Spring Meetings 2016

Taxing tobacco and the new vision for financing development

As part of the 2016 World Bank Group-International Monetary Fund Spring Meetings held this past week in Washington, D.C., a fascinating panel discussion, A New Vision for Financing Development, took place on Sunday, April 17. Moderated by Michelle Fleury, BBC's New York business correspondent, it included World Bank Group President Jim Yong Kim, Bill Gates, Justine Greening (UK Secretary of State for International Development), Raghuram Rajan (Governor of the Reserve Bank of India), and Seth Terkper (Minister for Finance and Economic Planning of Ghana).
A construction worker takes a break in Timor-Leste. © Alex Baluyut/World Bank The panel was in consensus about the current challenging economic and social environment facing the world as a whole. That environment includes low rates of economic growth across the world, drastic reductions in the price of commodities that are impacting negatively low-and middle-income countries, rising inequality, frequent natural disasters and pandemics, increased number of displaced populations and refugees due to conflict and violence spilling across national borders and continents, and the ambitious United Nations 2030 Agenda for Sustainable Development, which includes a set of 17 Sustainable Development Goals (SDGs). A question debated in the panel was, Where will the resources be found to address these challenges? This question is critical under the current scenario if countries are to continue to build on the progress achieved over the last decade and maintain previous gains.

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World Bank Group President Jim Yong Kim, Bill & Melinda Gates Foundation Co-Chair Bill Gates, and UK Secretary of State for International Development Justine Greening. © Simone McCourtie/World Bank

What would be a game-changer for achieving some of the world’s most difficult goals — such as ending poverty and hunger and making sure every child gets a quality education?

Billionaire philanthropist Bill Gates came to the World Bank Group Spring Meetings to answer that question in a thought-provoking conversation about how to finance development for greater impact.

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World Bank Group President Jim Yong Kim and Queen Rania of Jordan. © Grant Ellis/World Bank

Jordan’s Queen Rania and other high-ranking officials said Friday that the world needs a new approach to deal with historically high numbers of forcibly displaced people.

“This is a global crisis, and we’re deluding ourselves if we think it can be contained,” the queen said at the World Bank Group-IMF Spring Meetings, where forced displacement is a top issue on the agenda amid a refugee crisis that has spread from the Middle East into Europe over the last year.

Queen Rania said Jordan has received 1.3 million Syrian refugees over the past five years. The influx has been a “demographic shock that is exhausting our social and physical infrastructure to its absolute limits,” she said. International contributions have made up less than a third of Jordan’s expenses.

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If everyone had Internet access, then everyone would have a fair shot at financial stability and an education, right?

If only it were so easy.

On Thursday, U.S. Secretary of State John Kerry and World Bank Group President Jim Yong Kim led a meeting of some of the top minds in global development to talk about the U.S. State Department’s Global Connect Initiative. The goal: to get 1.5 billion people online by 2020.

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High-rises and hotel buildings in Panama City, Panama. © Gerardo Pesantez/World Bank

The so-called “Panama Papers” scandal reminds us that concealing wealth and avoiding tax payments is neither uncommon nor — in many cases — illegal. But the embarrassing leak exposes something else: The public trust is breached when companies, the rich and the powerful can hide their money without breaking the law. If this breach is left unaddressed, those who aren’t rich enough to hide money will be less willing to pay and contribute to the social contract in which taxes are exchanged for quality services.

As finance minister in my home country of Indonesia, I saw firsthand how a weak tax system eroded public trust and enabled crony capitalism. Shadow markets arose for highly subsidized fuel, family connections secured jobs, and bribes helped public servants beef up their salaries. Tax avoidance among the elites was common and the country couldn’t mobilize the resources we needed to build infrastructure, create jobs, and fight poverty.

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The world must move quickly to fulfill the promise of the climate change agreement reached in Paris four months ago and accelerate low-carbon growth, World Bank Group President Jim Yong Kim said on the opening day of the Spring Meetings.

More than 190 countries came together last December to pledge to do their part to halt global warming. The result was an unprecedented agreement to keep warming below 2 degrees Celsius over pre-industrial times, with the goal of limiting warming to 1.5° C.

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It is widely acknowledged that reducing emissions from deforestation could bring about one-third of the greenhouse gas emission reductions we need by 2030 to stay on a 2-degrees trajectory. But protecting and managing forests wisely does not only make sense from a climate perspective. It is also smart for the economy. Forests are key economic resources in tropical countries. Protecting them would increase resilience to climate change, reduce poverty and help preserve invaluable biodiversity.

Here are just a few facts to illustrate why forests are so important. First, forests provide us with ecosystem services like pollination of food crops, water and air filtration, and protection against floods and erosion. Forests are also home for about 1.3 billion people worldwide who depend on forest resources for their livelihood. Locally, forests contribute to the rainfall needed to sustain food production over time. When forests are destroyed, humanity is robbed of these benefits.

