[Andreja Lenarcic] Good morning and welcome to this joint IMF-World Bank high level event, “Rising to the Challenge: Policy Action in Low-Income Countries & the Role of the International Community”. I am Andrea Linarcic, an economist working in Strategy, Policy and Review department here at the IMF. Welcome to the participants joining here in person, participants joining online, and also to all those of you who are watching the live stream on the IMF or the World Bank web platforms. If you're joining the conversation online, you can use the hashtag #Action4Growth to share your thoughts. So, today we come here together from across the globe to foster a common understanding on the key challenges facing low-income countries and to discuss priority areas for domestic reforms and the role of international community. Today's agenda features esteemed speakers from different countries and organizations around the world, and we will begin our event today with the fireside chat between the IMF Managing Director Kristalina Georgieva and the World Bank Group President Ajay Banga. The chat will be moderated by Yahoo Finance anchor Rachelle Akuffo. Please, welcome the IMF Managing Director, the World Bank President, and Miss Akuffo.
[Kristalina Georgieva] Good morning. [Ajay Banga] Good morning, everyone.
[Rachelle Akuffo] Thank you so much for joining us this morning. So, we want to get right into this fireside chat. We have a lot that we'd like to get through. Kristalina, I'd like to first start with you. As we look around, we've had several turbulent years. How would you characterize the global economic situation today and the prospects for low-income countries?
[Kristalina Georgieva] I want to start with the good news, and it is the world economy today is doing better than we feared even a year ago. Growth is holding, inflation is going down, and the expectation that we will move through this phase of high inflation without recession, the so-called “soft landing” is up. That also translates with better conditions for low-income countries. What they see is also their growth prospects improving. They see inflation going down, and some of the low-income countries see prospects of tapping into markets. But this, unfortunately, is not the whole story. Both globally, we are not yet done in the fight against inflation, and major central banks are not rushing to cut interest rates in low-income countries. The hit of this shock after shock: pandemic, the war in Ukraine, high prices is felt most profoundly. In fact, our analysis shows that scarring from the shocks in advanced economies and emerging market economies is less than we feared. But scarring in low-income countries is higher than we expected. They today are 10% below, in GDP terms, their projected trend from before the pandemic. imagine they have 10% less, and then what comes on top of it? One, the fact that many of them have high debt levels. The average debt service eats up 13% of GDP, so you're 10% less and you spend 13% to service debt. And what I am particularly worried is that with growth being slow, the chances to catch up are actually worsened. And when we look at low-income countries, we have to recognize they're not one universe with no differences. You have low-income countries with more diversified economies, better fundamentals. They handle all this better. And then you have fragile states. You have countries that are truly facing life or death, economic, social difficulties. And this is why it is so important. I want to turn to those who are here and those who are online. Thank you for joining us. It is so important that as we step into the period of the Spring Meetings, we focus on the low-income countries. And Rachelle, thank you for moderating this discussion with Ajay and me.
[Rachelle Akuffo] It's certainly an important discussion when we think of how different countries have emerged differently coming out of these multiple hits. So, Ajay, given this backdrop, what are the key challenges that developing countries must overcome to, to eradicate poverty while ensuring our planet remains livable? And in what areas are innovative solutions most needed to address these interconnected issues?
[Ajay Banga] Again, thank you for having me. And I'm glad to be here for the same reasons that Kristalina just said. By the way, one little point to not forget, the fact that their debt servicing costs is at that level also means it crowds out health and education. In fact, a number of them are spending more on repaying debt than they would be able to spend on healthcare and education. And that just tells you how challenging their own circumstances are. And you can say “they should have been smarter when they borrowed the money.” That “should have, could have” is a historical view. The question is, we are where we are and people need help. And I think that's kind of one of the biggest issues coming out of what she just said. Your question to me is a little different. Since the day I joined, I've been talking about these intertwined challenges. And that's the issue of the fact that to believe that you can take on poverty or sharing prosperity, which were excellent goals for the Bank, and much progress was made by many institutions over 30, 40 years, including Kristalina at her time in the Bank, that got set back. It started with the pandemic, but I think you've got to realize that underlying this is the fact that climate change, fragility, conflict, violence, food insecurity and pandemics, and healthcare are all things that you cannot compartmentalize and hope that you can deal with them separately from poverty. And so, getting that, the consequence of that is that the luxury of compartmentalizing was somebody else's. We can't do that. And so that means you have to take these on and comprehend how to deal with them. I think that one of the things that a lot of the people in the Bank are thinking about is that “do we really need to invent new things we need to do, or do we need to just do them differently?” I would argue that a number of cases, technology and solutions exist to some of the challenges we are discussing. In others, they don't. To give you an example where they don't, and where true innovation is required, or where they are beginning to get available, is, for example, livestock methane, methane from livestock. There is a lot of research going into how to develop the right kind of feed stuff for that to reduce. We helped to fund some of that research, so do many others. When you fund that, the question is then what do you do with it? Can you take it to scale and replicate it in as many countries as possible? We looked back three, four years from today and say we moved the needle as compared to spreading it out. Similarly, I went to Indonesia and I saw these mangrove plantations where not only had we helped to regenerate the mangroves, but we'd also made sure that the money then went to the community, which was able to then therefore not live off cutting mangroves to provide for their lifestyle. It's the same thing in the Amazon today, where, as you know, President Lula has taken on the idea of fighting what was going on there with deforestation. Now, the deforestation was not just plundering, it's because people needed it for their life, but it impacts the rainfall from North America to Patagonia. So, we're all in this together. And what he's trying to say is, “maybe I can direct that energy into ecotourism, into timber, but done sustainably, into healthcare, into things for the community, so that we can turn from using the forest for one kind of survival to actually creating a different form of growth and development, and not making the false choice of cutting down the forest in return for that.” I think there the Bank can play a role. Take the solutions and technology, invest in new ones, but both those things, scale them and replicate them so we can look back at moving the needle well over the coming years.
[Rachelle Akuffo] That's definitely an important part. That scaling and replicating. Obviously, none of these things exist within a bubble. As you mentioned there. So, Kristalina, what would it take for the low-income countries to reduce vulnerabilities and achieve sustainable and a meaningful raise in income levels? And importantly, quickly.
[Kristalina Georgieva] It will take the countries themselves doing more to build strength of their economies and the international community to be a reliable partner. The saying goes, it takes two to tango. And here I want to flag three very important tasks for the countries and then two for us, for the international community, for the countries. We know, we see that those that are doing better are countries with strong institutions, rule of law, transparency, less corruption. And building those strengths is what nobody but the countries themselves can take on. We know and this is number one, build institutions and policies so you have strength. Number two, countries can very practically look at where they are falling short in generating the kinds of revenues they need to invest in their people, to invest in infrastructure, to invest in prosperity. And we did an analysis that shows that up to 9% tax to GDP is still for grabs in many countries. So, build your tax system, especially focusing on bringing more of the economy in the open. You can't do all of it, but as much as you can. The richer part of the population, the businesses that are thriving, they have an obligation to the rest of society. Number three, one thing that we are very concerned in many countries is that their buffers, both domestic and external, have melted during this crisis. So, we look at low-income countries and quite a number of them have reserves, external reserves below three months of import. And this we take to be the critical level for a country to be able to serve its people. So, having policies in place and actions to rebuild reserves and look at things that are on the way of that, countries can and must do. And of course, that comes then to our part, because very… Hand on heart, it would be morally wrong and bad for the countries and the world if they are left to struggle with these challenges on their own. The international community has a huge responsibility to step up. What can we do? Of course, we are source of financing. For the Fund, it is this external capacity. We are balance of payment supporter, so we can provide loans and we have done it remarkably well. I want to thank our board. I see some of our board members and I want to thank our staff, because the Fund in this period of time stepped up remarkably strongly. We have provided about 32 billion dollars in loans. We also provided 34 billion dollars in SDR allocation to these countries. Of this 32 billion, 24 billion is zero interest rate loans. And if you compare to before the pandemic, our level of lending to this group of countries was below 10 billion. So, we more than tripled financing. And that is important, but even more important is engagement in collaboration with other institutions and in support of capacity development, institution building in these countries. Because what often people think of the Fund association is what? Programs. But actually very, very frequently, we do much more by helping countries build the tax systems, improve the quality of spending, get institutions to be more transparent. And that, I think, is where that dual role of financier and institution builder, capacity developer for us stands up. I want to thank the Ajay and the Bank. They have also moved heaven and earth in this period of time, but we also recognize so much more needs to be done.
[Rachelle Akuffo] And certainly, as you mentioned, a holistic process there and it’s something that does require work with policy. So, Ajay, bringing you back in here, what specific policies should low-income countries pursue to increase climate resilience, create jobs, reduce poverty and foster sustainable growth? And what is the role of the international community?
[Ajay Banga] So, you know, if you pick jobs for a minute, which I think is the single best way to drive a nail in the coffin of poverty, then what you have to think about is the fact that in the coming decade, more than a billion people in the Global South, by Global South I'm loosely saying the emerging markets and developing economies, there's going to be a billion odd people coming of age for jobs. And that's what the demographic dividend is supposed to represent. And I think it will if they grow up with clean air, clean water, health and education, which is where we started from; but when they do grow up, they need jobs. Currently, the forecast for the same countries is 325 million. That's a big gap. Now, forecasts are not destiny, so we can do something about them, but to do something about them, you need a number of things to fall into place. Policy. So the Bank is both a money bank and a knowledge bank, and working with the IMF, who also are both a money institution and a capacity and knowledge institution, we both bring these two things to the table, and the knowledge side of it is where we can help to build policies. She described a few. I could tell you, for example, if you think that gender and the empowering of gender makes a difference to productivity in a country, which kind of with two women on the stage, I'm in a good place saying that, but I believe in it anyway, you have to invest in the policies that make that possible. Everything from access to finance, to education, to quality healthcare for women, to legislative policies, to the availability of childcare, to the availability of safe transit and so on. That's just one example. So, there's a whole series of these that you can do in policies, trade policies, facilitation policies and that. On jobs. If I could just speak for a minute. I don't know how much time you have, but if I've got a minute, I'm going to use that for this. If you took Africa, where you're from originally, where a large part of our effort goes, currently, the lion's share of our money tends to go to Africa, particularly from IDA. I believe the jobs that will come in the coming decade will come from five areas. Infrastructure, and the construction of infrastructure. Roads, ports, airports, bridges. Energy, I'm taking it out of infrastructure only because I think connecting people to power deserves its own attention. 600 million people in Africa do not have any power. Changing that is what we think people like us should do, and that'll create jobs. Third, will be the whole space of healthcare. Disseminating healthcare to Africa will require primary healthcare centers, nurses, technicians, PPE manufacturing. There's going to be a whole series of jobs there. Tourism, which you can see is already booming. There are recent articles about the growth of hotels and tourism across Africa. And finally, agribusiness. Because Africa could be the food basket of the world if done right with lots of ifs and buts, but it could be there. Then the question arises, are we all, the international community, helping countries on the ground pursue the right policies and the right financing for these five? And digitization can help, but if people don't have power, they can't charge their phone with their fingers, so we have to get them power. It is a basic human right. And so then are we digitizing? Are we helping them with the right policies and the right financing to make that happen? Those are the kind of questions that she and I are trying to tackle as part members of the international community. It's governments as well. It's other NGO's, it's MDBs, it's the whole lot. But that, to us, is our task.
[Rachelle Akuffo] That's true, because people forget some of these countries risk getting left behind, but if you're not able to have continued reliable power, you do. You do.
[Ajay Banga] It's a fundamental basis for everything. [Rachelle Akuffo] Yes. [Ajay Banga] Just as digital identity is the basis for a digital revolution, electricity is the basis, even for digital, so…
[Rachelle Akuffo] Kristalina, to follow up, then how will the IMF ensure adequate support for low-income countries?
