Governing Effectively During Challenging Times
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Governing Effectively During Challenging Times
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Governments worldwide are facing overlapping crises, including COVID-19, debt, climate change, and conflict, which challenge their ability to provide essential public goods and services to their people, especially the most vulnerable. Fiscal constraints, climate-related disasters, wars, and lack of legitimacy often limit governments' capacity to act effectively.
Anna Bjerde, Managing Director of the World Bank, emphasized the need for multilateral banks, governments, and NGOs to collaborate with "humility", share information, and be transparent and innovative, to support governments in delivering critical needs and building resilience to prepare for future crises.
Two Finance Ministers, Sergii Marchenko of Ukraine and Pablo Arosamena of Ecuador, shared how their governments are functioning under challenging circumstances. Marchenko noted that the Ukrainian government continued to pay pensions daily since the Russian invasion began, which boosted morale. Arosamena narrated how Ecuador partnered with the private sector, army, and government to vaccinate 90% of the population quickly.
Other speakers, including Shameran Abed, president of BRAC, and Mirjana Spolrajic of the International Committee of the Red Cross, discussed their organizations' approaches to addressing economic and social vulnerabilities in different regions worldwide. Abed emphasized the importance of empowering people to take development into their own hands, while Spolrajic stressed the need for humanitarian aid organizations to work with development banks to transition from assistance to socio-economic plans tailored to specific regions.
To learn more about how governments can overcome multicrises and support their citizens and vulnerable populations, watch the event replay and visit the website: worldbank.org/governance.
01:40 What the world has been facing and what lies ahead
05:29 Ukraine: Governing and dealing with a war
08:59 Ecuador: COVID-19 vaccination campaign
11:39 The role of the International Committee of the Red Cross
15:06 The case of BRAC: Taking a business approach to ending poverty
19:39 Ukraine: Lessons learned from a crisis
22:33 Dealing with overlapping crises: What's coming next
28:30 ICRC: Lessons learned in conflict settings
33:44 Evidence-based models to get results in times of crises
37:56 Ecuador: Social protection programs and major fiscal reforms
42:52 Live Q&A: Long-term development path / Food insecurity
Hello and welcome to the 2023 Spring Meetings of the World Bank Group and IMF. I'm Kathleen Hays from Bloomberg Television and Radio, and I'll be guiding you through the next hour. We're going to discuss how the overlapping crises of the last three years, from the pandemic to the war on Ukraine and its impact globally on food and energy prices, are squeezing governments’ resources at a time when their citizens need even more help. You can share your thoughts on these topics at any time using the hashtag #ReshapingDevelopment. Please, use the QR code you see on the screens to post your questions. If you're following us online, join the chat at live.worldbank.org.
Now, I want to introduce a very special panel for this discussion today on governing effectively during challenging times. We're joined by Anna Bjerde, she's World Bank Managing Director of Operations, Pablo Arosemena, he's Ecuador's Minister of Economy and Finance, Mirjana Spoljaric, President of the International Committee of the Red Cross, or ICRC, Shameran Abed, Executive Director of BRAC International in Bangladesh and Sergii Marchenko, Ukraine's Minister of Finance. We want our audience to know that you have another commitment, sir, and you have to leave us in a half an hour. We're so glad he could join us today. Very, very busy times for all of these people at these Meetings, these Spring Meetings here in Washington DC. So, Anna, I want to start with you. Set the stage for us, what the world has been facing and what lies ahead.
Well, thank you so much and good morning to everybody, wonderful to be with you. It's really a very relevant topic for us as these Spring Meetings are taking place at a time when we're really facing unprecedented challenges and it just seems to be never ending, to be very honest. But you mentioned some of these crises, of course, COVID-19, and we're still living with the aftermath of COVID-19. Of course, we also have the ever-pressing challenges of inflation and of destabilization. But we also, of course, are now into the 14th month of Russia's invasion of Ukraine, which is having an incredible impact in Ukraine, of course, but also regionally and globally. It is a very important time for us to come together, and many governments have had to respond in really unprecedented ways to support the people of their countries. What I wanted to emphasize first and foremost is while everyone is impacted, each country has its own impacts that it has to deal with, and there's really no universal approach. When we're looking for solutions, we have to have a little bit of humility because each situation warrants its own approach. Certain countries experience the effects of these specific crises more directly than others, and governments really have to make very hard choices to focus on delivering for their citizens. I'm really happy that Minister Marchenko is here with us today. Ukraine is a very strong example of a government that needed to be extremely decisive, but also very creative on how to function during this incredibly difficult time and focus on essential service delivery in the middle of a war that's caused a lot of devastation. I look forward to hearing from the minister and I have to say I'm very proud with our partnership and grateful for the work that we are doing together.
