Coronavirus Live Series: Interview with World Bank Group President David Malpass

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Coronavirus Live Series: Interview with World Bank Group President David Malpass

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Over the past three months, the World Bank Group has mounted the fastest crisis response in its history. We are now financing emergency operations in over 100 countries – home to 70% of the global population. 
 
Join David Malpass, President of the World Bank Group as he discusses the path ahead for developing countries. What will a robust and resilient recovery look like? How can we promote economic growth, support the poorest, and sustain businesses and jobs ? 

Read the transcript


  • 00:02 [Paul Blake] Hello, and welcome to World Bank Live. I'm Paul Blake.
  • 00:05 Over the past three months, the World Bank Group has mounted  
  • 00:09 the fastest crisis response in its history,  quickly making available up to $160 billion  
  • 00:16 over 15 months as well as technical assistance  to developing countries as they brace for,  
  • 00:22 are responding to and prepare to recover  from the coronavirus pandemic. The World  
  • 00:28 Bank is now financing emergency operations in  over 100 countries, home to 70% of the global  
  • 00:36 population. Let's take a quick look at the  global scale of the World Bank's response. 
  • 00:41 Well, to get his assessment of the road ahead  and the risks and opportunities for developing  
  • 01:28 countries as they look towards recovery, I'm  very happy to welcome World Bank Group president,  
  • 01:32 David Malpass to World Bank Live.  David, thank you so much for joining us. 
  • 01:37 [David Malpass] Hi, happy to be on. It's a good topic. 
  • 01:40 [Paul Blake] Well, sir, let's just jump right  
  • 01:42 into it. Much of the world's attention so far has  rightly been focused on the health crisis and the  
  • 01:47 immediate response to that. But as countries  begin to relax some of those restrictions,  
  • 01:50 those lockdowns, a lot of the focus is going to  be turning towards rebuilding and recovery. What  
  • 01:56 will be your priorities in the focus areas for  the World Bank Group as we move forward here? 
  • 02:01 [David Malpass] It'll be the very  
  • 02:03 important that the private sector be maintained,  the government sectors be improved, and also that  
  • 02:11 we have a matching of where the World Bank can  help countries and where they can actually make  
  • 02:19 progress. There's this combination of available  resources and things that the countries want to  
  • 02:27 do. We want to be responsive to the country's  needs, but also to make as much progress as we  
  • 02:32 can. When I talk about the World Bank, I'm also  talking and mostly about IDA, the International  
  • 02:39 Development Association, which is the part of the  World Bank that works with the poorest countries. 
  • 02:45 Both of those… the World Bank entity is working  as a combined group along with IFC in order  
  • 02:53 to create a better recovery, a stronger  recovery for as many countries as we can. 
  • 03:00 [Paul Blake] Really bringing all the different  
  • 03:02 institutions together, bringing all that force  to bear to support developing countries as they  
  • 03:06 recover. I know you believe that the developing  countries will be hardest hit by the downturn that  
  • 03:13 is likely to result from the pandemic. Help me and  the audience understand this a little bit further,  
  • 03:18 why does the Bank, why do you think they are  particularly vulnerable in this period ahead? 
  • 03:23 [David Malpass] It's a double impact. They're vulnerable to the  
  • 03:27 pandemic, to COVID-19 itself, and people are dying  in the countries, but then this added problem is  
  • 03:34 they just don't have the resources and capacity  in order to protect their economies. What we've  
  • 03:42 seen in the advanced countries is huge amounts of  borrowing and spending in order to maintain jobs,  
  • 03:49 protect jobs, and also give a social safety net.  We can do some of that in the developing world,  
  • 03:57 but we can't match the unemployment insurance that  people get in the advanced economies, for example. 
