World Bank President David Malpass (Image: Reuters)
Inequality is most apparent in direct effects of COVID-19 that has hit vulnerable people the most, World Bank President David Malpass has said, noting that the world faces major challenges such as climate change, rising poverty and violence.
Malpass, during a conversation with IMF Managing Director Kristalina Georgieva and US Treasury Secretary Janet Yellen on Tuesday, said that in response to the coronavirus pandemic, the World Bank took broad, fast action and quickly achieved over 100active operations of support for developing countries.
The world faces major challenges, including COVID-19, climate change, rising poverty, inequality, growing fragility and violence in many countries, he said.
“The inequality is most apparent in the direct effects of COVID-19 that hits informal workers and the vulnerable the most. The inequality extends well beyond that to vaccinations, the concentration in wealth, the unequal impact of the fiscal stimulus and asset purchases, and the imbalance in debtor-creditor relationships, particularly for people in the poorest countries,” Malpass said.
The World Bank, he said, is leaning forward as much as possible to face these challenges.
Malpass said that there are major challenges for countries in securing deliveries, from COVAX and manufacturers, and the Bank is working to support their efforts.
Many developing countries entered the pandemic with unsustainable debt levels, he said.
“We've worked to achieve a debt service suspension initiative and increased transparency in debt contracts. Both steps are helping,” he said, adding that the Bank is finalising a new climate change action plan which includes a big step up in financing, building on its record climate financing over the past two years.
“It includes new analytical support to countries as part of integrated climate and development programmes,” he said.
The Biden administration, Yellen said, recognises that for the US and for the world as a whole, the pandemic really is what's going to call the shots in terms of how the economy does.
“I think it's equally important for the entire globe. We are trying to support the most vulnerable people, who typically are low-income people and minorities in the United States. And the same is true globally,” she said.
“Those who work in the service sector and minorities, vulnerable people, have been most impacted both health wise and in terms of the economic impact. So, we have many programmes that are supporting them,” she said.
Georgieva said the IMF has stepped up significantly the provision of financial lifelines to vulnerable countries, emerging markets with weak fundamentals, low-income countries.
“We are joining you, the World Bank in making sure that those with limited fiscal space, no access to markets, are not left out from the recovery,” she said.
Georgieva said that climate risks are a growing threat to the macroeconomic and to financial stability.
“And with the same token climate action offers the prospects for green growth and green jobs, critical for what we do at the IMF in supporting growth and employment,” she said.
Yellen said that climate change is a global problem, and the US is not going to really be able to deal with greenhouse gas emissions successfully unless countries like the US act domestically and then foster the transfer of resources in the financing that’s necessary for developing countries to be able to do so successfully.
President Joe Biden is very focused on the US climate agenda, Yellen said, adding that he is going to be proposing a package of infrastructure and climate change investments to make sure that America makes its own domestic contribution to meeting the Paris objectives.