Policy paper

Development Committee statement by First Secretary of State and Secretary of State for Foreign Commonwealth and Development Affairs, and Chancellor of the Exchequer

Published 9 April 2021

This was published under the 2019 to 2022 Johnson Conservative government

Development Committee Statement by Rt. Hon. Dominic Raab, First Secretary of State and Secretary of State for Foreign Commonwealth and Development Affairs and Rt. Hon. Rishi Sunak, Chancellor of the Exchequer, United Kingdom

103rd Meeting of the Development Committee, 9 April 2021 Washington, DC.

More than a year on from the declaration of a public health emergency by the World Health Organization, COVID-19 continues to decimate lives, livelihoods, and economies around the globe. In 2020, global poverty rose for the first time in over 20 years and the World Bank estimated by 2021 over 150 million people would fall into extreme poverty. The poorest and most vulnerable countries have been hit the hardest. Covid-19 has highlighted the indivisibility of our health and biodiversity loss. In recent months the emergence of new, more transmissible variants has served as a further warning the world must remain steadfast in confronting the virus. The pandemic will not be under control anywhere until it’s under control everywhere.

The UK’s Integrated Review published on 16 March sets a vision for a Global Britain as a force for good in the world, strengthening the international system to boost global prosperity for all, trade, expanding and diversifying supply chains to promote open economies, open societies, and enhancing global economic resilience. The Integrated Review also underlined the UK’s continued aim to use our expertise to support developing countries to become more self-sufficient financially through trade and economic growth.

The UK is committed to playing our part in the global effort to respond to and build back better from this pandemic. Through our scientific expertise and coordinated international action we have driven forward the development and deployment of successful vaccines, treatments, and diagnostics. The UK is among the largest donors to the Access to COVID-19 Tools (ACT) Accelerator and welcomes the $4.3bn of commitments made at February’s G7 Leaders’ Call to the ACT-Accelerator. . This remarkable progress means the world can begin to strike back against COVID-19. We have provided £548m of UK aid to ensure equitable access to vaccines for vulnerable countries through the COVAX Facility’s Advance Market Commitment. We are committed to using our G7 Presidency to drive further action, in that spirit we will share the majority of COVID-19 vaccines that are surplus to our domestic needs through the COVAX procurement pool. The UK has also been clear on the importance of supply chains remaining open to support the global distribution of vaccines, therapeutics and diagnostics and other goods which play a role in supporting countries’ response to the pandemic such as personal protection equipment.

The World Bank Group (WBG), working in close partnership with the International Monetary Fund and the rest of the multilateral system, has a significant role to play supporting countries respond to the ongoing health and economic emergency, and helping to build a green, inclusive and resilient recovery. The UK encourages the WBG to focus on the following areas:

Firstly, the WBG should continue to provide resources at scale to help client countries respond to the economic challenges of COVID. Last year, the WBG’s commitment to provide $160bn of financing to developing countries provided a crucial source of resources to the public and private sectors. It should continue to explore innovative ways of using its balance sheet to maximise resources available, while protecting its low cost of funding to meet urgent needs in response and recovery. This year, with debt levels in some of the most vulnerable countries continuing to rise, we look forward to the World Bank and IMF supporting the G20 to implement the Common Framework in order to provide timely and orderly debt treatment for eligible countries. This year, with debt levels in some of the most vulnerable countries continuing to rise, we welcome the extension of the Debt Service Suspension Initiative for a further six months and look forward to the World Bank and IMF supporting the G20 to implement the Common Framework in order to provide timely and orderly debt treatment for eligible countries.

The Bank should be at the forefront of efforts to restore global prosperity, boosting economic productivity and resilience while removing barriers for the poorest and most vulnerable to benefit from new jobs. The pandemic has created unprecedented disruption to global trade, including a rise in protectionism. We stand ready to work with the World Bank, national governments and other multilateral organisations (including the World Trade Organisation) to restore stability and openness to the global trading system, in a way that works for developed and developing countries alike. In particular, we encourage the Bank to strengthen supply chains by supporting developing countries to build their capacity to meet global standards, unlock the potential of trade in services and compete in a digital trade environment.

