Spring Meetings Press Conference Opening Remarks: World Bank Group President David Malpass

Hi, everyone. It's already been a busy week. The Spring Meetings of the World Bank Group and IMF have started, and people are convening at a time of crisis. We are facing COVID-19, inflation, and the war in Ukraine. On our growth outlooks, we've lowered our forecast for global economic growth and I saw the IMF also downgraded their outlook. China's COVID-related shutdown is part of that and may weigh on the world economy in 2022. Above all, the war and its consequences are putting stress on poor people around the world. It's adding to the debt burden, an overburden in many countries, and also the fragility of the world environment. One of the key transmission mechanisms is the shortage of food, energy and fertilizer. Fertilizers and energy are critical for the crop cycle so they're building on each other and creating a food insecurity crisis that will last at least months and probably into next year. Food prices are up already 37% year-over-year. There's been a shift in relative prices with food up more than CPI (Consumer Price Index). That's significant because it measures how much it hits the poor, who have to spend more on food in their daily budget. When you have food prices going up more than CPI, it puts on display the burden and inequality of the various global crises.

The World Bank Group has been acting fast in the face of the crises: first, the COVID-19 surge financing in over the last two years, which was one of the fastest and largest in our history. And we are now putting money into Ukraine and have moved quickly both to commitments and disbursements, including nearly $1.5 billion dollars that I announced in Poland last week.

That is part of a surge in World Bank Group financing, that we expect to carry out over the next 15 months, which should reach $170 billion dollars. It would be the largest set of commitments by the World Bank Group ever. We're also working on other key issues facing developing countries. Vaccines are important, and we're continuing to push forward. We will have committed $11 billion dollars in vaccination programs in 81 countries by the end of June. We are working on debt transparency and debt sustainability solutions for developing countries, which affect both low- and middle-income countries.

We're also working actively on climate, through our Climate Change Action Plan and the formation of Country Climate and Development Reports (CCDRs), which will identify the high priority items country by country, in their efforts to mitigate and to adapt to climate change.

The world needs to take important steps to address the current set of crises. One is to allow more trade. Market opening steps are very important. I was intrigued to see and welcomed India's moves yesterday and today to begin to sell from its stockpiles. I think market opening steps by many of the advanced economies could add a lot to the global supplies and alleviate some of the impact on the poor countries. And they themselves need to build up their systems to produce more. One of the drawbacks is that, in recent years, there's been a shortage of investment, especially in the developing world. We need to find policies going forward that will add investment.

One of the solutions for the world is to recognize that markets are forward looking. If you announced policies today, it has an immediate impact on where people begin to invest. I think the world can take steps to say that the capital allocation of global resources can be improved. What we have now is a capital allocation that leads to deep inequality. And in fact, the inequality is growing worse. That means more countries falling further behind, not making advancements, and not having the investment that is needed. Some of that owes to the macro policies of the advanced economies. They've been borrowing very heavily from the global capital markets, which leaves less for other countries. That can be improved.

And as central banks raise interest rates, it's important for them to use all their tools and not be undercut by government demand stimulus. The central banks can use tools that add to supply and that allow capital allocation to be improved. I think that's going to be vital. They've been talking about, not just interest rates, but also shrinking the balance sheet, which I think would have a stimulative effect on the global investment climate, because it would occupy less of the capital at the central banks from the current situation. Also, they have regulatory policy tools that can be used to allow and encourage more investment in small businesses, in new businesses, that will be the dynamic portion of a new economy.

Again, I stress markets are forward looking. Announcements on currency stability have an impact and announcements on capital allocation have a positive impact, as the world tries to confront these various crises.

I want to mention one more thing and then turn to your questions. The debt crisis itself is a topic of extensive conversation this week, both at the IMF, at the World Bank, and among the G-20, and other shareholder groups that are forming this week. It’s vital and we know what the data shows: a huge buildup of debt, especially in the poorest countries. It's important that the resolution process starts early. If you wait, the resolutions are much more difficult to carry out. Sri Lanka is facing that problem now. It's important to form the creditor committees early. There was a call today for China to form the creditor committee for Zambia, which would help with the implementation of the Common Framework. And so, I've mentioned that as interest rates rise, the debt pressures are mounting on developing countries, and we need to move urgently towards solutions. Thank you and I'll turn to questions.

Recording and Transcript of Opening Press Conference

https://live.worldbank.org/spring-meetings-2022-opening-press-conference