Welcome to the opening press conference of the 2016 World Bank and International Monetary Fund Spring Meetings. My name is John Donnelly. I’m the communications advisor for Dr. Jim Yong Kim, President of the World Bank Group. I’ll be your moderator today. Dr. Kim will open with a statement and then we’ll take your questions. Jim?

DR. KIM: Thanks everybody and welcome, again, to the meeting. I’d like to first acknowledge our 189th member country, the Pacific Island State of Nauru which officially joined the World Bank Group just days two ago. On behalf of the institution I’m very happy to welcome the Republic of Nauru to the World Bank Group.

At the last meeting in Lima we announced that for the first time the percentage of people living in extreme poverty around the world was projected to fall to under 10 percent globally in 2015. Today, that’s roughly 700 million people living in extreme poverty, a reduction of more than 1 billion people in just the last 15 years. But the weakening global economy threatens our progress toward ending extreme poverty by 2030. In the global economy there are not many bright spots around the world. The United States is one among the developed countries and India is another among the middle income countries. Growth remains weak in Europe and Japan and among emerging economies. Russia and Brazil are projected to post, again, negative growth.

We just downgraded our global growth forecast this year from 2.9 percent to 2.5 percent. In this period of global economic slowdown we’re also facing major global challenges: forced displacement, climate change, and pandemics. I want to stress that each of these three represent very clear downside risks to the global economy. We’re now working urgently and in new ways with partners to find solutions to these issues that affect all of us.

On forced displacement, for instance, we’re using innovative financial tools right now to fund projects that will create what we hope will be thousands of jobs for Syrian refugees and also for their Jordanian hosts. We’re also working with Lebanon to make sure all children in the country, Lebanese and Syrian refugees are going to school. We need to do much, much more to provide hope and opportunity for young people in countries affected by conflict, especially in the Middle East and Africa. Of course, this will be the main topic of our development committee meeting.

On climate change, we must deliver on the promises that were made in Paris. But we’re seeing countries around the world about to sign agreements for the dirtiest source of energy which is coal. So we’re working with countries right now to piece together deals that would make renewable energy cheaper, much cheaper in some instances than coal, and push forward the movement to mitigate the effects of climate change.

Also, because the weak global economy and because of global challenges the demand for our services has never been higher outside of a crisis period. We project that we’ll provide more than $25 billion in loans this year to middle income countries. That’s $10 billion more than we had projected. Including this year’s projections, World Bank lending will top $150 billion in the last four years. More than any other four year span in the World Bank’s history in a non-crisis period.

This increased demand underscores the importance for donor countries to support our replenishment this year for the international development association, or IDA, which gives low cost loans or grants to the poorest countries. In the last five years alone, IDA has supported the recruitment or training of 5.1 million teachers, antenatal care for 17 million pregnant women, improved water services for 150 million people, and the construction or improvement of 102,000 kilometers of roads.

IDA also helps developing countries enact policies that promote inclusive economic growth, attract private sector investment, and invest in peoples’ education and health. A strong IDA replenishment this year will be essential for us to work on our goals to end extreme poverty and boost shared prosperity, to continue our intense focus on the poorest countries in the world, including in Africa and South Asia, and to broaden our work to tackle these global challenges. Thanks very much and now I’ll take your questions.

MR. DONNELLY: Please identify yourself and your outlet. Jeremy?

QUESTIONER: Hello, Jeremy Tordjman with AFP. I have two questions, if I may? The first will be on the Panama papers and the issue of tax evasion. I was wondering how concerned are you about the fact that the widespread tax evasion could impact developed countries?

And I have a question that’s on Iran. The World Bank hasn’t worked with Iran since 2006, if I’m not mistaken. And I was wondering if you were considering going back to the country now that the US sanctions have been eased? Thank you very much.

DR. KIM: Yeah, thanks Jeremy. So on the panel up here, we’re extremely concerned about the fact that it’s been revealed once again, and it’s not–it was no mystery. We knew that these things were happening but I want to stress that when taxes are evaded, that when state assets are taken and put into these havens, all of these things can have a tremendously negative effect on our mission to end poverty and boost shared prosperity.

We’re very actively involved. We have a program called the StAR program, the Stolen Asset Recovery Program. We’ve had some success over the past few years but this is a great, great concern and we would bunch all of these kinds of activities under what might be called illicit financial flows where corporations don’t pay taxes, where individuals take profits out of a particular country. And for us, it’s a fundamental issue of trust. You know if you’re trying to end extreme poverty–avoiding taxes, avoiding payments, taking state assets out of a country, these are all very, very damaging.

