April 26, 2009
As prepared for delivery
We had a constructive meeting today of the Development Committee. These meetings over the weekend were the first major global gathering since the G-20 and provided an opportunity to discuss the broader set of problems in developing countries where real economies are being hit by second and third waves of the crisis. The meeting of the Development Committee allows our 185 member countries to be full participants in discussions on resources, instruments, and responses that are needed for developing countries.
There is a widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most, and that we must continue to act in real time to prevent a human catastrophe.
Before this crisis, the Millennium Development Goals on overcoming poverty by 2015 already looked like a stretch. Our latest research shows that most of these eight globally agreed goals are unlikely to be met. These include those related to hunger, child and maternal mortality, education, and progress in combating HIV/AIDS, malaria and other major diseases.
An additional 55 to 90 million people will be trapped in extreme poverty in 2009. The number of chronically hungry people is expected to climb to over 1 billion this year.
In anticipation of this unfolding crisis, the World Bank has launched a series of initiatives to address key weaknesses in the global economy. We have announced plans to triple support for social protection, put in place $55 billion of financing for infrastructure, and $12 billion for agriculture over the next two years to help ensure vital food security and safety. Other initiatives include support for microfinance to help poor borrowers, a global trade finance program, and a capitalization fund for developing country banks. The committee underscored the importance of these actions and asked governments to provide additional support for these initiatives. It also urged governments to meet their existing commitments on aid and to consider going beyond them.
No one knows how long this crisis will last. We also do not know the pace of the recovery. The committee therefore supported the World Bank’s plans to make full use of IBRD’s balance sheet to increase lending by up to $100 billion over three years.
The Bank’s finances have been prudently run and we are therefore currently in a strong position to help our partner countries. We are tripling our support to IBRD countries and fast-tracking disbursements of IDA money. But given the uncertain outlook, our 185 members underscored the critical importance of ensuring that the World Bank has the necessary resources to confront this crisis. They have asked the World Bank to prepare an analysis of IBRD and IFC’s capital adequacy. In addition, they have asked the World Bank to assess whether there is enough money on hand for the poorest countries, through the current IDA program. They have asked the World Bank’s management to report back on these two questions at the Annual Meeting in October.
This crisis is changing the world and the World Bank must change with it. It was widely recognized at the meeting that developing countries should have more influence in how the World Bank is run. The committee therefore agreed that the work on a second round of reforms to the bank’s voting structure should be accelerated. The aim should be to reach an agreement on these changes by the Spring Meeting in 2010. I have urged governments to be bold and far-sighted.