Since the start of the COVID-19 pandemic, the World Bank Group has worked hard to help countries fight the pandemic’s health, economic, and social impacts.
From April 2020 through the end of fiscal 2021, the Bank Group committed over $157 billion—the largest crisis response in any such period of our history. We have helped countries address the health emergency, procure billions of dollars of medical supplies, deploy COVID-19 vaccines, strengthen health systems and pandemic preparedness, protect the poor and vulnerable, support businesses, create jobs, promote growth, and expand social protection.
Despite this unprecedented global effort, the pandemic has reversed gains in global poverty reduction for the first time in a generation, pushing nearly 100 million people into extreme poverty in 2020. I remain deeply concerned about fragile states, which have been particularly hard-hit by unsustainable debt burdens, climate change, conflict, and weak governance. And though I am hopeful for the global economy to rebound, many of the world’s poorest countries are being left behind, with inequality widening both within and between countries. We are committed to working with our partners to find solutions to these urgent challenges—including by promoting transparency, human rights, and a rule of law that extends accountability to all institutions. We are working to save lives, protect the poor and vulnerable, support business growth and job creation, and rebuild in better ways toward a green, resilient, and inclusive recovery.
Ensuring safe, fair, and widespread immunization will be key to curb the pandemic and advance recovery: we are supporting countries’ access to COVID-19 vaccines, including through COVAX and directly from manufacturers. The World Bank has expanded its financing available for COVID-19 vaccines to $20 billion over two years—in fiscal 2021 alone, we committed $4.4 billion for 53 countries. Working with WHO, Gavi, and UNICEF, we developed mechanisms for safe distribution in 140 low- and middle-income countries. We are partnering with the African Union and the Africa Centers for Disease Control to support the Africa Vaccine Acquisition Trust (AVAT) in order to help countries purchase and deploy COVID-19 vaccines for up to 400 million people across Africa. And we are working with the IMF, WHO, WTO, and other partners to track, coordinate, and advance delivery of vaccines to developing countries.
IFC is doing vital work to build resilient health systems and expand the manufacturing and supply chains for COVID-19 vaccines. Through its Global Health Platform, IFC committed $1.2 billion to support vaccine manufacturing capacity, including in Africa, and the production of essential services and medical equipment, including test kits and personal protective equipment. IFC-led investments include the mobilization of a €600 million financing package to boost COVID-19 vaccine production in South Africa, support to vaccine manufacturers in Asia, and investments in medical equipment manufacturers and suppliers.
To address many countries’ risk of debt distress, we’ve played a key role in the G20’s Debt Service Suspension Initiative, alongside the IMF. The effort has helped more than 40 countries to suspend debt service payments in excess of $5 billion, freeing up fiscal space as countries combat the crisis. While I am pleased the initiative has been extended to the end of 2021, more needs to be done, particularly to reduce the stock of debt in the poorest countries. With the IMF, we are helping implement the G20 Common Framework for Debt Treatments, which aims to reduce countries’ debt burdens for the long term.
As the world emerges from the pandemic, climate change will remain a central challenge. The World Bank Group is the largest multilateral provider of climate finance for developing countries. Over the past five years, we have delivered over $83 billion–in fiscal 2021 alone, our climate finance totaled over $26 billion. Our new Climate Change Action Plan, launched in June, seeks to integrate climate throughout development efforts, with a focus on greenhouse gas reduction and successful adaptation. The plan commits us to 35 percent of Bank Group financing having climate co-benefits over the next five years; 50 percent of IBRD and IDA climate financing will support adaptation and resilience. We will align all World Bank financing with the goals of the Paris Agreement starting on July 1, 2023. For IFC and MIGA, 85 percent of Board-approved real sector operations will be aligned starting July 1, 2023, and 100 percent starting July 1, 2025. We will support countries’ preparation and implementation of Nationally Determined Contributions and long-term strategies; these, in turn, will inform our Country Partnership Frameworks. And we will support countries’ transition away from coal to affordable, reliable, and cleaner alternatives for electricity. Our efforts will help countries grow their economies while reducing emissions, adapting to climate change, building resilience, and protecting natural resources, including biodiversity.
