Meet the new World Bank President David Malpass
The first Q&A session with World Bank Group President, David Malpass, at the Spring Meetings 2019 Opening Press Conference.
Remarks by World Bank Group President, David Malpass, at the Spring Meetings 2019 Opening Press Conference, which held on April 11, 2019, in Washington, D.C.
Good morning, everyone. Welcome to the World Bank and IMF Spring Meetings. I am honoured to be joining you this morning as would Bank Group President. I am also grateful to work with such a strong team of talented and dedicated development professionals.
The World Bank Group plays an increasingly vital role in leading on global challenges that people face in developing countries. Our mission is clear and important. The Bank's role is particularly important in poorer countries where the global economic slowdown that began last year hits people the hardest.
Global growth lost momentum throughout 2018, falling to 2.7 percent in the fourth quarter down from 3.3 percent in the first quarter based on World Bank calculations. The deceleration has – was seen in both advanced and developing economies and it coincided with three other warning signs.
Waning structural reforms in major economies, financial stress in some large emerging markets, and elevated policy uncertainty globally.
On current trends, per capita income in growth in sub-Saharan Africa as a whole is now projected to stay below one percent until at least 2021, which elevates the risk of a further concentration of extreme poverty on the continent. Growth in median income will also be weak.
This fact is extremely troubling because it jeopardizes the World Bank's primary goal of ending extreme poverty by 2030.
Globally, extreme poverty has dropped to 700 million at the last count. That’s down from much higher levels in the 1990's and 2000's. But the number of people living in extreme poverty is on the rise in sub-Saharan Africa.
By 2030, nearly 9 in 10 extremely poor people will be Africans, and half of the world's poor will be living in fragile and conflict-affected settings. This calls for urgent action – by countries themselves and by the global community.
Fortunately, the World Bank group is financially strong. And with the capital package, which was agreed to a year ago at the Spring Meetings, and which I was proud to support, the organization is becoming even more responsive, efficient, and effective.
This week at the World Bank Group – this week we at the World Bank Group have joined the IMF in welcoming our 189 shareholders to the Spring Meetings. I have already begun meeting with member countries and other stakeholders to discuss the challenges ahead and to advance the broader global development agenda. I am happy to join these important discussions.
Thank you all for coming this morning and I will be glad to take a few questions.
Ateba: My name is Simon Ateba from Today News Africa here in Washington, D.C. I just finished speaking with some African leaders and activists and this seem to repeat the same things that there are three issues that Africa is really concerned about.
The first thing is climate change and how it's bringing so many Africans below poverty level. And the second one is digital economy and how it can leave so many Africans, millions of Africans out of poverty. And the last one is capital flow, especially from China.
Mr. President, I know you are on your third day at work and but how do you sit under your leadership, how do you think at the World Bank will partner with African countries to tackle the first two issues – Climate change and the digital economy?
And how concerned are you about capital flows from China, especially because the loans are given to unaccountable corrupt government and they will take forever and ever and ever to repay. Thank you.
Malpass: Thank you very much. Well, these are huge challenges, ones that the World Bank is grappling with and that I want to take on.
As we think about climate change, one thing to take note of is that it has its biggest effect often on the poorest people, so that adds to the challenge. As you know, the Bank has goals under the climate change action plan – ones that I think are achievable in terms of addressing some of the effects of climate change. And that follows from a mitigation types of lending and also adaptation types of lending. Other innovative products that the Bank can be involved in.
As far as the digital economy, these are critically important for people to move fast – to move forward quickly in terms of their economic development.
So, as in my opening remarks, I was talking about poverty. A major part of the World Bank's vision and mission is poverty reduction. It can be addressed, a big chunk of it, with markets that actually operate.
So, in the digital economy, we – the World Bank have programmes that are trying to take some of the knowledge learned in East Africa to the West Africa side and other countries. So, one of the things that I think can be done is look at successful stories and see if you can make them work elsewhere.
To your third point, as far as China, and as far as the buildup of debt, let me take a second – a few moments on that. Debt is something that helps economies grow, but if it's not done in a transparent way, with good outcome from the build-up of debt, then you end up having it be a drag on economies. And history is full of those situations where too much debt dragged down economies. So what we are trying to do – and The World Bank is a key part of the Debt Transparency Project and the collection of data that has been encouraged by the G20 – and so this is a project that we are working hard on.
I'll be reporting to the G20 on the progress during our meetings coming up this week, and the keys are to have transparent disclosure of the debt as it is being created, and also then have the focus on good outcomes in terms of quality projects. This is critical for poor countries as they try to move forward to have the projects associated with good quality programmes and full disclosure of the debt.
