[Background music for video] The second day of the Spring Meetings 2021 [Live: Washington, DC] We're on a live broadcast again from World Bank Group headquarters In Washington, DC. [Srimathi Sridhar, World Bank Group] I'm Srimathi Sridhar and we'll start in a few minutes Our main activity is about debt. But before we get started on this, he will be cast by my colleague Paul Blake A quick look at what you can expect from this live event on air today And how can you participate in it.
[Background music for video] Once again, the World Bank Group and International Monetary Fund meetings are held by default Although our buildings are relatively empty compared to what they were in previous years, you are By communicating with you wherever you are, You have more opportunity than ever to participate. For weeks, we conducted and recorded in-depth conversations With some of the most prominent experts in the world On the most pressing development issues of our time. And now at these Spring Meetings, we are proud to bring you four events It will unfold over a period of four days and cover four important themes: Economic recovery, debt, climate, and vaccines. Although the main events are recorded, Our specialist experts are ready to go live now To answer your questions and share your comments. Hello and welcome, this is Najma Sheikh. With each of these events taking place, my colleagues and I will answer. To your questions In English, French, Spanish and Arabic, in the live chat on the World Bank's live site, live.worldbank.org.
While you're with us, please vote on our survey. Every day we will ask a new question. After each event, we will return here to the live streaming platform From our headquarters in Washington, DC. And through these socially distant encounters, We'll be asking some of the most common questions asked of adults online World Bank Group leaders and experts. So what are you waiting for? Learn all the details, and share your opinion, on the World Bank's live.worldbank.org website. [Join the Conversation: Debt for Development hashtag # DEBT4DEV] To share your opinion on today's event, you can use the hashtag "debt4dev." Now we'll be back here in about an hour For a live discussion with World Bank Group President David Malpass, Your questions are covered.
And I'm also going to show you the results of today's survey, and a whole lot more. Please stay with us for this. [In a few minutes: Debt Reconsideration: Financing the Future in the Midst of Crisis] Now, let's go straight to today's program, Debt Rethinking: Financing the Future Amidst Crisis Event host Paul Blake of the World Bank Group. [Background music for video] [The 2021 Virtual Spring Meetings of the World Bank Group and the International Monetary Fund] [Debt Accumulation] [Danger to recovery] [New solutions] [Debt Revisited: Financing the Future Amidst Crisis] [Paul Blake, World Bank Group] Hello everyone, welcome to Washington, DC, And welcome to the second day of the Spring Meetings 2021. And I, Paul Blake, come to you from the main hall For World Bank Group headquarters.
The focus today will be on how we can help developing countries to Managing leveraged financing. The Coronavirus (COVID-19) pandemic, now a year old, has exacerbated the debt distress In the poorest countries, This may weaken her ability to finance her future. Debt reduction would allow countries Concentrate its resources where they are really needed most, Building on a green, resilient, and inclusive recovery. What is the best way to achieve this? How can governments finance development Without sinking into debt swamp? What lessons can we draw from past experiences? And now over the next hour we will be joined by some of our top-notch guests We hear from people from all over the world who are directly affected by these issues. [Background music for video] [Virtual Spring Meetings 2021] [Why unsustainable debts cause concern, Zainab Haroun, Global Young Leaders Forum Ambassador] [Revisiting Debt: Sustainable Solutions for Inclusive Growth] [Vera Davis de Sousa, Minister of Finance of the Republic of Angola] [Debt Revisited: A Private Sector Perspective] Julie Monaco; General Manager, City] [Rethinking Religion: The Impact on Future Generations] [Kevin Watkins; CEO of Save the Children] [Toward efficient debt reduction] [Kingsley Way Amoako; President of the African Center for Economic Transition] [Carmen Reinhart, World Bank Group Chief Economist] Now before we dive into our discussion, Remember there are many ways you can participate in this event.
We will be broadcasting in English, French, Spanish and Arabic [World Bank Live] On the digital platform, the World Bank, directly and through our social media channels. On the World Bank Mubasher platform, you will also find our experts We are ready to answer your questions in our live chat. You can also vote with the support of your favorite questions. And we'll ask some of those questions To World Bank Group President David Malpass. Following this event. [Debt for Development hashtag # DEBT4DEV] You can post your comments at any time using the hashtag "debt4dev." Before starting our first discussion, let's take a look at how government debt impacts The livelihood of ordinary citizens, positively or negatively.
To explain this, here we have Zainab Haroun, Ambassador of the Global Young Leaders Forum. She is the founder of the (Decoding Solutions) project, a youth-led social enterprise In her country Nigeria. [Zainab Haroun, Global Young Leaders Forum Ambassador and Founder of the (Decoding Solutions) Project] Whenever you or I need to buy a home, We may ask for a loan, So are governments, doing the same thing, and borrowing money from different lenders To build roads, schools and hospitals. And this is in addition to an enormous amount of debt, But that is not necessarily a bad thing.
And the way countries invest and manage their debts It determines whether its people thrive or fall behind. Let's look at why. Let's get to know Emma, a young girl who lives in a rural village. And her country is not rich, but the government is investing in its people. Her school acquired computers and hired skilled teachers. Emma loves coding data and discovered her talents in programming games and websites. She won a scholarship and went to college. After obtaining a degree in computer science, she obtained a loan to establish her project.
Her company has thrived, and now dozens of people work for it. What enabled Emma to succeed? Every step the government has taken is on the way to investing in the future. Emma and others like her have supported her with a strong education budget It made possible the payment of teacher wages, technology costs, and scholarships. The country had to borrow from different lenders, but the investment paid off. It led to growth, job creation and prosperity for her people like Emma. Rather, the problem arises when a country is overburdened with unsustainable debt levels Can't continue bearing its burden.
Developing countries were burdened by a whopping $ 55 trillion in debt Even before the coronavirus pandemic came. And interest in debt sustainability has increased as countries respond to the pandemic, And its endeavor to meet urgent financing needs. Now imagine Emma's life again. Her country is borrowing to finance an ambitious agenda, It takes loans from savage elements in the private sector and all those of us who are eager to lend. But interest rates are high Loan amounts and terms are lacking in transparency. This starts a vicious cycle of debt accumulation With little money available to spend on projects, including education. Then came the pandemic, to derail the budget from its right track. And because the country is now suffering from heavy debt burdens, Conditions for ordinary citizens are also affected by rising interest rates.
Emma does not get additional investment in teachers and computers It cannot learn to encode and encode the data. Without a scholarship, she misses the opportunity to attend a university college. She cannot get a loan and start her own business. Emma and her family continue to be in poverty. It is a story of unrealized potential It is common in many countries around the world. Countries are when they can finance the future in a sustainable way And investing in its people, it benefits everyone. That is why debt is something we all care about. [Bishkek, Kyrgyz Republic] I am jolly in Bishkek, Kyrgyz Republic, As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund.
As Zainab has pointed out, the way governments manage their debts is an issue It affects all of us in the future. Even before the coronavirus pandemic, many developing countries were burdened with debt But the pandemic exacerbated this bad situation. And low-income countries in particular She now faces unsustainable debt levels. World Bank Group President David Malpass invited three important thought leaders To present their views on how best to manage debt crises quickly and efficiently so that the world returns To the right path towards a resilient recovery. And in the first in this important series of discussions about reexamining religion, he spoke To Angolan Finance Minister Vera Davis.
[Rethinking Religion: A Conversation with Vera Davis de Sousa] Minister of Finance of Angola] Thank you very much, Paul. [David Malpass, President of the World Bank Group] I'm here with my first guest, Davis de Sousa is Minister of Finance of Angola. Vera, nice to see you. Angola has passed a readjustment of its debt terms. Could you explain the effect of debt on the people of Angola? Why was the readjustment of debt conditions important? How did it go? What were some of the challenges that existed? [Vera Davis de Sousa, Angola's Finance Minister] Thank you very much, President Malpass. Thank you, David, for the opportunity to be here To inform you and the public about our experiences. Yes, we have experienced the repercussions of the pandemic. True, we were moving from a starting point that was not easy.
We've been dealing with recessions for years The pandemic came to worsen the situation for the Angolan economy. And as you know, with heavy reliance on oil, Anything that affects the oil sector, causes great harm to us. This affects our debt balance. Because it affects various indicators. Growth is declining, and to a greater degree, our foreign exchange reserves are decreasing. With the effect on the exchange rate And the effect on debt linked to the exchange rate. Thus, a set of events placed us in a very narrow and embarrassing situation It required us to act on all fronts On the revenue side, on the expenditure side, and also on the debt side. We have received important assistance from institutions such as the World Bank Group and the International Monetary Fund. The G20 initiative to suspend debt service payments was very helpful. But we are also talking to our major creditors To find solutions that enable us to have another outlet In the medium term, it will free up the necessary financial resources To meet the social needs of health care and financial support for families.