  • 04:05 What we are trying to do is create programs that  are as helpful as possible to the countries. And  
  • 04:12 this means tailoring the programs to different  countries. Some of the countries have the ability  
  • 04:19 to pass cash to people, to poor people through  a safety net that's similar to what advanced  
  • 04:29 countries have. In those cases, we can put money  through those systems, and it really keeps people  
  • 04:35 out of extreme poverty. That's very valuable to  their children, to education that they can pay  
  • 04:43 a little bit of money so that their children  can go to school or be transported to school  
  • 04:48 or be spared in the fields. That's critical  to the family's future. Food resources are  
  • 04:58 a critical part of this problem and money can  help, but also food products for the animals,  
  • 05:06 that's a critical part of the East Africa problem. What I'm conveying is there needs to be variation  
  • 05:14 across countries to meet the needs, the urgent  needs that people are having as the world goes  
  • 05:21 into this deep recession. [Paul Blake] 
  • 05:22 If I'm understanding you correctly, it's a lot of  looking at the individual needs of those countries  
  • 05:28 and tailoring the response for those countries to  make sure they're getting an effective response  
  • 05:32 that they need. [David Malpass] 
  • 05:33 That's exactly right. As we think about the  future, if you think about three years from now,  
  • 05:39 what you would like to have is some areas where  countries have been able to make progress in ways  
  • 05:47 that allows them to have stronger growth.  An example of that is advancements that are  
  • 05:57 being made in digital access. One of the problems  that poor countries have is just being cut off,  
  • 06:03 people live in rural areas, they don't have  broadband. In some cases, many cases they don't  
  • 06:09 have electricity or water that's clean enough  to drink. As we look to the other side of this,  
  • 06:18 I think there's a way to make progress on  advancing the digital services that people have  
  • 06:26 available so they can get access to information. That's a starting point for farmers to do a better  
  • 06:32 job, for people to learn skills. One of the big  things that people can do now and the Bank has  
  • 06:39 big programs in is the skills learning at  the basic level so that people are able to  
  • 06:46 have jobs in the future. That's something that  we're making available programs that will help  
  • 06:55 people get access to education or to skills  that will help them when there's a recovery. 
  • 07:03 [Paul Blake] On a more sort of abstract kind  
  • 07:05 of overview at economic level, my understanding  is that a faster recovery will require a return  
  • 07:12 to growth. What are some of the key areas for  the Bank and your priorities for supporting and  
  • 07:18 promoting that return to growth? [David Malpass] 
  • 07:20 A starting point is maintaining some financial  capacity within the countries. That means the  
  • 07:32 countries... One big problem is countries have  been cut off from access to global financial  
  • 07:40 markets. And so there's been a sudden change  in their ability to roll over their debt,  
  • 07:47 borrow their debt. So we're doing multiple  things in that area. One is sizable new resources  
  • 07:56 from the World Bank Group. We're providing  large net positive flows to many countries,  
  • 08:04 the IMF is adding resources and the other  multilateral development banks are doing that. 
  • 08:11 Then another part of this is a debt moratorium.  Many of the poorest countries had taken on large  
  • 08:20 debt burdens that were coming due, they were  having to pay interest and principle on their  
  • 08:27 debt, and so I called for a moratorium on that.  Kristalina Georgieva of the IMF joined me in  
  • 08:35 March and the G20 endorsed this approach, and  it took effect on May 1st. So the countries are  
  • 08:44 saving billions of dollars, and will be over  the summer and over the middle of the year and  
  • 08:51 into late 2020, on debt service that they don't  have to pay. There's lots of details in this,  
  • 09:00 but the key issue is to have more resources  available from donors, from capital markets,  
  • 09:10 where we, the World Bank borrows a lot of money  and passes it on to the poorer countries, and then  
  • 09:16 from this moratorium. So that's one set of tasks. Then the other set of tasks is to maintain an  
  • 09:24 economy so that it's ready to have growth when the  developed world starts growing again. That means  
  • 09:32 farmers are able to have seeds for their crops.  One of the things we're doing in East Africa,  
  • 09:38 which has been hard hit by the locust crisis, is  setting the stage or creating the foundation so  
  • 09:46 that the farmers that have lost their entire crop  will be able to replant and create a new crop into  
  • 09:53 the future. That allows some maintenance of the  agriculture system and also the livestock system,  
  • 10:02 which is such a key part of developing countries. Then the private sector itself, that means the  
  • 10:12 basic building blocks so that companies who  are starting up are able to import goods and  
  • 10:19 export goods into their neighbors and into  the global market. Those are all steps. 