I'm also very much looking forward to hearing from Minister Arosemena on Ecuador's experience, and here we will hear about the pandemic management and service delivery in the context of fiscal constraints. Ecuador was actually one of the first countries to receive World Bank funds to respond to the health emergency and later for vaccination. Additionally, we have joined forces to support the most vulnerable groups through social protection programs and to promote economic recovery. I think this is a powerful example of how, during the pandemic, we had to really combine the protection of health but also protection of livelihoods, which is why the social protection angle will be so important.
It’s great that we have President Spoljaric and Executive Director Abed also joining us today to explain how ICRC and BRAC have taken on this challenge, and I'd like to really take this opportunity to thank them for their partnership and great collaboration.
In a world of increasing volatility, more and more countries are confronted with the need to operate differently, prioritizing basic service delivery and goods and services, and really the focus is on protecting the most vulnerable. Under these circumstances, what we're seeing is that governments need to focus on the most critical needs to protect the people and to maintain the foundations for recovery and beyond. Taking both an immediate crisis response, but never taking your eye off what's the priority of tomorrow and making sure that there's still a foundation being laid. Those of us in the development community have a clear responsibility to support the governments in meeting these critical needs while building capacity and resilience so that we're better prepared for the next crisis.
Well, a good summary, a good overview of something we want to now continue to flesh out in this discussion today. I want to remind you about #ReshapingDevelopment and the QR code, you can look for questions and comments on what's going on. Minister Marchenko, for the past year you’ve managed to keep your country, your government up and running during a war. How have you done it? How have you managed? What has been key to the tremendous accomplishment of the past year and more?
First of all, thank you very much for inviting me to be here, it's a pleasure to be part of this discussion. Of course, it's something unbelievable in the 21st century, this war, because the Russian assault of Ukraine has become a brutal war of attrition, militarily, but also economically. What we realized in the first days of the war was that our security script didn't work. They just prepared for another war for other security reasons and for us it was important to secure, for the people of Ukraine, the notion that the government of Ukraine is functional, the government of Ukraine can provide necessary services for people of Ukraine. Starting from the first days of the war, we relocated our critical services to the most secure locations. We managed to restore our functioning as a treasury because we need to pay pensions every day. When people realize that they are receiving money in the account, for them it was like a good signal. The government is capable, the government is functional, and it helped us to boost the necessary mood within our people that we are capable of winning this war.
Starting from this first month, we developed a lot of other skills which we previously didn’t have. We managed to negotiate with our partners that Ukraine should not be alone in this endeavor, and we are thankful to World Bank for your support because the existing projects which we have help us to finance our needs, help us to cover our social humanitarian needs as well as it's a good signal for all the countries in the world that even if you see that the enemy can approach you, you won’t be alone, other countries can support you. Also, I want to mention that despite all those damages, economic problems, et cetera, we are capable of collecting enough taxes, we are capable of providing services for the people of Ukraine and at this moment, the capital of Ukraine, Kyiv, is as functional as it was before the war. During all of the restrictions, despite all the missile attacks, despite the air surrenders, despite all the necessity to protect ourselves, now we are more capable and of moderate mind to protect our future, to protect our nation.
That's the kind of thing you don't necessarily think about when someone's in a war, “yeah, I got to pay my taxes. Where's my pension check?” People depend on these things and that's partly how you keep going and the speed with which all of this was accomplished, and I'm sure all these relationships, including with the World Bank, made a big difference.
Minister Arosemena, I want to turn to you. In Ecuador, you like many countries were hit very heavily by the pandemic, hospitals, not just in cities, but across the country, overburdened, high death rates, and somehow by May of 2021 you managed to lead the region when it came to rolling out vaccines. How did you do that? What kind of partnerships have you had? It's quite an accomplishment as well.
[Pablo Arosemena Marriott]
Thank you for this invitation and I’m delighted to be here. Let me tell you a short story. Our president, Guillermo Lasso, I met him 20 years ago. Back then, he was a successful private banker, and he used to have a sign on his doorstep. The sign said, “Bring me problems.” He's a natural problem solver. The idea when he came to office was to have diplomacy of vaccines. Diplomacy of vaccines. That meant get vaccines from everywhere, that could be the US, Europe, China, from everywhere. And we did that. Before we came to office, 1% of the population had been vaccinated. We had a very robust plan of 9 million people to be vaccinated within the first 100 days, and we did that successfully. So, at the day 100 of being in office, I believe 57% of the people of the whole country had already been vaccinated. This was possible because of his leadership, this pragmatism of diplomacy of vaccines and also a collaboration with the public and private sector. In the end, this is a matter of logistics. Who has better logistics than the private sector? Supermarkets, and we made them work together with the army because in the public sector, who has better logistics than the army? That was the key thing, the diplomacy of vaccines, strong leadership of the president because of him being a problem solver, and bringing people together from the public sector and private sector.
