The Pandemic Response: Building a Resilient and Inclusive Recovery

Watch the Replay

The Pandemic Response: Building a Resilient and Inclusive Recovery

Follow the event on Twitter #ResilientRecovery

Ahead of the World Bank Group-IMF Annual Meetings, Frankfurt School of Finance and Management hosted World Bank Group President David Malpass who discussed the impact of the COVID-19 pandemic on the world’s poorest and most vulnerable people and the challenge of building a resilient and inclusive global recovery.

The event was introduced by Germany’s Bundesbank President Dr. Jens Weidmann and included a conversation between President Malpass and Professor Nils Stieglitz, President and Managing Director of Frankfurt School of Finance and Management.

The Resilient Recovery Series includes in-depth interviews with the Bank’s leading experts focused on health, social, and economic responses, as well as policies, institutions, and investments that will be critical to resilient, inclusive, and sustainable recovery.

Check out the previous episodes!

Read the transcript


  • 0:37 Welcome to viewers from around the world to the event:
  • 0:40 "The Pandemic Response: Building A Resilient And Inclusive Recovery".
  • 0:45 I am Asiya Mohammed, CEO of Conflict Woman and a Frankfurt School alumna.
  • 0:50 I have the pleasure of being your moderator for today
  • 0:53 and I am joining you from my home country, Trinidad-and-Tobago in the Caribbean.
  • 0:58 Before I introduce our speakers, a few words about today's event:
  • 1:03 COVID-19 has overtaken the world it has affected every single person in some way
  • 1:10 and has fundamentally changing societies, economies, and countries.
  • 1:15 Today we are here to understand its true impact
  • 1:18 which has been particularly devastating for developing countries
  • 1:22 and in the most vulnerable communities:  women, youth, the elderly, and migrants.
  • 1:29 But most importantly we are here to find innovative solutions to creating change.
  • 1:35 This is precisely the focus of this year's World Bank Group Annual Meetings
  • 1:41 which will take place starting the week of October 12th
  • 1:44 and convene global leaders from government, business, and civil society.
  • 1:49 To set the stage for the meetings
  • 1:51 we will hear today from World Bank Group's president David Malpass,
  • 1:56 on what it will take to tackle this crisis  and how we can turn this into an opportunity  
  • 2:03 to build a path towards a resilient and inclusive recovery.
  • 2:07 Mr. Malpass will be joined in conversation  
  • 2:10 with professor Stieglitz, president of Frankfurt School of Finance and Management.
  • 2:16 But first, we will hear from Dr. Jens Weidmann, President of the Deutsche Bundesbank
  • 2:22 who is joining us from his office in Frankfurt?
  • 2:26 Dr. Weidman has been president of the German Central Bank since May 2011.
  • 2:32 He is a member of the Governing Council of the ECB,  
  • 2:36 represents Germany and the IMF and other international bodies
  • 2:40 and has been Chairman of the Board of Directors  
  • 2:43 of the Bank for International Settlements since November 2015.
  • 2:48 Dr. Weidmann, welcome. The virtual floor is yours.
  • 2:54 Thank you very much Asiya for your kind words of welcome.
  • 2:57 Ladies and gentlemen, it's a great pleasure and honor for me to be joining you today.
  • 3:02 As everyone here knows addressing inequalities  and realizing an inclusive and sustainable world
  • 3:09 requires jobs, education, healthcare, attention to the environment,
  • 3:14 and robust commerce, trade, among neighbors and nations.
  • 3:19 This wise statement was made, not recently, but more than a year ago
  • 3:24 by the President of the World Bank Group David Malpass.
  • 3:29 Given the present crisis, however, these words sound very current and pressing indeed.
  • 3:35 A few months ago millions of people lost their jobs, international supply chains were broken,
  • 3:42 children were unable to go to school, and health systems were at breaking point.
  • 3:47 And worst of all, many people have died.
  • 3:51 The World Bank's chief economist Carmen Reinhart summarized  
  • 3:54 the economic fallout by saying:
  • 3:57 "even by the standards of systemic crisis,  this is a once in a century [global...]  
  • 4:03 truly global crisis." Germany was not spared by the crisis either.
  • 4:09 In the second quarter alone, the German economy shrank by one-tenth,
  • 4:14 the depth and pace of the contraction were unprecedented.
  • 4:19 One reason for this was the stringent measures
  • 4:22 taken by the government to keep the pandemic in check
  • 4:26 but consumers and businesses also behaved cautiously  
  • 4:30 on their own account and held back on spending.
  • 4:34 When the protective measures were relaxed
  • 4:36 people regained their confidence and the economy revived.
  • 4:41 Indeed the German economy is likely to have grown strongly  
  • 4:44 in the third quarter orbit from a very depressed level.
  • 4:49 Though the rebound initially appears v-shaped, it is in fact becoming flattered.
  • 4:54 But a slowdown such as this has been expected.
  • 4:58 The recovery of the German economy is likely to be protracted
  • 5:02 and to remain incomplete for some time
  • 5:05 since economic life is still constrained.
  • 5:08 Whether this is due to government requirements or  because people are choosing to social distance.
  • 5:14 But differently economic activity  has passed through the trough  
  • 5:19 and while the first three metres  of the climb out of that trough
  • 5:23 were comparatively easy the  upward path to the previous level
  • 5:27 is still long and fraught with uncertainties.
  • 5:32 A major source of uncertainty is how  the pandemic will continue to unfold.
  • 5:38 Keeping the disease at bay,
  • 5:41 Learning to achieve containment  at decreasing economic cost
  • 5:45 and eventually overcoming the pandemic, are  essential to sustaining the economic recovery.
  • 5:52 But that's easier said than done.
  • 5:55 As rising infection rates across Europe highlight,
  • 5:58 and for German industry which is closely  interlinked with our partner countries,
  • 6:02 it is also important that others  regain their economic strength as well.
  • 6:07 However, the recovery in Germany  also hinges on something else
  • 6:12 Second-round effects need to be  prevented so that they cannot  
  • 6:16 intensify and entrench economic problems.
  • 6:21 Monetary policy is playing its part in this.
  • 6:24 Providing banks with ample liquidity,  coupled with low-interest rates,
  • 6:28 is crucial to ensuring that the economic crisis is  not further aggravated by the financial system.
