Meeting

C. Peter McColough Series on International Economics With David Malpass

Thursday, January 14, 2021
Florence Lo/REUTERS
Speaker

President, World Bank Group; CFR Member

Presider

Founder and Chief Executive Officer, RockCreek; Member, Board of Directors, Council on Foreign Relations

World Bank President David Malpass discusses global economic recovery from the COVID-19 pandemic.

The C. Peter McColough Series on International Economics brings the world's foremost economic policymakers and scholars to address members on current topics in international economics and U.S. monetary policy. This meeting series is presented by the Maurice R. Greenberg Center for Geoeconomic Studies.

BESCHLOSS: Thank you so much. Again, thank you so much for all of you to be here today. And I hope you all are keeping well and safe at this extraordinary time. We're very fortunate to be welcoming World Bank President, David Malpass, to today's Council on Foreign Relations meeting. I’m Afsaneh Mashayekhi Beschloss, founder and CEO of RockCreek, and I'll be presiding over today's discussion. This meeting is part of CFR's C. Peter McColough Series on International Economics. David doesn't need an introduction to this audience but let me just say that he is currently the president of the World Bank Group. He was nominated by President Trump in 2019. He was previously serving as undersecretary of the Treasury for international affairs in the Trump administration and has had a number of senior positions at the U.S. Treasury and U.S. government for both Presidents Bush and President Reagan. In addition to his government service, he has worked as chief economist at Bear Stearns from 2002 to 2008 and has had also his own economic consulting firm. He has served on the boards of a number of nonprofits, including the Council of the Americas and the Economic Club of New York.

Thank you so much, David, with your very busy schedule to be joining us today. You've been in Washington during this last week that has seen appalling violence and a sad loss of life. You've been very busy also in the last few days talking about the Global Economic Prospects report that was released just last week. And I wanted to start, David, if I may, to ask you about the question that's really on everybody's mind, which is the COVID-19 pandemic, of course, and the global health security that it has caused with the soaring infection rates, with the lockdowns, with the collapse in output in goods and services, with the incredible debt issues that you're facing every day in the countries you're working on, spiking poverty, and according to the reports that you have just been releasing, an additional 176 million people who have gone back into extreme poverty. David, as the leader of the preeminent development institution, it would be great if you could tell us today how the $12 billion vaccine financing package has been spent and what do you see the role of the World Bank for the next steps on the vaccine front?

MALPASS: Hello, Afsaneh. Very good to be with you. I saw the roster of people at CFR and I want to say hello to a lot of old friends, and I'm looking forward to the conversation today. And I missed the CFR conversations that I participated in over the years, so I wish everyone a very, very happy new year. And, you know, good luck in 2021 to everybody. The World Bank, to give you background—and thanks, Afsaneh, for the question—in April, as the pandemic was hitting, we worked hard to get up programs in a lot of countries. Part of the response to COVID needs to be the breadth of the response. So we ended up with 112 operating programs to help people with their personal protective equipment and other things that can respond to COVID. In August and September, I recognized that we needed to have an explicit address of the vaccination process. That means the therapeutics, the vaccines themselves, but also the systems that are needed to deliver the vaccines. We passed that through our board in October, so that was a $12 billion financing window that allows countries to draw on it to purchase vaccines from manufacturers or from COVAX. So it's a flexible facility. We've just completed assessments now in ninety countries on their readiness to do vaccines. That means assessing the cold chain, that means helping the government think about how it wants to create a fair and equitable distribution system within their country. As we know from the advanced economies, it's different. Some countries want to do by age, some countries want to do by profession or engagement within the society, and that's the same in the developing countries. So what our goal has been is to help the developing countries vaccinate safely and fairly in massive numbers and as soon as possible. So one of the things we're bringing to it is the urgency of getting access for countries that don't have access. I won't go into or we can come back to why is that important, but clearly, from the standpoint of both saving lives and the standpoint of the economic recovery, it's important that the world work fast to provide vaccines to as broad a group of people as quickly as possible and so we're actively engaged in that. I'm optimistic on the Philippines, for example, that we can begin that program—that will be good. And the way I think about our country development goals, the World Bank's goals, it's very much country by country. We're bringing together global knowledge but applying it because each country is so different. The vaccination program in neighboring countries is often very different, and that's true of their other development goals, too. So I'm thinking of our success in vaccinations. I hope to be able to tick off within a couple months, or three or four months, a number of countries where we've made a difference in accelerating their vaccination schedules.