Well, I'm thinking of all the problems many countries had, including right here in the good old US of A. And diplomacy vaccine, I like that. I think that's something we could all learn a lot from. President Spoljaric, the Red Cross for decades and decades is known for rapid delivery of humanitarian assistance when governments, the World Bank, other institutions can't get in there. How has this model evolved of keeping people on their feet, keeping everything at the most basic level, providing the kind of support you need, so at some point, the institutions, governments, can get back in there and do what they need to do?
[Mirjana Spoljaric Egger]
Thank you, Kathleen, and thanks for everyone for being here and for the interest, and it's a great honor for me to participate in this panel. The ICRC was designed to help people, predominantly civilians, but also others, in situations of conflict. We have done so for the last 160 years, it's probably the oldest humanitarian organization as such. We have done this according to a very specific business model.
Today, 22,000 personnel work in roughly 100 conflict situations and we work very close to the people. We work according to our principles of neutrality, independence and impartiality. Everything we do when necessary is done in a confidential manner. That's important for two reasons. A, because we reach further than everybody else, because for others it can be too complicated. We can do that because we talk to everybody, and we gain the trust of everybody in the field and because it's an established institution and everybody knows the Red Cross or the Red Crescent. We also do so because we need to address violations of international humanitarian law, which, if they are not respected, increase massively the cost of war, as we can see in Ukraine for instance, and in many other situations. But what is most important, through our presence in the field and very close to the fighting, we can translate the needs of the population to those and pass the messages to those who have the means to change their situation. It's not always easy, but we can only do that by persistently staying and pushing for that operational space that can only be guaranteed through the way we operate.
Now, if you look at humanitarian assistance today, it's very much about sustaining basic service delivery, and it's very much about sustaining public service delivery. It is so in Ukraine, where we undertake our biggest program at the moment, and I visited Mykolaiv recently and Kherson, where we worked with local authorities to sustain provision of water. We do the same in North Mali, and we always do it with the local authorities and with the local entities because they have to be able to continue working. As the minister has said, this is essential for the system not to collapse because the more we can sustain public service delivery and then eventually hand it over to bigger and more powerful actors economically, the better it will be for the people and the easier it will be to return to a functioning economic system. Thank you.
I want to turn now to Executive Director Abed. I wasn't familiar with your work, really, before I was thankfully invited to this panel, BRAC, and you stand out for taking a business approach to ending poverty, not just in crises beyond. What do you do that's different, and how do you work with governments to accomplish this? It's a very interesting program you have.
Yeah, Kathleen, thank you very much. Again, I'm extremely honored to be here and to be able to share this stage with such a distinguished panel. So BRAC, when it was founded in Bangladesh in 1972 a little over half a century ago, we initially started actually as a relief and rehabilitation organization. Our roots are very much in humanitarian work. But very quickly, we pivoted to longer-term community development. I think you asked me what is different, and for us, whether we work… now in Bangladesh and across 16 countries in Asia and Africa, so whether we're working in Bangladesh or Afghanistan, in Uganda or Liberia, whether we're working in humanitarian settings or development settings, and increasingly we see that those lines are getting blurred as well. We have realized through 50 years of work that there are certain things, there are certain principles and values that are quite universal. We have a theory of development, let me say, which is built on our work across 50 years as a southern-led development organization, and one of the very few southern led-development organizations of our size. Maybe I'll spend just a couple of minutes talking about what those principles and values are.
First of all, from our point of view, having worked with the poorest people in the most marginalized communities across the global South, one of the things we've learned and one of the things that has informed our work from very early on is that development is not something we can give, development is something people must take. When I say that, what I mean is a lot of our work has been to try to move people from the sense that the poor and the marginalized are passive recipients of aid and move them to becoming active participants in their own development. That is a very fundamental thing that BRAC has been doing for the last 50 years. Catalyze people's belief in their own ability to change their lives, because we believe that even the poorest person has inherent potential, and our role is to catalyze that potential so that people can develop themselves and change their own lives. We don't like to use the word beneficiary, in our work, everyone is a program participant. And our role is not as a benefactor, it's as a facilitator.
Very quickly on a couple of others. People have economic vulnerabilities, people have social vulnerabilities. Vulnerabilities are multidimensional. The programs, the approaches, the work that we do must be holistic, must be integrated. There is no silver bullet, there is no single approach that can help lift people out of the worst forms of marginalization and poverty.
