Today is the beginning of an important debt relief initiative for the world’s poorest countries. I wanted to highlight that and provide an update on other recent activities.
- We’re proceeding at full speed with our COVID-19 support. Using the fast-track approach developed in April, the World Bank is currently assisting 93 countries with COVID-related health projects, with support in another 18 countries expected shortly. The broad support efforts can be viewed on this interactive map of our ongoing COVID-19 projects.
- Today (May 1) marks the start of a debt payment suspension by IDA countries if they request forbearance. In March, IMF Managing Director Kristalina Georgieva and I called on official bilateral creditors to grant a debt suspension to countries eligible for International Development Association (IDA) financing – the world’s poorest countries – to help provide extra financial support to help respond to the COVID-19 pandemic. During the Spring Meetings, the Governors of the World Bank and IMF and the Finance Ministers of the G7 and G20 supported a May 1 start date. The G20 countries agreed on a coordinated approach, with a common term sheet providing the key features for a debt service suspension initiative. Private creditors were also called on to participate in the initiative on comparable terms.
- In addition to financial support, the initiative provides an important opportunity for IDA countries to enhance transparency and fully disclose their public sector’s financial commitments. Debt and investment transparency are high priorities in order to improve the quality of a country’s financial commitments and encourage more investment. The World Bank and IMF are working together with IDA countries to evaluate their debt sustainability and transparency and monitor their use of the savings on debt service.
- Another important component of our response to COVID-19 will be to scale up our social safety net operations – cash transfer operations through banks, post offices, microenterprises, and digitally, and community-based approaches where available and scalable. We’re also actively engaging with governments to eliminate or redirect costly and climate-harmful fuel subsidies and reduce barriers to the flow of food and medical supplies.
- We continue to coordinate well with the regional MDBs. Yesterday, I had a virtual meeting with the MDB Heads and Kristalina to discuss our COVID-19 support, joint initiatives, co-financing, and ways to maximize net flows to the poorest countries.
- Last week, the World Bank released an updated study on remittances. The report found that global remittances are projected to decline sharply, by about 20% in 2020, due to the economic crisis induced by the COVID-19 pandemic and economic shutdown. Remittances are a vital source of income for developing countries. They help families afford food, healthcare, and basic needs. Yet their costs are prohibitively high. The global average cost of sending $200 remains high at 6.8% in Q1 of 2020. Sub-Saharan Africa continued to face the highest average cost, at about 9%. We’re working to keep remittance channels open, recognizing their crucial value, especially to the world’s poorest communities.
- Some weekend reading: "Expanding digital financial services can help developing economies cope with crisis now and boost growth later," by Ceyla Pazarbasioglu, World Bank Vice President for Equitable Growth, Finance and Institutions and Alfonso Garcia Mora, Global Director for Finance, Competitiveness, and Innovation.
- Lastly, World Bank Group staff, consultants, and retirees never cease to inspire. They donated $550K of their own money to local pandemic relief efforts to support the work of NGO partners in communities around the world.
The last few weeks have been very productive, but the world, especially the poorest countries, faces a long road to recovery.
Originally published on LinkedIn.