Global NewsCOVID-19 Pushed Millions Into Extreme Poverty, World Bank President

COVID-19 Pushed Millions Into Extreme Poverty, World Bank President

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September 30, (THEWILL) – The World Bank Group’s president, David Malpass, has lamented that the COVID-19 pandemic resulted in increased poverty rates globally and pushed nearly 100 million people into extreme poverty.

Calling the current era of high inequality and reversals in global development progress a “time of upheaval,” Malpass outlined steps to help boost economic growth, shorten the crisis, resume development, and lay a strong foundation for a future more prosperous and better prepared for global disasters like COVID-19.

He said: “The COVID-19 crisis has resulted in increased poverty rates again after decades of steady decline. It has pushed nearly 100 million people into extreme poverty, with several hundred million more becoming poor, many of them in middle-income countries.”

Malpass spoke in Khartoum on Thursday, as the first World Bank president to visit Sudan in nearly 40 years.

The World Bank president said, “Reversals in development threaten people’s lives, jobs, livelihoods, and sustenance. In many places around the world, poverty is rising, living standards and literacy rates are falling, and past gains on gender equality, nutrition and health are sliding backwards. For some countries, the debt burden was unsustainable before the crisis and is getting worse. Rather than gaining ground, the poor are being left behind in a global tragedy of inequality. This drastic narrowing of economic and social progress is creating a time of upheaval in economics, politics and geopolitical relationships.”

Malpass noted recent progress Sudan has achieved, saying, “Over the past few years, you have made a tremendous effort to put people on a forward path, amid very adverse conditions. Two years ago, Sudan’s transitional government inherited a deeply damaged economy and society that had suffered decades of conflict and isolation. Even as the people resolved to break with the past, Sudan faced extraordinary headwinds: from the COVID-19 pandemic, from a locust plague, from unprecedented floods, and an inflow of refugees escaping conflict from across the border.

“Yet the country pressed forward with bold reforms, re-engaging with the international community, clearing World Bank arrears with the help of a U.S. bridge loan, and in June reaching the decision point for the Heavily Indebted Poor Countries – or HIPC – initiative…. While there is much work ahead, I commend the Sudanese authorities, civil and military, for their efforts and achievements in working together toward a better future. It’s critical to avoid political slippages because there is no development without peace and stability. I would also like to acknowledge the remarkable resilience of the Sudanese people – your drive to build a better Sudan despite the challenges is truly inspiring.”

He noted that while a turnaround is possible, risks remain, recalling how the deadly Spanish Flu (1918-1920) was followed by extremely rapid economic growth –but also by wider inequality, and dangerous financial vulnerabilities that culminated in the prolonged Great Depression.

The World Bank boss challenged the international community to boost growth that is inclusive, broad-based, and sustainable in order to avoid a lost decade for development

Malpass noted four areas in which determined action should make a difference: Achieving economic stability; leveraging the digital revolution; making development greener and more sustainable; and investing in people.

Malpass noted that many developing countries made extraordinary efforts to support their people and keep economic activity going during the pandemic. “Many have gone beyond what they could afford, especially as debt in developing economies was at record highs when the pandemic hit.”

According to him, when the Debt Service Suspension Initiative (DSSI) would expire at the end of this year, low-income countries that resumed debt service payments would see their fiscal space shrink to purchase vaccines and finance other priority expenditures,

Malpass said: “It’s time to pursue a gradual and people-oriented fiscal consolidation and restructure unsustainable debt. Enhanced and accelerated implementation of the G20’s Common Framework will be critical on this front.”

Malpass called for greater global cooperation, including private sector participation, to provide debt relief to the world’s poorest countries and fund growth-enhancing investments.

He cited the example of Sudan where “global cooperation that included the U.S., France and the UK helped the country clear its arrears with the World Bank, IMF and other IFIs, making possible more than $50 billion in debt relief in what will be the largest HIPC initiative ever.”

In addition to better debt management, Malpass said countries must eliminate wasteful public expenditures, make service delivery more efficient, and reallocate public resources to their most productive uses.

He also suggested that a faster adoption of digital solutions would radically expand access to finance and create new economic opportunities

Malpass said: “Supporting this transformation requires many actions at scale: investing in digital infrastructure, eliminating monopolies in the telecom sector, providing national IDs, and creating an enabling regulatory environment.

“The digital revolution can also transform the public sector. For example, it allows a radical rethink of safety nets systems. Across the world we are seeing programs move from in-kind and cash delivery to digital delivery, direct to people’s bank accounts or visible on their phones. Similarly, in both the formal and informal sectors, new payment systems enable daily purchases through phones, using QR codes and other technologies. Kenya and many other African countries have extensive experience on this.”

Moreover, the World Bank boss noted that the international community was strongly committed to slowing the increase in atmospheric carbon and to reducing climate impacts on the most vulnerable, while suggesting the creation of new coal-fired plants, decommissioning of existing ones, and substituting them with cleaner sources of electricity.

Malpass also highlighted the importance of investing in people’s long-term health and education, saying, “Strengthening education and health systems takes more than just providing budgetary resources in an efficient and prioritized way. For example, aligning incentives for teachers and health care providers – public or private – with the needs of the people they serve is important. And finding scalable solutions to enhance health care and improve the quality of education, including through distance learning, is also critical.

“Nowhere is human capital accumulation more important than in conflict-affected countries, where most poor people live today. Assisting refugees and host communities is a key priority. Security is essential, but soldiers can’t win the battle of development. Change is more likely to come from small victories won across millions of households over time.”

Malpass noted the role the World Bank Group could play in all this.

He said: “The World Bank Group is uniquely endowed and positioned to support countries with the four priorities I have outlined — through finance and know-how for governments, while mobilizing the private sector. We have unmatched experience working with countries, using technical experts across all the key sectors.”

For all these initiatives to succeed, he said, it would require the active participation of the public and private sectors across countries, civil societies, foundations and the entire international community working together.

He submitted: “These efforts require leaders to be ambitious for the prosperity of people. And they require focus and scale throughout our development work.”

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