[Kristalina Georgieva] Well, the number one issue for all of us is to step back and say, what are we talking about? What are the needs? And this is what our team has done. At the IMF, we produce a report on macro. Well, here it is. I actually can show it. It is on macroeconomic development and prospects for low-income countries. And what we have grasped in this report is the size of the challenge. It's enormous. Low-income countries over the next four years would need 840 billion dollars to flow in terms of international support. And obviously, it cannot be just financing from our institutions. A big chunk of it has to come from private sector investments domestically and internationally. So, when we look at this challenge, what we are asking ourselves is two questions. One, how do we come strong enough on our side? How do we guarantee we have the resources to do our part? At the IMF we are now starting a discussion. Actually, on April 10, we are going to have a board meeting to talk about the future of our instrument for low-income countries. It’s called “Poverty Reduction and Growth Trust.” We have managed, with the help of our members, to raise our capacity to finance, but we still have part of the job not finished, which is to bring subsidies so we can have low-cost financing. We have to recognize that our ability to step up matters for the ability of the Fund to do our job. I can tell you, I expect there would be more demand for financing from both institutions in years to come because of this huge financial gap. But it also matters because when we are there, we bring confidence for others to come. When the Bank and the Fund are in the country, we send the signal, including to private investors. This country is moving forward the right way. So, I think of the Fund in the next years as the time in our history when more of our attention and more of our programs will be focused on this group of countries, on low-income countries. If you look at the history of the Fund, it is very interesting because we provide balance of payment support to anyone, advanced economies, emerging markets, low-income countries. And we go through these cycles. The last cycle was eurozone, but I think in my heart of hearts, I am convinced that this next cycle our task would be low-income countries and vulnerable emerging market economies. And we are really gearing up. We got for the emerging markets, we got an increase in our quarters, 50% increase. And now the task is to have the PRGT fully equipped, capable to do our part. And I am exhausting our time. So let me pass the baton to Ajay.
[Rachelle Akuffo] So I want to make sure we just quickly get these last two questions in. Ajay, the World Bank is launching the process of the International Development Association's 21st replenishment. Please, share with us your vision for IDA. And what do you hope to achieve with the replenishment and which areas will future IDA support focus on?
[Ajay Banga] Well, what I want to achieve from the replenishment is the resources that are required to make all that we are discussing come true. There are 75 countries who currently receive IDA resources, and they need the opportunities that we are talking about because they have all the problems Kristalina talked about at the beginning, but they also have, I think, a wealth of natural resources, including plenty of sun and wind, which is important in the green transition. But they also have human resources. That demographic dividend that I was referring to, but policies and effort done the right way will be required for them to surmount their debt, the investment in trade paucity that we are seeing currently, some of the geopolitics, and the fragmentation of the system, which goes against their chance for their time in the sun to come true. Right? So, I think that's kind of the first part. 36 countries have graduated from IDA over the years. Japan, Korea, India. There are great examples of countries doing well out of this and now becoming outstanding donors as well. The place, it works. The question is how do we get the right amount of resources, both in terms of grants and concessional financing, to her point about subsidies, but also then absolute amounts of money to put at work, and then how do we get our capacity and our knowledge to work for that? That's what I'm trying to work on to make a difference in IDA 21. I think working with Kristalina, who is also beginning more and more with the Fund to focus on similar countries enables us to take one plus one and make three. We're trying to find intelligent ways where we could cooperate because she has resources that I don't have, I have capabilities she may not have, but the country doesn't care about the two of us being separate. They care about a solution, and finding a way to do that well together is not that easy, but is very important. And that's kind of where I'm headed in my head with all our people. This IDA work did not happen in isolation. There are tens of thousands of people who have contributed to it, and they're really keen to see IDA 21 be another great opportunity.
[Rachelle Akuffo] That collaboration, very important, as you mentioned, it does signal growth coming and renewed interest in these countries as well. Just very, very quickly. Obviously, we're going to be moving on to our next session shortly. Just in a few words, what are you hoping to see in the next session?
[Kristalina Georgieva] Excitement about the future of these countries. I want us to imagine the idle capital in the north moving because of great conditions, attractive conditions, to the countries where youthful population is eager to work. And this transforming the fate of these countries and bringing prosperity for them and also for the rest of the world. Excitement. [Rachelle Akuffo] Ajay?
[Ajay Banga] I think if I can get awareness and knowledge about what they're dealing with, but also the opportunity to know that capacity and knowledge building along with money, can be used really well to change their future. Their future is our future. Young people are our future. They have young people. It is time for those young people to get a fair shot at their future.
[Kristalina Georgieva] And I want to recognize everybody in the audience. But in particular, what you see on this table are the Deputy Managing Director of the IMF, Antoinette Sayeh, sitting right next to Anna Bjerde, the Managing Director for the World Bank. And next to them are Ceyla [Pazarbasioglu] and Pablo [Saavedra]. These are the leaders of our teams. It is such a beautiful picture to see us all together.
[Rachelle Akuffo] Indeed, a wonderful collaboration. We looking forward to seeing that reflected even more going forward. A big thank you to the World Bank President and the Managing Director of the IMF. [Ajay Banga] Thank you. Thanks very much. [Kristalina Georgieva] You are so right.
[Andreja Lenarcic] Thank you, Managing Director Georgieva, President Banga and Miss Akuffo for setting the stage for this morning’s discussions and this insightful and informative chat. Next, we move to a presentation of G20 vision and priorities from the Brazil presidency. Please, welcome Secretary of International Affairs from Ministry of Finance of Brazil, Tatiana Rosito, who will be joining us virtually from the screen above. [Applause]
[Tatiana Rosito] Good morning to all. Thank you. At the outset, let me salute the IMF and the World Bank for the organization of this event and greet all participants that are on site or online. It's indeed a pleasure and an honor to do this keynote representing Minister Fernando Haddad and the Brazilian G20 presidency. I'm encouraged by the fireside chat with Kristalina and Ajay, and also the host of ministerial speakers in the next two sessions. And I wish us a great event today. Let me start by saying that the very premise of this event, the necessity of a particular focus by the international community on low-income countries and achieving the SDGs, is very timely and welcome. As we know, LICs have disproportionately suffered in the aftermath of the pandemic. In many cases, growth remains well below pre pandemic trends, while debt levels have risen substantially, announcing a looming debt crisis. At the same time, the world is seriously lagging behind on the SDGs and sustaining progress in LICs is crucial if we are going to meet our goals by 2030. Furthermore, LICs typically lack adequate representation in decision making forums. Their views and perspectives are often not adequately reflected in key policy documents. The relatively optimistic message of the most recent world economic outlook, for instance, which identified broadly balanced risks and an open path to towards a soft lending, does not apply to several LICs. Instead, they are facing debt crisis or heightened risks of debt distress, combined with the challenge to reignite growth and accelerate progress towards the SDGs. My brief talk today with thus focus on two crucial topics, debt challenges and the way forward for the international community to support LICs in delivering on the SDGs’ agenda. In both cases, the Brazilian G20 presidency has put some ambitious proposals on the table. I will present them in turn and offer some concluding remarks on the way forward. First, regarding that, let me tell you that this issue is very close to the heart of President Lula and Minister Haddad. The situation of low-income countries is, of course, of particular concern. There are a number of policy measures that LICs could pursue to enhance domestic resource mobilization, and Brazil continues to be fully supported supportive of the work of the IMF and the World Bank in these areas. Nevertheless, no matter the size of the domestic fiscal effort, structural debt issues will only be properly addressed through international policy cooperation and coordinated action among official creditors, private creditors, debtors and multilateral institutions. Much in the spirit just highlighted by Ajay. IMF and World Bank figures leave no doubt about the magnitude and the urgency of the situation. Presently, 54% of LICs are either at high risk or already in that distress. That service is projected to increase significantly when compared to the past decade, which will create difficult tradeoffs, jeopardizing investments in crucial areas like climate resilience, poverty reduction, health and education. This in turn can have serious social and political consequences, in some cases undermining hard won political stability and still young democratic institutions. Reflecting the central importance we give to the topic, the Brazilian presidency convened two high level discussions in São Paulo and in Brasilia in the context of the G20 Meetings of both vice ministers and ministers. Overall, our effort is to galvanize political momentum, unblock difficult issues, foster political consensus, and move to action. At a more technical level, in the International Financial Architecture Working Group, we are committed to supporting, improving, and continuing the implementation of existing initiatives, as well as exploring new solutions. In particular, our focus goes beyond promoting well-functioning debt restructurings. We believe that in many cases, it is still possible to prevent imminent debt distress from materializing. Therefore, we are keen to support initiatives for coordinating efforts among stakeholders, in particular the design of mechanisms that could prevent countries from sliding into that distress due to temporary liquidity challenges. We will also prioritize policy related issues linked to the implementation of the Common Framework. Regular updates will be provided throughout the year and new transparency initiatives are being discussed, enabling interested parties to access crucial information and learn from past cases and lessons. Together with the IFA co-chairs, France and Korea, we are working towards a G20 note on lessons learned from the first Common Framework cases. By drawing from these experiences and further refining the Common Framework, we aim to facilitate transparent, orderly and timely implementation of debt restructuring while promoting efficient information sharing among relevant parties. We are also happy to co-lead the Global Sovereign Debt Roundtable with the IMF and the World Bank, which has provided valuable insights for enhancing the debt restructuring process. This year, the workshops have covered topics like sovereign ratings and debt distress, climate resilient debt clauses and swaps, revisit the comparability of treatment and debt perimeter, the impact of nonresident holders and SOE debt in restructurings. Actually, we just before this event, we just finished our first deputies meeting for the year on GSDR, preparing for the principals’ meeting. Going further, we have planned candid discussions on climate resilient debt clauses and the possible use of innovative mechanisms such as that for climate, that for nature, and debt for health swaps. Although we know full well that these are not panaceas, we believe well designed swaps can have very promising side effects by creating the right incentives and means to implement high quality public policies. We have also been working towards new initiatives such as an Africa-led debate on that, which will amplify the voices of debtor countries and their perspectives on the matter, helping to remedy the issue of insufficient representation that I mentioned earlier. Heightened debt vulnerabilities are not the whole story, however. So, before I finish, let me turn briefly to the second key issue I mentioned at the beginning of this talk, namely, the necessity of stepping up international efforts towards achieving the SDGs. Indeed, Brazil's number one priority in the G20 is to fight hunger, poverty and inequality, which have also an inextricable relationship to climate and other challenges. Both in the finance track and the Sherpa Track of the G20, we are fully committed to focusing the attention on bringing the SDGs back on track. This involves several initiatives in almost all G20 working groups, from a new debate on macroeconomic and inequality to progressive international taxation initiatives to inclusive infrastructure debates. In the interest of time, I will expand here only on the task force for the establishment of a global alliance against hunger and poverty, as proposed by President Lula. As the name suggests, this task force will aim to boost global progress towards SDG 1 by creating a global alliance which will make possible the adoption of effective poverty alleviation policies in countries most in need. The alliance will provide both political commitment, technical support, and a basket of tested policies that can be readily implemented by the LICs adhering to it. In the finance track, we’ll seek ways to efficiently mobilize existing poverty alleviation funding and new resources to finance this initiative. The commitment of Multilateral Development Banks and other international financial institutions will be of the essence. Therefore, I invite you to seek more information about the alliance and study ways your organizations can contribute to it. Together with the World Bank, we will host a high-level event during the Spring Meetings on the 17 April to present the alliance to the broader international financial community. Several other events will follow during the year. For those of you interested in hearing more, we are happy to facilitate contact with the task force teams of the Brazilian G20 presidency. To conclude, let me once again commend the IMF and the World Bank for organizing this very important event. We should act now to prevent the debt difficulties in some countries from becoming a full-blown debt crisis, which would make the SDGs definitely unachievable. But addressing that issue is just one side of the coin. The international community must join efforts to offer a positive development perspective for LICs, including the eradication of hunger and extreme poverty. Count on the Brazilian G20 presidency to foster international consensus to address these pressing challenges. Thank you. [Applause]
[Andreja Lenarcic] Thank you, Miss Rosito. It's very good to have the voice of G20 in this important engagement. So now it's time to introduce our first panel. So, the first panel will be focusing on domestic reform priorities to accelerate progress towards Sustainable Development Goals, the SDGs. This panel will be moderated by Shanta Devarajan, who is a professor of international development at Georgetown University. Professor will be joined by a virtual panel which we will introduce shortly. In this session, you will also have a chance to ask questions, so he will take questions from the registered participants online. You can just type them in the Webex chat, or for those of you who are here in person, you can scan the QR code that you can find in your tables and you can put your questions in the app that will open up when you scan the code. We will pass as many as possible of these questions to our moderator, Shanta Devarajan. Over to you.
[Shanta Devarajan] Okay, thank you very much. It's a pleasure to be here. Nice to see old friends after a while. And I am delighted to be moderating this session, which follows from the opening remarks by Kristalina and Ajay about probably the most significant aspect of improving prospects for developing countries and low-income countries, which is the policy framework. How do we improve policies that can then induce better results and also make the aid and the resources that we're going to talk about in the second half more productive? So, this is the pivotal part of the session. And for that, I'm very pleased to introduce our panel. They’re on? Okay. The first is Romuald Wadagni, who is the Finance Minister of Benin. And then Vera Daves de Sousa, who's the Finance Minister of Angola, Liao Min, who's the Vice Minister of Finance of China, and Andrew Mitchell, who's the Minister of State for Development and Africa of the United Kingdom. Welcome to all of you. Delighted to have you here. To get us started, we're going to now have a presentation from colleagues at the World Bank and the IMF. A very short, they assured me a five-minute presentation to make sure we're all on the same page in terms of the facts. So. Guillaume.
