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]
- 15:51 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.
Coronavirus Live Series: Interview with World Bank Group President David Malpass
Follow the event on Twitter #COVID19
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]
- 15:51 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.