  • 6:35 Another risk is that businesses with  previously solid fundamentals and a  
  • 6:41 promising future do not make it through the  crisis setting off broad waves of insolvencies.
  • 6:48 Many people would lose their jobs and probably  have a hard time finding new employment.
  • 6:53 Their skills and knowledge could begin to erode  which would darken their individual prospects,
  • 6:58 lower their lifetime income,  scare the economy as a whole
  • 7:03 And this is where fiscal policy needs to step in.
  • 7:06 By providing rapid and  comprehensive financial support
  • 7:10 for businesses and people  during this difficult period.
  • 7:14 Fiscal policymakers have taken the right  course of action in Germany and elsewhere.
  • 7:21 However, we also need to  look at the bigger picture.
  • 7:24 The global nature of the crisis makes  the situation particularly challenging.  
  • 7:30 Above all for emerging market  and developing economies
  • 7:34 with their structural vulnerabilities.
  • 7:38 As the World Bank highlighted in its June report,  EMDEs currently face headwinds from two sides. 
  • 7:45 First, they have to contain the pandemic at  home, thereby curbing the domestic economy,
  • 7:51 and second, they have to cope with the  economic spillovers from the deep recessions
  • 7:56 in advanced economies.
  • 7:58 Commodity prices have plunged,  global demand for goods has shrunk,
  • 8:02 tourism almost ground to a halt,  and remittances have sunk markedly.
  • 8:09 Overall the ranks of extremely  poor people could swell
  • 8:13 by 70 to 100 million this year,  according to World Bank estimate.
  • 8:18 Moreover, the World Bank fears that  the current crisis might leave more and
  • 8:23 deeper scars than typical recessions.  In particular disruptions to
  • 8:28 schooling and in access to primary health care
  • 8:31 are likely to have a lasting impact on individuals
  • 8:36 but also, as economists say, on the human capital  of population cohorts and at the aggregate level.
  • 8:43 According to Unesco calculations  over 90% of pupils worldwide
  • 8:47 were impacted when school closures peaked,
  • 8:50 but as many as half of them are  still affected today indeed.
  • 8:55 Many schools remain closed especially  in the Middle East, the Americas and Africa.
  • 9:02 What's more, remote learning  capabilities are often  
  • 9:06 far worse in less developed countries  than they are in industrial nations.
  • 9:11 With only parts of the population having  access to online learning formats for instance.
  • 9:16 When the OECD looked at the lowest  income category in Latin America,
  • 9:21 only one in seven primary school  pupils had internet access at home.
  • 9:27 Recently, a World Bank calculation  has shown the possible consequences  
  • 9:31 of disruptions in the education  process due to the pandemic.
  • 9:35 The number of what it terms "learning adjusted  
  • 9:39 years of schooling" could fall on  average by more than half a year
  • 9:44 and this could lower expected  lifetime earnings by 5%.
  • 9:49 and as the alternatives to school  learning do not serve pupils equally
  • 9:55 the current crisis is also likely to exacerbate  income inequality, especially in EMDEs.
  • 10:02 The magazine The Economist  recently summed the problem up  
  • 10:06 particularly well and I quote:  "This coronavirus affects  
  • 10:11 everyone but not equally. The rich shrug  off the economic shock, the poor cannot." 
  • 10:19 Fortunately, the World Bank is very much a  key player in global crisis management
  • 10:24 and in supporting low-income countries.
  • 10:27 Since the beginning of the crisis, it has  been able to provide funds and advice quickly
  • 10:33 and also efficiently. For example, the emergency  health support has reached 111 countries.
  • 10:40 Overall the World Bank Group will be  mobilizing resources at an unprecedented scale
  • 10:45 and with that, it is high time to introduce  to you the head of this essential institution
  • 10:51 and, may I say, the driving force  behind its crisis response.
  • 10:57 I would like to welcome David Malpass,  
  • 10:58 President of the World Bank Group  for the past one and a half years.
  • 11:03 International economist and,  somewhat unusually, holder  
  • 11:06 of a Bachelor's degree majoring in physics.
  • 11:10 David, you've worked in very  different settings over your life.
  • 11:14 I imagine that during your career you have often  quite intuitively applied the lever principle  
  • 11:20 using it to achieve maximum progress  with a given amount of force.
  • 11:25 You did this at various private  sector enterprises, including
  • 11:30 a long stint as Chief Economist at Bear Stearns,  
  • 11:33 and later, when you started your own company, when you started your own company,
  • 11:36 but you also served public spending  many years at the U.S. Treasury  
  • 11:41 as far back as the Reagan administration.
  • 11:44 Your task at that time included a wealth  of foreign and development policy issues
  • 11:50 which already brought you into contact with  the World Bank in 2017 you returned to the  
  • 11:57 U.S. Treasury and became Under Secretary  of the Treasury for international affairs  
  • 12:02 and as you represented the united states  in international settings our pass crossed  
  • 12:08 at numerous g7 and g20 meetings David tom  keane the edit at launch at bloomberg news  
  • 12:17 once praised a whole host of your talents what  he stressed most of all though was your hands-on  
  • 12:26 approach to paraphrase tom clean's words others  talked but you did qualities such as this are  
  • 12:36 important particularly in times of crisis so it  is with great anticipation that we await hearing  
  • 12:45 what you have to say today about the outlook for  the global economy the impact of the pandemic  
  • 12:51 in developing countries and the world  bank's agenda I wish you all new insights  
  • 12:57 and a fruitful and intense debate good to see  you David the floor is yours good to see you
  • 13:04 Thank you, Jens. And thanks to Frankfurt  School and the Bundesbank for hosting me  
  • 13:17 virtually. I look forward to engaging with you  and taking questions from students, who will be  
  • 13:23 future business leaders in a post-COVID world.  I’m here to set the stage ahead of the IMF and  
  • 13:30 World Bank Group’s Annual Meetings, which will  focus primarily on COVID and debt, and will also  
  • 13:36 engage partners in urgent discussions on human  capital, climate change, and digital development.
  • 13:42 Before I begin, I would be remiss not to mention  that this is the first time that the positioning  
  • 13:48 speech for the World Bank Group Annual  Meetings is being held in continental Europe.  