I'll mention, I'm sorry to go on, Afsaneh, but this is a really important part of 2021, is a problem that we've encountered that we're working on is the indemnification process. The legal constraints in various countries are a challenge for the vaccine manufacturers. They don't want to take the liability in the countries if it's an open-ended liability. And it also turns out to be an issue in the countries. We found that in this assessment process, that the ministers are sometimes cautious about signing contracts. So whereas there might have been a news announcement that they were entered into a contract to get vaccines, when you really looked at the legal documentation, it hadn't been completed. So one of the things we're working on with the countries is we can handhold or we can help them with technical assistance to actually get the contracts executed so they'll get a delivery schedule set up. Let me stop there. Thanks.

BESCHLOSS: No, no, that is so important, David. And it sort of brings me to the point, as you said, the country-by-country approach obviously is very important. At the same time, for example, you mentioned COVAX and working with COVAX. But in terms of, let's say, using an institution, like MIGA, for a sovereign risk mitigation, because, as you said, a number of the health ministers are worried about certain issues, the pharmaceuticals are worried about certain issues. At the same time, we need to mitigate against the sovereign risks of people maybe not being able to pay for the vaccines and, I think, part of the World Bank, which is needed can play such an important role. How do you see those [inaudible] getting in a row so that Gavi, World Bank, WHO, all the other multilaterals, can cooperate closely together to get vaccines to as many people and, as you said, I think, very importantly in an equitable manner?

MALPASS: We work on a daily basis with WHO, with UNICEF, with Gavi, who the World Bank is a principal partner in Gavi. Gavi is the parent in a way or is closely associated with COVAX, which is a financing facility. So the World Bank funding that we have is available to the countries if they're able to use it to get deliveries from COVAX, if it has the vaccines, but also from the manufacturers if that turns out to be a better channel for the access. Our approval process is that the countries work with stringent regulatory authorities or the vaccines need to be safe vaccines that are available through regulatory authorities. That's an important part of the work. So for people's background, MIGA is the Multilateral Investment Guarantee Agency. It's one of the five main parts of the World Bank, along with IBRD, IDA, IFC and ICSID, the dispute settlement organization. So MIGA provides—its traditional product is political risk guarantee, and it's meant to facilitate investment in developing countries. So it's been mentioned as a possible guarantor of the liability risk related to vaccines. There needs to be, in some way, a liability shield but, frankly, this isn't the primary way that we're exploring. It's very hard for the World Bank then to identify and absorb the risk of litigation in various countries in the manufacturers’ country, nor in the developing country. As I understand it, there's litigation risk in both of those spots. And so, and there have been some inquiries into whether MIGA could help mitigate those risks. But we haven't seen a way—I think that more fruitful way is for the countries themselves working with manufacturers to find wording within their funding that provides the assurances on some kind of litigation shield. But for me, my primary goal is to try to shorten the time in which people will start getting vaccinated in the developing countries.

BESCHLOSS: I think, as you said, and I was in the World Bank financial complex when Gavi was created with Bill Gates, etcetera, it was created in order to sort of deal with the kinds of questions that you just referred to. And it would be nice if the institutions get between Gavi, between MIGA, between, you know, the World Bank and others, gets up to the point where they can deal with these new risks that are out there. And they get organized so that, as you said, things can move much faster. And I'm very excited to hear that you are working on that. And I'm sure we'll hear more from you as you help to expedite this process. And the other area that you've been talking about a lot in the last few days, since this report came out, is the whole area of debt reduction. Obviously, there is the G20 common framework for restructuring debt that was done last year. And the World Bank and IMF are very involved in the process. It's not quite the Paris Club agreement that you used to work with in terms of framework. It has pros and cons compared to that, as all agreements do, but I think you managed to get also China into that framework, which was really important at this, you know, G20, getting China into the agreement was super important. But many countries are afraid to sign the document, many developing countries feel that if they sign it would be a sign of weakness or they would have problems borrowing and, you know, they're worried about losing their credit worthiness and so on and so forth. Is this time to go back? I remember, you know, Jim Wolfensohn helped to set up HIPC and some other groups that are still getting used in the bank. Do you see a role for that? Do you see the World Bank getting more involved in debt reduction?

