World Bank Group President David Malpass today called our current era of severe inequality and reversals in global development progress a “time of upheaval,” and outlined steps to boost growth. economic, shorten the crisis, resume development and lay a solid foundation for a more prosperous future and better prepared for global disasters like COVID19.
“Development reversals threaten people’s lives, jobs, livelihoods and livelihoods. In many parts of the world, poverty is increasing, living standards and literacy rates are falling, and past achievements in gender equality, nutrition and health are declining. For some countries, the debt burden was unsustainable before the crisis and is getting worse. Rather than gaining ground, the poor are left behind in a global tragedy of inequality. This drastic shrinkage in economic and social progress creates a period of upheaval in economics, politics and geopolitical relations. “
Speaking in Khartoum as the first Bank Group President to visit Sudan in nearly 40 years, Malpass noted the recent progress made by the country. âOver the past few years you have made a tremendous effort to put people on the path to the future, under very adverse conditions. Two years ago, the Sudanese transitional government inherited a deeply damaged economy and society that had suffered from decades of conflict and isolation. Even as the people decided to break with the past, Sudan faced extraordinary headwinds: from the COVID-19 pandemic, a locust plague, unprecedented flooding and an influx of fleeing refugees. the conflict across the border.. “
âYet the country continued its bold reforms, re-engaged with the international community, cleared World Bank arrears with the help of a US bridging loan and reached the decision point in June. Heavily Indebted Poor Countries Initiative – or HIPCs -â¦ Although there is much work to be done, I commend the Sudanese authorities, civilian and military, for their efforts and achievements in working together towards a better future. It is essential to avoid political slippages because there is no development without peace and stability. I also want to salute the remarkable resilience of the Sudanese people – your will to build a better Sudan despite the challenges is truly inspiring. “
Malpass noted that the global pandemic has taken a heavy toll on poverty: âThe COVID-19 crisis has led to a further rise in poverty rates after decades of steady decline. It has pushed nearly 100 million people into extreme poverty, and several hundred million more have become poor, many in middle-income countries. “
He noted that while a turnaround is possible, risks remain. He recalled how the deadly Spanish Flu of 1918-20 was followed by extremely rapid economic growth – but also wider inequalities and dangerous financial vulnerabilities that culminated in the protracted Great Depression.
Malpass posed a question to the international community: what should we do to stimulate inclusive, broad and sustainable growth and avoid a lost decade for development? âFirst, we need a to concentrate on key priorities, with clarity on how we approach and measure themâ¦ And second, we need a lot more climb to achieve impact.
Malpass noted four areas where determined action should make a difference: achieving economic stability; capitalize on the digital revolution; make development greener and more sustainable; and invest in people.
Achieve economic stability
Malpass noted that many developing countries have made extraordinary efforts to support their populations and maintain economic activity during the pandemic. “Many have gone beyond what they could afford, especially as debt in developing economies was reaching record levels when the pandemic hit.”
When the Debt Service Suspension Initiative – or DSSI – expires at the end of this year, low-income countries resuming debt service payments will see their fiscal space shrink to purchase vaccines and finance d ‘other priority spending, Malpass said. âIt’s time to pursue progressive, people-centered fiscal consolidation and restructure unsustainable debt. Improved and accelerated implementation of the G20 common framework will be crucial on this front. “
Malpass called for greater global cooperation, including private sector participation, to ease the debt of the world’s poorest countries and finance growth-promoting investments. âIn Sudan, for example, global cooperation that included the United States, France and the United Kingdom helped the country clear its arrears with the World Bank, the IMF and other IFIs, enabling debt relief. debt of over $ 50 billion in what will be the largest HIPC. initiative ever.
In addition to better debt management, Malpass said countries need to eliminate unnecessary public spending, make service delivery more efficient, and reallocate public resources to their most productive uses. âNow is also the time for proactive debt management to reshape payments while international interest rates remain low. Concrete steps must be taken to improve the transparency of debt contracts, increase accountability and ensure that decisions are based on comprehensive information. Low-income countries should prioritize concessional financing and avoid high-interest financing which has become increasingly problematic. It will be essential to focus this agenda for each country and to measure the progress made. “
Capitalizing on the digital revolution
Faster adoption of digital solutions can dramatically expand access to finance and create new economic opportunities, said Malpass, noting that digital solutions can increase competition in product markets and allow people to sell services in online, connecting them to national and global markets. âSupporting this transformation requires many large-scale actions: investing in digital infrastructure, eliminating monopolies in the telecommunications sector, providing national credentials and creating an enabling regulatory environment. “
âThe digital revolution can also transform the public sector. For example, it makes it possible to radically rethink safety net systems. Around the world, we are seeing programs moving from in-kind and cash delivery to digital delivery, directly to people’s bank accounts or visible on their phones. Likewise, in the formal and informal sectors, new payment systems allow daily purchases over the phone, using QR codes and other technologies. Kenya and many other African countries have extensive experience in this area â, said Malpass.
Making development greener and more sustainable
Malpass noted that the international community is firmly committed to slowing the increase in atmospheric carbon and reducing climate impacts on the most vulnerable. âA key step is to stop the creation of new coal-fired plants, dismantle existing plants and replace them with cleaner sources of electricity. We need to support countries in a ‘just’ transition, which includes caring for affected workers. â
âThis is also the time to relaunch reforms in the electricity sector, which are often at a standstill. Energy subsidies are costly and distorting, while their removal must be done in a way that addresses underlying inefficiencies and increases access. Aiming for clean and affordable energy requires competition in the production and distribution of electricity, as well as a truly independent regulatorâ¦ Transmission is another major source of emissions. With more urbanization expected in developing countries, the infrastructure and design of cities can make a huge difference. Instead of sprawling metropolises where commuters spend hours on the road, governments can aim for more compact cities with efficient and clean public transport systems.
In efforts related to climate change, both mitigation and adaptation, and the development effort more broadly, we must prioritize and focus efforts for the greatest impact per dollar spent and seek solutions that are quickly scalable. “
Invest in people
Malpass stressed the importance of investing in people’s long-term health and education – the human capital agenda. âStrengthening education and health systems is about more than providing budget resources efficiently and on a priority basis. For example, it is important to align incentives for teachers and health care providers – public or private – with the needs of the people they serve. And finding scalable solutions to improve healthcare and improve the quality of education, including through distance learning, is also essential.
âNowhere is the accumulation of human capital greater than in countries affected by conflict, where most of the poor now live. Assistance to refugees and host communities is a key priority. Security is essential, but soldiers cannot win the battle for development. Change is more likely to come from small victories won by millions of households over time. “
Malpass noted the role the World Bank Group can play. âThe World Bank Group is uniquely endowed and positioned to support countries with the four priorities I have outlined – through finance and know-how for governments, while engaging the private sector. We have unparalleled experience working with countries, employing technical experts in all key sectors. “
Combat reversals in development
âThis unprecedented crisis has triggered a period of upheaval. The many choices in the years to come will determine whether developing countries suffer a lost decade or can usher in rapid growth and economic transformation â, said Malpass.
Success requires the active participation of the public and private sectors in all countries, civil societies and foundations, and even the entire international community working together. These efforts require leaders to be ambitious for the prosperity of the people. And they require focus and scale throughout our development work.