  • 13:54 Germany is a major anchor for the World  Bank Group and the rest of Europe;  
  • 13:58 it is IBRD’s fourth largest shareholder,  and the fourth largest contributor to IDA,  
  • 14:05 and Chancellor Merkel has always been a strong  supporter of World Bank Group priorities,  
  • 14:11 including tackling debt and COVID, as well as  action on global public goods. I understand that  
  • 14:17 these priorities are also the focus of Germany’s  EU Presidency, which runs through the end of 2020.
  • 14:25 As Jens said, the COVID-19 pandemic is a  crisis like no other. Its toll has been  
  • 14:31 massive and people in the poorest countries  are likely to suffer the most and the longest.  
  • 14:37 The pandemic has taken lives and disrupted  livelihoods in every corner of the globe.  
  • 14:43 It has knocked more economies into simultaneous  recession than at any time since 1870.  
  • 14:50 And it could lead to the first wave of  a lost decade burdened by weak growth,  
  • 14:56 a collapse in many health and  education systems, and excessive debt.
  • 15:01 The pandemic has already changed our world  decisively and forced upon the world a painful  
  • 15:07 transformation. It has changed everything: the  way we work, the extent to which we travel,  
  • 15:14 and the manner in which we communicate,  teach, and learn. It has rapidly elevated  
  • 15:19 some industries—especially the technology  sector—while pushing others toward obsolescence.
  • 15:26 Our approach has been comprehensive—focused on  saving lives, protecting the poor and vulnerable,  
  • 15:33 ensuring sustainable business growth, and  rebuilding in better ways. Today, I’m going to  
  • 15:39 focus on four urgent aspects of this work: first,  the need to redouble efforts to alleviate poverty  
  • 15:46 and inequality; second, the associated loss of  human capital and what must be done to restore it;  
  • 15:54 third, the urgent need to help  the poorest countries make their  
  • 15:58 government debt more transparent and  permanently reduce their debt burdens,  
  • 16:04 two necessary steps to attract  effective investment; and finally,  
  • 16:09 how we can cooperate to facilitate the changes  needed for an inclusive and resilient recovery.
  • 16:15 Topic 1: Poverty and Inequality
  • 16:16 First, on poverty and inequality, COVID-19  has dealt an unprecedented setback to the  
  • 16:22 worldwide effort to end extreme poverty, raise  median incomes and create shared prosperity.
  • 16:30 Jens has referred to the World Bank’s new  poverty projections, which suggest that  
  • 16:36 by 2021 an additional 110 to 150 million people  
  • 16:42 will have fallen into extreme poverty, living  on less than $1.90 per day. This means that the  
  • 16:52 pandemic and global recession may push over 1.4%  of the world’s population into extreme poverty.
  • 17:01 The current crisis is a sharp contrast from the  recession of 2008, which focused much of its  
  • 17:08 damage on financial assets and hit advanced  economies harder than developing countries.  
  • 17:14 This time, the economic downturn is broader,  much deeper, and has hit informal sector workers  
  • 17:21 and the poor, especially women and children,  harder than those with higher incomes or assets.
  • 17:28 One reason for the differential impact is  the advanced economies’ sweeping expansion  
  • 17:33 of government spending programs. Rich countries  have had the resources to protect their citizens  
  • 17:40 to an extent many developing countries have  not. Another is central bank asset purchases.  
  • 17:47 The scale of such purchases is unprecedented  and has successfully propped up global financial  
  • 17:53 markets. This benefits the well-to-do  and those with guaranteed pensions,  
  • 17:59 especially in the rich world, but it is not clear,  either in textbook theory or in practice, how 0%  
  • 18:08 interest rates and ever-expanding government  asset and liability balances will translate into  
  • 18:15 new jobs, profitable small businesses, or rising  median income—key steps in reversing inequality.
  • 18:24 Poorer economies have fewer macro-economic tools  and stabilizers and suffer from weaker health  
  • 18:32 care systems and social safety nets. For them,  there are no fast ways to reverse the sudden  
  • 18:39 reduction in their sales to consumers in advanced  economies or the almost overnight collapse in  
  • 18:49 tourism and remittances from family members  working abroad. It’s clear that sustainable  
  • 18:56 recoveries will require growth that benefits all  people—and not just those in positions of power.  
  • 19:04 In an interconnected world, where people are  more informed than ever before, this pandemic  
  • 19:10 of inequality—with rising poverty and declining  median incomes—will increasingly be a threat to  
  • 19:19 the maintenance of social order and political  stability, and even to the defense of democracy.
  • 19:25 Topic 2: Human Capital
  • 19:27 Second, on human capital, developing countries  were making significant progress before  
  • 19:33 COVID-19—and, notably, starting to close gender  gaps. Human capital is what drives sustainable  
  • 19:41 economic growth and poverty reduction. It consists  of the knowledge, skills, and quality of health  
  • 19:48 that people gain over their lives. It is  associated with higher earnings for people,  
  • 19:54 higher income for countries, and  stronger cohesion in societies.
  • 19:59 Since the outbreak, however, more than 1.6 billion  children in developing countries have been out of  
  • 20:05 school because of COVID-19, implying a potential  loss of as much as $10 trillion in lifetime  
  • 20:12 earnings for these students. Gender-based violence  is on the rise, and child mortality is also likely  
  • 20:20 to increase in coming years: our early estimates  suggest a potential increase of up to 45%  
  • 20:29 in child mortality because of health-service  shortfalls and reductions in access to food.
  • 20:37 These setbacks imply a long-term hit to  productivity, income growth and social  
  • 20:42 cohesion—which is why we’re doing everything we  can to bolster health and education in developing  
  • 20:49 countries. In the area of health, the World Bank  Group worked with our Board in March to establish  
  • 20:56 a fast-track COVID response that has delivered  emergency support to 111 countries so far.  
  • 21:03 Most projects are now in advanced stages  of disbursement for the purchase of  
  • 21:08 COVID-related health supplies, such  as masks and emergency room equipment.