Thanks to your support, we were able Implementing a financial aid program To the most vulnerable families. Therefore, everything gives us an outlet, which gives us more financial space to spend To meet the social needs of the population We do it, and we do it with your help. Thank you, and so the balance of external debt increased From about $ 33 billion to more than $ 50 billion, which is a huge amount.
I am wondering about the interest rate on that amount, and what will happen. Thus, you have a temporary relief now. Has that dilution run out, and what are the consequences? Or what is the interest rate you expect in the next ten years? Yes, we can look at the external situation and the general picture of the indebtedness. As for the external situation, the debt has increased by about $ 18 billion since 2015. But if we look at debt in general, we will find that in the period from 2017 to 2020, We saw a drop from $ 88 billion to $ 68.8 billion.
Thus, we still face challenges in managing debt, but I believe we are on the right track, Especially since we have seen it since 2018 Also, the total funding needs decreased. We were able to finance more expenditures using the tax revenue proceeds. That's good news since 2018, see 60% cuts in our total financing needs. Therefore, I think we are on the right track, and have done very well in broadening the tax base. We should continue to work on improving the quality of expenditures. We must continue to work on building trust On macroeconomic indicators, and on government commitment, Reforms to ensure risk perceptions recede Involved in this country. That is also important for lowering interest rates. We also intend to continue negotiating with our multilateral partners To approve soft loans, To meet the financial needs that we will have to fulfill. But we really think … That to tackle all these challenges in a sustainable way, We must take care to diversify our economic activities, And to cut our dependence on oil, and for our growth to be inclusive of all And to make sure we're on the way to seeing more jobs, seeing more tax collection, And we have also increased our capacity To reduce our request for financing lines, even on favorable terms And that we can collect more money to finance our activities.
If this happens, the interest rates will diminish. That is a medium-term goal, but we must continue to work towards it So we can make sure that in the short term and through solutions such as a common framework it will be That is very helpful. We can deal with this problem in the short term, And in the medium term, as the economy grows, We can get more financing Without risking an increase in our debt stock. It is interesting. A large part of your debt balance is financing covered by an oil guarantee. But I understand you when you say that you are working to diversify the activities of the Angolan economy, I imagine it will be important … How can you procure financing from commercial banks for business establishments through Shorter-term financing types? How will your relations with commercial banks proceed? Will she keep her engagement or is that also a challenge? We feel it is still involved.
Very often we receive many proposals to finance specific projects. Our initiative is to call for caution, We want to set priorities, To give more importance to the private sector for direct investment. We want to reduce our impulsivity with regard to the financing lines. Therefore, we feel, yes, that the commercial banks Still interested in providing funding to Angola, But Angola wants to act on the basis of a strategy Combine access to private financing To engage with us and share with us In growth and in exploring the opportunities available to us in our country And to obtain financing on easy terms They are sometimes not acceptable to commercial banks.
Thus, it is a somewhat painful process Because it is a different way of thinking, and a different strategy Some of our partners are beginning to understand it But in the beginning it was not easy to negotiate these terms But we are still committed to that. We remain committed to private investment. We remain committed to seeking financing on concessional terms We resist signing contracts on commercial terms We understand that it will add burdens to our debt situation. I understand that. Therefore, these are very difficult times for countries due to the pandemic, Because of the slowdown in global economic activity Worse, due to severe recessions in many countries. Then comes the challenge of rebuilding for the future In a way that makes it sustainable in all respects. So I would really like to thank you for joining us today I wish you good luck in taking on all the challenges that Angola faces.
Thank you, Vera. Thank you very much, David and Secretary Vera Davis, for our first discussion. We have a lot of great speakers on our list, But now, another chance for you to participate. We ask you to vote in our private poll, We want to know how you will respond to the pandemic. Therefore, our question is: After the end of the Corona pandemic, What is your biggest financial priority? Is it (a) saving for the future? Or (b) making rational investments? Or (c) your country obtained a loan, Or will your focus finally be on (d) debt repayment? Now let me talk about that again. After the end of the Corona pandemic, what is your biggest financial priority? Is it (a) saving for the future? (B) Making rational investments? Is it (c) your country getting a loan, Or will your focus finally be on (d) repaying debt? You can vote on the digital platform, the World Bank Mubasher. My colleague Sri Sridhar and I will Detects survey results live At the end of this program.
And now, as we heard earlier in Angola, Governments are striving today to see how they can finance their development in the future At the same time, it also supports their economies to overcome the current crisis. Ordinary citizens face similar challenges. And we wanted to hear your opinion. How do you finance your future? How does it affect your government debt On your ability to achieve your financial goals? He sent us young leaders and entrepreneurs from all over the world Videos presenting their ideas. Let us seize the opportunity to hear what they have to say. [Ronic Ngambwe, Student, University of Mary Washington, United States] If I could finance my future, [Democratic Republic of the Congo] I will pursue a college degree and invest in a home.
[Viktor Mitievsky, Co-Founder, Research and Analytics Association (ZMA)] If I can finance my future, I will continue to invest in my business. [Anuka Primors Aperathney, sustainability expert] I will support more women entrepreneurs [Ambassador of the Global Young Leaders Forum, Sri Lanka] by expanding my project to empower them. [Ichglin Irdenbat, Real Estate Manager, Mongolia] I will be able to open my business That will give my family a better lifestyle and income.
[Gerlentoya Khuju, HR Expert, Mongolia] I will travel to many places around the world. [Santiago Crespo, Entrepreneur, Argentina] I will expand my company's activity to create new job opportunities for others. [Amy Malek, Research Analyst, Lebanon] I will feel reassured and peace of mind From overcoming the current economic crisis in Lebanon. [Jason Barija Jauregui, engineer and activist, Global Young Leaders Forum Ambassador] I'm getting a student loan at a low interest rate.
[Peru] So that I can pay for my studies to get my MBA degree. [Aikin Korkmaz, Business Development and Sales Expert, BEAM TECH] My biggest financial goal right now is to save more. [Sergio David Silva Gutierrez, Advocate of Community Impact Entrepreneurship, Colombia] is to pay off my student loans. [Jubilee Cotting, Founder, Digital Media Agency, Guyana] He's buying a house and a car, saving more, and investing more. Now in his first interview, President Malpass heard about the challenges Angola is facing As she fights against the pandemic, At the same time, it is also dealing with heavy debt burdens.
And in his second conversation, he wanted to hear from the private sector And how to address this challenge. Julie Monaco; General Manager of City Group. [Debt Revisited: A Conversation with Julie Monaco; General Manager City Group] Hello, I'm here with Julie Monaco, General Manager, Citibank Group. It has a wealth of experience gained over decades in the field of international finance. I wanted to explore and understand very well how Citi responded We are discussing the debt crisis in general. [Washington, DC, USA, Maryland, USA] I know, Julie, that you are an advisor to sovereign bodies And that is one of your roles. I wonder if you could take care of the various roles Or the relationships that link Citibank as a whole with developing countries And most especially the poorest countries.
[Julie Monaco, Citi Group General Manager] Yes, David, we in City are the biggest provider For debt guarantee services to sovereigns in emerging market countries around the world. He is a formidable appointee of experience and leadership skills from the Citi Group over many decades. Therefore, we have extensive experience working with sovereign institutions in debt restructuring processes. We have an advisory team in classifying sovereign debt and in dealing with sovereign debt It cooperates with sovereign institutions facing debt distress.
We will continue this work, and we have many years of experience … And my team, I should even say the collective team of City, He has many years of experience working in parallel With the International Monetary Fund and with a sovereign body, and negotiating with private creditors. And more recently, we were in that situation with Ecuador in terms of debt restructuring. So, in relation to commercial bank loans, you know, There are not many conventional commercial bank loans From organizations like Citi or our counterpart For sovereign bodies in emerging market countries. And that's because of what happened in the 1980s and 1990s. Therefore, most commercial loans to be made … And commercial bank loans to be made to sovereign bodies It will be linked to projects.
Once again, it is also linked to financing along the lines of the Enhanced Integrated Financing Trust Fund Which is characterized by a high degree of consistency with official circles. Our loan portfolio is concentrated on the sovereigns Mostly on foreign exchange lines, commercial lines of credit, As well as on loans covered by the guarantee of export agencies Submitted by official circles in which the positions of the public and private sectors are located Very consistent with that type of lending. So it is very different. And I think bank lending is very minimal Compared to the overall formal lending as well as to the bond market.
