Even as the global economy begins to strengthen, major risks remain for developing countries and the world’s poor. The World Bank Group retains an essential role in helping ensure that growth is sustainable, with benefits that reach everyone and help reduce poverty and inequality.
This was a key message from the Development Committee, a ministerial-level forum of the World Bank Group and the International Monetary Fund, in a communiqué<http://www.worldbank.org/en/news/press-release/2017/04/22/world-bankimf-spring-meetings-2017-development-committee-communique> issued at the close of the institutions’ Spring Meetings in Washington.
The committee, which represents 189 member countries, reiterated its support for the Bank Group’s role in tackling a wide range of challenges in the global public goods arena and its work to develop a comprehensive approach to crises. On the urgent issues of famine and forced displacement, the committee cited both “efforts to mobilize and rapidly disburse support for countries, communities, and refugees” and the importance of “investing to address the root causes and drivers of fragility and helping countries build institutional and social resilience.”
World Bank Group Jim Yong Kim addressed this new approach in his opening remarks<http://www.worldbank.org/en/news/speech/2017/04/20/opening-remarks-by-world-bank-group-president-jim-yong-kim-wbg-imf-2017-spring-meetings-opening-press-conference> to the press at the beginning of the meetings. The Bank Group is working closely with the UN and other global partners on a coordinated and effective response to famine in parts of East Africa and Yemen. At the same time, Kim emphasized that “we will use every tool we have, financial and advisory, to prevent famine in the future.”
On the refugee crisis, in a speech<http://www.worldbank.org/en/news/speech/2017/04/11/speech-by-world-bank-group-president-jim-yong-kim-rethinking-development-finance> at the London School of Economics in the lead-up to the meetings, Kim noted major efforts that address urgent needs while supporting long-term development objectives. IDA, the Bank Group’s fund for the poorest countries, has allocated $2 billion over the next three years to support low-income countries that are hosting refugees.
A complementary initiative addresses the cross-border nature of forced displacement. As Kim explained, “For the first time, we’re also providing concessional, essentially below-market interest financing to any middle-income country hosting refugees through our new Global Concessional Financing Facility, starting with support to Jordan and Lebanon, who are hosting millions of Syrian refugees.”
The committee’s communiqué and the statements by Kim stress the need to address doubts that many people feel, in developed and developing countries alike, whether they are benefiting from a more interconnected and economically integrated world. Some of this is rooted in inequality; the committee notes that “gains have not always been shared evenly within countries.” Kim’s speech in London also highlights a “convergence of aspirations,” as technology makes it easier for people to compare their income prospects and quality of life with others around the world. He noted the risks: when people have “no opportunity to achieve those aspirations, frustration may very well lead to fragility, conflict, violence, extremism, and eventually migration.”
To meet the ambitions embodied by the world’s Sustainable Development Goals – as well as growing aspirations –, he and the committee have emphasized a major shift in thinking about development finance: the need to mobilize funding on a much larger scale, with a stepped-up role for investments from the private sector.
For many projects crucial to development, even in the poorest countries, the Bank Group sees untapped potential for private investment, on commercial terms. As the committee puts it, development partners can “prioritize private sector solutions when deploying scarce public resources, including for infrastructure.” The Bank Group can help by reducing risk, both real and perceived, for investors, while also helping ensure that projects really work for poor countries and poor people.
As Kim states in his speech, there “has never been a better time to find those win-win solutions. The trillions of dollars sitting on the sidelines, earning little interest, and the investors looking for better opportunities should be mobilized to help us meet the exploding aspirations of people all over the world.”
World Bank/IMF Spring Meetings 2017: Development Committee Communiqué
April 22, 2017
- The Development Committee met today, April 22, in Washington, D.C.
- The global economy is gaining momentum, but risks remain tilted to the downside. Further improvements in the global outlook will require policies that foster inclusive and sustainable growth, address financial vulnerabilities, and create jobs and economic opportunities for all. Actions to tackle the adverse impact of the decline in correspondent banking relations are an important priority for many countries. World Bank Group (WBG) and International Monetary Fund (IMF) advice and support are important to advance such policies, deliver the 2030 agenda, and protect the most vulnerable.
- Reducing inequality is necessary to ensure long-term and sustainable growth. Technological change, trade, financial flows, and economic integration have helped boost incomes and have narrowed the economic gaps between countries. But these gains have not always been shared evenly within countries. We urge the WBG and IMF to redouble efforts to eradicate poverty and ensure that the benefits of international economic integration are shared widely.
- We welcome the implementation update on the WBG Forward Look. In October, we endorsed a vision for a better, stronger, and more agile WBG and identified areas for improvement. We recognize the progress so far in becoming a better WBG. We encourage continuing efforts, in coordination with development partners, to implement and report on the Forward Look commitments and associated policies to (i) prioritize private sector solutions when deploying scarce public resources, including for infrastructure; (ii) strengthen domestic resource mobilization; (iii) support global public goods; (iv) assist all WBG client segments; (v) be more agile, responsive, and results-focused in working across the public and private sectors; and (vi) pay special attention to stabilizing the economy and supporting growth in situations of fragility, conflict, and violence, as well as to the development needs of small states.
- We support the WBG’s scaled-up activities in the area of crisis preparedness, prevention, and response, through investments to address the root causes and drivers of fragility by helping countries build institutional and social resilience. We encourage further efforts to mobilize and rapidly disburse support for countries, communities, and refugees that are affected by famine or forced displacement, in close coordination with the UN and other partners. We acknowledge the various initiatives by the WBG to strengthen the Humanitarian-Development-Peace nexus.
- We are encouraged by the WBG’s efforts to become more efficient through reforms of its operational and administrative policies and its People Strategy. We welcome the budget discipline introduced by the Expenditure Review, acknowledge WBG efforts to ensure transparency and accountability in tracking and reporting how it uses its scarce resources, and urge continued commitment on these fronts.
- We also welcome progress and discussions to strengthen the WBG’s financial capacity. We are greatly encouraged by the successful IDA replenishment negotiations. IDA18 delivered a record $75 billion thanks to the generosity of partners and the plans to leverage IDA’s equity. Innovative measures introduced, such as the Private Sector Window, will help catalyze additional resources for IDA countries. We look forward to successful implementation that maximizes development impact.
- We take note of the ongoing discussions to enhance the WBG’s financial capacity and enable it to deliver on the ambition of the Forward Look. We ask the Board and Management to develop a set of options by the Annual Meetings in October 2017.
- We welcome the progress made in the Shareholding Review and recall our commitment to the principles we endorsed in Lima toward a WBG that reflects the evolution of the global economy and contributions to the WBG’s mission. We are encouraged by progress on diversity and inclusion in WBG staff and management, and we support similar progress on gender diversity in the Executive Board.
- The next meeting of the Development Committee is scheduled for October 14, 2017