MALPASS: We are heavily involved in debt reduction. I don't know that it will take the direction of HIPC. And so to give people background, and I'm going to take us all the way back to the '70s, there was heavy lending on petro dollars. From the petrodollar recycling, it went into developing countries and became over indebted. And then during the 1980s, there wasn't a process to resolve those over-indebted situations and it was, you know, very problematic for the global financial system. For example, in 1982, Paul Volcker was involved in as Mexico declared that it couldn't pay the debt to the—in those days it was largely syndicated bank loans. And so it had a direct implication for bank capitalization. And that went on through the '80s and then into the Brady Plan. So I was at Treasury as the Brady Plan was formed and it took the form of a menu of options that would allow the reduction in the net present value of the heavily indebted, in those days, middle income, mostly middle-income countries. And that was very helpful in the recovery that occurred in the 1990s for the emerging markets. And there have been other experiences. Carmen Reinhart, who is our chief economist at the World Bank, has written extensively on this, the different ways that these long-term debt crises have been resolved. But one of the key unifying points in it is to as quickly as possible get to the end point to the reduction of the debt burden in a way that allows the country to be sustainable into the future. History shows that it's very costly to have a drawn-out process, as occurred in the1980s and has often been the case in other debt crises.

So using that, in March of last year, well, over a year ago, we at the World Bank did a report on the waves of debt. And we cautioned—this was before the pandemic—that there was a new wave of excessive debt that had been created since the HIPC initiative. The HIPC initiative [inaudible] the highly indebted poor countries was in the 1990s, and then into the early 2000s, it allowed massive reduction of debt of the poorest countries, and it was an intricate relationship that involved legislation in some of the creditor countries and reforms in the debtor countries and also, like the World Bank, had what was called the debt reduction facility, DRF, that allowed the buyback of some of the debt at a deep discount to help the countries clear the debt burden. And we're looking at using that facility again now—the debt reduction facility—in order to help countries hire the advisors needed and also have some money to buy back debt at a very deep discount if that facilitates the ending of the over indebtedness.

So Afsaneh, I wanted to give quite a bit of background because it's important, I think, and we look for the understanding of the Council on Foreign Relations and others in how big this problem is, many countries that are in debt distress already or will be in debt distress and how complicated it is for the world system this time, it's a very different structure of the debt than in the 1980s. As I mentioned, that was syndicated bank loans, then subsequently there arose the Eurobond market, which now forms a core of the debt that's in emerging markets. Also China has become a major lender, and it's not a member of the Paris Club. So in the 1980s and 1990s, there was an organized system of creditors that would deal with the official debt and then a separate group, the London Club, that would deal with the private sector debt, the commercial credits, and neither of those are as broad or organizations nowadays. And so what we did in 2020, I, with Kristalina [Georgieva], in March of 2020, proposed a moratorium on debt payments. That was a stopgap and immediate action and the G20 endorsed that on May 1. So the payments for some of the countries stopped, starting on May 1 and it's now been made retroactive to May 1, so that saves some of the poorest countries a lot of money that they can use on health care. And then by October, the G20 had pushed that forward to create what's called a common framework for the reduction of debt. We're still in the process of implementing that, and so that brings us up to present that—the World Bank is pushing forward actively as the voice for the poorest countries in an effort to be able to reduce dramatically the net present value the debt burden of the debt. And that involves Chad, Zambia, Angola, Ecuador, and a range of countries. Those are not all covered under the common framework, but they all have faced debt distress challenges.

One technical issue that's very important in this is interest rates have fallen dramatically over the last five years, ten years, and fifteen years. And that changes the arithmetic, the actual mathematical process of assessing net present value reductions. So with the low-for-long interest rate environment that we're in now, we need to look at using a much lower benchmark rate for the discount rate that was mentioned by the G20 in the communique that they used on this. And it’s important in assessing what kind of debt restructurings will be beneficial to the people of the country. So I'll leave you with the thought. It’s very important, I think, as the world deals with and tries to help the poorest countries deal with excessive debt that we keep in mind that the people of the country have a strong interest, you know, a vital interest in the long-term sustainability of the debt. That's what will work for themselves and their children and their grandchildren, and that may be a little bit different than the goals of the sitting government and also of the creditors. So one of the things that the World Bank is trying to be very cognizant of is the importance of the voice of the people in the poorest countries. They need long-term debt sustainability solutions. Thanks.