And that was wonderful, And there was a lot of attention paid to the details of that kind. So, as you research Ecuador, it should be noted that it has faced different types of debt And they were able to readjust its conditions or restructure some parts of that debt. How does the change in contracting affect the capacity of the country in question? Or the outcome of those discussions? For example, in terms of warranties or in terms of the non-disclosure clause, What has changed over the past few years in that regard? The role played by the City Group in Ecuador … We were in an advisory role alongside an independent advisor. And we were negotiating with the official creditors We worked parallel to the International Monetary Fund and we worked with bondholders. And I think that situation … I think Ecuador is a perfect example of how the current process can work. And that is when you look at a situation that is The bondholders are just as willing to accept a debt deduction as they did. And they are prepared to do so when there is some degree of transparency And when there is good intentions, and the ability to show that there will be changes and reforms And they feel confident in the data On the path that the country in question will go forward.
And I think, David, we've seen it again and again There have been 17 debt restructurings through the Paris Club since 2010. Twelve of those operations included mandatory bondholder engagement And the bond holders were very ready to come to the negotiating table And debt restructuring as long as there is … Because the way it was done Increased adoption of collective action clauses It facilitated the completion of these restructurings on the bond side. Well what you can see is just an expectation. I think it is evident in the bond markets This type of restructuring is part of this asset class in emerging market countries. And so, I think there is some degree of acceptance of that. But it also requires sincerity of intent about how to complete that restructuring. It is different. The mechanism for restructuring the debts of commercial banks Very different from bond debt. And as you know in Ecuador we have restructured Ecuador's debt.
The holders of the bonds bore deducting part of the debt, But no one touched the official debt as part of that restructuring. In fact, during my preparation to talk to you about the benefits The G20 common framework for dealing with unsustainable debt, I asked My team, could that framework have changed anything? In the way we did debt restructuring in Ecuador? The answer I got was that it was probably the G20 framework Because all the official creditors were on the negotiating table And major formal creditors were not present In the framework of the Paris Club like China, It would have speeded up some negotiations On the official debt side. Let's focus on this point … Thank you for all of that. Let me focus on the common framework. It targets indebted countries And the countries with lower income than Ecuador.
And so, it was the constructive aspect that you described It is that it brings together creditors who are members of the Paris Club And official creditors not members of the Paris Club, as well as private creditors. And so we are working at the moment with Chad, and with Ethiopia, And with Zambia, which are countries that have requested treatment under the common framework.
How do you see the results of this effort? Will he succeed, I wonder? I think it definitely has the potential to succeed In theory, I think the common framework increases this possibility Because … conditions are right for that, right? The level of transparency must be improved. There must be full transparency to build sincerity of intent. And again, you should look to see if he succeeds? How do you determine "will he succeed?" There is a principle about debt When we go into these processes of debt restructuring with any sovereign body You want to preserve your ability to obtain commercial credit as much as possible And credit from the market after the restructuring, right? And for entities that are at the lower end of the income scale Which does not have …
That is lost … If the sovereign body is really going through a very awkward situation, that they are Already suffering exclusion from the market, It is clear that this kind of restructuring under the common framework of the Group of Twenty It would be useful to them, right? They have nothing to lose by implementing such a framework. And I think we must be careful with this framework When sovereign institutions have a respectable economy. And they have the ability to readjust the terms of the debt In a way that allows it not to lose access to credit, is it? Obtaining bank credit or access to capital markets.
This is what we want to emphasize. And that is why we feel so comfortable. I would like to make one sentence, namely We were very encouraged by the way I involved the G20 and the Paris Club The private sector in the common framework of the Group of Twenty. And we think it will be extremely important to make sure it works In terms of engaging the private sector at the negotiating table at an early stage. Julie, what do you think of the short-term tradeoffs? Compared to the long-term trade-offs for countries? You can look at it as a liquidity problem Against longer-term sustainability or solvency problems Faced by the population of the country concerned. Are all of these incentives compatible … It seems to me that the creditors have a great incentive That the liquidity problem is solved Which means the problem is short term, and then maybe they will do it again. You mentioned the large number Paris Club debt restructurings are already underway. Yes, I think in terms of trade-offs You balance immediate relief with long-term access to credit.
And finance the required growth, right? And so, when you think about how a country is going through that process He'll have to balance that And his desire to finance his sustainable development goals. And that is all … and there will not be enough official funds to do that. And so, I think the trade-offs that you constantly try to balance between them When entering one of these negotiations It is how to achieve that budget in a way that does not cut off the country's accessibility On additional funding from the private sector that will be required.
Because, as we know, there is a financing gap of trillions of dollars The private sector must fill it To help these countries achieve their sustainable development goals. Therefore, you do not want to be in a situation where they do not have access to financing Or you are forced, as I said, to look at the bond market, The mechanism of the bond market and the bank credit market is very different. On the side of bank credit, If commercial banks are forced to accept debt restructuring, This will have long-lasting repercussions for the country concerned Due to credit committees and regulatory restrictions … This is one of the reasons why conventional trade credit is so limited It is a large institution like Citibank at the moment. And so you notice that there are long-term risks Accompanying the forced restructuring of debts owed to commercial banks.
Therefore, extreme caution must be exercised in this matter. There are also implications that are not limited to lending. It also includes foreign exchange lines, commercial lines of credit, and other influences. So be careful … And I think when we say under the common framework, The problem is in the details And everything must be done on an equal footing. If we apply the same methodology to bond holders That we apply to commercial bank credit, It will not necessarily work because they are two vastly different mechanisms. Because of widely differing considerations, we must take them into account when providing advice.
And a final question about guarantees … More lending is done with the introduction of collateral And also with its inclusion clauses of non-disclosure Not by Citi, but by others. Does this change the dynamics of readjusting or restructuring debt conditions? Yeah. And so I think that when we talk about principles of transparency, Disclosure of liabilities is critical. And what we're seeing is that there are indirect guarantees on central bank reserves. And even the banks ’ownership of their reserves, and their bank repurchase agreements, And its long-term business obligations with clearing operations, right? This is very common in oil-exporting countries And it has state-owned enterprises that are oil companies. Those are the concerns. And I think we must define the principles of transparency … It was not taken into account because it was not included in the requirements for transparency And we must work to define it. I think one of the most important … I think we in the City group were very much supporters Transparency principles introduced by the International Monetary Fund in 2019.
And I think a lot of great solutions to the transparency problem Included in the World Bank report that you issued in the fall. And I think we must address these issues of transparency If we were to reach this goal because it is a difficult problem when we deal with these issues. And I can inform you that it's like a forensic process Get all this information when performing a debt restructuring process. Without going into details, I can inform you that it was like the forensic analysis process when the restructuring was done in Ecuador. It will be just like this in other countries.
And so, I think the IIF realized that recently … The institute recently asked the Organization for Economic Cooperation and Development To implement the principles of transparency Because it has been around for a few years, but it hasn't actually been implemented. If the organization gets support from the G20 And it has already been implemented, and we can build on that, I think it will be very important To improve these restructuring processes. Thank you very much, Julie. It's a great conversation, and I deeply appreciate it. [Lome, Togo] I'm Eric Keglan in Lomé, Togo As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund. And for the ticket, President Malpass will join us again Your questions will be answered in a special live show following this event. So please stay with us for this. Meanwhile, you can vote in support of your favorite question [World Bank Live] On the digital platform World Bank Mubasher live.worldbank.org. In which our experts actually answer your questions In English, Arabic, Spanish and French in the live chat. All this is directly on the World Bank platform. And if you have already joined us, welcome.
This is Paul Blake, and at the World Bank Group Spring Meetings you are watching an event on debt reconsideration. Now it's fair to say that in this debt crisis, Children were among the worst affected. Kevin Watkins; CEO of Save the Children, He knows from his experiences how debt crises can harm future generations. He joined President Malpass in the final part From today's series of talks about a debt reconsideration. [Religion Revisited: A Conversation with Kevin Watkins; CEO of Save the Children] [Washington DC, USA, London, UK] Hi, I'm here with Kevin Watkins. Kevin, you've been in development activities for a long time, for decades. I wonder do you have notes on the debt itself How does it affect countries? What are your thoughts in general? [Kevin Watkins; CEO of Save the Children] Thank you David, I am very happy to be here with you. And I think my most immediate remarks are That when I think back to when I started my job at Oxfam, in the early 1990s, It was truly at the end of a lost decade for Latin America.