  • 21:14 Our goal was to take broad, fast action  early and to provide large net positive  
  • 21:20 flows to the world’s poorest countries. We  are making good progress toward our announced  
  • 21:27 15-month target of $160 billion in  surge financing, much of it to the  
  • 21:34 poorest countries and to private sectors for  trade finance and working capital. Over $50  
  • 21:40 billion of that support takes the form of  grants or low-rate, long-maturity loans,  
  • 21:46 providing key resources to maintain or expand  health care systems and social safety nets.  
  • 21:53 Both are likely to play a key near-term role in  survival and health for millions of families.
  • 22:01 We are also taking action to help developing  countries with COVID vaccines and therapeutics.  
  • 22:07 I announced last week that, by extending  and expanding our fast-track approach to  
  • 22:14 address the COVID emergency, we plan to make  available up to $12 billion to countries  
  • 22:21 for the purchase and  deployment of COVID-19 vaccines  
  • 22:26 once the vaccines have been approved by  multiple stringent regulatory agencies  
  • 22:31 around the world. This additional financing  will be to low- and middle-income developing  
  • 22:32 countries that don’t have adequate access and  will help them alter the course of the pandemic  
  • 22:33 for their people. The approach draws on the World  Bank’s significant expertise in supporting public  
  • 22:33 health and vaccination programs and will signal  to markets that developing countries will have  
  • 22:33 multiple ways to purchase approved vaccines  and will have significant purchasing power.
  • 22:33 Our private sector arm—the International Finance  Corporation, or IFC—is also investing heavily  
  • 22:39 in vaccine manufacturers through its $4 billion  Global Health Platform. The aim is to encourage  
  • 22:45 ramped-up production of COVID-19 vaccines and  therapeutics in advanced and developing economies  
  • 22:45 alike—and to ensure that emerging markets  gain access to available doses. IFC is also  
  • 22:47 working with the vaccine partnership—CEPI—to  map COVID-19 vaccine manufacturing capacity,  
  • 22:54 focusing especially on potential bottlenecks.
  • 22:58 To mitigate the impact of  the pandemic on education,  
  • 23:02 the Bank is working to help countries reopen  primary and secondary schools safely and quickly.  
  • 23:09 Out of school, children tend to  backslide in their educational skills;  
  • 23:15 and for children in the poorest countries,  physical attendance in school is an important  
  • 23:21 source of food and security, not just the  reading and math that provide a critical  
  • 23:29 ladder out of poverty. The Bank is working in 65  countries to implement remote-learning strategies,  
  • 23:31 combining online resources with radio, TV, and  social networks, and printed materials for the  
  • 23:31 most vulnerable. We are also partnering with  UNICEF and UNESCO on school-reopening frameworks.
  • 23:31 In Nigeria, for example, we provided $500  million in new funding for the Adolescent Girls  
  • 23:38 Initiative for Learning and Empowerment (AGILE),  which aims to improve secondary education  
  • 23:45 opportunities among girls. The project is  expected to benefit more than 6 million  
  • 23:51 girls, using TV, radio, and remote-learning tools.
  • 23:55 Topic 3: Debt Burdens
  • 23:57 My third urgent topic is debt. A combination  of factors has led to a wave of excessive debt  
  • 24:04 in countries where there is no margin  for error. Global financial markets  
  • 24:09 are dominated by low interest rates, creating a  reach-for-yield fervor that invites excess. This  
  • 24:17 is reinforced by an imbalance in the global  debt system that puts sovereign debt in a unique  
  • 24:24 category that favors creditors over the people  in the borrowing country—there’s not a sovereign  
  • 24:30 bankruptcy process that allows for partial  payment and reduction of claims. As a result,  
  • 24:38 people, even the world’s poorest and most  destitute, are required to pay their government’s  
  • 24:44 debts as long as creditors pursue claims—even  so-called “vulture” creditors who acquire  
  • 24:52 the distressed claims on secondary markets,  exploit litigation, penalty interest clauses  
  • 24:59 and court judgments to ratchet up the value of the  claims, and use attachment of assets and payments  
  • 25:07 to enforce debt service. In the worst cases,  it’s the modern equivalent of debtor’s prison.
  • 25:19 Further, the political incentive and opportunity  for government officials to borrow heavily has  
  • 25:25 increased. Their careers benefit from  the availability of long-maturity debt  
  • 25:30 because the repayment cycle is often well  after the political cycle. This undermines  
  • 25:37 accountability for debt, making transparency  much more important than in the past.
  • 25:42 An added factor in the current wave  of debt is the rapid growth of new  
  • 25:47 official lenders, especially several of  China’s well-capitalized creditors. They’ve  
  • 25:54 expanded their portfolios dramatically  and are not fully participating in  
  • 25:58 the debt rescheduling processes that were  developed to soften previous waves of debt.
  • 26:05 To take a first step toward debt  relief for the poorest countries,  
  • 26:09 at the World Bank’s Spring Meetings in March,  I, along with Kristalina Georgieva of the IMF,  
  • 26:15 proposed a moratorium on debt payments by the  poorest countries. It was partly a response to  
  • 26:22 COVID and the need for countries to have fiscal  space, and also a recognition that a debt crisis  
  • 26:30 was underway for the poorest countries. With  endorsement by the G20, G7 and Paris Club,  
  • 26:42 the Debt Service Suspension  Initiative, or DSSI, took effect on  
  • 26:48 May 1. It enabled a fast and coordinated response  to provide additional fiscal space for the poorest  
  • 26:48 countries in the world. As of mid-September, 43  countries were benefiting from an estimated $5  
  • 26:49 billion in debt-service suspension from official  bilateral creditors, complementing the scaled-up  
  • 26:49 emergency financing provided by the World Bank  and IMF. The DSSI has also enabled us to make  
  • 26:52 significant progress on debt transparency, which  will help borrowing countries and their creditors  
  • 26:58 make more informed borrowing and investment  decisions. This year’s edition of the World Bank’s  
  • 27:04 International Debt Statistics, to be released next  Monday, October 12, will provide more detailed  
  • 27:13 and more disaggregated data on sovereign debt  than ever before in its nearly 70-year history.