BESCHLOSS: I think, I’m not a historian so the history lesson is really, really helpful, I think, great for all of us and I really appreciate that. I think the big question, David, is the scale of the problem is so huge, right? In the developed world, more than $10-11 trillion has gone out and probably more will go out, you know, shortly. The question, though, is, for example, as you mentioned, $160 billion is a large number when you look at, you know, the amounts that the World Bank has been doing historically, but it is kind of a little, you know, drop in the bucket compared to the needs of the countries. And as you said, often leaders in the countries leave the people of the country with huge debts, problems, and burdens, and then hedge funds or others come or credit funds to negotiate, and at the end of the day, who gets stuck with the debts? I think I'm very sensitive to that point. I think it's a really important one. But don't you think the bank should be doing a lot more, number one? And number two, are there innovations looking forward that you look at, you know, the bank did the first swap, the first green bond, the first global bond, you know, many firsts in financial innovation? What innovations do you see looking forward that you're thinking about so that a lot more can go to these countries, because these numbers are not going to be helpful, particularly for the poorest that you've been talking about?

MALPASS: These are, of course, core questions, Afsaneh, that you're putting forward. I think the development profession, the academics, the interest groups, civil society, and the countries themselves of how do we get through this, how do we put together the point that there needs to be giant new amounts of financing and the known sources are simply not big enough to do it. So I agree with your point that the World Bank should be as active as possible and more active than it has been. So we've had a record year of commitments in 2020, calendar year 2020, way above the 2008 crisis certainly, and so we are meeting the commitments that we made at the beginning of the pandemic. And we're trying to do it in innovative ways, but I accept your point that this will not be enough. So the way we're thinking about it is if we have good country programs where the country is addressing the core problems that it faces in development, it can then begin to attract more resources, both donor resources because donors want to go into an improving situation in the country. These are, I mean, national governments that make ODA commitments, that these can be put into countries that are improving their systems and the World Bank can help by working with the government to identify what kinds of changes can take place that will be beneficial. So we can help with that. And let me just describe several of the things we've been trying to do in the crisis that are, I think, innovative, and that also help the countries attract more resources. On the private sector side IFC—we started early in April with the idea that there was going to be a gap in trade finance and working capital. Working capital is accounts receivable financing and inventory financing, short-term financing for liquidity needs by private sector firms, and so IFC stepped into that void with working capital and with trade finance, and they've been rapidly ramping up those. So those have helped.

With regard to vaccines, IFC has helped manufacturers expand their production if they will dedicate some of that production to the developing world. So those are ways that you can mobilize resources from outside in order to bring more leverage to the problem. In the bank, we've looked at ways to have more efficiency in terms of cash programs. One of the things in the midst of this crisis is active social safety nets, where the people that have lost their jobs or their incomes have some means of survival in terms of money. And in the past, those systems have been very inefficient in their ability to target and deliver to the people who are most vulnerable. So one innovation that's occurring is the digital availability of cash, even to the poorest people through things like debit cards. For example, just yesterday, we move forward with a Lebanon program. So here's the government, it’s not formed so strongly and is still looking for direction, but we're able to have a quite broad program in Lebanon for the poorest where the money is loaded onto the debit card. Many of you are familiar with the success Kenya has had with its digital money program that operates through the telephone system rather than a banking system. So it allows a very inexpensive transaction platform that can help more people. So we're looking to expand those broadly. We operate in Brazil and other countries that have social safety nets. So I'll mention that. One thing I wanted to mention, Afsaneh, with the low-for-long environment, it also provides opportunity for funding by the World Bank. The World Bank is one of the biggest non-government issuers of debt. We issued in our fiscal 2020, which ended in June, $95 billion of new debt. And those are coming at lower and lower interest rates. For example, yesterday, we announced a forty-year euro-denominated bond and the yield was I think, twenty basis points, and it was very well received by investors. So that means that we can get long-term financing and we can pass some of those benefits on to the borrowing country.

Another innovation on the financing side is World Bank has been in the forefront of the switch from LIBOR to SOFR, that's going to be the alternative benchmark reference rate for floating rate financing. And that's also important because most of the World Bank's clients borrow at floating interest rates. And so it's important that we make the transition smoothly from LIBOR to the future system. So I just wanted to mention an array of things. I've left out all of the, you know, infrastructure, health, education, all of the areas that we work in actively every day to try to help countries not only directly—meaning with our own resources—but also with the changes in their system that will invite new investment.

