{"rows":150,"os":"0","page":"1","total":"11","everything":{"_bf495cbd3e90317393f007a95677964b5cacc77c":{"id":"bf495cbd3e90317393f007a95677964b5cacc77c","title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at City Week 2020: 10th Annual International Financial Services Forum","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/09/21/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-city-week-2020-10th-annual-international-financial-services-forum","descr":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at City Week 2020: 10th Annual International Financial Services Forum","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/09/21/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-city-week-2020-10th-annual-international-financial-services-forum","wcmsource":"cq5","content":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at the 10th edition of the City Week event. Convenings like today’s are crucial as policymakers, financial industry leaders, and the international community come together to address the multiple issues facing the future of financial services in the new COVID-19 world. Over the past few months, it has become apparent that the pandemic is a watershed, forcing us to embrace a future we didn’t expect - one that is marked by structural changes in the way we work, consume, and communicate. These changes are reshaping industries and reallocating capital and yet creating opportunities for those who can spot the emerging trends early enough. I will begin by talking about some of the challenges countries have been facing while struggling with the pandemic, particularly emerging market and developing economies, as they are the hardest hit. I will also touch upon the World Bank Group’s response to the COVID-19 crisis. In the second half of my remarks, I will explore how the World Bank is making a difference towards a sustainable recovery and share some experiences from our longstanding work as a champion and promoter of sustainable capital markets. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, and the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty, that is less than $1.90 per day per person, and is exacerbating inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. The strong shareholder support, our longstanding partnership with client countries, the wide local presence as well as the sound financial principles we follow have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 111 countries which includes addressing transmission issues. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. The World Bank Group is preparing additional interventions on human capital under the Social Response. The economic shock associated with supply disruptions, lockdowns and social distancing will likely result in worse nutrition and higher rates of stunting in children. School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. As part of our emergency response, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped due to school closures through household or community delivery. This brings me to the increasingly larger role capital markets are playing in directing financing to build a sustainable and resilient future – a path where investors consider the Environmental Social and Governance, or ESG, credentials and impacts. We understand that financial markets play a vital role for the ‘real economy’ as they provide financial solutions to tackle the world’s most pressing problems, including solutions to address income inequality and poverty. It is critical that governments and the private sector also do more in the ‘real economy’ to account for and address ESG related externalities so that the risk-return calculation is more accurate and helps channel funds towards sustainable activities. At the World Bank, we continuously strive to find new ways to leverage our market knowledge to help member countries design programs that meet their development priorities. We design World Bank projects to achieve positive environmental and social impacts. All our projects go through an extensive review process to ensure we include sustainability considerations and address environmental and social risks. Our portfolio management and review processes help us improve and adjust projects as needed. Because we have decades-long relationships and work closely with our client countries, we are nimble, and we can adjust – when times call for it – like now – to reprioritize projects to help governments address new and urgent needs as they combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic disruptions, we are maintaining a line of sight to our client countries long-term development vision to seize opportunities to create a resilient and sustainable future. Like any bank, IBRD borrows and lends money. Our lending goes to emerging market and developing countries for sustainable development and our resources come from our shareholders and from borrowings in the capital markets, with an annual funding program of about USD 60-65 billion. To meet the increased requirements from client countries, we stepped up our funding program in FY 20 (our financial year closes in June) by raising USD 75 billion from the markets. In this context, let me say a few words about the International Development Association or IDA. IDA is a 60-year-old development organization and an integral member of the World Bank Group. It is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of shareholder resources. Starting two years ago, IDA has been issuing bonds in the capital markets to scale up its financing to low-income countries giving investors an opportunity to invest in triple-A rated bonds that support hundreds of millions of beneficiaries around the globe, especially in African countries. In FY 20 alone, IDA raised up to USD 5 billion from the markets. It is a great example of capital markets having a substantial developmental impact. In recent years we have been issuing bonds to raise awareness towards development challenges and have been connecting investors to the purpose and importance of their investment using the Sustainable Development Goals as a framework. For example, we have issued bonds to raise awareness for the need to protect marine and freshwater resources, tackle the use of plastics to protect our oceans, address food loss and waste, and the importance of gender and income equality. Our funding program also helps finance our support to countries as they invest in their people – programs including health, education, and social safety nets. These are all themes that are at the heart of World Bank’s work with our member countries and these acquire even greater importance with the onset of the pandemic. But we are not just another issuer of sustainable bonds. We are also a champion and promoter of sustainable capital markets. We have been playing this role through setting the foundations for the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles; our partnerships with asset owners like the Government Pension Investment Fund of Japan to expand ESG considerations in fixed income; our role in developing ESG and sustainable investment guidance for central banks through the Network for Greening the Financial System; and by convening investors and sovereigns to engage on ESG concerns and opportunities. We are communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our member governments. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio. Through our Sustainable Development Bonds issuance, we are communicating: World Bank’s development mandate, how our activities are aligned with the SDGs, and that our projects are designed for impact and carefully assessed for environmental and social risks. The green, and now, social and sustainability bond market is essentially about purpose and transparency. There is much focus on ESG factors in investing and how these bonds fit with ESG strategies and sustainable investing. Labels are a useful first step in this direction. However, what we must be working towards is broader transparency and increasing information and data so that investors can make more informed decisions for all their investments. With improved data and technology, investors can extend their focus on risk management to take into account climate and social risks, and factor in purposeful investing to include a wider range of investments. For over a decade now, we have been seeing investor behavior and demand change. Investors are looking for new and innovative opportunities that allow them to do well and to do good. Our bonds give investors the opportunity to invest in liquid, highly rated products which finance projects that serve a social purpose. Let me conclude by highlighting that the pandemic has crystalized the opportunity for sustainable investment to benefit everyone. Issuers and investors can lead the way, but the focus must be on transparency. Issuers must be aware that investors are assessing the risks and opportunities of their investments and issuers must explain how they are using investors’ funds to make a positive difference for society. And investors must look at their entire portfolio to see how they can use the power of investment to contribute to sustainable development, and demand transparency from issuers in order to take sustainable decisions. I am confident that our collective efforts can drive a sustainable and resilient future.  Thank you.","content_1000":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at the 10th edition of the City Week event. Convenings like today’s are crucial as policymakers, financial industry leaders, and the international community come together to address the multiple issues facing the future of financial services in the new COVID-19 world. Over the past few months, it has become apparent that the pandemic is a watershed, forcing us to embrace a future we didn’t expect - one that is marked by structural changes in the way we work, consume, and communicate. These changes are reshaping industries and reallocating capital and yet creating opportunities for those who can spot the emerging trends early enough. I will begin by talking about some of the challenges countries have been facing while struggling with the pandemic, particularly emerging market and developing economies, as they are the hardest hit. I will also touch upon the World Bank Group’s r","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"bf495cbd3e90317393f007a95677964b5cacc77c","wn_title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at City Week 2020: 10th Annual International Financial Services Forum","wn_desc":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at the 10th edition of the City Week event. Convenings like today’s are crucial as policymakers, financial industry leaders, and the international community come together to address the multiple issues facing the future of financial services in the new COVID-19 world. Over the past few months, it has become apparent that the pandemic is a watershed, forcing us to embrace a future we didn’t expect - one that is marked by structural changes in the way we work, consume, and communicate. These changes are reshaping industries and reallocating capital and yet creating opportunities for those who can spot the emerging trends early enough. I will begin by talking about some of the challenges countries have been facing while struggling with the pandemic, particularly emerging market and developing economies, as they are the hardest hit. I will also touch upon the World Bank Group’s response to the COVID-19 crisis. In the second half of my remarks, I will explore how the World Bank is making a difference towards a sustainable recovery and share some experiences from our longstanding work as a champion and promoter of sustainable capital markets. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, and the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty, that is less than $1.90 per day per person, and is exacerbating inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. The strong shareholder support, our longstanding partnership with client countries, the wide local presence as well as the sound financial principles we follow have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 111 countries which includes addressing transmission issues. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. The World Bank Group is preparing additional interventions on human capital under the Social Response. The economic shock associated with supply disruptions, lockdowns and social distancing will likely result in worse nutrition and higher rates of stunting in children. School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. As part of our emergency response, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped due to school closures through household or community delivery. This brings me to the increasingly larger role capital markets are playing in directing financing to build a sustainable and resilient future – a path where investors consider the Environmental Social and Governance, or ESG, credentials and impacts. We understand that financial markets play a vital role for the ‘real economy’ as they provide financial solutions to tackle the world’s most pressing problems, including solutions to address income inequality and poverty. It is critical that governments and the private sector also do more in the ‘real economy’ to account for and address ESG related externalities so that the risk-return calculation is more accurate and helps channel funds towards sustainable activities. At the World Bank, we continuously strive to find new ways to leverage our market knowledge to help member countries design programs that meet their development priorities. We design World Bank projects to achieve positive environmental and social impacts. All our projects go through an extensive review process to ensure we include sustainability considerations and address environmental and social risks. Our portfolio management and review processes help us improve and adjust projects as needed. Because we have decades-long relationships and work closely with our client countries, we are nimble, and we can adjust – when times call for it – like now – to reprioritize projects to help governments address new and urgent needs as they combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic disruptions, we are maintaining a line of sight to our client countries long-term development vision to seize opportunities to create a resilient and sustainable future. Like any bank, IBRD borrows and lends money. Our lending goes to emerging market and developing countries for sustainable development and our resources come from our shareholders and from borrowings in the capital markets, with an annual funding program of about USD 60-65 billion. To meet the increased requirements from client countries, we stepped up our funding program in FY 20 (our financial year closes in June) by raising USD 75 billion from the markets. In this context, let me say a few words about the International Development Association or IDA. IDA is a 60-year-old development organization and an integral member of the World Bank Group. It is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of shareholder resources. Starting two years ago, IDA has been issuing bonds in the capital markets to scale up its financing to low-income countries giving investors an opportunity to invest in triple-A rated bonds that support hundreds of millions of beneficiaries around the globe, especially in African countries. In FY 20 alone, IDA raised up to USD 5 billion from the markets. It is a great example of capital markets having a substantial developmental impact. In recent years we have been issuing bonds to raise awareness towards development challenges and have been connecting investors to the purpose and importance of their investment using the Sustainable Development Goals as a framework. For example, we have issued bonds to raise awareness for the need to protect marine and freshwater resources, tackle the use of plastics to protect our oceans, address food loss and waste, and the importance of gender and income equality. Our funding program also helps finance our support to countries as they invest in their people – programs including health, education, and social safety nets. These are all themes that are at the heart of World Bank’s work with our member countries and these acquire even greater importance with the onset of the pandemic. But we are not just another issuer of sustainable bonds. We are also a champion and promoter of sustainable capital markets. We have been playing this role through setting the foundations for the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles; our partnerships with asset owners like the Government Pension Investment Fund of Japan to expand ESG considerations in fixed income; our role in developing ESG and sustainable investment guidance for central banks through the Network for Greening the Financial System; and by convening investors and sovereigns to engage on ESG concerns and opportunities. We are communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our member governments. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio. Through our Sustainable Development Bonds issuance, we are communicating: World Bank’s development mandate, how our activities are aligned with the SDGs, and that our projects are designed for impact and carefully assessed for environmental and social risks. The green, and now, social and sustainability bond market is essentially about purpose and transparency. There is much focus on ESG factors in investing and how these bonds fit with ESG strategies and sustainable investing. Labels are a useful first step in this direction. However, what we must be working towards is broader transparency and increasing information and data so that investors can make more informed decisions for all their investments. With improved data and technology, investors can extend their focus on risk management to take into account climate and social risks, and factor in purposeful investing to include a wider range of investments. For over a decade now, we have been seeing investor behavior and demand change. Investors are looking for new and innovative opportunities that allow them to do well and to do good. Our bonds give investors the opportunity to invest in liquid, highly rated products which finance projects that serve a social purpose. Let me conclude by highlighting that the pandemic has crystalized the opportunity for sustainable investment to benefit everyone. Issuers and investors can lead the way, but the focus must be on transparency. Issuers must be aware that investors are assessing the risks and opportunities of their investments and issuers must explain how they are using investors’ funds to make a positive difference for society. And investors must look at their entire portfolio to see how they can use the power of investment to contribute to sustainable development, and demand transparency from issuers in order to take sustainable decisions. I am confident that our collective efforts can drive a sustainable and resilient future.  Thank you.","upi":"000512825","master_date":"2020-09-21T09:00:00Z","master_date_srt":"2020-09-21T09:00:00Z","master_recent_date_srt":"2020-09-21T09:00:00Z","master_recent_date":"2020-09-21T09:00:00Z","short_description":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at City Week 2020: 10th Annual International Financial Services Forum","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at the 10th edition of the City Week event. Convenings like today’s are crucial as policymakers, financial industry leaders, and the international community come together to address the multiple issues facing the future of financial services in the new COVID-19 world. Over the past few months, it has become apparent that the pandemic is a watershed, forcing us to embrace a future we didn’t expect - one that is marked by structural changes in the way we work, consume, and communicate. These changes are reshaping industries and reallocating capital and yet creating opportunities for those who can spot the emerging trends early enough. I will begin by talking about some of the challenges countries have been facing while struggling with the pandemic, particularly emerging market and developing economies, as they are the hardest hit. I will also touch upon the World Bank Group’s response to the COVID-19 crisis. In the second half of my remarks, I will explore how the World Bank is making a difference towards a sustainable recovery and share some experiences from our longstanding work as a champion and promoter of sustainable capital markets. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, and the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty, that is less than $1.90 per day per person, and is exacerbating inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. The strong shareholder support, our longstanding partnership with client countries, the wide local presence as well as the sound financial principles we follow have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 111 countries which includes addressing transmission issues. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. The World Bank Group is preparing additional interventions on human capital under the Social Response. The economic shock associated with supply disruptions, lockdowns and social distancing will likely result in worse nutrition and higher rates of stunting in children. School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. As part of our emergency response, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped due to school closures through household or community delivery. This brings me to the increasingly larger role capital markets are playing in directing financing to build a sustainable and resilient future – a path where investors consider the Environmental Social and Governance, or ESG, credentials and impacts. We understand that financial markets play a vital role for the ‘real economy’ as they provide financial solutions to tackle the world’s most pressing problems, including solutions to address income inequality and poverty. It is critical that governments and the private sector also do more in the ‘real economy’ to account for and address ESG related externalities so that the risk-return calculation is more accurate and helps channel funds towards sustainable activities. At the World Bank, we continuously strive to find new ways to leverage our market knowledge to help member countries design programs that meet their development priorities. We design World Bank projects to achieve positive environmental and social impacts. All our projects go through an extensive review process to ensure we include sustainability considerations and address environmental and social risks. Our portfolio management and review processes help us improve and adjust projects as needed. Because we have decades-long relationships and work closely with our client countries, we are nimble, and we can adjust – when times call for it – like now – to reprioritize projects to help governments address new and urgent needs as they combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic disruptions, we are maintaining a line of sight to our client countries long-term development vision to seize opportunities to create a resilient and sustainable future. Like any bank, IBRD borrows and lends money. Our lending goes to emerging market and developing countries for sustainable development and our resources come from our shareholders and from borrowings in the capital markets, with an annual funding program of about USD 60-65 billion. To meet the increased requirements from client countries, we stepped up our funding program in FY 20 (our financial year closes in June) by raising USD 75 billion from the markets. In this context, let me say a few words about the International Development Association or IDA. IDA is a 60-year-old development organization and an integral member of the World Bank Group. It is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of shareholder resources. Starting two years ago, IDA has been issuing bonds in the capital markets to scale up its financing to low-income countries giving investors an opportunity to invest in triple-A rated bonds that support hundreds of millions of beneficiaries around the globe, especially in African countries. In FY 20 alone, IDA raised up to USD 5 billion from the markets. It is a great example of capital markets having a substantial developmental impact. In recent years we have been issuing bonds to raise awareness towards development challenges and have been connecting investors to the purpose and importance of their investment using the Sustainable Development Goals as a framework. For example, we have issued bonds to raise awareness for the need to protect marine and freshwater resources, tackle the use of plastics to protect our oceans, address food loss and waste, and the importance of gender and income equality. Our funding program also helps finance our support to countries as they invest in their people – programs including health, education, and social safety nets. These are all themes that are at the heart of World Bank’s work with our member countries and these acquire even greater importance with the onset of the pandemic. But we are not just another issuer of sustainable bonds. We are also a champion and promoter of sustainable capital markets. We have been playing this role through setting the foundations for the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles; our partnerships with asset owners like the Government Pension Investment Fund of Japan to expand ESG considerations in fixed income; our role in developing ESG and sustainable investment guidance for central banks through the Network for Greening the Financial System; and by convening investors and sovereigns to engage on ESG concerns and opportunities. We are communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our member governments. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio. Through our Sustainable Development Bonds issuance, we are communicating: World Bank’s development mandate, how our activities are aligned with the SDGs, and that our projects are designed for impact and carefully assessed for environmental and social risks. The green, and now, social and sustainability bond market is essentially about purpose and transparency. There is much focus on ESG factors in investing and how these bonds fit with ESG strategies and sustainable investing. Labels are a useful first step in this direction. However, what we must be working towards is broader transparency and increasing information and data so that investors can make more informed decisions for all their investments. With improved data and technology, investors can extend their focus on risk management to take into account climate and social risks, and factor in purposeful investing to include a wider range of investments. For over a decade now, we have been seeing investor behavior and demand change. Investors are looking for new and innovative opportunities that allow them to do well and to do good. Our bonds give investors the opportunity to invest in liquid, highly rated products which finance projects that serve a social purpose. Let me conclude by highlighting that the pandemic has crystalized the opportunity for sustainable investment to benefit everyone. Issuers and investors can lead the way, but the focus must be on transparency. Issuers must be aware that investors are assessing the risks and opportunities of their investments and issuers must explain how they are using investors’ funds to make a positive difference for society. And investors must look at their entire portfolio to see how they can use the power of investment to contribute to sustainable development, and demand transparency from issuers in order to take sustainable decisions. I am confident that our collective efforts can drive a sustainable and resilient future.  Thank you.","date":"2020-09-21T09:00:00Z","contenttype":"Speeches and Transcripts"},"_9e6db0f076de6ce662cc02fceb30f04b127da6ba":{"id":"9e6db0f076de6ce662cc02fceb30f04b127da6ba","title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at The Economic Times CFO Strategy Summit 2020","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/09/11/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-economic-times-cfo-strategy-summit-2020","descr":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at The Economic Times CFO Strategy Summit 2020","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/09/11/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-economic-times-cfo-strategy-summit-2020","wcmsource":"cq5","content":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at this Economic Times’ CFO Strategy Summit. Convenings like today’s are crucial as policymakers, businesses, and the international community work to address the multiple issues facing the world. The coronavirus pandemic is threatening to set back years of progress. The future will not look like the past ─ the pandemic is accelerating changes in how we work, consume, and communicate. These trends could reshape entire industries, and yet create opportunities for those who can spot these trends early enough. Given that this is a summit for CFOs, let me begin by touching briefly upon World Bank’s business model and how it is different from a typical commercial organization. The World Bank Group has set two goals for the world to achieve by 2030 ─ End extreme poverty and Promote shared prosperity. We are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The Bank extends funds at concessional rates, which are significantly lower than the market. Our support to client countries is countercyclical as we scale up lending during times of crisis. The overall objective of IBRD’s financial policy framework is to support the Bank’s development mandate through efficient utilization of shareholder resources while protecting IBRD’s triple-A credit rating through an array of financial policies and risk management practices. Based on the strength of its triple-A rating, IBRD can borrow from the bond markets at attractive terms to raise funds for on-lending to support middle-income countries in their developmental activities and pass on the favorable terms to them. The International Development Association or IDA is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of scarce shareholder resources. IDA has now begun to issue bonds in the capital markets to scale up its financing to low-income countries. The triple-A rating of IDA also bears testament to its financial strength and prudent risk management. Member countries have increased their support for both the institutions over the years, the latest being the 2018 IBRD capital increase which will add $7.5 billion to IBRD’s paid-in capital and the recently agreed-upon IDA19 replenishment, which will provide IDA with additional donor contributions of nearly $24 billion and support $82 billion of additional financing to client countries. Turning to the current crisis, the COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty and is exacerbating intense inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. Strong connections with client countries, our local presence, and sound financial principles have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 104 countries which includes reducing transmission. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. Another sector that needs focused attention is education ─ School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. In the emergency stage, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped by school closures through household or community delivery. Looking to India, the economy has been facing many challenges in the past few months. For specific COVID-19 support for India, the Bank has provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$750 million social protection project, and a US$750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises (MSME). Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. The World Bank Group will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation (IFC) will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models and reshaping businesses in lasting ways. Roughly 436 million enterprises worldwide in the hardest-hit sectors are facing serious disruption according to the International Labour Organization, including both employers and the self-employed. To support job creation and preserve growth-oriented enterprises, it will be important to restructure and recapitalize firms to make them more efficient as also promote reallocation of resources to more efficient companies. Businesses are being forced to rethink and realign their priorities. Those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger than before. The COVID-19 pandemic has amplified the benefits of expanding Digital Financial Services. These services significantly reduce the need for physical contact in retail and financial transactions and help governments respond more quickly to extend liquidity support to firms and people who are most at risk. Platform-based models for discounting supply-chain invoices have enabled MSMEs to leverage their receivables to access working capital. Basic digital insurance products have emerged across Africa and South Asia. During this crisis, the role of inclusive businesses will only become more critical as, for the first time in over 20 years, the World Bank Group has predicted that the global poverty rate is going to rise substantially.  And the most vulnerable groups at the base of the pyramid face the highest consequences. Let me share a few examples of how inclusive businesses in emerging markets are leveraging their assets, capabilities, long-standing networks, and local knowledge and relationships to address the needs of those at the base of the pyramid - to support their low-income and vulnerable suppliers, distributors, and customers. UK based IrisGuard is an iris-recognition solutions company and a leading supplier of iris biometric technology platforms for large-scale humanitarian efforts. To address the needs of forcibly displaced populations in refugee camps, the company has adapted its technology to enable refugees to make retail and banking transactions by using their iris for identification, rather than a fingerprint. IrisGuard has also added off-line functionality that enables its partners to provide mobile banking services at consumers’ doorsteps. And by building ATMs into vans, the company has enabled refugees to conduct financial transactions and receive their cash aid from governments or humanitarian agencies PickMe is a ride-hailing app in Sri Lanka with over 60 percent of its drivers operating motorized rickshaws. When COVID-19 became a threat, PickMe quickly shifted its services from ride-hailing to delivering essential goods such as groceries and liquid petroleum gas for cooking. Within just a week of starting its new service, PickMe mobilized more than 2,000 drivers who have since made more than 130,128 deliveries. Through PickMe’s collaboration with local police stations, its drivers have been authorized to deliver emergency medical supplies during curfew hours. The company has also established an emergency hotline for hospital staff who need transportation to get to and from work. An example from India - Dodla Dairy is a company that sources milk from cooperatives of small farmers. With the onset of the crisis, demand for milk products declined and, as a result, Dodla’s purchases from small dairy farmers also declined. To help dairy farmers maintain their livelihoods, Dodla began purchasing some of farmers’ excess milk and converting it into powder. This is creating continuity and stability in the dairy supply chain. And there are many more examples of how we are seeing many companies respond to the crisis by reorienting and adapting their business models and operations to continue to work with their suppliers and customers at the base of the economic pyramid. The future will not look like the past. We are evolving into a new normal which has a lot of uncertainty, but it also provides new opportunities to reimagine business models with the support of technology and digital. Skill requirements will change with more automation, digitization and remote work. For a sustainable and resilient recovery, companies will need to incorporate more Environmental Social and Governance principles in the way they operate and produce goods and services. Let me end by saying that businesses which are able to explore alternative distribution channels, adapt their products and services, leverage technology channels and fintech, and focus on re-skilling workers will emerge as the winners. The CFOs of course will have to play a vital role in this process by ensuring that their businesses are fit for purpose and remain financially sustainable through these challenging times. Thank you.  ","content_1000":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at this Economic Times’ CFO Strategy Summit. Convenings like today’s are crucial as policymakers, businesses, and the international community work to address the multiple issues facing the world. The coronavirus pandemic is threatening to set back years of progress. The future will not look like the past ─ the pandemic is accelerating changes in how we work, consume, and communicate. These trends could reshape entire industries, and yet create opportunities for those who can spot these trends early enough. Given that this is a summit for CFOs, let me begin by touching briefly upon World Bank’s business model and how it is different from a typical commercial organization. The World Bank Group has set two goals for the world to achieve by 2030 ─ End extreme poverty and Promote shared prosperity. We are not a bank in the ordinary sense but a unique partnership to reduc","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"9e6db0f076de6ce662cc02fceb30f04b127da6ba","wn_title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at The Economic Times CFO Strategy Summit 2020","wn_desc":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at this Economic Times’ CFO Strategy Summit. Convenings like today’s are crucial as policymakers, businesses, and the international community work to address the multiple issues facing the world. The coronavirus pandemic is threatening to set back years of progress. The future will not look like the past ─ the pandemic is accelerating changes in how we work, consume, and communicate. These trends could reshape entire industries, and yet create opportunities for those who can spot these trends early enough. Given that this is a summit for CFOs, let me begin by touching briefly upon World Bank’s business model and how it is different from a typical commercial organization. The World Bank Group has set two goals for the world to achieve by 2030 ─ End extreme poverty and Promote shared prosperity. We are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The Bank extends funds at concessional rates, which are significantly lower than the market. Our support to client countries is countercyclical as we scale up lending during times of crisis. The overall objective of IBRD’s financial policy framework is to support the Bank’s development mandate through efficient utilization of shareholder resources while protecting IBRD’s triple-A credit rating through an array of financial policies and risk management practices. Based on the strength of its triple-A rating, IBRD can borrow from the bond markets at attractive terms to raise funds for on-lending to support middle-income countries in their developmental activities and pass on the favorable terms to them. The International Development Association or IDA is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of scarce shareholder resources. IDA has now begun to issue bonds in the capital markets to scale up its financing to low-income countries. The triple-A rating of IDA also bears testament to its financial strength and prudent risk management. Member countries have increased their support for both the institutions over the years, the latest being the 2018 IBRD capital increase which will add $7.5 billion to IBRD’s paid-in capital and the recently agreed-upon IDA19 replenishment, which will provide IDA with additional donor contributions of nearly $24 billion and support $82 billion of additional financing to client countries. Turning to the current crisis, the COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty and is exacerbating intense inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. Strong connections with client countries, our local presence, and sound financial principles have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 104 countries which includes reducing transmission. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. Another sector that needs focused attention is education ─ School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. In the emergency stage, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped by school closures through household or community delivery. Looking to India, the economy has been facing many challenges in the past few months. For specific COVID-19 support for India, the Bank has provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$750 million social protection project, and a US$750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises (MSME). Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. The World Bank Group will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation (IFC) will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models and reshaping businesses in lasting ways. Roughly 436 million enterprises worldwide in the hardest-hit sectors are facing serious disruption according to the International Labour Organization, including both employers and the self-employed. To support job creation and preserve growth-oriented enterprises, it will be important to restructure and recapitalize firms to make them more efficient as also promote reallocation of resources to more efficient companies. Businesses are being forced to rethink and realign their priorities. Those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger than before. The COVID-19 pandemic has amplified the benefits of expanding Digital Financial Services. These services significantly reduce the need for physical contact in retail and financial transactions and help governments respond more quickly to extend liquidity support to firms and people who are most at risk. Platform-based models for discounting supply-chain invoices have enabled MSMEs to leverage their receivables to access working capital. Basic digital insurance products have emerged across Africa and South Asia. During this crisis, the role of inclusive businesses will only become more critical as, for the first time in over 20 years, the World Bank Group has predicted that the global poverty rate is going to rise substantially.  And the most vulnerable groups at the base of the pyramid face the highest consequences. Let me share a few examples of how inclusive businesses in emerging markets are leveraging their assets, capabilities, long-standing networks, and local knowledge and relationships to address the needs of those at the base of the pyramid - to support their low-income and vulnerable suppliers, distributors, and customers. UK based IrisGuard is an iris-recognition solutions company and a leading supplier of iris biometric technology platforms for large-scale humanitarian efforts. To address the needs of forcibly displaced populations in refugee camps, the company has adapted its technology to enable refugees to make retail and banking transactions by using their iris for identification, rather than a fingerprint. IrisGuard has also added off-line functionality that enables its partners to provide mobile banking services at consumers’ doorsteps. And by building ATMs into vans, the company has enabled refugees to conduct financial transactions and receive their cash aid from governments or humanitarian agencies PickMe is a ride-hailing app in Sri Lanka with over 60 percent of its drivers operating motorized rickshaws. When COVID-19 became a threat, PickMe quickly shifted its services from ride-hailing to delivering essential goods such as groceries and liquid petroleum gas for cooking. Within just a week of starting its new service, PickMe mobilized more than 2,000 drivers who have since made more than 130,128 deliveries. Through PickMe’s collaboration with local police stations, its drivers have been authorized to deliver emergency medical supplies during curfew hours. The company has also established an emergency hotline for hospital staff who need transportation to get to and from work. An example from India - Dodla Dairy is a company that sources milk from cooperatives of small farmers. With the onset of the crisis, demand for milk products declined and, as a result, Dodla’s purchases from small dairy farmers also declined. To help dairy farmers maintain their livelihoods, Dodla began purchasing some of farmers’ excess milk and converting it into powder. This is creating continuity and stability in the dairy supply chain. And there are many more examples of how we are seeing many companies respond to the crisis by reorienting and adapting their business models and operations to continue to work with their suppliers and customers at the base of the economic pyramid. The future will not look like the past. We are evolving into a new normal which has a lot of uncertainty, but it also provides new opportunities to reimagine business models with the support of technology and digital. Skill requirements will change with more automation, digitization and remote work. For a sustainable and resilient recovery, companies will need to incorporate more Environmental Social and Governance principles in the way they operate and produce goods and services. Let me end by saying that businesses which are able to explore alternative distribution channels, adapt their products and services, leverage technology channels and fintech, and focus on re-skilling workers will emerge as the winners. The CFOs of course will have to play a vital role in this process by ensuring that their businesses are fit for purpose and remain financially sustainable through these challenging times. Thank you.  ","upi":"000512825","master_date":"2020-09-11T15:00:00Z","master_date_srt":"2020-09-11T15:00:00Z","master_recent_date_srt":"2020-09-11T15:00:00Z","master_recent_date":"2020-09-11T15:00:00Z","short_description":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at The Economic Times CFO Strategy Summit 2020","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Good morning to all the distinguished speakers and viewers who have joined today. I’m delighted to be with you at this Economic Times’ CFO Strategy Summit. Convenings like today’s are crucial as policymakers, businesses, and the international community work to address the multiple issues facing the world. The coronavirus pandemic is threatening to set back years of progress. The future will not look like the past ─ the pandemic is accelerating changes in how we work, consume, and communicate. These trends could reshape entire industries, and yet create opportunities for those who can spot these trends early enough. Given that this is a summit for CFOs, let me begin by touching briefly upon World Bank’s business model and how it is different from a typical commercial organization. The World Bank Group has set two goals for the world to achieve by 2030 ─ End extreme poverty and Promote shared prosperity. We are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The Bank extends funds at concessional rates, which are significantly lower than the market. Our support to client countries is countercyclical as we scale up lending during times of crisis. The overall objective of IBRD’s financial policy framework is to support the Bank’s development mandate through efficient utilization of shareholder resources while protecting IBRD’s triple-A credit rating through an array of financial policies and risk management practices. Based on the strength of its triple-A rating, IBRD can borrow from the bond markets at attractive terms to raise funds for on-lending to support middle-income countries in their developmental activities and pass on the favorable terms to them. The International Development Association or IDA is one of the largest sources of assistance for the world’s 74 poorest countries. IDA provides highly concessional financing at zero- or very low-interest rates and outright grants to low-income countries. With the help of donor contributions, IDA loans and grants since its inception have totaled $422 billion. IDA’s business model has evolved over the last few years to enhance efficient utilization of scarce shareholder resources. IDA has now begun to issue bonds in the capital markets to scale up its financing to low-income countries. The triple-A rating of IDA also bears testament to its financial strength and prudent risk management. Member countries have increased their support for both the institutions over the years, the latest being the 2018 IBRD capital increase which will add $7.5 billion to IBRD’s paid-in capital and the recently agreed-upon IDA19 replenishment, which will provide IDA with additional donor contributions of nearly $24 billion and support $82 billion of additional financing to client countries. Turning to the current crisis, the COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before picking up in 2021. The pandemic has hit developing countries particularly hard due to capital outflows, declines in remittances, the collapse of informal labor markets with limited social safety nets. COVID 19 threatens to push over 100 million people into extreme poverty and is exacerbating intense inequality throughout the world. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail trade, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows which are an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. Strong connections with client countries, our local presence, and sound financial principles have allowed the World Bank Group to step up quickly to provide counter-cyclical financing during the on-going COVID-19 crisis. We expect to provide an exceptional crisis response to support developing countries of up to US$160 billion over the 15 months period beginning April 2020 to June 2021. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis. The World Bank Group response operates across the three stages of crisis ─ providing relief, supporting restructuring, and building a resilient recovery. The relief stage involves emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. The subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. The World Bank Group’s emergency health response is already under implementation in 104 countries which includes reducing transmission. It also addresses health service delivery through the expansion and reorganization of health care, introducing new service delivery modes (e.g. telemedicine) and drawing on private sector capacity to ensure safe access to COVID-19 and other essential health services. The Bank is helping countries secure urgently needed medical supplies through Bank Facilitated Procurement. In addition, our efforts are working to enable households to cope with income shocks, comply with mitigation measures, and access protective gear, supplies, and water and sanitation. We are also helping client countries manage budgets as spending needs grow, economies contract and fiscal pressures mount. Public financial management process needs to be temporarily adjusted during the emergency response to facilitate fund flows, procurement and payroll management. Another sector that needs focused attention is education ─ School closures are already impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. In the emergency stage, the Bank is supporting education systems to mitigate learning losses using multiplatform remote programs for learning and early childhood development. To date, 120 countries are implementing some modality of multiplatform remote learning. There is also critical support to replace school feeding programs stopped by school closures through household or community delivery. Looking to India, the economy has been facing many challenges in the past few months. For specific COVID-19 support for India, the Bank has provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$750 million social protection project, and a US$750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises (MSME). Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. The World Bank Group will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation (IFC) will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models and reshaping businesses in lasting ways. Roughly 436 million enterprises worldwide in the hardest-hit sectors are facing serious disruption according to the International Labour Organization, including both employers and the self-employed. To support job creation and preserve growth-oriented enterprises, it will be important to restructure and recapitalize firms to make them more efficient as also promote reallocation of resources to more efficient companies. Businesses are being forced to rethink and realign their priorities. Those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger than before. The COVID-19 pandemic has amplified the benefits of expanding Digital Financial Services. These services significantly reduce the need for physical contact in retail and financial transactions and help governments respond more quickly to extend liquidity support to firms and people who are most at risk. Platform-based models for discounting supply-chain invoices have enabled MSMEs to leverage their receivables to access working capital. Basic digital insurance products have emerged across Africa and South Asia. During this crisis, the role of inclusive businesses will only become more critical as, for the first time in over 20 years, the World Bank Group has predicted that the global poverty rate is going to rise substantially.  And the most vulnerable groups at the base of the pyramid face the highest consequences. Let me share a few examples of how inclusive businesses in emerging markets are leveraging their assets, capabilities, long-standing networks, and local knowledge and relationships to address the needs of those at the base of the pyramid - to support their low-income and vulnerable suppliers, distributors, and customers. UK based IrisGuard is an iris-recognition solutions company and a leading supplier of iris biometric technology platforms for large-scale humanitarian efforts. To address the needs of forcibly displaced populations in refugee camps, the company has adapted its technology to enable refugees to make retail and banking transactions by using their iris for identification, rather than a fingerprint. IrisGuard has also added off-line functionality that enables its partners to provide mobile banking services at consumers’ doorsteps. And by building ATMs into vans, the company has enabled refugees to conduct financial transactions and receive their cash aid from governments or humanitarian agencies PickMe is a ride-hailing app in Sri Lanka with over 60 percent of its drivers operating motorized rickshaws. When COVID-19 became a threat, PickMe quickly shifted its services from ride-hailing to delivering essential goods such as groceries and liquid petroleum gas for cooking. Within just a week of starting its new service, PickMe mobilized more than 2,000 drivers who have since made more than 130,128 deliveries. Through PickMe’s collaboration with local police stations, its drivers have been authorized to deliver emergency medical supplies during curfew hours. The company has also established an emergency hotline for hospital staff who need transportation to get to and from work. An example from India - Dodla Dairy is a company that sources milk from cooperatives of small farmers. With the onset of the crisis, demand for milk products declined and, as a result, Dodla’s purchases from small dairy farmers also declined. To help dairy farmers maintain their livelihoods, Dodla began purchasing some of farmers’ excess milk and converting it into powder. This is creating continuity and stability in the dairy supply chain. And there are many more examples of how we are seeing many companies respond to the crisis by reorienting and adapting their business models and operations to continue to work with their suppliers and customers at the base of the economic pyramid. The future will not look like the past. We are evolving into a new normal which has a lot of uncertainty, but it also provides new opportunities to reimagine business models with the support of technology and digital. Skill requirements will change with more automation, digitization and remote work. For a sustainable and resilient recovery, companies will need to incorporate more Environmental Social and Governance principles in the way they operate and produce goods and services. Let me end by saying that businesses which are able to explore alternative distribution channels, adapt their products and services, leverage technology channels and fintech, and focus on re-skilling workers will emerge as the winners. The CFOs of course will have to play a vital role in this process by ensuring that their businesses are fit for purpose and remain financially sustainable through these challenging times. Thank you.  ","date":"2020-09-11T15:00:00Z","contenttype":"Speeches and Transcripts"},"_bf28809aee06c85ad7f37e8bfadf6181f344a571":{"id":"bf28809aee06c85ad7f37e8bfadf6181f344a571","title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Independence Day Eve Celebration of the Rotary Clubs of the Twin Cities of Hyderabad & Secunderabad","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/08/14/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-independence-day-eve-celebration-of-the-rotary-clubs-of-the-twin-cities-of-hyderabad-secunderabad","descr":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Independence Day Eve Celebration of the Rotary Clubs of the Twin Cities of Hyderabad & Secunderabad","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/08/14/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-independence-day-eve-celebration-of-the-rotary-clubs-of-the-twin-cities-of-hyderabad-secunderabad","wcmsource":"cq5","content":" I am delighted to join you today at the joint meeting of Rotary Clubs and it is a pleasure to celebrate together the 74th Independence Day. I wish I were present physically with you but as we live in another type of reality now, I can only praise technology for allowing us to convene virtually. I hope that each of you and your families are staying safe and healthy during these incredibly challenging times. On this eve of India’s Independence Day, I would like to talk to you today about how the World Bank Group is mounting an unprecedent response to COVID-19 to help countries in need, including India. Disrupting billions of lives and livelihoods, the COVID-19 pandemic threatens decades of hard-won development gains and demands an urgent, exceptional response. The severity of the pandemic is challenging the world’s health systems, while associated lockdowns and travel restrictions have upended normal life for most people – even as lockdowns ease in some countries. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before rebounding in 2021. The recession in advanced economies is hitting developing countries hard, and the World Bank now projects negative growth for over 150 countries in 2020. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows – an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. And we all know that India has been hit hard by all these three indirect impacts of the pandemic. The COVID-19 crisis is exacting a massive toll on the poor and vulnerable. Millions of people will fall into extreme poverty, while millions of existing poor will experience even deeper deprivation – the first increase in global poverty since 1998. The World Bank Group is mounting an exceptional crisis response to support developing countries address spillover effects from the massive, sudden stop in global economic activity. We expect to provide up to US$160 billion over the 15 months spanning between April 2020 and June 2021. The World Bank Group’s objective is to assist countries to meet the dual challenge they now confront. First, addressing the health threat and the social and economic impacts of the COVID-19 crisis. And second, maintaining a line of sight to their long-term development vision when rebuilding back. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis and to restore momentum on what we call our Twin Goals: ending extreme poverty and promoting shared prosperity. This response required a lot of careful thought. After a thorough review, we decided to structure it along three stages: relief, restructuring, and resilient recovery. The relief stage involves the emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. As countries bring the pandemic under control and start re-opening their economies, the subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. Given the complexity of the impact of COVID, the World Bank Group is offering emergency support to health interventions for saving lives threatened by the virus but also social response for protecting poor and vulnerable people from the impact of the economic and social crisis triggered by the pandemic. There is also an economic response for saving livelihoods, preserving jobs, and ensuring more sustainable business growth and job creation. This will be achieved by helping firms and financial institutions survive the initial crisis shock, as well as restructure and recapitalize to build resilience in recovery. Last but not least, we offer support for strengthening policies, institutions and investments for resilient, inclusive and sustainable recovery by Rebuilding Better. Let me now say a few words about our health response, targeted at helping countries prevent, detect and respond to the health threat posed by COVID-19 and to strengthen national systems for public health preparedness. The World Bank Group’s emergency health response is already under implementation in 104 countries, with US$5.9 billion approved as of June 1st. Our main actions were directed toward supporting countries to stop transmission through testing, isolating and treating, contact tracing and quarantining; communication that changed behaviors and built trust; developing general surveillance capacity and other core public health functions. Beyond the immediate threat, the World Bank Group will also help clients Rebuild Better, by strengthening core public health functions, investing in systems for pandemic preparedness; galvanizing health sector reforms especially in primary health care, and focusing on innovative approaches such as telemedicine, and digital technologies. Let me also say a few words also about education. The developing world was already living a learning crisis pre-COVID-19, which has now grown even deeper with exacerbated inequality. School closures because of COVID are impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. The challenge is to recover learning losses of those who were in school, prevent dropout rates in basic and tertiary education, and reduce out-of-school populations. The World Bank Group is helping countries take measures to mitigate learning losses through multiplatform remote programs. Limited internet penetration precludes relying solely on online resources, and requires use of social networks, SMS, radio and print media. There is also critical support to replace school feeding programs stopped by school closures.  When schools reopen, the World Bank Group will provide support such as through protective facilities and health screening and help ensure access to school especially for girls through subsidies and other measures.  Over time, our focus will shift to helping rebuild a more diversified, affordable and equitable education service, such as via consolidation of multiplatform remote learning, and investments to scale-up teachers’ capacity, including in digital skills. Turning to India, the challenges that the Indian economy has been facing in the past few months are dire. In terms of the specific COVID-19 related support for India, the Bank provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$ 750 million social protection project, and a US$ 750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises. Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Of these, 100 to 130 million are hired workers and 50 to 55 million are self-employed or own account firms. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. Unfortunately, the COVID crisis has severely hit the MSMEs. The cancellation of orders, loss of customers and clients, and supply chain disruptions, have caused a sharp fall in revenues. The lockdown has in fact raised a question mark on the sheer existence of many MSMEs, primarily because these are firms that have thin, if any, cash cushions to withstand the crisis. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models, reshaping businesses in lasting ways.  Companies are being forced to rethink and realign their priorities and those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger. Besides being agile and tech savvy, companies will need to incorporate more Environmental Social and Governance principles in the way they operate as well as in the goods and services they produce and deliver. Companies have been under pressure for years from shareholders, customers, and civil society to become aware of their impact on environment and climate change, but now, because of the dramatic shifts brought about by the pandemic, they need to deliver on their promises in order to be deemed fit for the future. The World Bank Group will continue to actively provide support to the Indian MSME sector.  Over the coming months, the Bank plans to deliver US$1.25 billion in lending, with $750 million of this amount to support “MSME access to finance” and the rest being targeted at “Raising and Accelerating MSME Productivity”. The World Bank, together with International Financial Corporation – the private sector arm of the World Bank Group – will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility together with the IFC. Significant steps have already been taken to deliver on the $750 million budgetary support on “MSME access to finance”. In July, the World Bank and the Government of India signed the agreement for the MSME Emergency Response Program to support increased flow of finance into the hands of MSMEs, severely impacted by the COVID-19 crisis. This lending operation has been carried out to address the immediate liquidity and credit needs of MSMEs so they can ‘keep the lights on’, to help viable firms survive, and to save jobs. This budgetary support will also help lay the foundations for a stronger MSME financing ecosystem in the recovery phase. The Project has three pillars. First, channeling financing to MSMEs. Second, supporting non-financial banking companies (or NFBCs). And, third, incentivizing and mainstreaming the use of fintech in MSME lending and payments. The short-term measures in this operation will focus primarily on addressing liquidity and cash constraints to avoid worker layoffs – thus preserving jobs, livelihoods, and productive capacity. The second lending project focuses on increasing the productive capacity of MSMEs through better linking MSMEs to domestic and international value chains, building MSME capacity (especially delivered digitally), addressing the challenge of delayed payments facing MSMEs in India, and increasing access to finance. In addition to new instruments and crowding in private sector investment, the fintech sector has the potential to close the gap in access to financial services and help firms address liquidity issues, which are critical due to financial shocks in the current crisis. As COVID-19 sweeps the world and disrupts the way we interact and conduct business, innovative technologies can help by providing solutions to maintain social distancing, ensure business continuity, strengthen health-care outcomes, and prevent service disruptions. In this regard, the World Bank Group continues to work with the Reserve Bank of India to operationalize the Fintech Regulatory Sandbox, which would provide the fintech players a space to test innovative products, services or business models in a live and time-bound market environment. I think I could give many more examples of ways the WBG, governments, the private sector, and the development community are all working to help support people and shore up economies. While this crisis is truly unprecedented and is causing severe challenges and distress around the world, I remain optimistic that we will come out of this stronger than we were before the pandemic struck. What is critical is that in all our efforts, we must build back while keeping a clear line of sight on the long-term development objectives of countries. It is very important for all of us, including India, to focus on the only silver lining of this crisis: the opportunity to rebuild better, in a more resilient, inclusive and sustainable way. For an organization whose motto is “Service Above Self,” I know that Rotarians are working hard to help your neighbors as they deal with this crisis and will work hard to rebuild better. Because of people like you, I have great hope that we will come out of this crisis stronger than ever before. It has been my pleasure to join you today. Thank you for welcoming me and I wish each of you a very happy Independence Day.","content_1000":" I am delighted to join you today at the joint meeting of Rotary Clubs and it is a pleasure to celebrate together the 74th Independence Day. I wish I were present physically with you but as we live in another type of reality now, I can only praise technology for allowing us to convene virtually. I hope that each of you and your families are staying safe and healthy during these incredibly challenging times. On this eve of India’s Independence Day, I would like to talk to you today about how the World Bank Group is mounting an unprecedent response to COVID-19 to help countries in need, including India. Disrupting billions of lives and livelihoods, the COVID-19 pandemic threatens decades of hard-won development gains and demands an urgent, exceptional response. The severity of the pandemic is challenging the world’s health systems, while associated lockdowns and travel restrictions have upended normal life for most people – even as lockdowns ease in some countries. The COVID-19 pandemic ","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"bf28809aee06c85ad7f37e8bfadf6181f344a571","wn_title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Independence Day Eve Celebration of the Rotary Clubs of the Twin Cities of Hyderabad & Secunderabad","wn_desc":" I am delighted to join you today at the joint meeting of Rotary Clubs and it is a pleasure to celebrate together the 74th Independence Day. I wish I were present physically with you but as we live in another type of reality now, I can only praise technology for allowing us to convene virtually. I hope that each of you and your families are staying safe and healthy during these incredibly challenging times. On this eve of India’s Independence Day, I would like to talk to you today about how the World Bank Group is mounting an unprecedent response to COVID-19 to help countries in need, including India. Disrupting billions of lives and livelihoods, the COVID-19 pandemic threatens decades of hard-won development gains and demands an urgent, exceptional response. The severity of the pandemic is challenging the world’s health systems, while associated lockdowns and travel restrictions have upended normal life for most people – even as lockdowns ease in some countries. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before rebounding in 2021. The recession in advanced economies is hitting developing countries hard, and the World Bank now projects negative growth for over 150 countries in 2020. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows – an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. And we all know that India has been hit hard by all these three indirect impacts of the pandemic. The COVID-19 crisis is exacting a massive toll on the poor and vulnerable. Millions of people will fall into extreme poverty, while millions of existing poor will experience even deeper deprivation – the first increase in global poverty since 1998. The World Bank Group is mounting an exceptional crisis response to support developing countries address spillover effects from the massive, sudden stop in global economic activity. We expect to provide up to US$160 billion over the 15 months spanning between April 2020 and June 2021. The World Bank Group’s objective is to assist countries to meet the dual challenge they now confront. First, addressing the health threat and the social and economic impacts of the COVID-19 crisis. And second, maintaining a line of sight to their long-term development vision when rebuilding back. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis and to restore momentum on what we call our Twin Goals: ending extreme poverty and promoting shared prosperity. This response required a lot of careful thought. After a thorough review, we decided to structure it along three stages: relief, restructuring, and resilient recovery. The relief stage involves the emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. As countries bring the pandemic under control and start re-opening their economies, the subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. Given the complexity of the impact of COVID, the World Bank Group is offering emergency support to health interventions for saving lives threatened by the virus but also social response for protecting poor and vulnerable people from the impact of the economic and social crisis triggered by the pandemic. There is also an economic response for saving livelihoods, preserving jobs, and ensuring more sustainable business growth and job creation. This will be achieved by helping firms and financial institutions survive the initial crisis shock, as well as restructure and recapitalize to build resilience in recovery. Last but not least, we offer support for strengthening policies, institutions and investments for resilient, inclusive and sustainable recovery by Rebuilding Better. Let me now say a few words about our health response, targeted at helping countries prevent, detect and respond to the health threat posed by COVID-19 and to strengthen national systems for public health preparedness. The World Bank Group’s emergency health response is already under implementation in 104 countries, with US$5.9 billion approved as of June 1st. Our main actions were directed toward supporting countries to stop transmission through testing, isolating and treating, contact tracing and quarantining; communication that changed behaviors and built trust; developing general surveillance capacity and other core public health functions. Beyond the immediate threat, the World Bank Group will also help clients Rebuild Better, by strengthening core public health functions, investing in systems for pandemic preparedness; galvanizing health sector reforms especially in primary health care, and focusing on innovative approaches such as telemedicine, and digital technologies. Let me also say a few words also about education. The developing world was already living a learning crisis pre-COVID-19, which has now grown even deeper with exacerbated inequality. School closures because of COVID are impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. The challenge is to recover learning losses of those who were in school, prevent dropout rates in basic and tertiary education, and reduce out-of-school populations. The World Bank Group is helping countries take measures to mitigate learning losses through multiplatform remote programs. Limited internet penetration precludes relying solely on online resources, and requires use of social networks, SMS, radio and print media. There is also critical support to replace school feeding programs stopped by school closures.  When schools reopen, the World Bank Group will provide support such as through protective facilities and health screening and help ensure access to school especially for girls through subsidies and other measures.  Over time, our focus will shift to helping rebuild a more diversified, affordable and equitable education service, such as via consolidation of multiplatform remote learning, and investments to scale-up teachers’ capacity, including in digital skills. Turning to India, the challenges that the Indian economy has been facing in the past few months are dire. In terms of the specific COVID-19 related support for India, the Bank provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$ 750 million social protection project, and a US$ 750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises. Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Of these, 100 to 130 million are hired workers and 50 to 55 million are self-employed or own account firms. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. Unfortunately, the COVID crisis has severely hit the MSMEs. The cancellation of orders, loss of customers and clients, and supply chain disruptions, have caused a sharp fall in revenues. The lockdown has in fact raised a question mark on the sheer existence of many MSMEs, primarily because these are firms that have thin, if any, cash cushions to withstand the crisis. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models, reshaping businesses in lasting ways.  Companies are being forced to rethink and realign their priorities and those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger. Besides being agile and tech savvy, companies will need to incorporate more Environmental Social and Governance principles in the way they operate as well as in the goods and services they produce and deliver. Companies have been under pressure for years from shareholders, customers, and civil society to become aware of their impact on environment and climate change, but now, because of the dramatic shifts brought about by the pandemic, they need to deliver on their promises in order to be deemed fit for the future. The World Bank Group will continue to actively provide support to the Indian MSME sector.  Over the coming months, the Bank plans to deliver US$1.25 billion in lending, with $750 million of this amount to support “MSME access to finance” and the rest being targeted at “Raising and Accelerating MSME Productivity”. The World Bank, together with International Financial Corporation – the private sector arm of the World Bank Group – will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility together with the IFC. Significant steps have already been taken to deliver on the $750 million budgetary support on “MSME access to finance”. In July, the World Bank and the Government of India signed the agreement for the MSME Emergency Response Program to support increased flow of finance into the hands of MSMEs, severely impacted by the COVID-19 crisis. This lending operation has been carried out to address the immediate liquidity and credit needs of MSMEs so they can ‘keep the lights on’, to help viable firms survive, and to save jobs. This budgetary support will also help lay the foundations for a stronger MSME financing ecosystem in the recovery phase. The Project has three pillars. First, channeling financing to MSMEs. Second, supporting non-financial banking companies (or NFBCs). And, third, incentivizing and mainstreaming the use of fintech in MSME lending and payments. The short-term measures in this operation will focus primarily on addressing liquidity and cash constraints to avoid worker layoffs – thus preserving jobs, livelihoods, and productive capacity. The second lending project focuses on increasing the productive capacity of MSMEs through better linking MSMEs to domestic and international value chains, building MSME capacity (especially delivered digitally), addressing the challenge of delayed payments facing MSMEs in India, and increasing access to finance. In addition to new instruments and crowding in private sector investment, the fintech sector has the potential to close the gap in access to financial services and help firms address liquidity issues, which are critical due to financial shocks in the current crisis. As COVID-19 sweeps the world and disrupts the way we interact and conduct business, innovative technologies can help by providing solutions to maintain social distancing, ensure business continuity, strengthen health-care outcomes, and prevent service disruptions. In this regard, the World Bank Group continues to work with the Reserve Bank of India to operationalize the Fintech Regulatory Sandbox, which would provide the fintech players a space to test innovative products, services or business models in a live and time-bound market environment. I think I could give many more examples of ways the WBG, governments, the private sector, and the development community are all working to help support people and shore up economies. While this crisis is truly unprecedented and is causing severe challenges and distress around the world, I remain optimistic that we will come out of this stronger than we were before the pandemic struck. What is critical is that in all our efforts, we must build back while keeping a clear line of sight on the long-term development objectives of countries. It is very important for all of us, including India, to focus on the only silver lining of this crisis: the opportunity to rebuild better, in a more resilient, inclusive and sustainable way. For an organization whose motto is “Service Above Self,” I know that Rotarians are working hard to help your neighbors as they deal with this crisis and will work hard to rebuild better. Because of people like you, I have great hope that we will come out of this crisis stronger than ever before. It has been my pleasure to join you today. Thank you for welcoming me and I wish each of you a very happy Independence Day.","upi":"000512825","master_date":"2020-08-14T15:30:00Z","master_date_srt":"2020-08-14T15:30:00Z","master_recent_date_srt":"2020-08-14T15:30:00Z","master_recent_date":"2020-08-14T15:30:00Z","short_description":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Independence Day Eve Celebration of the Rotary Clubs of the Twin Cities of Hyderabad & Secunderabad","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" I am delighted to join you today at the joint meeting of Rotary Clubs and it is a pleasure to celebrate together the 74th Independence Day. I wish I were present physically with you but as we live in another type of reality now, I can only praise technology for allowing us to convene virtually. I hope that each of you and your families are staying safe and healthy during these incredibly challenging times. On this eve of India’s Independence Day, I would like to talk to you today about how the World Bank Group is mounting an unprecedent response to COVID-19 to help countries in need, including India. Disrupting billions of lives and livelihoods, the COVID-19 pandemic threatens decades of hard-won development gains and demands an urgent, exceptional response. The severity of the pandemic is challenging the world’s health systems, while associated lockdowns and travel restrictions have upended normal life for most people – even as lockdowns ease in some countries. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. The global economy could shrink by 5.2 percent in 2020 before rebounding in 2021. The recession in advanced economies is hitting developing countries hard, and the World Bank now projects negative growth for over 150 countries in 2020. Billions of jobs are under threat worldwide. Nearly 80 percent of the world’s informal economy workers – 1.6 billion people – have faced COVID-19 lockdowns and slowdowns in hard-hit industries including wholesale and retail, food and hospitality, tourism, transport and manufacturing. With 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis. Remittance flows – an economic lifeline for many low-income families and a key source of revenues for many developing economies – are expected to fall by 20% in 2020. And we all know that India has been hit hard by all these three indirect impacts of the pandemic. The COVID-19 crisis is exacting a massive toll on the poor and vulnerable. Millions of people will fall into extreme poverty, while millions of existing poor will experience even deeper deprivation – the first increase in global poverty since 1998. The World Bank Group is mounting an exceptional crisis response to support developing countries address spillover effects from the massive, sudden stop in global economic activity. We expect to provide up to US$160 billion over the 15 months spanning between April 2020 and June 2021. The World Bank Group’s objective is to assist countries to meet the dual challenge they now confront. First, addressing the health threat and the social and economic impacts of the COVID-19 crisis. And second, maintaining a line of sight to their long-term development vision when rebuilding back. The ambition of the World Bank Group crisis response is to help client countries assist at least one billion people impacted by the COVID-19 crisis and to restore momentum on what we call our Twin Goals: ending extreme poverty and promoting shared prosperity. This response required a lot of careful thought. After a thorough review, we decided to structure it along three stages: relief, restructuring, and resilient recovery. The relief stage involves the emergency response to the health threats posed by COVID-19 and its immediate social, economic, and financial impacts. As countries bring the pandemic under control and start re-opening their economies, the subsequent restructuring stage focuses on strengthening health systems for pandemic readiness; restoring human capital; and restructuring, debt resolution, and recapitalization of firms and financial institutions. Finally, the resilient recovery stage entails taking advantage of new opportunities to build a more sustainable, inclusive, and resilient future in a world transformed by the pandemic. Given the complexity of the impact of COVID, the World Bank Group is offering emergency support to health interventions for saving lives threatened by the virus but also social response for protecting poor and vulnerable people from the impact of the economic and social crisis triggered by the pandemic. There is also an economic response for saving livelihoods, preserving jobs, and ensuring more sustainable business growth and job creation. This will be achieved by helping firms and financial institutions survive the initial crisis shock, as well as restructure and recapitalize to build resilience in recovery. Last but not least, we offer support for strengthening policies, institutions and investments for resilient, inclusive and sustainable recovery by Rebuilding Better. Let me now say a few words about our health response, targeted at helping countries prevent, detect and respond to the health threat posed by COVID-19 and to strengthen national systems for public health preparedness. The World Bank Group’s emergency health response is already under implementation in 104 countries, with US$5.9 billion approved as of June 1st. Our main actions were directed toward supporting countries to stop transmission through testing, isolating and treating, contact tracing and quarantining; communication that changed behaviors and built trust; developing general surveillance capacity and other core public health functions. Beyond the immediate threat, the World Bank Group will also help clients Rebuild Better, by strengthening core public health functions, investing in systems for pandemic preparedness; galvanizing health sector reforms especially in primary health care, and focusing on innovative approaches such as telemedicine, and digital technologies. Let me also say a few words also about education. The developing world was already living a learning crisis pre-COVID-19, which has now grown even deeper with exacerbated inequality. School closures because of COVID are impacting learning for 1.5 billion students worldwide, half of whom lack access to a computer, and might result in school detachment. The challenge is to recover learning losses of those who were in school, prevent dropout rates in basic and tertiary education, and reduce out-of-school populations. The World Bank Group is helping countries take measures to mitigate learning losses through multiplatform remote programs. Limited internet penetration precludes relying solely on online resources, and requires use of social networks, SMS, radio and print media. There is also critical support to replace school feeding programs stopped by school closures.  When schools reopen, the World Bank Group will provide support such as through protective facilities and health screening and help ensure access to school especially for girls through subsidies and other measures.  Over time, our focus will shift to helping rebuild a more diversified, affordable and equitable education service, such as via consolidation of multiplatform remote learning, and investments to scale-up teachers’ capacity, including in digital skills. Turning to India, the challenges that the Indian economy has been facing in the past few months are dire. In terms of the specific COVID-19 related support for India, the Bank provided financing for three projects during the April-June quarter. These include emergency support through a US$1 billion health project, a US$ 750 million social protection project, and a US$ 750 million economic response emergency operation to support micro-, small-, and medium-sized enterprises. Offering support for MSMEs has been especially important since we all know the critical role they play in India’s economy. Various estimates suggest that 150 to 180 million people are employed by 75 to 80 million MSMEs in India. Of these, 100 to 130 million are hired workers and 50 to 55 million are self-employed or own account firms. Additionally, MSMEs are estimated to contribute to 40 percent of exports from India. Unfortunately, the COVID crisis has severely hit the MSMEs. The cancellation of orders, loss of customers and clients, and supply chain disruptions, have caused a sharp fall in revenues. The lockdown has in fact raised a question mark on the sheer existence of many MSMEs, primarily because these are firms that have thin, if any, cash cushions to withstand the crisis. Not only in India, but around the world, private companies have been hit hard by the pandemic. As the crisis unfolds, it has become apparent that COVID is leading to paradigm shifts in business models, reshaping businesses in lasting ways.  Companies are being forced to rethink and realign their priorities and those who have already adjusted to the technology demands of the future are better equipped to survive and emerge from this crisis even stronger. Besides being agile and tech savvy, companies will need to incorporate more Environmental Social and Governance principles in the way they operate as well as in the goods and services they produce and deliver. Companies have been under pressure for years from shareholders, customers, and civil society to become aware of their impact on environment and climate change, but now, because of the dramatic shifts brought about by the pandemic, they need to deliver on their promises in order to be deemed fit for the future. The World Bank Group will continue to actively provide support to the Indian MSME sector.  Over the coming months, the Bank plans to deliver US$1.25 billion in lending, with $750 million of this amount to support “MSME access to finance” and the rest being targeted at “Raising and Accelerating MSME Productivity”. The World Bank, together with International Financial Corporation – the private sector arm of the World Bank Group – will support the Government of India through a Technical Assistance program to further the agenda of developing a robust ecosystem for MSME financing. The International Financial Corporation will provide direct support to Small Finance Banks via loans/equity together with other multilateral development financial institutions (MDFIs) and other partners. We will also focus on de-risking lending to MSMEs, possibly through a risk-sharing facility together with the IFC. Significant steps have already been taken to deliver on the $750 million budgetary support on “MSME access to finance”. In July, the World Bank and the Government of India signed the agreement for the MSME Emergency Response Program to support increased flow of finance into the hands of MSMEs, severely impacted by the COVID-19 crisis. This lending operation has been carried out to address the immediate liquidity and credit needs of MSMEs so they can ‘keep the lights on’, to help viable firms survive, and to save jobs. This budgetary support will also help lay the foundations for a stronger MSME financing ecosystem in the recovery phase. The Project has three pillars. First, channeling financing to MSMEs. Second, supporting non-financial banking companies (or NFBCs). And, third, incentivizing and mainstreaming the use of fintech in MSME lending and payments. The short-term measures in this operation will focus primarily on addressing liquidity and cash constraints to avoid worker layoffs – thus preserving jobs, livelihoods, and productive capacity. The second lending project focuses on increasing the productive capacity of MSMEs through better linking MSMEs to domestic and international value chains, building MSME capacity (especially delivered digitally), addressing the challenge of delayed payments facing MSMEs in India, and increasing access to finance. In addition to new instruments and crowding in private sector investment, the fintech sector has the potential to close the gap in access to financial services and help firms address liquidity issues, which are critical due to financial shocks in the current crisis. As COVID-19 sweeps the world and disrupts the way we interact and conduct business, innovative technologies can help by providing solutions to maintain social distancing, ensure business continuity, strengthen health-care outcomes, and prevent service disruptions. In this regard, the World Bank Group continues to work with the Reserve Bank of India to operationalize the Fintech Regulatory Sandbox, which would provide the fintech players a space to test innovative products, services or business models in a live and time-bound market environment. I think I could give many more examples of ways the WBG, governments, the private sector, and the development community are all working to help support people and shore up economies. While this crisis is truly unprecedented and is causing severe challenges and distress around the world, I remain optimistic that we will come out of this stronger than we were before the pandemic struck. What is critical is that in all our efforts, we must build back while keeping a clear line of sight on the long-term development objectives of countries. It is very important for all of us, including India, to focus on the only silver lining of this crisis: the opportunity to rebuild better, in a more resilient, inclusive and sustainable way. For an organization whose motto is “Service Above Self,” I know that Rotarians are working hard to help your neighbors as they deal with this crisis and will work hard to rebuild better. Because of people like you, I have great hope that we will come out of this crisis stronger than ever before. It has been my pleasure to join you today. Thank you for welcoming me and I wish each of you a very happy Independence Day.","date":"2020-08-14T15:30:00Z","contenttype":"Speeches and Transcripts"},"_ddba2fb641e2185f2778716e9638359d01ffc819":{"id":"ddba2fb641e2185f2778716e9638359d01ffc819","title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the OMFIF Global Public Investor 2020 Forum","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/07/29/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-omfif-global-public-investor-2020-forum","descr":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the OMFIF Global Public Investor 2020 Forum","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/07/29/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-omfif-global-public-investor-2020-forum","wcmsource":"cq5","content":" I am delighted to join you today at the launch of the seventh Global Public Investor Report produced by OMFIF. I would like to talk to you about some of the challenges that central banks and public investors face and are likely to face in the aftermath of the pandemic, and the essential role they will play in a sustainable recovery. I will also touch upon how the World Bank is making a difference in sustainable recovery and the ways we can partner to champion and promote sustainable capital markets. But first, a few words on the new economic context.  The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. In a best-case scenario, the global economy could shrink by 5.2 percent in 2020. The recession in advanced economies is hitting developing countries hard. Globally, we will see the first increase in poverty since 1998. And as it disrupts billions of lives and livelihoods, the pandemic threatens decades of hard-won development gains. Recovery is also likely to be slow in 2021. Growth forecasts for the global economy are around 4 percent next year. But there is some hope. Central banks have been playing an essential role in responding swiftly to the challenges of the pandemic. With the purpose of stimulating the economy and preserving the normal functioning of financial markets central banks have gone beyond their traditional role of lenders of last resort. Policy rates were cut by approximately 80 basis points in developed economies, and almost 100 basis points in emerging economies. Balance sheets have experienced an expansion at an unprecedented speed and size. For example, G4 central bank balance sheets have expanded by 20 percent of GDP over the first three months of the pandemic. Moreover, asset purchase programs have been adjusted to impact also non-financial private firms, by allowing the purchase of corporate bonds. This was particularly important, given the effects a sudden stop in economic activity could have on labor and corporate income. With national governments working fast to strengthen health care systems and protect the most vulnerable, central banks have also played a critical role in supporting the fiscal policy response. Under different institutional arrangements, central banks have developed lending facilities to implement the credit backstops provided by governments. Notably, the Federal Reserve offered USD FX swap facilities to several central banks and inaugurated a repo facility designed to provide collateralized lending of dollars to foreign central banks. These measures were timely and effective, reducing dollar funding pressures and preventing large scale currency depreciation in many emerging countries.  While all these nimble actions have helped stabilize financial markets, their medium- and long-term impact remains to be seen. Central banks will have to rethink their policy toolbox to navigate further these uncharted waters. Monetary policy should continue supporting economic recovery as long as required. But once the world economy is back on track, policy will need to be normalized. This phase will require a careful unwinding of the extraordinary policy measures to avoid disrupting financial markets and allow for efficient risk pricing. In the meantime, financial systems will have to cope with recession and the impact on credit quality. While managing their countries’ foreign exchange reserves, Central Banks are public investors, often rather conservative ones, keeping a close eye on capital preservation, liquidity and safety of their portfolios. The GPI report as well as our own survey on central banks reserves management activities published by RAMP, (RAMP is our Reserve Advisory and Management Partnership arm in World Bank Treasury), earlier this year, make us think of another role the central banks can play in economic recovery. In addition to the “traditional” risks, many of them exacerbated by the pandemic, public investors need to keep in mind another risk affecting the entire world, and that is climate change. This risk has significant implications for the long-term risk-return profile of assets. Here investors can make a difference by financing projects that help advance a low-carbon economy. They can also contribute by incorporating environmental, social, and governance principles into their investment policies.   In fact, Global Public Investors are starting to recognize that climate change risk has the potential to destroy significant global economic wealth in the coming decades and regulators too have warned of the potential investment risk from assets that become unsellable because of climate change. The first step for institutions seeking to adopt sustainable and responsible investment principles is to get a clear mandate on this from their stakeholders. Once the investment objectives are updated to include ESG principles, implementation becomes the next challenge, especially for central banks, as many of them operate in the high-quality fixed income space.  In this space, the availability of instruments where ESG considerations play a straightforward role in the risk-return analysis may be discouraging. But this is an area where the World Bank makes a difference, because of the bonds we issue.  At the World Bank Group, we understand that financial markets play a vital role for the “real economy,” as they provide financial solutions to tackle the world’s most pressing problems, such as income inequality and poverty. We work with the countries to design programs that meet their development priorities and advance our mission to end extreme poverty and build shared prosperity. We look for ways to achieve positive environmental and social impacts as we design our projects. Because we work closely with our client countries to design programs, when the times call for it, we can be nimble, and we can adjust quickly to reprioritize projects to help governments address new and urgent needs.  This has proved critical as our clients combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic repercussions, we have been maintaining a line of sight to our client countries’ long-term development vision, not just to get development back on track but to identify opportunities to “build back in a more resilient and sustainable manner.” In the context of a sustainable recovery, I would like to point out the steady shift we’ve seen in investor behavior over the past years, with investors seeking to do good while doing well. The World Bank has also helped drive this shift, as both a leader and key partner in efforts to build sustainable capital markets. We played a founding role in the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles.  We have partnered with asset owners like the Government Pension Investment Fund of Japan and Network for Greening the Financial System and we have convened investors and sovereigns to engage on ESG concerns and opportunities. We are also communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our client countries. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio.   The green, and now, social and sustainability bond market is essentially about purpose and transparency. We must continue working toward broader transparency and increasing information and data so that investors have better information for decision-making for all their investments. We have used our issuance program to engage investors on the SDGs. For the World Bank this has been an opportunity to raise awareness for key development challenges while financing a broad range of development sectors in line with our mandate. For investors it has been an opportunity to align their investments to the SDGs and/or to implement ESG strategies.  