For the second year in a row, the World Bank’s annual meetings will be held as emerging and developing countries struggle to cope with the coronavirus pandemic. But this time, the focus on the multilateral’s purpose post-Covid.
As its president, David Malpass, said on a visit to Sudan on the eve of the meetings, in many economies poverty is rising, living standards are falling and past gains on nutrition and healthcare going into reverse.
“The challenge for the development community is to shorten the crisis, resume development, and lay a strong foundation for a future that is more prosperous and better prepared for disasters like Covid-19,” he said.
The bank can point to some achievements. It committed more than $157bn to fight the impacts of the pandemic and is making $20bn available to help developing countries finance the purchase and distribution of vaccines.
It pushed for the G20 to adopt a debt service suspension initiative (DSSI) that deferred about $6bn of interest payments in 2020 and a further $7bn in 2021.
But these measures are only mitigating, rather than reversing, the impacts of this frightening disease. Covid has pushed almost 100 million people into extreme poverty with several tens of million more becoming poor.
According to the charity ONE, there were 11.6 vaccinations for every 100 people in Africa as of October 7, compared with Europe and North America where everyone has had at least one vaccine.
And the DSSI comes to an end in December as 29 low-income countries are at high risk of debt distress with seven potential already in debt distress, according to the bank’s own debt sustainability index.
Masood Ahmed, president of the Center for Global Development thinktank and a former bank vice-president, says finance ministers should use the meetings to send a strong signal that the bank and the IMF will be able to continue to provide funding.
The obvious opportunity is the triennial replenishment of the International Development Association (IDA), the arm of the bank that provides grants and low interest loans to the poorest countries. IDA20 is due to be wrapped up in December.
“A successful, adequately sized IDA Replenishment will be key for the World Bank to deliver at this level for low income countries,” says Ahmed, who also highlights the potential for creatively leveraging its balance sheet for the IBRD, that focuses on middle income countries.
Luiz Vieira, co-ordinator of the civil
society network Bretton Woods Project, says he wants the bank to close the private sector window that provides subsidised finance to its private sector-focused arms, the International Finance Corporation and Multilateral Investment Guarantee Agency.
“It is not very large at $2.5bn but for us it is a test case of whether the bank has really reconsidered its approach,” he says, adding that he wants to see a jobs and economic transformation pillar in the IDA20 programme that will run up to June 2025.
“We’re very keen to ensure that, in that component, the bank takes the experience of the past and changes its focus to really supporting local and regional, private sector.”
Global public goods
But beyond that, there is growing recognition that the bank needs to have a greater role in providing global public goods, such as pandemic preparedness.
An independent panel commissioned by the G20 and co-chaired by WTO director general Ngozi Okonjo-Iweala said earlier this year it should incorporate pandemic prevention, preparedness and response as a core activity alongside climate.
“We must strengthen global governance and mobilise greater and sustained investments in global public goods, which have been dangerously underfunded,” it said.
There may, however, be a greatly reduced appetite for “reimagining” how the Bank and Fund operate — especially amid allegations that IMF managing director Kristalina Georgieva interfered with the bank’s defunct Doing Business report while she was its CEO.
But as Ahmed says: “It is essential that this issue does not distract from the urgent, consequential, and substantive agenda on which the annual meetings must make progress.”