And what is the beginning of the second lost decade of Sub-Saharan Africa? Undoubtedly, debt was not the only problem causing the loss of these contracts On some of the poorest parts of the world, but it was a big part of the problem. Looking back on that period now, I think two lessons can be drawn They have an important impact on the business that the World Bank leads And you personally started it first and foremost It was wrong in Latin America and in Africa Deal with what is perceived as a solvency problem as a liquidity problem. And so we witnessed a succession of failed initiatives Even in the case of low-income countries, we had the HIPC debt reduction initiative Which the World Bank played a major role in its formulation and implementation In reality, it took us more than two decades to solve the problem.
And I think that's the second lesson that we're taking from that period It is really necessary that all creditors participate To solve the problem. And again, there were many delays in those early stages To bring all the creditors together and treat that problem in a coordinated manner. There was, of course, a lack of transparency in the system. For many countries it was very difficult to determine who was borrowing from What is the amount of this debt, and who bears it? And when we talk about solvency and liquidity … Liquidity is related to the shorter term And a realization that the country lacks liquidity Solvency is an idea of how sustainable your debt is and you have the capacity to continue to bear its burden.
So, do you think the system has improved over these decades? Are we in a better position now to manage that particular contradiction? Show creditors tendency to say "Well, as long as I get paid over the next three years, I have nothing wrong with me." And among the longer-term goals for the country concerned That his children grow up with adequate nutrition and adequate health care. How are we getting better now? I think that's a good question You are right to draw attention to the human dimension of this issue.
What worried me deeply while I was working for Oxfam Thinking back to the 1990s and early 2000s The effect that this had in terms of skewed investments That would have been directed to nutrition To education, to child health, to go instead to creditors In a way that impedes the progress of countries. Now, regarding the question of whether the system has become more transparent And clearer now than it was in those days, I think this is still an unanswered question because if you look at what happened after the HIPC Debt Relief Initiative Of course, a lot of money has been saved, just under 2% of global GDP annually For the average of the 37 countries covered by the initiative. And a lot of that money went to healthcare and education. Unfortunately, many countries have benefited from the initiative to reduce the debt burden of poverty On the basis of the commodity boom that occurred after 2007 You're starting to get credit on terms, which is what we're looking at now We argue that it was probably not affordable in the case of many sovereign debt.
And in the case of debts that have been incurred Especially from China, it was severely lacking transparency. These were mostly debt secured by productive assets Most of them were not recorded in the records, as they were in quasi-governmental projects. And now we've come to accept the fact that it is even Before the Corona pandemic came, it was about Half of the countries eligible to borrow from IDA Either you have fallen into debt distress again or are at risk Falling into that distress. So I fear that we have not drawn enough lessons from that previous period. It is of utmost importance now that we take those lessons into account We are working to make the debt sustainability initiative a success. And one of those lessons is the need for transparency.
To a much deeper understanding of what contracts involve, What are the conditions, and what are the guarantees that the contracts may contain. And we are striving to this end at the World Bank, One of that is our system of international debt statistics. In order to expand its scope, and include more types of debt Because creditors are good at finding ways It ensures that debt is not counted in the statistics, but still bears the burden. So I think we can make progress on the issue of transparency But there is, however, a tendency or less, there is an increasing tendency To the debt contracts to include non-disclosure clauses and guarantees, as you say, Which makes it all difficult.
It is at the core of the G20's common framework The idea is to try to offer similar treatment to all creditors. And one of the challenges, and I wonder if you will have a comment on it, It is the composition of the global financial system or legal structure. Is it for granted … Is there really a way to provide symmetric treatment? Include private creditors? I think it's very important, David, That private creditors be part of the agreement reached in this regard.
Whether in the joint framework or in reality within the framework of the initiative to suspend debt service payments Quite obviously it is to be expected All creditors participate In providing debt relief and support for the suspension of debt payments. The truth is, you only have to look at the simple calculation of debt servicing burdens. Paris Club, It is the main gathering of creditors who have provided debt relief so far, Its share is roughly six and a half billion dollars in debt servicing burdens. The share of China and private creditors is roughly More than 35 billion dollars. Therefore, if private creditors do not participate And if China does not participate, We will not be able to support you Countries need it most It seeks to cope with the financial crisis it is now going through.
Yup, it's a massive shift from your early days in the '90s … Paris Club has been one of the major credit players But you say he has $ 6 billion in debt servicing for $ 35 billion. It has become an unbalanced situation in the opposite direction. It was in the 1980s when commercial banks were taking on a large debt package. But now this situation has receded, so we are facing various problems. Well, Kevin do you have another opinion … I mean any direct advice that you want to give to the international community On the debt problem? Is it a big problem and what can be done? One or two things will make it go ahead Better than it was before? I think I should suggest support in that regard.
The first thing is that it is very clear for a large group of countries Its debt servicing burdens are now in jeopardy The government's ability to provide basic services To some of the most vulnerable citizens and to children. I mean to give an illustrative example of the problem That there are about 35 countries covered by the initiative to suspend debt service payments, Currently, it spends more on debt servicing than it spends To health care. And this is at a time when malnutrition rates are on the rise Children are getting poorer, We have evidence from the World Bank on Education budgets are being cut sharply As governments come under pressure on their public finances. Therefore, this is definitely a good opportunity For the world to join hands in the interest of children To transfer what is in essence non-refundable debt obligations in many cases Into investments in human capital Especially investing in capital and support for the benefit of children To ensure that they have access to education and nutrition services And the decent health care they deserve. The second point that I would like to make is that for this initiative to succeed, We greatly appreciate your leadership skills, David, in supporting this initiative, It is necessary that all creditors participate.
It is not acceptable for the holders of sovereign bonds to stand Stand by, and hide behind ambiguous targets, And they assume they have some kind of exemption It is their moral responsibility And their obligations to the countries concerned. And so, we really want to see all of the creditors involved. We know from the Bolivian experience That when private sector creditors take responsibility and provide debt relief, This could really lead to improving the credit rating of countries, Undoubtedly, it may help improve prospects for financial sustainability. And so, I think, David, they're going to be the focus of two key recommendations on my part. Thank you, it's a great extraction. Thank you very much, Kevin, for your valuable thoughts. Good luck in everything. Thank you very much, David. Pleased to see you. [Uganda] Gibali Kuo I am Kunda Easter in Uganda, As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund.
Thank you very much, President Malpass, and all his guests today. Let me remind you of the poll we are doing during this event. We ask you to vote on the World Bank website directly, and the question is After the end of the Corona pandemic, what is your biggest financial priority? Is it (a) saving for the future or (b) making rational investments? Or (c) your country obtained a loan Or will your focus finally be on (d) repaying debt? [World Bank Live] You can cast your vote on the digital platform The World Bank Mubasher.
It is also an area where you can dive deeper into some of the issues Raised by our guests. We have compiled a list of reports, blogs and entries So you can learn more about the topics we're discussing today. Now is the time to move on to our final discussion. The current debt crisis is unprecedented because it is linked to a global pandemic, But it is certainly not the first time the world has faced this challenge. In fact, there have been recurring cycles of debt In many parts of the world throughout history. I am joined today by two experts To discuss what we can learn from this experience And charting a better path to permanent debt relief. [Washington, DC, USA, Florida, USA, Virginia, USA] Carmen Reinhart, Chief Economist at the World Bank Group, Kingsley Wai Amoako is the chief African Center for Economic Transition.
Welcome, both of you. Carmen, let me start with you. You have studied financial crises over the past eight hundred years. What is the difference in this crisis? [Carmen Reinhart, Chief Economist at the World Bank Group] The list is really too long to list, but let me focus on a double crisis … I mean, it started as a health crisis.
It was not rooted in a financial bubble or driven by financial factors … It was a pandemic. And because it is a pandemic, one of the exceptional things about this crisis is It really hurt everyone. The coincidence of output declines in 2020 Something we haven't seen throughout history. There is another characteristic that makes it significantly different from the 2008 and 2009 crises. It is a very condescending crisis. It is regressive within countries, affecting the poorest groups within countries Smaller families and firms in different countries.