One thing that I want to stress is that I think for anyone who’s involved in these kinds of activities, the message I’d send is transparency is not going to move backwards. The world is going to become only more and more transparent as we move forward. And so I would just say that be very careful and also understand that, for example, leaders in developing countries all over the world are telling us that they want to work with us at the World Bank Group very, very strongly to track down these illicit financial flows to make sure that the fair share of taxes are being paid so that many, much of these assets that are taken, you know, out literally of the hands of governments and the poor can be then reutilized for tackling poverty and inequality.

On Iran, you know, we’re following the situation very closely. Iran remains a member of the World Bank Group. We don’t have any specific plans yet but, you know, it’s been quite interesting to watch. I mean we understand now that Iranian oil production is close to or even above two million barrels a day so things are changing very quickly. We’ll continue to watch the situation carefully but there’s no specific plans for lending to Iran at this point.

MR. DONNELLY: Alex?

QUESTIONER: Alex Brummer, Daily Mail London. Mr. President, two issues. The first one Panama, again, you’ve obviously given a comprehensive answer there but do you worry that those Panama papers are going to undermine the support for development assistance of all kinds? That people will say why on earth should taxpayers in advanced countries and other countries be paying their taxes for it to go out the back door the moment it arrives?

That’s the first thing. And secondly, I just wondered if you had any thoughts at all about how a British exit from the European Union might impact on the global economy and your poverty fighting activities?

DR. KIM: Thanks, Alex. So first of all, you know, I think every one of us has to do as much as we can to really tackle this issue of illicit financial flows. And I just want to say that along with the IMF, we are very focused on this particular issue. For example, Christine Lagarde and I have informed all of our member governments that the IMF and the World Bank together are ready to help with domestic resource mobilization.

But what that means is creating efficient, transparent tax systems that in many developing countries are, in fact, regressive. That these often, and I’ve been in many countries in which the only people who pay taxes are the ones who are too weak to refuse to pay taxes. And you see systems where the rich don’t pay and the poor do.

So this is a comprehensive problem that we have to tackle. We have to when government former government officials leave a country and take stolen funds with them, we have to track them down and we do exactly that with our stolen asset recovery initiative. We have continued for a very long time to work very hard on issues of corruption. We’ve done it over the last 20 years and we must continue.

And so I think what we would say is this. There’s no question that this is a major issue but we are working as diligently and as aggressively as we possibly can on this issue.

You know, regional integration is a huge issue for us and we see the lack of regional integration in South Asia, the lack of regional integration in Africa, the lack of regional integration in the Middle East as huge problems that are at the very top of our list. We’ve also written extensively on how regional integration in Europe has had a huge impact especially for the newest entrants in reducing poverty, reducing inequality, increasing trade.

So for us, regional integration is extremely important. Right now, you know, in the global economy instability and uncertainty is not a good thing. It’s causing havoc and, of course, when the global economy is suffering and when there’s instability and uncertainty in the global economy, poor countries suffer tremendously.

The Brexit is an issue for the British voters and we leave it to the British voters to decide but I would just say that this is an economy, you know, given our projections of lower growth this year that is not going to do well with more uncertainty.

MR. DONNELLY: Right here, in the front.

QUESTIONER: Thank you very much. Jennifer Cho with Xinhua Media Group China. Mr. President, we know World Bank and AIIB just designed the first co-financing framework agreement yesterday. Are there any difficulties in implementing the agreement and which countries will receive benefits first and why? Thank you very much.

DR. KIM: Yes. We just signed a co-financing agreement yesterday with the AIIB. You know, the AIIB is just getting up and running. So in order to put together an investment loan, for example, for a piece of infrastructure, requires a huge amount of work and the big chunks of work are things like project preparation, making sure that certain safeguards are respected. And the AIIB is only now increasing their staff.

So, likely, the first projects will be that we do all of that project preparation, we do all of the work that requires huge amounts of staff and, you know, in a larger sort of institutional infrastructure, and then they will simply co-finance. We haven’t made any decisions yet, but we are actively looking at very specific projects where we will be co-financing.

MR. DONNELLY: Right here in the front.

QUESTIONER: Thank you, Mr. President. With ISIS controlling areas in Iraq and Syria, does The World Bank have any specific programs in Iraq and Syria to help the people under ISIS control? And my second question: Regarding the weak global economy, growth, and the decline in oil prices, what’s your review on the impact on the GCC area, and North African areas? And what’s your recommendation to minimize this impact? Thank you.

DR. KIM: Thanks very much. You know, I just returned from a trip to Jordan, Lebanon, Iraq; I also visited Erbil in the Kurdish area, and then finally to Tunisia. And what we saw was very, very worrying. In Iraq we met with, of course, Prime Minister al-Abadi, and we also went to Kurdistan to meet with the KRG, and what we found was that there’s still quite a bit of instability. You know, Jordan and Lebanon continue to reel from the influx of refugees. In Iraq, what we are trying to do is to make sure that, for example, some of the regions that we are just recently taking back from ISIS get immediate support.