Third, very important for us is women's economic and political emancipation. There will be no development, there will be no justice without gender justice, and that is a very critical area of our work.
In the interest of time, I'll end with the last one, a relentless focus on scale. All of the work we do, all of the programs we run, have to be simple, scalable. We can design very complex, very impactful programs, but if we can't scale them, we can't get them to help people. So, the problems are becoming more complex, but we feel that the solutions have to remain simple, scalable.
Kathleen, across humanitarian settings and development settings, we feel that these principles help us to make sure that we continue to have impact at scale for the most vulnerable communities. And increasingly, of course, we work a lot more with governments. If you have time to come back to my second question, I'll talk a lot more about that.
Okay, “Development isn't something we can give, it's something people must take.” That's a great starting point. As we continue, I just want to remind everybody out there and here at the World Bank Atrium, share your thoughts @ReshapingDevelopment [#Reshaping Development]. You can use the QR code you can see on the screens to post questions. If you're following us online, I hope you are, join the chat at live.worldbank.org.
Minister Marchenko, I want to get to you because I know you've got an important meeting to get to. Before you go, the unique experience of the past year, what are some of the most important things or the most important thing you want people to know about the lessons you learned from this crisis? This isn't the typical crisis people face, but countries, governments do face sudden, abrupt things they have to deal with. What is it?
Thank you very much. We are not ready to answer this question because we are still learning, we are still fighting for our independence, and it's not easy because every day you should adjust yourself for a new reality. Because when you realize that, you can understand that this war is not finished yet, and we need to find a solution, how to liberate our lands, how to move on. But the most important lesson, which I personally learned, is that you shouldn't frighten your enemy, you shouldn't frighten the crisis. You should believe in yourself, in your country and your people. A solution, maybe it's not an easy solution, can be found. I remember myself last year when I approached Spring Meetings, our idea is to find out how to cover our gap of 5 billion dollars per month. It's unbelievable. I can't even imagine how it pressured me at that time, because I can't even realize how to fill this gap. But your economy should run, your military should fight, your people should receive salaries, etcetera. As a Ministry of Finance, it’s a tremendous pressure. But then I come myself and realize that things are moving on and a solution will be found. Hopefully, slightly, we found a solution, we convinced our partners to step in, we found a different internal solution, and it's very helpful not to be too frightened, not to worry about future problems, just do your job and forget about everything else. The people of Ukraine need me, need people, need government, that's why you should execute your key functions. This is a key message which I should deliver for you. So, don’t forget, not frightened, just fighting.
Okay, I think we can all take that away, maybe not in such dramatic circumstances for everybody. Minister Marchenko, we know that you have to leave, so thank you so much for joining us, it's been wonderful having you here with us today.
So, Anna Bjerde, let's look ahead. This is three years of one kind of crisis after another. How imaginative the universe can get sometimes, right? What do we have coming ahead? What do you think this next set of challenges may look like? The past isn't necessarily prologue, right? But what are you preparing for? What do you think we should all be ready to deal with?
Thank you. Well, we don't know what the next crisis is going to be, but I do think we know it will come. I was on a panel yesterday related to climate change and taking action on climate change, and one of the participants, a country that is very much affected by the impact of climate change, just said “We wake up every morning and we know danger is imminent.” This is a country that has to really focus on resilience and adaptation. We don't know exactly where it will come from, I think the last three years have taught us that it's very unpredictable. We have to be able to adjust, we have to be able to adapt, and we have to be able to make decisions, as I think the Minister from Ecuador was saying, “Bring me problems.” Well, this is happening on an everyday basis, I think, to all of us. But I think we have learned a couple of things coming out of this, and maybe I'll emphasize three.
I started off by saying each country is different, each country will deal with crises differently, but I think what we also see is that many of these crises actually cross borders. When they cross borders, it means that we actually have to, as a community, come together and learn from each other. This notion of information sharing, of making sure that there's transparency in what we know, what we don't know, I think is very important. I think we saw this during the pandemic. This was something no one in the whole world was prepared for. No one. So, what was very important was, yes, the vaccines, diplomacy, but even before the vaccines, what is the COVID-19? What are the risk factors? What are the issues to watch for? And then once the vaccines came, how do you get people vaccinated? What is the prioritization? How do you deal with hesitancy around vaccines? And so forth. I think that's lesson number one. We have to work together, we have to share information, and we have to be open.
