By 2021, an additional 110 – 150 million people will have fallen into extreme poverty, living on less than $1.90 per day, said World Bank President, David Malpass, during the International Monetary Fund (IMF) and the World Bank Group (WBG) annual meetings that have been held virtually this year.
He said that COVID-19 and its associated economic crisis, compounded by the effects of armed conflict and climate changes, are reversing hard-won gains in poverty reduction, ending more than two decades of continuous progress.
“Poverty is expected to rise in 2020 for the first time since 1998. It’s clear that we face a unique pandemic of inequality: the downturn is broader and deeper, and it has hit informal sector workers and the poor-especially women and children-the hardest,” he said.
Malpass noted that the COVID-19 pandemic’s toll has been enormous, and people in the poorest countries are likely to suffer the longest and hardest. The crisis has knocked more economies into simultaneous recession than at any time since 1870, and it could lead to a lost decade characterized by weak growth, a collapse in many health and education systems, and a new round of sovereign-debt crises.
In response, he explained that the approach at the WBG has been comprehensive, in which it focused on saving lives, protecting the poor and vulnerable, working toward sustainable business growth, and rebuilding in better ways. He briefed four most urgent aspects of this work.
“First, we need to redouble our efforts to alleviate poverty and inequality. COVID-19 has dealt an unprecedented setback to the global effort to end extreme poverty, raise median incomes, and create shared prosperity,” he said,
He pointed to that the global economy is expected to partly recover in 2021 from its worst recession since World War II. Although it is growing again, global activity is expected to remain well below its pre-pandemic trend for a prolonged period.
“Developments thus far point to shallower recessions in advanced economies and a more robust rebound in China than previous estimates. However, in the majority of other emerging and developing economies, the recessions in 2020 have turned out to be much deeper-and recoveries have been more delayed-than June estimates, largely reflecting more damaging economic disruptions from the pandemic,” he said.
He said that the WBG took broad, fast action early, and provided large net positive flows to the world’s poorest countries.
“We are making good progress toward our announced 15-month target of $160bn in surge financing, much of it to the poorest countries. Over $50bn of that is in the form of grants or low-rate, long-maturity loans-providing key resources to maintain or expand health care systems and social safety nets.” he said.
Second, is that the world need to take note of the loss of human capital underway and what can be done to restore it. He mentioned that before the pandemic, developing countries were making significant progress and, notably, starting to close gender gaps.
Due to the pandemic outbreak, he said, more than 1.6 billion children in developing countries have been out of school, implying a potential loss of as much as $10trn in lifetime earnings for these students.
Also he revealed that the Gender-based violence is on the rise, in addition to that child mortality rates are also likely to rise significantly.
“These setbacks imply a long-term hit to productivity, income growth and social cohesion-which is why we’re doing everything we can to bolster health and education in developing countries,” he said.
He talked about the WBG role amid the pandemic in order to invest in the human capital stating that in the area of health, the WBG established a fast-track COVID response that has delivered emergency support to 111 countries so far. Most projects are now in advanced stages of disbursement for the purchase of masks, emergency-room equipment, and other COVID-related supplies.
“We are also helping developing countries with COVID-19 vaccines and therapeutics. We plan to make available up to $12bn to countries for the purchase and deployment of COVID-19 vaccines. IFC is also investing heavily in vaccine manufacturers through its $4bn Global Health Platform,” he said.
Meanwhile, in education area, the WBG is helping countries reopen primary and secondary schools safely and quickly.
“We are working in 65 countries to implement remote-learning strategies, combining online resources with radio, TV, and social networks, and printed materials for the most vulnerable. We are also partnering with UNICEF and UNESCO on school-reopening frameworks,” he said.
Furthermore, he mentioned that the third aspect of work is helping the poorest countries permanently reduce their debt burdens and attract effective investment-which will require much greater debt and investment transparency.
“Fourth, we need to work together to facilitate the changes needed for an inclusive and resilient recovery. A key step to generate a sustainable recovery will be for economies and people to allow change and embrace it. Countries will need to allow capital, labor, skills, and innovation to shift to a different, post-COVID business environment. This puts a premium on workers and businesses using their skills and innovations in new ways-and in a commercial environment that is likely to rely more on electronic connections and less on travel and handshakes,” according to Malpass.
He said that amid the pandemic, the WBG has remained the largest multilateral financier of climate action. Over the last five years, we provided $83bn in climate-related investments, revealing that in Fiscal Year 2020, the WBG made more climate-related investments than at any time in its history.
“We intend to step up that work over the next five years,” he said.