To conclude, I see genuine cause for optimism that the financial markets have been doing so much to embrace ESG considerations and bond issues that are specifically designed to support sustainability objectives. This puts us in a stronger position to support the kind of sustainable recovery that countries will need. It makes me hopeful that we can not only get developing countries back on their feet, but also help them advance on their development goals, build more resilience, and improve people’s lives. It has been my pleasure to join you today. Thank you.","content_1000":" I am delighted to join you today at the launch of the seventh Global Public Investor Report produced by OMFIF. I would like to talk to you about some of the challenges that central banks and public investors face and are likely to face in the aftermath of the pandemic, and the essential role they will play in a sustainable recovery. I will also touch upon how the World Bank is making a difference in sustainable recovery and the ways we can partner to champion and promote sustainable capital markets. But first, a few words on the new economic context.  The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. In a best-case scenario, the global economy could shrink by 5.2 percent in 2020. The recession in advanced economies is hitting developing countries hard. Globally, we will see the first increase in poverty since 1998. And as it disrupts billions of lives and livelihoods, the pandemic threatens decades of hard-won development ga","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"ddba2fb641e2185f2778716e9638359d01ffc819","wn_title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the OMFIF Global Public Investor 2020 Forum","wn_desc":" I am delighted to join you today at the launch of the seventh Global Public Investor Report produced by OMFIF. I would like to talk to you about some of the challenges that central banks and public investors face and are likely to face in the aftermath of the pandemic, and the essential role they will play in a sustainable recovery. I will also touch upon how the World Bank is making a difference in sustainable recovery and the ways we can partner to champion and promote sustainable capital markets. But first, a few words on the new economic context.  The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. In a best-case scenario, the global economy could shrink by 5.2 percent in 2020. The recession in advanced economies is hitting developing countries hard. Globally, we will see the first increase in poverty since 1998. And as it disrupts billions of lives and livelihoods, the pandemic threatens decades of hard-won development gains. Recovery is also likely to be slow in 2021. Growth forecasts for the global economy are around 4 percent next year. But there is some hope. Central banks have been playing an essential role in responding swiftly to the challenges of the pandemic. With the purpose of stimulating the economy and preserving the normal functioning of financial markets central banks have gone beyond their traditional role of lenders of last resort. Policy rates were cut by approximately 80 basis points in developed economies, and almost 100 basis points in emerging economies. Balance sheets have experienced an expansion at an unprecedented speed and size. For example, G4 central bank balance sheets have expanded by 20 percent of GDP over the first three months of the pandemic. Moreover, asset purchase programs have been adjusted to impact also non-financial private firms, by allowing the purchase of corporate bonds. This was particularly important, given the effects a sudden stop in economic activity could have on labor and corporate income. With national governments working fast to strengthen health care systems and protect the most vulnerable, central banks have also played a critical role in supporting the fiscal policy response. Under different institutional arrangements, central banks have developed lending facilities to implement the credit backstops provided by governments. Notably, the Federal Reserve offered USD FX swap facilities to several central banks and inaugurated a repo facility designed to provide collateralized lending of dollars to foreign central banks. These measures were timely and effective, reducing dollar funding pressures and preventing large scale currency depreciation in many emerging countries.  While all these nimble actions have helped stabilize financial markets, their medium- and long-term impact remains to be seen. Central banks will have to rethink their policy toolbox to navigate further these uncharted waters. Monetary policy should continue supporting economic recovery as long as required. But once the world economy is back on track, policy will need to be normalized. This phase will require a careful unwinding of the extraordinary policy measures to avoid disrupting financial markets and allow for efficient risk pricing. In the meantime, financial systems will have to cope with recession and the impact on credit quality. While managing their countries’ foreign exchange reserves, Central Banks are public investors, often rather conservative ones, keeping a close eye on capital preservation, liquidity and safety of their portfolios. The GPI report as well as our own survey on central banks reserves management activities published by RAMP, (RAMP is our Reserve Advisory and Management Partnership arm in World Bank Treasury), earlier this year, make us think of another role the central banks can play in economic recovery. In addition to the “traditional” risks, many of them exacerbated by the pandemic, public investors need to keep in mind another risk affecting the entire world, and that is climate change. This risk has significant implications for the long-term risk-return profile of assets. Here investors can make a difference by financing projects that help advance a low-carbon economy. They can also contribute by incorporating environmental, social, and governance principles into their investment policies.   In fact, Global Public Investors are starting to recognize that climate change risk has the potential to destroy significant global economic wealth in the coming decades and regulators too have warned of the potential investment risk from assets that become unsellable because of climate change. The first step for institutions seeking to adopt sustainable and responsible investment principles is to get a clear mandate on this from their stakeholders. Once the investment objectives are updated to include ESG principles, implementation becomes the next challenge, especially for central banks, as many of them operate in the high-quality fixed income space.  In this space, the availability of instruments where ESG considerations play a straightforward role in the risk-return analysis may be discouraging. But this is an area where the World Bank makes a difference, because of the bonds we issue.  At the World Bank Group, we understand that financial markets play a vital role for the “real economy,” as they provide financial solutions to tackle the world’s most pressing problems, such as income inequality and poverty. We work with the countries to design programs that meet their development priorities and advance our mission to end extreme poverty and build shared prosperity. We look for ways to achieve positive environmental and social impacts as we design our projects. Because we work closely with our client countries to design programs, when the times call for it, we can be nimble, and we can adjust quickly to reprioritize projects to help governments address new and urgent needs.  This has proved critical as our clients combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic repercussions, we have been maintaining a line of sight to our client countries’ long-term development vision, not just to get development back on track but to identify opportunities to “build back in a more resilient and sustainable manner.” In the context of a sustainable recovery, I would like to point out the steady shift we’ve seen in investor behavior over the past years, with investors seeking to do good while doing well. The World Bank has also helped drive this shift, as both a leader and key partner in efforts to build sustainable capital markets. We played a founding role in the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles.  We have partnered with asset owners like the Government Pension Investment Fund of Japan and Network for Greening the Financial System and we have convened investors and sovereigns to engage on ESG concerns and opportunities. We are also communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our client countries. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio.   The green, and now, social and sustainability bond market is essentially about purpose and transparency. We must continue working toward broader transparency and increasing information and data so that investors have better information for decision-making for all their investments. We have used our issuance program to engage investors on the SDGs. For the World Bank this has been an opportunity to raise awareness for key development challenges while financing a broad range of development sectors in line with our mandate. For investors it has been an opportunity to align their investments to the SDGs and/or to implement ESG strategies.  To conclude, I see genuine cause for optimism that the financial markets have been doing so much to embrace ESG considerations and bond issues that are specifically designed to support sustainability objectives. This puts us in a stronger position to support the kind of sustainable recovery that countries will need. It makes me hopeful that we can not only get developing countries back on their feet, but also help them advance on their development goals, build more resilience, and improve people’s lives. It has been my pleasure to join you today. Thank you.","upi":"000512825","master_date":"2020-07-29T09:00:00Z","master_date_srt":"2020-07-29T09:00:00Z","master_recent_date_srt":"2020-07-29T09:00:00Z","master_recent_date":"2020-07-29T09:00:00Z","short_description":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the OMFIF Global Public Investor 2020 Forum","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" I am delighted to join you today at the launch of the seventh Global Public Investor Report produced by OMFIF. I would like to talk to you about some of the challenges that central banks and public investors face and are likely to face in the aftermath of the pandemic, and the essential role they will play in a sustainable recovery. I will also touch upon how the World Bank is making a difference in sustainable recovery and the ways we can partner to champion and promote sustainable capital markets. But first, a few words on the new economic context.  The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II. In a best-case scenario, the global economy could shrink by 5.2 percent in 2020. The recession in advanced economies is hitting developing countries hard. Globally, we will see the first increase in poverty since 1998. And as it disrupts billions of lives and livelihoods, the pandemic threatens decades of hard-won development gains. Recovery is also likely to be slow in 2021. Growth forecasts for the global economy are around 4 percent next year. But there is some hope. Central banks have been playing an essential role in responding swiftly to the challenges of the pandemic. With the purpose of stimulating the economy and preserving the normal functioning of financial markets central banks have gone beyond their traditional role of lenders of last resort. Policy rates were cut by approximately 80 basis points in developed economies, and almost 100 basis points in emerging economies. Balance sheets have experienced an expansion at an unprecedented speed and size. For example, G4 central bank balance sheets have expanded by 20 percent of GDP over the first three months of the pandemic. Moreover, asset purchase programs have been adjusted to impact also non-financial private firms, by allowing the purchase of corporate bonds. This was particularly important, given the effects a sudden stop in economic activity could have on labor and corporate income. With national governments working fast to strengthen health care systems and protect the most vulnerable, central banks have also played a critical role in supporting the fiscal policy response. Under different institutional arrangements, central banks have developed lending facilities to implement the credit backstops provided by governments. Notably, the Federal Reserve offered USD FX swap facilities to several central banks and inaugurated a repo facility designed to provide collateralized lending of dollars to foreign central banks. These measures were timely and effective, reducing dollar funding pressures and preventing large scale currency depreciation in many emerging countries.  While all these nimble actions have helped stabilize financial markets, their medium- and long-term impact remains to be seen. Central banks will have to rethink their policy toolbox to navigate further these uncharted waters. Monetary policy should continue supporting economic recovery as long as required. But once the world economy is back on track, policy will need to be normalized. This phase will require a careful unwinding of the extraordinary policy measures to avoid disrupting financial markets and allow for efficient risk pricing. In the meantime, financial systems will have to cope with recession and the impact on credit quality. While managing their countries’ foreign exchange reserves, Central Banks are public investors, often rather conservative ones, keeping a close eye on capital preservation, liquidity and safety of their portfolios. The GPI report as well as our own survey on central banks reserves management activities published by RAMP, (RAMP is our Reserve Advisory and Management Partnership arm in World Bank Treasury), earlier this year, make us think of another role the central banks can play in economic recovery. In addition to the “traditional” risks, many of them exacerbated by the pandemic, public investors need to keep in mind another risk affecting the entire world, and that is climate change. This risk has significant implications for the long-term risk-return profile of assets. Here investors can make a difference by financing projects that help advance a low-carbon economy. They can also contribute by incorporating environmental, social, and governance principles into their investment policies.   In fact, Global Public Investors are starting to recognize that climate change risk has the potential to destroy significant global economic wealth in the coming decades and regulators too have warned of the potential investment risk from assets that become unsellable because of climate change. The first step for institutions seeking to adopt sustainable and responsible investment principles is to get a clear mandate on this from their stakeholders. Once the investment objectives are updated to include ESG principles, implementation becomes the next challenge, especially for central banks, as many of them operate in the high-quality fixed income space.  In this space, the availability of instruments where ESG considerations play a straightforward role in the risk-return analysis may be discouraging. But this is an area where the World Bank makes a difference, because of the bonds we issue.  At the World Bank Group, we understand that financial markets play a vital role for the “real economy,” as they provide financial solutions to tackle the world’s most pressing problems, such as income inequality and poverty. We work with the countries to design programs that meet their development priorities and advance our mission to end extreme poverty and build shared prosperity. We look for ways to achieve positive environmental and social impacts as we design our projects. Because we work closely with our client countries to design programs, when the times call for it, we can be nimble, and we can adjust quickly to reprioritize projects to help governments address new and urgent needs.  This has proved critical as our clients combat COVID-19. But besides addressing the immediate health threat from COVID, and its social and economic repercussions, we have been maintaining a line of sight to our client countries’ long-term development vision, not just to get development back on track but to identify opportunities to “build back in a more resilient and sustainable manner.” In the context of a sustainable recovery, I would like to point out the steady shift we’ve seen in investor behavior over the past years, with investors seeking to do good while doing well. The World Bank has also helped drive this shift, as both a leader and key partner in efforts to build sustainable capital markets. We played a founding role in the development of the Green Bond, Social Bond, and Sustainability-Linked Bond Principles.  We have partnered with asset owners like the Government Pension Investment Fund of Japan and Network for Greening the Financial System and we have convened investors and sovereigns to engage on ESG concerns and opportunities. We are also communicating the environmental and social impacts of everything the World Bank does across all the sectors in which we lend to our client countries. We want investors in our Sustainable Development Bonds to understand what the entire balance sheet finances, not just our green bond portfolio.   The green, and now, social and sustainability bond market is essentially about purpose and transparency. We must continue working toward broader transparency and increasing information and data so that investors have better information for decision-making for all their investments. We have used our issuance program to engage investors on the SDGs. For the World Bank this has been an opportunity to raise awareness for key development challenges while financing a broad range of development sectors in line with our mandate. For investors it has been an opportunity to align their investments to the SDGs and/or to implement ESG strategies.  To conclude, I see genuine cause for optimism that the financial markets have been doing so much to embrace ESG considerations and bond issues that are specifically designed to support sustainability objectives. This puts us in a stronger position to support the kind of sustainable recovery that countries will need. It makes me hopeful that we can not only get developing countries back on their feet, but also help them advance on their development goals, build more resilience, and improve people’s lives. It has been my pleasure to join you today. Thank you.","date":"2020-07-29T09:00:00Z","contenttype":"Speeches and Transcripts"},"_6d7c7245844f8336a248031c13474f554bd1344f":{"id":"6d7c7245844f8336a248031c13474f554bd1344f","title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Webinar on the Pandemic’s Impact on Global and Indian Economy","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/06/09/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-webinar-on-the-pandemics-impact-on-global-and-indian-economy","descr":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Webinar on the Pandemic’s Impact on Global and Indian Economy","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/06/09/remarks-by-managing-director-and-world-bank-group-chief-financial-officer-anshula-kant-at-the-webinar-on-the-pandemics-impact-on-global-and-indian-economy","wcmsource":"cq5","content":" Thank you, Mr. Salunkhe, for inviting me to this webinar and good afternoon to all the distinguished speakers and viewers who have joined this webinar through different platforms. I was here in India in early March attending a conference and sharing my views on the global perspective on India’s growth slowdown; its consistency with decelerating international growth and how India’s slowdown compared to other emerging market and developing economies - or EMDEs. And today, only three months later we are dealing with a much more severe blow to the global economy caused by the coronavirus (COVID-19) pandemic. I will focus my remarks mainly in three areas: (i) how COVID-19 is impacting the global economy; (ii) the impact of the virus on India; and (iii) the SME implications in India. Impact of COVID-19 on Global Economy: Growing from an international health emergency in January 2020 to a global pandemic by mid-March 2020, there are more than 6.7 million confirmed cases and nearly 400 thousand confirmed deaths across 216 countries by now. While outbreaks in most advanced economies appear to be past the peak, the pandemic is rapidly spreading across many EMDEs, including low-income countries, where health care systems have limited capacity. The rapidity of the coronavirus’ spread has severely challenged even the world’s top health systems, while associated lockdowns and travel restrictions have upended normal life for most of the world’s population.  The COVID-19 crisis is spurring deep changes in behaviors, preferences and societal trends that are likely to transform the post-COVID-19 world. Those EMDEs that have weak health systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit. Beyond its short-term impact, deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of human capital of the unemployed; and a retreat from global trade and supply linkages. These effects may well lower potential growth and labor productivity in the longer term. Economic Impacts. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II.  In a base case scenario, the global economy could shrink by 5.2 percent in 2020 before rebounding in 2021; in the downside scenario of prolonged shutdowns, world output could contract by almost 8 percent in 2020 (roughly equivalent to the combined GDP of France, Italy, and Spain).  The recession in advanced economies is hitting EMDEs hard, and the World Bank now projects negative growth for over 150 countries in 2020.  Faced with reversal of capital flows EMDEs are likely to contract for the first time in sixty years.  The emerging food crisis could also intensify, and food insecurity could spread much more widely across the developing world. Emerging Global Jobs Crisis. Billions of jobs are under threat worldwide, and half of world’s workers could lose their jobs because of the pandemic according to the ILO.  Nearly 80 percent of the world’s informal economy workers have faced COVID-19 lockdowns and slowdowns in wholesale and retail sectors, food and hospitality, tourism, transport and manufacturing.  Notably, with 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis.  Among the estimated 2 billion workers in the informal economy globally, incomes fell by an estimated 60 percent in the first month of the crisis.   As the informal sector accounts for up to 90 percent of workers in some emerging economies, the implications of lost wages will cascade from households to communities to entire societies.  Remittance flows, which are the economic lifeline for many low-income families and a key source of revenues for many developing economies, are expected to fall by one-fifth in 2020. Aggravating long-term challenges. Recessions associated with the pandemic will likely have an even larger impact on long-term growth prospects because of pre-existing vulnerabilities, fading demographic dividends, structural bottlenecks, and permanent changes in behavior patterns, including consumption habits, and human capital formation. In most years during the past decade, EMDE growth fell short of its long-term average. This was reflected in repeated downgrades to long-term growth projections for EMDEs. The pandemic is expected to exacerbate the multi-decade trend slowdown in potential output and productivity growth. Urgent Need to Step up Support for EMDEs. Packages of policy support have been far greater in advanced economies than in EMDEs.  The unprecedented reversal of capital flows – now flowing from south to north – is helping finance the exceptional fiscal packages in the advanced economies but leaving EMDEs exposed.  Financing gaps for developing countries arising from the COVID-19 crisis will likely be exceptionally high and persist over the medium term. Financing gaps for low income countries could be in the range of US$25-100 billion per year and for the middle-income countries the equivalent range is US$75-300 billion annually. While the immediate priorities of policymakers are to address the health crisis and moderate the short-term economic losses, the likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth. A successful crisis response at the country level will depend critically on macroeconomic stability and a strong fiscal framework – including debt management and debt transparency. The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. Over 15 months, the World Bank Group will be providing up to $160 billion in financing tailored to the health, economic and social shocks countries are facing, including $50 billion of IDA resources on grant and highly concessional terms. As of June 1, the Bank had approved $5.9 billion for emergency health support to 104 developing countries – home to 70 percent of the world’s population. Early responses by IFC and MIGA complement each other as well as the early action by the World Bank. With that backdrop, let me now zoom into the specific impacts of the COVID-19 pandemic and crisis on India. The COVID-19 epidemic has created a daunting challenge for India. The COVID-19 outbreak is expected to significantly hurt the Indian economy, at a time when growth was already slowing. Its impact on the real economy will exacerbate earlier fragilities, including low credit to industry with the banking sector burdened by a legacy of non-performing assets and non-banking financial companies – or NBFCs – by stressed asset quality and tight liquidity. Consequently, the RBI has taken multiple steps to not only ease overall liquidity via open market operations, but also to relax regulatory requirements, including a 3-month moratorium on outstanding loans. The World Bank’s latest forecasting cycle - concluded on May 21, 2020 – projects negative growth of -3.2 percent in FY20/21, with risks tilted on the downside. Given the very significant uncertainties pertaining to the possible epidemic related developments (in India and in the rest of the world) it is impossible to assess the severity of the impacts. Nevertheless, in FY21/22, growth is expected to come back, but slowly, reflecting the possible long-lasting effects of the crisis. Public sector banks – or PSBs – are expected to play a proactive role in reviving credit growth. Their share in incremental lending has already grown in recent months. While PSBs accounted for 39.7 percent of all new rupee loans sanctioned by scheduled commercial banks in August 2019, that share increased to 52.8 per cent in February 2020. After several of them were merged in April 1, 2020, PSBs now have higher regulatory and growth capital, and they are also perceived as safe haven by depositors. Recent economic data for India suggests that some recovery in May as activity reopens. Data for May shows a recovery in electricity consumption and mobility almost to levels before lockdown as workplaces in many states resume: the central government has eased restrictions and is giving more discretion to the states to impose selective restrictions. However, India’s services PMI remained very lackluster in May lifting to just 12.6 from the record-low of 5.4 in April (a level below 50 shows declining orders from the previous month).         The external sector remains weak, although India is not highly linked to global value chains South Asia has a relatively low global value chain participation rate compared to other regions. Manufacturing, other than pharmaceuticals and personal protective equipment, remains subdued in India according to data as of April, as demand for machinery, electronics and autos collapsed globally in March. Many global value chains have been affected, and their ability to survive will depend on whether protectionist sentiment in advanced economies and the US-China conflict do not intensify further. South Asia’s main export industries such as textiles and garments as well as BPO/IT services have suffered.  For garments, many of the buyers (retail companies as well as fast-fashion companies in Europe) have gone under due to collapsing demand for retail fashion; while call centers in principle can still function as many employees begin to return to work. The longer-term question is whether demand in advanced economies for call-center services will resume to pre-COVID levels. Remittances have fallen by 20 percent in all of South Asia and are expected to continue doing so, which is a concern for the whole of South Asia given their importance as a share of GDP. Both domestic and foreign tourism which had been growing well prior to COVID and had provided livelihoods for a large, mostly urban section of workers, has collapsed in India as also in other South Asian countries. The government fiscal and monetary policies have responded quickly. The Government of India has announced stimulus measures and guarantees to a range of sectors equal to an estimated 10 percent of GDP, around 1 percent of which has been effectively spent till May. Food prices have stabilized, and food distribution is now mostly working despite some initial bottlenecks. The depth and length of the economic impact of the COVID-19 pandemic will crucially depend on the extent to which the initial shock is amplified through India’s weak financial system. Banks will need to increase lending again to fund the recovery. Let me now share a few insights on SMEs given their critical role in the Indian economy. First, why the emphasis on MSMEs? Various estimates suggest around 150-180 million people are employed by 75-80 million MSMEs today. Additionally, MSMEs are estimated to contribute to 30 percent of India’s GDP and 40 percent of exports and accounted for 30 percent of India’s non-farm labor force in 2015-2016. Socially and economically, they are a critical source of non-farm employment which needs to keep growing to absorb millions of new job market entrants. Therefore, the recently announced modification by the government in the definition of MSMEs is a welcome structural change – it will not only increase the coverage and extend benefits to many more units, it will also encourage MSMEs to grow and create the much-needed jobs. MSMEs urgently need access to liquidity. The COVID-19 impact on MSMEs comes primarily through a collapse in demand and a resultant sharp fall in revenues. This has created a cash flow problem and liquidity constraints. Funding sources for MSMEs have become scarce: while the overall credit growth had been slow during FY19-20, MSME credit growth had been hit even worse, falling to below 2 percent even before the crisis. Access to liquidity has been severely impacted – in the form of lack of working capital and delayed collection of receivables – and it’s a huge challenge to continue paying workers’ salaries, cover fixed costs incurred during closure, pay rent and suppliers for inputs; and all this during a period of time when demand has fallen off and MSMEs are not earning adequate revenues. Many units are working at less than half their capacity and it may take months before demand comes back to pre COVID levels. But why is desired liquidity not reaching MSMEs? Despite early and decisive measures taken by the RBI to infuse liquidity into the market, the liquidity has not made its way to MSMEs to a desired extent. First, the risks of lending to MSMEs in the current environment are high and banks are naturally conservative. Second, NBFCs and SFBs are less risk-averse than banks and important financiers of MSMEs, but they themselves are facing severe liquidity issues which is hurting their ability to lend to MSMEs. Only the highly rated NBFCs have the ability to access funding from capital markets. With uneven implementation of the loan moratorium for NBFCs, they face severe mismatches in asset-liability management. NBFCs play an important role in MSME credit as they utilize innovative underwriting models and alternative data to serve thin-file MSMEs which would not have been considered credit-worthy by banks. Third, long delays in honoring outstanding payments owed to MSMEs, especially from public sector enterprises, are yet another source of liquidity constraint. Platforms such as Trade Receivables Discounting System allow MSMEs to discount invoices which helps them to better manage their working capital needs. Strengthening such platforms will lead to reduced turnaround time and improved MSME liquidity. Fourth, while the new loan support schemes announced by the Government of India are welcome, additional interest burden may prove to be a deterrent in the current situation. Flexibility in terms of debt restructuring may be the need of the hour. Global examples that India can benefit from. Public DFIs serving as quasi-lenders of last resort to NBFCs (e.g., Landesbanken in Germany) can serve as highly relevant examples for India due to its large NBFC sector without a dedicated lender-of-last-resort window. The torrent of COVID-19 response measures from around the world, Advanced Economies and EMDEs alike, provides multiple examples of instruments and approaches to review and consider.In terms of access to finance schemes for MSMEs that leverage public sector creditworthiness, credit guarantee schemes from Germany, Switzerland, or Spain are very relevant. DFIs such as Kreditanstalt für Wiederaufbau in Germany or Instituto de Credito Oficial in Spain have stepped in forcefully in extending their governments’ support to local MSMEs.The United States offers examples of a paycheck protection and other MSME programs as well as a joint U.S. Treasury-Federal Reserve Bank Special Purpose Vehicle for financing domestic firms.Multiple central banks have provided various forms of liquidity support/quantitative easing to their markets towards (i) maintaining liquidity of the otherwise cash-strapped market participants, (ii) maintaining stable interest rates and values of debt securities in primary and secondary markets, and (iii) preventing disorderly debt deflation. The World Bank is supporting India and the South Asia region (as well as other parts of the world) to face the economic and health crisis related to COVID-19. In particular a proposed operation for India is focused on releasing some of the financing constraints to MSMEs. The operation is based on the Government of India’s overall strategy to fight COVID-19 and the program will support measures that: (i) reduce risks of lending to MSMEs for both banks and NBFCs; (ii) address the funding constraints facing NBFCs and SFBs so that they remain important intermediaries which serve the MSME segment; and (iii) leverages fintech/Digital Financial Services to accelerate lending to MSMEs and importantly to tackle payment delays to MSMEs by large buyers. The COVID-19 outbreak has magnified pre-existing risks to the outlook. The government is undertaking measures to contain the health and economic fallout, and the RBI has begun providing calibrated support in the form of policy rate cuts and regulatory forbearance. If a large-scale domestic contagion scenario is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted judiciously, an upside scenario could materialize in FY21. Thank you.","content_1000":" Thank you, Mr. Salunkhe, for inviting me to this webinar and good afternoon to all the distinguished speakers and viewers who have joined this webinar through different platforms. I was here in India in early March attending a conference and sharing my views on the global perspective on India’s growth slowdown; its consistency with decelerating international growth and how India’s slowdown compared to other emerging market and developing economies - or EMDEs. And today, only three months later we are dealing with a much more severe blow to the global economy caused by the coronavirus (COVID-19) pandemic. I will focus my remarks mainly in three areas: (i) how COVID-19 is impacting the global economy; (ii) the impact of the virus on India; and (iii) the SME implications in India. Impact of COVID-19 on Global Economy: Growing from an international health emergency in January 2020 to a global pandemic by mid-March 2020, there are more than 6.7 million confirmed cases and nearly 400 thousa","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"6d7c7245844f8336a248031c13474f554bd1344f","wn_title":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Webinar on the Pandemic’s Impact on Global and Indian Economy","wn_desc":" Thank you, Mr. Salunkhe, for inviting me to this webinar and good afternoon to all the distinguished speakers and viewers who have joined this webinar through different platforms. I was here in India in early March attending a conference and sharing my views on the global perspective on India’s growth slowdown; its consistency with decelerating international growth and how India’s slowdown compared to other emerging market and developing economies - or EMDEs. And today, only three months later we are dealing with a much more severe blow to the global economy caused by the coronavirus (COVID-19) pandemic. I will focus my remarks mainly in three areas: (i) how COVID-19 is impacting the global economy; (ii) the impact of the virus on India; and (iii) the SME implications in India. Impact of COVID-19 on Global Economy: Growing from an international health emergency in January 2020 to a global pandemic by mid-March 2020, there are more than 6.7 million confirmed cases and nearly 400 thousand confirmed deaths across 216 countries by now. While outbreaks in most advanced economies appear to be past the peak, the pandemic is rapidly spreading across many EMDEs, including low-income countries, where health care systems have limited capacity. The rapidity of the coronavirus’ spread has severely challenged even the world’s top health systems, while associated lockdowns and travel restrictions have upended normal life for most of the world’s population.  The COVID-19 crisis is spurring deep changes in behaviors, preferences and societal trends that are likely to transform the post-COVID-19 world. Those EMDEs that have weak health systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit. Beyond its short-term impact, deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of human capital of the unemployed; and a retreat from global trade and supply linkages. These effects may well lower potential growth and labor productivity in the longer term. Economic Impacts. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II.  In a base case scenario, the global economy could shrink by 5.2 percent in 2020 before rebounding in 2021; in the downside scenario of prolonged shutdowns, world output could contract by almost 8 percent in 2020 (roughly equivalent to the combined GDP of France, Italy, and Spain).  The recession in advanced economies is hitting EMDEs hard, and the World Bank now projects negative growth for over 150 countries in 2020.  Faced with reversal of capital flows EMDEs are likely to contract for the first time in sixty years.  The emerging food crisis could also intensify, and food insecurity could spread much more widely across the developing world. Emerging Global Jobs Crisis. Billions of jobs are under threat worldwide, and half of world’s workers could lose their jobs because of the pandemic according to the ILO.  Nearly 80 percent of the world’s informal economy workers have faced COVID-19 lockdowns and slowdowns in wholesale and retail sectors, food and hospitality, tourism, transport and manufacturing.  Notably, with 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis.  Among the estimated 2 billion workers in the informal economy globally, incomes fell by an estimated 60 percent in the first month of the crisis.   As the informal sector accounts for up to 90 percent of workers in some emerging economies, the implications of lost wages will cascade from households to communities to entire societies.  Remittance flows, which are the economic lifeline for many low-income families and a key source of revenues for many developing economies, are expected to fall by one-fifth in 2020. Aggravating long-term challenges. Recessions associated with the pandemic will likely have an even larger impact on long-term growth prospects because of pre-existing vulnerabilities, fading demographic dividends, structural bottlenecks, and permanent changes in behavior patterns, including consumption habits, and human capital formation. In most years during the past decade, EMDE growth fell short of its long-term average. This was reflected in repeated downgrades to long-term growth projections for EMDEs. The pandemic is expected to exacerbate the multi-decade trend slowdown in potential output and productivity growth. Urgent Need to Step up Support for EMDEs. Packages of policy support have been far greater in advanced economies than in EMDEs.  The unprecedented reversal of capital flows – now flowing from south to north – is helping finance the exceptional fiscal packages in the advanced economies but leaving EMDEs exposed.  Financing gaps for developing countries arising from the COVID-19 crisis will likely be exceptionally high and persist over the medium term. Financing gaps for low income countries could be in the range of US$25-100 billion per year and for the middle-income countries the equivalent range is US$75-300 billion annually. While the immediate priorities of policymakers are to address the health crisis and moderate the short-term economic losses, the likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth. A successful crisis response at the country level will depend critically on macroeconomic stability and a strong fiscal framework – including debt management and debt transparency. The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. Over 15 months, the World Bank Group will be providing up to $160 billion in financing tailored to the health, economic and social shocks countries are facing, including $50 billion of IDA resources on grant and highly concessional terms. As of June 1, the Bank had approved $5.9 billion for emergency health support to 104 developing countries – home to 70 percent of the world’s population. Early responses by IFC and MIGA complement each other as well as the early action by the World Bank. With that backdrop, let me now zoom into the specific impacts of the COVID-19 pandemic and crisis on India. The COVID-19 epidemic has created a daunting challenge for India. The COVID-19 outbreak is expected to significantly hurt the Indian economy, at a time when growth was already slowing. Its impact on the real economy will exacerbate earlier fragilities, including low credit to industry with the banking sector burdened by a legacy of non-performing assets and non-banking financial companies – or NBFCs – by stressed asset quality and tight liquidity. Consequently, the RBI has taken multiple steps to not only ease overall liquidity via open market operations, but also to relax regulatory requirements, including a 3-month moratorium on outstanding loans. The World Bank’s latest forecasting cycle - concluded on May 21, 2020 – projects negative growth of -3.2 percent in FY20/21, with risks tilted on the downside. Given the very significant uncertainties pertaining to the possible epidemic related developments (in India and in the rest of the world) it is impossible to assess the severity of the impacts. Nevertheless, in FY21/22, growth is expected to come back, but slowly, reflecting the possible long-lasting effects of the crisis. Public sector banks – or PSBs – are expected to play a proactive role in reviving credit growth. Their share in incremental lending has already grown in recent months. While PSBs accounted for 39.7 percent of all new rupee loans sanctioned by scheduled commercial banks in August 2019, that share increased to 52.8 per cent in February 2020. After several of them were merged in April 1, 2020, PSBs now have higher regulatory and growth capital, and they are also perceived as safe haven by depositors. Recent economic data for India suggests that some recovery in May as activity reopens. Data for May shows a recovery in electricity consumption and mobility almost to levels before lockdown as workplaces in many states resume: the central government has eased restrictions and is giving more discretion to the states to impose selective restrictions. However, India’s services PMI remained very lackluster in May lifting to just 12.6 from the record-low of 5.4 in April (a level below 50 shows declining orders from the previous month).         The external sector remains weak, although India is not highly linked to global value chains South Asia has a relatively low global value chain participation rate compared to other regions. Manufacturing, other than pharmaceuticals and personal protective equipment, remains subdued in India according to data as of April, as demand for machinery, electronics and autos collapsed globally in March. Many global value chains have been affected, and their ability to survive will depend on whether protectionist sentiment in advanced economies and the US-China conflict do not intensify further. South Asia’s main export industries such as textiles and garments as well as BPO/IT services have suffered.  For garments, many of the buyers (retail companies as well as fast-fashion companies in Europe) have gone under due to collapsing demand for retail fashion; while call centers in principle can still function as many employees begin to return to work. The longer-term question is whether demand in advanced economies for call-center services will resume to pre-COVID levels. Remittances have fallen by 20 percent in all of South Asia and are expected to continue doing so, which is a concern for the whole of South Asia given their importance as a share of GDP. Both domestic and foreign tourism which had been growing well prior to COVID and had provided livelihoods for a large, mostly urban section of workers, has collapsed in India as also in other South Asian countries. The government fiscal and monetary policies have responded quickly. The Government of India has announced stimulus measures and guarantees to a range of sectors equal to an estimated 10 percent of GDP, around 1 percent of which has been effectively spent till May. Food prices have stabilized, and food distribution is now mostly working despite some initial bottlenecks. The depth and length of the economic impact of the COVID-19 pandemic will crucially depend on the extent to which the initial shock is amplified through India’s weak financial system. Banks will need to increase lending again to fund the recovery. Let me now share a few insights on SMEs given their critical role in the Indian economy. First, why the emphasis on MSMEs? Various estimates suggest around 150-180 million people are employed by 75-80 million MSMEs today. Additionally, MSMEs are estimated to contribute to 30 percent of India’s GDP and 40 percent of exports and accounted for 30 percent of India’s non-farm labor force in 2015-2016. Socially and economically, they are a critical source of non-farm employment which needs to keep growing to absorb millions of new job market entrants. Therefore, the recently announced modification by the government in the definition of MSMEs is a welcome structural change – it will not only increase the coverage and extend benefits to many more units, it will also encourage MSMEs to grow and create the much-needed jobs. MSMEs urgently need access to liquidity. The COVID-19 impact on MSMEs comes primarily through a collapse in demand and a resultant sharp fall in revenues. This has created a cash flow problem and liquidity constraints. Funding sources for MSMEs have become scarce: while the overall credit growth had been slow during FY19-20, MSME credit growth had been hit even worse, falling to below 2 percent even before the crisis. Access to liquidity has been severely impacted – in the form of lack of working capital and delayed collection of receivables – and it’s a huge challenge to continue paying workers’ salaries, cover fixed costs incurred during closure, pay rent and suppliers for inputs; and all this during a period of time when demand has fallen off and MSMEs are not earning adequate revenues. Many units are working at less than half their capacity and it may take months before demand comes back to pre COVID levels. But why is desired liquidity not reaching MSMEs? Despite early and decisive measures taken by the RBI to infuse liquidity into the market, the liquidity has not made its way to MSMEs to a desired extent. First, the risks of lending to MSMEs in the current environment are high and banks are naturally conservative. Second, NBFCs and SFBs are less risk-averse than banks and important financiers of MSMEs, but they themselves are facing severe liquidity issues which is hurting their ability to lend to MSMEs. Only the highly rated NBFCs have the ability to access funding from capital markets. With uneven implementation of the loan moratorium for NBFCs, they face severe mismatches in asset-liability management. NBFCs play an important role in MSME credit as they utilize innovative underwriting models and alternative data to serve thin-file MSMEs which would not have been considered credit-worthy by banks. Third, long delays in honoring outstanding payments owed to MSMEs, especially from public sector enterprises, are yet another source of liquidity constraint. Platforms such as Trade Receivables Discounting System allow MSMEs to discount invoices which helps them to better manage their working capital needs. Strengthening such platforms will lead to reduced turnaround time and improved MSME liquidity. Fourth, while the new loan support schemes announced by the Government of India are welcome, additional interest burden may prove to be a deterrent in the current situation. Flexibility in terms of debt restructuring may be the need of the hour. Global examples that India can benefit from. Public DFIs serving as quasi-lenders of last resort to NBFCs (e.g., Landesbanken in Germany) can serve as highly relevant examples for India due to its large NBFC sector without a dedicated lender-of-last-resort window. The torrent of COVID-19 response measures from around the world, Advanced Economies and EMDEs alike, provides multiple examples of instruments and approaches to review and consider.In terms of access to finance schemes for MSMEs that leverage public sector creditworthiness, credit guarantee schemes from Germany, Switzerland, or Spain are very relevant. DFIs such as Kreditanstalt für Wiederaufbau in Germany or Instituto de Credito Oficial in Spain have stepped in forcefully in extending their governments’ support to local MSMEs.The United States offers examples of a paycheck protection and other MSME programs as well as a joint U.S. Treasury-Federal Reserve Bank Special Purpose Vehicle for financing domestic firms.Multiple central banks have provided various forms of liquidity support/quantitative easing to their markets towards (i) maintaining liquidity of the otherwise cash-strapped market participants, (ii) maintaining stable interest rates and values of debt securities in primary and secondary markets, and (iii) preventing disorderly debt deflation. The World Bank is supporting India and the South Asia region (as well as other parts of the world) to face the economic and health crisis related to COVID-19. In particular a proposed operation for India is focused on releasing some of the financing constraints to MSMEs. The operation is based on the Government of India’s overall strategy to fight COVID-19 and the program will support measures that: (i) reduce risks of lending to MSMEs for both banks and NBFCs; (ii) address the funding constraints facing NBFCs and SFBs so that they remain important intermediaries which serve the MSME segment; and (iii) leverages fintech/Digital Financial Services to accelerate lending to MSMEs and importantly to tackle payment delays to MSMEs by large buyers. The COVID-19 outbreak has magnified pre-existing risks to the outlook. The government is undertaking measures to contain the health and economic fallout, and the RBI has begun providing calibrated support in the form of policy rate cuts and regulatory forbearance. If a large-scale domestic contagion scenario is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted judiciously, an upside scenario could materialize in FY21. Thank you.","upi":"000512825","master_date":"2020-06-09T12:03:00Z","master_date_srt":"2020-06-09T12:03:00Z","master_recent_date_srt":"2020-06-09T12:03:00Z","master_recent_date":"2020-06-09T12:03:00Z","short_description":"Remarks by Managing Director and World Bank Group Chief Financial Officer Anshula Kant at the Webinar on the Pandemic’s Impact on Global and Indian Economy","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Thank you, Mr. Salunkhe, for inviting me to this webinar and good afternoon to all the distinguished speakers and viewers who have joined this webinar through different platforms. I was here in India in early March attending a conference and sharing my views on the global perspective on India’s growth slowdown; its consistency with decelerating international growth and how India’s slowdown compared to other emerging market and developing economies - or EMDEs. And today, only three months later we are dealing with a much more severe blow to the global economy caused by the coronavirus (COVID-19) pandemic. I will focus my remarks mainly in three areas: (i) how COVID-19 is impacting the global economy; (ii) the impact of the virus on India; and (iii) the SME implications in India. Impact of COVID-19 on Global Economy: Growing from an international health emergency in January 2020 to a global pandemic by mid-March 2020, there are more than 6.7 million confirmed cases and nearly 400 thousand confirmed deaths across 216 countries by now. While outbreaks in most advanced economies appear to be past the peak, the pandemic is rapidly spreading across many EMDEs, including low-income countries, where health care systems have limited capacity. The rapidity of the coronavirus’ spread has severely challenged even the world’s top health systems, while associated lockdowns and travel restrictions have upended normal life for most of the world’s population.  