This differs from the 2008 and 2009 crises Where it was the major center of the crisis in about a dozen advanced economies. And now, low-income countries are in It is the emerging markets that have been hit the hardest the most. Yes, let's talk about some of those emerging economies. Over the years, Africa has been hit by cycles of debt accumulation and then crises. And you witness setbacks when budgets are tight Difficulties in repaying debts become the biggest concern and concern. How have people and development programs been affected during these crises? [Dr. Kingsley Wai Amoako, President of the African Center for Economic Transition] Well, the first point that I would like to make is that the crisis Accompanying them are large debt payments, Naturally, this reduces the space available for action in the fiscal framework. And when countries are exposed to such distress or debt crisis, It spends its limited revenue to pay off the interest owed No on investing in human capital and developing critical infrastructure, Facilitating economic growth and job creation.
Therefore, countries are already struggling to transform their economies Investing in its own people has struck further setbacks. Let me add to the African context what I know very well. The growing numbers of young people demand our population Governments invest in education, skills and job creation, but we are We increase debt premium payments In times of downturn, the financial resources that countries can invest diminish. Therefore, there is a strong possibility that we add Another generation of young, less educated and non-educated Skilled to young people who are already there Because we spend our limited resources on debt payments On social protection for the most vulnerable. It seems to me that this situation in Africa will have a huge impact On our ability to transform our wonderful guys To the demographic dividend we are looking for. So as I see it by 2020, and you all know this, Africa will see more people join the labor market than any other region in the world. If they are not hired for gainful employment, we will witness social and political unrest. Therefore, we – in my opinion – need to find a viable solution.
We are laying the foundations without a viable solution. Rather, we lay the groundwork for embodying potential risks Accompanying these challenges. It is very dangerous. Let's talk about some of those solutions. And you are talking about some of the risks involved. Carmen, I know you stress the need for a speedy debt settlement. Are there examples where decisive debt reduction has succeeded? It led to improved economic conditions In particular, with regard to emerging markets … Emerging Market Crises of the 1980s and 2000s? Yes, there are examples of quick reconciliations. Unfortunately, they are often of unusual sporadic types. In the sense of a country struck by a natural disaster, He was able to renegotiate quickly with his creditors.
But when you asked me about the eighties. It is a great lesson from the crisis of the 1980s that we certainly do not want to repeat. For the same reasons Kingsley Way has alluded. The burden of maintaining debt servicing resources At a time when resources are most needed to recover from pandemics. This highlights the importance of debt relief. But what do I fear now? My fear is that the move in that direction has been far too slow.
We have not yet seen private creditors participating in the initiative to suspend debt service payments. And if we have a lesson in history, Unfortunately, creditors will also move slowly in granting debt relief. Today we have a much more complex creditor base than we experienced in the 1980s. Countries owe bondholders and a variety of private creditors. And a wider range of formal creditors. It's a complicated scene. Therefore, the need for rapid debt reduction is evident. But as I said, the problem was always in Very slow action on the part of creditors. I think more transparency – Which is what the World Bank has been working really hard for for some time To increase the transparency of debts, credits, borrowing terms, etc.- It can increase the coordination between the creditors and speed things up. It will not solve problems, but it may help speed up the process. And Kingsley Way was just talking there about the changing creditor base. And I read a little on this topic. Diversifying the creditor base while increasing the share of private sector creditors. Little reveals why this is challenging How do countries in Africa deal with this new challenge? Are there lessons to be learned from past experiences? For better debt management today? Yeah, I think you and Carmen got hit The debt problem is very complex.
And in that first part, we all agree, But we also agreed that everyone wants transformation in Africa. And as I said, as our population grows, we must spend more On infrastructure, education, and urbanization. We need smart agriculture, smart technology, and smart people. But we testify that over the years, Rather, during the past few decades, China emerged, for example As the largest bilateral lender to Africa. Approximately $ 150 billion was transferred to it. Moreover, the private sector debt increased significantly Russia and cities in the Middle East became major lenders to Africa. These new players often – let's assume – do by the rules That may seem less transparent. This is a reality. It is made even more difficult to understand the scale and scope of the problem. Debt management capacity across the continent appears to have become More durable than it was in the 1990s. But after the coming of the Corona crisis, Many African countries faced debt distress or debt crises.
But as you say we must learn from the lessons of the past. I have just written a book on Africa and development entitled "If you know the beginning correctly, the end will not harm you." It is taken from an African proverb. Therefore, we must learn from the lessons of the past to guide him in the future. This is the summary of what I am trying to say. So what are some of these lessons … The first is that national and regional debt problems are not isolated events For countries experiencing a temporary shortage of liquidity. It will, over time, have important repercussions On global financial stability. This is the first lesson. The second is that negotiating private solutions with different borrowers does not work. Any solution devised should benefit all official and commercial lenders. And the third is that the process, Carmen said, must be transparent. Cover any new funding sources And the framework for subsequent transactions between the parties. And the fourth and last is that it is pursuing a robust environmental policy reform program At the country level, And the right bet with money, and the availability of real options for creditors.
If it did, it could reduce the degree of uncertainty and restore investor confidence. Those are some of the lessons that I think It applies to our situation today. Three countries have so far requested debt relief Under the Group of Twenty Common Framework for Debt Transactions. And now, for those of us who have no knowledge, Can you tell us briefly what this approach is? Then could you tell us if this is what you think A step in the right direction Towards shaping a future debt restructuring? first and foremost, Let's start with the debt suspension initiative, We call it the Debt Service Payments Suspension Initiative. We are struck by a pandemic that occurs once every hundred years. It is an unparalleled shock, as we have already explained. The initiative to suspend debt service payments was therefore originally designed from the perspective that it was not During a pandemic, It would be much better for countries to divert their resources away from servicing their debt burden To address health and social emergencies And the social needs accompanying the pandemic But that is a temporary solution.
And it was designed as a temporary solution. Now, Kingsley Way has hinted at this. Even before the coronavirus pandemic came, it was a large proportion of countries Either you have reached a critical indebtedness stage or there is a high probability that you will reach it. That percentage has increased since the onset of the pandemic. Therefore, the common framework stems from awareness These problems are temporary To the structural problems that Requires one form or another of debt reduction.
Debt reduction can take many forms. It could be a reduction in the face value Or it could be longer maturities and better lending terms. It may take a variety of forms. This is not the subject of our discussion here, But the main point is the need to reduce debt in terms of NPV, This goes far beyond the initiative to suspend debt service payments. Kingsley Way and I have also mentioned the issue of transparency. And I think now it's a very important driver It will determine the speed at which the Common Framework application can proceed in The cases of Chad, Ethiopia and Zambia, The three countries that asked to be treated Under the framework, most importantly it depends on creditors ’ability to pool And they come up with a solution.
For creditors to come up with a solution, they need transparency. As Kingsley Way pointed out, Many new entrants joined the creditors group, Therefore, it will be a daunting challenge. I conclude by saying that it is a step in the right direction. It opens the door to the realization that problems are More than just a temporary pandemic, But… In these matters, I always say the problem is in the details. And so we will see how the creditors can coordinate with each other to reach a good result For countries that have requested treatment according to the common framework. Kingsley Way, could you give us your final say. What can the international community do to find a more durable solution? Wow. This is a great solution. I think that starts with the debt service payment suspension initiative that Carmen just mentioned. It is a step in the right direction, but it is not enough.
And so, we need to build on that. And I think that in the first phase we need to extend it until the end of 2021 To give countries more room to move in the fiscal framework to keep investing In the priorities I mentioned before. Next, obviously, comes the issue of the common framework How will he succeed in that? So this is a first step, but how can we deepen that step in the future? So I very much agree with what Carmen said on that. We must also work on innovation and finding solutions to today's debt challenges So it responds to the diverse needs of borrowers and lenders. For example, see my colleagues at the Economic Commission for Africa, of which I previously chaired We should acknowledge the problem And devise a fairer classification system For African borrowers and borrowing countries.
They point to, for example, Greece, which has a worse debt-to-GDP ratio than Ghana. But Greece can borrow less than 2%. Ghana, on the other hand, can borrow at least 4.5%. Therefore, the entire international classification system How are African countries unable to access markets? An issue also they talk about, These are the requests of African finance ministers Who met in Addis Ababa a few days ago. The ministers came out with their recommendation That the International Monetary Fund create up to $ 650 billion in Special Drawing Rights.
And set up an electronic mechanism via the Internet To the G7 countries to convert their holdings from SDRs into shares. And offering SDR shares to low- and middle-income countries. This is a specific recommendation from African Finance Ministers. And I'm glad it's just yesterday, I think She noted the Director-General of the International Monetary Fund That it is committed to the recommendation of the IMF's Board of Governors to create additional SDRs. And I think it is one of the integrated solutions that we need. But we shouldn't just focus on debt, and that is my main point. And if Africa were to achieve … To regain what it lost due to the Corona pandemic in terms of achieving our sustainable development goals in the next decade, We must transform our economies at a faster rate than we have witnessed so far.