BESCHLOSS: How about changing the leverage ratio? It used to be in the 1980s, I think, double and keeping triple-A rated and conservative management but increasing leverage. Is that something you're thinking about?

MALPASS: You know, we just completed the capital increase. The subscriptions are still coming in which we appreciate and we are thankful to the shareholders for adding equity capital to the World Bank. And those issues were discussed heavily in 2017-2018 as far as what the leverage would bear in terms of our—so the World Bank has triple-A credit rating, which is valuable from a funding standpoint, meaning our issuance of triple-A-rated bonds is important in our ability to finance large amounts. And then it also allows a range of instruments. For example, we were talking about MIGA earlier, it benefits from being backed by a triple-A-rated creditor, or I mean institution, as the World Bank is. So your question is how did the shareholders think about how much you could borrow [inaudible]? I mentioned to you that we issued $90 billion of debt last year. Could we have issued $120 billion of debt last year? I spoke with our chief financial officer this morning, Anshula Kant, not about this, but I mean a regular meeting. She has regular meetings with the bond-rating agencies, and they have a good dialogue with her about what will the market bear in terms of issuance in order to maximize or to do as much as we can in our lending. So that's a dialogue that we have with shareholders. My own sense is, we have the staff and, you know, the technical ability and so on to do a certain number of programs. We've ramped up very rapidly starting in April. And so we made a commitment at the time to do $160 billion of commitments over a fifteen-month period, and we're fully on track with that commitment. And right now, that's the limit of what we can do. We are exploring with donors a supplemental or an additional IDA contribution from the donors that would allow more funding to flow through the World Bank. So that's an important part of our expansion or of the surge that we're doing in lending.

BESCHLOSS: David, you know, there's so much more to talk about in terms of smoothing the, instead of smoothing, you know, spending the IDA money faster, or, you know, as you said, a lot of really interesting topics to touch on. But I wanted to switch over to climate change and the bank's role in the environment area and climate change. And whether you see the bank, you know, using the resources that you were just talking about, and the increased resources that we were also talking about, to become really the leader on the climate front. The bank obviously has a long history in infrastructure, also in environmental assessments. I think twenty, thirty years ago the bank started doing them as well as investing as a financier of doing projects going back a long way. So where do you see the bank's role moving forward?

MALPASS: We're very active. The World Bank is already by far the world's biggest multilateral financier of climate and environment. And I'm glad you mentioned the history. So in 1987 and '88, I was at Treasury and I was a senior official on the capital increase for the World Bank at the time. And one of the strong pushes by me in the U.S. was more activity by the World Bank on the environment. So the World Bank's expanded that effort dramatically after that capital increase and has been at it very aggressively ever since. So the biggest year in terms of climate-related commitments was this year, this last year, and we expect to go further. The bank is committed to 35 percent of our funding having co-financing. So what that means is, each of the country directors—you know, I'm going to break things down into countries-specific kinds of programs. Each of the country directors—and the World Bank has coverage in a great many developing countries—so the country directors look for things that will help the country meet its indices, its nationally determined commitments with the Paris Agreement. They look for things in the countries that will help with adaptation. One of the big challenges for the countries is to adapt to climate changes that are on underway, and so we're committed to having 50 percent of our climate activities be in the form of adaptation so that the people in the countries can be better prepared and better responding to the climate change that is underway.

And then another part of this that, you know, I spoke on Monday at the One Climate Summit that President Macron and I co-hosted, I guess. So there will be two big, you know, COPs this year—one in China related to biodiversity and the World Bank has a very full set of programs in countries helping add to biodiversity. We recognize the importance of public goods. You know, economists spend a lot of time thinking about how do you finance global public goods because it's not to the benefit of only the country itself, but to the whole world. So in China, we've shifted a big portion of that program. The new lending in China is heavily oriented toward global public goods, including marine plastics. And then I wanted to mention on the core issues of greenhouse gas emissions, the challenges from the knowledge standpoint—what are the most effective ways to reduce greenhouse gas emissions around the world? And so that raises lots of challenges in terms of the transition from high carbon fuels to lower carbon fuels into zero carbon fuels, and then how do you go beyond that into neutrality or zero carbon kinds of environments. So those are, well, I don't want to bore people with the numbers, but as I say, the bank has had a record year in terms of commitments. We're going beyond that in our expected commitments and the biggest multilateral financer of climate, more than all of the others combined. Of all of the other multilateral agencies and the IMF, the World Bank's financing is more than all the others combined and we're going higher from here.

