 So, good afternoon, everybody. I'm happy to chair the next session. My name is Enmi Oikari. I come from the Ministry for Foreign Affairs, where I'm leading the unit for Development, Finance and Private Check the Cooperation. And the topic of our session is the World Development Report 2022, Finance for Inevitable Recovery. First, we will hear about it and then discuss about it. And the report looks at the role of finance in the economic recovery from the pandemic. And obviously, the report highlights the challenges as well as the consequences of the crisis. It should be noted that the report was published before the Russian invasion of Ukraine, which some of you already mentioned this morning, as of course only making the situation even worse, especially in terms of energy and food security. When I was reviewing the report, what really stood out was the call for transparency, something we also have discussed already during this morning. But let me now introduce Leora Klapper, who will present the report together with some of your colleagues. I was just told. Leora is the lead economist in the finance and private sector issues group at the World Bank. Her publications focus on corporate and household finance, entrepreneurship and risk management. And I was also also very interested to learn that her current research that is the impact of digital finance or services, especially for women. But now Leora please, the digital floor is yours. Welcome. Thank you. Thank you for the invitation to join you today to discuss our 2022 World Development Report, which we launched last spring, and financed for an equitable recovery, which unfortunately has become more our recommendations have become even more urgent in the current environment. This report was drafted by interdisciplinary team from both the World Bank and the IFC. I'm joined this morning with a colleague from IFC. And we hope that our report will elevate these issues among government priorities during the recovery. And so like your conference, the report touches on encouraging sustainable private and sovereign death and the importance of green finance. To summarize, our report focuses on the unprecedented financial and economic risks that were created or worsened by the pandemic and the pandemic responses and more recent macroeconomic threats caused by rising fuel and food prices and the war in Ukraine, growing climate risks, which have all hindered a swift recovery from the pandemic and outlines concrete steps that policymakers can take to address them. So the global public health the global public health crisis that was triggered by the pandemic quickly led to an economic crisis, which increased global poverty and inequality and dealt the biggest setback to global poverty in decades. In 2020 economic activity contracted in 90% of countries and global poverty increased for the first time in a generation. And so while the wealthiest 40% of the global population continued today to recover, we're still seeing the income of the poorest adults continuing to decline and expected to decline further. For example, the World Bank's 2022 poverty and shared prosperity report shows that global progress in reducing extreme poverty has effectively come to a complete halt. And so even as countries around the world were struggling to contain the spread of COVID-19 and managing the health costs of the pandemic, governments were quickly implementing an encompassing and really unprecedented response of fiscal, monetary and financial sector policies, all aimed at limiting the worst immediate economics of the health crisis on household and businesses. The theme we really pull out in the report is the macroeconomic impact of macroeconomic policy on households and firms, these micro effects of macro policies. And so we collected data showing that these included direct cash transfers, debt payment moratoriums, as well as central banks, unconventional monetary policies that were again we're seeing today the ramifications of such as asset purchase programs that were effective in pumping liquidity into the financial sector. And we used by 27 emerging markets for the very first time during the pandemic. So for example, early in the crisis, the Philippines took 22 measures to support the banking sector, 11 to improve liquidity and funding, and six to support the payment system. And so in the midst of the crisis, these policy measures provided much needed liquidity support to households and helped avert a wave of loan defaults that could have threatened the stability of the financial sector. However, policy makers around the world needed to achieve a balance. And now we're trying to achieve that balance between providing enough support to prevent the worst human costs of really the growing economic and political instabilities, while limiting longer term risks, such as growing sovereign debt, rising inflation, and expanding non performing loans and distressed firms. So our conceptual framework illustrates a central message to the report that the numerous mutually reinforcing channels that connect the financial health of households, firms, financial institutions and governments can trigger global financial chain reaction. And this means that elevated financial risks in one sector can spill over and destabilize the entire economy. And again, we wrote this in the context of the pandemic and the recovery, although unfortunately, there's really tremendous urgency to these risks given rising fuel and food prices and the ongoing war in Ukraine. So it gives them simple examples, inclusive access to finance, to financial services offers households and businesses financial resilience, to economic shocks and unanticipated expenses, and many of the world today experiencing and allow firms to invest in the recovery. But banks confronting decline in loan quality tend to tighten the lending. And these reductions typically hit lower income households and small businesses the hardest, setting up a negative feedback loop between financial sector performance and real economic activity with the potential to increase income inequality. And so official statistics seem to show that non performing loans in some markets are growing. And there's reason to be worried. For example, even before the COVID-19 pandemic, global household debt had increased by more than 30% of the share of GDP since 2008. And household balance sheet data showed that in low and middle income countries, only half of all households had the liquidity to sustain basic consumption beyond