I hope this finds you well, safe, and healthy during these very difficult times. I have enormously appreciated your support over the past year, and our warm and constructive interactions. Face-to- face meetings have become harder over recent months, so at our fiscal year-end, I wanted to provide an update on World Bank Group (WBG) deliveries, as well as other efforts over the past year. I would like to focus in particular on the COVID-19 emergency response, the Debt Service Suspension Initiative for the world’s poorest countries, and progress made on debt transparency since the Development Committee on April 17. I would also like to update you on a few organizational, leadership, and governance matters.
The COVID-19 crisis and economic shutdown threaten to reverse much of the development progress made in recent years and throw hundreds of millions of people back into poverty. We have worked hard to respond rapidly and innovate throughout the pandemic, creating a process for fast-track preparation and approval of emergency health response projects in over 100 countries, with the goal of mitigating the health crisis and helping countries take steps toward recovery. Through IFC and MIGA, we provided vital working capital and trade finance for the private sector in developing countries, particularly firms in vulnerable industries, and we are helping their financial sectors continue lending to core local business sectors.
We presented a strategy paper to the Board to explain our approach to deploy further resources in FY21, including our knowledge and global expertise, in response to the pandemic. This paper sets out our approach to providing support that is exceptional in speed, scale, and impact to countries tackling the unprecedented threats posed by the COVID-19 crisis. WBG support focuses on helping countries address the crisis and transition to recovery through a combination of saving lives threatened by the pandemic; protecting the poor and vulnerable; securing foundations of the economy; and strengthening policies and institutions for resilience based on transparent and sustainable debt and investments.
Next week, I will announce the WBG’s preliminary and unaudited total FY20 commitments to help countries achieve better development outcomes. I expect WBG FY20 commitments to be approximately $74 billion, a significant step up from FY19. Our expectations in terms of commitments for FY21 are higher still. As we have discussed with your Executive Directors, total WBG financing in the 15 months ending June 30, 2021 (with frontloading and including cancellations and mobilization) could reach $160 billion. This will constrain our financing capacity in outer years but is appropriate in view of the depth of the current crisis. Thanks to the generous support of IDA donors to IDA-19 in December, and to the completion of the WBG capital increase package in March, this size of response is consistent with the financial sustainability frameworks agreed for our institutions.
I would like to provide an update on the Debt Service Suspension Initiative (DSSI) we discussed at the Development Committee meeting in April. On May 1, many of the poorest countries suspended their debt service to official bilateral creditors following widespread endorsement of this approach in April. As of this week, 40 countries have requested forbearance and I encourage other such countries at risk of debt distress to do so. This will allow them to use more resources to tackle the crisis.
Much more needs to be done beyond the DSSI. To support debt transparency, we launched a website on June 19 showing the creditor country composition of projected annual debt service payments for all 73 countries eligible for relief under the initiative. Transparency of all government financial commitments and investments is a key step in creating an attractive investment climate and could make substantial progress this year. As discussed at the Development Committee meeting in April, it is important that transparency extend to all government financial commitments, including debt-like instruments. This level of transparency is vital to attracting investment, ensuring accountability, and improving debt sustainability, which are keys to achieving better development outcomes.
We will need to do more to tackle the unsustainable debt burdens of some IDA countries, which is posing a crushing burden on the poorest and has become an obstacle to broad-based growth and shared prosperity. I will be discussing these issues in greater detail at the Paris Debt Forum on July 8 and G20 Finance Ministers’ meeting later this month.
I would also like to provide an update on staffing and organizational changes over the past fiscal year. Within the WBG, I am working to build the world’s strongest development staff and an even more resilient and responsive business model that can help each client country and region achieve better development outcomes. I appointed four new senior leaders in FY20 – Anshula Kant as Managing Director & Chief Financial Officer, Mari Pangestu as Managing Director of Development Policy & Partnerships, Hiroshi Matano as Executive Vice President of MIGA, and Axel van Trotsenburg as Managing Director of Operations on the departure of Kristalina Georgieva to the IMF. In addition to the above new appointments, there were twelve Vice-Presidential appointments or reassignments over the last year.
We realigned the World Bank’s staff and management to drive coordinated country programs and put high-quality knowledge at the center of our operations and development policy. We also strengthened our focus on Africa by creating two Vice Presidencies, one focused on Western and Central Africa and the other on Eastern and Southern Africa. Both changes will help with the effectiveness of our development programs. Making use of the capital increase, IFC is working with countries to create better conditions for private enterprise and expanding its work in fragile countries, and MIGA is also supporting these efforts. Through the COVID-19 crisis, we have worked tirelessly to support staff well-being and keep staff safe, healthy, and productive, while improving our IT resiliency despite a prolonged home-based work situation.
I would like to conclude with a couple of governance-related matters regarding the Annual Meetings and the appointment of new Executive Directors. Looking ahead to this year’s Annual Meetings in October, the meetings will be virtual. We expect the Development Committee meeting will discuss debt sustainability and transparency, an update on the WBG’s response to the COVID-19 pandemic, and a review of the advances in digital connectivity.
Last, I know that some of you are considering the appointment of a new Executive Director to represent your constituency at the WBG Boards from November 2020. While the selection of Executive Directors is governed by your own national and constituency rules and processes, I would like to encourage you to consider gender diversity and also to insist on candidates in your selection process who will exemplify the highest standards of integrity and ethics as required under the WBG’s Code of Conduct for Board Officials. At present, among the 25 Board chairs and 25 Alternates, there are only five female Executive Directors and five female Alternate Executive Directors. Thank you to Governors who have already indicated that they are planning for this. The WBG is committed to enhancing and promoting diversity and inclusion and we look forward to your continued support to gender equality at the WBG.
I wish you a safe and restful July and August and look forward to seeing many of you “virtually” at our Annual Meetings and over the year ahead.