  • 10:25 IFC, the International Finance Corporation, has  been instrumental in creating trade finance.  
  • 10:32 They have 300 programs or have had 300 inquiries  that turn into programs where they lend companies  
  • 10:41 money for a very short period of time to finance  imports. That program already has had $1.4 billion  
  • 10:49 of involvement, of engagement with countries in  order to maintain the flow of goods into and out  
  • 10:59 of poor countries. We think as much as half of  that is to what we call FCV countries, countries  
  • 11:08 that face fragility, conflict and violence.  Those are some of the poorest countries, often in  
  • 11:15 Sub-Saharan Africa, but around the world. So that  gives you a sense of the breadth of the program. 
  • 11:23 To put it in perspective, we started with the  healthcare crisis, that was a hundred programs  
  • 11:28 starting in mid-March that we were able to set  up programs in a hundred different countries  
  • 11:33 that would address the immediate health crisis  and provide things like personal protective  
  • 11:39 equipment. Now we're implementing that, and it's  a big challenge, it involves a lot of people at  
  • 11:47 the Bank, but we're moving to the next stage  of designing programs that will maintain the  
  • 11:53 economies and be ready as a recovery takes  hold, we hope, in the second half of 2020. 
  • 12:01 [Paul Blake] You mentioned the IFC there,  
  • 12:03 I want to talk to you more about that, but  let's just pause for a moment and take the  
  • 12:07 opportunity to welcome people who are tuning in  from around the world. We appreciate everyone  
  • 12:11 who is joining us here on World Bank Live. As many know, over the past few months,  
  • 12:15 we've been taking stock of the COVID-19 pandemic  and its impact on just about out every aspect of  
  • 12:21 economic development. Today, that effort  continues as we've got an overview of the  
  • 12:26 World Bank's work and its response to the  crisis. We're also getting a preview of what  
  • 12:31 a strong economic recovery will look like. And  to do that, we have World Bank Group President,  
  • 12:35 David Malpass, joining us on the line,  sharing his thoughts on the road ahead. 
  • 12:40 David, before the break, we were talking about  some of these different aspects of the recovery,  
  • 12:44 and one of the key areas that the Bank will be  supporting to promote economic growth as the  
  • 12:51 pandemic is affecting the global economy. We're  seeing many companies struggling and workers  
  • 12:57 losing their jobs right across the world.  You mentioned before the IFC, folks who are  
  • 13:02 just tuning in, who might not be aware that's  the International Finance Corporation, that's  
  • 13:05 the part of the Bank that supports the private  sector in developing countries, it's deploying  
  • 13:10 an $8 billion package in fast track financing  as a part of its response to this crisis,  
  • 13:16 as part of the World Bank Group's response to this  crisis. What are some of the priorities for that  
  • 13:20 $8 billion package and how is it addressing the  employment situation in the developing countries? 
  • 13:26 [David Malpass] It varies in different countries.  
  • 13:30 Some countries have been completely cut off from  financial markets abroad, for example, from banks,  
  • 13:37 and those were important. We talked earlier  about the trade finance side of what IFC does,  
  • 13:45 and that's very important because it's fast  acting. You can borrow money in order to buy  
  • 13:53 goods to bring them into your country and also  you can export and get the money from the export  
  • 14:03 more quickly than maybe the buyer could supply. So  that finances a fast part of the recovery, and IFC  
  • 14:12 is in the middle of that. It's been particularly  important to because during this global recession,  
  • 14:18 the financial markets have frozen up and so  this provides liquidity. That's one aspect. 