The COVID-19 crisis is spurring deep changes in behaviors, preferences and societal trends that are likely to transform the post-COVID-19 world. Those EMDEs that have weak health systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit. Beyond its short-term impact, deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of human capital of the unemployed; and a retreat from global trade and supply linkages. These effects may well lower potential growth and labor productivity in the longer term. Economic Impacts. The COVID-19 pandemic has triggered what is likely to be the deepest global recession since World War II.  In a base case scenario, the global economy could shrink by 5.2 percent in 2020 before rebounding in 2021; in the downside scenario of prolonged shutdowns, world output could contract by almost 8 percent in 2020 (roughly equivalent to the combined GDP of France, Italy, and Spain).  The recession in advanced economies is hitting EMDEs hard, and the World Bank now projects negative growth for over 150 countries in 2020.  Faced with reversal of capital flows EMDEs are likely to contract for the first time in sixty years.  The emerging food crisis could also intensify, and food insecurity could spread much more widely across the developing world. Emerging Global Jobs Crisis. Billions of jobs are under threat worldwide, and half of world’s workers could lose their jobs because of the pandemic according to the ILO.  Nearly 80 percent of the world’s informal economy workers have faced COVID-19 lockdowns and slowdowns in wholesale and retail sectors, food and hospitality, tourism, transport and manufacturing.  Notably, with 740 million women globally in informal employment and a majority employed in services, women are particularly hard hit by the crisis.  Among the estimated 2 billion workers in the informal economy globally, incomes fell by an estimated 60 percent in the first month of the crisis.   As the informal sector accounts for up to 90 percent of workers in some emerging economies, the implications of lost wages will cascade from households to communities to entire societies.  Remittance flows, which are the economic lifeline for many low-income families and a key source of revenues for many developing economies, are expected to fall by one-fifth in 2020. Aggravating long-term challenges. Recessions associated with the pandemic will likely have an even larger impact on long-term growth prospects because of pre-existing vulnerabilities, fading demographic dividends, structural bottlenecks, and permanent changes in behavior patterns, including consumption habits, and human capital formation. In most years during the past decade, EMDE growth fell short of its long-term average. This was reflected in repeated downgrades to long-term growth projections for EMDEs. The pandemic is expected to exacerbate the multi-decade trend slowdown in potential output and productivity growth. Urgent Need to Step up Support for EMDEs. Packages of policy support have been far greater in advanced economies than in EMDEs.  The unprecedented reversal of capital flows – now flowing from south to north – is helping finance the exceptional fiscal packages in the advanced economies but leaving EMDEs exposed.  Financing gaps for developing countries arising from the COVID-19 crisis will likely be exceptionally high and persist over the medium term. Financing gaps for low income countries could be in the range of US$25-100 billion per year and for the middle-income countries the equivalent range is US$75-300 billion annually. While the immediate priorities of policymakers are to address the health crisis and moderate the short-term economic losses, the likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth. A successful crisis response at the country level will depend critically on macroeconomic stability and a strong fiscal framework – including debt management and debt transparency. The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. Over 15 months, the World Bank Group will be providing up to $160 billion in financing tailored to the health, economic and social shocks countries are facing, including $50 billion of IDA resources on grant and highly concessional terms. As of June 1, the Bank had approved $5.9 billion for emergency health support to 104 developing countries – home to 70 percent of the world’s population. Early responses by IFC and MIGA complement each other as well as the early action by the World Bank. With that backdrop, let me now zoom into the specific impacts of the COVID-19 pandemic and crisis on India. The COVID-19 epidemic has created a daunting challenge for India. The COVID-19 outbreak is expected to significantly hurt the Indian economy, at a time when growth was already slowing. Its impact on the real economy will exacerbate earlier fragilities, including low credit to industry with the banking sector burdened by a legacy of non-performing assets and non-banking financial companies – or NBFCs – by stressed asset quality and tight liquidity. Consequently, the RBI has taken multiple steps to not only ease overall liquidity via open market operations, but also to relax regulatory requirements, including a 3-month moratorium on outstanding loans. The World Bank’s latest forecasting cycle - concluded on May 21, 2020 – projects negative growth of -3.2 percent in FY20/21, with risks tilted on the downside. Given the very significant uncertainties pertaining to the possible epidemic related developments (in India and in the rest of the world) it is impossible to assess the severity of the impacts. Nevertheless, in FY21/22, growth is expected to come back, but slowly, reflecting the possible long-lasting effects of the crisis. Public sector banks – or PSBs – are expected to play a proactive role in reviving credit growth. Their share in incremental lending has already grown in recent months. While PSBs accounted for 39.7 percent of all new rupee loans sanctioned by scheduled commercial banks in August 2019, that share increased to 52.8 per cent in February 2020. After several of them were merged in April 1, 2020, PSBs now have higher regulatory and growth capital, and they are also perceived as safe haven by depositors. Recent economic data for India suggests that some recovery in May as activity reopens. Data for May shows a recovery in electricity consumption and mobility almost to levels before lockdown as workplaces in many states resume: the central government has eased restrictions and is giving more discretion to the states to impose selective restrictions. However, India’s services PMI remained very lackluster in May lifting to just 12.6 from the record-low of 5.4 in April (a level below 50 shows declining orders from the previous month).         The external sector remains weak, although India is not highly linked to global value chains South Asia has a relatively low global value chain participation rate compared to other regions. Manufacturing, other than pharmaceuticals and personal protective equipment, remains subdued in India according to data as of April, as demand for machinery, electronics and autos collapsed globally in March. Many global value chains have been affected, and their ability to survive will depend on whether protectionist sentiment in advanced economies and the US-China conflict do not intensify further. South Asia’s main export industries such as textiles and garments as well as BPO/IT services have suffered.  For garments, many of the buyers (retail companies as well as fast-fashion companies in Europe) have gone under due to collapsing demand for retail fashion; while call centers in principle can still function as many employees begin to return to work. The longer-term question is whether demand in advanced economies for call-center services will resume to pre-COVID levels. Remittances have fallen by 20 percent in all of South Asia and are expected to continue doing so, which is a concern for the whole of South Asia given their importance as a share of GDP. Both domestic and foreign tourism which had been growing well prior to COVID and had provided livelihoods for a large, mostly urban section of workers, has collapsed in India as also in other South Asian countries. The government fiscal and monetary policies have responded quickly. The Government of India has announced stimulus measures and guarantees to a range of sectors equal to an estimated 10 percent of GDP, around 1 percent of which has been effectively spent till May. Food prices have stabilized, and food distribution is now mostly working despite some initial bottlenecks. The depth and length of the economic impact of the COVID-19 pandemic will crucially depend on the extent to which the initial shock is amplified through India’s weak financial system. Banks will need to increase lending again to fund the recovery. Let me now share a few insights on SMEs given their critical role in the Indian economy. First, why the emphasis on MSMEs? Various estimates suggest around 150-180 million people are employed by 75-80 million MSMEs today. Additionally, MSMEs are estimated to contribute to 30 percent of India’s GDP and 40 percent of exports and accounted for 30 percent of India’s non-farm labor force in 2015-2016. Socially and economically, they are a critical source of non-farm employment which needs to keep growing to absorb millions of new job market entrants. Therefore, the recently announced modification by the government in the definition of MSMEs is a welcome structural change – it will not only increase the coverage and extend benefits to many more units, it will also encourage MSMEs to grow and create the much-needed jobs. MSMEs urgently need access to liquidity. The COVID-19 impact on MSMEs comes primarily through a collapse in demand and a resultant sharp fall in revenues. This has created a cash flow problem and liquidity constraints. Funding sources for MSMEs have become scarce: while the overall credit growth had been slow during FY19-20, MSME credit growth had been hit even worse, falling to below 2 percent even before the crisis. Access to liquidity has been severely impacted – in the form of lack of working capital and delayed collection of receivables – and it’s a huge challenge to continue paying workers’ salaries, cover fixed costs incurred during closure, pay rent and suppliers for inputs; and all this during a period of time when demand has fallen off and MSMEs are not earning adequate revenues. Many units are working at less than half their capacity and it may take months before demand comes back to pre COVID levels. But why is desired liquidity not reaching MSMEs? Despite early and decisive measures taken by the RBI to infuse liquidity into the market, the liquidity has not made its way to MSMEs to a desired extent. First, the risks of lending to MSMEs in the current environment are high and banks are naturally conservative. Second, NBFCs and SFBs are less risk-averse than banks and important financiers of MSMEs, but they themselves are facing severe liquidity issues which is hurting their ability to lend to MSMEs. Only the highly rated NBFCs have the ability to access funding from capital markets. With uneven implementation of the loan moratorium for NBFCs, they face severe mismatches in asset-liability management. NBFCs play an important role in MSME credit as they utilize innovative underwriting models and alternative data to serve thin-file MSMEs which would not have been considered credit-worthy by banks. Third, long delays in honoring outstanding payments owed to MSMEs, especially from public sector enterprises, are yet another source of liquidity constraint. Platforms such as Trade Receivables Discounting System allow MSMEs to discount invoices which helps them to better manage their working capital needs. Strengthening such platforms will lead to reduced turnaround time and improved MSME liquidity. Fourth, while the new loan support schemes announced by the Government of India are welcome, additional interest burden may prove to be a deterrent in the current situation. Flexibility in terms of debt restructuring may be the need of the hour. Global examples that India can benefit from. Public DFIs serving as quasi-lenders of last resort to NBFCs (e.g., Landesbanken in Germany) can serve as highly relevant examples for India due to its large NBFC sector without a dedicated lender-of-last-resort window. The torrent of COVID-19 response measures from around the world, Advanced Economies and EMDEs alike, provides multiple examples of instruments and approaches to review and consider.In terms of access to finance schemes for MSMEs that leverage public sector creditworthiness, credit guarantee schemes from Germany, Switzerland, or Spain are very relevant. DFIs such as Kreditanstalt für Wiederaufbau in Germany or Instituto de Credito Oficial in Spain have stepped in forcefully in extending their governments’ support to local MSMEs.The United States offers examples of a paycheck protection and other MSME programs as well as a joint U.S. Treasury-Federal Reserve Bank Special Purpose Vehicle for financing domestic firms.Multiple central banks have provided various forms of liquidity support/quantitative easing to their markets towards (i) maintaining liquidity of the otherwise cash-strapped market participants, (ii) maintaining stable interest rates and values of debt securities in primary and secondary markets, and (iii) preventing disorderly debt deflation. The World Bank is supporting India and the South Asia region (as well as other parts of the world) to face the economic and health crisis related to COVID-19. In particular a proposed operation for India is focused on releasing some of the financing constraints to MSMEs. The operation is based on the Government of India’s overall strategy to fight COVID-19 and the program will support measures that: (i) reduce risks of lending to MSMEs for both banks and NBFCs; (ii) address the funding constraints facing NBFCs and SFBs so that they remain important intermediaries which serve the MSME segment; and (iii) leverages fintech/Digital Financial Services to accelerate lending to MSMEs and importantly to tackle payment delays to MSMEs by large buyers. The COVID-19 outbreak has magnified pre-existing risks to the outlook. The government is undertaking measures to contain the health and economic fallout, and the RBI has begun providing calibrated support in the form of policy rate cuts and regulatory forbearance. If a large-scale domestic contagion scenario is avoided, early policy measures payoff, and restrictions to the mobility of goods and people can be lifted judiciously, an upside scenario could materialize in FY21. Thank you.","date":"2020-06-09T12:03:00Z","contenttype":"Speeches and Transcripts"},"_15a59932157b2e60ecbb3c602496f8d0eb4c6089":{"id":"15a59932157b2e60ecbb3c602496f8d0eb4c6089","title":"World Bank Group President David Malpass Remarks at the NABE Economic Policy Conference","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/02/25/world-bank-group-president-david-malpass-remarks-at-nabe-economic-policy-conference","descr":"World Bank Group President David Malpass Remarks at the National Association for Business Economics (NABE) Economic Policy Conference.","keywd":"People:david-malpass,People:world-bank-group-president","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/02/25/world-bank-group-president-david-malpass-remarks-at-nabe-economic-policy-conference","wcmsource":"cq5","content":" MR. MALPASS: Well, Ilan, I'm very pleased to be here. I've got some notes, and then I've got some ideas of things to tell people about, and then looking forward to the conversation. I’m especially pleased to be here with the National Association for Business Economists. The NABE meetings were one of my favorites in the 1980s when I was at the Senate— when I worked at the Senate Budget Committee, Treasury, and Congress's Joint Economic Committee. So, it's fun to be back and see some old friends. The 1980s was an important time for US growth, but like today, the years have presented stiff challenges for global growth, and especially for developing countries. There are quite a few hotter topics today, like Coronavirus, but the one I'd like to tackle is the need for faster growth in developing countries, the challenges that they're facing, and I want to focus on the importance of Europe's growth rate within the developing country growth rate matrix, but also the importance of digital financial services, which I want to speak a little about, and also transparency of debt and investment policies, which is something that the World Bank is working on [inaudible]. I can list the various parts—not everyone knows what the World Bank is—but the short take is there are five different parts of it: IBRD; IDA; the IFC, the International Finance Corporation, which works on private sector growth; there's MIGA, which insures against different types of cross-border risk; and there's also ICSID, which helps settle investment disputes between governments and investors. So, it's a big group with a very clear mission: the mission of lowering the poverty rate and also increasing shared prosperity. That shared prosperity can— it means to me, and can be done from a mathematical standpoint, higher median incomes, better living standards, better social circumstances within countries. So, it’s a goal that probably we all share: to have better prospects for people around the world and especially in the poorer countries. The World Bank does forecasts, or we have forecasts sometimes. In January we put out a forecast for 2020 of 2.5% real growth for the world. The good news is that was slightly higher than what the growth rate was in 2019, but the bad news is, for one, the first half is probably going to be slower than that, given Coronavirus, but also, even at 2.5% real growth for the world, that simply is not enough growth to really lift developing countries. Many of the poorer countries need a faster growth rate by the world economy in order to lift them up. There's also the concern that growth is unequal. Inequality takes various forms, which are all concerning for developing country growth. One is that capital is tending to go more towards developed countries than developing countries, meaning there's not an equalization of capital flows going on. Even within developing countries, capital is going more toward big companies, rather than small companies, and so that, too, contributes to the inequality of both, and also of wealth. And there is an added problem with inequality. As we look at the investment rates for developing countries, they've been sluggish. Our report, the World Bank report in June of 2019, had a subtitle, which is: Sluggish Investment in Developing Countries. So if you start from a platform that's unequal, and then you have an inequality of new investment that, that gives you prospects for continued inequality or slow growth in the developing world—that there's simply not enough new investment taking place. I'd like to focus for a little bit on Europe, and then talk also about transparency and digital financial services. As we look at the growth rate around the world, one of the notable weaknesses has been in Europe—in just-reported numbers, the weakest growth in seven years, which is of particular concern to Africa, where a lot of the world's poor live, because their growth rate is— their ability to grow is closely associated with Europe's growth rate. As we look at a 1% or even lower growth rate for Europe, we can look to various factors. One is the structural system, labor and mobility, but one important one, the slow growth is coming at a time when the central banks are trying to be as stimulative as possible, so I want to talk a bit about that. Europe’s slow growth comes at a time when mainstream economics considers the ECB’s policies to be massively stimulant—that's the size of the balance sheet, the expansion of the balance sheet. One interpretation of the slow growth now is that there simply hasn't been enough quantitative easing (QE) that the constraints on growth in Europe are so great that the central bank should increase its bond purchases or even buy corporate bonds or increase its holdings of low-rated sovereign bonds. The other interpretation, which I prefer, is that Europe's combined monetary and financial regulatory policies has not actually been stimulative. While textbooks teach monetarism—that's the idea that monetary actions of the central banks are multiplied through the private banking system by the way of bank reserves and reserve requirements—the reality is that we've moved to a post-monetarist world. We’re in post-monetarism. The ECB’s balance sheet has expanded many-fold in these recent years, but there's no direct connection to private-sector bank credit growth, so we have the oddity under a monetarist system, there should have been some leveraging into private sector growth, but it simply hasn't happened. Adding to the inequality, central banks are buying long-duration government assets using short-term liabilities. That's a major distortion of markets, because the central bank purchases subsidize the least productive assets in the economy. To be productive, a market economy needs working capital, that's short-term floating rate capital, more than long-term capital, at least in the growth phase for an economy. That requires short-term financing, but much of the supply of short-term capital in Europe is soaked up by the Central Bank in order to purchase and hold long-term government bonds. The result is a central bank policy that doesn't provide monetary stimulus. It’s notable the slowness of private sector credit growth in Europe, especially for small business; despite all the targeted small business credit programs out there, it's not working. I think it's important that economists recognize the new environment of post-monetarism. The key levers are financial regulatory policy, which itself is biased toward large existing borrowers. That's a recipe for slow growth, especially for new entrants, for small businesses, for people without much capital, for developing countries. The system is biased to provide slow growth for the people trying to get into the system. It's a recipe for inequality. I think it's important that the economic profession reexamines QE as a monetary policy tool. What it's leaving is slow, unequal growth, specifically because it sets out to channel capital into long-term government bonds. It's just not a workable system. I want to turn to Africa for a minute and make some general points. One is that structural reforms are as critical in developing countries as they are in developed countries, that the systems that work for labor mobility, for fiscal policy, for monetary policy, for providing some means for people to have access to money and credit, and all of those are struggling in many of the developing country world. The World Bank has a major program to try to push forward with transparency of debt and investment. What this means, or the basis of that, is the idea that if you have a more transparent system, you're going to be able to attract more capital, so it's actually a recipe for more debt, more investment, and more growth, if you can have more transparency in your own system. The challenge is that it becomes very detailed in order to improve the transparency of credit markets in developing countries. I want to list some of the challenges that we're facing. This is all particularly important with the yield curve flat, because as I described, the slowness of investment into developing countries is in part as capital gets sucked up in long-duration assets in developed countries. That doesn't leave enough for the investment that's needed in developing countries. I'm talking about how do credits get established in developing countries? And the environment has changed dramatically over recent years. The World Bank did a report about two months ago called Four Waves of Debt, which went through and described the evolution of the debt available to developing countries. What we find now, today, in our analysis, and it was discussed at the G-20 and the G-7 that occurred just this weekend in Riyadh, some creditors are using contracts with excessive confidentiality clauses. This is new: a creditor comes into a sovereign and says, “You have to sign a confidentiality agreement.” Where these exist, we're encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting. Number two: at times, creditors may be violating legal requirements of other creditors, such as negative pledge clauses. Again, these are important because they become obstacles to new investments within the developing country, and IBRD, one part of the World Bank, has contracts with countries around the world that have negative pledge clauses inside. And so that's a protection for the people of the country, as their governments think about new types of loans. We think it would be helpful if official lenders would publish templates of their loan contracts and we invited the G-20 to endorse this suggestion and push it forward in developing countries. I want to mention state-owned enterprise debt. One of the things going on in developing countries is you push the debt down to a subsidiary of the government, a state-owned enterprise, and that doesn't show up in the government's debt statistics, so it ends up being an obstacle to new investors, coming into the country. Another challenge is the growth of sovereign borrowing that provides collateral for the lender. It used to be that sovereign lenders didn't provide collateral, but more and more, they have been providing collateral, and that ties up the assets of the country from other types of growth or borrowing that might have been achieved on that, so we're working with countries around the world to try to shift away from collateralizing borrowing in order to have more transparency and get more investment in. The World Bank has a policy of discouraging non-concessional borrowing when there's concessional borrowing going on. For poor countries, we make very concessional loans and grants to the countries. That's undercut—and the work, the donors’ interest in doing that—is undercut when the country then turns around and takes on high-interest rate borrowing from other creditors. There's a policy that discourages that, and that will be pushing forward as we go into a new year of encouragement of policy. The Transparency Initiative is to show countries that they can have faster growth and more investment if they have more transparency within their systems. It sounds straightforward, it sounds like it should be the normal policy, but I have to say that the world system right now is set up to work against that approach, so we're pushing back on that and really trying to deepen it. I wanted to take a short moment and mention the importance of a new step in development, which is digital financial services. Throughout history, for poor people, it's been a giant struggle to actually have money, rather than barter. You know, the barter system is inherently inefficient, because you're comparing apples and oranges. You're comparing different kinds of goods and trying to trade, to make trades. It was a big innovation to monetize the world's financial system. But the problem has been, really throughout time, that it's hard to have money in the weakest parts of the global economy. It's hard for small businesses to get a hold of credit. It's hard for women to physically hold onto money because someone takes it away. Those obstacles, I think are big. We can see an avenue to improving this through digital financial services. You can think of it as a debit card, but it's a debit card with a fingerprint, creates a great deal of security for a woman or a small business or some new entrants into the market to actually have— it starts as small amounts of money, and then it can grow, and that becomes one of the most important avenues for dynamic new growth. We're pushing hard for digital financial services to grow. That means you have to have a regular—it's not easy—you have to have a regulatory policy that encourages that kind of diversity, and you also have to have a banking system or the telecommunications system that's up to the task of keeping track of individual money for even the poorest person within an economy. It's critical to get financial transaction costs down as low as possible, so you need to be thinking about the smallest fraction of a cent per transaction cost. That enables hundreds of millions of transactions, even for poor people in countries. So, Kenya’s been a good example of a country that’s managed to set up a system that works on even the most basic cell phone, and even for the poorest person, and that's opening new businesses [and increasing] transaction volume, which people in this room—the financial market people—know how critical it is to have a high volume of low-cost transactions in order liquify the market. In summary, I wanted to give you some sense. I'm concerned about the slowness of growth, especially the slowness of growth in Europe, and it's going to be challenged by current events. And as we think about developing countries, there's an inequality, because of the way the system is set up, that's exacerbating the challenges. A lot of it is their own structural reforms, and we can hope for better systems. I work every day on countries themselves and how they can get a better system going in their own country. But we need more transparency in the debt and investment policies, and I think digital financial services provide one avenue to achieve that. Thanks very much. MODERATOR: Wonderful. Thanks very much President Malpass for those really insightful and wide-ranging comments. One of the benefits of being the moderator is you have monopoly of the first question or two. So, I have a few questions related to some of the comments you have made. And then I'd invite everyone in the audience to submit questions. I don’t think there will be any shortage of questions. So, I have been coming to this conference for a very long time, and as you mentioned, you have as well. And we spend a considerable amount of time discussing frustratingly weak potential growth. And I know this is something you’ve spent a lot of time thinking about. In your mind, what are the building blocks of strong and sustainable growth? And how does the World Bank think about this? What’s the framing? MR. MALPASS: I’ll tell you my view and then bring in the World Bank. I think economics is pretty clear that you need to have some money as a starting point. You need to have a system of taxation that's not too distorted. I think that's best done by having taxes at a low rate on a broad base. That's the revenue creation goal of a tax system. Governments that provide restraint on their own spending, but more importantly provide a regulatory framework for people to operate in a free environment. That means the rule of law. That means some clarity in terms of how the rules and regulations change over time. And so those are critical in order to getting growth because we know that growth comes from people, and often people at the bottom, having an opportunity. This idea that was featured at the G20 this weekend of an ‘opportunity society’ is, I think, really important—that people have to feel like they can try something and see if it works. Either that's a new kind of job skill, or changing colleges or other things, or getting to go to high school, even. For a lot of developing countries, the first step toward growth is being allowed to go into seventh grade or eighth grade, which in a lot of countries still is not allowed. As far as how does the World Bank interact with that system: the Bank is active in governance processes and rule of law. One of the things in the Transparency Initiative that I can go through for you is the importance of knowing within a country who has the right to sign a contract on behalf of the government, because many countries don't have clarity on that. So you're the lender; you come in, and you get Joe or Janet to sign the contract and it hasn't really been scrutinized by other parts of the Government. We want to see a governance process that can make some sensible choices. We can provide technical assistance to build the capacities, because a lot of countries just don't have the people that can think about the contracting environment. You need, of course, to have an environment that invites new investment—both private sector investment and infrastructure investment, some of which comes from the governments themselves. We do a lot of work in that area. And vitally important is human capital, which is people’s skills and the education system. We have an education poverty index, the Learning Poverty Index, which is a simple measurement that’s done globally for a lot of countries, maybe over 150 countries, which asks: of children at age 10, what percentage can read a basic story? It's a simple indicator, and it allows you then to tie back to countries: Why? What's the obstacles? And really focus on more learning. Health is critical and there's a lot of time on that. Climate and the environment and the ability to withstand changes in climate and extreme weather conditions is important for a huge portion of the world’s poor. They tend to live closer to sea level, or—that’s a broad statement—but many of them, millions and even hundreds of millions live close to sea level without very much protection. And other aspects of that are important. The Bank works in all those areas but the starting point, I think, is the structure of an economy That’s basically market-based rather than monopolies. One of the hardest things that we fight against is capture by state-owned enterprises or by the military. Many countries still have systems where there's a bias in favor of businesses owned by the military or by state-owned enterprises, and that really undercuts the innovation of the economy. MODERATOR: Very good. So staying on the growth theme for just a moment, one of the things you mentioned was female labor force participation and one of the things that was brought up yesterday by Federal Reserve Bank of Cleveland President Loretta Mester was really the very significant increase in the female participation rate, here in the US. And when I was researching ideas to pose to you, I was quite struck by the decline globally in the female participation rate, from some of the data from the World Bank. How do you think about female engagement in the labor force and the dividend for growth? MR. MALPASS: This is one of the strongest points of economics—you know, economists can argue about 2.5% growth or 3.5% growth, but one thing that that they can agree on is the vital portion that women can provide into an economy, and we see it every day, in terms of women being just additive from a straight GDP standpoint, but then also very importantly, creating different kinds of innovation than a man might think off. Oftentimes being better at negotiating a favorable outcome than a man might be, so getting that participation is vital, everywhere in the world. Some countries are going up, and we've been encouraged—the World Bank does a lot of reporting on this. I was just in Dubai a week ago for the Global Women’s Summit. One of the things the World Bank tries to do, and does very effectively, is lean on governments, often male-headed governments, to change the laws of the country so that women can own businesses or can have a passport or can take a job in different sectors of the economy, can have pay that goes up rather than going sideways. And it's been actually I think one of the bigger successes of world development over the last let's say 10 years because it's relatively recent that countries are changing their laws to allow fuller participation by women in the economy, and then they get better results out of it. We do an important report called the Women, Business and the Law, WBL, which documents the rules changes. One part of development is just keeping track of which countries actually change their laws in a positive way that empowers women. It just came out two weeks ago; it's a big report, and it gives a blow-by-blow of which countries were making progress. I'm cautiously optimistic, but to your point: I was in Pakistan in October, and the participation rate for women in their economy is still really low. Like 25% even. And so what that means is a whole group of important economic contributors is screened out at the get-go. They have an additional problem which is girls go to school for a while but then they stop and they’re not schooled in Secondary Schools and much less in higher education that's readily available for girls. That leads to lower skills. We could spend the whole hour on this topic because it's one that's clearly economically beneficial. There is some progress being made, and it's identifiable enough what needs to be done in which countries in order to get more progress. MODERATOR: Interesting. So, staying with the theme of the building blocks of growth. Another topic that came up yesterday in a really great session—get the slides if you haven't seen them—it was the climate change session. You know research suggests that the effects of climate change will disproportionately affect the countries that are already struggling to develop, as you mentioned. Is the solution well-targeted public and private investment, and how is the World Bank thinking about the drivers of growth, and climate change? It’s a fairly broad question. MR. MALPASS: Let me address that by, I’m not sure I got the whole question, but the answer is, what the World Bank is doing. So, there is a big program in order to invest or make loans in ways that address climate issues, and countries have different programs in what they're trying to do within their climate commitments that the Bank can support those. Over the next five years there's a target, a commitment by the Bank of doing $200 billion in climate co-benefits. To put it in perspective, there are lots and lots of international organizations from the United Nations to the European Bank for Reconstruction and Development, if you’re familiar with the IMF, and on down. All of those, if you put all of the rest together, the World Bank does half of the total in terms of climate and environment investments in countries. The types of things that are done are adaptations so that people are prepared for climate changes and for extreme weather conditions and our lives are preserved. There's disaster relief—I was in Mozambique in April after the Cyclone hit, and the World Bank can provide immediate funding and has Windows or tools that are fast dispersing. A lot of times, the biggest thing that can be done is responding quickly. And then there's preparedness. We strongly encourage and work with countries on ways that they can be prepared for change. And there's all sorts of mitigation, so we think about low carbon. There's around the world still glaring anomalies within the carbon environment: Germany continuing to burn a lot of coal; Pakistan still signing contracts for new coal, and in other parts of the world still, an expansion of that. And then there are a lot of developing countries that still have such difficulty in their electricity sectors that they're using bunker fuel and diesel fuel to make electricity, which is one of the most costly parts of a higher carbon environment that we're in. Those are all different aspects of change that can go on and I think focusing country by country and region by region on things that will really improve the outcome is really where people can be focused. MODERATOR: Thank you. MR. MALPASS: Yeah, I you know I’ve left out, there’s a whole range. Water usage is a critical part of the whole eco-system and that gets into the crop cycle. The Bank is very involved in trying to help countries use better fertilizer, much lower quantities of fertilizer that that will allow more productivity for crops. One anomaly, or one harmful thing in the world is countries choose to grow crops not based on whether it's environmentally sustainable, but whether there's a special interest that wants that crop, whether it's cotton or rice or wheat in parts of the world that don’t need those, and on down the list. In the US, we're aware of the sugar anomaly, and it uses up, it drains a lot from other environmental resources. And I wanted to mention also one of our bigger new programs is in China—the marine plastic problem. China has fallen into the habit of putting plastic into rivers and then it goes into oceans. Many are aware of that as a major problem within environmental processes so we're working on it; we have a loan going through right now that addresses how farmers use plastic, to try to discourage that plastic from finding its way to rivers, which is an important new aspect so we're doing the marine plastic undertakings in Indonesia, in the Caribbean, and other places to try to reduce that overhead. MODERATOR: Let me go to some of the questions that we have in the few minutes that we have left. It's always interesting, the questions you submit when they're anonymous. So is the World Bank operating differently versus the previous administration. If so, how? MR. MALPASS: Thanks, I began with the World Bank in April 2019. To an extent there’s a lot of inertia in organizations, but I think we're making very positive changes. One of the things I've wanted the Bank to do is focus on good development outcomes. That means country by country and region by region, for example for the Sahel or the Horn of Africa, and that focuses this big, very talented staff on thinking about how do we get a good outcome in Nigeria, how do we get a good outcome in Ethiopia, and around the world, in China and India and other places around the world. I think it's a good healthy focus for the Bank and people are really energized about that. We're doing what we call a realignment or a global footprint to put more resources near the client. The bank has a huge number of offices around the world and we will be putting more practice managers into regional offices, rather than DC, which allows them to connect well with clients and do the job well within that. And it's putting the resources, and the decision-making in a shorter process. Those are all inside baseball; they’re ways to make the Bank function well. We’re in the process of recruiting a new chief economist, and the economic role is very important in the Bank. We also have two new very senior women in the Bank. Mari Pangestu is in DC this week, I'm very happy that she will start at the Bank on March 1. And Anshula Kant became our Chief Financial Officer in September. These are very strong, luminary women at the top of the Bank. Anshula Kant was just at the G20 in Riyadh this weekend with Finance Ministers from around the world. She's speaking on behalf of the Bank and showing the strength of the leadership of the World Bank in terms of addressing some of the challenges. People all want to talk about what the challenges are, but what I'm trying to do is have us focus very much on individual solutions—let’s break it down for this country, what change can we actually hope for and encourage? MODERATOR: That actually speaks to the next question. Maybe our last question, we will try to sneak in two. You highlight the ways that the current policy mix in Europe may not be working. What are the specific policies, you would advocate for changes? MR. MALPASS: People have written for 20 years about this. One is labor mobility which I mentioned, meaning the ability of people to change jobs, and to get new skills. That just hasn't been working well. Small business credit is the second major problem for Europe, and I think we have to examine is central bank policy where they buy long term government instruments so that's a heavy bias in the system away from where you’re trying to go which is to get small business dynamism started up. Of course, the efficiency of government spending is important, but some European countries have better systems than others in that, so I would say better uniformity around Europe on the quality of government spending would be important. I think the regulatory policies have to be looked at as far as why is it that a lot of the innovative capital and innovative investing is done maybe from Europe, but into places where the businesses start somewhere outside of continental Europe. That should be a focus. MODERATOR: Interesting. And one last question before we wrap up. What is the World Bank's response to the coronavirus outbreak? MR. MALPASS: [Inaudible] Coronavirus is topic number one. We are looking at ways to respond or to make available resources for developing countries, as it goes and we're also very closely coordinated with WHO, the World Health Organization, which is one of the frontline providers on that. We have a range of tools that the Bank can use as a pandemic spreads. MODERATOR: Please join me in thanking President Malpass [Applause]  This transcript has been edited for clarity. ","content_1000":" MR. MALPASS: Well, Ilan, I'm very pleased to be here. I've got some notes, and then I've got some ideas of things to tell people about, and then looking forward to the conversation. I’m especially pleased to be here with the National Association for Business Economists. The NABE meetings were one of my favorites in the 1980s when I was at the Senate— when I worked at the Senate Budget Committee, Treasury, and Congress's Joint Economic Committee. So, it's fun to be back and see some old friends. The 1980s was an important time for US growth, but like today, the years have presented stiff challenges for global growth, and especially for developing countries. There are quite a few hotter topics today, like Coronavirus, but the one I'd like to tackle is the need for faster growth in developing countries, the challenges that they're facing, and I want to focus on the importance of Europe's growth rate within the developing country growth rate matrix, but also the importance of digital fina","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations - Corporate Communications, ECRCC","originating_unit_exact":"External and Corporate Relations - Corporate Communications, ECRCC","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"15a59932157b2e60ecbb3c602496f8d0eb4c6089","wn_title":"World Bank Group President David Malpass Remarks at the NABE Economic Policy Conference","wn_desc":" MR. MALPASS: Well, Ilan, I'm very pleased to be here. I've got some notes, and then I've got some ideas of things to tell people about, and then looking forward to the conversation. I’m especially pleased to be here with the National Association for Business Economists. The NABE meetings were one of my favorites in the 1980s when I was at the Senate— when I worked at the Senate Budget Committee, Treasury, and Congress's Joint Economic Committee. So, it's fun to be back and see some old friends. The 1980s was an important time for US growth, but like today, the years have presented stiff challenges for global growth, and especially for developing countries. There are quite a few hotter topics today, like Coronavirus, but the one I'd like to tackle is the need for faster growth in developing countries, the challenges that they're facing, and I want to focus on the importance of Europe's growth rate within the developing country growth rate matrix, but also the importance of digital financial services, which I want to speak a little about, and also transparency of debt and investment policies, which is something that the World Bank is working on [inaudible]. I can list the various parts—not everyone knows what the World Bank is—but the short take is there are five different parts of it: IBRD; IDA; the IFC, the International Finance Corporation, which works on private sector growth; there's MIGA, which insures against different types of cross-border risk; and there's also ICSID, which helps settle investment disputes between governments and investors. So, it's a big group with a very clear mission: the mission of lowering the poverty rate and also increasing shared prosperity. That shared prosperity can— it means to me, and can be done from a mathematical standpoint, higher median incomes, better living standards, better social circumstances within countries. So, it’s a goal that probably we all share: to have better prospects for people around the world and especially in the poorer countries. The World Bank does forecasts, or we have forecasts sometimes. In January we put out a forecast for 2020 of 2.5% real growth for the world. The good news is that was slightly higher than what the growth rate was in 2019, but the bad news is, for one, the first half is probably going to be slower than that, given Coronavirus, but also, even at 2.5% real growth for the world, that simply is not enough growth to really lift developing countries. Many of the poorer countries need a faster growth rate by the world economy in order to lift them up. There's also the concern that growth is unequal. Inequality takes various forms, which are all concerning for developing country growth. One is that capital is tending to go more towards developed countries than developing countries, meaning there's not an equalization of capital flows going on. Even within developing countries, capital is going more toward big companies, rather than small companies, and so that, too, contributes to the inequality of both, and also of wealth. And there is an added problem with inequality. As we look at the investment rates for developing countries, they've been sluggish. Our report, the World Bank report in June of 2019, had a subtitle, which is: Sluggish Investment in Developing Countries. So if you start from a platform that's unequal, and then you have an inequality of new investment that, that gives you prospects for continued inequality or slow growth in the