To ensure stronger economic recovery particularly for developing countries, the World Bank Group plans to step-up its climate financing to an average of 35% over the next five years.
The international lender also pledged to offers countries additional support in meeting their Paris climate commitments and transitioning to cleaner energy.
These were key messages from the Development Committee, a ministerial-level forum that represents 189 member countries of the World Bank Group and the International Monetary Fund, in a communiqué issued at the just-concluded Annual Meetings.
Welcoming the stepped-up ambitions of the Climate Change Action Plan, the Committee noted that the COVID-19 pandemic has compounded long-standing development challenges, as low- and middle-income countries face acute vulnerabilities, and therefore require stronger policies, institutions, and resources to bolster resilience.
In a statement titled, “Ensuring a Stronger Recovery for Developing Countries,” the World Bank noted that the global economy is experiencing an uneven recovery, with the risk that it will worsen inequality and leave low- and middle-income countries behind. “The path of the COVID-19 pandemic remains uncertain, with obstacles to vaccination in many countries. Developing economies face challenges that could slow their recovery for years to come.”
To this end, it said the Group has mounted the largest crisis response in its history, and is uniquely positioned to help ensure that all countries can participate in a green, resilient, and inclusive return to stability and growth.
Recall that ahead of the meetings, World Bank Group President, David Malpass, said in a speech delivered in Khartoum, Sudan, that “This drastic narrowing of economic and social progress is creating a time of upheaval in economics, politics, and geopolitical relationships.”
With reversals in development threatening people’s lives, livelihoods, and long-term prospects, he called for new approaches and urged that the development community “focus our efforts more, set clear priorities by measuring what works and what doesn’t, and rapidly scale up successes.”
The Development Committee underscored its support for the Bank Group’s comprehensive approach and rapid financing for recovery, tailored to the needs of its clients, from the poorest countries served by IDA to middle-income countries that have been hard hit, as well as those facing distinct challenges, such as fragility, conflict, and violence.
The path of the COVID-19 pandemic remains uncertain, with obstacles to vaccination in many countries. Developing economies face challenges that could slow their recovery for years to come.
The Committee and Malpass underscored the urgency of expanding access to COVID-19 vaccines, both to save lives and to help restart economies. The Bank Group is partnering with COVAX, the African Union, and UNICEF to help countries purchase and deploy vaccines, with IFC helping finance manufacturers of vaccines and related supplies, particularly in Africa.
In addition, the Multilateral Leaders Task Force has brought together the Bank Group, IMF, WHO, and WTO to help speed the delivery of vaccines and finance testing, diagnostics, and treatment.
On climate, Malpass emphasized the need for action on a much bigger scale: “we need thousands of large public-private projects that combine the world’s resources – from governments, MDBs, foundations, private investors, and the buyers of carbon credits” to reduce emissions, expand access to electricity, and adapt to a changing climate.
The meetings took place with the 20th replenishment of IDA well underway. The COVID response has brought Bank Group support for the poorest countries to an all-time high, largely through the IDA grants and highly concessional loans that donor countries help fund. But with the 74 IDA countries’ economic output expected to remain 5.6% below pre-pandemic projections in 2022, a strong replenishment is vital to providing resources at a scale that can keep them from falling farther behind.
Despite the immense global challenges, the Committee expressed its support for Bank Group’s role and approach in advancing recovery for its low- and middle-income clients.
In his speech, Malpass struck a positive note: “I feel optimistic that we will help countries avoid a lost decade,” adding, “By working together, we will build a better development path.”
The meetings also included a series of flagship events that were open to the public and are accessible online. These brought together global thought leaders for discussions of economic recovery, vaccines, climate action, and trade.