  • 27:21 Many more steps are needed on debt relief. One  avenue is to broaden and extend the current  
  • 27:27 debt initiative so that there is time to work  out a more permanent solution. The World Bank  
  • 27:32 and the IMF have called on the G20 to extend  the DSSI’s relief through the end of 2021,  
  • 27:40 and we are highlighting the  need for G20 governments  
  • 27:44 to urge the participation of all their  private and bilateral public sector creditors  
  • 27:50 in the DSSI. Private creditors and  non-participating bilateral creditors should  
  • 27:57 not be allowed to free-ride on the debt relief of  others, and at the expense of the world’s poor.
  • 28:05 Debt service suspension is an important  stopgap, but it is not enough. First,  
  • 28:10 too many of the creditors are not participating,  leaving the debt relief too shallow to meet the  
  • 28:16 fiscal needs of the inequality pandemic around us.  Second, debt payments are simply being deferred,  
  • 28:24 not reduced. It doesn’t produce light at the end  of the debt tunnel. This is particularly apparent  
  • 28:30 in today’s low-for-long financing environment. The  normal time value of money simply isn’t working,  
  • 28:38 so the creditors’ offer of a deferral of payments  with a compounding of interest often means that  
  • 28:45 the burden of debt goes up with time, not down.  The historical use of net present value equations  
  • 28:53 in debt restructurings has to be scrutinized for  fairness to the people in the debtor countries.
  • 29:00 The risk is that it will take years or decades  for the poorest countries to convince creditors  
  • 29:06 to reduce their debt burdens enough to  help restart growth and investment. Given  
  • 29:12 the depth of the pandemic, I believe we need  to move with urgency to provide a meaningful  
  • 29:17 reduction in the stock of debt for countries  in debt distress. Under the current system,  
  • 29:23 however, each country, no matter how poor,  may have to fight it out with each creditor.  
  • 29:30 Creditors are usually better financed with  the highest paid lawyers representing them,  
  • 29:35 often in U.S. and UK courts that  make debt restructurings difficult.  
  • 29:43 It is surely possible that these countries—two  of the biggest contributors to development—can  
  • 29:49 do more to reconcile their public  policies toward the poorest countries  
  • 29:54 and their laws protecting the rights of creditors  to demand repayments from these countries.
  • 30:01 Several steps are needed. First, as  I mentioned, full participation in  
  • 30:04 the moratorium by all official bilateral and  commercial creditors, to buy time. Second, full  
  • 30:06 transparency of the terms of the existing and new  debt and debt-like commitments of the governments  
  • 30:07 of the poorest countries. Both creditors and  debtors should embrace this transparency,  
  • 30:08 but neither has done enough in this regard.  Third, using this fuller transparency, we need a  
  • 30:09 careful analysis of a country’s long-term debt  sustainability to identify sovereign debt levels  
  • 30:13 that would be sustainable and consistent  with growth and poverty reduction. This  
  • 30:14 degree of transparency and analysis would  also be strongly beneficial for the public  
  • 30:20 commitments of developed countries, such as  outlay projections for public pension funds.  
  • 30:28 Fourth, we need new tools to push forward with  the reduction of the stock of debt for the poorest  
  • 30:34 countries. The World Bank and IMF are proposing  to the Development Committee a joint action plan  
  • 30:42 by the end of 2020 for debt reduction for IDA  countries in unsustainable debt situations.
  • 30:50 Looking more broadly, since  the arrival of COVID-19,  
  • 30:50 the challenge of high debt burdens has  expanded to endanger the solvency of many  
  • 30:50 businesses. The Bank for International  Settlements has estimated that 50% of  
  • 30:50 businesses do not have enough cash to pay their  debt-servicing costs over the coming year.
  • 30:50 Rising corporate debt distress has the potential  to put otherwise viable firms out of business,  
  • 30:51 exacerbating job losses, depressing  entrepreneurship, and slowing growth  
  • 30:51 prospects well into the future. The World  Bank and IFC are both working with our  
  • 30:51 client countries to address this issue, helping  them bolster and improve insolvency frameworks  
  • 30:51 while shoring up the working capital  of systemically important businesses.
  • 30:51 Topic 4: Fostering an Inclusive  and Resilient Recovery
  • 30:51 My fourth topic is on fostering an inclusive and  resilient recovery. COVID-19 has demonstrated—with  
  • 30:59 deadly effect—that national borders offer  little protection against some calamities.  
  • 31:05 It has underscored the deep connections  between economic systems, human health,  
  • 31:10 and global well-being. It has concentrated our  minds on building systems that will better protect  
  • 31:17 all countries the next time, especially  our poorest and most vulnerable citizens.
  • 31:24 It is critical that countries work toward  their climate and environmental goals. A  
  • 31:29 high priority for the world is to lower the  carbon emissions from electricity generation,  
  • 31:36 meaning the termination of new coal- and  oil-dependent power generation projects and the  
  • 31:43 wind-down of existing high-carbon generators. Many  of the largest emitters—in the developing world  
  • 31:51 but, I must say, also in the developed world—are  still not making sufficient progress in this area.
  • 31:59 Amid the pandemic, the World Bank  Group has remained the largest  
  • 32:03 multilateral financier of climate action. Over  the last five years, we have provided $83 billion  
  • 32:11 in climate-related investments. Our work has  helped 120 million people in over 50 countries  
  • 32:18 gain access to weather data and early-warning  systems crucial to saving lives in disasters.  
  • 32:26 We have added a total of 34 gigawatts of renewable  energy into grids to help communities, businesses  
  • 32:34 and economies thrive. I’m happy to say that, in  Fiscal Year 2020, my first full year as President,  
  • 32:44 the World Bank Group made more climate-related  investments than at any time in its history.
  • 32:52 We intend to step up that work over the next  five years. We are helping countries put an  
  • 32:57 economic value on biodiversity—including  forests, land, and water resources—so  
  • 33:04 they can better manage these natural  assets. We are helping them assess  
  • 33:08 how climate risks affect women and  others who are already vulnerable.
  • 33:14 We are also working with governments to eliminate  or redirect environmentally harmful fuel subsidies  
  • 33:21 and to reduce trade barriers for food and medical  supplies. Global progress in this area, however,  
  • 33:27 has remained slow. COVID-19 spending packages  could have a decisive effect on promoting more  
  • 33:36 low-carbon energy sources and facilitating  a stronger, more resilient recovery.