three months. And business performance also seems to have been affected. I've been looking at data from using with the Mastercard Economic Institute that suggests that globally, business failure rates have doubled in 2020 and 2021, above the 2019 and 2018 baselines. Loan defaults can now sharply increase and private debts can quickly become public debt, as governments are forcing to bailouts, household and firms suffering from lower income and revenue also pay less in taxes. In addition, when the financial position of the public sector deteriorates from both higher debt and debt servicing, this may weaken the government's ability to support households and firms in need. And we also discussed global risks, such as the rising interest rates and inflation risks, which are a little bit hypothetical when we wrote the report but are not today, which as Augustine Carson explained nicely in a 2020 speech on central banks and inequality, inflation is a regressive tax that disproportionately hits the most disadvantage because the poor season wages erode, but typically don't have inflation resilient assets to hedge their risks. And therefore, the responsibility of central banks macro civilization role can help make a more equitable society. So the policy challenges going forward will be to ensure sustainable debt burdens and uninterrupted access to formal credit. So that first households and businesses, especially low income households and small businesses, maintain access to financial services that offer financial resilience, economic shocks and unanticipated expenses and allow firms to invest in their recovery. And second governments and financial institutions can support the recovery and provide adequate financing, including for investments in all the services that governments need to support such as education and health. As our report focuses on four priority areas and policy measures that governments should take now to avoid major financial upheaval. First, increasing transparency and reducing the share of not performing loans to ensure banks can continue to lend. Second, to ensure effective procedures to discard distress debt, including out of court mediation and conciliation, which World Bank experiences have shown can be especially beneficial to small businesses and individuals. Third, to ensure continued access to credit. And fourth, to manage sovereign debt sustainably. Let me run through the first two and I'll pass on to my colleagues to talk in a little more depth. So the first area for policy action that we discussed in the report is a need to address risk to financial stability to ensure that banks can continue to lend to support the recovery. So one of the main recommendations of the report is that problem assets must be recognized and dealt with promptly. The faster than non performing loans are addressed, the sooner banks and microfinance lenders will be able to support the recovery. And we bring out we bring the evidence why timely management of non performing loans is so important, really highlighting three reasons. First, that high not performing loan levels burden all levels of an economy. We discussed in the report research showing that the late action can cut off access to credit, destroy jobs and discourage entrepreneurship. Second, how high non performing loans to press economic growth, as for example in the well documented case of the loss of generate the Japan's lost decade of growth. And third, that without switch policy responses to hidden loan distress, we could also see an increase in evergreening. This is a continuous rolling over of zombie loans, the businesses that are weak with little or no chance of returning to health and politicize government interference in death resolution. This ultimately translate into lower economic output, investment and employment. But the negative cycle of high performing loans leading to low economic growth is not inevitable. Establishing effective NPL resolution strategy that involves regulatory authorities and the private sector together working together is an urgent priority. And there are many benefits of early decisive action. First, unambiguous regulations to identify non performing loans allows lenders and regulators to assess the magnitude of the issue and take prompt action. As you mentioned earlier, transparency is a critical theme transparency on NPLs on the stress firms. Second, building banks operational capacity to deal with a significant increase in NPLs can improve the efficient resolution of distress assets and free up resources for credit intermediation. And third, authority should be prepared to quickly assist troubled banks while always prioritizing exhausting private sector led and funded solutions before resorting to bailouts. And so experience shows that taking action allows non performing loans to be brought to sustainable levels. The objective should not be to pursue zero level non performing loans, but to have banks taking on a level of risk that doesn't compromise their financial soundness. And so in the report, we highlight some examples of countries that successfully equip their financial sector to address rising levels of non performing loans. For example, Serbia established the national NPL working group to reduce stubbornly high levels of NPLs in the aftermath of the 2007 2009 global financial crisis that effectively we capitalize and strengthen their banking sector. The second risk we discuss is debt sustainability. And so wave of loan defaults can stabilize financial institutions and create contingent liabilities for their governments. There's a risk of zombie firms and politicized government interference and debt resolution. Infected insolvency regimes can reduce access to credit again, especially for riskier smaller firms and households by reducing creditors confidence that both then they can force their rights in the case of default and collect in the case of default. The late actions can cut off access to credit, destroy jobs, discourage entrepreneurship. These governments are prioritized strengthening formal insolvency frameworks, including conciliation and mediation. It's not easy to pass through bankruptcy laws, especially during a crisis. However, growing number of out of court procedures have been very effective, especially for SMEs. And history shows that insolvency reforms that encourage out of court debt workouts can be effective at bringing down non performing loan rates. Efficient liquidation procedures can facilitate market exp of the zombie non viable firms that hybrid out of court arrangements that reduce the extent of court involvement in restructuring can ease the burden on overcrowded courts to reduce the costs, especially for smaller businesses. So we bring lessons learned from the MSME insolvency reform during the Asian financial crisis in the late 1990s, early 2000s. For example, in Indonesia, a judicial reform program enacted in the aftermath of the Asian financial crisis helped reduce the time needed to conclude an SME insolvency from 72 months in 2004 to 13 months in 2012. We also discussed the comprehensive and ongoing insolvency reforms in India, starting in the 2016 overhaul of the business and personal insolvency framework, which more than doubled the recovery rate for creditors, although backlogs remain an issue. In response to the economic impact of COVID in April 2021, the government of India added a simplified framework for insolvency of small businesses, which might ease the demand and backlog for the corporate restructuring framework. And Columbia has introduced a temporary fast track restructuring framework that's being administrated by the Chamber of Commerce for MSMEs. So before passing the floor to my colleague, let me mention spotlights that are woven through the report focusing on development finance, including the regulation of microfinance as institutions and the role of contained and well-governed partial credit guarantees. But we also discussed the importance of strong financial markets to accelerate the transformation towards a sustainable world economy. Examples of how regulators can incentivize green investments, such as mandating higher risk provisioning for loans to sectors engaged in non-sustainable activities. Those discussed the role of capital markets, which was discussed earlier, and how the economic stress arising from the pandemic propelled the expansion of sovereign, sustainable green blonde, green blue bond licenses. Although there's no conclusive cross-country patterns, some sovereign green and social bond issuances have paved the way for similar debt issuances by the private sector. So some suggestive examples how government issuances could crowd in private bank issuances include Chile, who in 2019 became the first green, sovereign bond issuer in Latin America. And soon after, a large private Chilean bank issued a green bond to raise funds for renewable energy projects. So let me start. Let me see. Is Rita here? Okay, so let me actually pass the floor first to my colleague, Benny Sonito, an economist in the Economic Analysis Department of the IFC. Great. Benny. Thank you, Leora. And good afternoon, everyone. So, so far, we've heard from Leora that the report highlights the need to address outstanding credit, resolve balance sheets, challenges that banks and borrowers are facing. And where we turn with the contribution that I'll share with you right now is on the impact of the crisis on the bank's abilities and the economy's abilities to generate new credit. And particularly for those segments, like, yes, MSMEs or lower income segments that were harder to learn to begin with. So we highlight three main policy messages. The first, which brings in the first to bullet points here on the slide, relates to the need to create an enabling environment for responsive responsible lending innovation. This can help mitigate the heightened risk and uncertainties in the short run, or as we're seeing the short run is extending a little bit because of compounding elements around it. And but also in the long term, it can help make markets more inclusive and resilient to future shocks. Some some of these enablers include policies around greater data access by lenders, both in terms of new types of alternative data to help fill the gaps that traditional credit information is leaving, but also especially important for emerging markets to keep building on what we would consider traditional credit information systems and financial infrastructure, both in the forms of upgraded payment system, asset registries and frameworks for allowing secure transactions that really can help improve the data quality on which Can you check your connection? We can't hear you now. Yeah, Laura, we can't hear you either, but it seems that you can hear each other. Still no. How about now? Previews panel and their audio went away a couple of times. Now we can hear you. Great. Oh, fantastic. Wonderful. Hi. Should I keep going? Or yes, please. OK, so a second enabler that we identify here is the need to update risk assessment and management tools for financial institutions. And this is again a survey of our financial institutions. I'll tell you a bit more about later shows that this has been particularly infrequent among among financial institutions in the post crisis time, so in 2020 and 2021. A third enabler would be enabling innovations in products as well as in the types of institutions that lend to MSMEs. And I know there was some discussions about the BFI lending in the previous section, but innovators such as data driven digital lenders and embedded finance providers while they, you know, can lead to some concerns and needs to update regulations, have the potential of bringing in different risk appetites and different potentials for reaching such underserved standards. Another recommendation that we bring forward in in in this work is the importance of balance in these innovations with appropriate regulation and infrastructure to counter some of the risks and also particularly those related to financial literacy and cyber security. Furthermore, we can recognize that in the in the draft, the sorry, or just one still on the first slide, recognize that the partial credit guarantees may need to continue. They were a central policy tool for through the crisis, and they may need to continue to be in place for a while longer to help balance the risk and returns for lenders. As economic conditions improve, however, we would expect that these guarantees are progressively narrowed in terms of eligibility to the sectors and customers that they serve. And they can possibly turn to leverage and be leveraged to reduce some of the risk associated with longer term investments. For example, some of the climate related ones that were discussed in previous months. So now we can move to the next slide. As we mentioned, the lockdown that had emerged in 2020 many economies and the shock to the economic activity that we saw over at least two years has heightened credit risk. What is somewhat unique from this crisis is that lenders saw their visibility on the borrower's capacity and willingness to repay loans, particularly in pair during this time and also saw more limited options for recourse in event of a default. And so these challenges kind of as we have seen have led to constraining credit standards across many economies. And in the chart, we have an analysis across country that shows several quarters of consecutive tightening across markets in credit standards. And while the situation went better, improved in 2021, 2022 is showing again a shift towards tightening. What I present here is actually instead data from a survey of IFC client financial institutions, about 200 of them across emerging markets. That was conducted at the end of 2020 and at the end of 2021. And by 2021 and we were seeing a very positive outlook on what the future and the future of the recovery would have looked like. And we were seeing already significant signs of recovery. At that point, two-thirds of respondents had returned to pre-crisis operation levels and expected to fully recover by 2020. Liquidity had held very well, thanks also to a strong performance of deposits. Which were also a feature of many of our client financial microfinance institutions. There was a focus of IFC in the late 2000s, 2010s in terms of working with microfinance institutions to broader their fundraising platforms. But collection levels, again at the end of 2021, were still a challenge for over half of the lenders that we interviewed and MPLs increased compared to pre-crisis levels. Although now at the levels that we were expecting, we see and you can see it here in the kind of last bar chart on this chart, we see that the impact on MPLs that we were seeing by the end of 2021 was almost exclusively focused on low and lower middle-income countries institutions. So inversely proportional to the amount of policy support that the economies and this financial sector had received through the crisis. So in this case, we see that there was an increase between 2019 and 2021 among the institutions in our sample, of course, of about 40 percent in the MPL rates, which is substantial. We can move to the next slide. As I mentioned earlier, credit tightening was a concern. Credit standards towards overall the private sector, but particularly the SME sectors were tightening. We saw this across economies. We see also from our client financial institutions is a 46 percent of them still maintain tighter credit standards compared to pre-crisis by the end of 2021. And again, as a reminder, at the end, by the end of 2021, most economies had rebounded significantly from a GDP perspective. It was certainly an expansionary period, which was then met with tightening conditions that occurred early in 2022. But in 2020, by the end of 2021, credit standards were tighter because the outlook for businesses was still deemed to be particularly risky because the impact of the last two years on the economic situation of financial institutions was was was a challenge. And because of this visibility and recourse challenges that we were that I lighted earlier, it was more difficult for lenders to assess credit risk and the quality of collateral was a challenge. We can move to the next slide. So what we do highlight in this chapter, in addition to kind of framing the risk and the challenges to lending, is what are some of the opportunities that are coming our way in terms of in terms of enabling financial institutions to be better at managing risk and avoid a credit crunch vis-à-vis primarily on one important digital dividend that was produced by the crisis, which is that business surveys and industry data show that markets witnessed a growth in the adoption of technology both by businesses and consumers following the crisis. Much of it was forced by the lockdown, much of it just gained priority as a result of of the events during those times. So we see payments and technology adoption grow. This kind of allows us to highlight some of the strategies that lender can adopt to meet the site and risk and uncertainty. But as many of you will notice some many of the ideas that we propose here are not new. We were talking about these way before the crisis as well. And so we highlight how these are becoming increasingly possible, particularly in the emerging market context as a result of the this crisis. So the first kind of big area that we focus on is that the digitalization of activities and operations can allow lenders to leverage. Again, we lost you. Oh, yeah, yeah. Leora, it's fine. Just I hear again. Sorry, I'm afraid it might not be my side that is challenged, but I wouldn't know how to fix it. OK, so I'll try to speak even faster so you can hear me more. Can you hear me just to check? We can hear you. Yes. OK, great. So in our survey, we find that 60 percent of institutions of financial institutions had made some type of update to their credit models. But just one out of seven added capabilities that were significant in terms of integrating alternative data or machine learning risk assessments in their in their model. So most of it was still kind of fairly manual updates. And preliminary evidence so far shows us that innovators that have invested heavily in these technologies performed really well through the crisis. We cannot say better because the comparison is challenging, but really well. And one example that was a chart if you if you moved to the next, I think you will appear. Yeah, one example is is one of our clients, Confio in Mexico, which is a kind of fintech lender that uses before the crisis used electronic invoicing data and payroll information to reach small firms and lend to them. And we see essentially the Confio that a year and a half period essentially doubled its monthly loan disbursement. And this is happening after an initial drop in lending following early months of covid and a fairly rapid effort to adapt its algorithm to integrate new data on the impacts of covid-19 on sub sectors and rapidly return to growth. So we've seen many more of those examples coming across. Another area that we identify is that lenders can adjust and diversify their product offerings to clients. And this can be done in many ways from reducing low maturities, which can improve visibility to strengthen kind of product features that can help improve recourse in the case of non repayments, for example, leveraging alternative forms of collateral or enabling automatic payments for loans from existing cash flows. So another example that it's very much in the press these days is the question related to embedded finance and supply chain finance that can be particularly effective in terms of helping with some of this visibility. Here my bank is the it's a bank part of Ant Group in China that was focused, that is focused on micro small enterprise lending. And the example here is how this institution was able to keep growing. You don't even see covid in the in their expansion growth. They were able to keep growing the amount of MSMEs that they reached and the loans that they were able to provide to MSMEs during this period. Thanks to an integration with the e-commerce platform and the payment platforms that are part of the group that were allowing them unique visibility, but also unique recourse opportunity. So I'll stop here. Thank you for your attention. And if I may take one minute to finish up. The fourth area that we talk about is delayed resolution of distress. Elevated risk of sovereign debt, which should not be shortchanged, but I know so many other presentations today were on the topic. And simply around that in many countries, both the crisis and a subsequent war, Ukraine, et cetera, have exacerbated and exposed deteriorating sovereign debt quality and drops. And we've also been seeing drops in government's revenue that might pose a risk to banks through the bank's high exposures to government debt. And so the importance for these countries to prioritize our guidance, global guidance on how existing debt burdens can be managed more effectively to free up more resources that might be needed for the recovery. And also to avoid and mitigate the significant social and economic costs of sovereign debt distress, which we've been research has shown are associated with a wide sort of economic problems, ranging from prolonged recessions to high inflation, which have disproportionate negative effects on the poor. So for example, as shown in research by Carmen Reinhardt and others, it takes on average eight years for countries to emerge from a sovereign debt default. Effective debt management requires debt transparency and going back to the theme of better governance, full disclosure of claims and contract terms, contractual innovations, such as collective action clauses and insurance for borrowers against natural and climate related disasters, and appropriate revenue mobilization through sound tax policies, but also strengthen incentives for businesses to formalize. So please, I said, the report is available, I'm sorry, the report is available on our website. And I encourage you to dig deeper into the report's findings. So thank you very much. Well, thank you. Thank you very much, Laura and Benio Amino for this really, really interesting presentation of the report. And I'm particularly as a typical Finnish happy taxpayer, I'm particularly happy with with the ending on tax taxes. Next, I would like to introduce our our speaker, next speaker, who is Abrams Tagem. He will give a give a short comment on the on the report and then we can open open the discussion. Abrams is a resource associate here with the UN wider. He is an empirical development economist focusing on fiscal capacity and development aid and on the application of time series methods. And as I was reviewing your bio, I noticed that you really have a broader broad experience with with everybody here today, as you have before, also worked for at the World Bank and with the ODI. Abrams, please go ahead. All right. Thank you, Amy. And nice to see everyone again. I remember Shakira when I was in ODI. Sanjay, I didn't meet when I was in Nottingham, but we may have crossed paths, but I didn't know him then. So and I'm very happy to be here. I think I've learned a lot from the debt discussion since morning. I mean, the most important of which is that there is too much debt around the world. And we may go back to the Barthas system pretty soon. But let's wait and see. So I'm happy to have had the opportunity to discuss the World Development Report. It's quite long and interesting. A lot of the discussions or the lot of the knowledge in the report is on financial instability and most of the aspect related to the financial sector. So I wasn't going to spend though. I'm not going to spend too much time on discussing that or focus more on debt. And as Amy said, on the aspects of tax policy and tax administration. So this is the structure of my discussion. I would emphasize a bit on the uniqueness of the COVID-19 pandemic. Some brief discussion on the interconnections between sectors. The recommendations which emanated from the World Development Report. And another aspect which I'll call the medium term fiscal reform plan. Which is basically a kind of reform plan to enhance fiscal space to be able to deal with the debt problems which are mounting. So the uniqueness of the pandemic as if you go through the report as the first diagram in the discussion showed economic activity contracted more than 90 percent of countries. So it is resulted in the following issues financial instability across countries over indebtedness amongst households and businesses. Reduce access to credit and rising sovereign debt issues. So in terms of debt distress and especially based on the composition of the debt. There was an increase in internal debt but also a very large increase in external debt especially foreign currency denominated external debt. Various policy responses were implemented ranging from fiscal to financial sector policies. But crucially the efficiency of these policies depended on pre-existing strengths of respective countries and by that I mean the strengths of their institutions and equally importantly the level of fiscal space available in the countries. If you go through the report you would find that the advanced economies were able to respond better and faster to the crisis than the more developing countries especially low income countries. So this is an extension of the conceptual framework. So on the left you see what they refer to as a vicious cycle and on the right it's a virtual cycle. So the blue is for the government and central banks. The red for the financial sector and then the yellow is for households and firms. And as you can see there are very very strong interconnections between both. So for example low attached revenue resulted in declining fiscal support for distressed households and firms. It also resulted in counter cyclical government spending and especially the development the difficulty in managing sustainable debt. And also the government not being able to incur the state contingent liabilities from inefficient state owned enterprises. On the right it's a virtual cycle and all of the happy things about a country. And I think we had a conference in May on development and peace and there was this nice blog about creating the next Finland. So I think the next Finland is some of a virtual cycle. We're happy to be here. So higher tax revenue, stronger fiscal support. And again it leads to you know the ability to manage government spending and you know the ability of the countries to manage their debt and also their state contingent liabilities. So essentially moving from the visual cycle to the virtual cycle depends crucially on debt restructuring but also on the medium term economic and fiscal reform plan. So these are the recommendations from the report. Managing and reducing loan distress, improving the legal solvency status, ensuring continued access to finance and one which I found particularly interesting and which I focused on. Managing increased levels of sovereign debt. So sovereign debt was the debt stock in many countries was really considerably high even before the pandemic. A lot of countries, especially developing countries were borrowing a lot to be able to fund their development objectives and even to fund they are not what you can call pro-poor spending in terms of the wages and salaries being paid to their workers. The increased debt levels became a problem, particularly with external debt. So the composition of debt was also very important. You could get bilateral debt from the bilateral donors. For example, the French picking countries in Africa get a lot of debt from France, multilateral debt from the multilateral financing institutions and also the Euro bonds and the Euro bonds are particularly important because how they are used is very important in how they can be repaid. So if the Euro bonds are used for less development spending, then you have all sorts of risks in terms of interest rates, exchange rates and also rule over risks. The higher risks of debt distress and sub-Saharan Africa prior to the pandemic were really exacerbated by pandemic-related spending. Again, because the countries were borrowing at higher average borrowing costs, sometimes more than 5% on interest, it resulted in a very large increase in their debt servicing ratios, which constrained their fiscal space and made it almost impossible for them to respond to the inequalities of the pandemic as fast as the advanced countries. So the G20 common framework was created for debt restructuring, as well as the debt service suspension initiative, which was introduced during the pandemic for countries with liquidity issues and which needed debt treatment. So I just copied this diagram from the report. My focus is on the red one, which is for low-income countries. So as you can see, the share of debt to GDP has been increasing in low-income countries right up to 2020, which is at 67%. The debt being collected by advanced countries is higher than low-income countries. But again, because their debt or their borrowing costs are higher in low-income countries, you would find that the debt servicing costs in low-income countries are quite high. I think that's going to be a fundamental part of the discussion tomorrow on the 2020 Financing for Sustainable Development report. So we look forward to that. So the soaring debt service costs across countries and much higher in low-income countries have reduced the funds available for spending and exacerbated inequalities in those countries. Debt restructuring is crucial if countries are going to be able to manage their debt and the IMF and the World Bank are crucial in this procedure because they provide debt sustainability assessments, which are a natural first step in trying to restructure your debt. The common framework or the G20 common framework and the DSSI were also created to help countries so the common framework can coordinate the scheduling for countries with sustainable debt but with persistent liquidity issues. Coordination amongst the creditors is also very important because it involves the multilateral creditors, the Paris Club creditors and also the non-Paris Club creditors. So in as much as the development institutions may be inclined to coordinate and suspend debt service payments, sometimes the private creditors are not inclined to do that. So coordination in terms of how the debt service can be suspended is very important. So this brings us to a medium term fiscal reform plan in terms of creating more fiscal space to deal with the scarring effects of the pandemic. So managing soaring debt stocks which I've discussed above, prioritization and efficiency gains of spending and domestic revenue mobilization in terms of tax policy and administration reform. So improving efficiency of government spending, it has to deal with an improvement in public spending efficiency and the quality of public procurement. So this can be done to digital public financial management solutions in terms of fiscal transparency portals and digital procurement reforms, constant auditing of government processes and spending and also in terms of beneficial ownership. All of this within the backdrop of transparency, accountability and good governance. One thing which happens during a crisis is there are a lot of parallel systems of spending created and if the efficiency of spending has to be increased, then accountability and transparency are of utmost importance. There was a very big scandal in Cameroon in terms of the amount of money which was disbursed by the IMF for COVID and the presidency handed it to the prime ministry to handle who then handed it to the Ministry of Finance to handle. And it was a very nice visual cycle and a loop in terms of pointing fingers and nobody knew where the money went to. So the auditing process is going on now but I wouldn't hold my breath. So tax policy and administration reform. So this is actually very crucial because we talk about debt and other innovative methods of financing but those are external and sometimes they are not within the control of the countries. But in terms of your tax policy and administration reform, the countries are actually in control of that and which I think huge strides can be made into improving our tax policy and our tax administration which is going to lead to enhanced tax capacity and hence more tax revenue as a share of GDP. So this can be done by targeting on the tax basis such as XICs property, capital