By Caroline Mwanga
WASHINGTON (IDN) — While planning to rebuild economies after the COVID-19 pandemic, countries would do well to lay the foundation for a green, resilient, and inclusive future. This was the message of the World Bank-International Monetary Fund (IMF) virtual Spring Meetings from April 5 to 11, 2021. World Bank Group President David Malpass outlined the major challenges facing the world, including COVID, climate change, rising poverty and inequality, and growing fragility and violence as a part of the focus on Economic Recovery: Toward a Green, Resilient, and Inclusive Future. (P03) CHINESE | JAPANESE TEXT VERSION PDF | PORTUGUESE
U.S. Treasury Secretary Janet Yellen encouraged developed economies to continue to support a global recovery. She also highlighted the importance of helping developing countries meet their climate goals along with their development objectives, adding that the availability of green finance will be critical.
IMF Managing Director Kristalina Georgieva was also part of the conversation with Malpass and Yellen, pointing out that climate risks are a growing threat to the world’s macroeconomic and financial stability.
Other speakers at the event, discussing themes of sustainability, innovation, and inclusion, were ministers from Cambodia and Egypt, youth, business owners, and civil society representatives. Melinda Gates issued a call to put women and girls at the centre of the recovery, and Grammy-nominated singer Somi ended the event with a song, “Changing Inspiration.”
The World Bank Group President Malpass said, inequality is most apparent in the direct effects of pandemic that hits informal workers and the vulnerable the most. The inequality extends well beyond that to vaccinations, the concentration in wealth, the unequal impact of the fiscal stimulus and asset purchases, and the imbalance in debtor/creditor relationships particularly for people in the poorest countries.
“The World Bank Group is leaning forward as much as possible to face these challenges,” Malpass assured. In response to COVID-19, the World Bank took broad, fast action, and quickly achieved over 100 active operations of support for developing countries. Commitments rose 65% in 2020 from 2019.
Even before vaccines were available, working closely with GAVI, WHO, and UNICEF, the World Bank Group conducted over 100 capacity assessments. Now the Bank is passing several specific country vaccine financing operations each week through the board with already 10 approved, ten more scheduled in April, and around 30 more expected in May and June for a total of around four billion dollars in 50 countries.
There are major challenges for the countries in securing deliveries from COVAX and manufacturers. Many developing countries entered the pandemic with unsustainable debt levels. The World Bank has worked to achieve a debt service suspension initiative and increased transparency in debt contracts, said Malpaas.
Apparently, both steps are helping. For example, the World Bank has increased grants and loans to the DSSI (Debt Service Suspension Initiative) countries with a view to maximizing resources available to people.
Also, the World Bank and IMF are working in close collaboration to support the G20’s implementation of the “Common Framework for Debt Treatments beyond the DSSI”, a new instrument for dealing with sovereign debt vulnerabilities. “We’re pushing forward together on Chad and the World Bank hopes to be able to put in substantial fast dispersing resources.”
Malpass said, the Bank is finalizing a new climate change action plan, which includes a big step up in financing, building on its record climate financing over the past two years. It includes new analytical support to countries as part of integrated climate and development programs.
The plan identifies key priorities for action with a focus on both adaptation and mitigation. It also includes a strong focus on a just transition from coal. The Bank is also working toward aligning its financial flows with the objectives of the Paris Agreement, a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on December 12, 2015, and entered into force on November 4, 2016. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
U.S. Treasury Secretary Yellen expressed the hope that what the US is domestically doing is helpful to the entire global community. “Stronger growth in the US is going to spill over positively to the entire global outlook. And we’re going be careful to learn the lessons of the financial crisis, which is don’t withdraw support too quickly.”
Besides, the US would encourage all those developed countries that have the capacity, using fiscal policy and monetary policy, to continue to support a global recovery for the sake of the growth in the entire global economy, Yellen emphasized.
IMF managing director Georgieva assured that actions taken by the United States to boost prospects for recovery in the US are helping the whole world. While IMF is upgrading its projections for the year, economic fortunes within countries and across countries are diverging dangerously.
“And this is why in these meetings, we are focusing on giving everyone a fair shot. A fair shot in the arm everywhere, so we can bring the pandemic to a durable end, to underpin sustainable recovery. But also a fair shot to a chance for a better life for vulnerable people and for vulnerable countries.”
As the 2021 World Bank Group–IMF Spring Meetings were coming to a close, the World Bank chief said he was “very pleased” with strong support from all shareholders, the G7, G20, and Development Committee for the World Bank’s actions on climate, debt, vaccines, and other development priorities.
The World Bank-IMF Development Committee Communiqué commended the Bank’s “scale-up of climate finance over the past two years, its continuing role as the largest multilateral source of climate investments in developing countries, its emphasis on biodiversity, and its technical and financial support for adaptation, mitigation, and resilience”.
The Communiqué looks forward to the World Bank’s Climate Change Action Plan for 2021-2025 and recognizes its work on disaster risk management, preparedness, and response. “We support the WBG’s and the IMF’s important role in preparations for the CBD COP15, UNCCD COP15, and UNFCCC COP26 meetings later this year.”
The Communiqué further said: “We support the frontloading of IDA19 resources from FY23 to FY22 to help the poorest countries in their immediate response to the COVID-19 crisis. We also welcome advancing IDA20 by one year.”
The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Overseen by 173 shareholder nations, IDA aims to reduce poverty by providing zero to low-interest loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.
An ambitious and successful IDA replenishment by December 2021, underpinned by a strong policy framework, will support a green, resilient, and inclusive recovery in IDA countries as they address both the immediate and longer-term impacts of the pandemic, added the Communiqué. [IDN-InDepthNews – 21 April 2021]
Image credit: World Bank