[Guillaume Chabert] Thank you very much, Shanta, and good morning, good afternoon. Good evening, everyone. So, I am Guillaume Chabert from the IMF, and together with my colleague Manuela Francisco from the World Bank, we will indeed briefly present four slides. On this first slide, we wanted to underline that the macroeconomic outlook in low-income countries is finally improving. But scarring from the pandemic are stronger than for higher income countries, and economic outcomes are heterogeneous across countries. In addition, while improving, as you can see on the slides, the projected recovery in growth remained limited and would still be insufficient to reverse the adverse impacts of the successive shocks since 2020 and to make significant progress towards income convergence with more advanced economies. Debt has stabilized, but remains elevated. And as the Managing Director of the IMF and the World Bank President underlined, many low-income countries are facing an increasing liquidity squeeze, with high cost of debt service and limited space available to finance education, health, infrastructure, development spending in general. International financial institutions have stepped up their support, but the overall volume of net financial flows to low-income countries as fallen. So, this combination of low growth and high debt service makes it extremely challenging to restart progress in poverty reduction, that's the chart on the right, and achieve the sustainable development goals. More growth and more resources are needed to battle poverty, provide job opportunities and build resiliency in a more shock prone world. Now, against this backdrop, domestic resource mobilization is a critical aspect part of the package that would increase policy space in low-income countries. It would help low-income countries be in a stronger position to implement growth enhancing policies, strengthen social assistance, and have financing to cover their government spending. As you see on the chart on the left, revenue mobilization remains low in low-income countries, well below levels seen in emerging markets and even more advanced economies. Similarly, mobilization of private savings through financial sector intermediation is limited in low-income countries. So, there is a potential on both fronts that could be tapped. And the Bank and the Fund are joining forces to launch a new DRM initiative to help countries mobilize this potential. The new initiative will take a holistic, resilient based approach spanning revenue mobilization, improve spending efficiency, public financial management and debt management, and mobilization of private saving through the development of domestic capital markets. Activities will be carefully sequenced and tailored to the specific needs of each country and open, of course, to the support of other development partners.
[Manuela Francisco] Good morning, good afternoon and good evening, everyone. My name is Manuela Francisco, I'm from the World Bank and I'm joined presenting with Guillaume, in addition to domestic resource mobilization that Guillaume just talked about, acceleration of economic growth and job creation are also critical. And for this to happen, a number of conditions need to be met. First, we need to unleash economic growth. Private sector needs to invest more, needs to innovate and needs to grow. And for this, we need a number of conditions. We need an enabling environment, including, but it's not just these ones, we need digital transportation, water and electricity infrastructure. Second, we need contestable and competitive markets. When markets are competitive, productive firms grow and can create more and better jobs. Third, we need investment and productivity growth. For that, firms need capital and need technology. And in terms of policies, for example, policies to attract foreign direct investment can help in both fronts. But economic reforms need to be complemented by policies that connect jobs and people. Productive jobs require skilled workers. In today's world, workers need digital competencies if they want to fully reap the benefits of technology, including artificial intelligence. Finally, but also very important, it's important that we have policies that encourage more women to participate in the labor market. With that, we will expand the talent pool and we will raise productivity and production. Let me talk briefly about social safety nets. We all know that more and better jobs are critical to escape poverty, but we also know that it does not always work for all. And this is for two reasons at least. First, we are seeing around the world that shocks are getting larger and more frequent, a war in a neighboring country, a natural disaster, and the population is back into poverty. Second, economic growth lifts many out of poverty, but not all. We have two charts and two messages. First, we need to allocate more. In low-income countries, the allocation is about 1% of GDP, which is about half of the emerging market economies. Second, and very important, we need to allocate better. On average, only one third of the social spending goes to the poorest 20%. And with this, thank you very much, let me pass back to Shenta.
[Shanta Devarajan] Okay, thank you very much, Guillaume and Manuela. So now let me turn to our panelists and start with Minister Wadagni. Minister Wadagni, Benin is often credited with a very robust macroeconomic framework, exemplified by the fact that you had a successful issuance of a 750 million dollar Eurobond just in February. So, can you share with us how you did this? What were the successes on the policy front, and also, what were some of the challenges you had in achieving this successful macroeconomic management?
[Romuald Wadagni] Hello? Can you hear me? Can you hear me? [Shanta Devarajan] Ah, yes. Thank you.
[Romuald Wadagni] Okay. No, thank you. First of all, I would like to warmly thank Kristalina and Ajay for the invitation extended to Benin. I would also like to thank them for the very inspiring remarks and also for the very concise and clear presentation we got from both Manuela and Guillaume. Listening to both Ajay and Kristalina actually gives us comfort that Benin's reform and priorities are in line with the roadmap for low-income countries to bring the people from poverty to prosperity. And also listening to them, especially to their conclusion, gives us hope that there is a path for the youth of Africa to have a bright future. Now, coming to your question, I would like to start saying that the fact that Benin has made clear since 2026 to prioritize having a robust macroeconomic framework in line with the fact that we set a foundation and engagement with IMF and World Bank based on working through having a robust framework, helps us to have the capacity to address all the challenges coming from the shocks. As a matter of fact, as a result of four years of strong reforms, Benin was in a strong macroeconomic position by the end of 2019, beginning of 2020. For example, the growth rate in Benin was 7%, debt to GDP was below 50%, and the fiscal deficit was around 0.5%. So, a very strong fiscal policies and strong macroeconomic position that allow us to have the capacity to face the multiple external shocks generated by the 2020 COVID-19 crisis and all the subsequent global crises. The other thing I want to add is Benin is facing the same global crises, but in addition to that, Benin is facing two additional challenges specific to our region. The first being the political instability from our neighboring countries like Burkina Faso and Niger. The second specific crisis we're facing is the consequences of the spillover of the effect of security issues coming from the Sahel. So not only we have to face the global challenges, the global crises, but we also have to address those additional regional challenges, creating additional pressure on our countries and our capacity to address the needs of our population. Therefore, we can list many challenges, but I want to address two of them, explain them, and say how we manage to address those two challenges I will just present. The first one being inflation, Benin, and same thing for many countries of the region, we highly depend on importation. We pretty much import everything from food, clothes to equipment. So, the global inflation has exposed our population and small businesses to extreme poverty and economic slowdown. What we did is to prioritize public spending and dedicate significant part of our budget, close to 20% of the budget, to provide support to the poorest part of our population, and to provide additional support to small businesses, and to make sure that our population has the capacity to have access to food and basic needs. One example I want to address here is half of the youth of the country are in the agriculture sectors. They depend on having access to fertilizer in order to produce cereal and other things they need for day-to-day food. But when you look back to what happened to the fertilizer market, a small fertilizer bag, that price was $25, the price increased to $60. So, what we did is by prioritizing public spending, we actually stepped in and the government has to use public money and also some support coming from World Bank to actually buy the fertilizer and make sure that we provide fertilizer to all our farmers on time. The result of that policy is we managed for the last two years to make sure that all the basic products like cereals and cooking oil, all that we produce locally, we managed to maintain the price. And as a whole, we are having the lowest inflation rate in the whole region, one of the lowest inflation rates in Africa, below 3%. Because we had to prioritize public spending and focus part of our money to make sure that some of the imports that are the basic need for a population, sometimes we buy them and provide them to people with some subsidy, or we provide conditions so that small businesses can continue operating. So, that's one of the consequences. The second challenge is the fact that we have seen rising interest rate and liquidity shortage. What we did is we use an innovative approach to make sure that we find means to finance the additional needs we have for our budget. One of the things we did is we worked on a strong SDG framework, taking all the SDGs and put them together, the strategy for the country to reach each of them by 2030 and put it in front of each of the SDGs, the money we need, the domestic effort we're making for each of them, and the additional support we're getting from World Bank and all our partners, and what we need from the international market. So, thanks to that framework, we were able in 2021 to issue the first SDG bond in Africa for 500 million dollars, that is the first SDG issued by an African country in the whole continent, that allowed us to find men to have access to affordable financing. The second one is we were able to use a partial guarantee mechanism from the African Development Bank to issue, just last year, 350 credit enhanced loan. So, the takeaway here is because we have a strong macroeconomic situation to prioritize public spending, to address the challenges coming from global inflation, and also because we have clear framework and the credibility with the market, we were able to use innovative approach to have access to funding.
[Shanta Devarajan] Thank you very much, Minister Wadagni. Those are inspiring words, actually, and maybe lessons that we can take to other countries. Let me now turn to miss Daves de Sousa, the Finance Minister of Angola. Like Angola, many low-income countries are commodity exporters, mineral exporters in the case of Angola, and they face a particular set of challenges, which is managing the fluctuations in commodity prices, the phenomenon of overspending in good times and then having to tighten their belts in bad times, and also to diversify their economies away from mineral dependence. How is Angola managing these challenges? What seems to have worked well and what seems to have worked less well?
[Vera Daves de Sousa] Thank you. Thank you, Shanta, for this moderation. I hope that you, you can hear me well.
[Shanta Devarajan] Yes, we hear you very well.
[Vera Daves de Sousa] Thank you. I regret that I'm not there physically. Let me first of all show my gratitude for the invitation to Kristalina and Ajay. Thank you also for the initial conversation, the insights that for sure are aligned to the vision that Angola is following. Well, you are right. We still are heavily dependent on oil. On the fiscal revenue side, next to 60% of our fiscal revenue is still coming from the oil production and oil exports. Almost 90% of our currency, hard currency, is coming from the oil exports. So, yes, we need to continue working on the diversification of the economy strategy. Till now, we managed to navigate through this process with volatility, with COVID, with logistic constraints coming from geopolitical tensions. So even the drop on the oil price, that's a lot happening from the last years to now. And having the right partnerships, we were under a program with IMF IFF program, we had a series of DPOs with the World Bank, we have a very close relation and we are getting a lot of support from our key creditor, China, whom we also closed deals that allowed us during COVID to have some breathing space and more than recently to better manage our liquidity. So having these bridges and these partnerships helped us to strengthen our non-oil revenues. Under the FF program we implemented the VAT. Without that, probably it would be more difficult. As already mentioned, we managed to have some breathing space on our debts side and more liquidity now. And we are doing also a proactive debt and liquidity management. Just to make sure that we keep the debt sustainable and we progressively reduce the debt GDP ratio. We came from 140% of ratio debt GDP, now we are below 80%, but our goal is to reach the 60% where we already managed to be before the more recent volatility on the exchange rate. So, being more resilient in terms of the structure of our GDP for sure will contribute for all the efforts that we are putting in place, even in front of structural forms such as the subsidies. We are removing subsidies gradually. We started on electricity, water, more recently on fuel. And we are also reforming the legal framework where the state-owned enterprises works, just to make sure that they are more efficient, more transparent and they become a real asset to the state and not a source of liability. So, we are doing a lot in so many fronts, but at the same time we still have a huge gap on infrastructures. When you talk about overspending, it's a tricky statement because the gap is huge. We have at the same time to tap this, but with quality, because we are aware that it's possible to spend better, to pick the right priorities, to unlock the development, putting the infrastructures in the places that with the perfect sector, we can do more and we can see more coming, to increase the food security, as Benin, we also import a lot from food to clothes. So, we need to put the road in the right place, the electricity in the right place and put the business environment right. We still have work to do in terms of bureaucracy. We need to continue fighting against corruption, to combine all those efforts with FDI and export different goods and services different from oil. We are working with a focus on agribusiness, with a focus on tourists, mining and light industry, but the hybrid business is on top of the list because what I already mentioned about food security. We have good experience on subsistence agriculture, but we want to step up on that and have a more commercial one to scale up the production and even start exporting for the neighboring countries where we already find markets. The market is there, so we need to tap it. So, we need to build not only infrastructure, as I mentioned, but also on people, on capacity, on policies to be able to address that fragility in terms of how our GDP is structured and how we can be more resilient in terms of our fiscal revenues and our balance of payments. So.
[Shanta Devarajan] Okay, thank you. Thank you very much, Minister. That's actually a rich menu of a rich agenda that you have ahead of you. Let me now turn to Minister Andrew Mitchell from the UK, because I understand he may have to leave soon as well. I should quickly get to him. Minister Mitchell, the UK plays an important role in supporting low-income countries, but what can the UK and other bilateral partners do to support some of these domestic reforms that we've already heard from the Minister of Benin and the Minister from Angola?