BESCHLOSS: That's really interesting. And we could go on about that, as you said, David. Before I pass it on to the members, one last question. What history do you have with President-elect Biden? And how do you think, you know, your work and the work of the World Bank will change after January 20?

MALPASS: The World Bank works with all of our shareholders and works in a nonpolitical way with the shareholders. So the World Bank's had historically very good relations when there are Republican administrations. I worked in the Reagan and Bush 41 administrations on World Bank issues and other multilateral issues. I expect there to be a very good relationship with the Biden administration. You know, a lot of what we try to do as an institution is be very practical in terms of what can we achieve in the countries that we're working in that's transformational and that benefits. You know, our goal is to benefit millions of people and actually hundreds of millions of people. That's what we're talking about in terms of our poverty goals and in terms of our shared prosperity goals. So in that way, this is a common goal of everyone around the world. And certainly I expect that to be a core part of what the Biden administration is trying to do as well, to have better lives for people around the world. So on that we should be able to work very consistently and smoothly into the future. I'm certainly looking forward to that prospect.

BESCHLOSS: It's that sort of juncture between working on every single country and getting it right but also the multilateral cooperation between different institutions and making sure more of that, which I'm sure will be happening. I’m looking forward. At this time, let me move to the members and invite members to join our conversation. Now, I have to say, I think, David, there are more than 550 people on this call. So not everyone is going to get their question, but the operator will remind us on how to join the questions queue.

STAFF: We'll take our first question from Peggy Hicks. Please accept the “unmute now” button.

Q: Hello, thank you. This is Peggy Hicks. I'm with the UN High Commissioner for Human Rights, calling you here from Geneva. Thanks so much, a very interesting conversation. One of the issues that we're concerned about, and the multilateral banks have reported on, is the increased incidents of reprisals and retaliation against communities and activists in World Bank finance projects. And so one thing we wanted to comment on is the World Bank statement on reprisals, which we welcomed and the strong recognition of human rights in the FCV strategy for 2020 to 2025. So I just wanted to get your thoughts on how the bank looks to increase its engagement on these issues of reprisals. At this stage we see sort of a limited engagement on this at the country level with the UN and our offices there, so looking forward to your plans for the future on that.

MALPASS: Well, thank you. And so the World Bank is very active in what we call FCV countries—fragility, conflict, and violence states—and also in the broader developing world in terms of human rights, including gender-related issues. I mentioned the importance of social safety nets, and one of the key things they're able to do is get money to women, which ends up being a very, very important stabilizing mechanism in countries because the women tend to spend the money in a favorable way that takes care of children and preserves and saves the money and helps with the development side. So we're committed to human rights and taking active steps. And we work closely with the United Nations on a wide range of activities and this is one of them. Thank you for that.

STAFF: We will take our next question from Ryan Kaminski.

Q: Thank you, Mr. President. As you know, the Sustainable Development Goals are a very helpful framework because they represent the one sustainable development framework that every single government around the world has agreed to implement at the United Nations. And certainly COVID has had a very detrimental impact on the 2030 agenda. Can you discuss what you think is the most important thing the private sector and business community could do to help get the international community back on track on the SDGs and the role of the World Bank and assisting in this regard? Thank you so much.

MALPASS: So the clear mission of the World Bank is focused in two areas, though these are very broad areas. One is poverty alleviation. And one is shared prosperity. And that means living standards that rise in the poorest countries and in the developing world and rise in a broad sense. That means countries achieving their climate goals. That means more income for people. That means that women and other vulnerable groups see advances in their living standards. And these are core parts of the Sustainable Development Goals and the bank. We share our information where, you know, we are a very transparent organization. And I think that's helpful and helps if all organizations are as transparent as we can be.