The second one is, it's been alluded to on the panel already, is citizens need to trust authorities and governments because they turn to authorities and governments for service delivery, and they turn to authorities and governments for equitable treatment, equity in the service delivery. Building this trust is very important. That comes from a number of different means. Of course, straight communication and transparency by decision makers, by policymakers, by accountable authorities. It also comes from having feedback loops. I think this is something that we've learned in the development journey, that you have to really be in touch with citizens. I like this notion that development isn't something you're given, it's something you take, because it's a two-way street. We do need to shape development solutions by hearing from the citizens. I think this idea of trust building is very important, it's very hard to establish, it's very hard to reestablish if you lose it. This is something that needs to be really focused on.
And the third thing I think we've learned is that we need to be incredibly innovative. Old solutions may not fit the current context. Here, just listening to the panel and the context that they've come out of, minister Marchenko talked about what is the biggest lesson coming out of this? I know he woke up thinking, 5 billion dollars a month, I mean, that's an enormous amount of money, how is this going to come together? What I think was very powerful here was the way we came together as an international community with Ukraine and seeing, what can we do, what can we at the World Bank do to help this? We certainly don't have 5 billion dollars a month, but what we did was put together a platform, a platform through which we could channel resources to Ukraine for priority social expenditure. Most of the money is not our money coming through this platform, but we provided a mobilization mechanism that allowed Ukraine to meet a significant part of its needs.
I think this has been very, very successful. Most people who work for the World Bank know this operation, it's called PEACE, which I think is also very appropriate, and it's the largest operation that we've done in the World Bank, and it's really interesting. I think we will stand to learn from that. I think in Ecuador, listening to the minister, how fast they were able to act was also because of innovation and taking decisions. one of the things that we work closely together with was trying to… how do you reach people very quickly? Well, you need to know where they are. being able to merge information, so the social registry, with other national databases was a very, very creative way to go forward, and it allowed fast and quick action.
Then, finally, I want to thank our partners, because in many countries that we work in, we don't necessarily have the local footprint, but they do. So, I really want to thank you for working closely with us. And this also goes for UN agencies, because we're able to reach the most vulnerable in the most difficult circumstances, sometimes because others are on the ground. I think we need to realize these challenges are enormous, and we need to be together to solve them.
It's kind of like that… I always thought that during the pandemic, that even the pandemic, there were somehow a few silver linings in the very dark cloud. In these crises, it brings out often what we didn't know we had inside, and it does bring innovations, and it does bring steps being taken that will carry us forward in other ways. I'm sure that President Spoljaric, you at the Red Cross have been doing that for 160 years, right? All kinds of challenges. What have you learned about your collaboration, specifically with the World Bank in conflict settings? And is there some sense that now this has intensified, increased the collective impact the two organizations can have?
[Mirjana Spoljaric Egger]
Thank you, Kathleen. I hope you can hear me better now. My mic didn't seem to work. I'm happy to speak about it because Anna and I used to work together when I was still at the UN Development Programme. It was an interesting transition for me from the UN Development pillar to one of the oldest, if not the oldest, humanitarian organization to see how many similarities there are in our approach, but also the distinct comparative advantage that a humanitarian organization has in comparison to a development actor. I think we have a lot to learn from this type of transition. Not my personal one, but our cooperation together in improving the effectiveness of aid and eventually improving also the effectiveness of humanitarian assistance.
What I can see already is that we are more agile as humanitarians to work in situations that are too dangerous for development actors to engage in, or politically too complicated or impossible because of sanctions or other measures to come in and work directly with either the national or the local entities. So our neutrality and impartiality, the trust that we have from the people, enables us to stay on the ground and to work with partners while we need to stabilize the situation and bring urgent and very often lifesaving assistance to the people, stabilize public service provision, as I have said, but also engage in a dialogue with the local and national authorities on compliance with international humanitarian law. That dialogue can build an enabling environment for other types of conversations to follow.
Now, once there and once working, we will not and never be able to come in with a long-term development cooperation vision or with the capacity to assist governments and local entities in developing socioeconomic plans and responses to the crisis. So, eventually there will have to be a transition through that cooperation with the World Bank and other entities, where we go from tailor-made intervention to scaling impact and moving towards stabilizing an economy.
It is true that security interventions have to be underpinned by socioeconomic response plans, and this is also true for humanitarian intervention. We always have to bring humanitarian assistance that can pave the way for a more long-term development path. In working together, we don't only work at an operational level using the capital and the resources and the weight of a partner like the World Bank, but we also work together in improving the design of our programs because they are just as effective as the quality of their design is from the outset. It's this phase already that can inform our cooperation in the future. There is a vicious circle between climate change impact, you can see it across many regions where we operate, poverty and the resurgence of violence. The programs, especially in the field of adaptive measures, they can be improved and they can be much more tailor-made.