[Andrew Mitchell] Thank you very much indeed. I don't know whether you can hear me. I hope you can. [Shanta Devarajan] Yes, we can.
[Andrew Mitchell] Excellent. Well, look, thanks very much indeed. And I do apologize for the fact that I will have to leave after my contribution. And we'll miss the second question, which I know you wanted to ask, but forgive me for that. And then let me say thanks so much to Kristalina and Ajay for what they had to say. And it's very good to at least see at least remotely some good friends and colleagues. In November of last year, the British government published a white paper on international development in which we set out our vision for ending poverty and tackling climate change in an increasingly contested world. The white paper recognized that a quantum leap is needed in the volume of international finance and private sector capital that flows to low and middle income countries. We need Multilateral Development Banks and development finance institutions to mobilize private investment at far, far greater scale and British international investment, our British DFI, will be a leader among its peers in this respect. Now, the white paper also emphasizes that our partner countries have a crucial role to play themselves in implementing the domestic reforms needed to use this financing as efficiently and effectively as possible. We need to see international finance supporting a homegrown, domestically led economic transformation agenda. And at the heart of our white paper, which has been welcomed around the world and strongly endorsed by 20 heads of government and heads of agencies, the hub of it all is partnership and localism. So, it really is a true moving of the dial in, I submit, the right direction. Now, let me give you three examples of what the UK is doing to support these reforms. First, we are supporting greater revenue collection. We have a long history of supporting developing countries to raise domestic tax revenues and for example, in Rwanda, which I am visiting the day after tomorrow, Britain has been providing support to the revenue authority since as long ago as 1997, and during this period, Rwanda's tax to GDP ratio has increased by double from 8% to 16%. And in the white paper, Britain has also committed to support LICs to get the revenue that they are owed from the international tax system. We have called for reforms to corporate information exchange, particularly to the rules around country by country reporting to which only a handful of developing countries currently have access. We've also called for more capacity building to enable rules global minimum tax to be implemented. And second, we are supporting our partners to make better use of revenues. Britain has made clear commitments through the white paper to support our partners to develop more effective, efficient and transparent public financial systems. For example, we are bringing all of the UK's expertise to bear in improving transparency. Britain's National Audit office, NAO, with funding from Foreign Office, is working with the Supreme Audit Institutions of Rwanda, Kenya and the Gambia to strengthen the transparency and scrutiny of public finance. All of this is more possible within open and accountable states and societies. Ultimately, people should have a say in the policy direction of their countries. And in the white paper, we have committed to refocusing UK attention on promoting peace, justice and strong institutions. And third, the white paper commits us to boost international cooperation to tackle illicit finance. Britain is working with the African Development Bank to convene an African beneficial transparency network, bringing together international institutions and African governments looking at matching needs with funding and building a more efficient system for peer support. Measures to tackle illicit flows and tax evasion are needed more than ever before as global demand grows for critical minerals and commodities. Partners like Britain must support governments and citizens to benefit from these mineral resources. We are deploying British expertise to help countries understand their mineral resources, build their capacity and plan and regulate their extraction in an environmentally and socially responsible way, the very essence of what EITI, the Extractive Industry Transparency Initiative, does. Finally, to support these reforms, we need to make sure that the international finance is there, there to support countries when they deliver these important reforms. And that is why Britain is championing scaled up MDBs through changes to their capital adequacy frameworks and new capital from shareholders where there is a strong case for it. The white paper also highlights Britain's support for strong replenishments of the arms of the Multilateral Development Banks that provide finance to low-income countries, including the World Bank's IDA. IDA has grown substantially in recent years, from 19 billion dollars in 2015 to 37 billion dollars in 2022. The IMF also needs the financial capacity to play a proportionate role. Britain calls on the IMF to strengthen its support for the poorest countries. We strongly supported the temporary increase in the poverty reduction and growth trusts access limits that was agreed last year, but we need permanently to maintain these higher access volumes to allow the IMF to continue to play its part. The IMF must explore all possible ways to deliver this, including considering how internal resources, including a limited gold sale, can be used to deliver that. Thank you very much indeed for listening. It's a great pleasure to be with you, and I'm really sorry that I have to depart shortly. Please, forgive me, but every good wish to you all.
[Shanta Devarajan] Thank you very much. Andrew, that was excellent overview of British policy. I have lots of questions for you, but I can't bring them up at this point, but maybe at the next time we meet we can discuss it further. So now let me turn to Minister Liao, Vice Minister Liao from China. Minister, you know, China was once considered a low-income country, but has transformed itself remarkably over the course of only a few decades into an upper middle-income country. Based on your experience, what's the advice you would give today's low-income countries on how they can transform to upper middle-income status in a reasonable period of time?
[Liao Min] Okay, so thank you, Shanta. So, thanks World Bank and IMF for inviting me during today's very meaningful discussion. I pretty much agree with what just Kristalina, Ajay, Tatiana, and what Bank colleagues and also the panelists were just saying. I think the domestic reform priorities and sustainable development goals is highly relevant. So, I would like to take this opportunity to share my observation based on China's over 40-year journey of reform and open up. I think, generally speaking, there is no secret for China's story. China's evolution, as Shanta just said, from low income to upper middle-income country, aligned with the best practices in economic development, featuring market-oriented reform and integration with the global market. So, the reform gets institutions ready for the market to play a decisive role in resources allocation and for the government to better fix market failures while opening up integrates China into the world, learning from our international friends, advanced counterparts and benefiting from multinationalism, and globalization with free trade and mobilization of labor capitals and ideas. So, looking back, I think there are four meaningful points in this process I want to share with you today. I think it's a little bit late for me. Hopefully. I know what I'm saying. Okay, so firstly, the China reform got started from the rural areas in a pragmatic way. This was based on the fact that China had a large number, but a poor rural population at that time. The reform unleashed surplus rural labor into the process of urbanization and industrialization, so providing job opportunities for them to integrate it into cities in a very gradual way. Secondly, I think China's urban reform was a pilot in special economic and trade room in the coast areas. The pilot programs combined foreign direct investment, advanced technology and China's cheap labor, large domestic market together, which substantially helped China unleash the growth reform, growth potential along the way. Third, I think Ajay and Kristalina already said, I think the roads leads to riches. This is a household slogan in China. The Chinese government has made it happen with a lot of investment into their infrastructure. So now there is a complete infrastructure such as roads, highways, high speed railways and airports, electricity grids and online infrastructure connecting remote areas to the business and make life better and convenient. I have a good example. So, if you want to buy agricultural food in the remote western areas in China, it takes only two days to deliver to my door in Beijing. So, that's the good example how you can use these online digital infrastructures to connect people, which creates more opportunities for people, for their better life, for growth. Firstly, I think the education is prioritized, both for households and the government. Chinese people firmly believe knowledge can change one's destiny. And this is, to some extent, explains why there are so many tiger mothers in China. So, similarly, the Chinese government pays high attention to education. Since 2012, the increase of China's government expenditure on education each year is no less than 4% GDP. So, in short, the better education, better human capital; so better human capital, better development. So that's the four features I want to mention today. And if there is anything I want to share with our low-income countries’ governments, I think there's two points I want to mention today. So, first, I think the right incentives to all market players, particularly the enterprises, I think that's important. Economic development is a function of the decisions making by all entrepreneurs on a daily basis. So right decision needs right incentives, including the property rights protection, equal market access, so fair competition, transparency, good information disclosure and accounting system, legal systems, etcetera. We have made, and we are still making, great efforts in this regard to create a better business environment. Second, I think for the government, it's very important to well address two kinds of relationships. The first one is to try to strike the balance between economic development and environmental protection. Like other countries, China once took a pattern of growth first, clean up later. A kind of growth at the cost of environment. The treatment after pollution is costly. So, with a household slogan by President Xi. Lucid water and lush mountains are invaluable assets. And the twin carbon targets. So, China now is in a green journey to a higher quality development. Last weekend, actually Ajay and I went to Hubei Promises in China for a failed visit. A completely environmental protection project supported by the World Bank. It's very impressive that a monitoring on soil, water and air. So early warning and emergency response system has been set up under the project. So, I believe with advanced technology and international supporters our low-income countries can avoid the old patterns. Another balance is a balance between the current economic development needs and the long-term physical sustainability. At early stage of development there is a huge demand investment. So, prioritize those on agenda considering the fiscal constraints. Excessive borrowing without the rational analysis is harmful in the medium term and in the long run. I think this is another important balance as I want to mention today. So, I’ll stop here and thank you for your attention. We can continue to continue discussion today. Thank you.
[Shanta Devarajan] Thank you. Thank you very much, Mister Liao. And yes, we have some follow up questions and maybe even some from the audience for those very, very useful contributions. Let me now turn to the second round with Minister Wadagni from Benin. In fact, you already mentioned that Benin's reform program is centered around sustainable development goals. And you have a plan about how you're going to monitor and achieve the goals, but we know that not all the goals are equally achievable. And we're making different rates of progress along different ones of the goals. So, I'd like to hear from you, which are the most problematic SDGs and what are you doing and what can we do to help accelerate progress on some of those more difficult SDGs?
[Romuald Wadagni] Okay, thank you very much. I think with all the shocks we just mentioned, we are seeing now a global shift on the timeline for meeting the SDGs. So, let me give an example. The SDG number six. Making sure that we provide drinking water to everybody. Our initial target was to reach the SDG, that SDG, by 2025. And thanks to World Bank support, we got close to 300 million dollar report from World Bank, plus report from other partners and plus our own domestic revenue, we actually set the plan and we were on track to reach the SDG number six by 2025 instead of 2030. But what's happened is, first, with the slowdown in the global economy, that means less growth compared to the planned level of growth, so less revenue mobilized. The second thing is logistical constraint, an issue causing the delay of the equipment that we are importing to address, you know, to build the water system, to make sure that we provide water to people. And then the third reason is that we have to prioritize some of our public spending to address the consequences of global inflation. So, due to those three things, we are seeing a global shift in the timeline. Now, what are we doing, and what help do we need to make sure that we catch up with the timeline? So, not all the timeline can be, you know, we cannot touch upon everything, but we believe that by doing a couple of things, we can actually try to catch up some of the delays. For the SDG number six, the initial delay we see now is two years. So, we believe that by doing the right thing, we may be able to still reach the SDG number six by 2027 instead of 2025. So what are we planning to do? One is the acceleration of our program on domestic revenue mobilization. I mean, we have no choice but keep doing it. Over the last three years, we've managed to increase domestic revenue mobilization by around 65% to 70%, but the goal is, for the next three years to double the domestic revenue we're collecting but we have to do it. Second thing is, we are now thinking about how we can attract private sectors to join government efforts to reaching the SDGs. One example for, again, the SDG number six, what we're trying to do now is creating a framework that allow private setup to come. We give them some incentive, a fiscal incentive so that they can come do the investment. And then, by providing the water, the price coming from selling the water will allow, you know, the private sector to recover the investment. Thinking about innovative approach and attracting private sectors to join efforts with the government so that together we can reach things. Now, the third thing is to make sure that we maintain a solid macroeconomic framework so that the market will continue trusting us, IMF and World Bank will continue supporting us, so that we can have additional resources to address them because when you think about it, we're not at the base. We didn't cause most of the shocks, but the shock has devoted some of the money to other things, supporting the poorest people, etcetera. So, as a matter of fact, we need at some point more resources from our own effort, but also from our partners such as IMF and World Bank, to make sure that we catch up with the delay and the initial timeline of reaching the SDGs.
[Shanta Devarajan] Let me turn to Minister Daves de Sousa from Angola, and I'm going to deviate a little bit from the prepared questions here, because it's such an interesting topic. You talked about the fact that Angola is a resource rich country and something like 50% of government revenue comes from oil. In that context, do you have particular difficulties with what Kristalina and Ajay were talking about? And Manuela and Guillaume, which is domestic resource mobilization, because if you get 50% from oil, the incentives to then increase taxes is that much less, and taxes are, let's face it, taxes are politically very unpopular. So how do you manage this push for greater domestic resource mobilization in the face of high oil revenues?
[Vera Daves de Sousa] Thank you. Well, one important step was the implementation of VAT. We understand that now we have a strong contribution coming from VAT. We also implemented the special consumption tax on alcohol, tobacco and this also helps. We are now doing a strong work in terms of the property tax because we have a large margin of increase in our revenue on that part of our taxes, considering the properties that are not properly registered, are not probably on the radar, under the radar from the state. Something that is also critical that we are addressing is the informal sector. Of course, we have a subsistency business, ladies selling small products. We are not tackling this now. We are looking to the distribution part of the business, storage and groceries that they have. They look formal, but they act like informal. So, it's the shadow economy that we are addressing with our tax administration to capture those revenues that we are not capturing. So, the informal sector is also very heavy in our economy, and these also are not helping. Despite all this that we are already doing to increase our domestic revenues and also increase the efficiency of our tax administration, more digital systems calibrate the process of fiscalization, using artificial intelligence to help us to see where to tackle. We are working on all this, but the heart of the challenge is how our economy is structured. Even in the formal sector, the trade is heavier. So, we need to create the right incentives to see more happening in other sectors, apart from oil, apart from trade.