And I think it goes beyond that, it's about transformation. To transform, African countries, like countries everywhere, must borrow. But to ensure that this borrowing is rational, It has to be affordable to ensure we can pay our debts. These are the basic issues Which I would like to put on the table for discussion in the long term. Kingsley Way Amoako and Carmen Reinhart, Thank you very much for putting your valuable thoughts on us. Now, we've heard a lot about the amount of debt and financing Which can help or hinder a resilient recovery in developing countries. The way countries manage their loans today It will determine whether it will be able to achieve its development goals Tomorrow and in the future.
It will also drastically affect financial hopes and dreams Citizens everywhere, especially the youth. And now, we have heard the length of this event from the young global leaders Let's listen to them again. [An advocate of entrepreneurship with societal impact, Colombia] In five years, I hope to buy a house for my father. [Research Analyst, Lebanon] I hope to take back the resources I lost Because of the government defaulting on its debts. [Student at the University of Mary Washington, USA, Democratic Republic of the Congo] I hope to live a debt free and financially stable life. [Shah Zeb Kheirul Islam, Obama Foundation Scholars Program, Columbia University] I hope I can facilitate access to funding [Founder of YY VENTURES, Ambassador of the Global Young Leaders Forum, Bangladesh] for a hundred people from my generation of emerging market countries. [Ivana Filizón, University Student, Argentina] I hope to own a home and feel more comfortable managing my budget.
[Co-founder, ZMA Research and Analysis Association, North Macedonia] I hope to start a family and join the list of 100 fastest growing agricultural companies. [Anger Enkhtor, Team Assistant, World Bank, Mongolia] To travel to countries I've never been to And to save money for any kind of emergency. [Lamia Harilcic, student, Sarajevo, Bosnia and Herzegovina] The current financial system is not in my interest. Let's fix it. [Sustainability expert, Global Young Leaders Forum Ambassador, Sri Lanka] The current financial system is not in my interest. Let's fix it. [Entrepreneur, Argentina] The current financial system is not in my interest. Let's fix it. [Business Development and Sales Expert, BEAM TECH, Turkey] Let's fix it. Let's fix it. Let's fix it.
[Karita Seba, Co-Founder and Spokesperson, Tesbasic Inc., Finland] Let's fix it. [Saleh Mahmoud, Founder, Mosul Space Company, Iraq] Let's fix it. Let's fix it. How wonderful to hear all these positive hopes for the future. We are now halfway through this week's activities, And if you want to present your thoughts on any aspect of the World Bank Group Spring Meetings, [# [# RESILIENTRECOVERY] You can use the hashtag "ResilientRecovery". Now, please keep in touch and don't go anywhere. The live show continues from the headquarters of the World Bank Group. My colleague Srimathi Sridhar stands ready With World Bank Group President David Malpass. We will take care of your questions and comments, We reveal the results of today's survey, and many more. [Live: Washington, DC] We're on a live broadcast again from World Bank Group headquarters In Washington, DC. [Srimathi Sridhar, World Bank Group] I'm Srimathi Sridhar and for the next half hour or so, We'll hear from young people in Japan, Lesotho and Nigeria On their hopes for recovery from the Corona pandemic.
We will also disclose the results of our survey [Mubasher: World Bank Group President David Malpass on Debt Reconsideration] We are talking to our office managers in India and Benin On climate challenges and actions being taken to address them in these two countries. But first to get to know his thoughts, I am happy to join World Bank Group President David Malpass. David, great pleasure to see you again, thank you for being here. Hi Sri, I am glad to be here. We've had a lot of big questions over the past few weeks On the role debt can play in helping countries recover from the pandemic. Let me start with this first question. And he sent it to us in a video clip by Epoca Urjiakor in Nigeria. Let's take a look at it. [Lipuka Urjiakour, Nigeria] Hello everyone, my name is Christian Ibuka Urjiakour. The most important question here is: How does debt affect development? Does debt promote or hinder development? Or could debt be a double-edged sword? thank you. How does debt affect development? What do you want to say to Ibuka, David? Yes, these are really important topics People are discussing it today.
[World Bank Group President David Malpass] This is a vital issue, it is a double-edged sword. If you borrow and don't have a good reason to borrow, It will come back because you have to pay the debt service, You have to pay off the debt And you will not get what you want to get from borrowing. But on the other hand for developing countries, and for everyone really, Debt can be an important part of a growth drive. And you can fund healthcare initiatives, It is vitally important that you can finance new businesses. So if you are thinking about development, you have to borrow again and again. And this is what we are trying to establish Through some of our initiatives to enhance transparency. And if the people of the country know what their governments borrow, There is some transparency about contracts, What is the interest rate on the leveraged contract? What is the purpose of this contract? That would be really helpful.
[Direct discussion: financing the future in the midst of a crisis] And you know, it also works on the investment side, Meaning, what is the return that we get from spending money? Will it be beneficial to the local community? Will it be beneficial to the country? What is really the plan to use this country's borrowing capabilities? I think these are valid and valid questions. And we are now, at a point in the world, Some countries are burdened with heavy debts. There is an enormous amount of debt that is unsustainable.
This is a huge challenge that we strive to overcome. Therefore, understanding how this affects development now It helps to take the youth perspective into account. We took a question online from Tara Who wants to know what youth can do in their communities To raise more awareness about debt and leveraged financing. Well, that could be true of a lot of things. What can they do to increase their participation in health care and education? I think it is for the sake of getting involved in the institutions To help build stronger institutions, Institutions, for example, as a starting point for many countries He, do you know which government officials have the authority to authorize debt Or download our country or local community? It really works at all levels of government. Therefore, I believe that young people can be involved and sensitized On financing matters and what are the interest rates. How does that affect? Then how do you participate in the institutions of your country as well? Because the goal is for debt to be used in a way that truly benefits development.
So that means participation and whoever makes the decisions On when a debt contract can be entered into. How do they decide what to invest in And how do you get a beneficial use of all of it? I think there has to be a lot of participation. And frankly, that starts with a lot of awareness What are the goals of your country? How does it interact with health, education and climate issues? What do you want as a nation? Those are all the questions that I think are really important. Therefore, there are many ways for young people to be proactive, and awareness is a key factor in this regard. This is my next online question about negative interest rates. This online viewer wants to see how these rates work Could it be a solution that benefits the world's poorest countries? Economists have tried to solve this issue. This question has been repeated for several years Why is the inflation rate as low as it is? Given the size of the growth in the balance sheets of central banks. Therefore, it is likely that these questions cannot be resolved or figured out now.
But negative interest rates, if we look at them from an angle, are The product of an institutional success over 50 years Central banks and countries ’budgets adhered to a kind of discipline. And so we get to the bottom line Where can you borrow at a very low interest rate Or even a negative interest rate. The challenge is that you have to do it And people may have to do this once in a generation Because you borrow from future generations At a very low interest rate or negative interest rate.
Therefore, you will have to pay off that debt. As well as the country or the borrower That could sometimes be a municipality or even a city She must use the debt or loan for a truly beneficial use Because you will be obligated to return it. You don't have to do this over and over again. And there may be a period of several years The world is blessed with these extremely low interest rates. And one of the challenges in the way of development It is that developing countries themselves cannot fully participate in this. Interest rates have fallen for advanced economies But very few developing countries have gotten the same benefit from this situation. Therefore, this situation is unfair It is the people who already own some national wealth They get a low interest rate.
So I think this is a huge challenge, and we want to address that as the World Bank It has good practices in developing countries And if you find transparency, and the right choice of projects, It may help the country in question to get lower interest rates. And now this next question comes from Ngogi Irunga in Kenya, He wants to know if there are models for financing public projects Ensuring that governments can comfortably pay off their debts? While stressing comfortably. Therefore, the way to achieve it Is that you get a really good return on your project. Thus, if there is a partnership or joint investment between the public and private sectors, this is a good choice. Therefore, Kenya faces daunting challenges related to transportation and agriculture. Hence, the projects that really have a good pay-off should be chosen. You can then pay the burden of debt service and do so comfortably. This leads to this institutional structure Which relates to how you choose the projects your country wants to undertake? This leads to all these urban and city planning challenges.