  • 33:43 And on the economy itself, recognizing the  severity of the downturn and the likely longevity,  
  • 33:49 a key step in a sustainable recovery  will be for economies and people  
  • 33:54 to allow change and embrace it. Countries  will need to allow capital, labor,  
  • 34:01 skills, and innovation to shift to a different,  post-COVID business environment. This puts a  
  • 34:08 premium on workers and businesses using their  skills and innovations in new ways in a commercial  
  • 34:08 environment that is likely to rely more on  electronic connections than travel and handshakes.
  • 34:08 To speed recovery, countries will need to find  a better balance between, on the one hand,  
  • 34:08 maintaining core public and private  sector businesses and, on the other,  
  • 34:08 recognizing that many businesses won’t survive  the downturn. In many cases, support efforts will  
  • 34:08 be more effective if they aid families rather  than propping up pre-COVID business structures.
  • 34:08 The business environment needs change  and improvement to build a faster,  
  • 34:09 more sustainable recovery. A key part of this  process of change is for the ownership and  
  • 34:09 repurposing of distressed assets to be resolved  as quickly as possible. This will likely entail  
  • 34:09 a combination of faster bankruptcy proceedings,  new legal avenues for settling small claims,  
  • 34:09 and other out-of-court alternatives such as  arbitration. These are important building blocks  
  • 34:09 for effective contracts and capital allocation,  but only a few developing countries have them  
  • 34:09 in place. The severity of the downturn makes  the prompt streamlining and transparency of  
  • 34:09 commercial law as vital for recovery as the  availability of new debt and equity capital.
  • 34:10 None of these steps will be enough, and the  reality is that aid, even from the most generous  
  • 34:10 donors, can’t make ends meet. Just to reverse  COVID’s likely increase in extreme poverty in  
  • 34:10 2020 would require $70 billion per year ($2  per day times 100 million people). That’s  
  • 34:10 well beyond the World Bank Group’s financial  capacity or any of the development agencies.  
  • 34:10 My view is that sustainable solutions can only  come by embracing change—through innovation,  
  • 34:10 new uses for existing assets, workers and job  skills, a reset on excessive debt burdens,  
  • 34:10 and governance systems that create a stable  rule of law while also embracing change.
  • 34:10 Conclusion
  • 34:10 In conclusion, I raised the urgency  of addressing poverty, inequality,  
  • 34:17 human capital, debt reduction, climate change,  and economic adaptability as elements in ensuring  
  • 34:25 a resilient recovery. This once-in-a-century  crisis has demonstrated why history doesn’t  
  • 34:32 exactly repeat itself—because humankind does  learn from its mistakes. The pandemic so far  
  • 34:40 has not triggered the devastating side effects  of earlier crashes—neither hyperinflation,  
  • 34:47 nor deflation, nor widespread famine. Even though  the loss of income and the inequality of the  
  • 34:55 impact have been worse than in most past  crises, the global economic response,  
  • 35:01 so far, has been much bigger than we might  have expected at the start of this crisis.
  • 35:07 The development response will need to be  extended and intensified, both in terms  
  • 35:12 of the health emergency and the efforts to  help countries find effective support systems  
  • 35:19 and recovery plans. Greater cooperation will  enable us to share knowledge and develop  
  • 35:25 and apply effective solutions far more swiftly.  It will enable innovators to develop a vaccine  
  • 35:33 that beats the virus and restores people’s  confidence in the future. Working through  
  • 35:39 all channels, my hope—and my belief—is that we can  shorten the downturn and build a strong foundation  
  • 35:47 for a more durable model of prosperity—one  that can lift all countries and all people.
  • 35:53 Thank you very much.
  • 35:56 thank you very much Mr. Malpass for those  excellent points to dull of depo we are joined  
  • 36:03 by professor Nils Steiglitz president of frankfurt  school who will provide a reaction and is joining  
  • 36:10 us today from the campus in Frankfurt Professor  Steiglitz previously served as vice president of  
  • 36:16 corporate development head of the management  department and as a professor of strategic  
  • 36:22 management he worked as an associate professor  at the university of southern denmark  
  • 36:28 and teaches strategy and organizational design  welcome Professor Steiglitz well thank you Mrs. 
  • 36:36 Mohammed for the kind introduction and also  for giving me the opportunity to share some  
  • 36:42 thoughts with you today so Mr. Malpass Thank you  very much for your inspiring and truly important  
  • 36:49 speech I think it highlights the challenges of  and the solutions to the global pandemic and I  
  • 36:56 would like to to make three points first of all I  really appreciate how you perceive the pandemic as  
  • 37:04 a truly global challenge that affects a developing  countries even more strongly than the developed  
  • 37:11 economies global growth and inclusive prosperity  will only pick up forcefully again when the global  
  • 37:20 community tackles the covet 19 health crisis  together and I firmly believe that purely national  
  • 37:27 responses will only have a very limited effect I  think the same is also true for the big second big  
  • 37:35 challenge that we face and that's climate change  right so that's my my first point second point  
  • 37:42 i I also agree that the pandemic does not own but  it also poses profound challenges for education  
  • 37:54 we as frankfurt school believe that education  is a powerful engine for inclusive growth  
  • 38:01 and we fma we offer many programs in developing  countries and emerging markets in the past couple  
  • 38:07 of months we had to move our teaching online  especially our summer schools over the summer  
  • 38:14 but that had actually a very beautiful  side effect that we had a record number of  
  • 38:20 participants from developing countries joining us  and we made substantial investments into digital  
  • 38:27 technology and we experienced first-hand how do  how digital technology and digital transformation  
  • 38:34 is breaking down barriers and is making education  a lot more accessible than just a year ago  
  • 38:43 i think our own experience also  demonstrates that digital transformation  
  • 38:47 opens up many new opportunities not just in  education and thereby provides the foundation  
  • 38:54 for future sustainable growth last point i  i also agree that excessive government debt  
  • 39:02 puts a burden on the younger generation that  has been especially hard hit by the carved 19  
  • 39:07 pandemic but also on private enterprise and  i think it's it's really great news today  
  • 39:14 that the world bank will put a lot more emphasis  on that relief and active debt management as a  
  • 39:20 response to the pandemic what obviously interests  me as a professor of strategy is how the world  
  • 39:28 being will adapt its long-term strategy to foster  sustainable and inclusive growth moving forward
  • 39:40 thank you
  • 40:02 okay thank you I i lost the very end of that  question so I i heard the whole first part  