So, I think this is an area that bilateral donors can do much better on and it is something that the world can press on and say, look, this is the way to help countries get ahead in terms of their growth. So, it is something the World Bank will be working hard on and it is very important to those countries, too many countries. I've got a statistic here: 17 African countries are already at high risk of debt distress, and that number is just growing as the new contracts come in and aren't sufficiently transparent.
Segura: Hi, thank you so much, Alex Segura from [EFE]. Last week one of your top economists on Latin America told us that The World Bank was preparing some kind of plan to assist the great humanitarian crisis in Venezuela. Could you please give us more details on that, and also, what would the World Bank do to help Venezuela in the upcoming months.
And the second one, very quick, do you expect this week for the World Bank to recognize Juan Guaido as the legitimate President of Venezuela. The IADB and the OAS have already done it, so we are just wondering if you are going to do the same, thank you.
Malpass: So, Venezuela is of deep concern, I think, to all of us and to the World Bank. It is a humanitarian crisis. People are losing their ability to even feed themselves and their families, to operate on a daily basis, and it's something that is deeply of concern.
The Bank will be involved as the situation evolves and the Bank is preparing for that, but the situation is still very troublesome on the ground in Venezuela. As far as the political side of it, we will be guided by the international community and the views of our shareholders on that matter. And so this is something that is not chosen by the Bank, but by the shareholders of the Bank.
Gao: Pan Gao China (inaudible) Agency. The World Bank has been a long-time partner of China dating back to the 1980s. As the new President of the Bank, I'm wondering, what is your take on the future collaborations between the World Bank and China, particularly on the Belt and Road initiative, thank you?
Malpass: Thank you, I'm looking forward to a constructive relationship with China. It is one that is evolving and, so you mentioned, the history going back many decades. China has changed greatly over these decades. In economic terms, very much stronger. And so, I think that we can think of it as evolving from one where it was a major borrower from the World Bank, and I hope benefitted from the loans from the World Bank, to one where now it will be much smaller borrower.
In the capital increase that was agreed to by shareholders a year ago, it was agreed that the borrowing by China would fall below a billion dollars by the end of the country programme that the World Bank has with China. And so that’s already been underway. For some time now the borrowing by China has been going down. That is part of the evolution of the relationship.
At the same time, China is becoming more of a donor to the World Bank, and shareholder in the World Bank, and so we value that constructive relationship. I was in China in early February, I think, and I met with several of the ministers and with President Xi. We talked in very constructive terms about the relationship, and one of the things that I want to emphasize is that we share a common view that poverty alleviation, that shared prosperity are key goals of what the World Bank should be doing, but also what nations around the world should be trying to do.
China, as we know, has been hugely successful in reducing extreme poverty. In China as many as 850 million people are no longer in extreme poverty as the median income in China went up over these decades. And, so that’s an achievement. China has some lessons to share and insights to share with the rest of the world.
But, having said that, I want to also take note of our previous conversation about the need for China's programmes abroad, the importance of transparency of the debt, of the quality of the projects, the coordination with other donors. And the reason for that is because we want the countries, the borrowing countries, to do well, to have good outcomes.
One of my key goals at the World Bank is to see us achieve breakthroughs where countries that either have a high amount of extreme poverty or too little sharing – shared prosperity – can do much better, as part of an effort by the World Bank. So, that’s one of the things I’ll be focusing on. Thanks.
Questioner: I am a journalist at Daily News Egypt. First of all, you are recently the new Bank President, so, regarding your Presidency period, what are the main policies you’re going to adopt, or issues you are focusing on, and regarding Middle East Region and Egypt? Thank you.
Malpass: Thank you. Well, as I mentioned, I want – I would like to see countries do well, and I would like to see Egypt do well. I take note that their unemployment has fallen below nine percent. The inflation rate has been falling, and so there’s still big challenges facing Egypt, as far as inclusion – as far as more jobs, and I’m very happy to have the question come from a woman. One of the key things in getting good growth in countries is full inclusion of women in the economy. This is a huge resource. It’s particularly apparent in Africa, and is something the Bank is working hard on, both from the standpoint of having women have legal rights that are full and are effective within the economy, but then also to be able to participate fully in the economy in real – in small businesses, in employment. All of those are progress.
So, I’m looking forward – Egypt, this year, is the head of the African Union, and a leader within the – within the way Africa can work together, and so I’m looking forward, greatly, to working with Egypt and with President Sisi on ways to have faster growth in Egypt, to have faster growth in the world, as a whole, and to have effective programmes. Thanks.
Michael: Thank you very much. Michael Igoe with Devex. On Tuesday, Representative Maxine Waters, on the House Financial Services Committee, expressed some concerns about the World Bank shifting resources from IDA to IFC, through the private sector window, and she threatened to obstruct the capital increase for IFC, unless they show more transparency on those deals. Have you seen her statement, and do you have any response to it? And then second, do you have any concerns that, perhaps, the World Bank has, sort of, generally, overpromised, in terms of delivering – leveraging private sector investment into low-income countries, particularly fragile and conflict affected states? Thanks.