developing world—that there's simply not enough new investment taking place. I'd like to focus for a little bit on Europe, and then talk also about transparency and digital financial services. As we look at the growth rate around the world, one of the notable weaknesses has been in Europe—in just-reported numbers, the weakest growth in seven years, which is of particular concern to Africa, where a lot of the world's poor live, because their growth rate is— their ability to grow is closely associated with Europe's growth rate. As we look at a 1% or even lower growth rate for Europe, we can look to various factors. One is the structural system, labor and mobility, but one important one, the slow growth is coming at a time when the central banks are trying to be as stimulative as possible, so I want to talk a bit about that. Europe’s slow growth comes at a time when mainstream economics considers the ECB’s policies to be massively stimulant—that's the size of the balance sheet, the expansion of the balance sheet. One interpretation of the slow growth now is that there simply hasn't been enough quantitative easing (QE) that the constraints on growth in Europe are so great that the central bank should increase its bond purchases or even buy corporate bonds or increase its holdings of low-rated sovereign bonds. The other interpretation, which I prefer, is that Europe's combined monetary and financial regulatory policies has not actually been stimulative. While textbooks teach monetarism—that's the idea that monetary actions of the central banks are multiplied through the private banking system by the way of bank reserves and reserve requirements—the reality is that we've moved to a post-monetarist world. We’re in post-monetarism. The ECB’s balance sheet has expanded many-fold in these recent years, but there's no direct connection to private-sector bank credit growth, so we have the oddity under a monetarist system, there should have been some leveraging into private sector growth, but it simply hasn't happened. Adding to the inequality, central banks are buying long-duration government assets using short-term liabilities. That's a major distortion of markets, because the central bank purchases subsidize the least productive assets in the economy. To be productive, a market economy needs working capital, that's short-term floating rate capital, more than long-term capital, at least in the growth phase for an economy. That requires short-term financing, but much of the supply of short-term capital in Europe is soaked up by the Central Bank in order to purchase and hold long-term government bonds. The result is a central bank policy that doesn't provide monetary stimulus. It’s notable the slowness of private sector credit growth in Europe, especially for small business; despite all the targeted small business credit programs out there, it's not working. I think it's important that economists recognize the new environment of post-monetarism. The key levers are financial regulatory policy, which itself is biased toward large existing borrowers. That's a recipe for slow growth, especially for new entrants, for small businesses, for people without much capital, for developing countries. The system is biased to provide slow growth for the people trying to get into the system. It's a recipe for inequality. I think it's important that the economic profession reexamines QE as a monetary policy tool. What it's leaving is slow, unequal growth, specifically because it sets out to channel capital into long-term government bonds. It's just not a workable system. I want to turn to Africa for a minute and make some general points. One is that structural reforms are as critical in developing countries as they are in developed countries, that the systems that work for labor mobility, for fiscal policy, for monetary policy, for providing some means for people to have access to money and credit, and all of those are struggling in many of the developing country world. The World Bank has a major program to try to push forward with transparency of debt and investment. What this means, or the basis of that, is the idea that if you have a more transparent system, you're going to be able to attract more capital, so it's actually a recipe for more debt, more investment, and more growth, if you can have more transparency in your own system. The challenge is that it becomes very detailed in order to improve the transparency of credit markets in developing countries. I want to list some of the challenges that we're facing. This is all particularly important with the yield curve flat, because as I described, the slowness of investment into developing countries is in part as capital gets sucked up in long-duration assets in developed countries. That doesn't leave enough for the investment that's needed in developing countries. I'm talking about how do credits get established in developing countries? And the environment has changed dramatically over recent years. The World Bank did a report about two months ago called Four Waves of Debt, which went through and described the evolution of the debt available to developing countries. What we find now, today, in our analysis, and it was discussed at the G-20 and the G-7 that occurred just this weekend in Riyadh, some creditors are using contracts with excessive confidentiality clauses. This is new: a creditor comes into a sovereign and says, “You have to sign a confidentiality agreement.” Where these exist, we're encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting. Number two: at times, creditors may be violating legal requirements of other creditors, such as negative pledge clauses. Again, these are important because they become obstacles to new investments within the developing country, and IBRD, one part of the World Bank, has contracts with countries around the world that have negative pledge clauses inside. And so that's a protection for the people of the country, as their governments think about new types of loans. We think it would be helpful if official lenders would publish templates of their loan contracts and we invited the G-20 to endorse this suggestion and push it forward in developing countries. I want to mention state-owned enterprise debt. One of the things going on in developing countries is you push the debt down to a subsidiary of the government, a state-owned enterprise, and that doesn't show up in the government's debt statistics, so it ends up being an obstacle to new investors, coming into the country. Another challenge is the growth of sovereign borrowing that provides collateral for the lender. It used to be that sovereign lenders didn't provide collateral, but more and more, they have been providing collateral, and that ties up the assets of the country from other types of growth or borrowing that might have been achieved on that, so we're working with countries around the world to try to shift away from collateralizing borrowing in order to have more transparency and get more investment in. The World Bank has a policy of discouraging non-concessional borrowing when there's concessional borrowing going on. For poor countries, we make very concessional loans and grants to the countries. That's undercut—and the work, the donors’ interest in doing that—is undercut when the country then turns around and takes on high-interest rate borrowing from other creditors. There's a policy that discourages that, and that will be pushing forward as we go into a new year of encouragement of policy. The Transparency Initiative is to show countries that they can have faster growth and more investment if they have more transparency within their systems. It sounds straightforward, it sounds like it should be the normal policy, but I have to say that the world system right now is set up to work against that approach, so we're pushing back on that and really trying to deepen it. I wanted to take a short moment and mention the importance of a new step in development, which is digital financial services. Throughout history, for poor people, it's been a giant struggle to actually have money, rather than barter. You know, the barter system is inherently inefficient, because you're comparing apples and oranges. You're comparing different kinds of goods and trying to trade, to make trades. It was a big innovation to monetize the world's financial system. But the problem has been, really throughout time, that it's hard to have money in the weakest parts of the global economy. It's hard for small businesses to get a hold of credit. It's hard for women to physically hold onto money because someone takes it away. Those obstacles, I think are big. We can see an avenue to improving this through digital financial services. You can think of it as a debit card, but it's a debit card with a fingerprint, creates a great deal of security for a woman or a small business or some new entrants into the market to actually have— it starts as small amounts of money, and then it can grow, and that becomes one of the most important avenues for dynamic new growth. We're pushing hard for digital financial services to grow. That means you have to have a regular—it's not easy—you have to have a regulatory policy that encourages that kind of diversity, and you also have to have a banking system or the telecommunications system that's up to the task of keeping track of individual money for even the poorest person within an economy. It's critical to get financial transaction costs down as low as possible, so you need to be thinking about the smallest fraction of a cent per transaction cost. That enables hundreds of millions of transactions, even for poor people in countries. So, Kenya’s been a good example of a country that’s managed to set up a system that works on even the most basic cell phone, and even for the poorest person, and that's opening new businesses [and increasing] transaction volume, which people in this room—the financial market people—know how critical it is to have a high volume of low-cost transactions in order liquify the market. In summary, I wanted to give you some sense. I'm concerned about the slowness of growth, especially the slowness of growth in Europe, and it's going to be challenged by current events. And as we think about developing countries, there's an inequality, because of the way the system is set up, that's exacerbating the challenges. A lot of it is their own structural reforms, and we can hope for better systems. I work every day on countries themselves and how they can get a better system going in their own country. But we need more transparency in the debt and investment policies, and I think digital financial services provide one avenue to achieve that. Thanks very much. MODERATOR: Wonderful. Thanks very much President Malpass for those really insightful and wide-ranging comments. One of the benefits of being the moderator is you have monopoly of the first question or two. So, I have a few questions related to some of the comments you have made. And then I'd invite everyone in the audience to submit questions. I don’t think there will be any shortage of questions. So, I have been coming to this conference for a very long time, and as you mentioned, you have as well. And we spend a considerable amount of time discussing frustratingly weak potential growth. And I know this is something you’ve spent a lot of time thinking about. In your mind, what are the building blocks of strong and sustainable growth? And how does the World Bank think about this? What’s the framing? MR. MALPASS: I’ll tell you my view and then bring in the World Bank. I think economics is pretty clear that you need to have some money as a starting point. You need to have a system of taxation that's not too distorted. I think that's best done by having taxes at a low rate on a broad base. That's the revenue creation goal of a tax system. Governments that provide restraint on their own spending, but more importantly provide a regulatory framework for people to operate in a free environment. That means the rule of law. That means some clarity in terms of how the rules and regulations change over time. And so those are critical in order to getting growth because we know that growth comes from people, and often people at the bottom, having an opportunity. This idea that was featured at the G20 this weekend of an ‘opportunity society’ is, I think, really important—that people have to feel like they can try something and see if it works. Either that's a new kind of job skill, or changing colleges or other things, or getting to go to high school, even. For a lot of developing countries, the first step toward growth is being allowed to go into seventh grade or eighth grade, which in a lot of countries still is not allowed. As far as how does the World Bank interact with that system: the Bank is active in governance processes and rule of law. One of the things in the Transparency Initiative that I can go through for you is the importance of knowing within a country who has the right to sign a contract on behalf of the government, because many countries don't have clarity on that. So you're the lender; you come in, and you get Joe or Janet to sign the contract and it hasn't really been scrutinized by other parts of the Government. We want to see a governance process that can make some sensible choices. We can provide technical assistance to build the capacities, because a lot of countries just don't have the people that can think about the contracting environment. You need, of course, to have an environment that invites new investment—both private sector investment and infrastructure investment, some of which comes from the governments themselves. We do a lot of work in that area. And vitally important is human capital, which is people’s skills and the education system. We have an education poverty index, the Learning Poverty Index, which is a simple measurement that’s done globally for a lot of countries, maybe over 150 countries, which asks: of children at age 10, what percentage can read a basic story? It's a simple indicator, and it allows you then to tie back to countries: Why? What's the obstacles? And really focus on more learning. Health is critical and there's a lot of time on that. Climate and the environment and the ability to withstand changes in climate and extreme weather conditions is important for a huge portion of the world’s poor. They tend to live closer to sea level, or—that’s a broad statement—but many of them, millions and even hundreds of millions live close to sea level without very much protection. And other aspects of that are important. The Bank works in all those areas but the starting point, I think, is the structure of an economy That’s basically market-based rather than monopolies. One of the hardest things that we fight against is capture by state-owned enterprises or by the military. Many countries still have systems where there's a bias in favor of businesses owned by the military or by state-owned enterprises, and that really undercuts the innovation of the economy. MODERATOR: Very good. So staying on the growth theme for just a moment, one of the things you mentioned was female labor force participation and one of the things that was brought up yesterday by Federal Reserve Bank of Cleveland President Loretta Mester was really the very significant increase in the female participation rate, here in the US. And when I was researching ideas to pose to you, I was quite struck by the decline globally in the female participation rate, from some of the data from the World Bank. How do you think about female engagement in the labor force and the dividend for growth? MR. MALPASS: This is one of the strongest points of economics—you know, economists can argue about 2.5% growth or 3.5% growth, but one thing that that they can agree on is the vital portion that women can provide into an economy, and we see it every day, in terms of women being just additive from a straight GDP standpoint, but then also very importantly, creating different kinds of innovation than a man might think off. Oftentimes being better at negotiating a favorable outcome than a man might be, so getting that participation is vital, everywhere in the world. Some countries are going up, and we've been encouraged—the World Bank does a lot of reporting on this. I was just in Dubai a week ago for the Global Women’s Summit. One of the things the World Bank tries to do, and does very effectively, is lean on governments, often male-headed governments, to change the laws of the country so that women can own businesses or can have a passport or can take a job in different sectors of the economy, can have pay that goes up rather than going sideways. And it's been actually I think one of the bigger successes of world development over the last let's say 10 years because it's relatively recent that countries are changing their laws to allow fuller participation by women in the economy, and then they get better results out of it. We do an important report called the Women, Business and the Law, WBL, which documents the rules changes. One part of development is just keeping track of which countries actually change their laws in a positive way that empowers women. It just came out two weeks ago; it's a big report, and it gives a blow-by-blow of which countries were making progress. I'm cautiously optimistic, but to your point: I was in Pakistan in October, and the participation rate for women in their economy is still really low. Like 25% even. And so what that means is a whole group of important economic contributors is screened out at the get-go. They have an additional problem which is girls go to school for a while but then they stop and they’re not schooled in Secondary Schools and much less in higher education that's readily available for girls. That leads to lower skills. We could spend the whole hour on this topic because it's one that's clearly economically beneficial. There is some progress being made, and it's identifiable enough what needs to be done in which countries in order to get more progress. MODERATOR: Interesting. So, staying with the theme of the building blocks of growth. Another topic that came up yesterday in a really great session—get the slides if you haven't seen them—it was the climate change session. You know research suggests that the effects of climate change will disproportionately affect the countries that are already struggling to develop, as you mentioned. Is the solution well-targeted public and private investment, and how is the World Bank thinking about the drivers of growth, and climate change? It’s a fairly broad question. MR. MALPASS: Let me address that by, I’m not sure I got the whole question, but the answer is, what the World Bank is doing. So, there is a big program in order to invest or make loans in ways that address climate issues, and countries have different programs in what they're trying to do within their climate commitments that the Bank can support those. Over the next five years there's a target, a commitment by the Bank of doing $200 billion in climate co-benefits. To put it in perspective, there are lots and lots of international organizations from the United Nations to the European Bank for Reconstruction and Development, if you’re familiar with the IMF, and on down. All of those, if you put all of the rest together, the World Bank does half of the total in terms of climate and environment investments in countries. The types of things that are done are adaptations so that people are prepared for climate changes and for extreme weather conditions and our lives are preserved. There's disaster relief—I was in Mozambique in April after the Cyclone hit, and the World Bank can provide immediate funding and has Windows or tools that are fast dispersing. A lot of times, the biggest thing that can be done is responding quickly. And then there's preparedness. We strongly encourage and work with countries on ways that they can be prepared for change. And there's all sorts of mitigation, so we think about low carbon. There's around the world still glaring anomalies within the carbon environment: Germany continuing to burn a lot of coal; Pakistan still signing contracts for new coal, and in other parts of the world still, an expansion of that. And then there are a lot of developing countries that still have such difficulty in their electricity sectors that they're using bunker fuel and diesel fuel to make electricity, which is one of the most costly parts of a higher carbon environment that we're in. Those are all different aspects of change that can go on and I think focusing country by country and region by region on things that will really improve the outcome is really where people can be focused. MODERATOR: Thank you. MR. MALPASS: Yeah, I you know I’ve left out, there’s a whole range. Water usage is a critical part of the whole eco-system and that gets into the crop cycle. The Bank is very involved in trying to help countries use better fertilizer, much lower quantities of fertilizer that that will allow more productivity for crops. One anomaly, or one harmful thing in the world is countries choose to grow crops not based on whether it's environmentally sustainable, but whether there's a special interest that wants that crop, whether it's cotton or rice or wheat in parts of the world that don’t need those, and on down the list. In the US, we're aware of the sugar anomaly, and it uses up, it drains a lot from other environmental resources. And I wanted to mention also one of our bigger new programs is in China—the marine plastic problem. China has fallen into the habit of putting plastic into rivers and then it goes into oceans. Many are aware of that as a major problem within environmental processes so we're working on it; we have a loan going through right now that addresses how farmers use plastic, to try to discourage that plastic from finding its way to rivers, which is an important new aspect so we're doing the marine plastic undertakings in Indonesia, in the Caribbean, and other places to try to reduce that overhead. MODERATOR: Let me go to some of the questions that we have in the few minutes that we have left. It's always interesting, the questions you submit when they're anonymous. So is the World Bank operating differently versus the previous administration. If so, how? MR. MALPASS: Thanks, I began with the World Bank in April 2019. To an extent there’s a lot of inertia in organizations, but I think we're making very positive changes. One of the things I've wanted the Bank to do is focus on good development outcomes. That means country by country and region by region, for example for the Sahel or the Horn of Africa, and that focuses this big, very talented staff on thinking about how do we get a good outcome in Nigeria, how do we get a good outcome in Ethiopia, and around the world, in China and India and other places around the world. I think it's a good healthy focus for the Bank and people are really energized about that. We're doing what we call a realignment or a global footprint to put more resources near the client. The bank has a huge number of offices around the world and we will be putting more practice managers into regional offices, rather than DC, which allows them to connect well with clients and do the job well within that. And it's putting the resources, and the decision-making in a shorter process. Those are all inside baseball; they’re ways to make the Bank function well. We’re in the process of recruiting a new chief economist, and the economic role is very important in the Bank. We also have two new very senior women in the Bank. Mari Pangestu is in DC this week, I'm very happy that she will start at the Bank on March 1. And Anshula Kant became our Chief Financial Officer in September. These are very strong, luminary women at the top of the Bank. Anshula Kant was just at the G20 in Riyadh this weekend with Finance Ministers from around the world. She's speaking on behalf of the Bank and showing the strength of the leadership of the World Bank in terms of addressing some of the challenges. People all want to talk about what the challenges are, but what I'm trying to do is have us focus very much on individual solutions—let’s break it down for this country, what change can we actually hope for and encourage? MODERATOR: That actually speaks to the next question. Maybe our last question, we will try to sneak in two. You highlight the ways that the current policy mix in Europe may not be working. What are the specific policies, you would advocate for changes? MR. MALPASS: People have written for 20 years about this. One is labor mobility which I mentioned, meaning the ability of people to change jobs, and to get new skills. That just hasn't been working well. Small business credit is the second major problem for Europe, and I think we have to examine is central bank policy where they buy long term government instruments so that's a heavy bias in the system away from where you’re trying to go which is to get small business dynamism started up. Of course, the efficiency of government spending is important, but some European countries have better systems than others in that, so I would say better uniformity around Europe on the quality of government spending would be important. I think the regulatory policies have to be looked at as far as why is it that a lot of the innovative capital and innovative investing is done maybe from Europe, but into places where the businesses start somewhere outside of continental Europe. That should be a focus. MODERATOR: Interesting. And one last question before we wrap up. What is the World Bank's response to the coronavirus outbreak? MR. MALPASS: [Inaudible] Coronavirus is topic number one. We are looking at ways to respond or to make available resources for developing countries, as it goes and we're also very closely coordinated with WHO, the World Health Organization, which is one of the frontline providers on that. We have a range of tools that the Bank can use as a pandemic spreads. MODERATOR: Please join me in thanking President Malpass [Applause]  This transcript has been edited for clarity. ","upi":"000523051","master_date":"2020-02-25T16:10:00Z","master_date_srt":"2020-02-25T16:10:00Z","master_recent_date_srt":"2020-02-25T16:10:00Z","master_recent_date":"2020-02-25T16:10:00Z","short_description":"World Bank Group President David Malpass Remarks at the National Association for Business Economics (NABE) Economic Policy Conference.","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" MR. MALPASS: Well, Ilan, I'm very pleased to be here. I've got some notes, and then I've got some ideas of things to tell people about, and then looking forward to the conversation. I’m especially pleased to be here with the National Association for Business Economists. The NABE meetings were one of my favorites in the 1980s when I was at the Senate— when I worked at the Senate Budget Committee, Treasury, and Congress's Joint Economic Committee. So, it's fun to be back and see some old friends. The 1980s was an important time for US growth, but like today, the years have presented stiff challenges for global growth, and especially for developing countries. There are quite a few hotter topics today, like Coronavirus, but the one I'd like to tackle is the need for faster growth in developing countries, the challenges that they're facing, and I want to focus on the importance of Europe's growth rate within the developing country growth rate matrix, but also the importance of digital financial services, which I want to speak a little about, and also transparency of debt and investment policies, which is something that the World Bank is working on [inaudible]. I can list the various parts—not everyone knows what the World Bank is—but the short take is there are five different parts of it: IBRD; IDA; the IFC, the International Finance Corporation, which works on private sector growth; there's MIGA, which insures against different types of cross-border risk; and there's also ICSID, which helps settle investment disputes between governments and investors. So, it's a big group with a very clear mission: the mission of lowering the poverty rate and also increasing shared prosperity. That shared prosperity can— it means to me, and can be done from a mathematical standpoint, higher median incomes, better living standards, better social circumstances within countries. So, it’s a goal that probably we all share: to have better prospects for people around the world and especially in the poorer countries. The World Bank does forecasts, or we have forecasts sometimes. In January we put out a forecast for 2020 of 2.5% real growth for the world. The good news is that was slightly higher than what the growth rate was in 2019, but the bad news is, for one, the first half is probably going to be slower than that, given Coronavirus, but also, even at 2.5% real growth for the world, that simply is not enough growth to really lift developing countries. Many of the poorer countries need a faster growth rate by the world economy in order to lift them up. There's also the concern that growth is unequal. Inequality takes various forms, which are all concerning for developing country growth. One is that capital is tending to go more towards developed countries than developing countries, meaning there's not an equalization of capital flows going on. Even within developing countries, capital is going more toward big companies, rather than small companies, and so that, too, contributes to the inequality of both, and also of wealth. And there is an added problem with inequality. As we look at the investment rates for developing countries, they've been sluggish. Our report, the World Bank report in June of 2019, had a subtitle, which is: Sluggish Investment in Developing Countries. So if you start from a platform that's unequal, and then you have an inequality of new investment that, that gives you prospects for continued inequality or slow growth in the developing world—that there's simply not enough new investment taking place. I'd like to focus for a little bit on Europe, and then talk also about transparency and digital financial services. As we look at the growth rate around the world, one of the notable weaknesses has been in Europe—in just-reported numbers, the weakest growth in seven years, which is of particular concern to Africa, where a lot of the world's poor live, because their growth rate is— their ability to grow is closely associated with Europe's growth rate. As we look at a 1% or even lower growth rate for Europe, we can look to various factors. One is the structural system, labor and mobility, but one important one, the slow growth is coming at a time when the central banks are trying to be as stimulative as possible, so I want to talk a bit about that. Europe’s slow growth comes at a time when mainstream economics considers the ECB’s policies to be massively stimulant—that's the size of the balance sheet, the expansion of the balance sheet. One interpretation of the slow growth now is that there simply hasn't been enough quantitative easing (QE) that the constraints on growth in Europe are so great that the central bank should increase its bond purchases or even buy corporate bonds or increase its holdings of low-rated sovereign bonds. The other interpretation, which I prefer, is that Europe's combined monetary and financial regulatory policies has not actually been stimulative. While textbooks teach monetarism—that's the idea that monetary actions of the central banks are multiplied through the private banking system by the way of bank reserves and reserve requirements—the reality is that we've moved to a post-monetarist world. We’re in post-monetarism. The ECB’s balance sheet has expanded many-fold in these recent years, but there's no direct connection to private-sector bank credit growth, so we have the oddity under a monetarist system, there should have been some leveraging into private sector growth, but it simply hasn't happened. Adding to the inequality, central banks are buying long-duration government assets using short-term liabilities. That's a major distortion of markets, because the central bank purchases subsidize the least productive assets in the economy. To be productive, a market economy needs working capital, that's short-term floating rate capital, more than long-term capital, at least in the growth phase for an economy. That requires short-term financing, but much of the supply of short-term capital in Europe is soaked up by the Central Bank in order to purchase and hold long-term government bonds. The result is a central bank policy that doesn't provide monetary stimulus. It’s notable the slowness of private sector credit growth in Europe, especially for small business; despite all the targeted small business credit programs out there, it's not working. I think it's important that economists recognize the new environment of post-monetarism. The key levers are financial regulatory policy, which itself is biased toward large existing borrowers. That's a recipe for slow growth, especially for new entrants, for small businesses, for people without much capital, for developing countries. The system is biased to provide slow growth for the people trying to get into the system. It's a recipe for inequality. I think it's important that the economic profession reexamines QE as a monetary policy tool. What it's leaving is slow, unequal growth, specifically because it sets out to channel capital into long-term government bonds. It's just not a workable system. I want to turn to Africa for a minute and make some general points. One is that structural reforms are as critical in developing countries as they are in developed countries, that the systems that work for labor mobility, for fiscal policy, for monetary policy, for providing some means for people to have access to money and credit, and all of those are struggling in many of the developing country world. The World Bank has a major program to try to push forward with transparency of debt and investment. What this means, or the basis of that, is the idea that if you have a more transparent system, you're going to be able to attract more capital, so it's actually a recipe for more debt, more investment, and more growth, if you can have more transparency in your own system. The challenge is that it becomes very detailed in order to improve the transparency of credit markets in developing countries. I want to list some of the challenges that we're facing. This is all particularly important with the yield curve flat, because as I described, the slowness of investment into developing countries is in part as capital gets sucked up in long-duration assets in developed countries. That doesn't leave enough for the investment that's needed in developing countries. I'm talking about how do credits get established in developing countries? And the environment has changed dramatically over recent years. The World Bank did a report about two months ago called Four Waves of Debt, which went through and described the evolution of the debt available to developing countries. What we find now, today, in our analysis, and it was discussed at the G-20 and the G-7 that occurred just this weekend in Riyadh, some creditors are using contracts with excessive confidentiality clauses. This is new: a creditor comes into a sovereign and says, “You have to sign a confidentiality agreement.” Where these exist, we're encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting. Number two: at times, creditors may be violating legal requirements of other creditors, such as negative pledge clauses. Again, these are important because they become obstacles to new investments within the developing country, and IBRD, one part of the World Bank, has contracts with countries around the world that have negative pledge clauses inside. And so that's a protection for the people of the country, as their governments think about new types of loans. We think it would be helpful if official lenders would publish templates of their loan contracts and we invited the G-20 to endorse this suggestion and push it forward in developing countries. I want to mention state-owned enterprise debt. One of the things going on in developing countries is you push the debt down to a subsidiary of the government, a state-owned enterprise, and that doesn't show up in the government's debt statistics, so it ends up being an obstacle to new investors, coming into the country. Another challenge is the growth of sovereign borrowing that provides collateral for the lender. It used to be that sovereign lenders didn't provide collateral, but more and more, they have been providing collateral, and that ties up the assets of the country from other types of growth or borrowing that might have been achieved on that, so we're working with countries around the world to try to shift away from collateralizing borrowing in order to have more transparency and get more investment in. The World Bank has a policy of discouraging non-concessional borrowing when there's concessional borrowing going on. For poor countries, we make very concessional loans and grants to the countries. That's undercut—and the work, the donors’ interest in doing that—is undercut when the country then turns around and takes on high-interest rate borrowing from other creditors. There's a policy that discourages that, and that will be pushing forward as we go into a new year of encouragement of policy. The Transparency Initiative is to show countries that they can have faster growth and more investment if they have more transparency within their systems. It sounds straightforward, it sounds like it should be the normal policy, but I have to say that the world system right now is set up to work against that approach, so we're pushing back on that and really trying to deepen it. I wanted to take a short moment and mention the importance of a new step in development, which is digital financial services. Throughout history, for poor people, it's been a giant struggle to actually have money, rather than barter. You know, the barter system is inherently inefficient, because you're comparing apples and oranges. You're comparing different kinds of goods and trying to trade, to make trades. It was a big innovation to monetize the world's financial system. But the problem has been, really throughout time, that it's hard to have money in the weakest parts of the global economy. It's hard for small businesses to get a hold of credit. It's hard for women to physically hold onto money because someone takes it away. Those obstacles, I think are big. We can see an avenue to improving this through digital financial services. You can think of it as a debit card, but it's a debit card with a fingerprint, creates a great deal of security for a woman or a small business or some new entrants into the market to actually have— it starts as small amounts of money, and then it can grow, and that becomes one of the most important avenues for dynamic new growth. We're pushing hard for digital financial services to grow. That means you have to have a regular—it's not easy—you have to have a regulatory policy that encourages that kind of diversity, and you also have to have a banking system or the telecommunications system that's up to the task of keeping track of individual money for even the poorest person within an economy. It's critical to get financial transaction costs down as low as possible, so you need to be thinking about the smallest fraction of a cent per transaction cost. That enables hundreds of millions of transactions, even for poor people in countries. So, Kenya’s been a good example of a country that’s managed to set up a system that works on even the most basic cell phone, and even for the poorest person, and that's opening new businesses [and increasing] transaction volume, which people in this room—the financial market people—know how critical it is to have a high volume of low-cost transactions in order liquify the market. In summary, I wanted to give you some sense. I'm concerned about the slowness of growth, especially the slowness of growth in Europe, and it's going to be challenged by current events. And as we think about developing countries, there's an inequality, because of the way the system is set up, that's exacerbating the challenges. A lot of it is their own structural reforms, and we can hope for better systems. I work every day on countries themselves and how they can get a better system going in their own country. But we need more transparency in the debt and investment policies, and I think digital financial services provide one avenue to achieve that. Thanks very much. MODERATOR: Wonderful. Thanks very much President Malpass for those really insightful and wide-ranging comments. One of the benefits of being the moderator is you have monopoly of the first question or two. So, I have a few questions related to some of the comments you have made. And then I'd invite everyone in the audience to submit questions. I don’t think there will be any shortage of questions. So, I have been coming to this conference for a very long time, and as you mentioned, you have as well. And we spend a considerable amount of time discussing frustratingly weak potential growth. And I know this is something you’ve spent a lot of time thinking about. In your mind, what are the building blocks of strong and sustainable growth? And how does the World Bank think about this? What’s the framing? MR. MALPASS: I’ll tell you my view and then bring in the World Bank. I think economics is pretty clear that you need to have some money as a starting point. You need to have a system of taxation that's not too distorted. I think that's best done by having taxes at a low rate on a broad base. That's the revenue creation goal of a tax system. Governments that provide restraint on their own spending, but more importantly provide a regulatory framework for people to operate in a free environment. That means the rule of law. That means some clarity in terms of how the rules and regulations change over time. And so those are critical in order to getting growth because we know that growth comes from people, and often people at the bottom, having an opportunity. This idea that was featured at the G20 this weekend of an ‘opportunity society’ is, I think, really important—that people have to feel like they can try something and see if it works. Either that's a new kind of job skill, or changing colleges or other things, or getting to go to high school, even. For a lot of developing countries, the first step toward growth is being allowed to go into seventh grade or eighth grade, which in a lot of countries still is not allowed. As far as how does the World Bank interact with that system: the Bank is active in governance processes and rule of law. One of the things in the Transparency Initiative that I can go through for you is the importance of knowing within a country who has the right to sign a contract on behalf of the government, because many countries don't have clarity on that. So you're the lender; you come in, and you get Joe or Janet to sign the contract and it hasn't really been scrutinized by other parts of the Government. We want to see a governance process that can make some sensible choices. We can provide technical assistance to build the capacities, because a lot of countries just don't have the people that can think about the contracting environment. You need, of course, to have an environment that invites new investment—both private sector investment and infrastructure investment, some of which comes from the governments themselves. We do a lot of work in that area. And vitally important is human capital, which is people’s skills and the education system. We have an education poverty index, the Learning Poverty Index, which is a simple measurement that’s done globally for a lot of countries, maybe over 150 countries, which asks: of children at age 10, what percentage can read a basic story? It's a simple indicator, and it allows you then to tie back to countries: Why? What's the obstacles? And really focus on more learning. Health is critical and there's a lot of time on that. Climate and the environment and the ability to withstand changes in climate and extreme weather conditions is important for a huge portion of the world’s poor. They tend to live closer to sea level, or—that’s a broad statement—but many of them, millions and even hundreds of millions live close to sea level without very much protection. And other aspects of that are important. The Bank works in all those areas but the starting point, I think, is the structure of an economy That’s basically market-based rather than monopolies. One of the hardest things that we fight against is capture by state-owned enterprises or by the military. Many countries still have systems where there's a bias in favor of businesses owned by the military or by state-owned enterprises, and that really undercuts the innovation of the economy. MODERATOR: Very good. So staying on the growth theme for just a moment, one of the things you mentioned was female labor force participation and one of the things that was brought up yesterday by Federal Reserve Bank of Cleveland President Loretta Mester was really the very significant increase in the female participation rate, here in the US. And when I was researching ideas to pose to you, I was quite struck by the decline globally in the female participation rate, from some of the data from the World Bank. How do you think about female engagement in the labor force and the dividend for growth? MR. MALPASS: This is one of the strongest points of economics—you know, economists can argue about 2.5% growth or 3.5% growth, but one thing that that they can agree on is the vital portion that women can provide into an economy, and we see it every day, in terms of women being just additive from a straight GDP standpoint, but then also very importantly, creating different kinds of innovation than a man might think off. Oftentimes being better at negotiating a favorable outcome than a man might be, so getting that participation is vital, everywhere in the world. Some countries are going up, and we've been encouraged—the World Bank does a lot of reporting on this. I was just in Dubai a week ago for the Global Women’s Summit. One of the things the World Bank tries to do, and does very effectively, is lean on governments, often male-headed governments, to change the laws of the country so that women can own businesses or can have a passport or can take a job in different sectors of the economy, can have pay that goes up rather than going sideways. And it's been actually I think one of the bigger successes of world development over the last let's say 10 years because it's relatively recent that countries are changing their laws to allow fuller participation by women in the economy, and then they get better results out of it. We do an important report called the Women, Business and the Law, WBL, which documents the rules changes. One part of development is just keeping track of which countries actually change their laws in a positive way that empowers women. It just came out two weeks ago; it's a big report, and it gives a blow-by-blow of which countries were making progress. I'm cautiously optimistic, but to your point: I was in Pakistan in October, and the participation rate for women in their economy is still really low. Like 25% even. And so what that means is a whole group of important economic contributors is screened out at the get-go. They have an additional problem which is girls go to school for a while but then they stop and they’re not schooled in Secondary Schools and much less in higher education that's readily available for girls. That leads to lower skills. We could spend the whole hour on this topic because it's one that's clearly economically beneficial. There is some progress being made, and it's identifiable enough what needs to be done in which countries in order to get more progress. MODERATOR: Interesting. So, staying with the theme of the building blocks of growth. Another topic that came up yesterday in a really great session—get the slides if you haven't seen them—it was the climate change session. You know research suggests that the effects of climate change will disproportionately affect the countries that are already struggling to develop, as you mentioned. Is the solution well-targeted public and private investment, and how is the World Bank thinking about the drivers of growth, and climate change? It’s a fairly broad question. MR. MALPASS: Let me address that by, I’m not sure I got the whole question, but the answer is, what the World Bank is doing. So, there is a big program in order to invest or make loans in ways that address climate issues, and countries have different programs in what they're trying to do within their climate commitments that the Bank can support those. Over the next five years there's a target, a commitment by the Bank of doing $200 billion in climate co-benefits. To put it in perspective, there are lots and lots of international organizations from the United Nations to the European Bank for Reconstruction and Development, if you’re familiar with the IMF, and on down. All of those, if you put all of the rest together, the World Bank does half of the total in terms of climate and environment investments in countries. The types of things that are done are adaptations so that people are prepared for climate changes and for extreme weather conditions and our lives are preserved. There's disaster relief—I was in Mozambique in April after the Cyclone hit, and the World Bank can provide immediate funding and has Windows or tools that are fast dispersing. A lot of times, the biggest thing that can be done is responding quickly. And then there's preparedness. We strongly encourage and work with countries on ways that they can be prepared for change. And there's all sorts of mitigation, so we think about low carbon. There's around the world still glaring anomalies within the carbon environment: Germany continuing to burn a lot of coal; Pakistan still signing contracts for new coal, and in other parts of the world still, an expansion of that. And then there are a lot of developing countries that still have such difficulty in their electricity sectors that they're using bunker fuel and diesel fuel to make electricity, which is one of the most costly parts of a higher carbon environment that we're in. Those are all different aspects of change that can go on and I think focusing country by country and region by region on things that will really improve the outcome is really where people can be focused. MODERATOR: Thank you. MR. MALPASS: Yeah, I you know I’ve left out, there’s a whole range. Water usage is a critical part of the whole eco-system and that gets into the crop cycle. The Bank is very involved in trying to help countries use better fertilizer, much lower quantities of fertilizer that that will allow more productivity for crops. One anomaly, or one harmful thing in the world is countries choose to grow crops not based on whether it's environmentally sustainable, but whether there's a special interest that wants that crop, whether it's cotton or rice or wheat in parts of the world that don’t need those, and on down the list. In the US, we're aware of the sugar anomaly, and it uses up, it drains a lot from other environmental resources. And I wanted to mention also one of our bigger new programs is in China—the marine plastic problem. China has fallen into the habit of putting plastic into rivers and then it goes into oceans. Many are aware of that as a major problem within environmental processes so we're working on it; we have a loan going through right now that addresses how farmers use plastic, to try to discourage that plastic from finding its way to rivers, which is an important new aspect so we're doing the marine plastic undertakings in Indonesia, in the Caribbean, and other places to try to reduce that overhead. MODERATOR: Let me go to some of the questions that we have in the few minutes that we have left. It's always interesting, the questions you submit when they're anonymous. So is the World Bank operating differently versus the previous administration. If so, how? MR. MALPASS: Thanks, I began with the World Bank in April 2019. To an extent there’s a lot of inertia in organizations, but I think we're making very positive changes. One of the things I've wanted the Bank to do is focus on good development outcomes. That means country by country and region by region, for example for the Sahel or the Horn of Africa, and that focuses this big, very talented staff on thinking about how do we get a good outcome in Nigeria, how do we get a good outcome in Ethiopia, and around the world, in China and India and other places around the world. I think it's a good healthy focus for the Bank and people are really energized about that. We're doing what we call a realignment or a global footprint to put more resources near the client. The bank has a huge number of offices around the world and we will be putting more practice managers into regional offices, rather than DC, which allows them to connect well with clients and do the job well within that. And it's putting the resources, and the decision-making in a shorter process. Those are all inside baseball; they’re ways to make the Bank function well. We’re in the process of recruiting a new chief economist, and the economic role is very important in the Bank. We also have two new very senior women in the Bank. Mari Pangestu is in DC this week, I'm very happy that she will start at the Bank on March 1. And Anshula Kant became our Chief Financial Officer in September. These are very strong, luminary women at the top of the Bank. Anshula Kant was just at the G20 in Riyadh this weekend with Finance Ministers from around the world. She's speaking on behalf of the Bank and showing the strength of the leadership of the World Bank in terms of addressing some of the challenges. People all want to talk about what the challenges are, but what I'm trying to do is have us focus very much on individual solutions—let’s break it down for this country, what change can we actually hope for and encourage? MODERATOR: That actually speaks to the next question. Maybe our last question, we will try to sneak in two. You highlight the ways that the current policy mix in Europe may not be working. What are the specific policies, you would advocate for changes? MR. MALPASS: People have written for 20 years about this. One is labor mobility which I mentioned, meaning the ability of people to change jobs, and to get new skills. That just hasn't been working well. Small business credit is the second major problem for Europe, and I think we have to examine is central bank policy where they buy long term government instruments so that's a heavy bias in the system away from where you’re trying to go which is to get small business dynamism started up. Of course, the efficiency of government spending is important, but some European countries have better systems than others in that, so I would say better uniformity around Europe on the quality of government spending would be important. I think the regulatory policies have to be looked at as far as why is it that a lot of the innovative capital and innovative investing is done maybe from Europe, but into places where the businesses start somewhere outside of continental Europe. That should be a focus. MODERATOR: Interesting. And one last question before we wrap up. What is the World Bank's response to the coronavirus outbreak? MR. MALPASS: [Inaudible] Coronavirus is topic number one. We are looking at ways to respond or to make available resources for developing countries, as it goes and we're also very closely coordinated with WHO, the World Health Organization, which is one of the frontline providers on that. We have a range of tools that the Bank can use as a pandemic spreads. MODERATOR: Please join me in thanking President Malpass [Applause]  This transcript has been edited for clarity. ","date":"2020-02-25T16:10:00Z","contenttype":"Speeches and Transcripts"},"_541cf182f52331b6be9a2a48bc87da2e2cfd7685":{"id":"541cf182f52331b6be9a2a48bc87da2e2cfd7685","title":"Digital Financial Services and Cross-Border Payments","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/02/23/digital-financial-services-and-cross-border-payments","descr":"Remarks by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, delivered at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/02/23/digital-financial-services-and-cross-border-payments","wcmsource":"cq5","content":" Digital Financial ServicesThe World Bank Group works with governments and the private sector to expand access to financial services to promote economic development and end poverty.For almost a third of adults around the world, the most basic aspects of day-to-day life are harder because they cannot get access to the financial services they need to store and save money, make payments and get credit.In addition to these, other benefits have been shown to accrue to the poor through Digital Financial Services (DFS) such as:     - Resiliency to shocks,     - Increased employment opportunities, and     - Empowering women.Digitization of financial services has made it cheaper for financial service providers to offer financial services to the poor.Through both its lending and advisory instruments, the World Bank Group helps countries implement policy changes that promote the growth of DFS by addressing the key cost drivers that have made the poor un-bankable. These include:     - Opening financial markets,     - Enabling simplified due-diligence and e-KYC (Know Your Customer),     - Legal and regulatory reform – as well as physical infrastructure, and     - Digitizing government-to-person (G2P) payments.The World Bank Group has been involved/helped launch a number of agendas/targets, including the Bali FinTech Agenda, Universal Financial Access 2020 Agenda, Digital Economy for Africa Initiative (DE4A), and Identification for Development (ID4D). IFC has invested in and provided technical assistance to DFS players. Cross-Border PaymentsThe World Bank Group welcomes the focus on cross-border payments. It is important and timely, given the impact of inefficiencies in cross-border payment arrangements on global trade, the digital economy and international remittances. Inefficiencies in cross-border payments impact emerging markets and developing economies (EMDEs) significantly, especially because international remittances are a significant portion of GDP for many EDMEs.The World Bank, in response to the call from G7 and G20, set up a comprehensive program on international remittances. The collective efforts of the global community brought the global average cost of international remittances from over 10 percent to 6.82 percent (Q4 2019) over the last decade. The World Bank is also participating in the FSB-CPMI cross-border payments group and supporting a series of different regional or global initiatives such as the Arab Regional Payments System or the ID4D.The importance of the reductions in the cost of cross-border payments cannot be understated: for every one percent drop in remittance prices, around $6.89 billion becomes available annually to migrant workers. We need to intensify our efforts to enable further reductions in the cost of cross-border payments by leveraging improvements in domestic payments.  ","content_1000":" Digital Financial ServicesThe World Bank Group works with governments and the private sector to expand access to financial services to promote economic development and end poverty.For almost a third of adults around the world, the most basic aspects of day-to-day life are harder because they cannot get access to the financial services they need to store and save money, make payments and get credit.In addition to these, other benefits have been shown to accrue to the poor through Digital Financial Services (DFS) such as:     - Resiliency to shocks,     - Increased employment opportunities, and     - Empowering women.Digitization of financial services has made it cheaper for financial service providers to offer financial services to the poor.Through both its lending and advisory instruments, the World Bank Group helps countries implement policy changes that promote the growth of DFS by addressing the key cost drivers that have made the poor u","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"541cf182f52331b6be9a2a48bc87da2e2cfd7685","wn_title":"Digital Financial Services and Cross-Border Payments","wn_desc":" Digital Financial ServicesThe World Bank Group works with governments and the private sector to expand access to financial services to promote economic development and end poverty.For almost a third of adults around the world, the most basic aspects of day-to-day life are harder because they cannot get access to the financial services they need to store and save money, make payments and get credit.In addition to these, other benefits have been shown to accrue to the poor through Digital Financial Services (DFS) such as:     - Resiliency to shocks,     - Increased employment opportunities, and     - Empowering women.Digitization of financial services has made it cheaper for financial service providers to offer financial services to the poor.Through both its lending and advisory instruments, the World Bank Group helps countries implement policy changes that promote the growth of DFS by addressing the key cost drivers that have made the poor un-bankable. These include:     - Opening financial markets,     - Enabling simplified due-diligence and e-KYC (Know Your Customer),     - Legal and regulatory reform – as well as physical infrastructure, and     - Digitizing government-to-person (G2P) payments.The World Bank Group has been involved/helped launch a number of agendas/targets, including the Bali FinTech Agenda, Universal Financial Access 2020 Agenda, Digital Economy for Africa Initiative (DE4A), and Identification for Development (ID4D). IFC has invested in and provided technical assistance to DFS players. Cross-Border PaymentsThe World Bank Group welcomes the focus on cross-border payments. It is important and timely, given the impact of inefficiencies in cross-border payment arrangements on global trade, the digital economy and international remittances. Inefficiencies in cross-border payments impact emerging markets and developing economies (EMDEs) significantly, especially because international remittances are a significant portion of GDP for many EDMEs.The World Bank, in response to the call from G7 and G20, set up a comprehensive program on international remittances. The collective efforts of the global community brought the global average cost of international remittances from over 10 percent to 6.82 percent (Q4 2019) over the last decade. The World Bank is also participating in the FSB-CPMI cross-border payments group and supporting a series of different regional or global initiatives such as the Arab Regional Payments System or the ID4D.The importance of the reductions in the cost of cross-border payments cannot be understated: for every one percent drop in remittance prices, around $6.89 billion becomes available annually to migrant workers. We need to intensify our efforts to enable further reductions in the cost of cross-border payments by leveraging improvements in domestic payments.  ","upi":"000512825","master_date":"2020-02-23T16:55:00Z","master_date_srt":"2020-02-23T16:55:00Z","master_recent_date_srt":"2020-02-23T16:55:00Z","master_recent_date":"2020-02-23T16:55:00Z","short_description":"Remarks by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, delivered at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Digital Financial ServicesThe World Bank Group works with governments and the private sector to expand access to financial services to promote economic development and end poverty.For almost a third of adults around the world, the most basic aspects of day-to-day life are harder because they cannot get access to the financial services they need to store and save money, make payments and get credit.In addition to these, other benefits have been shown to accrue to the poor through Digital Financial Services (DFS) such as:     - Resiliency to shocks,     - Increased employment opportunities, and     - Empowering women.Digitization of financial services has made it cheaper for financial service providers to offer financial services to the poor.Through both its lending and advisory instruments, the World Bank Group helps countries implement policy changes that promote the growth of DFS by addressing the key cost drivers that have made the poor un-bankable. These include:     - Opening financial markets,     - Enabling simplified due-diligence and e-KYC (Know Your Customer),     - Legal and regulatory reform – as well as physical infrastructure, and     - Digitizing government-to-person (G2P) payments.The World Bank Group has been involved/helped launch a number of agendas/targets, including the Bali FinTech Agenda, Universal Financial Access 2020 Agenda, Digital Economy for Africa Initiative (DE4A), and Identification for Development (ID4D). IFC has invested in and provided technical assistance to DFS players. Cross-Border PaymentsThe World Bank Group welcomes the focus on cross-border payments. It is important and timely, given the impact of inefficiencies in cross-border payment arrangements on global trade, the digital economy and international remittances. Inefficiencies in cross-border payments impact emerging markets and developing economies (EMDEs) significantly, especially because international remittances are a significant portion of GDP for many EDMEs.The World Bank, in response to the call from G7 and G20, set up a comprehensive program on international remittances. The collective efforts of the global community brought the global average cost of international remittances from over 10 percent to 6.82 percent (Q4 2019) over the last decade. The World Bank is also participating in the FSB-CPMI cross-border payments group and supporting a series of different regional or global initiatives such as the Arab Regional Payments System or the ID4D.The importance of the reductions in the cost of cross-border payments cannot be understated: for every one percent drop in remittance prices, around $6.89 billion becomes available annually to migrant workers. We need to intensify our efforts to enable further reductions in the cost of cross-border payments by leveraging improvements in domestic payments.  ","date":"2020-02-23T16:55:00Z","contenttype":"Speeches and Transcripts"},"_3a45285092f406fa986717f165697244bf220a37":{"id":"3a45285092f406fa986717f165697244bf220a37","title":"Domestic Capital Markets & Debt Transparency and Sustainability","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/02/23/domestic-capital-markets-debt-transparency-and-sustainability","descr":"Remarks made by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/02/23/domestic-capital-markets-debt-transparency-and-sustainability","wcmsource":"cq5","content":" Developing Domestic Capital MarketsA well-functioning and liquid domestic capital market provides a stable source of funding during normal times and provides a buffer during times of crisis. Importantly, meeting the additional financing needs required to fulfill the Sustainable Development Goals by 2030 will require sustained financing flows backed by public and private capital, making this agenda more important for Emerging Market Economies than ever before.While the importance of capital markets is undeniable, not all countries are in a position to develop deep and liquid private markets as many lack key basic preconditions. Requisite preconditions include robust macroeconomic conditions, an appropriate level of financial sector development and/or institutional environment.The World Bank Group launched the WB-IFC Joint Capital Markets Initiative (J-CAP) in 2017 to accelerate progress in developing capital markets in priority countries. Six priority countries and one sub-region have been targeted in the first phase: Bangladesh, Indonesia, Kenya, Morocco, Peru, Vietnam, and the WAEMU region and implementation has begun with early successes.Additionally, the World Bank Group has also developed new frameworks to enhance efforts to strengthen Local Currency Bond Markets (LCBMs) in emerging markets.For sovereigns, the World Bank and IMF have developed a new framework that identifies priority actions for each of six ‘building blocks’ to improve the functioning of government debt markets. The building blocks are: money markets, primary markets, investor base, secondary markets, financial market infrastructure, and legal and regulatory system.For corporates, new Bank guidance that highlights how financing for small and medium enterprise can be scaled also fills an important knowledge gap. Debt Transparency and Sustainability With the world facing relatively slow growth, we think increased debt and investment transparency is urgent to increase investment flows and make debt and investment more productive.   To this end, I would like to invite everyone’s comments and suggestions on the following recommendations: Eliminating the use of contracts with excessive confidentiality clauses.  Where these exist, we are encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting.Limiting the use of collateralized transactions and improving their disclosure. Not all collateralized borrowing is bad, as discussed in our recent joint WB-IMF paper on key considerations for collateralized transactions. But creditors and borrowers need to establish sound institutions and legal processes to promote desirable development outcomes. In particular, collateralized transactions and debt-equivalent instruments should be fully disclosed.Avoiding creditors’ violation of legal requirements of other creditors, such as negative pledge clauses. When contract terms are breached, it can cause substantial delays in IMF programs and new funding. We invite the G20 to take a strong stand against violations of the contractual terms of multilateral creditors including the World Bank.Asking official lenders to publish templates of their loan contracts.  I invite the G20 to endorse this suggestion. Promoting better disclosure of State-Owned Enterprise (SOE) debt. SOE debt needs to be understood more thoroughly and, in many cases, taken into account in debt sustainability analyses as sovereign debt. We are compiling an SOE debt database. Currently, the SOE database includes more than 9,000 loans owed by 900 SOEs in 94 countries and is growing steadily.The Bank is updating our non-concessional borrowing policy (NCBP).  The goal is to avoid the moral hazard that occurs if a country receives grants and uses the debt space to borrow on non-concessional terms. IDA19 creates a framework for addressing this problem through the Sustainable Development Financing Policy (SDFP). It aims to provide the right incentives to make debt transparent and sustainable.We are also piloting debt transparency reforms in several countries in order to advance such reforms and draw lessons for other countries.Investing in capacity development. As our recent joint WB-IMF paper on public debt definitions and reporting in low-income countries shows, while international statistical standards for public sector debt statistics are sound, there is significant room for better compilation, reporting, and dissemination of public sector debt data. Capacity development, as provided through the joint Bank-Fund Debt Management Facility, will remain critical in this regard.Promoting timely and comprehensive debt restructuring with fair burden-sharing across creditors. An inclusive creditor forum is necessary to ensure that debt restructuring efforts are comprehensive and coordinated. We strongly believe that the G20 provides an excellent platform to make progress on this very important issue. We look forward to your suggestions on our lines of work and your support.","content_1000":" Developing Domestic Capital MarketsA well-functioning and liquid domestic capital market provides a stable source of funding during normal times and provides a buffer during times of crisis. Importantly, meeting the additional financing needs required to fulfill the Sustainable Development Goals by 2030 will require sustained financing flows backed by public and private capital, making this agenda more important for Emerging Market Economies than ever before.While the importance of capital markets is undeniable, not all countries are in a position to develop deep and liquid private markets as many lack key basic preconditions. Requisite preconditions include robust macroeconomic conditions, an appropriate level of financial sector development and/or institutional environment.The World Bank Group launched the WB-IFC Joint Capital Markets Initiative (J-CAP) in 2017 to accelerate progress in developing capital markets in priority countries. Six priority countries and one sub-region have ","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"3a45285092f406fa986717f165697244bf220a37","wn_title":"Domestic Capital Markets & Debt Transparency and Sustainability","wn_desc":" Developing Domestic Capital MarketsA well-functioning and liquid domestic capital market provides a stable source of funding during normal times and provides a buffer during times of crisis. Importantly, meeting the additional financing needs required to fulfill the Sustainable Development Goals by 2030 will require sustained financing flows backed by public and private capital, making this agenda more important for Emerging Market Economies than ever before.While the importance of capital markets is undeniable, not all countries are in a position to develop deep and liquid private markets as many lack key basic preconditions. Requisite preconditions include robust macroeconomic conditions, an appropriate level of financial sector development and/or institutional environment.The World Bank Group launched the WB-IFC Joint Capital Markets Initiative (J-CAP) in 2017 to accelerate progress in developing capital markets in priority countries. Six priority countries and one sub-region have been targeted in the first phase: Bangladesh, Indonesia, Kenya, Morocco, Peru, Vietnam, and the WAEMU region and implementation has begun with early successes.Additionally, the World Bank Group has also developed new frameworks to enhance efforts to strengthen Local Currency Bond Markets (LCBMs) in emerging markets.For sovereigns, the World Bank and IMF have developed a new framework that identifies priority actions for each of six ‘building blocks’ to improve the functioning of government debt markets. The building blocks are: money markets, primary markets, investor base, secondary markets, financial market infrastructure, and legal and regulatory system.For corporates, new Bank guidance that highlights how financing for small and medium enterprise can be scaled also fills an important knowledge gap. Debt Transparency and Sustainability With the world facing relatively slow growth, we think increased debt and investment transparency is urgent to increase investment flows and make debt and investment more productive.   To this end, I would like to invite everyone’s comments and suggestions on the following recommendations: Eliminating the use of contracts with excessive confidentiality clauses.  Where these exist, we are encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting.Limiting the use of collateralized transactions and improving their disclosure. Not all collateralized borrowing is bad, as discussed in our recent joint WB-IMF paper on key considerations for collateralized transactions. But creditors and borrowers need to establish sound institutions and legal processes to promote desirable development outcomes. In particular, collateralized transactions and debt-equivalent instruments should be fully disclosed.Avoiding creditors’ violation of legal requirements of other creditors, such as negative pledge clauses. When contract terms are breached, it can cause substantial delays in IMF programs and new funding. We invite the G20 to take a strong stand against violations of the contractual terms of multilateral creditors including the World Bank.Asking official lenders to publish templates of their loan contracts.  I invite the G20 to endorse this suggestion. Promoting better disclosure of State-Owned Enterprise (SOE) debt. SOE debt needs to be understood more thoroughly and, in many cases, taken into account in debt sustainability analyses as sovereign debt. We are compiling an SOE debt database. Currently, the SOE database includes more than 9,000 loans owed by 900 SOEs in 94 countries and is growing steadily.The Bank is updating our non-concessional borrowing policy (NCBP).  The goal is to avoid the moral hazard that occurs if a country receives grants and uses the debt space to borrow on non-concessional terms. IDA19 creates a framework for addressing this problem through the Sustainable Development Financing Policy (SDFP). It aims to provide the right incentives to make debt transparent and sustainable.We are also piloting debt transparency reforms in several countries in order to advance such reforms and draw lessons for other countries.Investing in capacity development. As our recent joint WB-IMF paper on public debt definitions and reporting in low-income countries shows, while international statistical standards for public sector debt statistics are sound, there is significant room for better compilation, reporting, and dissemination of public sector debt data. Capacity development, as provided through the joint Bank-Fund Debt Management Facility, will remain critical in this regard.Promoting timely and comprehensive debt restructuring with fair burden-sharing across creditors. An inclusive creditor forum is necessary to ensure that debt restructuring efforts are comprehensive and coordinated. We strongly believe that the G20 provides an excellent platform to make progress on this very important issue. We look forward to your suggestions on our lines of work and your support.","upi":"000512825","master_date":"2020-02-23T14:03:00Z","master_date_srt":"2020-02-23T14:03:00Z","master_recent_date_srt":"2020-02-23T14:03:00Z","master_recent_date":"2020-02-23T14:03:00Z","short_description":"Remarks made by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Developing Domestic Capital MarketsA well-functioning and liquid domestic capital market provides a stable source of funding during normal times and provides a buffer during times of crisis. Importantly, meeting the additional financing needs required to fulfill the Sustainable Development Goals by 2030 will require sustained financing flows backed by public and private capital, making this agenda more important for Emerging Market Economies than ever before.While the importance of capital markets is undeniable, not all countries are in a position to develop deep and liquid private markets as many lack key basic preconditions. Requisite preconditions include robust macroeconomic conditions, an appropriate level of financial sector development and/or institutional environment.The World Bank Group launched the WB-IFC Joint Capital Markets Initiative (J-CAP) in 2017 to accelerate progress in developing capital markets in priority countries. Six priority countries and one sub-region have been targeted in the first phase: Bangladesh, Indonesia, Kenya, Morocco, Peru, Vietnam, and the WAEMU region and implementation has begun with early successes.Additionally, the World Bank Group has also developed new frameworks to enhance efforts to strengthen Local Currency Bond Markets (LCBMs) in emerging markets.For sovereigns, the World Bank and IMF have developed a new framework that identifies priority actions for each of six ‘building blocks’ to improve the functioning of government debt markets. The building blocks are: money markets, primary markets, investor base, secondary markets, financial market infrastructure, and legal and regulatory system.For corporates, new Bank guidance that highlights how financing for small and medium enterprise can be scaled also fills an important knowledge gap. Debt Transparency and Sustainability With the world facing relatively slow growth, we think increased debt and investment transparency is urgent to increase investment flows and make debt and investment more productive.   To this end, I would like to invite everyone’s comments and suggestions on the following recommendations: Eliminating the use of contracts with excessive confidentiality clauses.  Where these exist, we are encouraging borrowers to request relief from the clause in order to proceed with transparent data reporting.Limiting the use of collateralized transactions and improving their disclosure. Not all collateralized borrowing is bad, as discussed in our recent joint WB-IMF paper on key considerations for collateralized transactions. But creditors and borrowers need to establish sound institutions and legal processes to promote desirable development outcomes. In particular, collateralized transactions and debt-equivalent instruments should be fully disclosed.Avoiding creditors’ violation of legal requirements of other creditors, such as negative pledge clauses. When contract terms are breached, it can cause substantial delays in IMF programs and new funding. We invite the G20 to take a strong stand against violations of the contractual terms of multilateral creditors including the World Bank.Asking official lenders to publish templates of their loan contracts.  I invite the G20 to endorse this suggestion. Promoting better disclosure of State-Owned Enterprise (SOE) debt. SOE debt needs to be understood more thoroughly and, in many cases, taken into account in debt sustainability analyses as sovereign debt. We are compiling an SOE debt database. Currently, the SOE database includes more than 9,000 loans owed by 900 SOEs in 94 countries and is growing steadily.The Bank is updating our non-concessional borrowing policy (NCBP).  The goal is to avoid the moral hazard that occurs if a country receives grants and uses the debt space to borrow on non-concessional terms. IDA19 creates a framework for addressing this problem through the Sustainable Development Financing Policy (SDFP). It aims to provide the right incentives to make debt transparent and sustainable.We are also piloting debt transparency reforms in several countries in order to advance such reforms and draw lessons for other countries.Investing in capacity development. As our recent joint WB-IMF paper on public debt definitions and reporting in low-income countries shows, while international statistical standards for public sector debt statistics are sound, there is significant room for better compilation, reporting, and dissemination of public sector debt data. Capacity development, as provided through the joint Bank-Fund Debt Management Facility, will remain critical in this regard.Promoting timely and comprehensive debt restructuring with fair burden-sharing across creditors. An inclusive creditor forum is necessary to ensure that debt restructuring efforts are comprehensive and coordinated. We strongly believe that the G20 provides an excellent platform to make progress on this very important issue. We look forward to your suggestions on our lines of work and your support.","date":"2020-02-23T14:03:00Z","contenttype":"Speeches and Transcripts"},"_9527deb5b0c2ba288b04e84becbc35ed52b2c741":{"id":"9527deb5b0c2ba288b04e84becbc35ed52b2c741","title":"Addressing Learning Poverty","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/02/22/addressing-learning-poverty","descr":"Remarks delivered by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/02/22/addressing-learning-poverty","wcmsource":"cq5","content":"Enhancing opportunities can lead to more durable, inclusive growth. This requires closing the gaps in access to opportunities that emerge at birth and accumulate through life: pre-natal care, nutrition, healthcare, quality education, and safety in childhood, to finance, jobs and technology as adults.Foundational skills (basic literacy and numeracy) are necessary stepping stones to facilitate access to opportunities in education and in the labor market, and even more so with the rapid changes induced by technology and globalization that require workers to be adaptable to new skills.More children are in school than ever before, but even if in school, many children are not acquiring fundamental skills.53 percent of the children in developing countries cannot read and understand a basic story by age 10. In poor countries, the figure is 80 percent.To galvanize action, the World Bank announced a new global learning target: to cut at least in half, by 2030, the share of 10-year-olds (in low-income and middle-income countries) who cannot read and understand a basic story: we called this indicator “Learning Poverty.”To achieve our Learning Poverty goals, the Bank is advocating a two-pronged approach:A Literacy Policy Package constituting interventions aimed at ensuring children acquire reading proficiency in primary school.Strengthening the education system – through a five-pillar Education Approach – to build on and sustain gains in literacy. This includes: preparing learners for school; effective and valued teachers; classrooms as effective learning spaces; safe and inclusive schools; and well managed education systems.The Bank is organizing its support to countries through a new collaborative Foundational Learning Compact focused on measurement; policy; and knowledge and implementation capacity building. Some examples of current World Bank operations focused on reducing learning poverty:In the Gambia Results for Education Achievement and Development (READ) project, children are taught first in one of seven native languages, and teachers trained and provided with structured lessons. An evaluation found that children under the home language program read with a higher fluency in English in grades 1–3 compared to the children in other programs. Learning to read in a language they understand provides them with a better foundation to then learn English. The heavy emphasis on learning to read in a mother tongue language is aligned with the government’s own strategy as well as best practices in reading acquisition.Cambodia has implemented a “Track and Trace” system to show textbook locations in real time. This technology allows government officials, school-level stakeholders such as support committees, parent associations, local partners, and distributors to track the ordering and distribution of books and other supplies to ensure that they reach classrooms in a timely manner and in the right condition for children to learn.","content_1000":"Enhancing opportunities can lead to more durable, inclusive growth. This requires closing the gaps in access to opportunities that emerge at birth and accumulate through life: pre-natal care, nutrition, healthcare, quality education, and safety in childhood, to finance, jobs and technology as adults.Foundational skills (basic literacy and numeracy) are necessary stepping stones to facilitate access to opportunities in education and in the labor market, and even more so with the rapid changes induced by technology and globalization that require workers to be adaptable to new skills.More children are in school than ever before, but even if in school, many children are not acquiring fundamental skills.53 percent of the children in developing countries cannot read and understand a basic story by age 10. In poor countries, the figure is 80 percent.To galvanize action, the World Bank announced a new global learning target: to cut at least in half, by 2030, the share of 10-year-olds (in low-i","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations, ECR","originating_unit_exact":"External and Corporate Relations, ECR","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"9527deb5b0c2ba288b04e84becbc35ed52b2c741","wn_title":"Addressing Learning Poverty","wn_desc":"Enhancing opportunities can lead to more durable, inclusive growth. This requires closing the gaps in access to opportunities that emerge at birth and accumulate through life: pre-natal care, nutrition, healthcare, quality education, and safety in childhood, to finance, jobs and technology as adults.Foundational skills (basic literacy and numeracy) are necessary stepping stones to facilitate access to opportunities in education and in the labor market, and even more so with the rapid changes induced by technology and globalization that require workers to be adaptable to new skills.More children are in school than ever before, but even if in school, many children are not acquiring fundamental skills.53 percent of the children in developing countries cannot read and understand a basic story by age 10. In poor countries, the figure is 80 percent.To galvanize action, the World Bank announced a new global learning target: to cut at least in half, by 2030, the share of 10-year-olds (in low-income and middle-income countries) who cannot read and understand a basic story: we called this indicator “Learning Poverty.”To achieve our Learning Poverty goals, the Bank is advocating a two-pronged approach:A Literacy Policy Package constituting interventions aimed at ensuring children acquire reading proficiency in primary school.Strengthening the education system – through a five-pillar Education Approach – to build on and sustain gains in literacy. This includes: preparing learners for school; effective and valued teachers; classrooms as effective learning spaces; safe and inclusive schools; and well managed education systems.The Bank is organizing its support to countries through a new collaborative Foundational Learning Compact focused on measurement; policy; and knowledge and implementation capacity building. Some examples of current World Bank operations focused on reducing learning poverty:In the Gambia Results for Education Achievement and Development (READ) project, children are taught first in one of seven native languages, and teachers trained and provided with structured lessons. An evaluation found that children under the home language program read with a higher fluency in English in grades 1–3 compared to the children in other programs. Learning to read in a language they understand provides them with a better foundation to then learn English. The heavy emphasis on learning to read in a mother tongue language is aligned with the government’s own strategy as well as best practices in reading acquisition.Cambodia has implemented a “Track and Trace” system to show textbook locations in real time. This technology allows government officials, school-level stakeholders such as support committees, parent associations, local partners, and distributors to track the ordering and distribution of books and other supplies to ensure that they reach classrooms in a timely manner and in the right condition for children to learn.","upi":"000512825","master_date":"2020-02-22T14:43:00Z","master_date_srt":"2020-02-22T14:43:00Z","master_recent_date_srt":"2020-02-22T14:43:00Z","master_recent_date":"2020-02-22T14:43:00Z","short_description":"Remarks delivered by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, at the G20 Finance Ministers and Central Bank Governors Meeting in Riyadh, Saudi Arabia","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":"Enhancing opportunities can lead to more durable, inclusive growth. This requires closing the gaps in access to opportunities that emerge at birth and accumulate through life: pre-natal care, nutrition, healthcare, quality education, and safety in childhood, to finance, jobs and technology as adults.Foundational skills (basic literacy and numeracy) are necessary stepping stones to facilitate access to opportunities in education and in the labor market, and even more so with the rapid changes induced by technology and globalization that require workers to be adaptable to new skills.More children are in school than ever before, but even if in school, many children are not acquiring fundamental skills.53 percent of the children in developing countries cannot read and understand a basic story by age 10. In poor countries, the figure is 80 percent.To galvanize action, the World Bank announced a new global learning target: to cut at least in half, by 2030, the share of 10-year-olds (in low-income and middle-income countries) who cannot read and understand a basic story: we called this indicator “Learning Poverty.”To achieve our Learning Poverty goals, the Bank is advocating a two-pronged approach:A Literacy Policy Package constituting interventions aimed at ensuring children acquire reading proficiency in primary school.Strengthening the education system – through a five-pillar Education Approach – to build on and sustain gains in literacy. This includes: preparing learners for school; effective and valued teachers; classrooms as effective learning spaces; safe and inclusive schools; and well managed education systems.The Bank is organizing its support to countries through a new collaborative Foundational Learning Compact focused on measurement; policy; and knowledge and implementation capacity building. Some examples of current World Bank operations focused on reducing learning poverty:In the Gambia Results for Education Achievement and Development (READ) project, children are taught first in one of seven native languages, and teachers trained and provided with structured lessons. An evaluation found that children under the home language program read with a higher fluency in English in grades 1–3 compared to the children in other programs. Learning to read in a language they understand provides them with a better foundation to then learn English. The heavy emphasis on learning to read in a mother tongue language is aligned with the government’s own strategy as well as best practices in reading acquisition.Cambodia has implemented a “Track and Trace” system to show textbook locations in real time. This technology allows government officials, school-level stakeholders such as support committees, parent associations, local partners, and distributors to track the ordering and distribution of books and other supplies to ensure that they reach classrooms in a timely manner and in the right condition for children to learn.","date":"2020-02-22T14:43:00Z","contenttype":"Speeches and Transcripts"},"_5d86df224aa5360ebd08e482770f6b6cd58f4d72":{"id":"5d86df224aa5360ebd08e482770f6b6cd58f4d72","title":"Capital Market Driven Development and the Role of the World Bank Group","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2020/02/10/capital-market-driven-development-and-the-role-of-the-world-bank-group","descr":"Speech by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer.","lang":{"0":{"cdata!":"English"}},"cqpath":"/content/wb-home/en/news/speech/2020/02/10/capital-market-driven-development-and-the-role-of-the-world-bank-group","wcmsource":"cq5","content":" Dear Prime Minister and Head of Government, dear Minister of Economy and Finance of Côte d’Ivoire, dear Minister of Finance of Benin and President of the WAEMU Council of Ministers, dear Ambassadors, dear President of CREPMF, dear President of the WAEMU Commission, dear Vice-Governor of BCEAO, and dear honorable guests and participants, let me extend my sincerest gratitude for your support of this important event. Your hospitality is impeccable, and it is a pleasure for me to be here with all of you in this beautiful country.  I would like to especially thank the CREPMF for its support and great partnership. You have been instrumental in developing WAEMU’s capital markets. This event is a milestone for the WAEMU region and for the World Bank Group.  The turnout in this room is a testament to the interest and expectations of the future of WAEMU’s capital markets. The agenda for the coming two days is packed with a wide spectrum of important topics, ranging from policy discussions on how to strengthen the sovereign debt market and the domestic investor base, to technical working sessions on credit risk, the innovations of fintech and the financing of key sectors, such as infrastructure, housing and SMEs.   This will be an exciting time. I am delighted to be with you and to have the opportunity to discuss WAEMU’s capital markets development. This is also a great opportunity to discuss ways to connect those to the regional and international investors of the world, so as to create a key channel of financing for the region’s investment needs. The World Bank Group views local capital markets as critical to accelerating the sustainable economic growth needed to broaden prosperity and reduce poverty. Deeper and more efficient equity and debt markets can be more effective in helping to mobilize domestic savings, complementing traditional bank lending by fostering risk-taking and long-term investments. Further, capital markets can protect economies from volatile fluctuations in capital flows and reduce the dependency on foreign debt. Capital markets also promote strong transparency and governance and they provide diversified sources of investment to savers and firms. Looking ahead, capital markets need to play an even bigger role by mobilizing more private capital for key sectors with financing needs, including infrastructure, housing, SME and climate action projects. Unfortunately, many developing countries cannot enjoy these benefits as their local capital markets remain small or inactive. To help countries accelerate the development of their markets and realize the benefits offered, the World Bank Group created the Joint Capital Markets Program, or as we call it, J-CAP. J-CAP was launched in June 2017. It differs from other initiatives as it mobilizes experts across the World Bank Group to deliver country-tailored advice and investments that can create a systemic market impact. Developing capital markets successfully requires a supportive institutional, legal and regulatory framework for institutional and retail investors as well as the issuing companies and banks. For such frameworks to develop, a highly coordinated approach is needed. It requires a wide range of experts and involves a large group of different stakeholders. These include central banks, ministries and regulatory agencies, market infrastructure providers, the private sector, and non-sovereign issuers and investors. In addition to the enabling framework, well-functioning capital markets require strong capacities in asset, risk, and debt management. Lastly, J-CAP includes a powerful investment component as part of which the WBG aims to crowd-in issuers and investors by acting as an anchor investor, risk mitigator, or provider of local currency solutions. J-CAP is focusing initially on six priority countries and one sub-region. For Latin America, this is Peru, in Asia, these are Bangladesh, Indonesia and Vietnam and for Africa, these are Kenya, Morocco and the West African Economic & Monetary Union.  I am proud to say that in the short period of time since JCAP was launched, we have seen significant progress across all seven priority countries in which J-CAP operates. While I leave it to my colleague Sergio to tell some of the success stories of WAEMU, I would like to give you a flavor from those in other parts of the world . For example, in Peru we have been able to promote the financial inclusion of SMEs by investing in a factoring fund that provides them with urgently needed working capital.  In Kenya and Morocco, preparatory work is underway to support infrastructure financing via project bonds.  In Indonesia, we have successfully promoted the climate finance agenda by issuing a green local currency bond and use the proceeds to act as an anchor investor in one of Indonesia’s largest commercial banks. J-CAP is an important strategic effort of the World Bank Group to support WAEMU’s economic development and poverty reduction.  We are thankful to the governments of Australia, Germany, Japan, Luxembourg, Norway, and Switzerland for their backing of J-CAP.  I very much look forward to the rich agenda ahead of us today and tomorrow.  I also look forward to meeting many here today and hearing your insights and perspectives.  I know this conference will be a huge success and I want to again thank our generous hosts here in Côte d’Ivoire.","content_1000":" Dear Prime Minister and Head of Government, dear Minister of Economy and Finance of Côte d’Ivoire, dear Minister of Finance of Benin and President of the WAEMU Council of Ministers, dear Ambassadors, dear President of CREPMF, dear President of the WAEMU Commission, dear Vice-Governor of BCEAO, and dear honorable guests and participants, let me extend my sincerest gratitude for your support of this important event. Your hospitality is impeccable, and it is a pleasure for me to be here with all of you in this beautiful country.  I would like to especially thank the CREPMF for its support and great partnership. You have been instrumental in developing WAEMU’s capital markets. This event is a milestone for the WAEMU region and for the World Bank Group.  The turnout in this room is a testament to the interest and expectations of the future of WAEMU’s capital markets. The agenda for the coming two days is packed with a wide spectrum of important topics, ranging from poli","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations - Corporate Communications, ECRCC","originating_unit_exact":"External and Corporate Relations - Corporate Communications, ECRCC","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"5d86df224aa5360ebd08e482770f6b6cd58f4d72","wn_title":"Capital Market Driven Development and the Role of the World Bank Group","wn_desc":" Dear Prime Minister and Head of Government, dear Minister of Economy and Finance of Côte d’Ivoire, dear Minister of Finance of Benin and President of the WAEMU Council of Ministers, dear Ambassadors, dear President of CREPMF, dear President of the WAEMU Commission, dear Vice-Governor of BCEAO, and dear honorable guests and participants, let me extend my sincerest gratitude for your support of this important event. Your hospitality is impeccable, and it is a pleasure for me to be here with all of you in this beautiful country.  I would like to especially thank the CREPMF for its support and great partnership. You have been instrumental in developing WAEMU’s capital markets. This event is a milestone for the WAEMU region and for the World Bank Group.  The turnout in this room is a testament to the interest and expectations of the future of WAEMU’s capital markets. The agenda for the coming two days is packed with a wide spectrum of important topics, ranging from policy discussions on how to strengthen the sovereign debt market and the domestic investor base, to technical working sessions on credit risk, the innovations of fintech and the financing of key sectors, such as infrastructure, housing and SMEs.   This will be an exciting time. I am delighted to be with you and to have the opportunity to discuss WAEMU’s capital markets development. This is also a great opportunity to discuss ways to connect those to the regional and international investors of the world, so as to create a key channel of financing for the region’s investment needs. The World Bank Group views local capital markets as critical to accelerating the sustainable economic growth needed to broaden prosperity and reduce poverty. Deeper and more efficient equity and debt markets can be more effective in helping to mobilize domestic savings, complementing traditional bank lending by fostering risk-taking and long-term investments. Further, capital markets can protect economies from volatile fluctuations in capital flows and reduce the dependency on foreign debt. Capital markets also promote strong transparency and governance and they provide diversified sources of investment to savers and firms. Looking ahead, capital markets need to play an even bigger role by mobilizing more private capital for key sectors with financing needs, including infrastructure, housing, SME and climate action projects. Unfortunately, many developing countries cannot enjoy these benefits as their local capital markets remain small or inactive. To help countries accelerate the development of their markets and realize the benefits offered, the World Bank Group created the Joint Capital Markets Program, or as we call it, J-CAP. J-CAP was launched in June 2017. It differs from other initiatives as it mobilizes experts across the World Bank Group to deliver country-tailored advice and investments that can create a systemic market impact. Developing capital markets successfully requires a supportive institutional, legal and regulatory framework for institutional and retail investors as well as the issuing companies and banks. For such frameworks to develop, a highly coordinated approach is needed. It requires a wide range of experts and involves a large group of different stakeholders. These include central banks, ministries and regulatory agencies, market infrastructure providers, the private sector, and non-sovereign issuers and investors. In addition to the enabling framework, well-functioning capital markets require strong capacities in asset, risk, and debt management. Lastly, J-CAP includes a powerful investment component as part of which the WBG aims to crowd-in issuers and investors by acting as an anchor investor, risk mitigator, or provider of local currency solutions. J-CAP is focusing initially on six priority countries and one sub-region. For Latin America, this is Peru, in Asia, these are Bangladesh, Indonesia and Vietnam and for Africa, these are Kenya, Morocco and the West African Economic & Monetary Union.  