  • 40:09 can I respond to that or  dr stieglitz thanks for uh  
  • 40:13 thanks for your work what would  the the sound win out sorry  
  • 40:19 okay i'm very very sorry for that I think as i  said I think what really interests me I think  
  • 40:25 in in in your speech you you told us about how  the world bank is going to rise to the challenge  
  • 40:33 posed by the carved 19 pandemic but about what  i'm interested in as well is how the world bank  
  • 40:40 is going to adapt their long-term strategy  moving forward given the current challenges
  • 40:49 yes um okay thanks and i'm sorry we have kind  of a delay in our system so if i'm hesitant to  
  • 40:55 if I hesitate in a response it's it's a little  bit the delay um so your points were very well  
  • 41:02 taken you know the the one of the things that the  bank that we are trying to do is find the spots  
  • 41:09 of international coordination and and and working  with people that are most effective in delivering  
  • 41:18 the the the on the mission of the world bank  so we're very focused on developing countries  
  • 41:24 but we also recognize that the pandemic is is a  grave crisis for the developed countries as well  
  • 41:32 so one of the things we want to do is learn from  the you know learn from developed countries what  
  • 41:38 is applicable in developing one of the you know  areas where where people all around the world  
  • 41:44 have some of the same challenges is in getting  back to school how do you how do you do it well  
  • 41:49 and effectively i'm glad to hear that frankfurt  school has had more participation by developing  
  • 41:56 country students uh that's great and that shows  us the the importance of digital connectivity  
  • 42:03 but also it's it's almost like the that  there I you know there's there's nothing good  
  • 42:11 in total that's coming out of the  pandemic but there are good things  
  • 42:15 in terms of the advances in technology the use  of the internet and of digital and of learn  
  • 42:22 distance learning those I think are quite  positive we we can sometimes say what uh  
  • 42:29 what challenges us makes us stronger and  one of the things we can try to strengthen  
  • 42:34 is the way people talk together in confronting  the same challenge it's very it's interesting and  
  • 42:42 and humbling that everyone around the world is  facing the same thing at the same time which is  
  • 42:49 a very rare if ever occurrence for humankind so  we can we can try to find ways that we in common  
  • 42:58 tackle the communication challenges the tech  technology challenges and the recovery challenges
  • 43:07 thank you thank you so much mr malphus back to  you professor stieglitz well just as a follow-up  
  • 43:14 question because I i found this quite interesting  what you said at the end mr malpus that we are  
  • 43:20 learning together that we have to frame the  crisis together that we also have to find  
  • 43:25 solutions together do you also feel that this  could become a template of how we can also tackle  
  • 43:32 the the climate change and how we can align  policies within the global community given that  
  • 43:40 i mean also I mean quite fundamental challenge  that we're all facing um yes I think there can be  
  • 43:48 a lot of learning experience from people working  together to confront the the covid challenge um  
  • 43:57 as I mentioned in my remarks a key aspect of the  of the climate change is to lower the carbon uh  
  • 44:04 emissions from electricity production and i  think from energy in general that's proving  
  • 44:10 a a challenge around the world because different  countries approach it differently they're they're  
  • 44:17 you know and and and so there are and there  are many approaches that are useful and needed  
  • 44:23 it's a little like the covet challenge where we  need we need action in multiple areas in order  
  • 44:30 to make headway the same is true on on climate  so for for some countries that means uh you know  
  • 44:38 they don't have electricity generation at all so  they need to start from from a low level of output  
  • 44:46 and have low carbon sources that can push them  forward for other countries uh they they already  
  • 44:53 have generation but it's in a high carbon variety  of electricity generation that that means a quite  
  • 45:00 a different kind of approach to to what they're  going to do one example of that is south africa  
  • 45:08 which has substantial electricity generation but  of the very high carbon output kind in pakistan  
  • 45:16 there's a big increase in high carbon sources  of of energy underway of electricity underway  
  • 45:25 even at a time when the country has ample hydro uh  hydroelectric generation capacity the the access  
  • 45:32 to natural gas from from the middle east and a  large investment in solar and wind that the world  
  • 45:40 bank has been instrumental in encouraging and so  you have this you have this dichotomy where the  
  • 45:48 the the total energy production is going up on  the high carbon side when what you want is lower  
  • 45:55 carbon low very low carbon energy sources so  that these are areas that I think dialogue can  
  • 46:02 help and also data can help knowledge can  help and that's similar to covet excellent  
  • 46:09 conversation gentlemen you raised some excellent  points um we will now take a few questions from  
  • 46:16 our future leaders please allow me to turn the  floor over to our frankfurt school students
  • 46:25 thank you so much for your insight mr Malpass  
  • 46:28 my name is leona i'm from germany and this  is my friend jessica from india we're both  
  • 46:33 bachelor students at frankfort school we have  thought about the role and responsibility  
  • 46:39 of the european union especially during this  pandemic and beyond as you mentioned the pandemic  
  • 46:46 has posed major challenges not just to developing  countries but also to developed ones as a result  
  • 46:53 greater international cooperation and collective  responsibility is needed in this time of crisis  
  • 47:02 on those lines mr Malpass our question is  are there effective policies that world bank  
  • 47:10 and the european union together have implemented  in order to support the developing economies  
  • 47:17 during the pandemic and if not are there  any upcoming policies that you think can  
  • 47:24 significantly contribute towards an inclusive  and resilient recovery from the pandemic  
  • 47:34 thank you very interesting question um the the we  work closely with various parts of the european  
  • 47:43 union as you know it's become a a large set of  policy makers and also of regulatory policies  
  • 47:50 and also of funding for some of the uh development  programs around the around the world so we  
  • 47:57 interact on each of those levels through often  through brussels but also in in national capitals  
  • 48:04 as well so I i think we can we can uh work  together and we do that you know world bank  
  • 48:12 is heavily involved in gaby and sepi's two of the  organizations that are that are involved in in uh  
  • 48:18 in vaccines therapeutics and in the development of  vaccination campaigns we also work with the global  
  • 48:25 fund which the european union has been has been  a participant in so it's it's a good relationship  