  • 14:26 Another aspect is working capital. Smaller  businesses and many even mid-size bigger  
  • 14:34 businesses don't have access to a bank that  will lend to them while they build up accounts  
  • 14:41 receivable, while they build up an inventory.  Let's say you want to buy something in a country,  
  • 14:46 you need to hold inventory so people will  come in and buy it and can see the product,  
  • 14:52 that costs money. So the IFC can help with that,  and that's another chunk of the resources. It's a  
  • 15:00 little bit different, country by country, in terms  of the legal structure, so that creates challenges  
  • 15:06 but they're moving very quickly on that. One other aspect that I'll mention is the ability  
  • 15:16 to buy equipment for a company. Let's say you have  a great idea for a company and you know people are  
  • 15:22 going to buy it, but it takes some degree of  equipment. Maybe it's for small manufacturing,  
  • 15:27 so you need a lathe, or you need a sewing machine,  or you need a wheelbarrow for a construction  
  • 15:34 project. Each of those is hard in very poor  countries. It's just hard for people to buy those.  
  • 15:41 So the IFC can create the leasing opportunities,  the equipment purchasing opportunities that helps  
  • 15:51 businesses get started. [Paul Blake]  Promoting the creation of businesses and allowing  people to start businesses. Now, I think if I'm  
  • 15:58 not mistaken, earlier in the program you mentioned  trade. I know that's another big priority for you,  
  • 16:02 for the World Bank, for the IFC, keeping trade  flowing. Can you explain that to us a little  
  • 16:08 bit more? What are some of the actions that can  help in this area? For those of us who might not  
  • 16:13 understand some of the finer details here, why  are developing countries particularly vulnerable  
  • 16:19 to trade disruptions? [David Malpass] 
  • 16:20 They are. That's because the advanced economies  have more money, and they can buy things at a  
  • 16:30 higher price. It's quite an important avenue  of development for the developing countries  
  • 16:37 to be able to sell into global markets. I want to step back for a minute. We know  
  • 16:43 from human history that people benefit when they  specialize. One of the most important parts of  
  • 16:50 trade and commerce is trading with your neighbor.  I'm good at doing something, my neighbor,  
  • 16:56 she's good at doing something, we can trade  goods and services, and develop a better town,  
  • 17:03 and then a better county, and then a better  state, and then a better nation. Very soon  
  • 17:11 nations want to trade with each other because some  they're better at some things than other things. 
  • 17:17 It turns out that one of the most important things  is cross border trade, is the ability to have  
  • 17:25 similar standards, or transparent standards,  that allow you to trade across a boundary. 
  • 17:33 We work a lot on... This area is called  trade facilitation. It means just that,  
  • 17:40 you try to facilitate or make it easier for people  to trade with each other by having some light  
  • 17:47 regulatory policy that addresses safety, addresses  standards so that you know what you're buying.  
  • 17:56 That's a chunk of the work that the Bank does. It turns out to be not that expensive, and very  
  • 18:05 beneficial, when it can be accomplished. I  wanted to tell you about that. Then as we  
  • 18:12 come to more global markets, this gets into the  ability of developing countries to move up the  
  • 18:22 value chain. You start by making things that are  the most basic raw materials. And that might be,  
  • 18:28 for example, a coffee bean or a peanut  in the fields, or other kinds of crops,  
  • 18:36 that you know have market value, but all you  can do at this point is produce it and sell it  
  • 18:44 to someone else. Then it gets shipped abroad. As we think about what countries can do to get  
  • 18:51 ready for faster growth, they can add value.  Maybe they differentiate their coffee from  
  • 18:58 someone else's coffee. They put a brand  on it so that people want to buy it as a  
  • 19:04 specialty product. There are all sorts of  different ways that countries can make in  
  • 19:09 advance. This, I'll make a point here about the  importance of the flexibility of an economy,  
  • 19:17 and ability to allocate resources, or allow  their country to allocate resources to things  
  • 19:26 that are going to be profitable down the line. One of the biggest things we can do during the  
  • 19:31 crisis is identify areas where countries can  build their flexibility and create capacity for  
  • 19:41 growth in the future. [Paul Blake] 
  • 19:43 Those explanations are super, super helpful  there. Let's just take another moment, David,  
  • 19:47 to pause and welcome everyone who's been  tuning in from around the world. You're  
  • 19:51 with World Bank live, and we're continuing to  take stock of the coronavirus pandemic's impact  
  • 19:55 on global economics and development. Today,  we're joined by World Bank Group President,  
  • 20:01 David Malpass. He's sharing his thoughts on  the crisis response and what the road to a  
  • 20:06 strong and sustainable recovery will look like. If you're just joining us, you can catch up on  
  • 20:12 this episode and all the other episodes from  our COVID-19 Live Series if you head on over  
  • 20:17 to live.worldbank.org. Later today, this will  be up there. The other episodes are up there. 
  • 20:22 David, I want to turn back to you now. I know  another big priority of yours is sustainable  
  • 20:27 use of debt. I've heard in the past about debt  transparency and other responsible uses of debt.  
  • 20:32 The World Bank has warned about the level of debt  that some of the poorest, some of the developing  
  • 20:38 countries, are holding even before crisis began. My question for you is, has this crisis made that  
  • 20:45 situation worse? Has the coronavirus pandemic  increased the threat of unsustainable debt? 
  • 20:51 [David Malpass] One problem is that the governments  
  • 20:55 of developing countries are seeing their revenues  go down a lot. That's their tax revenues and their  
  • 21:00 revenues from tariffs, from trade, for example.  What that means is, whatever level of debt  
  • 21:08 they had prior to the crisis is more burdensome. We're addressing that by providing more resources,  
  • 21:15 by the moratorium on payments that we  talked to about earlier. The G20 countries,  
  • 21:24 the biggest countries, have been generous  in saying that the poorest countries don't  
  • 21:30 need to pay them back for their official debt.  That saves money for the developing country,  
  • 21:38 but also means that new investments have some  breathing room in order to grow going forward. 
  • 21:47 That's an important step, the debt  sustainability. Another part of this is the  
  • 21:53 transparency of both the debt and the investment  that countries make. I'll phrase it as a problem,  
  • 22:02 but I think we're making progress. The problem  is, when governments enter into contracts that  
  • 22:08 are not transparent, it's hard to know whether  they've been getting a good deal, whether it's  
  • 22:15 going to work for the people of the country. It's a better system to have transparency.  
  • 22:21 That way the people of the country are able  to see what the commitments are that their  
  • 22:27 governments are making, and also what they're  getting for the money that they're going to  
  • 22:32 be paying back to the lender. We've been  strongly encouraging a more transparent  
  • 22:39 process for both the debt and the investments  that countries make, countries around the world. 
  • 22:48 Every stage of development, I think, can benefit  from transparency. The positive side of this is  
  • 22:56 that way you can attract more investment, and  higher quality investment. If you have that  
  • 23:03 transparency at the base, then investors want to  come in, and projects start being proposed that  
  • 23:11 make more sense for the people of the country. That's been a strong focus of the Bank. We'll  
  • 23:20 continue that over the next year, over the next  two years. The countries are participating,  
  • 23:25 but I don't want to underestimate the difficulty  of this. There's a lot of inertia in the system,  
  • 23:32 and it's hard to break out of that. Countries  are used to entering contracts, and the lender  
  • 23:38 like it to have these non-transparent contracts. One of the things we're trying to do is break  
  • 23:44 through that and convince both sides  that it's going to be better for them,  
  • 23:49 more in their interest, if there can  be more transparency within the system. 