So we’ve increased the flexibility and with the very strong support of our Board Members. We are looking at, for example, getting the sovereign guarantee from the Central Government, but then moving money directly to the areas that need it most. And so we are doing everything we can to increase the flexibility in our lending procedures so that the areas that need it the most will get the support. We are doing a very large operation in Iraq, in Jordan and Lebanon, we’ve done something quite extraordinary for us.

We’ve taken money from IDA, the loan window which is strictly for the 75, or so, poorest countries in the world; and we’ve provided direct support to Jordan and Lebanon, because of what they’ve done as a great service to the world by hosting the refugees. Now, you know, in visiting Tunisia, which, as everyone knows, is a bright spot, we also have to recognize that Tunisia has exported more ISIS fighters than any country in the region, and a big part of the reason is because the young people, and this is what the people in Tunisia told me, the young people have no hope, have no optimism about the future.

The highest rates of unemployment are among the college-educated. And so we are now, really for the first time, going to tremendously increase our own work in the area, in the midst of a humanitarian crisis. Now, usually the development agencies have waited until after humanitarian crisis pass to go in and really do work, but now we’ve realized that the development in the humanitarian world, have to work much more closely together.

So we are working very closely with U.N. High Commissioner on refugees, we are working with the World Food Program, with the U.N. more generally, but I think there’s the recognition that in order to create stability, we have to do many of our sort of traditional development activities much earlier. We have to go upstream, so in Tunisia, our big task is to stabilize the economy and in a situation in which tourism which is the biggest employer, traditionally, has gone down by 70 percent because of the very targeted attacks by extremists.

You know, we have to do something now to create dynamism and activity in the private sector. So, we are very focused on creating business opportunity. So, in Jordan we are doing something else that’s really unprecedented, we are trying to create a series of special economic zones in the country. We are doing this with the British Government where they will provide some loan — excuse me — some grants, and then we will use our loans, blend them, to provide concessional financing to create a productive capacity.

Now the hope is that there will be an agreement in Syria soon, and the special economic zones, while they’ll have special access to European markets, we hope that eventually they will become drivers of economic growth in these two countries in supplying Syria as Syria recovers. But I’m extremely worried about the situation, I’ve heard estimates for the cost of rebuilding Syria that reaches the 150, $180 billion just to get them back to the levels that they were before the war.

And what you mention is very important that the low price of oil has really not had an impact. I mean, we are following the oil-producing countries in the region very closely, and what we learn is that while the cost of production of oil may be low, what’s worrisome is the price of oil that these governments need to reach fiscal balance. In other words, you know, what price of oil do they need to not go into fiscal deficit, and the prices are fairly high, you know, in the 80, 90-dollar-a-barrel region. So, many of the traditional donors in this region are going into fiscal deficit. Now, they have reserves, but I think that we are going to have to be extremely creative in thinking about how we will rebuild Syria, how we will continue to support the other countries in the region, Iraq and Jordan, Lebanon, Tunisia, Egypt, all the countries in the region, when these traditional group of donors is facing such difficulties.

I think that’s another reason why the demand for World Bank services is at a record high, because we are going to have to play a major role in that rebuilding effort.

MR. DONNELLY: Ian?

QUESTIONER: Ian Talley, Wall Street Journal. Can you help me to understand exactly how the refugee crisis is a threat to the global economy, one? Two, can you just update me on the status of where financing is, not just for the World Bank, but collectively for refugees? Three, what more financing, how much more, and how should it be mobilized is needed?

DR.KIM: Thanks, Ian. So, you know, in terms of the refugee crisis being a threat to the global economy, you know, I have learned that from talking to European leaders. I mean if there is more uncertainty — so if you were to say a million more refugees this year could have an enormous impact on the European economy, and an impact like that on the European economy of course is going to have an impact on the global economy. But the thing that really worries us is what if this instability spreads to the Sahel, what if the instability spreads to the Horn of Africa, what if refugees start leaving those areas and moving to Europe or elsewhere? I think that we now have a much, much clearer sense of how fragility and conflict can lead to the exodus of refugees which then will have an impact on the world as a whole.

So we’re not just looking at the Middle East and North Africa, we’re also looking at the Sahel and the Horn of Africa. People have talked about if there is — and this is from European leaders, European leaders have said in quiet moments that if the insatiability reaches all the way into the Sahel and into the Horn of Africa that this is really a threat of unprecedented proportions. So what we’re recognizing is that building opportunity, growth, the creation of jobs, this is all critical for trying to avoid a problem that could get much worse and have much bigger impacts.

