World Bank reveals capital flows are leaving developing countries

David Mapass, president of the World Bank, expressed his high concern about the prospects of developing countries and the capital flows that are leaving these countries.

Malpass indicated that there is technology and enough money, enough capital in the world, but he is concerned that these are in few hands, in few people, so it is necessary to “make these things work.”

It’s all being taken advantage of by a small group, he stressed, and therefore radical change is needed to make this work. She stressed that there is a divergence, which is reflected in inequality and fragility in many countries.

While Kristalina Georgieva, managing director of the International Monetary Fund (IMF) quoted Nelson Mandela, who in the face of this situation once said that “things are impossible until they are done.”

It is necessary to imagine a world where wealth is made available for the public good, with opportunities for all and the challenge of climate change can be dealt with, it will be possible to say that Mandela was right, he indicated.

Georgieva stated that there will be solutions, and “it is only a matter of will.” The top representatives of the World Bank and the IMF spoke at a press conference in Washington, broadcast on different platforms and in various languages.

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Malpass, who leaves the organization on June 30 of this year after a scheduled resignation, pointed out that it is important that there are more businesses, that fertilizer resources go to people who can pay more, “that is, that farmers can offer the crops the world needs.

He said that the supply of wheat is very low and the prices of food fertilizers are high in the world. He indicated that he is also concerned about the protectionist blocs, which are trying to reverse, to stop globalization and the leftover effects of the Russian war in Ukraine.

The theme addressed by Malpass and Georgieva was called: “Looking ahead: building resilience and reframing development”. Malpass said that last Sunday he completed four years at the head of the World Bank with the hope of achieving better results for the people of developing countries, through advances in the area of ​​currencies, politics, fiscal and commercial and infrastructure development, and is still trying to achieve it.

He gave the example of the case of Ethiopia, with 120 million inhabitants, which had a double exchange rate, an official one for a few and another operating in an expensive parallel market for the rest of the population, which will be analyzed at the Round Table on this week, in order to examine whether there has been any progress, “because creating a better future for them is a macroeconomic and microeconomic challenge.”

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He understands that making international trade flow will help (Ethiopia) improve its growth and living conditions.

Malpass explained that the problems around the world were affected by the Covid-19, the slow growth, the increase in interest rates and the Russian invasion of Ukraine, and all of this conspired so that there was not enough money to meet the multiple goals of the agency with people from developing countries.
after inflation target
For David Malpass, he said yesterday that although an increase in interest rates means losses for banks and the financial system, lowering them will not be the solution to the inflationary problem either, but there must be an inflation target and stability of the dollar.

He argued that more investment is needed, financing for small and medium-sized companies, in the short term.

He explained that the current economic cycle has focused on the purchase of long-maturity assets by central banks and that changed the direction of the world, since governments can invest for ten years but SMEs cannot, so he expects that we can return to a world where short-term financing is available for small businesses.

In this regard, Giorgieva stated that if SMEs do not have access, there is no way to generate the jobs that a growing population requires and therefore it is necessary to think about access to financing for all, especially businesses run by women.

The managing director of the IMF said that it has been recognized that debt is a problem and many countries have been affected by that burden, which is why they have raised the adoption of the initiative for the suspension of debt service.

Georgieva announced that a Sovereign Roundtable on world debt will take place this week, bringing together all traditional creditors, new ones, public and private sector with debtor countries and the World Bank and IMF to sit at the table and find solutions to what would be devastating for countries.

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