I am proud to say that in the short period of time since JCAP was launched, we have seen significant progress across all seven priority countries in which J-CAP operates. While I leave it to my colleague Sergio to tell some of the success stories of WAEMU, I would like to give you a flavor from those in other parts of the world . For example, in Peru we have been able to promote the financial inclusion of SMEs by investing in a factoring fund that provides them with urgently needed working capital.  In Kenya and Morocco, preparatory work is underway to support infrastructure financing via project bonds.  In Indonesia, we have successfully promoted the climate finance agenda by issuing a green local currency bond and use the proceeds to act as an anchor investor in one of Indonesia’s largest commercial banks. J-CAP is an important strategic effort of the World Bank Group to support WAEMU’s economic development and poverty reduction.  We are thankful to the governments of Australia, Germany, Japan, Luxembourg, Norway, and Switzerland for their backing of J-CAP.  I very much look forward to the rich agenda ahead of us today and tomorrow.  I also look forward to meeting many here today and hearing your insights and perspectives.  I know this conference will be a huge success and I want to again thank our generous hosts here in Côte d’Ivoire.","upi":"000450235","master_date":"2020-02-10T13:34:00Z","master_date_srt":"2020-02-10T13:34:00Z","master_recent_date_srt":"2020-02-10T13:34:00Z","master_recent_date":"2020-02-10T13:34:00Z","short_description":"Speech by Anshula Kant, Managing Director and World Bank Group Chief Financial Officer.","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Dear Prime Minister and Head of Government, dear Minister of Economy and Finance of Côte d’Ivoire, dear Minister of Finance of Benin and President of the WAEMU Council of Ministers, dear Ambassadors, dear President of CREPMF, dear President of the WAEMU Commission, dear Vice-Governor of BCEAO, and dear honorable guests and participants, let me extend my sincerest gratitude for your support of this important event. Your hospitality is impeccable, and it is a pleasure for me to be here with all of you in this beautiful country.  I would like to especially thank the CREPMF for its support and great partnership. You have been instrumental in developing WAEMU’s capital markets. This event is a milestone for the WAEMU region and for the World Bank Group.  The turnout in this room is a testament to the interest and expectations of the future of WAEMU’s capital markets. The agenda for the coming two days is packed with a wide spectrum of important topics, ranging from policy discussions on how to strengthen the sovereign debt market and the domestic investor base, to technical working sessions on credit risk, the innovations of fintech and the financing of key sectors, such as infrastructure, housing and SMEs.   This will be an exciting time. I am delighted to be with you and to have the opportunity to discuss WAEMU’s capital markets development. This is also a great opportunity to discuss ways to connect those to the regional and international investors of the world, so as to create a key channel of financing for the region’s investment needs. The World Bank Group views local capital markets as critical to accelerating the sustainable economic growth needed to broaden prosperity and reduce poverty. Deeper and more efficient equity and debt markets can be more effective in helping to mobilize domestic savings, complementing traditional bank lending by fostering risk-taking and long-term investments. Further, capital markets can protect economies from volatile fluctuations in capital flows and reduce the dependency on foreign debt. Capital markets also promote strong transparency and governance and they provide diversified sources of investment to savers and firms. Looking ahead, capital markets need to play an even bigger role by mobilizing more private capital for key sectors with financing needs, including infrastructure, housing, SME and climate action projects. Unfortunately, many developing countries cannot enjoy these benefits as their local capital markets remain small or inactive. To help countries accelerate the development of their markets and realize the benefits offered, the World Bank Group created the Joint Capital Markets Program, or as we call it, J-CAP. J-CAP was launched in June 2017. It differs from other initiatives as it mobilizes experts across the World Bank Group to deliver country-tailored advice and investments that can create a systemic market impact. Developing capital markets successfully requires a supportive institutional, legal and regulatory framework for institutional and retail investors as well as the issuing companies and banks. For such frameworks to develop, a highly coordinated approach is needed. It requires a wide range of experts and involves a large group of different stakeholders. These include central banks, ministries and regulatory agencies, market infrastructure providers, the private sector, and non-sovereign issuers and investors. In addition to the enabling framework, well-functioning capital markets require strong capacities in asset, risk, and debt management. Lastly, J-CAP includes a powerful investment component as part of which the WBG aims to crowd-in issuers and investors by acting as an anchor investor, risk mitigator, or provider of local currency solutions. J-CAP is focusing initially on six priority countries and one sub-region. For Latin America, this is Peru, in Asia, these are Bangladesh, Indonesia and Vietnam and for Africa, these are Kenya, Morocco and the West African Economic & Monetary Union.  I am proud to say that in the short period of time since JCAP was launched, we have seen significant progress across all seven priority countries in which J-CAP operates. While I leave it to my colleague Sergio to tell some of the success stories of WAEMU, I would like to give you a flavor from those in other parts of the world . For example, in Peru we have been able to promote the financial inclusion of SMEs by investing in a factoring fund that provides them with urgently needed working capital.  In Kenya and Morocco, preparatory work is underway to support infrastructure financing via project bonds.  In Indonesia, we have successfully promoted the climate finance agenda by issuing a green local currency bond and use the proceeds to act as an anchor investor in one of Indonesia’s largest commercial banks. J-CAP is an important strategic effort of the World Bank Group to support WAEMU’s economic development and poverty reduction.  We are thankful to the governments of Australia, Germany, Japan, Luxembourg, Norway, and Switzerland for their backing of J-CAP.  I very much look forward to the rich agenda ahead of us today and tomorrow.  I also look forward to meeting many here today and hearing your insights and perspectives.  I know this conference will be a huge success and I want to again thank our generous hosts here in Côte d’Ivoire.","date":"2020-02-10T13:34:00Z","contenttype":"Speeches and Transcripts"},"_3da15ca570d6b0ff3cdcefb6d9bc2fc336cbf5e3":{"id":"3da15ca570d6b0ff3cdcefb6d9bc2fc336cbf5e3","title":"World Bank Group President David Malpass: Speech to the plenary session of the Annual Meetings of the Board of Governors","indextype":"cq5indextype","url":"http://www.worldbank.org/en/news/speech/2019/10/18/world-bank-group-president-david-malpass-speech-to-the-plenary-session-of-the-annual-meetings-of-the-board-of-governors","descr":"Speech to the plenary session of the Annual Meetings of the Board of Governors","keywd":"People:world-bank-group-president,organization:World Bank Group,People:david-malpass","lang":{"0":{"cdata!":"English"}},"unit":"World Bank Group","cqpath":"/content/wb-home/en/news/speech/2019/10/18/world-bank-group-president-david-malpass-speech-to-the-plenary-session-of-the-annual-meetings-of-the-board-of-governors","wcmsource":"cq5","content":" Chairman Sayed-Khaiyum, IMF Managing Director Georgieva, Governors and distinguished guests, thank you for joining us at the Annual Meetings. I’d like to welcome former World Bank Group President James Wolfensohn, who is with us here today. Thank you, Jim--and thank you to the many other leaders in the audience--for your hard work, leadership and service. Thank you, Chairman, for your remarks. The delegates who gathered at the Bretton Woods conference 75 years ago faced great uncertainty. War was raging in Europe and the Pacific. The world economy had been hammered for over a decade by high tariff barriers, depression and war. As the conference opened, U.S. Treasury Secretary Morgenthau said the new global system should be based on two ideas. First, there’s no limit to prosperity. Second, broadly shared prosperity benefits everyone. He expressed hope for a “dynamic world economy” where people of every nation have an opportunity “to raise their own standards of living and enjoy, increasingly, the fruits of material progress.” At the World Bank Group, we’re determined to help countries make that hope a reality. Even while the global economy is facing a weak patch, we believe living standards can rise in many countries. We’re committed to our goals of reducing extreme poverty and boosting shared prosperity--goals at the core of the Bretton Woods purpose and at the core of our annual meetings.   My time as president has reinforced my conviction about the urgency of our mission and the challenges we face. Some countries have made great strides in helping the poor, yet one in 12 people on the planet still live in extreme poverty, many of them in fragile and conflict-torn places. Existing institutions often aren’t able to deliver benefits to those in need, and projections for several countries show that poverty is likely to increase, not decrease. I’ve benefited from productive trips to developing countries: Egypt, Ethiopia, Madagascar and Mozambique. I expect to visit India, Pakistan, Mexico and China in coming weeks to encourage fast progress toward better policies, broad-based growth and higher living standards for all. One of the most valuable activities has been my time spent in individual meetings with world leaders--nearly a hundred heads of state since my nomination. I hear their perspectives, learn their challenges, and am encouraged by their openness to reforms that can boost growth, jobs and incomes.   I would like to present a broad update on the World Bank Group. This builds on two of my recent speeches. At the Peterson Institute, I described the weak global economic outlook, which is especially apparent in Europe, as well as trade and geopolitical uncertainty, sluggish investment rates and frozen capital in low-yielding bonds. This combination of factors presents grave challenges for development. At McGill University last week, I described some of our development tools that give us cause for optimism. We seek material impact in terms of broad-based growth, transparency, the rule of law, and private sector expansion--working in an effective way through a range of products including loans, credits, guarantees, grants, equity investments, insurance, and advisory and risk-management services. I invite the input of the Governors on these topics and welcome the accumulated wisdom of those here today and others in the development community.   Implementing the Capital Increase One of our major undertakings is implementing the capital increase package endorsed by our shareholders in 2018. I want to take this opportunity to thank shareholders for their support, which is enabling implementation of key reforms. Many members have submitted their IBRD subscription documents, with a few members already completing their subscription payment process. I encourage other members to do so as well. I’m pleased to report that, since the IBRD capital increase reached the 75% hurdle for shareholder approval a year ago, IBRD’s subscribed capital has increased by $8.7 billion, nearly 15% of the agreed increase.   The IFC capital package is close to the required shareholder approval hurdles. We’ve extended the voting period to March 18, 2020. IFC is moving to execute the capital-increase plan, shifting its focus to working “upstream” to open markets and create projects that will increase private investment in all countries, especially the poorest ones. The Multilateral Investment Guarantee Agency grew significantly under its FY18-20 strategy. Growth was driven by a deepening partnership with the Bank and IFC, an increasing focus on business development and product innovation. MIGA has expanded its reinsurance to seventy percent of gross exposure. This will allow MIGA to sustain its growth in the medium term as global macro and business conditions evolve. We’re working to increase the share of loans to those IBRD borrowers who are below the graduation threshold. As part of our country partnership frameworks for higher-income IBRD borrowers, we are systematically analyzing and assessing key elements of the IBRD graduation policy. This will shift the Bank’s lending profile substantially, helping countries that need it the most but also weighing on net income. We’ve adjusted our loan pricing, and other financial measures are under way to improve IBRD’s financial sustainability. In June, the Board approved a crisis buffer amount, as well as an annual limit on our lending to make sure that IBRD stays financially sustainable without additional capital increases. Management is committed to cost discipline throughout the year. The Expenditure Review achieved $4.8 billion in expected savings over Fiscal 2019 to Fiscal 2030, and progress is being made toward achieving the additional cumulative efficiency gains of $1.8 billion from the capital package. For IBRD, cost discipline will be complemented by tighter target zones for the “budget anchor,” the ratio of administrative expenses to business revenues. Fiscal 2019 was the first year in many decades when the administrative expenses of IBRD and IDA were less than their business revenues. As part of the World Bank Group capital increase, we are committed to an ambitious new target to bring the ratio of IBRD administrative budget to loan spread income down in steps, achieving a target range of 50-60 percent by FY30.  The anchor goals are demanding, but the Bank is committed to them. Replenishing IDA Ensuring the International Development Association is properly financed is a vital step in supporting the Horn of Africa, the Sahel, and our development goals around the world. IDA is the world’s largest and most effective platform for fighting extreme poverty. The current IDA 19 replenishment cycle, the nineteenth three-year cycle, is making good progress, and I’m encouraged by the engagement with donor countries. Consultations with IDA partners will continue in the coming months to finalize the policy package and financing framework for the IDA19 cycle.   At the same time, IDA is continuing to work toward good development outcomes with existing funds. We’ve been scaling up our commitments to countries affected by fragility, conflict and violence, as well as bolstering the ability of borrower countries to respond to crises, including through the Crisis Response Window. Since 2010, IDA funding has helped 769 million people receive essential health, nutrition, and population services, including immunizations for over 300 million children. It has improved access to water services for nearly 100 million people. It has helped to recruit or train 13 million teachers. And it has helped to build or improve more than 146,000 kilometers of roads. There’s an urgent need for IDA funding, and we’re counting on the continued strong support of our shareholders and donor countries in funding IDA as we address these challenges. The IDA19 replenishment is based on five special themes: jobs and economic transformation; fragility, conflict and violence; climate change; gender and development; and governance and institutions. It will also incorporate four cross-cutting issues: addressing debt vulnerabilities, exploiting opportunities from digital technology, investing in people to build human capital, and promoting inclusion of people with disabilities. The package includes a significant scale up of the regional program, as well as a further increase in FCV resources. The Private Sector Window, introduced in IDA18 together with IFC and MIGA, will continue to help mobilize private capital and scale up private sector development, particularly in fragile situations. IDA19 will expand IDA’s regional program, as well as increase resources for fragile situations. We expect to see poverty become more concentrated in fragile and conflict-affected states, with many refugees fleeing to countries that already struggle to deliver basic services, security and peace to their citizens. Notably, IDA commitments to countries affected by fragility, conflict and violence reached $8 billion in Fiscal 2019. Regarding peace and security, let me highlight just one out of dozens of memorable meetings. At the end of April, I met with Ethiopian Prime Minister Abiy Ahmed. He described with passion his work toward peace in the region, his peace-making trips to neighbors, and his dramatic economic program, which we are supporting with one of our biggest programs in the world. I phoned Prime Minister Abiy on Friday after he was named the winner of the Nobel Peace Prize. With senior colleagues in my office from around the World Bank Group, women and men who have worked so hard on Ethiopia and the region, we congratulated him on receiving one of the world’s most prestigious honors. Thanks in part to his efforts and others in the region, the Horn of Africa has the chance to break out of its long period of violence. In recent weeks, I’ve had the chance to meet with and encourage the nearby heads of state of Sudan, Somalia, Kenya, Rwanda, and Egypt, and others at the World Bank are also meeting with South Sudan, Eritrea and Djibouti. We can all take a moment today to look for ways to help this important region move dramatically forward. Personnel Is Key This brings me to the importance of World Bank Group personnel, who bring their dedication, skills and experience to the job every day. I’ve welcomed spending highly valuable time with hundreds of our development professionals. One of the most dynamic is Kristalina Georgieva. I’d like to take the opportunity now to recognize Kristalina’s accomplishments and congratulate her on her appointment as Managing Director of the IMF. Congratulations, Kristalina. We will miss you across the World Bank Group--it’s a loss for me and all of us--but we look forward to your strong leadership at the IMF and to working with you toward growth programs in developing countries.   I’d like to report on the transition in leadership. It’s been fast moving, and is going smoothly. Congratulations to our new Managing Director, Axel van Trotsenburg. Many of you here know the depth of his experience and expertise--including regional operations, IDA replenishments, relationships with stakeholders, and leadership skills, to name a few. I work closely with Axel, and we’re looking forward to innovation, continuity of purpose, and strength of implementation.    Congratulations also to Managing Director Anshula Kant, who started October 7 as Chief Financial Officer. Anshula brings more than 35 years of expertise in banking, finance, technology and management, most recently as managing director of the State Bank of India. Thank you to IFC’s CEO, Philippe le Houérou, for adding to his current tasks the role of co-chair of the IDA-19 replenishment, along with Antoinette Sayeh. I’d like to thank Keiko Honda for her six years of work at the Multilateral Investment Guarantee Agency. We’re reaching the conclusion of a broad search for her replacement, and I hope to have an update in the coming weeks. Looking throughout the World Bank Group, we recognize the challenges of leadership transitions but also the opportunities to focus on the mission, work hard and benefit from change. I look for input from employees and other stakeholders. While differences of view are common--and necessary for good decision-making--I’m pleased with how people are working together, and I’m confident we’re well positioned to provide solid progress on behalf of our stakeholders. IBRD, IDA, IFC and MIGA are working together to make us more effective, efficient and accountable. Steps include coordinating our country programs, co-locating offices, aligning staffing to meet the needs of country programs, adjusting the global footprint of the WBG to increase our presence in lower income countries, providing employee benefits that are attractive for the task and fair to stakeholders, and developing country platforms that will help governments work more effectively with the entire investor community. We’re encouraging more staff exchanges between the WBG entities and more joint teams working together on a problem to create better solutions for clients. Successful implementation of these processes is critical to our mission. Financial Results Over the last few months, we’ve reported on our financial results in several ways. For our fiscal year ended June 30, 2019, we published commitments, financial statements, a detailed “management discussion and analysis,” and the recently released annual reports. We believe in transparency for our borrowers and want to practice it ourselves. The financial results from the fiscal year highlighted the strength of the financial positions of the World Bank Group entities, steady demand for financing, and continued support from shareholders. We are working to increase our commitments to lower-income countries as they improve their development outlook and to shift resources toward countries suffering from fragility, conflict, and violence. We’ve doubled core allocations for FCV-affected countries to more than $14 billion under IDA18. The Global Concessional Financing Facility (GCFF) has provided around $500 million in grants to unlock more than $2.5 billion in concessional financing for Jordan and Lebanon to help address the influx of Syrian refugees, as well as for Colombia to help address the needs of more than 1.4 million displaced Venezuelans and their host communities. For Fiscal 2019, World Bank Group commitments reached nearly $60 billion. IBRD’s commitments were on par with the prior year at $23 billion, while disbursements increased by 16% to $20 billion in Fiscal 2019. Commitments to countries below the graduation discussion income threshold were over 70% last year. To strengthen financial management, IBRD introduced a financial sustainability framework and lending limit. Considering loan repayments received, net disbursements were $10 billion in Fiscal 2019. This increased IBRD’s loan portfolio to $193 billion, 5% above a year ago. With the Fiscal 2019 balance sheet, IBRD netted its derivative asset and liability positions in alignment with the preferred accounting treatment and prevailing market practice. IBRD raised medium- and long-term debt of $54 billion during Fiscal 2019. Allocable income, the internal measure that IBRD uses to make net income allocation decisions, was $1.19 billion, which reflects the gradual impact of new pricing measures and will be used to increase reserves and support IDA. Turning to IDA, its commitments were $22 billion in Fiscal 19. Net disbursements increased by almost a third, increasing the outstanding loan balance to $152 billion. IDA introduced its short-term debt instruments in the capital markets, with an outstanding balance of $1.9 billion as of June 30, 2019. Last week, it issued a 1.25-billion euro seven-year bond.   IFC concluded Fiscal 2019 with $8.9 billion in long-term financing from its own account and mobilized an additional $10.2 billion from other investors, for a total program delivery of over $19 billion. Income from the loan and debt securities portfolio, net of allocated funding costs, was $872 million. Income available for designations—the key internal measure—was $909 million in FY19. IFC raised medium- and long-term debt of $11 billion during Fiscal 2019.  In Fiscal 2019, IFC adopted a new accounting standard that resulted in IFC reporting all gains and losses on investments in equity securities in net income.  MIGA provides political risk insurance and credit enhancement. It issued $5.5 billion in guarantees in Fiscal 2019, double the amount from six years ago, and mobilized $9.3 billion in development financing. Gross guarantee exposure was a record $23.3 billion, also more than double that from six years ago. MIGA reported a net income of $82.4 million in Fiscal 2019. Despite the portfolio growth, the capital utilization ratio (MIGA’s capital adequacy measure) remained stable at 47 percent. This reflects MIGA’s continued deployment of private sector reinsurance capacity to manage its capital, with 64 percent of the gross exposure ceded to reinsurance as of the end of FY19. With one of the world’s biggest LIBOR-linked long-maturity balance sheets, we look forward to working on a proactive and orderly LIBOR transition, preserving the integrity of the financial model of the Bank while applying principles of fairness and transparency. Work Program Looking forward, we face a number of development challenges. I’d like to briefly identify those and explain some of our approaches. Global growth has slowed; investment rates in developing countries aren’t sufficient to meet development needs; health systems, learning outcomes and technology are falling further behind needs; climate changes and extreme weather are taking a heavy toll; for some countries populations are expanding much faster than resources and capacity; and many countries are facing fragility, conflict and violence, making development even more urgent and difficult. The result is that several countries are facing rising poverty rates and falling median incomes, the opposite of our mission.   We’re sharpening our focus on creating strong country programs to boost growth and improve development outcomes. To oversimplify, we –meaning the World Bank, IFC and MIGA--work through country offices and country directors, with the support of technical and program experts, to help governments create improvements. They can be tailored to a country’s and region’s unique circumstances. Coordination with other MDBs is a key part of our development work. We’re encouraging better implementation of graduation and price differentiation to avoid undercutting each other’s work, covenants and standards. We’re working cooperatively with countries and the development community to launch country platforms. They can help countries prioritize their key development issues and encourage donors, including non-traditional donors, to engage in the most constructive way. There continue to be many international groups setting up yet more discussion groups on how to define, standardize, centralize and guide country platforms. The strong view of the World Bank Group is that there’s been ample discussion and final reports. The next steps are practical--for example, helping countries organize in-country meetings this month to prioritize their activities with major donors. We’re working on platforms with 11 countries so far.  The outcomes will be tailored to the countries and their needs, and will increase the focus on private sector involvement and engagement. The goal is for the World Bank Group and the broader development community to be as effective as possible in helping countries achieve good development outcomes. In this process, countries need to provide strong leadership to choose a path that works economically, socially and politically. It’s clear that the quality of policies and institutions plays a key role in explaining why some developing countries have been able to make the leap out of poverty, while others have been unable to advance. It’s also clear that development cannot be imposed from outside--country leadership and ownership matter. Jobs and economic transformation are a key topic in the Development Committee discussions this week. Key building blocks include clean water and dependable access to electricity, markets and market pricing, especially for agriculture inputs and outputs. Key development steps are the establishment of a dependable rule of law that encourages transparency in government contracts and pensions, fights corruption, builds strong and accountable institutions and creates a level playing field so that the private sector is allowed to compete fairly with state-owned enterprises, the military and the government itself. For many countries, this means opening up their closed and protected markets, allowing prices to be determined by market forces, and liberalizing capital flows. The payoff is that countries that make this step attract more investment, both foreign and domestic, and can generate growth that benefits a broader part of the population. The private sector must play a pivotal role in development. With official development assistance stagnant and public-sector debt growing in many countries, it’s critical that we pursue private-sector solutions and establish an environment that attracts private investors. The IFC and World Bank developed what we call the “Cascade” approach, which looks for private-sector solutions to development challenges and directs World Bank programs to overcome obstacles in the private sector framework. This approach is key to attracting new investment and boosting the impact of every development dollar.  The World Bank’s Systematic Country Diagnostic, and the IFC’s  Country Private Sector Diagnostic, assess barriers to private-sector investment and recommends ways to address them. We’re working to deepen capital markets, which is key to long-term development. Through the Joint Capital Markets Program, or J-Cap, the IFC and World Bank are helping countries build local capital markets through reforms and investments from Bangladesh to Morocco. A big obstacle to investment is the amount of a country’s sovereign and SOE debt and the lack of transparency surrounding the debt. Public debt in emerging markets and low-income countries has risen to levels not seen since the 1980s, and too much of that debt isn’t transparent. Some lenders, including Non-Paris Club lenders and private creditors, have imposed strict non-disclosure clauses on government borrowers; required liens and collateralization that violate the negative pledge clauses in our loan contracts; employed weaker procurement, environmental and social standards; placed guaranteed debt in state-owned enterprises and special purpose vehicles that undermine debt sustainability, and paid insufficient attention to non-concessional borrowing policies that are key to emerging from poverty.     When countries are transparent, they typically enjoy higher credit ratings, lower borrowing costs and better ability to attract foreign direct investment.  But we’ve found that fewer than half of the countries we’ve reviewed meet minimum requirements for debt recording, monitoring and reporting. Lenders need to be more transparent, eliminating confidentiality clauses in their lending to sovereign borrowers. It is also critical to have transparency in public spending and public pensions. We support public expenditure reviews to understand gaps in service delivery relating to resource allocation decisions and process-related bottlenecks. These diagnostics help countries develop more effective and transparent budget allocations, including in specific sectors such as health care, education or infrastructure. Our development policy financing, which disburses against impactful prior policy reforms, will increasingly play a role in encouraging more transparent and sustainable borrowing practices as well as more effective and efficient public spending and policy reforms, so that citizens can see and evaluate their government’s obligations and the use of proceeds. Transparency will help attract finance, innovation and expertise so countries can build the infrastructure they need. They face severe deficits in clean water, electricity, roads, and telecommunications that reduce connectivity and undercut job creation and access to markets. Trade facilitation is a critical part of many of our country programs because the economic benefits from commerce and trade are immense, and constructive policies--such as customs processing, tariff harmonization and standardized bills of lading--are achievable.   We’re putting substantial resources into closing the gender gap. In fiscal 2019, over 60 percent of combined IBRD and IDA operations helped address gender gaps and encouraged full incorporation of women in economies. Globally, countries are losing $160 trillion in wealth due to differences in lifetime earnings between men and women. Later today I’ll join a panel to talk about unleashing the potential of women entrepreneurs. We’re investing in human capital. More than half of all 10-year-olds in low- and middle-income countries can’t read, which is unacceptable. In this week’s education and learning announcements, we set a target of at least cutting learning poverty in half. We’re also making important investments in health. Some of the goals: preventable maternal and child mortality, ensuring that women and children can access comprehensive health services, and reducing childhood stunting. Massive growth of cities is an inevitable part of the outlook. It presents critical challenges--and opportunities--for development. One key example is the design and enforcement of street grids as cities grow. The World Bank Group is helping to build sustainable cities by investing directly in urban infrastructure and helping national and municipal governments develop fiscal and financial systems to expand revenues and provide access to private capital.  Climate and environment investments are a key part of the World Bank Group’s work, and in Fiscal 2019, we committed $17.8 billion to climate-related investments. Among multilateral development banks and other international organizations, we are the single largest funder of climate action, providing almost half of total climate-related finance. Over 30 percent of IBRD/IDA and IFC commitments included climate co-benefits in fiscal 2019, surpassing our target.  We’ve doubled our climate commitment targets for fiscal years 2021-2025 to $200 billion. We recently launched PROGREEN, an umbrella trust fund to boost efforts to stop deforestation, restore degraded lands, and improve livelihoods in poor, rural communities. We’re working through PROBLUE – a new, umbrella multi-donor trust fund – to help countries sustainably develop their blue economies. We’re aggressively expanding our work on marine plastics and the prevention of marine pollution. Our support helps countries provide clean air and water, healthy oceans, resilient cities, and sustainable food and agriculture systems.  To scale up climate-related investments, we’ve launched initiatives such as Scaling Solar, which is helping countries accelerate development of utility-scale solar-energy plants. We’re one of the biggest financers of renewable energy and energy-efficiency projects in developing countries. During IDA’s current three-year funding cycle, we’ll contribute more than $1 billion annually to grid and off-grid solutions for electricity access in countries with the high electricity deficits.   Advances in digital technologies are another critical development path.  A decline in transaction costs is particularly beneficial for new entrants to markets, women, small businesses and the poor. We’re almost at the point of having systems that would allow the poor to electronically receive remittances, foreign aid, and social safety net payments as well as their earnings, and then be allowed to save and transact freely. Once more countries enable these technologies, the innovation may turn out to be as big an advance in development policy as the ones that allowed people to move from a barter economy to a market economy. A key challenge is to make new systems compatible with the world’s interest in anti-money laundering and counter terrorism efforts. We’re helping client countries preserve correspondent banks and interact with FATF, the financial action task force, and helping FATF-style regional bodies interact with developing countries.   Financial inclusion and liberalization are core steps in development. We’re using Program-for-Results financing in a host of countries to encourage concrete outcomes and ensure accountability. We’re expanding our work to support correspondent banking relationships for developing countries, a key task in building stronger financial systems as well as helping to leverage technology-based solutions to improve financial inclusion.   As we work with countries, we want to listen to clear new thinking and the best available evidence. In that vein, we aim to produce research that cements the Bank’s reputation as a development innovator and thought leader. I was pleased to see that the just-announced Nobel Prize in economics highlighted development and the importance of data and careful evaluation of results. Our recent World Development Report explained how the expansion of global supply chains has helped countries reduce poverty and boost shared prosperity. The Doing Business report, which we’ll release later this month, highlights progress on business formation rules. The Women, Business and the Law report helps identify barriers to the full inclusion of women in societies and economies. IFC’s Creating Impact report surveyed the market for impact investing and examined the conditions that would allow the market to realize its vast potential. The semi-annual GEP report on Global Economic Prospects, tracks economic trends. The June release downgraded our global growth outlook, and I expect a further downgrade in the next release. Tackling the Challenge I know I’ve left out many parts of our work program, but I wanted to mention some key parts. Global development is a complex challenge, but if we stay focused and keep our mission in mind, I’m confident we can help improve outcomes. At the World Bank Group, we have a strong culture, grounded in our founding principles and embodied by our hard-working staff. It’s important that we are open and transparent about how we do our work, and the results we achieve. I want staff and stakeholders to feel they have the freedom to raise issues in a culture of open, candid communication.Our mission is urgent. Our shareholders have given us clear guidance through the capital increase package and have set high development ambition for IDA19. The IDA19 proposals cannot be achieved without the strong support of all development partners. I thank our IDA partners for their commitment and generosity. I’m confident that, working together, we can create better conditions, with stronger policy frameworks and more robust institutions aimed at broad-based growth that reduces poverty and boosts shared prosperity. Thank you.  ","content_1000":" Chairman Sayed-Khaiyum, IMF Managing Director Georgieva, Governors and distinguished guests, thank you for joining us at the Annual Meetings. I’d like to welcome former World Bank Group President James Wolfensohn, who is with us here today. Thank you, Jim--and thank you to the many other leaders in the audience--for your hard work, leadership and service. Thank you, Chairman, for your remarks. The delegates who gathered at the Bretton Woods conference 75 years ago faced great uncertainty. War was raging in Europe and the Pacific. The world economy had been hammered for over a decade by high tariff barriers, depression and war. As the conference opened, U.S. Treasury Secretary Morgenthau said the new global system should be based on two ideas. First, there’s no limit to prosperity. Second, broadly shared prosperity benefits everyone. He expressed hope for a “dynamic world economy” where people of every nation have an opportunity “to raise their own standards of living and enjoy, increa","displayconttype":"Speeches and Transcripts","originating_unit":"External and Corporate Relations - Corporate Communications, ECRCC","originating_unit_exact":"External and Corporate Relations - Corporate Communications, ECRCC","displayconttype_exact":"Speeches and Transcripts","lang_exact":"English","masterconttype":"Speeches and Transcripts","node_id":"3da15ca570d6b0ff3cdcefb6d9bc2fc336cbf5e3","wn_title":"World Bank Group President David Malpass: Speech to the plenary session of the Annual Meetings of the Board of Governors","wn_desc":" Chairman Sayed-Khaiyum, IMF Managing Director Georgieva, Governors and distinguished guests, thank you for joining us at the Annual Meetings. I’d like to welcome former World Bank Group President James Wolfensohn, who is with us here today. Thank you, Jim--and thank you to the many other leaders in the audience--for your hard work, leadership and service. Thank you, Chairman, for your remarks. The delegates who gathered at the Bretton Woods conference 75 years ago faced great uncertainty. War was raging in Europe and the Pacific. The world economy had been hammered for over a decade by high tariff barriers, depression and war. As the conference opened, U.S. Treasury Secretary Morgenthau said the new global system should be based on two ideas. First, there’s no limit to prosperity. Second, broadly shared prosperity benefits everyone. He expressed hope for a “dynamic world economy” where people of every nation have an opportunity “to raise their own standards of living and enjoy, increasingly, the fruits of material progress.” At the World Bank Group, we’re determined to help countries make that hope a reality. Even while the global economy is facing a weak patch, we believe living standards can rise in many countries. We’re committed to our goals of reducing extreme poverty and boosting shared prosperity--goals at the core of the Bretton Woods purpose and at the core of our annual meetings.   My time as president has reinforced my conviction about the urgency of our mission and the challenges we face. Some countries have made great strides in helping the poor, yet one in 12 people on the planet still live in extreme poverty, many of them in fragile and conflict-torn places. Existing institutions often aren’t able to deliver benefits to those in need, and projections for several countries show that poverty is likely to increase, not decrease. I’ve benefited from productive trips to developing countries: Egypt, Ethiopia, Madagascar and Mozambique. I expect to visit India, Pakistan, Mexico and China in coming weeks to encourage fast progress toward better policies, broad-based growth and higher living standards for all. One of the most valuable activities has been my time spent in individual meetings with world leaders--nearly a hundred heads of state since my nomination. I hear their perspectives, learn their challenges, and am encouraged by their openness to reforms that can boost growth, jobs and incomes.   I would like to present a broad update on the World Bank Group. This builds on two of my recent speeches. At the Peterson Institute, I described the weak global economic outlook, which is especially apparent in Europe, as well as trade and geopolitical uncertainty, sluggish investment rates and frozen capital in low-yielding bonds. This combination of factors presents grave challenges for development. At McGill University last week, I described some of our development tools that give us cause for optimism. We seek material impact in terms of broad-based growth, transparency, the rule of law, and private sector expansion--working in an effective way through a range of products including loans, credits, guarantees, grants, equity investments, insurance, and advisory and risk-management services. I invite the input of the Governors on these topics and welcome the accumulated wisdom of those here today and others in the development community.   Implementing the Capital Increase One of our major undertakings is implementing the capital increase package endorsed by our shareholders in 2018. I want to take this opportunity to thank shareholders for their support, which is enabling implementation of key reforms. Many members have submitted their IBRD subscription documents, with a few members already completing their subscription payment process. I encourage other members to do so as well. I’m pleased to report that, since the IBRD capital increase reached the 75% hurdle for shareholder approval a year ago, IBRD’s subscribed capital has increased by $8.7 billion, nearly 15% of the agreed increase.   The IFC capital package is close to the required shareholder approval hurdles. We’ve extended the voting period to March 18, 2020. IFC is moving to execute the capital-increase plan, shifting its focus to working “upstream” to open markets and create projects that will increase private investment in all countries, especially the poorest ones. The Multilateral Investment Guarantee Agency grew significantly under its FY18-20 strategy. Growth was driven by a deepening partnership with the Bank and IFC, an increasing focus on business development and product innovation. MIGA has expanded its reinsurance to seventy percent of gross exposure. This will allow MIGA to sustain its growth in the medium term as global macro and business conditions evolve. We’re working to increase the share of loans to those IBRD borrowers who are below the graduation threshold. As part of our country partnership frameworks for higher-income IBRD borrowers, we are systematically analyzing and assessing key elements of the IBRD graduation policy. This will shift the Bank’s lending profile substantially, helping countries that need it the most but also weighing on net income. We’ve adjusted our loan pricing, and other financial measures are under way to improve IBRD’s financial sustainability. In June, the Board approved a crisis buffer amount, as well as an annual limit on our lending to make sure that IBRD stays financially sustainable without additional capital increases. Management is committed to cost discipline throughout the year. The Expenditure Review achieved $4.8 billion in expected savings over Fiscal 2019 to Fiscal 2030, and progress is being made toward achieving the additional cumulative efficiency gains of $1.8 billion from the capital package. For IBRD, cost discipline will be complemented by tighter target zones for the “budget anchor,” the ratio of administrative expenses to business revenues. Fiscal 2019 was the first year in many decades when the administrative expenses of IBRD and IDA were less than their business revenues. As part of the World Bank Group capital increase, we are committed to an ambitious new target to bring the ratio of IBRD administrative budget to loan spread income down in steps, achieving a target range of 50-60 percent by FY30.  The anchor goals are demanding, but the Bank is committed to them. Replenishing IDA Ensuring the International Development Association is properly financed is a vital step in supporting the Horn of Africa, the Sahel, and our development goals around the world. IDA is the world’s largest and most effective platform for fighting extreme poverty. The current IDA 19 replenishment cycle, the nineteenth three-year cycle, is making good progress, and I’m encouraged by the engagement with donor countries. Consultations with IDA partners will continue in the coming months to finalize the policy package and financing framework for the IDA19 cycle.   At the same time, IDA is continuing to work toward good development outcomes with existing funds. We’ve been scaling up our commitments to countries affected by fragility, conflict and violence, as well as bolstering the ability of borrower countries to respond to crises, including through the Crisis Response Window. Since 2010, IDA funding has helped 769 million people receive essential health, nutrition, and population services, including immunizations for over 300 million children. It has improved access to water services for nearly 100 million people. It has helped to recruit or train 13 million teachers. And it has helped to build or improve more than 146,000 kilometers of roads. There’s an urgent need for IDA funding, and we’re counting on the continued strong support of our shareholders and donor countries in funding IDA as we address these challenges. The IDA19 replenishment is based on five special themes: jobs and economic transformation; fragility, conflict and violence; climate change; gender and development; and governance and institutions. It will also incorporate four cross-cutting issues: addressing debt vulnerabilities, exploiting opportunities from digital technology, investing in people to build human capital, and promoting inclusion of people with disabilities. The package includes a significant scale up of the regional program, as well as a further increase in FCV resources. The Private Sector Window, introduced in IDA18 together with IFC and MIGA, will continue to help mobilize private capital and scale up private sector development, particularly in fragile situations. IDA19 will expand IDA’s regional program, as well as increase resources for fragile situations. We expect to see poverty become more concentrated in fragile and conflict-affected states, with many refugees fleeing to countries that already struggle to deliver basic services, security and peace to their citizens. Notably, IDA commitments to countries affected by fragility, conflict and violence reached $8 billion in Fiscal 2019. Regarding peace and security, let me highlight just one out of dozens of memorable meetings. At the end of April, I met with Ethiopian Prime Minister Abiy Ahmed. He described with passion his work toward peace in the region, his peace-making trips to neighbors, and his dramatic economic program, which we are supporting with one of our biggest programs in the world. I phoned Prime Minister Abiy on Friday after he was named the winner of the Nobel Peace Prize. With senior colleagues in my office from around the World Bank Group, women and men who have worked so hard on Ethiopia and the region, we congratulated him on receiving one of the world’s most prestigious honors. Thanks in part to his efforts and others in the region, the Horn of Africa has the chance to break out of its long period of violence. In recent weeks, I’ve had the chance to meet with and encourage the nearby heads of state of Sudan, Somalia, Kenya, Rwanda, and Egypt, and others at the World Bank are also meeting with South Sudan, Eritrea and Djibouti. We can all take a moment today to look for ways to help this important region move dramatically forward. Personnel Is Key This brings me to the importance of World Bank Group personnel, who bring their dedication, skills and experience to the job every day. I’ve welcomed spending highly valuable time with hundreds of our development professionals. One of the most dynamic is Kristalina Georgieva. I’d like to take the opportunity now to recognize Kristalina’s accomplishments and congratulate her on her appointment as Managing Director of the IMF. Congratulations, Kristalina. We will miss you across the World Bank Group--it’s a loss for me and all of us--but we look forward to your strong leadership at the IMF and to working with you toward growth programs in developing countries.   