In fiscal 2021, IBRD committed $30.5 billion to client countries, and IDA committed $36.0 billion on grant and highly concessional terms to the poorest countries. I welcomed the G20’s endorsement of advancing IDA’s 20th replenishment cycle to 2021, which will provide the poorest countries with more resources to overcome the crisis and work toward recovery. I am also pleased that, after nearly three decades, Sudan cleared its arrears to IDA in March, enabling full reengagement with the Bank Group and paving the way for the country to access nearly $2 billion in IDA financing.
IFC delivered a strong fiscal performance, reaching a record high of $31.5 billion in financing, including $23.3 billion in long-term finance and $8.2 billion in short-term finance. IFC also scaled up its short-term financing offerings and kept trade flowing. With COVID-19 severely impacting private enterprises across emerging markets, IFC provided critical support through liquidity and trade financing, allowing companies to remain in operation, preserving jobs, and enabling long-term private sector intervention once pandemic impacts subside. We are accelerating the execution of the IFC 3.0 strategy to create more investible projects in places where they are needed most, particularly in IDA and FCS markets, and build a pipeline of investments in a post-pandemic world.
In February, I was pleased to announce the appointment of Makhtar Diop as IFC’s Managing Director and Executive Vice President. His leadership and experience will enable the World Bank Group to build on the unprecedented speed and scale of our response to the global crisis and support vital recovery efforts through the private sector.
MIGA issued $5.2 billion in guarantees to help countries achieve their development goals. These efforts are expected to provide 784,000 people with new or better electricity service, support about 14,600 jobs, generate over $362 million in taxes for countries, and enable about $1.3 billion in loans, including to local businesses. MIGA continued to make progress across its strategic priority areas, with 85 percent of its projects in fiscal 2021 dedicated to climate mitigation and adaptation, projects in fragile and conflict-affected settings, and IDA countries.
As part of our ongoing commitment to fight racism and racial discrimination in our workplaces and our work, our senior management and I welcomed 80 recommendations submitted in fiscal 2021 by the Bank Group’s Task Force on Racism. The first set of 10 foundational recommendations are already being implemented, and more are under review. I am grateful to all those who have come forward to engage on this important topic as we continue to work for tangible, meaningful, and long-lasting change.
Over the past year, our staff have gone above and beyond to support our clients, even as we transitioned to home-based work and coped with the pandemic’s impact on our own lives, families, and communities. They have ensured the highest quality standards even as we stepped up our support to clients. I am grateful for this commitment to our mission, and I look forward to welcoming staff back to our offices as circumstances permit.
There is no path to sustainable, long-term growth without continuous progress in reducing poverty and inequality. With the dedication of our staff, the support of our partners, and our relationships with countries, I am confident that we will help countries overcome this crisis and return to the path of inclusive, sustainable growth.
The past year has been immensely challenging around the world—especially for developing countries—as the COVID-19 pandemic reversed decades of progress in ending extreme poverty, achieving shared prosperity, and reducing inequality. The World Bank Group responded swiftly and extensively to the health, economic, and social impacts of the crisis to help spur recovery.
But more needs to be done to address the needs of the marginalized and those who live in the poorest areas. The Board discussed and approved several important initiatives and programs in support both of countries’ immediate needs and of long-term development goals.
Vaccines. We have made key and timely decisions on proposals by Bank Group management to respond to the pandemic and finance vaccination efforts, including mechanisms for prompt delivery. The Bank Group is partnering with WHO, COVAX, UNICEF, and others, including private manufacturers, to help facilitate transparent, affordable, and fair access to vaccines for developing countries and to continue strengthening global preparedness for future pandemics.
Assisting the poor. To help start the process of recovery, the Bank Group registered a historic increase in the delivery of lending for projects and initiatives to assist low- and middle-income countries, including small states, in tackling multifaceted challenges, safeguarding human capital, and providing social safety nets to target their most vulnerable people.
Given the immense financing needs, we agreed to bring forward the IDA20 replenishment process, which we expect will be completed by December 2021. At the 2021 Spring Meetings, the Development Committee also asked the Bank to scale up its work to address rising levels of food insecurity and to support countries in achieving SDG 2, and nutrition for all, along with other partners.
