World Bank

Last week I attended the launch of the World Bank’s Global Monitoring Report 2009 in Brussels. The report’s subtitle is ‘A Development Emergency’. A couple of key facts coming out of the report which, although not necessarily new statistics, serve to highlight the ‘development emergency’ as the World Bank calls it:

• In 2009, growth in developing countries will be 1.7%, just a quarter of pre-crisis levels; in sub-Saharan Africa it will be 1.6%
• The number of poor people will rise in over half of developing countries and in three quarters of countries in sub-Saharan Africa
• At the global level, access to sanitation is the most off-track Millennium Development Goal (MDG) after MDG1 on hunger

The report picks out 6 priorities for action: 1) adequate fiscal response 2) improve climate for private investment 3) redouble efforts on human development goals 4) scale up aid 5) open trade system 6) ensure multilateral system has the mandate, resources, and instruments to respond adequately.
Within the report’s main findings, infrastructure investment is presented as a win-win-win, in the sense that it has the highest multiplier effect, it removes bottlenecks to future growth, and contributes to a green recovery.

However, the report states that the infrastructure financing gap for sub-Saharan Africa (SSA) is $40bn annually. The World Bank contends that this amount could be reduced by 45% through improved management, efficiency and cost.

In March of this year, ONE undertook some research with ODI and NIESR to show the positive impact that investing $50bn in SSA could have on the world economy- invested in the right way, that development aid could ‘pay for itself’ within 16 years given the positive impact it would have on the global economy.

There was time for some discussion after the presentation of the report during which someone from the UN made a very interesting point. He said that just like with global warming, we need a kind of ‘polluter pays’ principle for this economic crisis. I don’t think we’ve had anything like this kind of ’speculating countries pay’ idea muted before. The general debate that followed the report underlined the urgency of the whole situation much more. It was suggested that the civil society push is too weak, especially considering we know that there will be 200m more people pushed into poverty (that’s equivalent to around half the population of Europe) and that at least 200,000 children will die per year up to 2015 (that’s 1.2million lives in total). The figures are almost too much to comprehend, statistics which struggle to convey the human suffering they mask. It’s averting those crises that spurs us all on as campaigners.

You can check out the full report here.

-Eloise Todd

On Sunday, we headed to the final portion of the IMF and World Bank Spring meetings. Unlike the International Monetary and Financial Committee (IMFC) on Saturday, where little was discussed on what the IMF can do for the poor, yesterday, the World Bank and the International Monetary Fund Joint Development Committee gathered to discuss how the global economic crisis is impacting developing countries specifically.

The Development Committee and the IMFC released communiqués laying out their recommendations for action. Generally, a few positive recommendations were made, but we have yet to see a comprehensive, grand plan to protect the world’s poorest people from the fallout of the financial crisis.

The good news first: ONE, along with others in the development community, requested that the Bank “frontload” funding to low income countries. Yesterday’s Development Committee communiqué indicates that this may happen. Frontloading International Development Association (IDA) funding commitments means that the World Bank will have the resources to provide funding to low income countries now in larger bundles over smaller periods of time, rather than spanning it out until 2011. This is critical in order to ensure that development projects already underway can be completed and new projects that help the poor can be implemented.

The not-so-good news: The IMFC Communique recommended that the IMF increase its lending capacity for poor countries, and agreed to explore the idea of giving better terms for low income countries on their lending, but did not specify how far the IMF will go with this. IMF loans also frequently come with burdening economic conditions and has the potential to lead to a new debt crisis.

Also, little progress has been made to reform the IMF and World Bank governance. We are asking that African countries be given strong representation because, after all, institutions like the World Bank and IMF have a very large impact on their development and it’s only right that these nations have a say.

The weekend was productive, but we still have a lot of work to do. Even with the petitions of ONE members, the IMF did not budge on the gold sale issue. We’ll now need to take that up with participating countries to ask them to help us move on this issue. We also continue to ask that funds be made available to poor countries through grants and debt relief, rather than in loans. Additionally, the IMF and World Bank must move forward quickly on reform.

Stay tuned for ways you can help.

-Chandler Smith

The World Bank has announced that it will triple its social safety net spending. This amounts to 12 billion dollars over the next two years “to help developing nations weather the global financial crisis.”

Excerpts below, full piece here

The World Bank said it was increasing investments in social protection programs in health and education “to protect the most vulnerable people from the worst effects of the global economic crisis.”
The investments will be in the form of loans to governments to finance the creation or the improvement of programs for the poor.

“This lending includes rapid social response programs and conditional cash transfers, where families are granted money transfers in exchange for sending their children to school and for regular medical checkups,” the 185-nation development lender said in a statement.

-Chris Scott

Liberia bought back $1.2 billion in debt today at a 97% discount, “the steepest ever negotiated on developing country commercial debt.”

From the World Bank:

“The deal was concluded with the payment of $38 million to retire 25 outstanding commercial claims. The World Bank contributed half of this money through the International Development Association (IDA) Debt Reduction Facility, and Germany, Norway, the United Kingdom, and the United States contributed the other half.

“The successful resolution of this inherited debt, which had ballooned through interest and penalty charges during a period when my country was wracked by civil war, is an important step on our road to recovery,” said Liberian President Ellen Johnson Sirleaf. “This puts us on a firmer footing to attract investment and accelerate economic growth.”

Expect more from ONE soon on this amazing update.

-Virginia Simmons

Overall, yesterday’s G20 Summit communique has left ONE very hopeful, but as always, with a lot of work on our plates. Below, I’ll quote the very succinct recap by our Global Campaigns Director Roxane Philson, and then I’ll include 3 very short flip camera interviews with some incredible G20 Voice bloggers: Nigerian blogger Sokari Ekine, Richard Murphy of the UK (who was able to ask a question about tax havens to Gordon Brown at his internationally-covered G20 press conference), and Kenyan blogger Daudi Were.

Roxy’s Summary:

“Yesterday’s G20 Summit looks like it made some real progress for the world’s poorest. Caution tells me that some of the vague language will take hard work to clarify, but this morning, as I re-read statements and news from yesterday, I am filled with a sense of hope and optimism.

Highlights include:

Resources: The G20 announced US $50 billion for low-income countries – although we are concerned this includes existing funding – and a further US $100 billion in lending for development banks.

Reform: Developing countries will have greater representation in the international financial institutions and that election to World Bank/IMF leadership will be based on merit.

Regulation: The G20 announced regulation of illicit tax havens.

As with all summits like the G20, we’re left with just as much work coming out of the summit as we had going in. We need to work to ensure that money going to developing countries is given as grants, not loans that trigger another debt crisis. Also, much more needs to be done on the green agenda in the interests of developing countries at the UN Climate Change Conference in Copenhagen later this year.”

And below, short interviews with 3 great global bloggers:

Nigerian Sokari Ekine of the blog Black Looks on attending the 2009 London G20 Summit:

UK Richard Murphy of The Tax Research Blog on asking a question on tax haven reform to British Prime Minister Gordon Brown at the internationally-covered G20 press conference:

Daudi Were, who lives in Nairobi, Kenya, and blogs at Mental Acrobatics blog, on the outcomes of the G20 Summit.

Attending the 2009 London G20 Summit as an accredited member of the media was absolutely the opportunity of a lifetime. I just want to publicly thank Karina Brisby, Shane McCracken, Samantha Bronnar, and everyone who put the G20 Voice project together and made it possible for 50 bloggers from around the world to attend this historic global summit. I hope it’s only the beginning for allowing new independent voices, particularly those from from the developing world, into these critical global discussions. I also want to thank our own Weldon Kennedy for handling all of ONE’s G20 Voice project work from the UK.

-Virginia Simmons

Yesterday the World Bank released a report projecting a GDP slowdown in developing countries. The report projects growth at 2.1 percent in 2009—down considerably from 5.8 percent in 2008. This is less than half the World Bank’s November 2008 projection of 4.4 percent.

Excerpts below, full report here.
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Across the developing world, we see that conditions of recession are affecting the poorest people, making them even more vulnerable than before to sudden shocks—but also reducing opportunities available to them, and frustrating their hopes,” said Justin Yifu Lin, World Bank Chief Economist and Senior Vice President, Development Economics “This could reverse years of progress, and is nothing less than an emergency for development.”

In the update, the Bank emphasized that even though growth should rebound—albeit slowly—economic activity will remain depressed, with unemployment and significant sectoral adjustment persisting for the next two years.

“Even if global growth turns positive again in 2010, output levels will remain depressed, fiscal pressures will mount, and unemployment levels will rise further in virtually every country well into 2011,” explained Hans Timmer, Manager, Global Trends, in the World Bank’s Development Prospects Group.

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-Chris Scott

A World Bank report released on 8 March projects that global GDP will decline this year for the first time since World War II. The new report revised earlier estimates that emerging markets would sustain and grow the world economy even as the economies of developed countries contracted. The report was released ahead of the G20 finance ministers’ meeting to be held in London later this week. The report predicts that developing countries face a financial gap of $270-$700 billion caused by the global recession, and warns that even at the lower end of this range, international financial institutions such as the World Bank and IMF cannot by themselves currently cover the shortfall that includes mounting public and private debt and trade deficits.

The report also highlighted earlier analysis that poverty (people living below $1.25 per day) will increase by around 46 million people in 2009 (and by 53 million for those living below $2 per day), caused by adverse effects on employment and wages as well as slowing remittance flows. The crisis will be a major setback to the progress towards the Millennium Development Goals, as the long run consequences of the crisis may be more severe than those observed in the short run. For example, when poor households withdraw their children from school, there is a significant risk that they will not return once the crisis is over, or that they will not be able to recover the learning gaps resulting from the missed months or years of school attendance. The World Bank also warns that infant deaths in developing countries may be 200,000-400,000 per year higher on average between 2009 and the MDG target year of 2015 than they would have been in the absence of the crisis, according to its preliminary analysis.

The report concludes that stabilization, protecting longer-term growth and development, and protecting the vulnerable will be the main challenges for developing and emerging market countries, but pursuing these objectives requires significant resources which low income countries lack. As a response to the crisis, the World Bank is calling on developed nations to dedicate 0.7% of the money they spend on stimulus programmes (the G20’s announced fiscal stimulus collectively amounts to almost $1 trillion for 2008 and 2009 as of end of January, with a further $650 billion in 2010) toward a Vulnerability Fund to help developing countries absorb the shock of the financial crisis. Some G20 countries such as the UK have expressed interest in this idea, but to date, none of the countries has committed to it. The upcoming G20 finance ministers’ meeting will be an important moment to discuss this proposal.

-Mikiko Imai

The Partnership for Maternal, Newborn, and Child Health (PMNCH) and the World Bank co-hosted a seminar last Wednesday on how to achieve MDGs 4 and 5 through strengthening health systems and increasing international and domestic financing for key maternal and child health interventions. MDG 4 calls for a two-thirds reduction in child mortality, and MDG 5 calls for a three quarters reduction in maternal mortality and increased access to reproductive health services. Countries are off-track to achieve these MDGs, and there has been almost no progress in reducing maternal mortality in Africa. Seminar participants discussed how to jump-start progress through more effective and efficient financing.

Financing for health systems has been dwarfed in recent years by financing for infectious diseases. While some progress has been made in the prevention and control of diseases like HIV, tuberculosis, and malaria, too many women and children in poor countries still die every year of diseases that are no longer issues in the wealthier world. The global community is now increasing its attention on building health systems in developing countries to maximize and sustain investments in infectious diseases and to address the root causes of poor maternal and child health.