[Shanta Devarajan] Yes.
[Vera Daves de Sousa] So again, agribusiness. We need to attract local investors, foreign investors, tell them that we have a lot of opportunities to export to the neighboring countries and also to address our own fragilities in terms of bureaucracy, in terms of logistics capacity, and in terms of transports and roads. So that's why I said that we need to conciliate the cities where we are already working in terms of putting the infrastructures and where the opportunities are with people that are already doing business on that side in terms of agribusiness and having some results and scaling up those initiatives. So domestic revenues is what we are doing. But of course, course all of this will pay off more as soon as we make our economy performing better and becoming more robust and more diversified. But those are not refraining us of already optimizing the structure that we have in place and some of the reforms that we implemented when we were under a program with IMF.
[Shanta Devarajan] Thanks. Thanks very much, Minister. Now, let me turn to Mister Liao. You described very well the things that China did in order to move from a low-income country to an upper middle-income country. So, my question is, what is China doing today to help current low-income countries adopt some of these policies and promote some of these changes so that they can actually also enjoy the rapid growth and poverty reduction that China did?
[Liao Min] Okay, thank you Shanta. I think I want to share three aspects. So first, I think we in China support more international development assistance to low-income countries. So, as the major shareholders of MDBs such as the World Bank, Asian Development Bank and International Fund for Agricultural Development, China has contributed within his own capacity to IDA, IDF, IFAD, encouraged these traditional MDBs’ increase in their support to low-income countries. And then, China has also set up several funding facilities in these MDBs with the purpose to promote the poverty reduction and sustainable development in ways of capacity building and the knowledge sharing. So, this facilitates assist funding as well as mobilizes more resources to south to south corporations. As the key initiator of the AIIB and the new development bank, so establishment of this new MDBs complements the current international development corporation system. So as the initiator of the Belt and Road Initiative we tried to enhance the global connectivities. So, investments were nearly 1 trillion US dollars stimulated and we have stimulated 420,000 jobs and nearly 40 million people lift out of the poverty. And also, the MCDF is established with the World Bank and other international financial institutions. We provided grants to the infrastructure connectivity projects in countries around the Belt and Road as the initiatives, the global development, security and civilization initiatives we try to cope with the global challenges, address the deficit in development and overcome security challenges and enhance mutual learning. The second aspect I think is that we, China, encourage more Chinese enterprises to go abroad and invest, and operate in low-income countries because we believe all the Chinese entrepreneurs just come out of the poverty so they know how to change their life with their own hands. I think their development experiences are quite fresh, and this is relevant to the low-income countries at the current stage. So, I think the Chinese enterprises actually has played an important role in China's development, and I believe they will play an active role in low-income countries as well. So, they can contribute direct investment, technology transfer, and create more job opportunities, hire more local workers, and also, they can participate in capacity building, and also they can make a contribution to the institutional building, and also they can help to upgrade the infrastructures in all these low income countries. So, simply put, I think the Chinese enterprises going abroad will increase the aggregate demand, aggregate global demand and supply, and create new opportunities worldwide. The third areas I want to mention is China made a great effort to support the low-income countries to address their sovereign debt issues. China attached great importance to these areas in the global high interest rate context. China actively participates in the discussion on the debt issues in G20 financing check and the Global Sovereignty Debt Roundtable. So along with other G20 members, China has endorsed the DSSI and actively implemented DSSI. So now I can say that China’s actually maybe the number one contribution so far, in terms of the DSSI, we actually account for 44% of the total, the debt, and also being an important participant in the debt treatment of countries’ specific cases under Common Framework. So, we try our best to make our efforts to help all the low-income countries. And so, working closely with IMF, World Bank and the G20 presidency, Brazil, we try to quick the pace to support and solve the debt issues with some countries. As Tatiana just mentioned before this discussion, these activities, we just finished the roundtable discussion, the first time in this year among the deputy ministers. Okay, so I’ll stop here.
[Shanta Devarajan] Thank you. Thank you very much, Minister. I'm afraid we're run out of time for any more questions. So, all that's left for me is to really thank the Ministers and the participants for a very, I think, a very candid discussion. I appreciate both the success stories that we have seen, the progress that's being made, but also an honest acknowledgement of the challenges ahead. And I think that's giving us a rich agenda going forward, and in particular, would feed nicely into the second session, which is on how the international community can support these policy reforms, both the ones that are working and the ones that need more work. So, let me thank Minister Wadagni, Minister Daves de Sousa, and Minister Liao for a very, very informative and candid discussion. And we now, I think we'll take a break before we move to the next session. Oh yeah, the MC will tell us that. [Applause]
[Andreja Lenarcic] Thank you very much Professor Devarajan and the panelists for this thought-provoking discussion. And indeed, you have already summed up the session, not much to add there. The next session indeed will talk about what the international community can do to help and support the low-income countries in their efforts, but now let's take a short break. Take ten minutes and see you back in the seats at 10:50. Thank you.
[Andreja Lenarcic] So I hope you enjoyed your break, even if it was a short one. And I think we can start our second session. So next on our agenda, we will explore the role of international community in supporting the low-income countries in pursuing their policy efforts and their path to the sustainable development goals, the SDGs. This next panel will be led by Masood Ahmed, President of the Center for Global Development, which is based here in Washington DC. Just like in the previous session, you can post your questions. Unfortunately, in the previous session there was no time to ask them, but hopefully this time and we'll make it to ask some questions from the audience. Mister Ahmed, over to you to introduce the panel. [Applause]
[Masood Ahmed] Thank you. Thank you very much, Andreja, sorry for your break being shortened, but at least I hope everybody managed to get coffee. So, we have 55 minutes now. And the first, the previous session was really about what countries could be doing in terms of dealing with the challenges that lie ahead. And now there's a nice segue actually with the last intervention about what China's doing. It's a very good segue into this one, which is really what is the international community, what can the international community do to support countries in the difficult challenges that so many of the low-income countries face going forward. We have a great panel which I hope they are all on screen. This is somewhat surreal experience where everybody else is on screen, but I'm sitting here, so I advise you to look at the screen, then you'll be able to get a sense of homogeneity. So, we have four panelists. We have Riccardo Barbieri Hermitte, who is the Director General of the Treasury, Italian Treasury, and then we also have Abdulmuhsen AlKhalaf. I don't see Mister AlKhalaf, but he's online also who is the Assistant Minister of Finance of Saudi Arabia. So, you have two representatives who will provide a perspective from being partners in the international community of low-income countries. And you have two more panelists. You have Mister Njuguna Ndung’u who is the Minister of Finance of Kenya. And Kenya has been very much recently in the news in terms of trying to find a way forward on dealing with some difficult financing issues. So, we'll hear from him and Hanan Morsy, the Deputy Executive Secretary and Chief economist of UNECA, and also an alumna of the IMF, in fact. And I used to work in the IMF as well. So, before we go to bring them in, we have two presenters who are going to take five minutes to sort of lay out the issues. So, we have Manuela Francisco from the World Bank and Guillaume, Guillaume Chabert from the Fund. And let me hand over to them first to just share some couple of slides, and then we will go right into the panelists. So, over to you, Manuela.
[Manuela Francisco] Thank you. I will start with some good news. Public debt levels have stabilized. In addition, some low-income countries and lower middle-income countries have started to tap into the international capital markets. Benin, Cote d'Ivoire and Kenya have issued bonds to refinance maturing debt. Now, the bad news, public debt levels stabilized at very high levels, and that's what we see in this chart. Currently, more than half of the low-income countries are already in debt distress or at high risk of debt distress, and this compares with less than 30% in 2019. Moreover, low-income countries will pay this year about 76 billion US dollars in external public debt service. If we add domestic service, this will add up to 185 billion US dollars. This is roughly equivalent to 7.5% of their combined GDP. This number, so that you have a bit of perspective here, this number, 7.5%, is on average higher than the combined budget of health, education and infrastructure. And this happens at the time when countries, as we heard, need to redouble their efforts towards sustainable development goals and need more funding for climate action. And as debt service is going up, what we can see is that disbursements from all but multilaterals are going down. Disbursements from official bilaterals and especially from private creditors, are coming down quickly. This chart has a very strong message. What is really telling us is that strong and robust multilateral support will be needed. Domestic resource mobilization is critical. International capital markets will be very helpful, but this will not be enough to cover all the development needs. A large and strong IDA 21 will be critical to help countries address the current challenge, but also to support them towards their medium and long term development goals. In addition, that will also be important so that we can scale up the results that we are already achieving. And just to mention, two results of the current IDA portfolio, with this current portfolio, we are expected to have 120 million more people with access to electricity and 75 million more people with access to water and sanitation. And this is just to give two numbers and two results because there are many more. Thank you very much. Over to you, Guillaume.
[Masood Ahmed] Thank you very much, Manuela. So, let me turn to Guillaume.
[Guillaume Chabert] Thank you, Masood. So, on the IMF side. We are supporting low-income countries through policy advice, capacity development and technical assistance. And of course, also lending. We scaled up significantly the level of lending to low-income countries in recent years to help them navigate the challenges emanating from the very, very significant shocks of COVID-19 and the commodity price shock and global monetary tightening in 2022 and 2023. Fund lending increased nearly fivefold in recent years relative to pre pandemic levels, as you see on the chart. Also, if you can look more in details at the charts, you would find out that at the peak of the pandemic in 2020, that's the green bar, we learned mainly in the form of quick dispersing emergency financing to support immediate crisis response and as the pandemic receded, we turned progressively to longer term programs to support reforms and help countries navigate the recovery. That's the blue bar, what we call the ECF. However, such a strong response since 2020 has eroded the resources of the Poverty Reduction and Growth Trust, the PRGT, which is the vehicle for the IMF concessional lending. So the high level of lending in recent years has reduced the long term self-sustained lending capacity of the trust for the future. And we just started the review of the PRGT to making sure that the Fund can continue to provide adequate financial support to low-income countries in the future, while ensuring the financial viability of the Trust. Last slide on debt, Manuela started with good news, which is that debt stocks are kind of stabilizing, but debt service are still a challenge. Globally, debt vulnerabilities remain elevated in low-income countries and the multiplied approach that the Bank and the Fund that started to unfold a few years ago is still very much required to address these challenges. So we are working, Bank and Fund together on several fronts. We just initiated the review of the Debt Sustainability Framework for low-income countries, LIC DSF, to keep the framework up to date with the changing nature of the debt vulnerabilities, the debt landscape, also the analytical advances. We are also providing strong support, Bank and Fund, to the G20 Common Framework, the actual depth restructuring, but also to support progresses in the rules, standards, timelines, processes to ensure greater credibility and timelines. And this is very much what we're also trying to do through the Global Sovereign Debt Roundtable that the Fund, the Bank and the G20 presidency launched last year. And lastly, but not the least, we are also working together to enhance debt transparency, strengthen debt management capacity, in particular through the debt management facility. Thank you.
[Masood Ahmed] Thank you very much, Guillaume. Thank you, Manuela. Also, so let us now, I think you've nicely laid out issues on liquidity, on where we are, on debt management, and the importance of ensuring that we have adequate resources, both in the IDA replenishment coming up, IDA 21 and also through the PRGT. And you might also say, actually the RST. Okay, so now let's go from that to our panelists, and I want to make sure that all four of our panelists are there. And yes, they are. So welcome to all of you. Great to have you online. And I'm going to jump right in. I hope you were all online to be able to see the presentations as well. Let me jump right in. I'm going to start with Mister Barbieri, and this is really a little bit, Riccardo, a question that carries over from the previous session, a little bit also, which is we talked about the importance of domestic policy reforms in the previous session. And of course, one of the roles of the international community is not just to provide financial support, but also to provide the experience across countries on policies, what works, what doesn't, and in that context, help to build capacity within countries, developing countries, to be able to formulate and implement policies in support of their economic and social agenda. So I want to start with asking you, how do you see the role of the international community, Riccardo, in providing this support on policy reforms? Are there any things that strike you in particular? And can I just say, since you're going to be the first of the speakers, that if you're going to be able to do two rounds with the speakers, then allow for some time for questions. It'd be great if each of you could keep your answers to three minutes or less, and then I'll come back for more. So over to you, Riccardo.