  • 48:32 I would say that some of the challenges sometimes  could be more focused one of them is the the  
  • 48:43 the uh eastern european side of the european  union faces faces large energy challenges that  
  • 48:51 I can't think can be where improvements can be  made and that that's one one aspect of it and I  
  • 49:00 wanted to also mention the the leadership of the  european union in its human rights um uh focus can  
  • 49:10 can continue and be strong and and be a leader for  the world now on in other areas i want to say that  
  • 49:20 development itself I think is very much a country  level and knowledge level activity so the world  
  • 49:27 bank is well positioned to um to interact with  countries directly and then to invite additions  
  • 49:36 and comments and and co-financing I i mentioned  our covid uh process and our covid response  
  • 49:45 was specifically designed to invite co-financing  by entities such as the european union  
  • 49:52 and our vaccine programs as well allow and invite  co-financing and that's one way that the european  
  • 50:00 union could directly apply funding into some of  the most dire the poorest countries around the  
  • 50:06 world if it if it were if it were so inclined it's  a very efficient way to extend assistance and we  
  • 50:14 welcome being uniquely confronted by this pandemic  we are thinking and worrying about our future  
  • 50:22 challenges but also about the place of developing  economies especially regarding the climate crisis  
  • 50:30 we know it is our responsibility to help better  the lives of those who do not have the same  
  • 50:37 privileges as we do my home country ecuador is  suffering under the effects of the climate crisis  
  • 50:45 agriculture is our main sector but floods and  droughts destroy the live food of the poorest  
  • 50:50 people the climate crisis is a challenge which  was created especially by rich countries but  
  • 50:57 developing countries are suffering the most what  more can be improved by the world bank and what  
  • 51:03 can be done to correct this for our generation  yeah thank you well in my remarks I alluded to one  
  • 51:12 of the challenges as we try to move toward lower  carbon electricity generation is the challenge  
  • 51:19 for developed countries themselves so so the the  and this is captured in your in your question that  
  • 51:27 that the developed countries often are are  are using and continuing to expand their high  
  • 51:35 carbon output even at a time when it has global  effects um global effects through through global  
  • 51:45 public goods so we're working actively on various  aspects of global public goods to recognize the  
  • 51:52 the the the car that the the costs apply to  people outside countries own borders for example  
  • 52:02 in china we're working on marine plastics which is  they're they're a large emitter of marine plastics  
  • 52:09 into the world's oceans which has an effect on  countries all over the world including in ecuador  
  • 52:15 which has very substantial investments and and  dependency on on on fishing on the fish industry  
  • 52:23 and it's it's one of their mainstays and is  very affected by by the environment and by  
  • 52:30 by climate issues so we can all work together  on programs the world bank has pro green and  
  • 52:38 pro blue these are um umbrella trust funds that  welcome co-financing from from countries around  
  • 52:46 the world that are specifically aimed at  at addressing climate challenges and as I  
  • 52:54 mentioned in my remarks the bank is the biggest  financier of that of club of climate co-benefits  
  • 53:02 through our various programs that work really in  developing countries but also provide information  
  • 53:09 to address the problems on a global basis  thanks thank you um today's discussion is  
  • 53:16 really important i feel like you've touched on so  many key points that inclusion poverty equality  
  • 53:24 um and we're fortunate to have persons  joining us from every corner of the world  
  • 53:29 africa latin america the caribbean  asia europe north america and australia  
  • 53:36 some today may be unemployed women children  and men may be caught in the silent epidemic  
  • 53:44 of rising gender-based violence while others are  struggling with multiple crises including natural  
  • 53:51 disasters and wars or may lack basic access  to food electricity the internet clean water  
  • 54:00 and healthcare so before we leave today let us  share messages of hope and inspiration for those  
  • 54:07 who most need them professor stiglutz what is one  final thought you'd like the audience to take away  
  • 54:14 from today's conversation well I think I i think  it's important to understand that every crisis  
  • 54:20 also creates many many opportunities but at the  same time I think we need private enterprise to  
  • 54:27 pursue these opportunities right and I think this  is something that we will also have to focus on  
  • 54:33 in dealing with the carved 19 crisis so  sometimes I wish to see a little bit more  
  • 54:38 emphasis on how we can foster entrepreneurship  in private enterprise in dealing with this crisis  
  • 54:46 thank you and mr Malpass the same question to  you please I i appreciated dr stieglitz answer  
  • 54:53 um it I cut from my spoken remarks a section on  how to help entrepreneurs small businesses um  
  • 55:05 in this time of crisis and change and so just to  directly continue the point dr stiegel has made  
  • 55:12 one of the one of the important parts of uh  recovering from covid will be preparing for  
  • 55:19 that different kind of economy that will come  postcoded and one part of that is a very financial  
  • 55:26 challenge of how do you allow assets to move  to the new economy how do you allow people and  
  • 55:33 their skills to adjust to a to a new environment  and so that's one of the big challenges for the  
  • 55:39 developing world that we we can't simply reflect  all of the previous assets as being write-offs  
  • 55:49 we have to find ways that many of the  previously built assets and skills of  
  • 55:54 people the human capital has to be utilized in in  in a different in a different way in the postcovid  
  • 56:03 environment the digital connectivity can help  a lot but also leadership we need we need and  
  • 56:11 people to embrace change and it to be a social and  I think a global kind of spirit that we can get  
  • 56:18 ahead and there can be resilience into the future  thank you thank you gentlemen i'm heartened by the  
  • 56:26 vision that you've shared today of our speakers  who are utilizing their influence and institutions  
  • 56:35 to tackle the impact of this pandemic more than  anything covert 19 has taught us to value each  
  • 56:42 other and to value human connection today's  conversation gives me a new sense of optimism  
  • 56:50 that the human spirit will continue to triumph  even in the face of this challenge and that  
  • 56:57 together we can build a more promising futur.  You can continue to follow the conversations  
  • 57:04 during the World Bank Group Annual Meetings check  worldbank.org for more information on the events  
  • 57:12 that will take place starting October 12th/  Thank you for watching and goodbye. Thank you.

Read the chat below!

The Event has concluded

Receive updates about upcoming events!

Language: