The 50th World Economic Forum Annual Meeting closed today, a historic meeting bringing all stakeholders together to shape a cohesive and sustainable world.
World Economic Forum President Børge Brende said “Our 50th Annual Meeting has been truly remarkable, due to the real progress that we created on a spectrum of issues where public-private collaboration is crucial. We laid the basis for a decade of delivery.”
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), told participants that we are in a better place in January 2020 than we were in October 2019. There are several drivers for this positive momentum: trade tensions are receding; central banks have loosened monetary policy; and global industrial production is bottoming out.
The IMF’s economic forecast is for 3.3% growth this year and 3.4% next year. This level of growth was characterised as “sluggish”, and governments were called on to enact structural reforms and boost spending.
In 2019, 29 central banks globally reduced rates 71 times and it is now time to pass the baton on to fiscal policy. “We need to go beyond monetary stimulus – fiscal policy needs to become more aggressive,” Georgieva added.
Christine Lagarde, President of the European Central Bank, shared this relatively sanguine outlook. Uncertainties have abated on issues like trade and Brexit, she said, and it is likely that income growth and low unemployment will eventually be reflected in prices.
“The European Central Bank has launched a broad strategic review, the first since 2003, to revisit the bank’s processes and policies and to recommend structural changes,” she said, committing to delivering the outcomes of this review at the next Annual Meeting.
Steven Mnuchin, Secretary of the Treasury of the United States, said: “The US economy continues to be the bright spot in the world.” The economic outlook for 2020 is very robust, he added. Inflation remains muted, incomes are rising and unemployment is near historic lows.
“Trade negotiations have started with both the EU and the UK and we look forward to completing both of those deals this year,” he said.
Haruhiko Kuroda, Governor of the Bank of Japan, said: “We expect Japan’s economy to grow by 1% to 1.5% this year.” Nevertheless, inflation in Japan is stubbornly low. Continued accommodative monetary policy will be required for some time to achieve the 2% inflation objective, he added.
Climate risk is quite real for Japan, he said. In the fourth quarter of last year, the Japanese economy experienced negative growth largely because of two large typhoons. These types of natural disasters are intensifying and Japan stands ready to do more to reduce greenhouse gas emissions and combat global climate change.
Germany has embarked on an expansionary fiscal policy programme, said Olaf Scholz, Vice-Chancellor and Federal Minister of Finance of Germany. Taxes have been reduced by about $25 billion a year, investment in infrastructure is at record levels and R&D spending is targeted to reach 3.5% of GDP.
“Germany’s economy remains strong and we expect these investment measures to have a material impact on demand,” he added.
However, we must act urgently on sustainability issues, he said. Europe will continue to lead on climate change, with a target to be carbon neutral by 2050 backed by investments in the green economy and renewable energy.
Outcomes of the Annual Meeting 2020
In a letter sent to participants in advance of the Annual Meeting, Klaus Schwab, the Forum’s Founder and Executive Chairman, and the heads of Bank of America and Royal DSM, asked all members and partners to commit to achieving net zero carbon emissions by 2050 or earlier. In part inspired by this, the World Economic Forum Annual Meeting 2020 saw a number of outcomes that made progress towards a more cohesive and sustainable world:
Skills and Work
· The Reskilling Revolution was launched to provide better education, skills and jobs to 1 billion people by 2030, with the initial backing of the governments of Bahrain, Brazil, Denmark, France, India, Oman, Pakistan, Singapore, United Arab Emirates and the United States as well as business partners, including PwC, Salesforce, ManpowerGroup, Infosys, LinkedIn, Coursera Inc. and The Adecco Group. Commitments to provide better education, skills and work for 250 million people have already been made. The Forum’s Global Shaper community further pledged to provide skills to 100,000 people in vulnerable communities.
· Six leading platform companies – Cabify, Deliveroo, Grab, MBO Partners, Postmates and Uber – became founding signatories of the Forum’s Charter of Principles for Good Platform Work.
· The Valuable 500 initiative of companies committed to placing disability inclusion on their leadership agendas that was launched last year in Davos, announced that 241 companies from 24 countries have pledged their support.
· Ingka Group (IKEA) and Royal DSM became founding members of the Forum’s Hardwiring Gender Parity in the Future of Work initiative. McKinsey joined as knowledge partner.
· The Partnership for Global LGBTI Equality, which was launched in Davos last year to accelerate inclusion for lesbian, gay, bisexual, transgender and intersex (LGBTI) people, announced that it has grown its membership to 17 international businesses.
· The International Business Council, incorporating 140 of the world’s largest companies, agreed to support efforts to develop a core set of common metrics and disclosures that could be used to measure private sector progress against key environmental, social and governance (ESG) goals.
· The Forum also became a founding partner this week, alongside Refinitiv, United Nations and others in the Future of Sustainable Data Alliance. The alliance focuses on improving the quality of ESG data available to governments and investors to inform decision-making.
· The Davos Friends of Africa Growth Platform launched with the support of the Presidents of Botswana and Ghana to promote entrepreneurism in Africa. The platform’s initial target is to reach 1 million entrepreneurs by the end of 2020.
· A strategic partnership was signed between the World Economic Forum and the Organisation for Economic Co-operation and Development (OECD) to accelerate progress towards inclusive and sustainable growth globally.
· Some 42 organizations, including businesses from mining, automotive, chemical and energy that have a combined revenue of $1 trillion dollars agreed on 10 guiding principles for a sustainable battery value chain, enabled by a traceability platform called Battery Passport.
· The Australian state of Queensland announced it will join the Forum’s Global Lighthouse Network in a bid to help small and medium-sized enterprises adopt advanced manufacturing technologies.
· CEPI, the Coalition for Epidemic Preparedness Innovations that was launched in Davos in 2017, today announced the initiation of three programmes to develop vaccines against the novel coronavirus, nCoV-2019, in partnership with Moderna and the Wellcome Trust. The swift action was made possible by the fact that the leaders of the partner organizations were all in Davos.
· GAVI, the Vaccine Alliance, celebrated its 20th anniversary. GAVI was launched at the Annual Meeting 2000 with the backing of the Gates Foundation, World Health Organization, pharmaceutical companies and governments to bring vaccines to children who lacked access. Since then, GAVI has reached 760 million children.
· The World Economic Forum announced a partnership with the Global CEO Initiative (CEOi) to form a coalition to accelerate diagnostics and treatments for Alzheimer’s disease.
· The Forum initiated Ending Workplace Tuberculosis, a multi-sector initiative aimed at tapping into the business community to help stop TB in countries affected disproportionately by the disease.
· Ministers at Davos announced negotiations between 99 economies on a new international agreement on investment facilitation at the WTO. The agreement is aimed at making it easier for investment to flow between economies while increasing its development impact.
· As theUS and France agreed a detente on digital tax during the Annual Meeting, the Forum received a mandate from multistakeholder partners to further build multistakeholder understanding of and input to international tax reforms and assist the search for broadly supported solutions.
· The Forum partnered with the Japanese government on a multistakeholder effort to find practical mechanisms to enable free “Data Free Flow with Trust” in support of the Osaka Track process that was initiated at the G20 in 2019.
· The Schwab Foundation for Social Entrepreneurship announced that its community has improved the lives and livelihoods of more than 622 million people in 190 countries since 2000. Impacts include distributing $6.7 billion in loans or value of products and services; mitigating more than 192 million tonnes of CO2; improving education for more than 226 million children and youth; improving energy access for more than 100 million people and driving social inclusion for over 25 million people.
· 11 NGO executives united to stop sale of .org domain to a private equity firm. Executive directors of Greenpeace International, Access Now, Human Rights Watch, ACLU, International Trade Union Confederation, Sierra Club, Amnesty International, Consumer Reports, 350.org, Color of Change and Transparency International released an open letter on 21 January 2020 “calling on the leaders of Internet Society (ISOC) and Internet Corporation for Assigned Names and Numbers (ICANN) to stop the sale of the .org top-level domain to private equity firm Ethos Capital”.
Combating climate change
· 1t.org, a new multistakeholder initiative aimed at supporting efforts to grow, conserve and restore 1 trillion trees by the end of the decade was announced. Within the first days of its launch, the US and China announced support. Salesforce announced a new commitment to plant 100 million trees; Colombia confirmed its existing commitment to plant 180 million trees by 2022; Pakistan reaffirmed its 10 billion trees campaign; and the Global Shapers also committed to planting 1 million trees by 2021 across its 400 hubs worldwide.
· New members signed up to the Forum’s community of CEO Climate Leaders. The community are committed to helping their respective companies meet the Paris Climate Goals. New members include: AstraZeneca; Bayer AG; BBVA, Dalmia Cement; Jacobs Engineering Group; JLL; Newmont Corporation; OVG Real Estate, and Zurich Insurance Group.
· The Sustainable Markets Initiative, backed by a Sustainable Markets Council, was launched by HRH The Prince of Wales in collaboration with the World Economic Forum with the goal of bringing about a transition to sustainable markets and rapid industry-wide decarbonization.
· The Forum’s Advanced Manufacturing and Production community launched the Carbon Reduction in Manufacturing Initiative with Johnson & Johnson, Schneider Electric and Unilever, with support from Al Gore’s Generation Investment Management to achieve a goal of cutting carbon emissions in manufacturing by 50% by 2030.
· The Net Zero Asset Owner Alliance of 16 pension funds and insurers committed to helping achieve the Paris Climate Goals added the Church of England and Generali as new members. The alliance’s portfolio now stands at $4.3 trillion.
· The Champions for Nature, a high-level group calling for raised ambition on nature, was launched. It is chaired by the Executive Director of UN Environment Programme, the CEO of Unilever, and the President of Costa Rica. The launch followed a new report Nature Risk Rising which found that over half the world’s total GDP – is moderately or highly dependent on nature.
Sustainable Development Goals
· Frontier 2030 was launched as a platform to leverage the technologies of the Fourth Industrial Revolution to accelerate the Sustainable Development Goals. The platform is chaired by UNDP in partnership with the governments of Botswana, South Korea and Norway, as well as private sector commitment from Microsoft, Google, Cisco, Arm, Planet Labs, X, Amazon Web Services and Chipsafer. It is hosted by the World Economic Forum.
· The Food Action Alliance was launched by over 25 partners of the World Economic Forum, UN agencies, companies, farmer organizations, civil society, and finance institutions to scale collective action and transform foods systems to be sustainable, nutritious and healthy, efficient and inclusive.
· A new multistakeholder partnership, SDG500, was launched to mobilize $500 million towards achieving the Sustainable Development Goals in emerging markets through a series of six blended finance funds. SDG500 is a partnership between the International Fund for Agricultural Development, the United Nations Capital Development Fund, Smart Africa, Stop TB Partnership, the IDB Lab of the Inter-American Development Bank, the International Trade Centre, CARE USA, and Bamboo Capital Partners.
A Cohesive and Sustainable Fourth Industrial Revolution
· The Forum partnered with a community of 40 central banks, international organizations, academic researchers and financial institutions to create a framework to help central banks evaluate, design and potentially deploy Central Bank Digital Currency (CBDC).
· The World Economic Forum, in collaboration with 100 stakeholders, produced theEmpowering AI Toolkit to help board members better understand the positive and negative implications of deploying artificial intelligence.
· The Government of Brazil, together with the World Economic Forum and key business stakeholders, rolled out a set of new scalable policy interventions to increase successful adoption of industrial internet of things technologies by small and medium-sized enterprises in manufacturing.
· Partners of the Centre for the Fourth Industrial Revolution Global Network, including Brazil, Colombia, Japan and Saudi Arabia, expanded their commitment to ensuring responsible and ethical governance of smart city technologies through the G20 Global Smart Cities Alliance on Technology Governance, led by the World Economic Forum.
· The World Economic Forum’s Global AI Council, launched in 2019, collaborated with UNICEF to create guidelines for AI-supported toys for under seven-year-olds, as well as identifying young people under the age of 18 to sit on a Global AI Youth Council.
· A group of private-sector leaders from cybersecurity companies, services providers and global corporations along with law enforcement agencies, Interpol and Europol, agreed to work together with the World Economic Forum through 2020 to foster a global public-private alliance against cybercrime.
· A group of telecommunications stakeholders, including BT, Deutsche Telekom, Du Telecom, Europol, Global Cyber Alliance, Internet Society, Korea Telecom, Proximus, Saudi Telcom, Singtel, Telstra and ITU, endorsed new principles combating high-volume cyberattacks that could protect up to 1 billion consumers in 180 countries.
· Navdeep Bains, Canadian Minister of Innovation, Science and Industry, and Ajay Banga, CEO of Mastercard, announced a $510 million investment by Mastercard to establish a new global Intelligence and Cyber Centre in Vancouver, British Columbia.
Battery Storage Paves Way for a Renewable-powered Future
Battery storage systems are emerging as one of the key solutions to effectively integrate high shares of solar and wind renewables in power systems worldwide. A recent analysis from the International Renewable Energy Agency (IRENA) illustrates how electricity storage technologies can be used for a variety of applications in the power sector, from e-mobility and behind-the-meter applications to utility-scale use cases.
Utility-scale batteries, for example, can enable a greater feed-in of renewables into the grid by storing excess generation and by firming renewable energy output. Furthermore, particularly when paired with renewable generators, batteries help provide reliable and cheaper electricity in isolated grids and to off-grid communities, which otherwise rely on expensive imported diesel fuel for electricity generation.
At present, utility-scale battery storage systems are mostly being deployed in Australia, Germany, Japan, United Kingdom, the United States and other European countries. One of the larger systems in terms of capacity is the Tesla 100 MW / 129 MWh Li-ion battery storage project at Hornsdale Wind Farm in Australia. In the US-State of New York, a high-level demonstration project using a 4 MW / 40 MWh battery storage system showed that the operator could reduce almost 400 hours of congestion in the power grid and save up to USD 2.03 million in fuel costs.
In addition, several island and off-grid communities have invested in large-scale battery storage to balance the grid and store excess renewable energy. In a mini-grid battery project in Martinique, the output of a solar PV farm is supported by a 2 MWh energy storage unit, ensuring that electricity is injected into the grid at a constant rate, avoiding the need for back-up generation. In Hawaii, almost 130 MWh of battery storage systems have been implemented to provide smoothening services for solar PV and wind energy.
Globally, energy storage deployment in emerging markets is expected to increase by over 40% each year until 2025.
Figure 1. Stationary battery storage’s energy capacity growth, 2017-2030
Currently, utility-scale stationary batteries dominate global energy storage. But by 2030, small-scale battery storage is expected to significantly increase, complementing utility-scale applications.
The behind-the-meter (BTM) batteries are connected behind the utility meter of commercial, industrial or residential customers, primarily aiming at electricity bill savings. Installations of BTM batteries globally is on the rise. This increase has been driven by the falling costs of battery storage technology, due to the growing consumer market and the development of electric vehicles (EVs) and plug-in hybrid EVs (PHEVs), along with the deployment of distributed renewable energy generation and the development of smart grids. In Germany, for example, 40% of recent rooftop solar PV applications have been installed with BTM batteries. Australia aims to reach one million BTM batteries installations by 2025, with 21 000 systems installed in the country in 2017.
Figure 2. Services provided by BTM battery storage systems
Overall, total battery capacity in stationary applications could increase from a current estimate of 11 GWh to between 180 to 420 GWh, an increase of 17- to 38-fold.
Find more information about enabling technologies in IRENA’s Innovation Landscape briefs: Enabling Technologies
Somalia to Receive Debt Relief under the Enhanced HIPC Initiative
The International Monetary Fund (IMF) and the World Bank’s International Development Association have determined that Somalia has taken the necessary steps to begin receiving debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Somalia is the 37th country to reach this milestone, known as the HIPC Decision Point.
Debt relief will help Somalia make lasting change for its people by allowing its debt to be irrevocably reduced from US$5.2 billion at end-2018 to US$557 million in net present value terms (NPV) once it reaches the HIPC Completion Point in about three years’ time. As Somalia continues on its path towards stability and development after 30 years outside the international financial system, the immediate normalization of its relations with the international community will re-open access to critical additional financial resources to strengthen the economy, help improve social conditions, raise millions out of poverty, and generate sustainable employment for Somalis.
“We welcome Somalia’s efforts to restore stability, engage with creditors, and adopt a poverty reduction strategy,” said World Bank Group President David Malpass. “Resumption of regular financing to Somalia is an important landmark, and we look forward to further economic and social progress.”
“I would like to congratulate the Somali government and people for their intense efforts over the past years leading to this momentous event,” said Kristalina Georgieva, IMF Managing Director. “Successful reform efforts have laid the foundation for inclusive economic growth and for addressing the needs of the country’s most vulnerable people. Work must continue to sustain and expand the implementation of these reforms as Somalia starts a new chapter of its history. I am confident a more resilient and prosperous future lies ahead for the people of Somalia.”
“The Government and People of Somalia are very pleased by the IMF’s and World Bank Group’s decision which allows Somalia to fully re-engage with International Financial Institutions. This decision is an important milestone which presents ample opportunities for Somalia as it relentlessly pursues its ongoing reform processes as well as its recovery and development agenda,” said Hassan Ali Khayre, Prime Minister, Federal Government of Somalia. “The journey leading to this decision required hard work, dedication and partnership. The FGS expresses its appreciation to the IMF, World Bank Group and partners for their unwavering support and to the Somali people for their patience and resilience in this journey.”
Somalia has committed to maintaining macroeconomic stability; implementing a poverty reduction strategy; and putting in place a set of reforms focused on fiscal stability, improving governance and debt management, strengthening social conditions, and supporting inclusive growth in order to reach the HIPC Completion Point. The World Bank and IMF will continue working together to provide the technical assistance and policy guidance the authorities need to achieve these goals, including in the context of the new, three-year IMF financial arrangement.
In addition, the World Bank is considering a range of new IDA investments with a focus on immediate relief for communities impacted by flooding, the locust invasion as well as preparing for the fast-moving threat of COVID-19. The leadership of the World Bank Group and the International Monetary Fund expressed thanks to their member countries of all regions and income levels, in particular Italy, Norway, Qatar, and the United Kingdom, together with the EU, whose interventions catalyzed support and provided the necessary financial resources to help Somalia reach the Decision Point.
Details of the Debt Relief Operation
At the start of the HIPC process, Somalia’s public- and publicly-guaranteed external debt was estimated at US$5.2 billion in NPV terms. Application of traditional debt relief mechanisms reduces this debt to US$3.7 billion.
Additional debt relief under the enhanced HIPC Initiative is estimated at US$2.1 billion in NPV terms. Of this amount, US$843 and US$1,225 million is projected to be provided by official multilateral and bilateral creditors, respectively.
Paris Club creditors are expected to make a decision on debt relief by the end of March 2020. The largest Paris Club creditors are the United States, Russia, Italy, and France. The IMF Executive Board has approved interim debt relief on debt service falling due to the IMF in the period between the HIPC Decision and Completion Points. At the HIPC Completion Point, Somalia’s current debt due to the IMF will be paid with the proceeds of financial contributions that have been received from over 100 IMF members, including many low-income countries.
MDRI debt relief from IDA and the African Development Bank would cancel all remaining claims at the Completion Point.