And then as far as how do we implement? As I mentioned, there are multiple aspects of implementation. One for the World Bank is the country platforms. We work with a variety of the groups that are important in the countries. And so that means the government of the country. That means civil society organizations within the country. It might mean the UNHCR may be active in the country and in pushing back on reprisals. The World Bank has a very high level of sustainable environmental and safeguards that help protect the contracting that is done in the countries. We work with other multilateral development banks in country and with the IMF. And so there's this broad platform for trying to help improve the situations in the individual countries. For example, with the United Nations we work very closely in Yemen. Yemen is a country that we're all very concerned about because of food insecurity. In other countries, there are grave concerns by the international community with regard to education, which may not be available for girls, for example. That's a big problem that we tried to address very aggressively and directly in terms of working with the government to change policies that are blocking girls from being able to go to school or to stay in school. And so I guess, you know, in addition to the country platforms, we have an active effort in regional kinds of activities that help a given region. For example, in East Africa, they were confronted with the locusts crisis last year, and we were very active in providing food for the people, food for the animals. The crops had been eaten by the locusts. So the animals, which are a critical part of the husbandry and the savings of the families in that region, needed to be fed in order to sustain the economic activity and also stopping the repeated cycle of locusts. That was a regional issue. If just one country did it, it wouldn't be nearly as effective as if multiple countries did it at the same time. So we're working on all those fronts in ways that are consistent with and supportive of the Sustainable Development Goals.

STAFF: We'll take our next question from Sabrina Tavernise.

Q: Hi, sorry, this is actually Rory MacFarquhar, Sabrina's husband from MasterCard. So I would like to return to the issue of vaccines that you addressed in the beginning. And in particular, one of the challenges with many of the vaccines is not only that they have to be kept very cold, but also that there are multiple doses. And so tracking who has got what dose and so on, is potentially a critical part of the vaccine rollout. Now, the World Bank has been at the forefront of a lot of the work on digital identity. And so my question is, how are you bringing together your work on vaccines with the digital identity efforts that you've made to ensure that the developing countries have the ability to track the vaccine administration as it's rolled out and that nothing is wasted?

MALPASS: That a great and very practical question. To give people background, as you're creating a social safety net or an inclusive financial system, as MasterCard has been involved with, that you need a social registry that identifies people and has enough information to know how, like for example, in a social safety net, do they have children and therefore they need some a bigger stipend than if they don't have children. So there's enough information to identify them. And for some of the developing countries, girls don't even have birth certificates. So they're not identified within the society. So we try to build the computer programs or the paper programs that identify people and has the right amount of targeting information so that the people can be helped according to their needs. I was mentioning, we started very quickly in October with assessments of the countries that would identify what kind of, either digital or paperwork, system do they have that would allow them to keep track of who had been vaccinated.

Now, with regard to the core point—one vaccine or two—we share the view that having two doses is hard for many developing countries. The World Bank is in direct contact with the various manufacturers. I've spoken with Astra Zeneca, who has a one—we see Johnson and Johnson coming forward and Novavax may have a vaccine, and I don't want to get ahead, you know, they have to go through these regulatory approval processes to have them approved. But there will be some that are more useful for it for given countries. So one of the things we wanted to do and needed to do was do an assessment. We've worked very closely with UNICEF in some of the poorest countries to do an assessment of the vaccination systems that are going to be most relevant and useful for individual countries. And I reemphasize the degree of difference among countries, even neighboring countries, that might speak the same language or a similar language, but they just have a different way of how they're going to go about it and a different appropriate vaccine that they choose to administer. And we're working, as I’ve mentioned, closely with COVAX, with Gavi, and WHO on these systems. So I take the point that the questioner is giving and it's a correct one, and we're trying to bring—well, to give you some comfort that, you know, the World Bank, while it is a very big organization, Mamta Murthi is in charge of human development and has been in it for a long time and has the vaccine people within it, also some aspects of the social safety net, and also some aspects of the digitalization, and she sits or at least works very closely with Juergen [Voegele] and with Mokhtar [Diop], who are in charge of big efforts. And so there's very good communication within the World Bank and with the outside world that's going to be providing the vaccines themselves. So I think that part of it, we're trying to work as hard on a daily basis as we can.

STAFF: We'll take our next question from Eli Whitney Debevoise.

Q: Thank you, David. I, too, would like to talk about the vaccine subject which was first raised. I was present as USED when we adopted the advanced market commitment for pneumococcal vaccines and I think that's a model which is being deployed here. It occurred to me that the liability issue could be folded into that as a window. In other words, donors could provide a certain amount of funding for that. And I do know from my own experience working with countries that have been dealing with COVAX, that the documentation is actually rather open-ended in favor of COVAX on this liability issue as well and that maybe that should be looked at. But most importantly, perhaps [inaudible] of an AMC type could be used for this liability issue.