Malpass: Thanks. I did see Chairman Waters’ statement. So, these are challenging issues that the most effective use of resources is something that we think about all the time, and so IDA has concessional resources, but private sectors are important, even in poor countries, and are particularly important, in fact, in poor countries, to have market pricing to have businesses be able to set up.
So, we think IFC is an important part of that, even, and the members of the World Bank, the contributors to the capital increase asked the Bank to use a portion to direct even more private, more resources through IDA FC to private sector businesses in poor countries, and IDA eligible countries, and also into fragile conflict and violent – violence marred states and situations.
So, the World Bank is doing that. I think that’s the right approach to getting growth, and so it’s incumbent on the Bank to do that as effectively as possible. So, you want to find a way that development assistance that’s participating in the private sector is as effective, or even more effective than development assistance that’s going through government sectors. This is something that we can work on. I see my important colleague, Kristalina Georgieva, is right beside you, and has been instrumental in thinking about the best resource allocation for IBRD and IDA funding, and this split is – so, I’m belabouring it a little bit because this is something that we have to think about every day. It’s important how you make the most effective programme to get good outcomes in a given country.
One of the things I’ve been trying to do in my few days at the World Bank and in preparing for this is put emphasis on individual country programmes. I think each country is different, and so the mix of resources that’s going to be most effective are – is going to vary by country. That’s particularly true of fragile conflict states. We talked earlier about Venezuela, for example. As you think about the design of a programme that can help a country that’s had such a catastrophe, or in Mozambique, where Hurricane – Cyclone Ida has taken a devastating toll. The way that the resources are programmed are important and it’s something the World Bank works every day on. Thanks.
Aldrick: Yes, hi. Phil Aldrick, at the Times. I just wanted to pick up on that point a bit more. You know, you mentioned you did talk about how poverty is actually getting worse in Sub-Saharan countries, and so I want to – how you’re going to be able to boost funding for those countries that are the most fragile and the most in need, and would you consider increasing your cooperation with the – China’s AIIB, to help reduce poverty in those regions?
Malpass: Yes, and I should be clear. Poverty is getting worse in some countries within Sub-Saharan average that is troublesome, and may be growing. So, in some countries they are making good progress, and we want to support that and fund more countries that can make good progress on it. Then more resources sometimes will help better programmes often, maybe almost always will help, so one of the things we want to do is to have as effective a country programme as we can. Part of that is coordination with other multilateral donors.
So, I met yesterday with the Head of the AIIB, Mr. Jin, who is here for the Spring Meetings. We had very good conversations about ways that we can – that there can be cooperation that achieves very high-quality lending programmes.
And then, last evening, we met until into the evening with a big group – or I mean, with all of the multilateral development banks. So, there were the Heads from the EBRD, from the African Development Bank, and from other multilateral development banks; Mr. Nakao from the Asian Development Bank, and several others. And we talked concretely about how we can cooperate as MDBs to meet the resource needs of the challenge.
Everyone agrees that the mission, or that the mission of shared prosperity, of better economies in developing countries is a common goal, so we can work together on that to have the right – or have as many resources available especially where good country programmes are being developed.
Questioner: Thank you very much. I want to find out from you. Illicit financial flows has been a problem in Africa and I want to find out what would be your approach, or what would be the Bank – what would be your legacy, you want to leave as far as fighting illicit financial flows is concerned.
Malpass: And what outlet are you with? I'm sorry? What outlet?
Questioner: Business and Financial Times.
Malpass: Thank you. And are you saying high-tech financial flows?
Questioner: No, illicit financial flows.
Malpass: Oh. Illicit, I'm sorry, I missed that key word. Corruption efforts are a key part of designing good transparent programmes. And so illicit flows take many forms, and area that is a big challenge. And they also suck resources away from poor people, and from the ability of a country to really grow and develop.
So, it's something that the Bank has ample broad – or not ample – the Bank has not nearly enough but expanding strength in helping people think about how to best keep track of financial flows and make sure that they are legitimate financial flows.
This takes the form of technical assistance, it takes the form of close cooperation with the financial officials in the country, and it's something countries, I think are rising to the challenge, and trying to make it work better. But clearly more can always be done.
I guess, I would like to put this into the context. I am enthusiastic about the job that I've undertaken. I'm deeply honoured to be here and to tackle these challenges. And as we have talked today, there is a wide range of challenges that the developing countries face, and that the World Bank can work every day on to be as effective as possible.
And the needs are urgent as we talk about any of the countries that we mentioned today. This is something that I hope progress can be made this year, and next year – even though I know it's such a daunting set of challenges. Thanks.
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