Secondly, the WBG should continue to support countries during this health crisis through rapid rollout and delivery of the Bank’s $12bn package of support for COVID-19 vaccines, treatments and diagnostics. As countries around the world begin their vaccination programmes, we urge the Bank to swiftly agree new projects to help procure safe and effective vaccines and strengthen health delivery systems. The Bank must work closely with COVAX and other international partners and ensure its projects are integrated into the collective global response. We expect IFC to play a role in using its Global Health Facility to boost manufacturing capacity and reduce supply bottlenecks in developing countries.

Thirdly, we urge the WBG to help countries prepare for and deliver a green, inclusive and resilient recovery. As a result of the pandemic, many countries have experienced falling growth and employment, challenging fiscal positions and significant setbacks to poverty, inequality and the UN Sustainable Development Goals. The international community can help rebuild sustainably; supporting plans and investments for economic recovery which boost human capital and accelerate progress towards environmental goals. We know investment in renewables and energy efficiency can generate more than twice as many jobs as investment in fossil fuels. Tackling the climate crisis and biodiversity should be hardwired into recovery planning. The UK would like to see the World Bank invest more in crisis risk scanning, especially in the most food insecure countries, working closely with institutions across the financial and UN systems. This should include an increase in the volume of preparedness and early response financing, available to those countries from IDA.

The crisis has seen devastating reversals in human capital, with 1.6 billion children and young people around the world out of school at the peak of school closures. Girls Education is a priority of the UK’s G7 presidency and we urge the WBG to support our goal of improving learning and getting 40 million more girls around the world into school by 2025. The WBG has a key role supporting countries to invest in their health workforce, public health, social protection systems, and preparedness strategies to target future health threats. As we recover, we should ensure lessons are learnt to prepare the world for the next crisis.

Fourthly, we are facing a climate emergency. We all must do more to mitigate climate change and help countries adapt to its devastating effects. The UK recognizes climate vulnerable developing countries are already being affected and wants to make sure their voices are heard and reflected in COP26 negotiations. That is why, as COP President, we held the Climate and Development Ministerial on 31 March. We thank President Malpass for attending the Ministerial and engaging with climate vulnerable and developing countries in attendance. We are also grateful for the commitment from the Bank, along with the IMF, to continue urgent discussions on access to finance, including to providing more concessional resources for the most vulnerable countries.

We congratulate the Bank on their commitment to align their portfolio with the Paris Agreement, and we look forward to the WBG making a strong contribution to a successful COP26 summit in Glasgow in November by increasing its commitments on climate, nature, and the environment through the Climate Change Action Plan. The UK also welcomes the WBG’s recent commitment at the Climate Ambition Summit in December to increase its share of financing that supports climate change to at least 35%.

The Bank should step up support to help countries plan for and manage the impacts of climate change and increase the amount of finance it mobilises for adaption and resilience, including from the IFC. By partnering with regional risk pools the WBG can offer client countries more comprehensive and affordable disaster risk management and financing options. Through coordination with other Multilateral Development Banks (MDBs) and DFIs it will also mobilise more private climate finance to accelerate transitions to low carbon, climate resilient development.

The Bank should formally reject coal and oil energy investments, allowing gas only in exceptional circumstances. The Bank has an opportunity to lead the MDB system in better valuing and mainstreaming nature positive investments across its portfolio, it should commit to action on this by signing a joint MDB statement on mainstreaming nature with clear commitment and outcomes.

Finally, we call on the WBG to step up their response to counter the increasing risks of famine and rising global food insecurity. The perfect storm of conflict, COVID-19 and climate change has exacerbated existing food insecurity, leaving up to 147 million people facing crisis levels of hunger – often in some of the most fragile and conflict affected states in the world. The UK looks forward to discussing how best to address these challenges in the forthcoming negotiations on IDA20 and we look forward to the World Bank setting out plans for how resources from the international community can be combined with use of equity from IDA’s balance sheet to deliver a successful replenishment with a strengthened set of policy commitments.

The WBG’s response to the COVID-19 pandemic has led to a rapid increase in the number of projects approved and increased financial commitments by the WBG. Even as situations on the ground remain challenging, we encourage the WBG to continue to ensure WBG lending is delivered to high standards, risks to development outcomes are monitored and mitigated, and environmental and social standards are maintained.

The UK recognizes the outstanding contribution made by WBG staff around the world over the course of the past year in delivering support to countries in some of the most challenging circumstances, and we will continue to work alongside you as a partner in your battle to end extreme poverty and promote shared prosperity.