income, as well as exploring untapped basis in terms of carbon emissions as greenhouse gas emissions and also the digital economy. Increasing the fairness and progressivity of existing tax systems, especially capital income. Because you have all these high net worth individuals and these strong multinational enterprises that can easily move their tax liabilities from high tax in the countries to low tax countries and that really has to be catered for which brings us to the next point, rethinking international tax rules to stop avoidance by multinational enterprises and high net worth individuals. Developing tax policy to meet other broader objectives like climate change and health. So again, this takes us back to the discussion on carbon emissions which as we are seeing, we are living in an existential or potential crisis which is going to involve the climate and developing tax policy now to be able to align itself with those climate objectives and other health objectives like in terms of obesity, you can talk of excise taxes and the like, that's also very important. And finally, improving the facilitation and enforcement in tax administrations and digitalization is going to be key here because in the recent World Bank report, it was found that countries that digitalized the tax administrations before the coronavirus pandemic responded much better and much faster than countries which were still dealing with the paper-based system of tax administration. So I think this brings an end to my discussion. Did I use all my five minutes? Yes. Thank you. Thank you very much, Abrams. Now it's time. We have some time for questions, comments. Who would like to start? Thank you. As always, very, very comprehensive report. I'm Ike Koranen from Bank of Finland. One thing that struck me was the how differently the non-performing loans performed in low-income and lower-middle-income countries vis-à-vis the rest of the world. And since I don't remember if the GDP outcomes were that different in that group of countries, is it because of health outcomes? Meaning that these countries probably had the or the last ones to have access to vaccines and hence the normal sort of functioning of SMEs and service sectors, for example, would probably hamper it. Yeah, I don't know if you have any insights on this. Thanks. Leorat, would you like to answer that? Sure, Benny, your question. One thing to remember is that sorry, there's an echo. You can control the echo. Thank you. So one issue is also that during the pandemic, especially in lower-middle-income countries, governments and central banks implemented regulatory forbearance, which allowed firms to not repay. And so there's one question around the moral hazard of whether firms figured they didn't have to pay it all. And so that now that the books are being opened and the transparency is being, and there's greater transparency into the true performance of many of those loans, we're getting this sort of bubble of not performing loans. I mean, in the second piece, yeah, I would say going back to the story on digital payments, many lower-income countries, so in many high-income countries, digital payments became a lifeline, especially for small businesses who were able to pay between delivery and online purchasing, which often wasn't available in lower-income countries, which might also have led to a slower recovery. Benny, do you have anything else? Yeah, maybe I'll add. So the best line of interpretation I can find is that first of all, in upper-middle-income countries and high-income countries, firms were likely to have a stronger cushion or stronger set of assets to face the crisis than in lower-income markets. Policy support, as Leora said, was significantly more intense in high and upper-middle-income markets, both in terms of direct transfer as well as the forbearance work. So it's very possible that some of those MPLs in upper-middle-income countries are simply not yet seen. It's not that the businesses are doing better, but I would bring those to... I don't think it's about the health outcomes being differentials. As a matter of fact, as far as I recall, from the last time I looked at the data, the health outcomes might have been worse and more deeply felt both in terms of health outcomes, but also in terms of the restrictions to the economy for higher-income markets than the lower-middle-income ones. Thanks. Thank you. Other questions, comments? Anybody else? We could take a few. Thank you, Ar-An-Han, IDRC. When the pandemic started, there was a lot of talk as happens to be the case in emergencies about building back better, and I think we've discovered that a lot of those haven't happened. In my own organisation, we introduced a new system for claiming expenses, and people tested during the pandemic, and I started trying to say, it's not working, because we tried it out during the pandemic, and some of those things actually weren't a particularly good idea to introduce during that emergency. The list of recommendations, and this is also to Abram, because of his comment he made on Cameroon, the list of recommendations are, and as you said, most of these were the case before the pandemic, they're equally relevant, but I'm particularly keen to hear what you would recommend now, and particularly at a time from the International Financial Institutions when so many countries have to restructure the debt, and IMF loans have certain conditions. Is it the right time to focus on these, or is it exactly the right time for some of these I can see, or would the recommendation be, let's get through this crisis first and then address those? And of course, that may be different for the long list of recommendations, but I'd really love to hear a little bit more at this particular time, at a time of crisis, what the priorities should be. Thank you, and Riko, we had another one here, and if there's any more, this, okay, and one more. So I'm Kunal Sen, and thanks so much for the very interesting presentation, Leera and Benjamino. I wanted to kind of raise the question that actually Abram's raised in his presentation, given that now a lot of the, and there's a last point you made, Leera, in your presentation on sovereign debt, given that most of the sovereign debt is now owed to private creditors, how do you get them around the table when they really have very little interest to do so, when there's a collective action problem? So what kind of incident-compatible mechanism can one think about to get private creditors on also talking to the Paris