In order to be able to work together, we have to be innovative, but this also relates to improving oversight and monitoring and how we do that in the future. Improving accountability will make it easier for our partners to come in, in terms of providing funding. Trust comes with solid accountability and oversight measures. We have to always preserve the agility to adapt to specific contexts, and at the end of the day, and this is something I want to discuss with Anna and with others in the future, we have to work towards increasing the effectiveness of aid. I think this is the leitmotif, it has to be the leitmotif in times of scarce resources and recurring crises that are producing humanitarian fallouts that are simply becoming unfundable for the humanitarian pillar. Thank you very much.
Executive Director Abed, you work with evidence-based models to get results in times of all kinds of crises at once. And as you mentioned, you deal with… you're not just in Bangladesh, what would you say, 40, 60 other countries in Asia? So, what can you tell us that other organizations like yours, other governments, can benefit from?
Yeah, thank you very much. As we've heard, the challenges are becoming much more complex, the crises are compounding the challenges that we face. But what we have seen is, regardless of what the crisis is, it's always the poorest of the poor who are the hardest hit. We can take that one step further to say it's usually the poorest women that are the hardest hit. A lot of the work that we've been doing over the last two decades or more is on trying to find ways to sustainably lift the poorest people out of extreme poverty and finding the evidence to support the work that we're doing. Again, looking at sort of all of the work that we've done, the Ultra-Poor Graduation Approach that BRAC has been working on for 20 years or more we know has plenty of evidence, that when you target the poorest people, and again, going back to what I said the first time, when you address both the economic and social vulnerabilities through a big push investment, through a set of wrap-around services that do address both the economic and social vulnerabilities, even the poorest people can sustainably pull themselves out of extreme poverty and put themselves on a sustainable pathway out of poverty and build resilience. This has been done in multiple contexts for 20 years or more, it's been piloted in many places, there is a lot of evidence. What I wanted to say was what we need to do now is to scale it. The size of the problem is huge. There is anywhere between 500 and 700 million people in what we call ultra-poverty, and that number has risen for the first time in decades in the last few years. We are not on course for SDG 1. We felt that we were not on course even before the pan… [video cuts off] …these evidence-backed approaches. We will be informed and guided by governments about what our role can be. It can be as little as sharing experiences, providing the evidence to technical assistance and providing capacity building all the way to becoming an implementation partner. We're happy to do what is needed, but really it is the government that has to lead on this and the government has to scale its own programs. Governments across the developing world spend hundreds of billions of dollars on anti-poverty programs. If we can make them better, you can get a much better bang for your buck.
I'll end by saying that given where the world is right now with all of these things happening, it's easy to feel despondent, but we have the resources and the know-how and the evidence to sustainably pull millions of people, hundreds of millions of people out of poverty. So, really what we need to do is galvanize political will and work together between the governments, the civil society organizations and institutions like the Bank. We actually helped create a new multi-donor trust fund called the Partnership for Economic Inclusion at the World Bank to support governments to do much better on anti-poverty programs that are evidence-backed. Again, from our role we would like to really ramp up that work and work more closely with governments to get ourselves back on the SDG 1 agenda. Whatever we care about, ultimately it always hits the poorest the hardest.
Well, it's actually an optimistic view because many things you're saying that resources are there, there's lots of money there, the will is there. People say this is terrible, we've got the poorest of the poor around the world in our own countries. It seems to be you're trying to provide that model or something, here's what we need to do to get past the point we are and kind of supercharge it, maybe we'll see. So, Minister Arosemena, because I cover business news and economic news and global central banks and all that, we have stories every day about indebted governments and particularly after the pandemic, a lot of the emerging market countries are very indebted, and so they're trying to do more at this time when they don't have much. But somehow you expanded social protection programs and at the same time you got through major fiscal reforms. Share with us how you did it and what others can learn from what you did.
[Pablo Arosemena Marriott]
Yeah, so three things.
Ecuador has been able to achieve so much in fiscal discipline and at the same time increase the social investment, social spending. But as anything important in life, we have not done this by ourselves, we have done this with the help of the international community. Especially MDBs, multilateral development banks, IDBB, World Bank, IMF, among others. But still, we have a huge challenge that we are facing to this moment. This fiscal discipline and social spending, how we do it. Two years ago, just two years ago, our fiscal deficit was 7.7 points of GDP. This year it is 1%. We have been able to reduce it very aggressively. The debt to GDP ratio, we have reduced it from 61% to 55% within less than two years. In this time, we have increased the social spending in a way that the poorest of the poor, we have doubled the social coverage, the money transfers that they receive every day. Just to give you some sense of this, before our president, Guillermo Lasso, three out of ten families that are very poor received this money transfer. Right now, eight out of ten. We have doubled the social coverage. That is, around 2 million people are receiving money transfers thanks to the help of the MDBs and the fiscal discipline. Because the link between the two, the fiscal discipline and the social spending is that the fiscal discipline has given us the space, the room to prioritize the social investment. This year, according to World Bank, Ecuador is going to grow around 3% of GDP in a year. That is very tough, the average of the region is around 1.3%, 1.5%, 1 .7%. We will be growing above average, and we have the second lowest inflation in the region and the 9th lowest inflation in the world this year.
