Thank you David and thanks everybody for joining on a call today and first I hope you and your families are staying well. I have several things I want to touch on it the opening and then I will take questions.
The health and economic impacts that the COVID-19 pandemic and shut down have inflicted on developing countries are severe. Our estimate is that up to 60 million people will be pushed into extreme poverty – that erases all the progress made in poverty alleviation in the past three years. And our forecasts indicate deep recession this year as much as minus five percent recession for the global economy. Families have lost loved ones, millions of jobs and livelihoods are lost, the health systems are under enormous strain worldwide.
From the beginning what the World Bank Group’s goal was to provide rapid, flexible responses to developing countries. That’s a way we can protect the poorest, by providing cash and other expandable support on debt, also to maintain the private sector and bolster the economic recovery. What we wanted to do was provide broad support in terms of the countries, the road to recovery from this leads through all countries. And we also wanted wide, broad support in terms of the types of financial support. With that includes the direct support from the health crisis and also working capital for small businesses, technical assistance to help countries with debt trends guarantee and programs that get digital cash to people so they can survive and later on participate in the recovery by working or maybe by starting a business. So that is the reason for our emphasis on fast and broad support.
Today, we are announcing that the World Bank Group is now financing emergency programs in 100 countries –that’s home to 70% of the world’s population.
This represents a significant milestone in the World Bank Group’s effort to deploy $160 billion dollars over a 15-month period. So this is a milestone in the $160 billion dollar that we have committed to. The programs are tailored to the countries to effectively respond to the health, economic and social shocks that that country are facing. The programs will reinforce healthcare systems; and also help procure vital life-saving medical equipment and supplies. And these programs contain mechanisms that allow other donors to rapidly expand the program. And we invite that. There can be co-financing, there can be additional donors parallel with these programs, so it is important that we note that the programs are expandable. And because of the breadth that means the interested donors and other multilateral banks can reach countries around the world.
Added to this, there are the billions of dollars that were fast-tracked by the IFC and MIGA, the parts of the World Bank, to help maintain the private sector. The programs are going to work to mitigate corruption. Transparency is a key step in creating resilience and recovery after the crisis, that’s transparency in terms of government debt, in terms of government investment, in terms of contracts and expenditures and tax collection. Those are all critical in having a strong recovery on the other side of the crisis.
While the World Bank Group is providing sizeable resources, this won’t be enough. I mentioned the importance of others, bilateral donors and so on, adding to the program, but the safe reopening of the advanced economies is one of the most critical parts of achieving a recovery in the developing world. Also, remittances, trade finance, and tourism are critical loses for the countries and will be critical steps in the reopening.
I will also like to highlight that on May 1 we marked the start of an official bilateral debt payment suspension for IDA countries, those that request forbearance. It is an initiative that I launched with the IMF’s Managing Director in March and it was quickly endorsed by the G20 countries. I was pleased to see President Xi’s explicit endorsement of the moratorium in his speech yesterday. The full participation of all China’s official lenders is vital for the poorest countries, and I welcome President Xi’s commitment on that.
Country participation has been substantial with well over half already fully engaged in the steps toward the suspension of their official bilateral payment. China’s full participation will help, and it is especially welcomed given its stage of development. A key remaining step in the debt payment moratorium is comparable treatment by commercial creditors. I have been somewhat frustrated by the slow pace. Commercial creditors are still, by enlarge, taking payments from even the poorest countries and there needs to be faster movement toward the commercial creditors meeting the goals of the G20 announcement of bilateral debt suspension and comparable treatment by commercial creditors. We look forward to their working on this with countries in order to find a solution to this very heavy debt burden.
IDA countries need to act quickly to take advantage of this initiative. It will free up resources for the major COVID response and economic response that the countries need to take. Going forward, it will be important that the countries have full transparency on their debt and investment activities by their government in order to create the strongest possible recovery and boost the confidence of investors as they look to reinvest.
To close: I am very pleased with what the World Bank Group staff have accomplished in this last month. We will continue to take broad, fast action and try to strengthen our own response.
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