[Riccardo Barbieri Hermitte] Sure. Thank you. I hope you can hear me. [Masood Ahmed] Yes.
[Riccardo Barbieri Hermitte] Thank you for the invitation. I'll go right into the question that you posed, which is quite interesting. Obviously, I think today we have a problem of macroeconomic stability that must be addressed, and also we are facing challenges related to climate change, but in terms of the so called structural reforms, I think that's obviously a huge field, but how should we approach it? Now, our view, my own view, is that there are some general prescriptions, some general guidelines, but then it's always important to study very in depth the reality of each country. There can be commonalities, but some of the countries we are dealing with, some of the LICs are energy producing countries, others are not, some of them rely on tourism, many of them on farming. So, the realities are quite different, and so is the institutional capacity. I think there's definitely a question of sequencing for reforms. And the most important ones are, in my opinion, the ones that strengthen the institutional capacity, the ability of countries to spend whatever resources they have efficiently to combat, contain corruption, and be able to increase tax revenue. Of course, in a way that we should be fair, maintaining progressivity, for example. So, how can we help in that effort? Of course, international organizations are the primary actors in this, but I think there are also bilateral initiatives that can be useful in improving capacity. For example, in our case, Italy has joined since the outset the Addis Tax Initiative, signing a commitment to increase the resources allocated to technical assistance for strengthening taxation and in general tax systems. We also have a good track record in anti-money laundering and the tax agency, and that we have a training facility near Rome that is open to foreign officials. I think these cases, these fields, can be quite important and quite useful in developing capacity. So, my answer to your question is, when I read the reports from the IMF, the World Bank, I agree with most of the suggestions and the recommendations. My own view is that we need to emphasize the specificity of each country, get into a very deep analysis, and provide also some bilateral support whenever we have expertise in a given area. Thank you.
[Masood Ahmed] Thank you very much. So, good to have general policy ideas and advice, but make sure that we ground it in the specificities of each country. And you also wanted to emphasize issues relating to public expenditure management and revenue mobilization. So, we'll come back to those points, I'm sure. Let me turn now to Mister Ndung’u, who, if I could have your perspective, particularly on how the international community can help countries like Kenya and others that have to cope more and more with shocks that are more frequent, deeper, the Managing Director of the IMF has repeatedly, repeatedly made the point that we're going to be living in a world that's going to be prone to more shocks. How can the international community, how can the IMF, for example, help countries deal with shocks, while also ensuring that this help doesn't come at the expense of supporting their longer term development and growth agenda? So, your perspective on that, and again, as succinctly as you can do it.
[Njuguna Ndung’u] Thank you. Thank you very much. And indeed, I'm very happy to be invited to this meeting. And I thank Kristalina and president Ajay for this. And I'm happy that I've listened to quite some interesting debates since this started, but I'm very happy that it is actually in conformation or it comes close to actually some of the experiences we are having in the African scene. But it also emphasizes some of the areas that we really need to push on. In terms of answering your question, Masood I'm very happy to see you. Let me make two points. And the first point is about strategy, and the second point is about interventions. With the first point, I do believe that economic recovery for low-income countries, low middle-income countries and even middle-income countries should be a strong focus on four areas in terms of my own thinking. And that for me is quite important. And the first one really talks about human capital development. And the African scene is a good example. We have covered most of this, especially from my area, work in the African Economic Research Consortium. The first area in terms of human capital development is to look at education system, to look at health and health infrastructure, to look at the labor markets and nutrition outcomes. It will tell you that there has been a major institutional failure problem. We did not realize, but we also didn't realize how pervasive it is. And that also goes down to the second point about markets. Markets failed because they were failed by the institutions, and institutional failure problems drove to policy failure. And you look at in most countries, where poverty has really been lumped and even growth has not really even woken and requires structural changes, markets have failed. We need to move into a different direction of even restructuring the global value chain, something that we have valued in G20, for example, and so many other aspects that will resuscitate markets and how to develop markets is going to become very, very important. And especially in African economies that are agriculture-based, where aggregation is very, very important and value addition becomes very, very important. The third point, which has actually come several times, is actually domestic resource mobilization. It's a whole family of reforms that we need here in terms of fiscal strategy and tax policy. Also, this one is also going to be supported by revenue generation and even revenue management. And finally, in this area, we need to adopt the technological evolution. In my area, I talked about digitization, especially payment system, but we went further and showed that actually it can introduce and coordinate most of these three areas that I've talked about. It can create efficiency, ease of entry, even culture. And more importantly, the fourth, industrial revolution is actually going to be generated from there. That is important as a strategy, but the second point is actually interventions. Once we take up the strategy, in those four areas, then we need some interventions to help come through, some of the areas that we have really even covered here. And one of them has been discussed, is actually resolving the debt distress. This debt distress is a combination of both external and domestic debt, domestic debt, and I see Masood was asking me about how we resolved, especially the Eurobond, which was threatening, but the most important thing is also the domestic debt. It actually is quite pervasive because it's a crowding out story, which is an extreme form of Dutch disease. It becomes quite problematic. And what we have seen is that this has also been pushed to a further limit by the areas of negative and persistent shocks in the recent years, and we have seen the kind of outcome it has given us. So, in a sense, you cannot even talk about economic recovery without resolving the debt situation. The second one is, which African countries have suffered, is actually risk profiling and even risk mitigation. We've suffered because most of the interest structure of this debt, especially external debt, has actually been influenced by ratings, credit rating. And so essentially, the risk profiling has become quite negative. It's an intervention we really need to think about. The third point is something that President Ajay Banga has really talked about, he called it big bet, but for me, it's a big boost, it's a big push that we want to look at climate action and opportunities that come with it. We can start from land, renewable energy in Kenya, for example, renewable energy is about 93%, and agricultural revolution and transformation. Whichever way you start, whether you start with the renewable energy, you go to land, you go to agriculture, it's going to be a very, very. It's a low hanging fruit, and it's one that can give us the big push that we would like to have. [Masood Ahmed] Thank you.
[Njuguna Ndung’u] But finally, and more importantly, we need the resource infusion, and this is where we have had debate about the global financial architecture. We are even coming up with the IDA 21 replenishment. I'm happy that with the request of the World Bank, the president of Kenya, his Excellency, President William Ruto, has accepted to champion IDA 21 replenishment. The whole idea is we can actually say, what are the priorities in Africa and other developing countries and other middle-income countries? Can we turn those priorities into actually, an agenda and a form of agenda? And we actually say that for us to succeed, we need to give the MDBs the critical capacity that they require. And IDA replenishment is one of those capacities that the World Bank requires to salvage the low-income countries, the low middle income countries and even the middle income countries from stagnation. And it's going to be very, very important.
[Masood Ahmed] Thank you. [Njuguna Ndung’u] But also in Kenya, we have moved in the other direction of trying to go into other markets. Sorry for that. Going to other markets. We have gone into try to enter markets like the Chinese markets with panda bond, Japanese market with samurai bond and the Middle east markets with sukuk markets just to diversify that kind of thing. It's an intervention that international community is going to support, is supporting us, so that we can actually move away from this quagmire because we have the strategy, but that strategy must be supported by resource infusion, I hope. I wanted to summarize those two points. Sorry for taking more time. Thank you very much.
[Masood Ahmed] No problem, but I'll come back maybe in the second round to the question about going to financial markets and link it a bit to the liquidity issues that so many countries are facing, but thank you also for raising the point that there has to be a strategy, but then there have to be some follow up key interventions that can serve as triggers for moving forward. Thank you for that. Let me now bring Hanan Morsy in. Hanan, I want to ask you particularly, you've been inside many organizations, you've been in the IMF, you've been in EBRD, you've been in Africa Development Bank, you've been in ECA. And I think you have now seen a lot of organizations internationally providing support or doing different things. Sometimes they're complimentary, sometimes they're overlapping. And I want to get a little bit your frank perspective from where you sit about how do you see the complementarity of, let's narrow it down to, say, the World Bank and the IMF in terms of the support they provide. Are there things that you think that only the Fund can provide from where you said, are there things that the World Bank is best at providing? Do you have any advice to all the people sitting in this room who are trying to design their next programs of support as to where you think that complementarity should go?
[Hanan Morsy] Thank you very much, Masood. And it's a great pleasure to be with you in this very important discussion. Let me read my response in terms of what are needed for African low middle income countries from the international community and then how, you know, do the IMF and the World Bank come? So what is needed to support low income countries? These are three things. One is having affordable finance at scale, two is crowding in the private sector and three is resolving the debt challenges that these countries are facing. And both institutions that play, the IMF and the World Bank, play critical role in these areas. So for the availing more affordable finance scale, we do need the bigger and better multinational development banks. And for that we need to have the balance sheets stretched. We need to have better resourced MDBs and will to capitalize, but very importantly, we also need more concessional financing. Here's the need to really ensure that we have scaling up of the position of financing windows at both the IMF and the World Bank and enhance that complementarity. So, we need to ensure that, you know, the scaling up of IDA to make sure that there are sufficient resources to meet the ever-increasing financing needs from the low-income countries, and for the IMF PRGT to massively scale up the support to low-income countries and to also look in terms of funding that from internal resources, from net income, and also considering full sales for the medium term. And what we really also need is for the, sum to be greater than its parts. We need to see more synergies, collaboration and a catalytic role of the IMF and the World Bank in not only bringing their expertise, significant systems and financing, but we need to see that crowding in other forms of financing from other Multilateral Development Banks, from other resources. And by bringing in crowding in the private sector. It has to be in an ecosystem that really brings transformational change. We want to move beyond the piecemeal approach of tackling small parts, but without creating a transformational impact on the countries. And in terms of being catalytic in mobilizing other resources, let me highlight, for example, there has been this proposal that has been put forward by the African Development Bank and by the Inter American Development Bank, and have a number of donor special drawing rights donor countries, holders that are supporting the proposal to actually be able to rechannel, you know, the IMF SDRs to Multilateral Development Banks so that they can create leverage. We have had this proposal for almost two years, but we haven't moved to implementation. We need to have these type of initiatives and proposals that can actually create scale and progress further. We need to also make sure that there is crowding and of the private sector. And here, you know, it's important to use the resilience and sustainability facility, for example, at the IMF to provide a framework, a green framework and reform measures that can actually attract private green financing. And that can be possible with collaboration and technical assistance from both the IMF and the World Bank, and to actually function with the facilities, function as a catalyst to bring other financing and as a policy instrument to facilitate, for example, swapping more expensive debt and mobilizing other credit enhancement from the World Bank, but also from other MDBs. And it's a very timely given that the World Bank is now, for example, looking at the guarantee reform, its own guarantee reform. So, we have a great opportunity to do more of that to bring scale.
[Masood Ahmed] Thank you. Thank you very much on that. Maybe just one point that I take away from what you said. It's important that when we sit inside the World Bank and the IMF, we often tend to think of the two institutions as being the international community in many ways. To between them do provide a very leadership role. But more and more, what I'm discovering is that there's a whole community of public development banks that are becoming larger and larger players and I think one of the issues that we have to try to grapple with is how do you create more of a common or shared approach to supporting countries through country platforms which work with a much larger set of, and more diverse set of international partners. And that's a challenge that I think one will begin to see in many low-income countries. Now, the last panelist for the first round is Abdulmuhsen AlKhalaf. And I want to turn to Mister AlKhalaf and get a bit your sense on, we've heard from almost every speaker the importance of adequately providing concessional financing, both through the PRGT and through IDA. In your view, what can be done to ensure that the adequate resources can be mobilized for both of these? And particularly, are there ways in which we might think of more creative solutions or different solutions for mobilizing these resources compared to the past? Any thoughts from you on that, please?