As I was telling you, this has been possible because of the work that we do every day with the MDBs. Just three weeks ago, we had an earthquake. This past month has been terrible, we had an earthquake, we had a landslide, the flood. I remember picking up the phone and talking to the local partner of the World Bank, and within hours we were meeting at our office and setting out a plan. What should we do to get a special line of credit for these natural disasters? We activated that very fast. It's not just that we do this, but that we are able to communicate to people that we have these systems in place so people can be at ease.
And the third thing that I want to mention is that we still have many challenges ahead, many, and we need resources to solve them, because after COVID-19, it is my feeling that people are not that patient. People are very impatient, so they want solutions now. In the particular case of Ecuador, we have barbarians at the gate, meaning that we have populist politicians that would love to dethrone our president and come into power by undemocratic ways. If that were to happen, all this fiscal discipline, all this social investment that we have achieved will be erased. We want to preserve not just the fiscal discipline and the public policy that we have, but the democratic stability, because that by itself is a great thing for the country.
Well, congratulations on what you've done so far, sounds good. I think we're going to turn some audience questions now, and we're going to start with one from Johanna and it's to President Spoljar… I'm sorry, I'm reading your name here, but your last name terribly.
[Mirjana Spoljaric Egger]
Spoljaric, thank you. And I practiced it so well before the event. But bottom line, is it true that after the pandemic we've entered an era of managing crises one after another, rather than focusing on long-term development? What do you see from where you sit?
[Mirjana Spoljaric Egger]
Thank you. It is true that there is a time before COVID-19 and there is a time after COVID-19 because everything that happened afterwards seemed to be piling up on an already stretched system, in terms of humanitarian and socioeconomic response. It is important to respond immediately to the urgent needs. I'm referring to the role that the ICRC has in providing lifesaving assistance. When I am in places where health systems are collapsing, I feel very bad if we can't deliver quickly enough because we are lacking the resources. But if we lose the focus on longer-term development, we will lose the opportunity to stabilize the system so that people can return to a normal life. The more and more closely we work together with development actors in understanding the combination of short-term intervention and longer-term development assistance, the better and more impactful will the help be for the people because ultimately, what they want is not to rely on humanitarian assistance in a protracted humanitarian situation, but to go back to having options and being empowered and controlling their own futures.
Okay, Mirjana, very well put. Shameran, I want to let you weigh on this as well, this issue of, okay, we were so focused on the pandemic, have we kind of gotten off track from a longer-term development path?
Yeah, absolutely, and I fully agree with that. It's a great question. Obviously, as we've heard, there are compounding crises, and we know that there's going to be a next one, and so and so we're not getting away from that. But again, from our point of view, again, looking at what are the underlying issues, who are the people who are always worst hit and continuing to make sure that we work with those people, whether they are in development context or humanitarian context, continues to be a priority. So, as I said, the issue of extreme poverty, the issue of gender justice, these are going to be issues that we need to solve for, because everything from climate to conflict to COVID-19 or the next pandemic will always hit these people the hardest. So, again, for all of us in the development and humanitarian world, it is how do we balance between the immediate, the crisis management, and still keep an eye on longer-term development? I think, as you've probably heard from me today, a big part of our advocacy is as we are getting more and more bogged down into immediate crises, let's not take our eye off some of the longer-term development priorities that we'd set for ourselves. The 2030 agenda, there's a lot of that there that needs a lot of work, and we need to continue to invest in them and do them, even as we are working on the immediate crises and that are coming one after the other.
Okay, Charles Mills out there somewhere has a question for you, Anna. The war in Ukraine, whatever food insecurity existed in the world has just gotten that much worse since the war started. How has the World Bank been dealing with this? What do you plan to do? War is dragging on, as he points out, and no sign of ending anytime soon, which is basically something that Minister Marchenko chimed in on as well.