Club and others and other country governments, when you might argue that, from a broad point of view, there really isn't any reason to have these discussions. Thanks. Thanks, and then we'll have one more from here. And with these three, I will hand it over to you. All right, thanks. Michael, Dankwa, you and you. Why, Abram, you did talk about the DESSI. I just wanted you to throw some more light on that and why that many developing countries, why many of them did not take advantage of that. I mean, I know a couple of countries. Why is that so? Yeah, thanks. Thank you, and Laura and Yamino, if you want to, if you could start, and then I will give you the last words. You picked the hard ones then. So, yeah, now around the sovereign debt question, I'll just provide the answer that, especially private creditors, transparency is a greater problem, right? So certainly the World Bank has been working simply to encourage greater transparency around total debt, which is critical understanding governments true obligations and vulnerability. Regarding the question about building back better, which I admit our own organization is guilty of reusing that phrase. In many of the recommendations in the report, this is an opportunity. So for example, as I mentioned, India, Columbia, many other countries during the crisis, introduced almost like a bandaid, but temporary out-of-court mechanisms of a small business bankruptcy proceedings, which is really important, right? And so this is a mechanism that was sort of brought out out of necessity because of the potential overwhelming of the court system, but has proven quite effective. So this is something that can be continued as well as many of the other recommendations around establishing, which again, Churchill never wasted a good crisis. Many banks have instituted non-performing loan departments to address vulnerability, late payments, for example. And these are the type of institutional changes, which the hope is will be continued and built up after the crisis. Although, I think it's important to say that we're not in a, we rather report we expected to be in the recovery stage now and helping countries in the recovery, whereas unfortunately this still tremendous urgency around many of these challenges, especially deteriorating real economic conditions. Benjamin, did you want to comment on something or? Maybe just starting one quick point. Sorry, I know we're already over time, but with respect to this last question that the lawyer addressed, I think we do notice a couple of things. First of all, much like governments, economies that already made significant progress in terms of digitization of payments and digital infrastructure still benefit from it. Others we are actually seeing went back to cash in a way. So some of those solutions, some economies were not ready to adopt in the long term. And so that's certainly a sobering consideration. The other one is that with the tightening of the funding environment that has happened over this past year, a lot of the innovators are actually finding it harder, especially the new entrants in markets that rely on capital markets, finding it harder to grow at the rates that we had seen even in 2021. So again, another, I guess not necessarily a response, but another acknowledgement that as the world, as these crises continue to evolve, so does the kind of the set of recommendations. Maybe last point, from the very beginning when we worked on the WDR, we acknowledged that with an ongoing crisis there wouldn't be a package of recommendations that would be fitting all markets. And Laura led a set of conversations with our regional offices, fairly individualized, to try to kind of tailor some of the recommendations region by region, country by country, because ultimately there's the report is so long and the list of issues and the list of recommendations are so multifaceted that they need to be tailored to each specific context. Yeah, I guess to follow up with what Benny said around the, so filling back better, for example, when we talk in the credit section with this, it was a massive adoption of, for example, digital merchant payments during the pandemic, ThinkTex entered to be able to offer safer, less risky credit products that were tied to the digital payments flow, both as a source of real time economic information, as well as often being paid back directly from the digital payment flows, reduced repayment, recourse risk. However, we're quickly seeing, especially places like Latin America, merchants returning to cash. And that's because of the underlining, going back to especially issues around taxation and formality. And unless countries address these underlying challenges, firms and business won't be able to take advantage of some of the more innovative technology and enables credit products. Thank you, Abrams, short comments. All right, thank you, Michael. I was kind of hoping my question was going to be on taxation, but... I think if I were to summarize, I think it's going to require some country by country analysis. But one thing you need to remember is that the DSSI was always temporary. So it may have eroded the incentives of countries to request the debt treatment from the creditors because the G20 common framework depends crucially on requests from the debtor countries. So they don't just come and then force some treatment on the country. No, you need to request the treatment from the creditors at which point they'll do a debt sustainability analysis from which they will determine how your debt gets restructured. If I were to guess, I would say the temporary nature of the DSSI and show that the countries were not going to request any kind of debt treatment. The Africa's polls, which is the flagship report of the African region of the World Bank, showed that even the benefits from the DSSI was going to be like 1% of GDP, which was pretty much trivial. Might explain why the countries didn't request. But if I were to guess, I would say it's because it was temporary. They had to request debt treatment from the creditors, and which also brings us to collective action problems like Kunal said, a lot of the creditors are non-Paris club creditors. And maybe the debt contracts have some binding clauses which make it very difficult for the countries to request. But that would be my guess. We have run out of time, yes, so that's what we are being. Let's continue the discussion over the coffee. But before that, thank you very much for our presenters. Let's give them a round of applause.