Defusing Debt - Creating Comprehensive Solutions
On October 13, David Malpass and global experts kicked off the 2020 Annual Meetings of the World Bank and IMF with a detailed and important discussion about comprehensive solutions for rising public debt levels.
During the event, we heard from a variety of people who offered compelling reasons why debt matters right now. Adriano Afonso Maleiane, Minister of the Economy and Finance in Mozambique, explained his country’s need to borrow in order to finance infrastructure and other critical investments in development. Odile Renaud-Basso of the Paris Club and The World Bank’s Chief Economist Carmen Reinhart cautioned about the risks a debt overhang could pose to countries’ ability to rebuild following the pandemic. Kevin Watkins, CEO of Save the Children, emphasized the impact rising debt levels can have on future generations, while Eric LeCompte, Executive Director of Jubilee USA Network, talked about why increasing debt levels and rising inequality go hand in hand. Joyce Chang, J.P. Morgan Global Chair of Research, mentioned that it’s important not to restrict market access, and to think of innovative investment options for emerging markets.
A key topic raised at the event that many panelists agreed with is that developing countries will need a long-term solution to debt reduction or resolution in the face of COVID-19. The current debt suspension organized by the G20, does not give countries the certainty they need. Nor does it compel the private sector to work with developing countries on debt reduction or relief. Greater transparency around how much governments borrow, for what reasons and from whom is critical to getting to effective solutions.
To close the event, actor and spokesperson for Global Citizen Idris Elba concluded with an inspiring message: “COVID has taught us that we can only succeed together. We have brought down poverty to historic lows. Solutions exist. We’ve done it before, and we can do it again. Now is the time to recover better, together.”