Yeah, thank you so much, and thank you so much to the panel. It's fascinating, also, listening to you. I think the food insecurity that the war in Ukraine brought is very significant because between Ukraine and also Russia, these were two major exporters and many countries around the world depended a lot on these two countries for imports, some almost exclusively. So, clearly that's a big disruption. The Grain Deal Agreement that has been extended is very helpful because it means that there's a certain amount of grains that can come out of Ukraine, which is very helpful to the world, but it's also helpful to Ukraine because it's an export product for them. But I think we also need to keep in mind that many countries that actually are domestic food producers are also suffering because of climate change and because of extreme weather conditions. I've been meeting over the last few days with a number of countries who are not so affected by the export reductions coming out of Ukraine and from Russia, but are actually more affected by the fact that their own domestic production is not at all yielding what they thought it would yield because either of droughts or other related weather incidents. I think this just tells us that we need to have action on all of these fronts and it means having short-term crisis response packages to help countries through, helping the most vulnerable is absolutely critical, but it also means working on some of the structural issues that are underlying the lack of, let's say, productivity, lack of investments, lack of enough food production around the world.
Minister Marriott, I want to give you a chance to just quickly, before we close here, I know everyone has things they have to get to, but I'm curious about food insecurity, how it's affected the Latin American region. Just a quick comment from you from your vantage point, how this is going, what kind of challenge it is moving ahead. For you, yes, sir.
[Pablo Arosemena Marriott]
That's a huge challenge that we have in the region. [Unintelligible], as I was telling you, the inflation is not a problem, which is a big thing because right now it's the biggest problem in the world and we don't have that problem. Of course, we are a dollarized economy, but we have half of the inflation of the US. We have been able to do this, in part because of the fiscal discipline, and also in part because of the logistics and the supply chain that we have from the country with abroad. One of the goals of this administration has been to sign as many free trade agreements as possible. And that's a big thing, that is a very important thing in order to lower the prices and to increase the purchasing power of the people.
Well, so another very practical and government-driven approach. Just for a minute, it's so hard to give you the key takeaways. I'm sure you're kind of sitting thinking, we heard so many interesting things and I'm an inveterate note taker and I always tell people I kind of can't think if I don't have a pen in my hand. And even then, sometimes I wonder how I'm thinking.
But anyway, diplomacy, vaccine, how you drew on so many different relationships and reaching out in very important ways to move ahead so quickly. I think the comments just now from Mirjana about trust and how important it is to gain the trust, and you're there on the ground, you have the means to do it, and then transparency and helping build on that trust and take programs to another level. I think we heard that in many different ways. I think crises cross borders, certainly the pandemic was global, but in other ways, and then how the kind of preparation… I think you mentioned the trust as well, that people have to trust governments for things to move forward, and of course, during the pandemic there was a lot of mistrust. I think frequently, I think in our world today, that's something that everyone is dealing with. Of course, all your work, BRAC, all the things, development isn't something you can give someone, and the poorest of the poor and every poor person has that potential to move ahead. You don't give it to them, you give them the tools and they get it done. Certainly, Minister Marchenko, who's going to forget, okay, 5 billion dollars a day? I think that's one thing I'll take away, just the enormity of what the country has faced, many countries that we don't always focus on as much. Maybe the challenges aren't that enormous, but they're shared by so many countries around the world.
So, I would just also like to thank all of you for being here today in the World Bank Atrium with us and following us online. I kind of feel like now they’ve set the stage, I could start asking them all kinds of questions, and I'm sure you could too, but again, we're just happy. These are busy people, these are busy Meetings. And so, we're going to come to an end of our event governing effectively during challenging times. More to come, watch the replay of this session, I know I'm going to, as well as our other events throughout the week on live.worldbank.org/spring-meetings-2023. And I'm sure if you just Google it as broadly, it's going to come up. We hope you've enjoyed hearing from all of our distinguished guests at today's event. Please continue sharing your comments online with the hashtag @ReshapingDevelopment [#ReshapingDevelopment]. We'd love to hear from you. I'm Kathleen Hays, thank you so much for joining us.
"When looking for solutions, we must have a little bit of humility because each situation warrants its own approach. Governments really have to make very hard choices to focus on delivering to their citizens."
— Anna Bjerde
"What we realized in the first days of the war was the importance of security for the people of Ukraine and the notion that the Government is functional and able to provide necessary services for citizens."
— Sergii Marchenko
"Before we came into office, only 1% of the population was vaccinated. With planning, we were able to vaccinate 9 million people through diplomacy and a partnership with the Army, the private sector, and the Government."
— Pablo Arosemena
"The problem has become more complex, but we feel that the solutions need to be simple and scalable. [We must focus on] impact and scale for the most vulnerable communities."
— Shameran Abed
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Spring Meetings 2023
Join us for a series of live events on today’s pressing development challenges.
All the public events are live-streamed publicly in English with interpretation in Arabic, French and Spanish.
Throughout the Spring Meetings, The Zone provides a round-up of all the week’s happenings.