[Abdulmuhsen AlKhalaf] Thank you so much, Masood. It is a pleasure to participate in this important discussion. Indeed, as you highlighted, ensuring adequate resources for the PRGT and IDA is crucial for providing effective financial support to low-income countries, especially given the challenging economic landscape during very difficult times. The PRGT and IDA have been the main sources of concessional financing for the countries most in need and have acted as a cushion in the face of major economic shocks. COVID-19 and the geopolitical issues are, case in point, where both instruments have helped low-income countries a great deal. With this in mind, let me share a few thoughts on how we can ensure adequate resources for the PRGT and IDA. First, I think we should continue with the traditional way. We must continue to encourage member countries to maintain their financial contributions to the PRGT and IDA. This including through the regular replenishment rounds and ad hoc funding support in response to global economic challenges. And in this context, I believe it is very important to find ways to broaden the donor base to include nontraditional donors, thereby increasing the pool of available resources. Second, I think we should advocate for the re channeling of SDRs as a means to support PRGT and IDA, allowing these instruments to augment their lending capacity to low-income countries. And to give an example, Saudi Arabia has utilized this approach effectively, providing the largest loan contribution to the PRGT since the 2021 SDR allocation and the commencement of the 2021 PRGT fundraising ground. Indeed, we re channeled around 2.8 billion SDR to PRGT, and this is equivalent to around 20-22, 22% of our allocation. And this, of course, provided the breathing space to PRGT to extend financing to low-income countries. Third, I think we must also look for more innovative means to ensure the financial adequacy during challenging times. One example of the innovative approaches is when IDA obtained the credit rating and went to the capital market. That helped IDA to leverage its balance sheet effectively and free up resources for low-income countries. And actually, IDA being innovative during the rounds of replenishments from time to time, including the recent work on the balance sheet optimization, makes IDA unique and up to date in terms of addressing the challenges facing low-income countries. And that's why Saudi Arabia has been a donor to IDA since 1977, when IDA 5 started. And then finally, I think a very important point to consider is for us, collectively as a global community, to seek greater coordination and cooperation between Multilateral Development Banks and financial institutions to optimize the use of resources and maximize the impact of the respective interventions. And also, I think for the specific case of the PRGT, there is ongoing review of its sustainability, and I believe the IMF will come up with some ideas that will help improve the sustainability of the PRGT. With this, I think both instruments are important and they deserve the support of the international community, including an accelerated push to make them more sustainable. Thank you, Masood.
[Masood Ahmed] Thank you so much, Abdulmuhsen. And thank you for those very specific ideas as well, and for your confidence in the staff of the IMF for coming up with creative solutions to make PRGT sustainable at a higher level of operations. So, we'll all look forward to that. Now, I want to carry on with the same topic with Mister Barbieri. And I want to come to you, Riccardo, to say, look, over the next year, there are going to be demands or requests for concessional financing for IDA replenishment, for subsidies of PRGT, maybe for Gavi coming up, and we all know that the budgets of donor countries, the sort of core donors that have been contributing to this, are quite strained. And I want to get a bit your sense on how do you see all this playing out. There is one of my colleagues has recently written a blog from Center for Global Development, which is saying, are we heading towards a slow motion train crash of replenishing, a whole series of them, just coming up one after the other? How do you think about this? Any ideas to build on top of what Mister AlKhalaf just said? And just to remind people that we actually have only 15 minutes now left, so just a quick thought on each, please. Over to you, Riccardo.
[Riccardo Barbieri Hermitte] Thank you. Well, I think the previous speakers have already covered some of the key issues here. The way we see it is we have one important goal, which is to complete the reform and increase the efficiency of Multilateral Development Banks. We welcome the progress that has been made by the World Bank in this field as being quite important. And then we have the field of concessional financing, with the PRGT, IDA being obviously the key items on the agenda. I think it's a question of making the use of resources as efficient as possible and then persuading, obviously the donors to commit resources. Our view is that this resource, as I said before, there's definitely a question of how efficiently these resources are used. The theme of climate change is quite important, and it has concrete implications for many of the countries that we aim to support. And so, we think focusing the resources in certain areas is equally important, but I also agree with what has been said about the need to broaden the donor base to continue with the re channeling of SDRs as important points. And I would also like to mention, given that many of the LICs are African countries, that in addition to our efforts to coordinate these policies as G7 presidency, Italy has launched its own program for Africa called the “Piano Mattei.” And the idea there is that Mattei, a few decades ago, was the CEO of our energy company, ENI, and he believed that the key to a successful relationship to enhance the energy procurement was to really promote and empower energy producing countries, notably in Africa. This “Piano Mattei” aims to combine national resources with the expertise of some of the development banks that already have operated in Africa for a long time. And we hope to bring on board additional countries. We think once the aim is clear, and it's clear that some of these projects can be transformative, for example, clean energy production, the local use of it, including for agriculture, but also the transportation of energy towards Europe can be a driver of development for African countries and also that can help us manage migration flows in a way that will be inclusive and balanced. So, we attach a very high importance, a critical importance to the policy vis-à-vis Africa in particular. And then I will close by saying we also think it's important to continue to make progress in the works of the Global Sovereign Debt Roundtable in implementing and enhancing the Common Framework. And there, there are ideas about how to support some of these countries, at least in getting or regaining access to the global markets because we can mobilize also private credit flows, investments, we are much more likely to be successful. We think anything that allows countries to resolve their debt problems and to return or access the global markets are also a key focus for us. Thank you.
[Masood Ahmed] Thank you very much. And thank you for making the link with private capital in different forms, and let me go straight on that point to Mister Ndung’u. I want to come back to you because Kenya successfully managed a liquidity crunch earlier, a few months ago. What role do you think that the IMF and the World Bank played in helping you to do that? What's the prospect that you see for accessing private capital markets? And will it be on terms that are affordable, or will it be on terms that three or four years down the road will come back and create problems in terms of repayments and sustainability? Any quick reaction to that?
[Njuguna Ndung’u] Thank you very much. Yes, I have some quick reactions. I think we have an IMF program, and right now we are actually covering the 7th review and we also have just finished almost finalizing the World Bank DPO six. A combination of both was a very strong signaling in terms of policy credibility in Kenya. And that was very, very much helpful and especially when we were looking for how could we refinance the Eurobond. That is very, very important for us, because as we continue driving this, policy credibility becomes very, very important. The second point is actually to say, while we were refinancing the Eurobond, one of the things we were trying to say, what benefits are we going to get by refinancing through the market. First is because the market can communicate the story about the policy credibility. There is nothing that is going to help us. At the very end, the domestic policy regime is not appropriate for, should I say, debt sustainability. That for us is very, very important. So refinancing through the market and the policy credibility that I've just talked about helped us to solve two problems. One, the escalating inflation, which was actually being fueled by the deposition of the nominal exchange rate, which had a very strong pass through effect. And obviously in a country like ours, that creates a very, very factor on political backlash. [Masood Ahmed] Right.
[Njuguna Ndung’u] The second one was actually we managed to reorganize the maturity program profile so that the future debt, we are not going to get such a large ticket of 2 billion dollars where the market just reacts because of the size of the ticket. Those two advantages become very, very important so that the maturity profile gives us a breathing space, but then at the end of that, that breathing space, what are we going to use it for? One is to fix the fiscal side expenditure prioritization, but more importantly, the domestic policies must be fixed so that we actually create a better environment. From where I started, I started by talking about strategy. That strategy is about economic recovery. That strategy is about creating a sustainable environment, policy environment for private sector to thrive and domestic production and even markets to work. And that is where we believe that at the end of day, that will be the winning point. So, I do believe that in the short term we have this support from the IMF and the World Bank. And of course we dealt with the liquidity issue. It was a liquidity issue, it was not a solvency issue, but how the way you solve liquidity crisis must be consistent that it does not create any solvency change and/or ignite any solvency change. That for us is very important and we are very happy about it. Thank you.
[Masood Ahmed] Thank you very much. And I must say the core point that at the end of the day is the credibility of the policy regime and the signaling role that comes from having the IMF and the World Bank providing support to that, that helps to build the kind of profile that enables you to successfully then access markets on terms that are more attractive. Let me go back to Mister AlKhalaf and debt has come up a lot in this conversation in different ways. And I want to get a bit your sense as a creditor, as a participant in the G20, he is a player in the Sovereign Debt Roundtable. Where do you see this going next? I mean, we've kind of seen what's come through these different mechanisms, the advantages. We've also seen that there's still some shortcomings, over the next year or so what do you see as the big priority for moving forward to make the system a bit more streamlined and function more effectively?
[Abdulmuhsen AlKhalaf] Thank you so much Masood. The issue of debt vulnerabilities in low-income countries is indeed a complex and pressing one. It demands our attention, our understanding and our action. It is our collective responsibility to work towards a sustainable solution towards this issue. Probably at the beginning of this session the IMF and the World Bank presented some findings and they show that almost more than 50% of low-income countries are either in or at high risk of debt distress. In addition, as highlighted by the Minister of Finance of Kenya, nearly half of the world's population lives in countries that spend more on interest expenses than on education or health. This is unacceptable and is a direct threat to efforts to make progress on the sustainable development goals. So, reducing these deep-rooted vulnerabilities require joint efforts from all stakeholders. It cannot be solved unilaterally or bilaterally. Saudi Arabia has been increasing its efforts to support low-income countries in dealing with debt vulnerabilities in 2020, during our presidency of the G20, Saudi Arabia has led the DSSI initiative which released almost 13 billion to 48 countries at the height of the pandemic, and this provided much needed liquidity relief. But as the Minister of Kenya mentioned, this is a liquidity support measure rather than providing the solutions for a solvency issue. So, to maintain the momentum, we wanted to ensure a way forward beyond the DSSI before the end of our presidency of the G20 in 2020, we worked with G20 members and many stakeholders, including the IMF and the World Bank, and the G20 Common Framework was established. I would like to note that the Common Framework is a relatively young platform and even though it may have faced some challenges, it has also achieved notable results. Now, we recognize that we learn as we go with the Common Framework, and we are pleased with the cases of Chad and Zambia and the progress made on the on the other cases. But the Common Framework is the only platform that we have, currently, that brings together traditional donors and nontraditional donors to agree on the treatment on equal footing. So, it is essential that we maintain our collective efforts to build on the recent progress and institutionalize the implementation of the G20 Common Framework. There are many ideas on how to do that and Riccardo highlighted some of these, but the importance is the political will to make the G20 Common Framework work. Likewise, our discussion as part of the Global Sovereign Debt Roundtable have been very professional, beneficial and insightful because it has helped participants to understand divergent views on various technical issues concerning the treatment and trying to bring people or countries together on the same page on different technical issues. So, we believe that these discussions should continue with all stakeholders, including private creditors, borrowing countries, credit rating agencies and international financial institutions, so that we reach a consensus on the technical issues through the Global Sovereign Debt Roundtable to help us make tangible progress on sovereign debt, and it also progresses moving very slowly. I'm optimistic that with the push from donor countries, with, I would say, active participation from borrowing countries, we can continue to make progress as we have done with Chad and Zambia. Thank you.
[Masood Ahmed] Thank you so much. Now, Hanan, you are in touch with a lot of finance ministers from Africa on a regular basis. And I know the debt issue comes up in a lot of your meetings with them. From where you sit, how do you see now the next year on the sovereign debt roundtable, on the Common Framework, on moving ahead with making additional changes to make it function more effectively? What are the priorities that you would like to see pursued?
[Hanan Morsy] Thank you very much, Masood. And let me start by the sense of urgency that has been really highlighted, and equipped during our conference of ministers and polls about the need for action to support African countries. And however, the response from the international community has not been matched by speed and scale. I want to really take a human perspective to what is at stake. So, if we are looking at African low-income countries, we're talking about 600 million people with median age of less than 17 years, very young population, fast growing, about 3% population growth, yet we have almost two thirds the population of these countries, basically, without access to energy, and hence that affects development across the board. You cannot achieve most of the SDGs without having access to energy. And on top of that, most of these countries are highly vulnerable to climate change. And we've seen devastation caused by extreme weather shocks, whether it's in the Horn of Africa, or droughts, or floods in Mozambique and Malawi. So, they are also hit by climate shocks. Yet they have to face very difficult choices. Policymakers have to face a tradeoff between servicing their debt or actually spending on social issues, investing in education, investing in health. And what is at stake is the future of this young population, their education and their ability to find jobs in the future. The development and socio-economic stability of these countries depend on. So that's kind of, you know, I think we need to have the human perspective of what is the cost of man action. And we need to really tackle these issues because not only it's important for Africa, but because these also matter for the international community. Having adequate financing for countries where they have a young labor force and growing population will be critical. And also supporting issues that relate to climate vulnerabilities, but also investing in the future where many of these countries have green minerals, they can play a key role and have huge potential in solar and renewables, so they can be a critical part of the prosperous future for the whole world. And we need to make sure that this happens and part of what is needed, in addition to the financing issues that we talked about earlier, is to really address the functioning of the debt resolution framework, to reform the G20 Common Framework, so that we have a framework that is actually timely, predictable, transparent and efficient. We need to introduce stance to debt service upon application so that countries don't have to continue to pay debt service while the process takes too long, some countries two years. And we need to have comparability of treatment formula introduced. We need to also design the whole debt framework in a way that actually encourages preemptive debt restructuring. We need it. We need to give incentives to tackle the problems before it's too late. Currently, we don't have that system. So, we need to really realign the incentives to avoid really ending up with countries with in-debt distress and being huge cost not just financially, but also in terms of human cost to their citizens. So, I think these are the type of issues that we need to really tackle. And we need to also incorporate, and work on incorporating climate resilient clauses and sovereign and debt assurances across the board to make it universal. Thank you.