The High-Level Task Force on Innovative International Financing for Health Systems is at the center of global efforts to estimate the resource needs to strengthen health systems and define the mechanisms that can accomplish this goal. Launched in September 2008 and co-chaired by World Bank President Robert Zoellick and UK Prime Minister Gordon Brown, the Task Force has among its members high-level policymakers from key donor and recipient country governments. Operating under the premise that more aid is necessary – but better aid is absolutely critical – the Task Force has two working groups estimating the global price tags and country-level costs of achieving the MDGs. A key emphasis of the ongoing work is on the right mix of innovative financing mechanisms to deliver aid more effectively and efficiently. Accountability for funding and the results it achieves is high priority for donors, recipient countries, and civil society. The Task Force will deliver the results of the working groups at the G8 meeting in July, including recommendations on the appropriate mix of financing mechanisms to strengthen health systems and ultimately improve maternal and child health outcomes.

-Lisa Fleisher

Monday saw the beginning of the two-day UN food summit, held in Madrid, where top officials from countries and institutions like the World Bank gathered to discuss the global food crisis. The summit was an opportunity to strategize about addressing the food crisis – particularly for poor countries – as the excerpts below describe.

ONE’s Eloise Todd was at the summit, and will be reporting about the outcomes shortly on the blog.

Excerpts below, full article here

World Bank Managing Director Ngozi Okonjo-Iweala, who is leading a delegation to the two-day meeting starting on Monday, said more resources and attention are needed to help the poor.

“Food prices are now volatile and that factor, combined with the impact of the financial crisis, only serves to heighten the challenges confronting the developing world,” Okonjo-Iweala said in a statement.

“We expect high price volatility to continue and it will hit the poorest the most, as they spend half their income on food. More needs to be done as we must ensure those who are vulnerable get the assistance they need.”

Okonjo-Iweala said while food prices have fallen they are are still higher than, say, just three years ago. And in some countries, prices have not fallen as sharply as in others.

-Beth Adler

Today in a New York Times op-ed, Robert Zoellick, president of the World Bank, calls for President Obama to lead the U.S. in enabling developing countries to weather the financial crisis. Specifically, Zoellick calls for Obama to use the April G20 global summit meeting as an opportunity to pledge 0.7 percent of the U.S. stimulus package to a vulnerability fund designed to assist developing countries who cannot afford bailouts and deficits. Obama should then encourage other developed countries to do the same.

“The United States could begin by pledging some $6 billion of its own $825 billion stimulus package — just 4 percent of what was provided to American International Group. With this modest step, the United States would speed up global recovery, help the world’s poor and bolster its foreign policy influence.” says Zoellick. Developed countries contributing 0.7 percent of their gross national income (GNI) for official development assistance (ODA) will fulfill the long-standing U.N. target that has been frequently re-pledged by the developed world, including at the Monterrey conference in 2002.

With an estimated 100 million additional people pushed into poverty by the financial crisis, decreasing foreign direct investment (FDI), and declining exports, developing countries need help now. The vulnerability fund will assist countries in establishing safety-net programs like food-for-work programs and seed and fertilizer projects. In addition, it will help countries invest in infrastructure projects, like building roads, which both create jobs and prepare a country for productivity and growth. The fund will also assist small and medium enterprises that are often worst affected by such crises because they neither access credit, nor do they get bailed out.

Developed countries have stepped up in the last year, calling for increases in aid and supporting programs that assist the developing word. But it is not enough, as Zoellick stresses, “Poor people in Africa should not pay the price for a crisis that originated in America. The total aid from developed countries is about $100 billion a year, a modest sum in light of developing countries’ needs. The United Nations target for aid is 0.7 percent of an economy. The United States contribution is about 0.2 percent, although polls consistently show the American public is willing to contribute much more.”

-Beth Adler