The World Bank is broadly involved in these activities because with the increasing growth of cities, It needs to make investments that help enable people to get to work. And to do so in a way that does not harm the environment, And help people save time Not having to travel hours and hours every day. It was one of the successful projects for the World Bank In cities where there are mountainous areas or bad roads to the city The deployment of a cable car network or some type of mass transit It really helps people get to work in fewer hours every day. It saves time for them. How can joint investment from the public and private sectors be created? Able to get the right things at the required time? These are challenges that I call or see as governance challenges.
Do you have a city council making the right decisions? And who is involved in that? How do they disclose decisions … A large part of this, I believe, is related to the required transparency So people know how a decision was made What are the evidence and what is the basis for taking this decision? That might really help us make rational decisions. Sure, that's really a great jump to my next and last question, It is about debt transparency. One of our online viewers says Debt transparency is clearly essential to achieving impact. But the Corona pandemic changed that situation, how did it change it And how can we overcome these enormous economic and financial obstacles and we Looking forward to recovering? '' Yes, one of the challenges is working from home It occurs in countries all over the world With various degrees of success. And some countries really don't have access to electricity for many people. It is therefore extremely difficult for them to work from home. Also in the informal sector, many workers have been laid off. They do not have a social safety net It is not inconceivable that they work from home.
One has to be in the workplace. This has created significant challenges. So we look at it in advanced economies As a challenge to transparency or communication. How do you really communicate? I think of a lot of poor countries, it's closer to being a matter of survival Nutrition, an issue of food insecurity, is a very urgent need. And one of the harmful aspects of the Corona crisis Is children not going to school Because they are falling behind in their education. They may not receive the vaccinations they need Perhaps schools were one of the systems That gives them nutritious food during the day.
And all these challenges … I see them from the perspective of transparency, We can also add digitization or access to data that helps Countries and governments know where to put their resources. The World Bank is working extensively in these areas in an effort to obtain data and surveys Of importance to people in countries so that they can make progress. All of this is made more difficult by the Corona virus. And so I think we must really act urgently for Recovering on the other side of the Corona pandemic. May I say one final word about the importance of vaccines and transparency? Who was able to get vaccinations? The World Bank has extensive programs. So far, we have been able to provide 50 countries with the necessary funding to purchase vaccines. This means establishing a system to follow up on those who have received vaccinations So as not to accidentally happen that people are vaccinated twice Or more than they need.
But also how to achieve full coverage For those people who need vaccination and who are most vulnerable and most vulnerable? How do you do this? This may be an aspect of digitization and transparency. The Corona pandemic has changed a lot for us here, and so it is great to hear How debt transparency is still a priority for us. David, In conclusion, I want to thank you very much for joining me here today. And to tell us more about the role debt can play In helping countries build a green recovery in which everyone is resilient. Please, my secret, thank you and thank you all.
I am delighted that people are interested in these topics. Sure, thank you. Thank. [Brasilia, Brazil] Hello everyone, this is Mariana Cerracci in Brasilia, Brazil As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund. [Live: Washington, DC] throughout these Spring Meetings We were highlighting voices and perspectives [Financing the Future: Voices of Youth] Young leaders and thinkers around the world. Over the past few weeks, we have been receiving video contributions From hundreds of young people. We ask them what role they and their peers could play In achieving a resilient recovery. Today, we listen to Jin in Japan, and Masasika in Lesotho, Benjamin and Anthony are from Nigeria.
[How can young people in your country participate in a resilient recovery From the Corona pandemic?] [Mapasika Mbhama, Lesotho] I think create a national youth council A good strategy for an action plan for a resilient and resilient recovery from the pandemic The National Youth Council is a platform for young people to be a part Of processes and decision-making, holding leaders accountable. [Benjamin Onyema, Nigeria] for a pandemic resilient recovery You must use your various social media platforms To publish the correct information about the vaccine against the Corona virus.
This will help reduce the reluctance to get vaccinated Which is common among the population of Nigeria today. And through a wide coverage of vaccination operations, We can start giving up Some interventions, restrictions, and shutdowns That hurt the economy indirectly. [Jin Tanaka, Japan] I think young people can contribute In new jobs provided by public projects and in establishing green infrastructure Lead to a resilient recovery. Onom Anthony, Nigeria] Communicate with young people taking into account factors such as gender, age and gender. Make the focus the focus on diversity, leveraging youth capabilities Within the framework of information, technology and social communication Networking is the way to start and change. Young people can advocate for policy implementation Help to revitalize female-owned businesses that have been damaged, Policies that foster youth employment, Policies that address observed technology gaps In rural areas that hinder the educational process. We are in an era when so many jobs are gone And new jobs began to appear. They arise with the requirements of a different set of new skills.
Young people must strive to acquire skills That increase their qualifications for employment. This should help reduce the high unemployment rates in the country today. Moreover, the government should make access to credit facilities Affordable for young people. This will encourage startups and small and medium enterprises that will directly boost GDP. Listen to young people. Young people of the twenty-first century have a distinct language. It is necessary, vital and appropriate Governments around the world can ask this question "What is the language of young people?" [# YOUTHONCOVID19] [Vientiane, Lao People's Democratic Republic] Sabide. Hello, I'm Nidal Manusa in Vientiane, Lao People's Democratic Republic As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund. We are joined now by my colleague Paul Blake At the headquarters of the World Bank Group.
Paul, let's talk about polls. We've had it all this week for each of our events So what was today's question? Yes, it is true, we take a different survey every day. Today's survey is after the end of the Corona pandemic, What is your biggest financial priority? The options are saving for the future. Or make rational investments, obtain a loan, or pay off debts. Below is the result of the vote. In first place, 55.8% of the vote went to making rational investments. And 27.3% of the votes went to saving for the future, which came in second place.
Third place is debt repayment, which received 11.8% of the vote. And in the last place came a loan. 5.1% of respondents say this is their biggest financial priority After the Corona pandemic recedes. Well, I was a bit surprised by this result. I was a little surprised by her, Although I would have considered paying off the debt, But this is my personal priority. I got some student loans that I have to pay off.
[Paul Blake, World Bank Group] This will definitely be my priority. I thought she'd get a little bigger vote than that. I personally voted for Saving for the Future. Which I could possibly say is that I think this is a rational investment. There is some overlap with this concept, but that's okay. I mean if you're saving for the future, In anticipation of the next crisis, or anything emergency, you are gaining more reserves to meet the emergency. Completely. Thank you for that, Paul. Certainly. Throughout this week, we spoke with country office directors and country affairs managers [In focus on India] around the world about their climate challenges And the actions they take in their countries. Today we head to India. From New Delhi, I spoke to Country Director Junaid Ahmed I asked him what are the features of a resilient recovery In the second most populous country in the world. Paul, that's a very difficult question that you asked, but it's a very important question.
[Junaid Kamal Ahmed, Country Director, India] I think there are two aspects to the features of a resilient recovery. The first is to realize that India is a federal system It has states the same size as Brazil, Nigeria and Germany. Therefore any recovery must relate to the state's recovery, Indeed, the future of India lies in the Indian states. But the most important news came out from India It is completely changing the social protection system.
We are in a world of trauma. We will see more shocks in the future, Whether it is climate shocks or pandemics, or income shocks, Countries must initiate protection measures that do not include the poor and the impoverished alone, But also its workers to prevent those shocks. And one last point, Paul, is very important. It is the provision of the largest direct money transfers in the world to female-headed households.
300 million families are headed by women You get direct cash transfers, especially in times of trauma. Those are the features of a future recovery. Strong social protection for the poor The incapable and the human capital for India. Thus social protection appears It plays this kind of pivotal role in recovery. And when the World Bank works with India Does he also really prioritize sustainability in recovery? Certainly. There is news of critical importance coming from India. First, India will become one of very few countries Which will fulfill its commitments related to the national contributions to combat climate change made in Paris at the 26th session of the United Nations Climate Change Conference (COP 26).
In particular, the energy density rates are decreasing. The level of support you are seeing is increasing from the green transformation. And the fact that it will fulfill its obligations related to national contributions to combat climate change And then its contribution to achieving the goal of limiting temperature rise to less than two degrees Celsius, It is a huge achievement for India, but it is not the only good news. India is undergoing some complex developmental transformations. They are transformations in the urban development sector, And in the energy sector, in the transport sector, and in the technology sector, These are just a few sectors. And with India's success in completing its development transformations, You will help the world achieve the transition to a low carbon economy.
That is how powerful India’s influence is on the global stage. And for those of us who are not familiar with India, And it's kind of a development story. Please tell me about the significance of some of these shifts And in particular, to tell me what it will take Investing in the next wave of transformation. So is the point now And also what the world needs to do to invest in a greener future in India. I will give you an example. Today there is one of the largest metro networks in cities in Delhi. It carries millions of passengers. Delhi is a city with a population of about 18 million to 20 million and it is growing. This subway network is a major means of public transportation. 60% comes from Delhi Metro's electricity From a renewable energy complex in Madhya Pradesh.
