David Malpass (World Bank) on RFI: "We are looking to widen the debt moratorium"

Audio 00:06

By: Olivier Rogez Follow

The president of the World Bank, David Malpass is this Wednesday the guest of RFI. He explains how the institution he heads intends to help poor countries, and in particular certain African countries, to overcome the Covid-19 pandemic and its economic consequences.

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RFI  :  David Malpass, we are living collectively an exceptional period. What have you learned from this pandemic on a personal level ? And has this experience called into question fundamental things in your vision of the economy ?

David Malpass  : Yes, first of all it is the deepest and most painful saving sleep I've seen in decades, actually all the time. And this affects the poorest first. Poor countries and their populations are extremely dependent on large economies. These economies have stopped, are confined, and are just beginning to restart. They are still looking for ways to restart safely. And it is a decisive step for developing countries. They need money transfers , they need tourism, they need orders from the most advanced economies.

Let's talk about your action at the head of the World Bank. You are helping a hundred countries around the world fight Covid-19. What form does this help take ? Are these donations or refundable credits ?

These are largely grants and loans at very low interest rates that allow immediate help. The money is used to urgently buy protective equipment for people, as well as other equipment for those on the frontline of the fight against disease. And what is notable for the hundred or so countries that receive this aid is the benefit it brings. We are talking about some of the poorest countries in the world, which are finding ways to fight the pandemic and other health crises that hit them. So this help is very welcome. In addition, we have implemented emergency procedures. By mid-March, we had an assistance program ready for this hundred countries.

And how much money did you provide them in total ?

So far, the amount is $ 5.5 billion. And the program we have set up will increase. Bilateral donors, I mean advanced economies, can add funds to this program. Always with the aim of providing more equipment and assistance to countries that need it.

In mid-April, the World Bank said it was looking for another $ 44 billion to help African countries in the fight against the pandemic. Did you find them ?

By the next fifteen months, that is to say by June 2021, we should be able to provide $ 156 billion in total aid. Whether it's grants or low interest credit. And most of it will go to countries in sub-Saharan Africa. But even with all this, it will not be enough. So what we are looking to do too, with Kristalina Georgieva, the head of the IMF, is to broaden the debt moratorium. In March, we called for a moratorium on paying the debts of poor countries, which should allow them to save quite a bit of money and spend it on health care. And we hope that private creditors, namely banks and asset managers, will participate in this moratorium. But there is reluctance on their part to forgo reimbursements from the poorest countries.

On this point, David Malpass, what can be done to push these private creditors to freeze debt payments ?

One of the things they have to do is meet and collectively decide on the best course of action given the severity of the crisis. These private creditors must clearly take into account the gravity of this crisis. And so I hope that together, they can provide a sensitive and encouraging response. This is the first point. The other thing is that countries need to explore what are the best options for them in this crisis.

I am optimistic that private creditors will understand that it is in the long term interest of the whole world to take into account what the G20 says. You know, in a press release, the G20 called on private creditors to act like public creditors, to treat this debt issue the same way.

It is indeed fundamental, David Malpass, because in Africa, people do not understand. They see European countries, China and the United States announcing plans worth thousands of billions of dollars, and on the other hand they are told that the cancellation of African debt is impossible. What can you say to our African listeners ?

The populations and their leaders must examine their situation together and choose their priorities in terms of the use of available resources. What the World Bank does is provide a wide range of resources. But there are a number of distinctions to be made. There have been calls to multilateral donors for debt relief, to put it plainly so that countries may not repay, for example, what they owe the World Bank. The problem is that, unlike other creditors, the World Bank uses the bond market to obtain funds and credits. So not to reimburse would be a very negative signal from these countries.

I think that the best solution for them is still to approach their traditional bilateral partners, and find with them a solution to obtain more means. More fundamentally, much will depend on the recovery of the economies of the advanced countries. And for poor countries, much will depend on the private sector and the sustainable development of this private sector, which will bounce back the economies.

Speaking of the private sector, David Malpass, we know that this sector is suffering and we also know that it is largely informal. How to concretely help the informal sector in Africa ?

It is a fundamental subject. Through the International Finance Corporation, IFC, we provide working capital to businesses. It is capital in the form of short-term loans to pay for inventory, fix various accounting problems, and anything else that keeps the business going. This is a very important aspect. As far as micro-enterprises are concerned, what we want to do is continue the financial flows they need. Because these funds keep people going.

You know the greatest assets of poor countries are the people themselves. They must be able to survive this crisis. Continue to be able to feed and educate themselves. They must be able to rebuild their lives and overcome this recession. And we are working on this through our programs.

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• world Bank
• Economy Africa
• Coronavirus

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