A hard-scrabble, drought-prone small African country; youth unemployment at 70 percent; poverty rates of 40 percent; highly dependent on the port which services much of Ethiopia’s imports and exports; a few foreign military bases which have little connectivity with the local economy. Pirates roaming the seas off the coast of the region (like a bad Johnny Depp movie); illegal money suffusing through the region from illicit piracy; neighboring Somalia in a state of war and chaos; Yemen just across the Red Sea with its own bloody revolution; and neighboring Eritrea causing significant problems of their own across the northern frontier. Can such a nation ever hope to become a more dynamic, diversified, and private-sector oriented state with faster, more fairly distributed, growth and deeper poverty reduction?
The current policy debate on spurring growth is sometimes couched as a binary battle between fiscal stimulus and structural reform. In the context of the euro zone, this gives an incomplete picture. Two other issues are important. Adding these complicates the picture, but it helps point the way to a fuller policy response and a clearer hierarchy among policy actions to address the current mutually reinforcing combination of a growing sovereign debt-banking problem on the one hand and fears of a recession on the other.
The first issue is the likelihood of a credit crunch as commercial banks scramble to meet higher capital adequacy ratios even as their portfolio of sovereign bonds deteriorates. Going to the markets to raise capital is not an attractive option, and banks are more likely to deleverage to meet the new capital requirements. The second issue is that of flagging confidence. This started rearing its head in the summer of 2011 with speculative attacks on the sovereign debt of Italy and Spain in addition to the EU/IMF-supported program countries (Greece, Ireland and Portugal). This confidence problem has its roots in the botched bailout of Greece and what is perceived as a weak crisis resolution framework in the euro zone. Table 1 attempts to pull the various elements together.
Table 1: Options for spurring growth
- Financial Sector
After a year of intensive consultation among development partners and with technical experts within the World Bank, I am pleased to announce that the World Bank Approach to Public Sector Management (2011-2020) has been agreed by the Public Sector Governance Board (the internal body that maintains professional standards on PSM and governance work within the Bank).
1. Tell us about some of the changes you have made since taking over the WBER? It seems like you have succeeded in reducing turnaround times for decisions - how have you done that?
2012 is off to a sobering start for those of us in the global health community, against a backdrop of continuing global financial volatility coupled with complex reforms at the Global Fund to Fight AIDS, Tuberculosis and Malaria. New research from the Institute for Health Metrics and Evaluation (IMHE) shows a slowdown—and perhaps a plateauing—of the historical growth in global health funding to which we have been accustomed during the past decade. This new reality is, rightly, leading to questions about whether substantial—if not radical—changes are needed in the highly fragmented global health ecosystem. And yet, at the same time, there are signs of new initiatives.
I believe the slowdown in global health funding requires adjusting our expectations in the coming years. Last fall, after participating in a number of inspiring discussions during the UN General Assembly, I reflected about each one of the critical global health priorities to which we have all pledged our support in recent years: the Millennium Development Goals (MDGs) for nutrition, child and maternal health, and HIV/AIDS, TB, and malaria, as well as non-communicable diseases. It struck me that while most of these health interventions are destined to help the same mother or child, we have created very separate initiatives and institutions to deliver on each. We have been able to elevate the awareness and commitments for each of these priorities, but now the challenge is, like Humpty Dumpty, how do we now put them all back together again?
During my first visit to Yemen, I met with a group of young people in the capital, Sana'a. The purpose of the meeting was to learn more about how the youth are thinking; what is important to them; and how the World Bank can help them achieve their goals. I was amazed at the level of their understanding of priorities, the immediate and short-term ones. Their enthusiasm was overflowing with an expression of unconditional love to serve and develop Yemen, their country. They expressed their full readiness to contribute to the national dialogue and work to build the new civil state if they were given the opportunity to do so.
Of late I have been receiving a number of questions on legal requirements for selling retail diaspora bonds in the US. I am enclosing below some general information, but with the caveat that I am not a lawyer and I may be wrong. In the end reputable law firms (rather than economists like me) ought to be consulted.
- Retail diaspora bonds (even if they are a part of a larger institutional offering) should be registered under SEC Securities Act 33 Schedule B.
- It can take 2-3 months to complete registration.
· The On think tanks blog examines Martin Ravallion’s work on the demand for research within the World Bank and compares it with its own work on whether research and evaluations are being used effectively by DFID staff.