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Will David Malpass trump the World Bank?

Apr 17,2019 - Last updated at Apr 17,2019

By Kevin Watkins

LONDON — David Malpass has taken over as World Bank (WB) president, and he carries some heavy political baggage. He is, after all, the pick of US President Donald Trump, raising fears that he may use the position to open a new front in Trump’s trade war with China, weaken the Bank’s leadership on climate change and undercut multilateralism more broadly.

At this week’s International Monetary Fund (IMF)-World Bank Spring Meetings, Malpass needs to address these concerns head-on. He should be judged not by his past, or by his links to the Trump administration, but by his delivery. As leader of a 189-member multilateral institution with a remit to tackle some of the greatest injustices of our time, from poverty to extreme inequality and global warming, Malpass is stepping into one of the world’s most important jobs.

Whatever the circumstances of his appointment, the temptation to pass sentence on Malpass ahead of a fair trial should be avoided. His anti-multilateral instincts can be overstated. As a senior US Treasury Department official, he helped engineer a $13-billion capital increase for the WB last year. He has also signaled an intent to keep poverty reduction at the heart of the WB’s mission.

The spring meetings provide an opportunity to put words into action on the Sustainable Development Goals (SDGs), the international community’s 2030 targets for eradicating poverty, improving health and wellbeing, expanding opportunity and environmental sustainability.

Despite the extraordinary progress of the past two decades, the SDG warning signs are flashing. Recent WB estimates point to a sharp slowdown in the pace of global poverty reduction. On current trends, some 600 million people will remain below the official poverty line of $1.90 per day in 2030. Over 40 per cent of those people will be African children.

Child survival data are similarly worrying. While the death rate of children under the age of five has been nearly halved since 2000, the SDG target of zero preventable child deaths is drifting out of reach. On current trends, more than 3 million children under five will die in 2030.

The report card on education is similarly bleak. In our increasingly knowledge-based global economy, there are still some 263 million young people out of school. One-quarter of these young people are primary-school-age children, and the numbers are rising. An even greater number of children are in school, but not receiving a quality education. For these children, the SDG commitment to “expand opportunity” has all the hallmarks of a bounced check. 

Inequality lies at the heart of the looming shortfall regarding the 2030 targets. Without some hefty income redistribution in favor of the poor, there is no prospect that the poverty eradication goal will be achieved.

The same applies to child survival. Children born into the poorest 20 per cent of households account for one-third of all child deaths, largely because of poor nutrition and inadequate and unequal access to healthcare, including vaccinations. Cutting the gap in death rates will require the redirection of health budgets toward the most deprived and marginalised children.

These are areas in which the WB and its new president can make a difference. To its credit, the WB has increasingly turned the spotlight on inequality. But it has been curiously reticent about advocating for the redistributive policies in taxation, public spending and regulation needed to narrow social disparities. Malpass may not be an obvious champion for pro-poor redistribution, but that is what is needed.

There is legitimate cause for concern on this front. In his initial “election” manifesto, Malpass focused overwhelmingly on cutting taxes, while scrupulously avoiding any reference to the need for increased public spending in areas like health, education and infrastructure. 

This is a cure guaranteed to kill the SDG patient. Far from cutting taxes, the IMF estimates that developing countries will need to raise an additional 5 per cent of GDP in tax revenues to achieve the SDGs. The WB should be helping build the progressive and accountable tax systems needed to achieve this outcome.

At a time of shrinking aid budgets, the WB should also be supporting more innovative approaches to finance. Former British prime minister Gordon Brown, the United Nations special envoy for education, has called for the creation of an International Finance Facility for Education that would use loan guarantees to unlock $8 billion in new education financing for lower-middle-income countries, whose access to concessional finance is currently restricted. This would help put 70 million children in school.

Health financing is another high-priority area. Millions of children die each year as a result of treatable diseases like pneumonia, malaria and diarrhea, because their parents cannot afford health fees, or because clinics lack trained health workers, drugs and vital diagnostic equipment. Under its former president, Jim Yong Kim, the WB championed publicly financed universal health coverage, and for good reason: there is no alternative route to providing quality health services to the poor. Malpass should work closely with the World Health Organisation to drive this agenda, focusing on primary care services.

Of course, progress on the SDGs is not just about spending more. It is also about spending more equitably. In a new report to be launched at the IMF-World Bank Spring Meetings, Save the Children documents a glaring gap between health risks, which are heavily skewed toward the poorest children, and the benefits of public spending, are often skewed in favour of better-off households.

This flies in the face of a central pledge governments made when they signed on to the SDGs: that those countries furthest from the targets would benefit from the fastest progress. In the language of the agenda, “no one should be left behind”.

The WB could help improve accountability for fulfilling that commitment by working with the UN and national agencies to monitor and report on the pace at which disparities in key indicators, from mortality to education, are being narrowed. Both the WB and the IMF should also use their public-finance reporting to monitor whether fiscal policies are aligned with the pledge to narrow social inequalities.

Malpass has the unique privilege and responsibility of overseeing one of the world’s largest sources of development finance, an institution staffed by dedicated professionals committed to transforming millions of lives by achieving the SDG targets. He must not drop the ball.

 

Kevin Watkins is the CEO of Save the Children UK. Copyright: Project Syndicate, 2019.
www.project-syndicate.org 

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