Green, resilient, and inclusive development. The Bank Group continues to support countries in achieving the twin goals of ending extreme poverty and boosting shared prosperity. In responding to the COVID-19 crisis, the Bank Group has an opportunity to help low- and middle-income countries build the foundations for a strong and durable recovery based on a framework that we discussed, which supports green, resilient, and inclusive development. We believe that this, in turn, can help address the longer-term challenge of climate change.
Climate. We hope that the ambitious new targets for climate financing outlined in the Climate Change Action Plan 2021–25 and the alignment of the Bank Group’s financing with the Paris agreement—complemented by the approach to green, resilient, and inclusive development and efforts to build long-term resilience for food security—will help deliver on the twin goals and the Sustainable Development Goals.
Knowledge framework. We welcomed the discussion of the new Strategic Framework for Knowledge, which strives to better integrate knowledge into solutions for clients and the global community. We look forward to implementation of this framework, which will strengthen the Bank Group’s role as a source of solutions.
Debt. As countries face increasing debt burdens, our Governors, together with the IMF, have given the Bank Group a mandate to address fiscal and debt distress in IDA countries in a way that supports green, resilient, and inclusive development and poverty reduction. We are hopeful that the G20 Common Framework, along with extension of the Debt Service Suspension Initiative to the end of 2021, will allow beneficiary countries to dedicate more resources to tackling the crisis, investing in health care and education, promoting growth, and improving their long-term approaches on debt.
Private sector. Recognizing growing credit constraints, the private sector is a critical player in helping client countries attain their development goals, create and develop markets, mobilize resources, and respond to COVID-19, including through IFC’s Global Health Platform and MIGA’s response programs. We expect the Bank Group to keep building partnerships across a common strategic framework to help generate private sector solutions that address development challenges.
Racial justice. There were important efforts this year to address racial injustice within the Bank Group and with our clients, including a set of recommendations put forth by the End Racism Task Force to fight racism and racial discrimination. We look forward to implementation of these recommendations through an action plan that will reaffirm this institutional value, which is embedded in the Bank Group’s Code of Ethics.
Accountability mechanisms. We also reaffirmed the importance of accountability mechanisms for people and communities who believe that they have been, or are likely to be, adversely affected by Bank Group projects and investments. We have approved enhancements to the Bank Group’s social and environmental accountability framework, including changes to the World Bank Inspection Panel’s toolkit and to the reporting line of the Compliance Advisor Ombudsman for IFC and MIGA.
Leadership, staff, and return to office. November 2020 marked the transition to a new term for the Board of Executive Directors, and in February we welcomed Makhtar Diop as IFC Managing Director and Executive Vice President.
We look forward to the widespread availability of COVID-19 vaccines across the globe, the safe return of the Bank Group’s staff to the office, and the overall return to a new normal. Our utmost appreciation goes to the staff for their ongoing dedication to the Bank Group’s mission and their perseverance and hard work over the past year, despite the immense and sudden change in their working environments.
The World Bank Group remains ready to help our clients on the path to recovery. We hope that the new fiscal year brings good health and strong development outcomes for all.
A year and a half into the global COVID-19 pandemic, we have accomplished much, yet much remains to be done. As the World Bank Group charts a path for green, resilient and inclusive development, MIGA has been focusing on its ongoing response to the pandemic as well as the other challenge of our time: climate change.
As the World Bank Group charts a path for green, resilient, and inclusive development, MIGA has been focusing on its ongoing response to the pandemic along with the other challenge of our time: climate change.
At the time of writing this message, the coronavirus has infected over 220 million people. Concurrently, global CO2 emissions continue unabated, and infrastructure in developing countries is particularly vulnerable to extreme weather events.
During the pandemic, global investors in FY21 held back and turned inward to domestic markets, which was reflected in the dramatic drop in 2020 of global foreign direct investment (FDI) flows by some 42 percent. As we begin to see recovery in advanced economies, MIGA is working on bringing investment back, and doubling down on supporting the World Bank Group’s mission of ending extreme poverty and boosting shared prosperity in a sustainable way.