MALPASS: Yes, exactly right. And Axel van Trotsenburg is the managing director of operations and was heavily involved in advanced marketing commitments at that time, and so one good thing about the bank is the knowledge that has been built up in previous vaccination campaigns is available now at high levels within the bank in order to implement those ideas. I mentioned earlier, Philippines, and I think there'll be some ability to use advanced market commitments there and we hope to have more countries coming through the approval process one by one. I mentioned earlier the contracting. You raised and mentioned the difficulty of the contracts. So the one thing we are trying to do is have a more standardized contract and a model that can be used by countries and that can be quickly drafted. There had been a tendency and as you begin to look, and you mentioned the COVAX contracts, it's been hard to unbundle or unpack these various areas. So we're working on that—our good lawyers who have been involved in previous pneumococcus and others. The bank was heavily involved in Ebola and in AIDS going back, you know, some years, and so I'm confident that we have the right people pushing as hard as they can on this. Each time we look at a specific country or a specific manufacturer, we see that the contracting turns out to be a challenge, a stumbling block. One that we hope to quickly begin penetrating and getting through. One thing, yes, I guess that's it. So thanks for that question. It’s is very relevant, something that we're working on every day.

STAFF: We'll take our last question from Alice Tupper Marlin. Please accept the “unmute now” button.

Q: Hello. Hello. I don't know how my hand got accidentally raised, but I don't have a question. Sorry.

STAFF: All right. Moving on, we will take our next question from Fernando Reimers. Please accept the “unmute now” button.

Q: Yes, thank you very much. I'm Fernando Reimers. I'm a professor of education at Harvard. As you know, one of the consequences of the debt crisis of the ‘80s was the Lost Decade, especially in Latin America and sub-Saharan Africa, in terms of disinvestment in human capital. What specific measures is the World Bank taking at the moment to prevent another lost decade? I mean, it's already the case that education budgets are being crowded out to attend to the health and economic needs created by the emergency. What kind of leadership is the bank taking on this issue?

MALPASS: Yes, these are severe, dangerous issues. We know on the education side that the closing of schools means children are going backward. And so that's an immediate and direct problem, so we're working to try to reopen schools where that can be done in a safe way. So that's, you know, that's the direct side of this. The resource side is a severe problem and you're right in naming it. So within the debt reduction process that we worked with the G20 on, the World Bank and the IMF are working together with the countries to monitor that they use the savings from the debt moratorium that I mentioned earlier. Some of the countries have stopped paying some of their creditors. Kenya announced yesterday that it had reached an agreement to suspend debt payments. That would save it quite a bit of money. And then that money can be channeled to health and education and try to help with the human capital. The World Bank has written from an advocacy standpoint. The World Bank has written extensively on this problem that we will lose ground on human capital. We published that we have a big human capital index that came out in September or October that showed the risk to countries from going backward on human capital, and within our country programs, we are working hard to make sure that the resources are available. For example, in Angola, we're in the process of pushing forward with a new program that will specifically try to make sure that enough government resources are allocated to try to do as much as can be done on this human capital side.

And then I'll make a more general point and maybe this is a good point for us closing on. It's the overall recovery, resilient recovery for the developing world that will be so critical to avoid a lost decade. So we want to quickly resolve the debt overhang, if we can, and to have governments be as effective in providing resources for human capital and for other needs. And then we also need to find ways to have private sectors bring in new capital. That's going to be critical capital to the job creation engine that's so important in skills and in incomes for people in the countries. And so we've kind of put this into the umbrella or into the process that we call “build back in a resilient, greener way for the future recovery.” And maybe it's vital for the developing world that the advanced economies get back on track as quickly as possible. They're vital because they provide markets for the developing world and also remittances and new capital flows. So for all those reasons, a vital part, we've talked a lot about vaccines, but a key part of the variable is for the advanced economies to restart their growth as quickly as possible because there'll be positive spillovers into the developing world. Thanks.

BESCHLOSS:  I also, like you, love that last question. And I think reminds us about the scale of the needs and the resources we need, the need for more multilateral aid to go into these countries. And I wanted to thank our members for joining in today for this virtual meeting, and especially to David for joining us today. Thank you.

MALPASS:  Afsaneh, thank you and thanks to everybody, great questions. I enjoyed it. Thanks all. Good luck.

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