Ideas to Action:
Independent research for global prosperity
The latest G20 finance ministers meeting concluded with no major progress on debt relief for the world’s poorest countries, and a few setbacks. To date, no country eligible for the G20’s Debt Service Suspension Initiative has requested a moratorium on their private sector debt. We are at an impasse.
In the wake of the United States Supreme Court’s decision in Jam v. IFC, which centered around harm to farming and fishing communities caused by Tata Mundra, a coal plant financed by the International Finance Corporation (IFC). The IFC’s board has yet to release the final report. It must do so now.
Philippe Le Houerou, the Chief Executive of the IFC has announced his intention to step down in September. His legacy will include a significant effort to focus the work of the corporation on development impact and the world’s poorest countries. Le Houerou has had some success. But a look at IFC’s portfolio suggests how far the institution still has to go to have the biggest impact.
Providing reliable electricity is complex and expensive: large power plants can be billion-dollar investments. As a result, a growing number of cash-strapped developing countries are signing power purchase agreements with electricity providers to shift investment costs to the private sector.
The World Bank has just released country-by-country data on the debt owed to individual creditors by the 73 countries eligible to participate in the G20-sponsored debt service suspension initiative.
Rather than providing relief on repayments from existing loans, IDA’s debt sustainability framework adjusts future financing from loans to grants for countries at high risk of debt distress. But what happens to IDA’s loans-to-grants model when a large number of IDA countries trigger the risk thresholds? Can IDA afford its commitment to debt sustainability?
Let’s unpack our arguments for why a debt standstill would be the wrong move for IDA at this point in time.
In recent years, many commentators have asked if the World Bank is still relevant. We’re about to find out. To track the World Bank’s response to COVID-19, we’ve built a small interactive tool to display how much each country has received to date, and what’s currently in the pipeline for approval.
As the coronavirus spreads across the globe and claims an increasing number of victims, calls have been made for the international community to raise and disburse huge sums of money to protect poorer countries, whose poverty and weak health systems make them especially vulnerable.
It is often said that governments “fight the last war” during times of economic crisis. But based on David Malpass’ remarks from last week’s G20 Finance Ministers call, it appears the World Bank is preparing to fight the wars of the 1990s by revamping old—and largely discredited—crisis policy prescriptions to address what is likely to be a severe economic downturn caused by the COVID-19 pandemic.
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