I’d like to report on the transition in leadership. It’s been fast moving, and is going smoothly. Congratulations to our new Managing Director, Axel van Trotsenburg. Many of you here know the depth of his experience and expertise--including regional operations, IDA replenishments, relationships with stakeholders, and leadership skills, to name a few. I work closely with Axel, and we’re looking forward to innovation, continuity of purpose, and strength of implementation.    Congratulations also to Managing Director Anshula Kant, who started October 7 as Chief Financial Officer. Anshula brings more than 35 years of expertise in banking, finance, technology and management, most recently as managing director of the State Bank of India. Thank you to IFC’s CEO, Philippe le Houérou, for adding to his current tasks the role of co-chair of the IDA-19 replenishment, along with Antoinette Sayeh. I’d like to thank Keiko Honda for her six years of work at the Multilateral Investment Guarantee Agency. We’re reaching the conclusion of a broad search for her replacement, and I hope to have an update in the coming weeks. Looking throughout the World Bank Group, we recognize the challenges of leadership transitions but also the opportunities to focus on the mission, work hard and benefit from change. I look for input from employees and other stakeholders. While differences of view are common--and necessary for good decision-making--I’m pleased with how people are working together, and I’m confident we’re well positioned to provide solid progress on behalf of our stakeholders. IBRD, IDA, IFC and MIGA are working together to make us more effective, efficient and accountable. Steps include coordinating our country programs, co-locating offices, aligning staffing to meet the needs of country programs, adjusting the global footprint of the WBG to increase our presence in lower income countries, providing employee benefits that are attractive for the task and fair to stakeholders, and developing country platforms that will help governments work more effectively with the entire investor community. We’re encouraging more staff exchanges between the WBG entities and more joint teams working together on a problem to create better solutions for clients. Successful implementation of these processes is critical to our mission. Financial Results Over the last few months, we’ve reported on our financial results in several ways. For our fiscal year ended June 30, 2019, we published commitments, financial statements, a detailed “management discussion and analysis,” and the recently released annual reports. We believe in transparency for our borrowers and want to practice it ourselves. The financial results from the fiscal year highlighted the strength of the financial positions of the World Bank Group entities, steady demand for financing, and continued support from shareholders. We are working to increase our commitments to lower-income countries as they improve their development outlook and to shift resources toward countries suffering from fragility, conflict, and violence. We’ve doubled core allocations for FCV-affected countries to more than $14 billion under IDA18. The Global Concessional Financing Facility (GCFF) has provided around $500 million in grants to unlock more than $2.5 billion in concessional financing for Jordan and Lebanon to help address the influx of Syrian refugees, as well as for Colombia to help address the needs of more than 1.4 million displaced Venezuelans and their host communities. For Fiscal 2019, World Bank Group commitments reached nearly $60 billion. IBRD’s commitments were on par with the prior year at $23 billion, while disbursements increased by 16% to $20 billion in Fiscal 2019. Commitments to countries below the graduation discussion income threshold were over 70% last year. To strengthen financial management, IBRD introduced a financial sustainability framework and lending limit. Considering loan repayments received, net disbursements were $10 billion in Fiscal 2019. This increased IBRD’s loan portfolio to $193 billion, 5% above a year ago. With the Fiscal 2019 balance sheet, IBRD netted its derivative asset and liability positions in alignment with the preferred accounting treatment and prevailing market practice. IBRD raised medium- and long-term debt of $54 billion during Fiscal 2019. Allocable income, the internal measure that IBRD uses to make net income allocation decisions, was $1.19 billion, which reflects the gradual impact of new pricing measures and will be used to increase reserves and support IDA. Turning to IDA, its commitments were $22 billion in Fiscal 19. Net disbursements increased by almost a third, increasing the outstanding loan balance to $152 billion. IDA introduced its short-term debt instruments in the capital markets, with an outstanding balance of $1.9 billion as of June 30, 2019. Last week, it issued a 1.25-billion euro seven-year bond.   IFC concluded Fiscal 2019 with $8.9 billion in long-term financing from its own account and mobilized an additional $10.2 billion from other investors, for a total program delivery of over $19 billion. Income from the loan and debt securities portfolio, net of allocated funding costs, was $872 million. Income available for designations—the key internal measure—was $909 million in FY19. IFC raised medium- and long-term debt of $11 billion during Fiscal 2019.  In Fiscal 2019, IFC adopted a new accounting standard that resulted in IFC reporting all gains and losses on investments in equity securities in net income.  MIGA provides political risk insurance and credit enhancement. It issued $5.5 billion in guarantees in Fiscal 2019, double the amount from six years ago, and mobilized $9.3 billion in development financing. Gross guarantee exposure was a record $23.3 billion, also more than double that from six years ago. MIGA reported a net income of $82.4 million in Fiscal 2019. Despite the portfolio growth, the capital utilization ratio (MIGA’s capital adequacy measure) remained stable at 47 percent. This reflects MIGA’s continued deployment of private sector reinsurance capacity to manage its capital, with 64 percent of the gross exposure ceded to reinsurance as of the end of FY19. With one of the world’s biggest LIBOR-linked long-maturity balance sheets, we look forward to working on a proactive and orderly LIBOR transition, preserving the integrity of the financial model of the Bank while applying principles of fairness and transparency. Work Program Looking forward, we face a number of development challenges. I’d like to briefly identify those and explain some of our approaches. Global growth has slowed; investment rates in developing countries aren’t sufficient to meet development needs; health systems, learning outcomes and technology are falling further behind needs; climate changes and extreme weather are taking a heavy toll; for some countries populations are expanding much faster than resources and capacity; and many countries are facing fragility, conflict and violence, making development even more urgent and difficult. The result is that several countries are facing rising poverty rates and falling median incomes, the opposite of our mission.   We’re sharpening our focus on creating strong country programs to boost growth and improve development outcomes. To oversimplify, we –meaning the World Bank, IFC and MIGA--work through country offices and country directors, with the support of technical and program experts, to help governments create improvements. They can be tailored to a country’s and region’s unique circumstances. Coordination with other MDBs is a key part of our development work. We’re encouraging better implementation of graduation and price differentiation to avoid undercutting each other’s work, covenants and standards. We’re working cooperatively with countries and the development community to launch country platforms. They can help countries prioritize their key development issues and encourage donors, including non-traditional donors, to engage in the most constructive way. There continue to be many international groups setting up yet more discussion groups on how to define, standardize, centralize and guide country platforms. The strong view of the World Bank Group is that there’s been ample discussion and final reports. The next steps are practical--for example, helping countries organize in-country meetings this month to prioritize their activities with major donors. We’re working on platforms with 11 countries so far.  The outcomes will be tailored to the countries and their needs, and will increase the focus on private sector involvement and engagement. The goal is for the World Bank Group and the broader development community to be as effective as possible in helping countries achieve good development outcomes. In this process, countries need to provide strong leadership to choose a path that works economically, socially and politically. It’s clear that the quality of policies and institutions plays a key role in explaining why some developing countries have been able to make the leap out of poverty, while others have been unable to advance. It’s also clear that development cannot be imposed from outside--country leadership and ownership matter. Jobs and economic transformation are a key topic in the Development Committee discussions this week. Key building blocks include clean water and dependable access to electricity, markets and market pricing, especially for agriculture inputs and outputs. Key development steps are the establishment of a dependable rule of law that encourages transparency in government contracts and pensions, fights corruption, builds strong and accountable institutions and creates a level playing field so that the private sector is allowed to compete fairly with state-owned enterprises, the military and the government itself. For many countries, this means opening up their closed and protected markets, allowing prices to be determined by market forces, and liberalizing capital flows. The payoff is that countries that make this step attract more investment, both foreign and domestic, and can generate growth that benefits a broader part of the population. The private sector must play a pivotal role in development. With official development assistance stagnant and public-sector debt growing in many countries, it’s critical that we pursue private-sector solutions and establish an environment that attracts private investors. The IFC and World Bank developed what we call the “Cascade” approach, which looks for private-sector solutions to development challenges and directs World Bank programs to overcome obstacles in the private sector framework. This approach is key to attracting new investment and boosting the impact of every development dollar.  The World Bank’s Systematic Country Diagnostic, and the IFC’s  Country Private Sector Diagnostic, assess barriers to private-sector investment and recommends ways to address them. We’re working to deepen capital markets, which is key to long-term development. Through the Joint Capital Markets Program, or J-Cap, the IFC and World Bank are helping countries build local capital markets through reforms and investments from Bangladesh to Morocco. A big obstacle to investment is the amount of a country’s sovereign and SOE debt and the lack of transparency surrounding the debt. Public debt in emerging markets and low-income countries has risen to levels not seen since the 1980s, and too much of that debt isn’t transparent. Some lenders, including Non-Paris Club lenders and private creditors, have imposed strict non-disclosure clauses on government borrowers; required liens and collateralization that violate the negative pledge clauses in our loan contracts; employed weaker procurement, environmental and social standards; placed guaranteed debt in state-owned enterprises and special purpose vehicles that undermine debt sustainability, and paid insufficient attention to non-concessional borrowing policies that are key to emerging from poverty.     When countries are transparent, they typically enjoy higher credit ratings, lower borrowing costs and better ability to attract foreign direct investment.  But we’ve found that fewer than half of the countries we’ve reviewed meet minimum requirements for debt recording, monitoring and reporting. Lenders need to be more transparent, eliminating confidentiality clauses in their lending to sovereign borrowers. It is also critical to have transparency in public spending and public pensions. We support public expenditure reviews to understand gaps in service delivery relating to resource allocation decisions and process-related bottlenecks. These diagnostics help countries develop more effective and transparent budget allocations, including in specific sectors such as health care, education or infrastructure. Our development policy financing, which disburses against impactful prior policy reforms, will increasingly play a role in encouraging more transparent and sustainable borrowing practices as well as more effective and efficient public spending and policy reforms, so that citizens can see and evaluate their government’s obligations and the use of proceeds. Transparency will help attract finance, innovation and expertise so countries can build the infrastructure they need. They face severe deficits in clean water, electricity, roads, and telecommunications that reduce connectivity and undercut job creation and access to markets. Trade facilitation is a critical part of many of our country programs because the economic benefits from commerce and trade are immense, and constructive policies--such as customs processing, tariff harmonization and standardized bills of lading--are achievable.   We’re putting substantial resources into closing the gender gap. In fiscal 2019, over 60 percent of combined IBRD and IDA operations helped address gender gaps and encouraged full incorporation of women in economies. Globally, countries are losing $160 trillion in wealth due to differences in lifetime earnings between men and women. Later today I’ll join a panel to talk about unleashing the potential of women entrepreneurs. We’re investing in human capital. More than half of all 10-year-olds in low- and middle-income countries can’t read, which is unacceptable. In this week’s education and learning announcements, we set a target of at least cutting learning poverty in half. We’re also making important investments in health. Some of the goals: preventable maternal and child mortality, ensuring that women and children can access comprehensive health services, and reducing childhood stunting. Massive growth of cities is an inevitable part of the outlook. It presents critical challenges--and opportunities--for development. One key example is the design and enforcement of street grids as cities grow. The World Bank Group is helping to build sustainable cities by investing directly in urban infrastructure and helping national and municipal governments develop fiscal and financial systems to expand revenues and provide access to private capital.  Climate and environment investments are a key part of the World Bank Group’s work, and in Fiscal 2019, we committed $17.8 billion to climate-related investments. Among multilateral development banks and other international organizations, we are the single largest funder of climate action, providing almost half of total climate-related finance. Over 30 percent of IBRD/IDA and IFC commitments included climate co-benefits in fiscal 2019, surpassing our target.  We’ve doubled our climate commitment targets for fiscal years 2021-2025 to $200 billion. We recently launched PROGREEN, an umbrella trust fund to boost efforts to stop deforestation, restore degraded lands, and improve livelihoods in poor, rural communities. We’re working through PROBLUE – a new, umbrella multi-donor trust fund – to help countries sustainably develop their blue economies. We’re aggressively expanding our work on marine plastics and the prevention of marine pollution. Our support helps countries provide clean air and water, healthy oceans, resilient cities, and sustainable food and agriculture systems.  To scale up climate-related investments, we’ve launched initiatives such as Scaling Solar, which is helping countries accelerate development of utility-scale solar-energy plants. We’re one of the biggest financers of renewable energy and energy-efficiency projects in developing countries. During IDA’s current three-year funding cycle, we’ll contribute more than $1 billion annually to grid and off-grid solutions for electricity access in countries with the high electricity deficits.   Advances in digital technologies are another critical development path.  A decline in transaction costs is particularly beneficial for new entrants to markets, women, small businesses and the poor. We’re almost at the point of having systems that would allow the poor to electronically receive remittances, foreign aid, and social safety net payments as well as their earnings, and then be allowed to save and transact freely. Once more countries enable these technologies, the innovation may turn out to be as big an advance in development policy as the ones that allowed people to move from a barter economy to a market economy. A key challenge is to make new systems compatible with the world’s interest in anti-money laundering and counter terrorism efforts. We’re helping client countries preserve correspondent banks and interact with FATF, the financial action task force, and helping FATF-style regional bodies interact with developing countries.   Financial inclusion and liberalization are core steps in development. We’re using Program-for-Results financing in a host of countries to encourage concrete outcomes and ensure accountability. We’re expanding our work to support correspondent banking relationships for developing countries, a key task in building stronger financial systems as well as helping to leverage technology-based solutions to improve financial inclusion.   As we work with countries, we want to listen to clear new thinking and the best available evidence. In that vein, we aim to produce research that cements the Bank’s reputation as a development innovator and thought leader. I was pleased to see that the just-announced Nobel Prize in economics highlighted development and the importance of data and careful evaluation of results. Our recent World Development Report explained how the expansion of global supply chains has helped countries reduce poverty and boost shared prosperity. The Doing Business report, which we’ll release later this month, highlights progress on business formation rules. The Women, Business and the Law report helps identify barriers to the full inclusion of women in societies and economies. IFC’s Creating Impact report surveyed the market for impact investing and examined the conditions that would allow the market to realize its vast potential. The semi-annual GEP report on Global Economic Prospects, tracks economic trends. The June release downgraded our global growth outlook, and I expect a further downgrade in the next release. Tackling the Challenge I know I’ve left out many parts of our work program, but I wanted to mention some key parts. Global development is a complex challenge, but if we stay focused and keep our mission in mind, I’m confident we can help improve outcomes. At the World Bank Group, we have a strong culture, grounded in our founding principles and embodied by our hard-working staff. It’s important that we are open and transparent about how we do our work, and the results we achieve. I want staff and stakeholders to feel they have the freedom to raise issues in a culture of open, candid communication.Our mission is urgent. Our shareholders have given us clear guidance through the capital increase package and have set high development ambition for IDA19. The IDA19 proposals cannot be achieved without the strong support of all development partners. I thank our IDA partners for their commitment and generosity. I’m confident that, working together, we can create better conditions, with stronger policy frameworks and more robust institutions aimed at broad-based growth that reduces poverty and boosts shared prosperity. Thank you.  ","upi":"000450235","master_date":"2019-10-18T08:36:00Z","master_date_srt":"2019-10-18T08:36:00Z","master_recent_date_srt":"2019-10-18T08:36:00Z","master_recent_date":"2019-10-18T08:36:00Z","short_description":"Speech to the plenary session of the Annual Meetings of the Board of Governors","masterconttype_exact":"Speeches and Transcripts","indextype_exact":"cq5indextype","ishighlightFeature":"N","desc":" Chairman Sayed-Khaiyum, IMF Managing Director Georgieva, Governors and distinguished guests, thank you for joining us at the Annual Meetings. I’d like to welcome former World Bank Group President James Wolfensohn, who is with us here today. Thank you, Jim--and thank you to the many other leaders in the audience--for your hard work, leadership and service. Thank you, Chairman, for your remarks. The delegates who gathered at the Bretton Woods conference 75 years ago faced great uncertainty. War was raging in Europe and the Pacific. The world economy had been hammered for over a decade by high tariff barriers, depression and war. As the conference opened, U.S. Treasury Secretary Morgenthau said the new global system should be based on two ideas. First, there’s no limit to prosperity. Second, broadly shared prosperity benefits everyone. He expressed hope for a “dynamic world economy” where people of every nation have an opportunity “to raise their own standards of living and enjoy, increasingly, the fruits of material progress.” At the World Bank Group, we’re determined to help countries make that hope a reality. Even while the global economy is facing a weak patch, we believe living standards can rise in many countries. We’re committed to our goals of reducing extreme poverty and boosting shared prosperity--goals at the core of the Bretton Woods purpose and at the core of our annual meetings.   My time as president has reinforced my conviction about the urgency of our mission and the challenges we face. Some countries have made great strides in helping the poor, yet one in 12 people on the planet still live in extreme poverty, many of them in fragile and conflict-torn places. Existing institutions often aren’t able to deliver benefits to those in need, and projections for several countries show that poverty is likely to increase, not decrease. I’ve benefited from productive trips to developing countries: Egypt, Ethiopia, Madagascar and Mozambique. I expect to visit India, Pakistan, Mexico and China in coming weeks to encourage fast progress toward better policies, broad-based growth and higher living standards for all. One of the most valuable activities has been my time spent in individual meetings with world leaders--nearly a hundred heads of state since my nomination. I hear their perspectives, learn their challenges, and am encouraged by their openness to reforms that can boost growth, jobs and incomes.   I would like to present a broad update on the World Bank Group. This builds on two of my recent speeches. At the Peterson Institute, I described the weak global economic outlook, which is especially apparent in Europe, as well as trade and geopolitical uncertainty, sluggish investment rates and frozen capital in low-yielding bonds. This combination of factors presents grave challenges for development. At McGill University last week, I described some of our development tools that give us cause for optimism. We seek material impact in terms of broad-based growth, transparency, the rule of law, and private sector expansion--working in an effective way through a range of products including loans, credits, guarantees, grants, equity investments, insurance, and advisory and risk-management services. I invite the input of the Governors on these topics and welcome the accumulated wisdom of those here today and others in the development community.   Implementing the Capital Increase One of our major undertakings is implementing the capital increase package endorsed by our shareholders in 2018. I want to take this opportunity to thank shareholders for their support, which is enabling implementation of key reforms. Many members have submitted their IBRD subscription documents, with a few members already completing their subscription payment process. I encourage other members to do so as well. I’m pleased to report that, since the IBRD capital increase reached the 75% hurdle for shareholder approval a year ago, IBRD’s subscribed capital has increased by $8.7 billion, nearly 15% of the agreed increase.   The IFC capital package is close to the required shareholder approval hurdles. We’ve extended the voting period to March 18, 2020. IFC is moving to execute the capital-increase plan, shifting its focus to working “upstream” to open markets and create projects that will increase private investment in all countries, especially the poorest ones. The Multilateral Investment Guarantee Agency grew significantly under its FY18-20 strategy. Growth was driven by a deepening partnership with the Bank and IFC, an increasing focus on business development and product innovation. MIGA has expanded its reinsurance to seventy percent of gross exposure. This will allow MIGA to sustain its growth in the medium term as global macro and business conditions evolve. We’re working to increase the share of loans to those IBRD borrowers who are below the graduation threshold. As part of our country partnership frameworks for higher-income IBRD borrowers, we are systematically analyzing and assessing key elements of the IBRD graduation policy. This will shift the Bank’s lending profile substantially, helping countries that need it the most but also weighing on net income. We’ve adjusted our loan pricing, and other financial measures are under way to improve IBRD’s financial sustainability. In June, the Board approved a crisis buffer amount, as well as an annual limit on our lending to make sure that IBRD stays financially sustainable without additional capital increases. Management is committed to cost discipline throughout the year. The Expenditure Review achieved $4.8 billion in expected savings over Fiscal 2019 to Fiscal 2030, and progress is being made toward achieving the additional cumulative efficiency gains of $1.8 billion from the capital package. For IBRD, cost discipline will be complemented by tighter target zones for the “budget anchor,” the ratio of administrative expenses to business revenues. Fiscal 2019 was the first year in many decades when the administrative expenses of IBRD and IDA were less than their business revenues. As part of the World Bank Group capital increase, we are committed to an ambitious new target to bring the ratio of IBRD administrative budget to loan spread income down in steps, achieving a target range of 50-60 percent by FY30.  The anchor goals are demanding, but the Bank is committed to them. Replenishing IDA Ensuring the International Development Association is properly financed is a vital step in supporting the Horn of Africa, the Sahel, and our development goals around the world. IDA is the world’s largest and most effective platform for fighting extreme poverty. The current IDA 19 replenishment cycle, the nineteenth three-year cycle, is making good progress, and I’m encouraged by the engagement with donor countries. Consultations with IDA partners will continue in the coming months to finalize the policy package and financing framework for the IDA19 cycle.   At the same time, IDA is continuing to work toward good development outcomes with existing funds. We’ve been scaling up our commitments to countries affected by fragility, conflict and violence, as well as bolstering the ability of borrower countries to respond to crises, including through the Crisis Response Window. Since 2010, IDA funding has helped 769 million people receive essential health, nutrition, and population services, including immunizations for over 300 million children. It has improved access to water services for nearly 100 million people. It has helped to recruit or train 13 million teachers. And it has helped to build or improve more than 146,000 kilometers of roads. There’s an urgent need for IDA funding, and we’re counting on the continued strong support of our shareholders and donor countries in funding IDA as we address these challenges. The IDA19 replenishment is based on five special themes: jobs and economic transformation; fragility, conflict and violence; climate change; gender and development; and governance and institutions. It will also incorporate four cross-cutting issues: addressing debt vulnerabilities, exploiting opportunities from digital technology, investing in people to build human capital, and promoting inclusion of people with disabilities. The package includes a significant scale up of the regional program, as well as a further increase in FCV resources. The Private Sector Window, introduced in IDA18 together with IFC and MIGA, will continue to help mobilize private capital and scale up private sector development, particularly in fragile situations. IDA19 will expand IDA’s regional program, as well as increase resources for fragile situations. We expect to see poverty become more concentrated in fragile and conflict-affected states, with many refugees fleeing to countries that already struggle to deliver basic services, security and peace to their citizens. Notably, IDA commitments to countries affected by fragility, conflict and violence reached $8 billion in Fiscal 2019. Regarding peace and security, let me highlight just one out of dozens of memorable meetings. At the end of April, I met with Ethiopian Prime Minister Abiy Ahmed. He described with passion his work toward peace in the region, his peace-making trips to neighbors, and his dramatic economic program, which we are supporting with one of our biggest programs in the world. I phoned Prime Minister Abiy on Friday after he was named the winner of the Nobel Peace Prize. With senior colleagues in my office from around the World Bank Group, women and men who have worked so hard on Ethiopia and the region, we congratulated him on receiving one of the world’s most prestigious honors. Thanks in part to his efforts and others in the region, the Horn of Africa has the chance to break out of its long period of violence. In recent weeks, I’ve had the chance to meet with and encourage the nearby heads of state of Sudan, Somalia, Kenya, Rwanda, and Egypt, and others at the World Bank are also meeting with South Sudan, Eritrea and Djibouti. We can all take a moment today to look for ways to help this important region move dramatically forward. Personnel Is Key This brings me to the importance of World Bank Group personnel, who bring their dedication, skills and experience to the job every day. I’ve welcomed spending highly valuable time with hundreds of our development professionals. One of the most dynamic is Kristalina Georgieva. I’d like to take the opportunity now to recognize Kristalina’s accomplishments and congratulate her on her appointment as Managing Director of the IMF. Congratulations, Kristalina. We will miss you across the World Bank Group--it’s a loss for me and all of us--but we look forward to your strong leadership at the IMF and to working with you toward growth programs in developing countries.   I’d like to report on the transition in leadership. It’s been fast moving, and is going smoothly. Congratulations to our new Managing Director, Axel van Trotsenburg. Many of you here know the depth of his experience and expertise--including regional operations, IDA replenishments, relationships with stakeholders, and leadership skills, to name a few. I work closely with Axel, and we’re looking forward to innovation, continuity of purpose, and strength of implementation.    Congratulations also to Managing Director Anshula Kant, who started October 7 as Chief Financial Officer. Anshula brings more than 35 years of expertise in banking, finance, technology and management, most recently as managing director of the State Bank of India. Thank you to IFC’s CEO, Philippe le Houérou, for adding to his current tasks the role of co-chair of the IDA-19 replenishment, along with Antoinette Sayeh. I’d like to thank Keiko Honda for her six years of work at the Multilateral Investment Guarantee Agency. We’re reaching the conclusion of a broad search for her replacement, and I hope to have an update in the coming weeks. Looking throughout the World Bank Group, we recognize the challenges of leadership transitions but also the opportunities to focus on the mission, work hard and benefit from change. I look for input from employees and other stakeholders. While differences of view are common--and necessary for good decision-making--I’m pleased with how people are working together, and I’m confident we’re well positioned to provide solid progress on behalf of our stakeholders. IBRD, IDA, IFC and MIGA are working together to make us more effective, efficient and accountable. Steps include coordinating our country programs, co-locating offices, aligning staffing to meet the needs of country programs, adjusting the global footprint of the WBG to increase our presence in lower income countries, providing employee benefits that are attractive for the task and fair to stakeholders, and developing country platforms that will help governments work more effectively with the entire investor community. We’re encouraging more staff exchanges between the WBG entities and more joint teams working together on a problem to create better solutions for clients. Successful implementation of these processes is critical to our mission. Financial Results Over the last few months, we’ve reported on our financial results in several ways. For our fiscal year ended June 30, 2019, we published commitments, financial statements, a detailed “management discussion and analysis,” and the recently released annual reports. We believe in transparency for our borrowers and want to practice it ourselves. The financial results from the fiscal year highlighted the strength of the financial positions of the World Bank Group entities, steady demand for financing, and continued support from shareholders. We are working to increase our commitments to lower-income countries as they improve their development outlook and to shift resources toward countries suffering from fragility, conflict, and violence. We’ve doubled core allocations for FCV-affected countries to more than $14 billion under IDA18. The Global Concessional Financing Facility (GCFF) has provided around $500 million in grants to unlock more than $2.5 billion in concessional financing for Jordan and Lebanon to help address the influx of Syrian refugees, as well as for Colombia to help address the needs of more than 1.4 million displaced Venezuelans and their host communities. For Fiscal 2019, World Bank Group commitments reached nearly $60 billion. IBRD’s commitments were on par with the prior year at $23 billion, while disbursements increased by 16% to $20 billion in Fiscal 2019. Commitments to countries below the graduation discussion income threshold were over 70% last year. To strengthen financial management, IBRD introduced a financial sustainability framework and lending limit. Considering loan repayments received, net disbursements were $10 billion in Fiscal 2019. This increased IBRD’s loan portfolio to $193 billion, 5% above a year ago. With the Fiscal 2019 balance sheet, IBRD netted its derivative asset and liability positions in alignment with the preferred accounting treatment and prevailing market practice. IBRD raised medium- and long-term debt of $54 billion during Fiscal 2019. Allocable income, the internal measure that IBRD uses to make net income allocation decisions, was $1.19 billion, which reflects the gradual impact of new pricing measures and will be used to increase reserves and support IDA. Turning to IDA, its commitments were $22 billion in Fiscal 19. Net disbursements increased by almost a third, increasing the outstanding loan balance to $152 billion. IDA introduced its short-term debt instruments in the capital markets, with an outstanding balance of $1.9 billion as of June 30, 2019. Last week, it issued a 1.25-billion euro seven-year bond.   IFC concluded Fiscal 2019 with $8.9 billion in long-term financing from its own account and mobilized an additional $10.2 billion from other investors, for a total program delivery of over $19 billion. Income from the loan and debt securities portfolio, net of allocated funding costs, was $872 million. Income available for designations—the key internal measure—was $909 million in FY19. IFC raised medium- and long-term debt of $11 billion during Fiscal 2019.  In Fiscal 2019, IFC adopted a new accounting standard that resulted in IFC reporting all gains and losses on investments in equity securities in net income.  MIGA provides political risk insurance and credit enhancement. It issued $5.5 billion in guarantees in Fiscal 2019, double the amount from six years ago, and mobilized $9.3 billion in development financing. Gross guarantee exposure was a record $23.3 billion, also more than double that from six years ago. MIGA reported a net income of $82.4 million in Fiscal 2019. Despite the portfolio growth, the capital utilization ratio (MIGA’s capital adequacy measure) remained stable at 47 percent. This reflects MIGA’s continued deployment of private sector reinsurance capacity to manage its capital, with 64 percent of the gross exposure ceded to reinsurance as of the end of FY19. With one of the world’s biggest LIBOR-linked long-maturity balance sheets, we look forward to working on a proactive and orderly LIBOR transition, preserving the integrity of the financial model of the Bank while applying principles of fairness and transparency. Work Program Looking forward, we face a number of development challenges. I’d like to briefly identify those and explain some of our approaches. Global growth has slowed; investment rates in developing countries aren’t sufficient to meet development needs; health systems, learning outcomes and technology are falling further behind needs; climate changes and extreme weather are taking a heavy toll; for some countries populations are expanding much faster than resources and capacity; and many countries are facing fragility, conflict and violence, making development even more urgent and difficult. The result is that several countries are facing rising poverty rates and falling median incomes, the opposite of our mission.   We’re sharpening our focus on creating strong country programs to boost growth and improve development outcomes. To oversimplify, we –meaning the World Bank, IFC and MIGA--work through country offices and country directors, with the support of technical and program experts, to help governments create improvements. They can be tailored to a country’s and region’s unique circumstances. Coordination with other MDBs is a key part of our development work. We’re encouraging better implementation of graduation and price differentiation to avoid undercutting each other’s work, covenants and standards. We’re working cooperatively with countries and the development community to launch country platforms. They can help countries prioritize their key development issues and encourage donors, including non-traditional donors, to engage in the most constructive way. There continue to be many international groups setting up yet more discussion groups on how to define, standardize, centralize and guide country platforms. The strong view of the World Bank Group is that there’s been ample discussion and final reports. The next steps are practical--for example, helping countries organize in-country meetings this month to prioritize their activities with major donors. We’re working on platforms with 11 countries so far.  The outcomes will be tailored to the countries and their needs, and will increase the focus on private sector involvement and engagement. The goal is for the World Bank Group and the broader development community to be as effective as possible in helping countries achieve good development outcomes. In this process, countries need to provide strong leadership to choose a path that works economically, socially and politically. It’s clear that the quality of policies and institutions plays a key role in explaining why some developing countries have been able to make the leap out of poverty, while others have been unable to advance. It’s also clear that development cannot be imposed from outside--country leadership and ownership matter. Jobs and economic transformation are a key topic in the Development Committee discussions this week. Key building blocks include clean water and dependable access to electricity, markets and market pricing, especially for agriculture inputs and outputs. Key development steps are the establishment of a dependable rule of law that encourages transparency in government contracts and pensions, fights corruption, builds strong and accountable institutions and creates a level playing field so that the private sector is allowed to compete fairly with state-owned enterprises, the military and the government itself. For many countries, this means opening up their closed and protected markets, allowing prices to be determined by market forces, and liberalizing capital flows. The payoff is that countries that make this step attract more investment, both foreign and domestic, and can generate growth that benefits a broader part of the population. The private sector must play a pivotal role in development. With official development assistance stagnant and public-sector debt growing in many countries, it’s critical that we pursue private-sector solutions and establish an environment that attracts private investors. The IFC and World Bank developed what we call the “Cascade” approach, which looks for private-sector solutions to development challenges and directs World Bank programs to overcome obstacles in the private sector framework. This approach is key to attracting new investment and boosting the impact of every development dollar.  The World Bank’s Systematic Country Diagnostic, and the IFC’s  Country Private Sector Diagnostic, assess barriers to private-sector investment and recommends ways to address them. We’re working to deepen capital markets, which is key to long-term development. Through the Joint Capital Markets Program, or J-Cap, the IFC and World Bank are helping countries build local capital markets through reforms and investments from Bangladesh to Morocco. A big obstacle to investment is the amount of a country’s sovereign and SOE debt and the lack of transparency surrounding the debt. Public debt in emerging markets and low-income countries has risen to levels not seen since the 1980s, and too much of that debt isn’t transparent. Some lenders, including Non-Paris Club lenders and private creditors, have imposed strict non-disclosure clauses on government borrowers; required liens and collateralization that violate the negative pledge clauses in our loan contracts; employed weaker procurement, environmental and social standards; placed guaranteed debt in state-owned enterprises and special purpose vehicles that undermine debt sustainability, and paid insufficient attention to non-concessional borrowing policies that are key to emerging from poverty.     When countries are transparent, they typically enjoy higher credit ratings, lower borrowing costs and better ability to attract foreign direct investment.  But we’ve found that fewer than half of the countries we’ve reviewed meet minimum requirements for debt recording, monitoring and reporting. Lenders need to be more transparent, eliminating confidentiality clauses in their lending to sovereign borrowers. It is also critical to have transparency in public spending and public pensions. We support public expenditure reviews to understand gaps in service delivery relating to resource allocation decisions and process-related bottlenecks. These diagnostics help countries develop more effective and transparent budget allocations, including in specific sectors such as health care, education or infrastructure. Our development policy financing, which disburses against impactful prior policy reforms, will increasingly play a role in encouraging more transparent and sustainable borrowing practices as well as more effective and efficient public spending and policy reforms, so that citizens can see and evaluate their government’s obligations and the use of proceeds. Transparency will help attract finance, innovation and expertise so countries can build the infrastructure they need. They face severe deficits in clean water, electricity, roads, and telecommunications that reduce connectivity and undercut job creation and access to markets. Trade facilitation is a critical part of many of our country programs because the economic benefits from commerce and trade are immense, and constructive policies--such as customs processing, tariff harmonization and standardized bills of lading--are achievable.   We’re putting substantial resources into closing the gender gap. In fiscal 2019, over 60 percent of combined IBRD and IDA operations helped address gender gaps and encouraged full incorporation of women in economies. Globally, countries are losing $160 trillion in wealth due to differences in lifetime earnings between men and women. Later today I’ll join a panel to talk about unleashing the potential of women entrepreneurs. We’re investing in human capital. More than half of all 10-year-olds in low- and middle-income countries can’t read, which is unacceptable. In this week’s education and learning announcements, we set a target of at least cutting learning poverty in half. We’re also making important investments in health. Some of the goals: preventable maternal and child mortality, ensuring that women and children can access comprehensive health services, and reducing childhood stunting. Massive growth of cities is an inevitable part of the outlook. It presents critical challenges--and opportunities--for development. One key example is the design and enforcement of street grids as cities grow. The World Bank Group is helping to build sustainable cities by investing directly in urban infrastructure and helping national and municipal governments develop fiscal and financial systems to expand revenues and provide access to private capital.  Climate and environment investments are a key part of the World Bank Group’s work, and in Fiscal 2019, we committed $17.8 billion to climate-related investments. Among multilateral development banks and other international organizations, we are the single largest funder of climate action, providing almost half of total climate-related finance. Over 30 percent of IBRD/IDA and IFC commitments included climate co-benefits in fiscal 2019, surpassing our target.  We’ve doubled our climate commitment targets for fiscal years 2021-2025 to $200 billion. We recently launched PROGREEN, an umbrella trust fund to boost efforts to stop deforestation, restore degraded lands, and improve livelihoods in poor, rural communities. We’re working through PROBLUE – a new, umbrella multi-donor trust fund – to help countries sustainably develop their blue economies. We’re aggressively expanding our work on marine plastics and the prevention of marine pollution. Our support helps countries provide clean air and water, healthy oceans, resilient cities, and sustainable food and agriculture systems.  To scale up climate-related investments, we’ve launched initiatives such as Scaling Solar, which is helping countries accelerate development of utility-scale solar-energy plants. We’re one of the biggest financers of renewable energy and energy-efficiency projects in developing countries. During IDA’s current three-year funding cycle, we’ll contribute more than $1 billion annually to grid and off-grid solutions for electricity access in countries with the high electricity deficits.   Advances in digital technologies are another critical development path.  A decline in transaction costs is particularly beneficial for new entrants to markets, women, small businesses and the poor. We’re almost at the point of having systems that would allow the poor to electronically receive remittances, foreign aid, and social safety net payments as well as their earnings, and then be allowed to save and transact freely. Once more countries enable these technologies, the innovation may turn out to be as big an advance in development policy as the ones that allowed people to move from a barter economy to a market economy. A key challenge is to make new systems compatible with the world’s interest in anti-money laundering and counter terrorism efforts. We’re helping client countries preserve correspondent banks and interact with FATF, the financial action task force, and helping FATF-style regional bodies interact with developing countries.   Financial inclusion and liberalization are core steps in development. We’re using Program-for-Results financing in a host of countries to encourage concrete outcomes and ensure accountability. We’re expanding our work to support correspondent banking relationships for developing countries, a key task in building stronger financial systems as well as helping to leverage technology-based solutions to improve financial inclusion.   As we work with countries, we want to listen to clear new thinking and the best available evidence. In that vein, we aim to produce research that cements the Bank’s reputation as a development innovator and thought leader. I was pleased to see that the just-announced Nobel Prize in economics highlighted development and the importance of data and careful evaluation of results. Our recent World Development Report explained how the expansion of global supply chains has helped countries reduce poverty and boost shared prosperity. The Doing Business report, which we’ll release later this month, highlights progress on business formation rules. The Women, Business and the Law report helps identify barriers to the full inclusion of women in societies and economies. IFC’s Creating Impact report surveyed the market for impact investing and examined the conditions that would allow the market to realize its vast potential. The semi-annual GEP report on Global Economic Prospects, tracks economic trends. The June release downgraded our global growth outlook, and I expect a further downgrade in the next release. Tackling the Challenge I know I’ve left out many parts of our work program, but I wanted to mention some key parts. Global development is a complex challenge, but if we stay focused and keep our mission in mind, I’m confident we can help improve outcomes. At the World Bank Group, we have a strong culture, grounded in our founding principles and embodied by our hard-working staff. It’s important that we are open and transparent about how we do our work, and the results we achieve. I want staff and stakeholders to feel they have the freedom to raise issues in a culture of open, candid communication.Our mission is urgent. Our shareholders have given us clear guidance through the capital increase package and have set high development ambition for IDA19. The IDA19 proposals cannot be achieved without the strong support of all development partners. I thank our IDA partners for their commitment and generosity. I’m confident that, working together, we can create better conditions, with stronger policy frameworks and more robust institutions aimed at broad-based growth that reduces poverty and boosts shared prosperity. Thank you.  ","date":"2019-10-18T08:36:00Z","contenttype":"Speeches and Transcripts"},"facets":{"displayconttype_exact":{"0":{"count":11,"name":"Speeches and Transcripts","label":"Speeches and Transcripts"}},"lang_exact":{"0":{"count":11,"name":"English","label":"English"}}}}}