It is a state hundreds of miles away. The World Bank helped Madhya Pradesh develop this renewable energy complex. The public grid carries that renewable energy To finance this public transportation network in India. It is perhaps one of the most powerful transportation networks I have often mentioned India is one of the few countries in the world Which has a network of railway lines for transporting passengers and a railway network for transporting goods. Australia, Canada, and China are the other countries that have these networks. But what is the importance of having such a parallel network? As I mentioned before, if cargo transportation can be diverted From road to rail freight corridor, this will reduce the rate of 30% to 40%. Greenhouse gas emissions from road transport And put it in the transport of goods in electric vehicles.
Those are the kinds of transformations we're making. In this area as well, the World Bank has invested in the freight lane in India. The next question will be the most difficult one You receive it all day long and it is about you. I would like to know what is the best part of your job What inspires you in your work? I wasn't expecting that question. Paul, We are very fortunate to have a job In a multilateral institution like the World Bank? It gives us a platform to make a difference in this world. Perhaps this is, I think … The biggest inspiration we all get. To be in India that can bring about such a massive change On climate change this is a great honor. If the World Bank did not exist today, we would have had to recreate it.
That is why I say it is such an honor to work in this organization. Some inspiring words. Junaid Ahmed, Country Director of the Bank's India office, thank you very much. Thank you. [Kingston, Jamaica] Wah Joan I am Charman Wright from Kingston, Jamaica As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund. [Live: Washington, DC] Now let's check out the social media landscape. Paul, what can you tell us about today's conversation? I was just talking to my social media managers Who have been during the conversation all day And they said that many people repeated their communication on the Internet The need for inclusive solutions that are green, resilient and inclusive. And we just had that conversation with World Bank Group President David Malpass. He spoke at length of the overlap between debt And find these solutions. And tell us, too, these directors tell us That a lot of talking is going on In Nigeria, Kenya, India, Canada, Ghana and the United Kingdom, The Philippines, and Mexico.
Welcome to all of you to those countries In other countries, we really appreciate your participation. [Join the Conversation: # DEBT4DEV hashtag Religion for Development] Yeah, it's cool. We also received some good comments that came on Twitter. Could you tell us about some of those comments. Certainly, we heard a comment from Badr al-Din Naseem. They work for the Ministry of Foreign Affairs of the Maldives They wrote on Twitter to say that they had learned more about leveraged financing And how countries can achieve a resilient recovery He is the main reason they call And what they look forward to hearing today. We also heard from Richard Watts, a Senior Counselor at Save the Children He wrote a tweet saying that the initiative to suspend debt service payments was ending It has to be needs-based.
He hopes to hear more new ideas And access to private creditors, and participation in debt relief efforts. And we heard Kevin Watkins earlier on the show Also in Save the Children. [Join the Conversation: # DEBT4DEV Hashtag Religion for Development] So if you missed this chat, be sure to watch the replay, it was a great conversation. Finally, we received a call from Sani from Nigeria on Twitter, He says he is interested in a long-term reform To solve Africa's debt problem.
Watch all this conversation on Twitter But it also broadcasts on LinkedIn. So please tell me a little bit about what's going on there. Sure, we've heard a comment from Elizabeth Irongo. She is a financial analyst from Kenya. And she wrote a comment saying that the mystery surrounding eight to five jobs has increased due to the pandemic, It stands for the type of our daily jobs. She said that rational investment will result To reduce over-reliance on salary transfer guarantee loans. We know how she most likely voted in the poll. She chose to make rational investments. And saving for the future just like you did. Then we also heard from Akil, who is a senior accountant in Ethiopia, He wrote that making rational investments is the best option.
Especially for countries that depend on imports. Therefore, this option received the highest vote. We really love to see all this conversation taking place In our social media platforms We hope that it will continue during the next two days. But let us now turn to the second country that we highlight. [Country in Focus: Benin] That is why we are heading to Benin. That's right, and from the capital, Portonovo I recently spoke to Country Director Ato Sec. I began by asking him about the challenges Faced by ordinary citizens of Benin in relation to the climate and the Coronavirus pandemic. [Atu Sik, Country Director, Benin] The main challenge that Benin faces is creating jobs, creating decent jobs, Access to education and healthcare services, As well as water and electricity. There are also climate-related challenges. Including coastal erosion, as well as deforestation Affecting the livelihoods of local communities. You mentioned some climate challenges. Could you tell me about the West African Coastal Area Management System, In particular, I understand that Benin has a 121 km long coastline.
How does the project (Program for Managing these Areas) affect the coastal strip? You may know that the coastal region of Benin is extremely vulnerable. They are exposed to the most severe coastal erosion risks in the Gulf of Guinea. The size of erosion here may reach 15 meters per year. This country is also exposed to torrential rains and floods. For example, in 2018, a flood occurred It affected 54 villages in the river basin, the Mono River. Therefore, Waka provided funds for the emergency protection work To cement the banks of the river. Thanks to this support, more than 25,000 vulnerable families were protected They live along the river from being swept away by floods. I understand that your portfolio of climate activities is not limited to the coast. You also do work related to Benin's wooden resource. Can you tell us a little about that? The natural forests of Benin are managed without controls. In order to obtain timber, as well as firewood. 85% of the population depends on firewood And charcoal for cooking needs. Moreover, natural forests are managed to obtain timber Necessary for making furniture for export.
As a result, Benin lost more than 215,000 hectares between 2016 and 2017. To alleviate these human pressures on natural forests, We are financing a forest management project It is invested in the cultivation of forests on a large scale As an alternative to using natural forests for firewood and timber. The goal is to create 22,000 hectares of firewood and timber plantations In order to contribute to meeting the much needed demand for wood energy In large cities such as Cotonou, Abome-Calafi and Puerto Novo. Wonderful, and here I would like to change the subject a little, We are in 2021, and a year has passed since the Coronavirus pandemic. I would be falling short if I didn't ask you about it And about the situation in Benin. Tell me what are the features of any resilient pandemic recovery In the context of the situation in Benin? One must learn from this crisis And he sees it as an opportunity to build a better world. It was not an easy matter for anyone around the globe It was even worse for the most vulnerable people.
This is definitely a new world now, We must pay more attention to nature And to be more careful of the climate crisis. We were alarmed because deforestation, for example, It leads to the proximity of wild animals to humans And how can we prevent diseases like Coronavirus. These are, in my opinion, the features of a sustainable recovery … in the next years. Let us conclude with a slight gesture, for those who are not familiar with us In you or in this country Benin, Tell us about the best thing about the business there What inspires you in your job? I am really excited to work daily with the dedicated professionals in Cotonou And in the system of work in the bank and with customers. These people are very hard working. And every individual or employee in the bank must put a monument in kind Our mission is to serve the people. I am honored to lead this team of talents Their communication is now more virtual than before and also displaying sincerity and dedication.
And I see that I agree with you on that. I think part of the best part about working here is all these amazing people. But Ato Seck, the country director of the bank’s office in Benin, Thank you very much for spending some time this morning. Thank you very much, I had the pleasure of chatting with you. [Montlebano, Colombia] Hello, I'm Jero Hidoya in Montelebano, Colombia, As you watch the Spring Meetings of the World Bank Group and the International Monetary Fund.
Time to wrap up today's program, But before we say goodbye, Paul, what can people expect tomorrow and the next? It is hard to believe that there are two days left, two more days before the conclusion. We're halfway through the public events of the Spring 2021 Meetings. Tomorrow the focus turns to climate On Friday, the focus turns to vaccines. If someone missed any of yesterday's programs, If you joined us late today, or want to watch anything from the recorded events You can do this via the World Bank YouTube channel. [Join Us Tomorrow: The World Bank Live] Make sure you subscribe to the events while you watch them. But all events will be available there including our live discussions That is coming in its wake. I should also mention the direct discussion tomorrow, You will be managing that discussion with Mary Pangesto and Stephanie von Friedberg on climate. You can view these questions on the World Bank platform directly.
And see it tonight, this evening. Some of these questions will be directed to Mary and Stephanie tomorrow. Yes, I think it's going to be a great conversation, and we're looking forward to it. Thank you, Paul. Thank you, Sri. Thank you all for joining us today. And please join us tomorrow at 11:00 am Washington, DC time To attend our climate event. Goodbye until that time. [Background music for video].