the economic shutdown of the advanced economies, will push 60 million people into extreme poverty in 2020, increasing the number of the world’s population living on less than $1.90 per day toward 700 million people and causing the global poverty rate to rise for the first time since 1998, when the Asian Financial Crisis hit.
I worry that these numbers will go higher. School closures in 191 countries are affecting 1.5 billion students. Reduced incomes for migrant workers will lower remittance flows back to home countries, while migrant labor shortages in the agriculture sector of advanced economies pose food supply risks.
The wide spillover from the pandemic and the shutdown in advanced economies hits the poor and vulnerable – women, children, elderly, and healthcare workers – hardest, deepening the inequality from lack of development and making the health crisis even worse.
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 regional program focused on the locust crisis.
There is an urgent need for additional financial action through the pathways we have available and I again invite you to join that financing effort.
The World Bank Group is working to help countries boost health spending, strengthen social safety nets, maintain both public services and a private sector that creates jobs, and counter financial disruptions. We are able to deploy as much as $160 billion by June 2021, including the frontloading of $51 billion worth of grants and highly concessional resources from the IDA19 replenishment. The other multilateral development banks (MDBs) have committed to adding another $80 billion to the MDB response, bring the total to $240 billion.
Still, that won’t be enough. I was among the first to call for a debt moratorium for the IDA countries plus Angola, along with Kristalina Georgieva. We strongly welcomed the prompt support of the G20 countries for a suspension of debt service by all official bilateral creditors, which included G20 endorsement for comparable treatment by commercial creditors. I have been vocal in stating that all official bilateral creditors should participate; that commercial creditors should also participate on comparable terms and not exploit the debt relief of others; and that much more is needed, including longer term debt service relief and, in many cases, permanent and significant debt reduction.
The World Bank Group is supporting countries that are participating in the moratorium. Already, it appears that half of all IDA countries are proceeding with the moratorium and more are joining each day.
Debt and investment transparency are also essential to support greater investment and growth. Transparency is vital to ensuring accountability, developing reliable estimates of debt sustainability, and will bring in new high-quality investment.
I invite the UN and its agencies to join Kristalina and me in providing a clear voice for these initiatives including the participation by all official bilateral creditors and comparable treatment by commercial creditors. I welcomed President Xi Jinping’s recent commitment to China’s full participation in the debt moratorium. I listened with interest to the comments by the Institute of International Finance just now and particularly to the strong points on debt transparency. I invite commercial creditors to agree on terms of reference to encourage their participation, especially given the focus of the initiative on debt relief for the IDA countries, the world’s poorest.
I’d like to address directly the continuing calls by some parts of the UN to extend the moratorium to debt repayments to MDBs. This would be harmful to the world’s poorest countries.
MDBs depend on financial markets, and instability in the payment stream would have a negative impact to the flows to client countries. Our focus is on providing large net positive flows to the world’s poorest countries. We need to focus our collective efforts in this direction and raise maximum funds for poor countries.
Let me conclude by encouraging that we communicate as clearly as possible and work together as much as possible to achieve the goals of sustainable development.
As I mentioned above, the UN’s call for MDB debt suspension would be harmful to the world’s poorest countries.
Similarly, and I am sorry to have to raise this, recent mischaracterizations by parts of the UN regarding the World Bank Group’s involvement as an observer to Egypt, Ethiopia, and Sudan’s negotiations regarding the Grand Ethiopian Renaissance Dam have not been helpful.
The World Bank Group is committed working cooperatively, to international coordination, to alleviating extreme poverty, boosting shared prosperity, and seeking much better outcomes for people in developing countries.
The World Bank Group is working with several UN Agencies to complement procurement efforts for the COVID-19 response. Examples include:
- The World Food Program to support delivery of procured medical supplies and equipment to remote areas in developing countries. We are also partnering to ensure food security and nutrition programs, for instance in Somalia and Afghanistan, and are exploring further stepping up collaboration in the Sahel.
- UNICEF on enhancing digital connectivity, including digital learning tools, to help children’s continued schooling. In that context, we are also coordinating with UNICEF, UNESCO and WFP on supporting governments in strengthening distance learning and facilitating the reopening of schools.
- And WHO and other partners to speed up the development, production and equitable access to COVID-19 diagnostics, therapeutics and vaccines.
In conclusion, the World Bank Group now has available COVID-19 financing programs in over 100 developing countries, and we invite use of those pathways to expand the financing of the health emergency and expand the response so that we can meet the full brunt of the crisis in the world’s poorest countries.