  • 23:53 [Paul Blake] Letting people get a view  
  • 23:55 of some of the terms around some of these loans  and deals that their governments are making. As  
  • 24:01 we wrap up here, looking for a silver lining,  a lot of people look at the pandemic and the  
  • 24:08 crisis and the recovery that will come as an  opportunity to, quote and quote, "build" back  
  • 24:12 better. I think what they mean by that is that  the decisions and the investments that countries  
  • 24:17 make now and will make here in the short term  could result in a more resilient and sustainable  
  • 24:22 foundation that will help those countries hold  off future crises or protect themselves from  
  • 24:29 somewhat from future crises. Where do you and  the Bank see some opportunities to that end? 
  • 24:35 [David Malpass] This is my favorite topic because  
  • 24:39 it points to the future, a better future where  people can have more confidence in what their  
  • 24:46 families will be experiencing. One part of that  is the environment itself. The pure meaning of  
  • 24:54 sustainable is that you can keep doing it year  after year without running out of resources,  
  • 24:59 your country's natural resources, without using  up global public goods. For example, polluting  
  • 25:06 the ocean means that the future generations are  going to have a harder time. The climate issues  
  • 25:16 are part of the work of the Bank, an important  part. I want to mention the opportunity or as  
  • 25:23 countries think about how to build back, having  a lower carbon footprint is an opportunity. Oil  
  • 25:32 prices are low now, it's a chance for people  to change their systems and improve their  
  • 25:38 systems so that they work better in the future. That's one aspect of sustainability. But then  
  • 25:46 another key aspect, we talked earlier about the  transparency of the debt and investment practices  
  • 25:51 that countries have. That can make them more  sustainable. And then there are many other aspects  
  • 25:57 of this. One is the health systems. You need  to have healthy people going forward after the  
  • 26:03 pandemic. That means systems that work to provide  vaccinations, to provide checking child nutrition  
  • 26:12 and the checkups that children need and all of  the other aspects of that. Same with education to  
  • 26:19 create the capacity in the future for businesses  to spring up and skills to be available. 
  • 26:26 One of the, interestingly one of the most  frequent questions that businesses ask when  
  • 26:35 they're thinking about investing in a developing  country is, what are the skills levels? The  
  • 26:41 businesses want to hire people in the countries,  but they want people that have language skills,  
  • 26:47 reading and writing skills, that have skills with  either with the education system, with tools,  
  • 26:56 with whatever the kind of company is. They often  say that the biggest constraint is the need for  
  • 27:03 more skills by workers. That's something that  we can build strongly as a way to get to faster  
  • 27:11 growth in the future. Faster sustainable  growth is a core mission of the World Bank. 
  • 27:18 I should mention that another core mission is  the alleviation of extreme poverty. I don't want  
  • 27:27 to leave us on a down note, but I think we have to  recognize the reality that with the world entering  
  • 27:33 a severe recession, there's urgency in this task  that I've talked about because the poverty levels  
  • 27:44 are rising. It's the first time since 1998, that  was the Asian crisis. The first time now, again,  
  • 27:52 that the poverty levels are going up instead of  down. That has severe consequences so that drives  
  • 27:58 the World Bank forward and I hope drives the  developing countries forward to create a better  
  • 28:05 stronger environment. [Paul Blake] 
  • 28:06 David, thank you so much  for taking the time today. 
  • 28:09 [David Malpass] And thank you. Good to talk with you. 
  • 28:13 [Paul Blake] David Malpass is the president of the  
  • 28:15 World Bank Group. He joined World Bank Live from  his home in Washington, DC. If you're not already,  
  • 28:20 be sure to follow his updates on LinkedIn. But  before we go, a big thank you to everyone who  
  • 28:26 tuned in, commented and shared this conversation  with your followers, your friends and your  
  • 28:31 colleagues. We really appreciate that. If you'd  like to watch it back or see it again, or see  
  • 28:35 any of the other conversations in our COVID-19  Live Series, head on over to live.worldbank.org.  
  • 28:41 If you'd like to learn more about the World Bank  Group and its work, especially when it comes to  
  • 28:45 fighting the coronavirus pandemic, head on over  to worldbank.org/coronavirus. Thank you again,  
  • 28:51 stay healthy, stay safe, we'll see  you back here again soon. Goodbye.

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