Highnesses, Excellencies, ladies and gentlemen, thank you very much for inviting me to participate in the Tenth Anniversary Edition of the World Government Summit.
We are meeting in 2023 with the world in turmoil. Russia’s invasion of Ukraine has caused significant disruptions. Developing countries are facing an economic crisis, heavy debt burdens, high inflation, and climate change. Underinvestment is blocking future growth. Access to electricity, fertilizer, food and capital has been slashed. These problems compound the already devastating reversals in poverty, health and education. In short, there is a "crisis facing development."
Here in MENA, the region is facing unprecedented droughts, water scarcity, desertification, coastal erosion and air pollution. This crisis requires a new way of thinking, innovative solutions, and the right institutions to implement them. The theme of this Summit — “Shaping Future Governments” — is therefore especially timely.
Current and future governments need to balance complex goals. For example, on energy: on the one hand, they need to provide reliable and affordable electricity to their people. On the other hand, they need to find low-carbon growth paths and provide a just transition for society to lower GHG emissions. Another example is on agriculture. Countries are looking for ways to ensure food security and protect the poor in today’s high price environment. At the same time, untargeted and inefficient subsidies are straining tight budgets, distorting global markets, and destroying the private sector.
This is an intricate balancing act in turbulent waters. Governments need to act with impact through these complexities and create conditions for sustainable and inclusive growth.
In the current context, there are no easy sources of growth. The world is confronted with difficult macroeconomic conditions: slower growth in advanced economies and China, high inflation, currency depreciations, high fiscal deficits and debt. It will take hard work to reignite growth and productivity. Let me offer a few thoughts on what this will entail.
- First, and as a precondition to growth, governments should implement sound macroeconomic policies, including monetary, exchange rate, fiscal and trade policies. Stable currencies can facilitate private capital flows, FDI, and trade. Countries should promote trade facilitation and avoid protectionist measures such as the latest wave of export bans on food and fertilizers and the local content requirements that will impede trade. Such market barriers hit poor consumers in low-income food-importing countries the hardest.
- Second, countries should encourage more investment to create jobs, increase output, and boost production, allowing growth in consumption. This requires improving the business enabling environment and strengthening the rule of law. Restrictions on FDI and corruption are key factors limiting the quantity and quality of cross-border investment. Reducing business start-up costs and strengthening property rights can also help enable business growth. An important part of the effort to build efficient markets, particularly for the MENA region, is transforming State-Owned Enterprises to well-governed, market-oriented, and financially sound enterprises.
- Third, countries need to work toward better debt transparency and sustainability. This is especially relevant for the rising share of poor countries that are at high risk of debt distress. This month Kristalina Georgieva and I will be co-chairing a roundtable to push for faster progress in creditor committees, fair burden sharing among creditors, and debt restructurings that reduce debt burdens to sustainable levels that attract new investment.
- Fourth, governments need to integrate climate and development in ways that increase energy access and speed up the transition to lower-carbon energy. This needs to be complemented by increased investment in climate adaptation. Investments in infrastructure to enhance energy, resilience and efficiency in transport, water and housing can foster long term growth. Weather resilient seeds, better storage capacity, and investments to improve agricultural productivity are also important for growth and resilience.
- Finally, the future path also requires technological leaps to propel greener growth. And full utilization of the economic opportunities from digital technologies. For the digital transformation to be successful, we need trusted, quality and inclusive public infrastructure; accessible and affordable internet; and the development of digital skills.
The World Bank Group is engaged across all these areas, and I look forward to continuing our cooperation with all of you.
Thank you, and I wish you all productive, insightful, and practical discussions during the Summit.