The New Climate Economy report shows us that economic growth and cutting carbon emissions can be mutually reinforcing. We need more innovation and we need more investments in a low carbon direction. This requires some fundamental choices of public policy, and the transformation will not be easy. However, it is possible and indeed the only path to sustained growth and development. If land uses are productive and energy systems are efficient, they will both drive strong economic growth and reduce carbon intensity.

Already, the world's large tropical forest countries are taking action.

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É amplamente reconhecido que a redução de emissões provenientes do desmatamento poderia corresponder a um terço da diminuição das emissões de gases de efeito estufa necessária até 2030 para o planeta não aquecer mais de 2ºC. No entanto, proteger e gerenciar as florestas de forma prudente não somente faz sentido de uma perspectiva do clima. É também algo inteligente para a economia. As florestas são recursos econômicos de suma importância nos países tropicais. Protegê-las aumentará a resiliência às mudanças do clima, reduzirá a pobreza e ajudará a preservar a biodiversidade.

Seguem apenas alguns fatos para ilustrar por que as florestas são tão importantes. Primeiro, as florestas nos prestam serviços de ecossistema, tais como polinização de safras de alimentos, água e filtração do ar, bem como proteção contra inundações e erosão. As florestas também abrigam cerca de 1,3 bilhão de pessoas no mundo inteiro que dependem dos recursos florestais para subsistência. Em nível local, as florestas contribuem para a pluviosidade necessária para manter a produção de alimentos no correr do tempo. Quando as florestas são destruídas, esses benefícios são roubados da humanidade.

O novo Relatório sobre a Economia Climática nos mostra que o crescimento econômico e a redução das emissões de carbono podem se reforçar mutuamente. Precisamos de mais inovação e mais investimentos para ter uma economia de baixo carbono. Isso requer certas escolhas fundamentais de política pública e a transformação não será fácil. No entanto, é possível e na realidade trata-se do único caminho para um crescimento e desenvolvimento sustentados. Se o uso da terra for produtivo e os sistemas energéticos forem eficientes, ambos impulsionarão um desenvolvimento econômico sólido e reduzirão a intensidade das emissões carbono.

Em âmbito mundial, os países com as grandes florestas tropicais já estão agindo.

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Michelle Obama Excited by World Bank 2.5 Billion Pledge for Girls Education

U.S. First Lady Michelle Obama brought her passion for girls’ education and a powerful message to a packed World Bank atrium just ahead of Spring Meetings: Support education for adolescent girls, because it’s one of the smartest investments any country can make.

She was talking to the right audience — finance and development ministers entrusted with crucial spending decisions, development experts, and leaders from civil society, the private sector, and the media.

World Bank Group President Jim Yong Kim praised Obama as a “tremendous champion for the rights of girls and women.” He announced that the Bank Group would invest $2.5 billion over five years in education projects directly benefiting adolescent girls.

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Girl. Panama. Gerardo Pesantez-World Bank

Em 2015, mais de 500 milhões de hectares de florestas eram posse de povos indígenas. Embora nas últimas décadas a área florestal designada aos povos indígenas e sob sua posse tenha aumentado, os governos ainda administram 60% dessas áreas, e as corporações e agentes privados, 9%. A pressão dos povos indígenas nas últimas décadas tornou possível aumentar em cerca de 50% a área florestal reconhecida como propriedade das comunidades indígenas e a elas designada. A América Latina e o Caribe, onde os povos indígenas controlam 40% das florestas, é a região com maiores avanços. Outras regiões do mundo mostram tendências semelhantes.

Para os povos indígenas, que sempre têm vivido na floresta, ela representa seu espaço de reprodução cultural, produção de alimentos e segurança espiritual. Para os governos e empresas, a floresta contém ativos importantes para a produção de alimentos, desenvolvimento econômico, segurança, mitigação da mudança do clima, sequestro de carbono, água, minerais e extração de gás. A essas percepções divergentes sobre propriedade e uso da floresta somou-se nas últimas décadas a multiplicação de conflitos sobre o controle do território e recursos florestais. Com a crescente demanda internacional de bens primários (minerais, hidrocarbonetos, soja e outros produtos agrícolas básicos), há um maior dinamismo econômico com base em sua exploração. No entanto, isso foi ao custo de graves impactos ambientais, reclassificações espaciais e violações de direitos, interesses, territórios e recursos dos povos indígenas (CEPAL 2014).

Nesse contexto, o que está contribuindo para a mudança de atitude, tanto no nível de país como global, que nos permite concluir que essa situação já começou a se reverter?