Together, Somalia’s external debt burden is expected to fall from about US$5.2 billion (110.7 percent of GDP) in NPV terms as of end-2018 to US$557 million (9 percent of GDP) once the Completion Point is reached.
IMF and World Bank Arrears Clearance Operations
Arrears to IDA were cleared on March 5, 2020 through bridge financing provided by the government of Norway, reimbursed with the proceeds of a Development Policy Grant.
Arrears to the IMF were cleared on March 25 with the assistance of bridge financing from the government of Italy, which the authorities have reimbursed using the front-loaded access under the new IMF financial arrangement.
Arrears to the African Development Bank were cleared on March 5, 2020 through bridge financing provided by the government of the United Kingdom and a contribution from the EU. The bridge loan from the UK was reimbursed by the proceeds of a Policy Based Operation Grant.
The HIPC Initiative
In 1996, the World Bank and IMF launched the HIPC Initiative to create a framework in which all creditors, including multilateral creditors, can provide debt relief to the world’s poorest and most heavily indebted countries to ensure debt sustainability, and thereby reduce the constraints on economic growth and poverty reduction imposed by the unsustainable debt-service burdens in these countries. To date, 37 HIPC countries, including Somalia, have reached their decision points, of which 36 have reached the completion point.
Created in 2005, the aim of the Multilateral Debt Relief Initiative (MDRI) is to reduce further the debt of eligible low-income countries and provide additional resources to help them reach their development objectives. Under the MDRI, three multilateral institutions – the World Bank’s IDA, the IMF and the African Development Fund– provide 100 percent debt relief on eligible debts to qualifying countries, at the time they reach the HIPC Initiative Completion Point.
WB to Support Increased Urban Resilience in Southern Brazil
The World Bank Board of Directors approved today two loans of EUR 44,800,000 each for the Southern Brazil Urban Resilience Program. The project will finance a credit line to be set up by the Southern Brazil Regional Development Bank (BRDE), which will act as a financial intermediary on-lending primarily to small and medium Brazilian cities interested in resilience-focused investments.
Brazil’s Southern states – Paraná (PR), Santa Catarina (SC) and Rio Grande do Sul (RS) – are the most affected by natural disasters, with 8,428 registered events between 1991-2017. Currently, more than 700,000 people in over 144 municipalities live in disaster risk areas, according to government data. The majority have a monthly average per capita income below minimum wage level ranging from 42.2 percent in SC, 57.7 percent in RS, to 69.3 percent in PR.
“There is a proven record of huge social, economic and fiscal impact of these events. The new credit line will allow the most affected municipalities to build their resilience program and reduce both the human and economic losses,’ said Luiz Correa Noronha, BRDE’s Vice-President and Planning Director.
Brazil is often seen as a country free from natural disasters. However, the nation’s rapid urbanization over the past decades, combined with inadequate planning, insufficient service provision and climate change, contributed to increased exposure and vulnerability of people and assets to natural hazards and extreme events, such as floods, flash floods, landslides, and storms, especially in the Southern Region.
The project aims to reduce the social and economic impact of future natural disasters and extreme climate-related events in Southern Brazil, especially for the most vulnerable. In addition, it will reduce the fiscal impact of those events on municipal budgets.
“These natural hazards disproportionately affect the poor and women. Reducing disaster risks is crucial to improve the welfare of the poor in these states,’ said Paloma Anós Casero, World Bank Director for Brazil.
Among the outcomes supported by the Project are:
- Reduced exposure and vulnerability of population and assets to natural disaster risks and extreme climate-related events of selected municipalities; and
- Strengthened capacity to promote municipal urban resilience.
This 6-year project totals EUR 89.6 million, divided in two IBRD loans to BRDE (50% of total amount each), one for each loan maturity:
- 12-year final maturity loan in EUR including a grace period of 3 years to lend to municipalities in BRL.
- 25-year final maturity period including a grace period of 4 years to lend to municipalities in EUR.
The project is guaranteed by the Federative Republic of Brazil.
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