MIGA’s role amid the pandemic is to encourage private investors to stay the course and offer greater stability by helping manage and mitigate country risks. Working with our clients and partners, we mobilized US$5.5 billion in financing (from private and public sources) through issuances of nearly US$5.2 billion in guarantees to cross-border private investors in FY21 ($7.6 billion since April 2020). A quarter of our guarantees supported projects in IDA (lower-income) countries and fragile situations, and 26 percent of our issuances contributed to climate change adaptation or mitigation. As a result, our issuances in FY21 are expected to help provide access to power to some 784,000 people, support nearly 14,600 jobs and enable US$1.3 billion in loans, including to small and medium enterprises (SMEs) and climate-related activities.
We kept investors engaged by devising innovative uses of our products—and with the help of the Board, streamlining project approval procedures.
We applied our unique approach to capital optimization on voluntary cash reserves, and issued our first-ever support for mini- and off-grid solutions in Africa.
We also used our credit enhancement product to get financial institutions to support countries that could take on nonconcessional borrowing. Through projects like Banco Nacional de Panamá, we helped financial institutions—in this case, Goldman Sachs Group Inc.—secure affordable financing from institutional investors. We also ventured into new territory by supporting the upgrading of two public hospitals in The Bahamas.
Following interest expressed by governments and investors, MIGA put together its first crisis response guarantee package. With the help of our Board, we expedited approval processes, instituting a fast-track COVID-19 Response Program that allowed for projects to go from early screening to Board approval in 51 days, compared with 129 days for regular COVID-19 response projects.
In addition to speed, we supported governments by encouraging our clients, when feasible, to provide leeway on payments. This type of collaboration was critical for protecting some of the most vulnerable in our member countries from the worst financial blows of the pandemic.
The US$6.5 billion COVID-19 Response Program we launched in April 2020 proved fit for purpose, leading to the issuance of US$5.6 billion in guarantees for COVID-19 projects and an anticipated expansion of the program to US$10–12 billion over the coming years. The program truly has been a testament to the countercyclical role that MIGA can play in mobilizing private investment in the face of global crises.
While we helped deliver results on the ground during the pandemic, we also took important steps in FY21 that position us to help address global challenges in the coming years. We secured Board approval for Trade Finance guarantees—our first entirely new product line since 2010, when we launched our Non-Honoring of Financial Obligations product.
We also contributed to the launch of the World Bank Group’s second Climate Change Action Plan (2021–25), issuing US$1.36 billion of guarantees—or 26 percent of our FY21 issuance—in support of climate change mitigation or adaptation. Going forward, 85 percent of MIGA’s Board-approved real sector operations will be aligned with the Paris Agreement by July 1, 2023, reaching 100 percent by 2025. To get there, we will hire more climate experts and help build client capacity on climate opportunities and vulnerabilities. Reflecting the importance with which MIGA views the climate challenge, I am pleased to be sharing for the first time MIGA’s climate-related disclosures, in accordance with the specifications of the Task Force on Climate-related Financial Disclosures (TCFD) (see Annex 1).
I am also appreciative that MIGA, working closely with the IFC and the Compliance Advisor Ombudsman (CAO), was able this year to help develop and garner Board approval for a robust and comprehensive new IFC/MIGA Independent Accountability Mechanism Policy that further extends our leadership in environmental and social sustainability.
Moreover, project finance is trickling back, although differently than before the pandemic. Many investors who had cash flow issues during the pandemic are selling assets in emerging markets, and new investors are acquiring these assets rather than building greenfield projects. We are seeing increasing demand for political risk insurance for acquisitions and brownfield investments.
For example, we signed a project in FY21 with Kasada, a billion-dollar private equity fund that is acquiring and upgrading 20 hotels in Sub-Saharan Africa and supporting jobs in an industry badly hit by COVID-19. Similarly, new investors are coming into the power sector to acquire existing projects and then upgrade plants and machinery.
Although we are living through challenging times, I am heartened that, working with our clients, we are helping individuals weather the pandemic. I remain optimistic that we will stay the course on meeting the World Bank Group’s mission.
I am particularly proud of our staff, who came together under difficult circumstances to meet the challenge. I thank our clients and Board, who have remained steadfast partners and helped us deliver results through the pandemic.
While the challenges ahead are many, we have the capacity to tackle them head-on. I am confident that the building blocks we are putting together now, will help us to not only recover from the pandemic but also to take on the other key challenges of our time—including, most immediately, climate change.