[Masood Ahmed] Thank you very much, Hanan, for giving us your specific ideas on debt, but actually, I want to thank you for putting the conversation on financing, bringing it back to the broader points about the human and development agenda that it's meant to serve. And I think it is a useful note on which to end this conversation, because it reminds us of what it is that all this financing discussion is about. It's not just about numbers, not about frameworks for sustainability of financial flows. It's really about how do you create a future of hope for that growing population of young people that currently live in conditions that they recognize as not being acceptable for them. And the implications of that are not just economic or social, but they're actually political and societal, and that's something that's important for us to just keep recognizing as you go about your important work every day. So, I want to thank all of our panelists for their remarks. I apologize to the people who had questions, but we didn't have time to bring in additional questions into this session. And I want to thank all of you for your participation and engagement in this. With that, let me bring this session to a close. Thank you. [Applause]
[Andreja Lenarcic] Thank you, Mister Ahmed. And thanks to all the panelists in this session for a really rich discussion. So, now we are coming to a close of this event, and we invite the IMF Deputy Managing Director, Antoinette Sayeh and the World Bank Group Managing Director of Operations, Anna Bjerde, to deliver their closing remarks. [Applause]
[Antoinette Sayeh] Well, a very good end of the morning to everyone. It's almost the afternoon, and I thought Anna would be first, actually, very much welcome doing this with her. It's really been our pleasure to host this very important event. I really want to start by thanking the moderators, thanking the panelists for all the time that they invested in it, the excellent conversations we've had in the panels, and for the valuable insights that will certainly provide much food for thought as we continue to work towards better supporting our low-income country members. I wanted to use this opportunity to just flag a few takeaways for me from this morning. I think, it's clear that as the theme for today well underscores rising to the challenges that our low-income country members face, really takes a village and even a world to lift, and all of us have a very important role to play in that regard. I think in the first session, we certainly saw that strong domestic reforms are the driving force at the core of accelerating progress towards the SDGs. We heard in quite a bit of detail about the successes and challenges in implementing such reforms. I think what we heard certainly leaves us with valuable lessons. And from the discussions, I'd like to maybe flag three main messages. First, that sound macroeconomic policy remains at the cornerstone of sustained development. We heard that clearly from Benin and from Angola, from Kenya as well. And despite exceptional challenges, countries that persisted with strong policies withstood the multiple shocks we've seen in recent years relatively well. They were able to restore macroeconomic stability more quickly and eventually return to international markets, as have been in Kenya and Cote d'Ivoire recently. Similarly, I think the example of Angola, which I was happy to visit in the last two weeks, shows how a resource rich country faced by multiple shocks can actually maintain macrostability by pursuing sound policies. We heard also from Kenya about the importance of policy credibility. And I think a second takeaway is that well planned reforms can truly transform countries. We heard this from China. We have a lot to take away from China's experience, as we heard this morning, truly inspiring for low-income countries who can learn from it and create their own success stories. I think the third takeaway was that donors, the international community, but donors play an important role in enhancing the capacity of low-income countries in taking forward these good macroeconomic policies. It requires capacity. It requires institutional strengthening and technical assistance and training crucial to that, coordinated appropriately between the providers of it is also very important not to constrain the scarce capacity we're trying to build. And I think it's a good way to come to the second session, which focused on the role of the international community, including our own institution here at the IMF. And we are in the process, as everyone flagged, of reviewing, of course, our engagement with low-income countries and trying to make sure that the PRGT is well resourced for the challenges ahead and continue to maintain support for them. As we think through the reforms that we have to make, notably in terms of the concessional lending facilities, we will reflect on the very good ideas, the messages conveyed by the panelists, and here again, maybe three messages also that I took away. First, the Fund support remains highly relevant, critical in some cases for low-income countries. The Fund has a unique role, of course, in providing policy advice and capacity development, and in financing, of course, to help countries maintain or restore macrostability. I think a number of people flagged the issue of the Fund being a key catalytic source, bringing in other partners, bringing in other financing for countries. We are looking at how to better resource the PRGT and require lots of discussions around the SDR rechanneling that has already helped the PRGT, and we continue to look at it as we go forward. I think the second takeaway is that the IMF support has to reflect country specific conditions. There cannot be a one size fits all, as we know. This means that the Fund needs to provide, of course, tailored support in the face of increasingly heterogeneous low-income countries. I think one example of how we do that is the new country engagement strategy we introduced to support our more fragile and conflict affected states, making sure that we retain a long-term perspective in our support to those countries and take into account their country specific underlying drivers of fragility. The Fund clearly needs partners. We are in partnership supporting our members in facing the many challenges they have, and we cannot work in isolation, certainly we cannot work any of us on our own. It means that we need to continue strengthening our collaboration, not only with our sister institution, the Bank, but with all other partners as well. Lots of ideas about how we strengthen partnership and ensure complementarity, which is crucial in light of the constraints and the challenges our member countries face. We don't want to be a burden to them in delivering the support we're trying to do. The Fund, of course, and the Bank have an obligation, frankly, to our low income country members to combine our efforts in a more effective and efficient way, working to create the future of hope, as Masood stressed. I think in that collaboration, of course, lots of thoughts about how the issue of debt resolution in particular can be accelerated and how we can work to better make sure that the debt relief that countries so desperately need to instill that future of hope is delivered more quickly. So, thank you again for your participation this morning. Very, very excellent discussion. I think we can sink our teeth into the many takeaways as we move forward. My thanks to the joint IMF and World Bank team for the hours that they put into making this possible. It's a great example, another great example of the collaboration between our two institutions. Thank you very much. Looking forward to seeing all of you at the Spring Meetings. Thank you. [Applause]
[Anna Bjerde] Great. Thank you so much, Antoinette, for those wonderful words and also for summing up what sounds like a really good set of discussions this morning. And let me also join Antoinette and really thank the IMF and World Bank teams who organized this. And I should also take this opportunity to thank you, Antoinette. It's really a pleasure to work together on many, many challenging issues, but I really feel we can always pick up the phone and get together and resolve issues, and I really, really appreciate that partnership. This event has really focused on the world's poorest and most vulnerable and in many ways, it speaks directly to what the World Bank's Group mission is, which is to end poverty on a livable planet, as you also heard from Ajay this morning. And needless to say, we're having this discussion also at a time when the outlook is quite daunting. It was good to hear from Kristalina that it's not as bad as we had feared it would be, but we still need to work very, very hard, hard to make it better. So, I thought that was a very, very good message. But we are seeing these overlapping crises and intertwined crises that are causing a very, very difficult set of circumstances for the lowest income countries, particularly as they work to eradicate poverty, which has been very, very stubbornly starting to creep up again in some of the poorest countries. And just one data point that sticks with me very much, is that a third of IDA countries, and I know you've discussed IDA a lot today, a third of IDA countries are actually poorer now than on the eve of the pandemic. I think this is very striking and that we also know that the outlook for the very, very poorest, as we heard also in the fireside chat this morning, remains bleak. And that's why it's so important that we come together and really think what can work, what can work as accelerator steps that we can take to really help these countries transform actions and our meaningful partnerships into real action. We also heard today participants talk about how critical it is for countries to implement reforms to strengthen the economic stability, reduce the poverty and accelerate the growth. And I think this is also very important because when you're in a crisis mode, it's easy to think we just need to make sure they get through this difficult time period; but it's very easy that we lay the foundations for growth as we're helping in a crisis. And I have to say during this year I've traveled around quite a bit to countries that are in very difficult economic circumstances but are taking bold steps. One country I visited recently is Nigeria. Many of you know, Nigeria has had two very pressing difficulties issues to address. One is to unify their exchange rates, which is having detrimental impact in their economy, very detrimental impact on the private sector. And the other one is very high fossil fuel subsidies, two issues that we've been talking to them, IMF, been talking to them for many, many years about. And finally, the steps have been taken to address these two issues, but it needs to come on the back of a strengthened social safety net and addressing other pressing issues such as food insecurity, which is also very, very big concern. I think Kenya, it's another interesting case, where Antoinette also referred to, avoided a liquidity cliff by basically embarking on fiscal reforms that were anchored in a medium term revenue strategy as well as with debt targets. And of course, there are many, many more good examples. But I think coming back to this issue that good policies really matter for development and that what we need to do is make sure we don't just channel funds in the short term, but we also lay the grounds for growth. And this is where I think comprehensive policy packages that really attract the private sector matter, but also making sure that they drive strong and sustainable growth. We see that by our own estimates, implementing better policies could reduce the infrastructure investment needs to achieve the SDGs actually by half. And that's important when we're talking about so many resources needed. This is where I also think that the knowledge work that we do together, the knowledge work IMF does, but also the knowledge work that the World Bank does play really critical roles. And you're very familiar with the country climate and development reports that we've been working on for the last few years, which work to identify the highest impact actions and policies that can really build resilience to climate change, but also our public finance reviews and our analytical work on growth and jobs. And you heard a lot from Ajay this morning on the fact that jobs is what's going to be the metric that we want to really be led by. But I have to say I also feel that there are many reasons that we should be optimistic about the future of low-income countries. And that is because many IDA countries around the world. World is also where the investment opportunities and needs lie, but it's also where a green future will be built. And many countries have the potential to play this very critical role for the green transition. It's also home to the world's youngest population. We know that. And by 2050, I find this another number that is very compelling. One in four people on earth will be African, and that will also be one third of all the young people in the world. I think this is an incredible number that we should keep in mind. I wanted to talk a bit about the challenges and opportunities faced by IDA countries in the sense of, so what are we in the World Bank doing to accelerate and step up? Well, one is we need to really, and you've heard Ajay talk about this, and this is very much what I spend a lot of my time on as operations responsible, we need to speed up how fast we can deliver results for our clients. And we're doing that by simplifying a lot of processes that allow us to deliver these results much faster. So, over the past five years, just to give you a sense, the World Bank has helped achieve good results. 100 million people find jobs, 500 million people get education, and 1 billion people access health care, but imagine how much more we could do if we cut down the time it took us to prepare and improve, implement projects. So that keeps me very motivated to be able to take these numbers to even greater scale, but also because the challenges, the scale of the challenges is beyond the capacity of the public sector. So, we put huge emphasis now on recognizing the role the private sector can and really must play as a partner to governments and to development finance institutions. So what we've been working on is putting together a much more meaningful One World Bank Group. And this really means that we get the very best out of IBRD, IDA, IFC and mega at any given time. And some of you will know that as of July, 1, 20 of our country representatives will be what we call World Bank Group representatives, which means they will be accountable to the country, to be able to represent the whole of our institution and all of the instruments, products and solutions that we can bring to the table. And if this goes well, we plan to roll this out further. And then for all the reasons I mentioned earlier, we're really doubling down on IDA countries and on IDA 21. We really want and need the IDA 21 replenishment to be a success. IDA is really important, and IDA really has been a lifeline for so many people around the world. And I think IDA financing, particularly for Africa, is increasing, which is very important because it's also in the context where we're seeing overall development finance flows to Africa actually go down. So IDA has been even more important there. It is also the largest single source of climate finance to low-income countries, particularly adaptation, which does not get a huge amount of finance to begin with, and certainly not climate finance. So, the adaptation part is really important also to keep in mind. And the other issue that I like to always remind ourselves of in a world with scarce resources, IDA is also very effective because it leverages. So, if we can leverage close to one to four, this is really compelling because it's good effectiveness and use of development resources, but we must make the case and we must fight for the countries that need IDA. So let me just conclude by saying, as we head into the Spring Meetings, I think this type of discussion helps us focus, sets us on the right path that we need to be on to really step into these Meetings and gives the most important attention to the lowest income countries in the world that absolutely need us the most. So, thank you so much and great to see this work together. Thanks.
[Andreja Lenarcic] Thank you very much for the concluding words. This brings us to the end of today's event. On behalf of the International Monetary Fund and the World Bank Group, we would like to thank our moderators, our panelists, and all attendees who have attended this event online or here in person. Unfortunately, we couldn't take questions from the audience. We had not enough time for that, but we will try to get back to you, to those where we have the name in the next days. And for all the rest, you can continue the conversation on the social media using the hashtag that you can see there. That's # #Action4Growth. And we will also share the recordings of this event on our social media. As you leave, we would also like to remind you to download the 2024 report on macroeconomic developments and prospects in low-income countries. This report was published yesterday. Take a look, and you know, it's an interesting report, rich, with a lot of information. You can get it on IMF website. We hope that those who are here with us in person can stay and join the networking lunch that we have in the room just behind this one. And to all the rest, thank you so much for joining and have a great rest of the day. [Applause]