In terms of financing, you know, the overall amount given to the refugee problem has gone up tremendously. It’s hard to know the exact number, but well north of $20 billion a year. And if you look at overall ODA at being at $140 billion, that’s a very large chunk of official development assistance. The thing I worry about most is that I just don’t — the scale of the problem is so large now that I don’t think grant based official development assistance will be anywhere near enough to build stability, to tackle huge problems like building the private sector. So what we’re looking at now is really utilizing the balance sheets of multilateral development banks. I mean this is what we were created to do anyway. We can go out onto the capital markets and raise money, you know, 15 year maturity at 2.3 percent fixed. That’s about what our numbers are right now. And that’s a lot better than most developing countries can get by themselves in the capital markets. And so what we do is we take that and blend it with some of this grand based money that’s available and we can increase our scale. For example, you know, at about a 1 to 3 to 1 to 4 ratio with 1 part grant and 3 to 4 parts loan we can provide 15 year, 20 year loans at 0 percent interest which I think is about as well as we can do. And the issue, Ian, is not so much will there be more grant based finance, the issue is are we going to have enough financing to reach the scale required to begin to build back stability in the system. And that’s a question that we’re trying to ask very acutely right now. And I think we’re going to have to be extremely creative and innovative, using every single resource that we have and use the grant based financing as creatively as possible to reach that level where we feel that we’re going to have the scale to have an impact.

MR. DONNELLY: Right here with the tie, the colorful tie.

QUESTIONER: Thank you. My name is Andre Sitov; I’m with the Russian News Agency Itar-Tass. Sir, from your opening remarks it felt like Russia is on your mind. You mentioned it even when you didn’t want to it seemed. So I wanted to ask you why that is so, what worries you about Russia, if anything.

But my real question is about Syria, like other people are worried. The Russian director here represents Syria. So my question is do you have any estimates as to how much it will take for the Syrian reconstruction? And again you mentioned it a little bit, but where would realistically the money be coming from? Thanks.

DR.KIM: So Russia is a very important member of the World Bank Group and the IMF and yes, we’re very concerned about Russia. We expect Russia will have negative growth again this year. And of course when Russia has negative growth it has an impact on many of the countries in the region. And it is one of the major drags on growth in the developing world.

As for Syria, we don’t have specific numbers. And I’ve just heard estimates and the estimates I’ve heard in the $150 billion plus area. And so I’m very concerned about, and I’m concerned about it specifically because of what I said, that the usual strong supporters of the region, the oil producing countries, are themselves facing fiscal deficits. So I think that in my view we’ve been following, for example, the schools and the health clinics that have been bombed. And in my meetings with Syrian refugees in many of these countries I hear from many of them — and I think it’s the majority — would like to go back to their homes if they could. But I don’t think that we’re going to see lots of return unless we start building back some of the basic infrastructure, schools and health clinics being at the top of the list. So we’re ready to be involved. This is why we’re starting our so-called “MENA Financing Facility,” the Middle East and North Africa financing facility that we’re launching this week. We’re hoping to get lots of support for it, and specifically what it will be is concessional loans. Right now, mostly focused on Jordan and Lebanon, but eventually, it will be focused, we hope, on Syria, when the peace returns.

I am very worried that there will not be the kind of grant-based aid that we might have seen, you know, at the time of $100 a barrel of oil. So, we’re going to have to be creative. We are cooperating very strongly with the oil producing countries.

I think everyone realizes that leveraging institutions like us, leveraging the Islamic Development Bank, which we are working with very closely, is probably going to be the best option to rebuild.

QUESTIONER: Hello, Zambia Daily Mail, Zambia. I would like to find out how feasible regional integration is considering that African economies are at different stages, and what should be done to ensure a win-win situation where all African countries benefit from it, and what deliberate policies or measures is World Bank putting in place to support regional integration? Thank you.

DR. KIM: So, one of the things that we’ve learned over the years is that it’s often more difficult for countries that share border in Africa to trade with each other than it is for them to trade with Europe or the United States, and this just makes no sense.

So, for example, on the very first trip that I took with the Secretary General of the United Nations to the Great Lakes Region, this was one of the big issues, that everything from sort of lack of capacity of border officials to an extreme number of taxes and bureaucratic hurdles that countries had to go through, trade among contiguous countries was very difficult.

So, part of it is just a very practical issue of increasing capacity among border and customs officials. I think it is very important for these regions to begin thinking about the potential economic weight and ability to attract, for example, foreign direct investment, by thinking of themselves as an entire region.

We have been working with the Sahel, we have been working with the Great Lakes Region. I think certain areas, the Horn of Africa, is more difficult. Certainly, in the Great Lakes Region and the Sahel, we think there is great possibility for reducing trade barriers and integrating these economies more.

So, it’s a difficult project. It gets to the issue of trade more generally. One of the things I’m really worried about in today’s political climate is this extreme move toward closing borders and trying to stop trade.

You know, from our perspective, trade is extremely important for ending poverty, and according to my friend, Roberto AzevA�do at the World Trade Organization, they found that it’s almost the case that the poorer a country is, the more trade benefits that country.

So, we are very concerned about the low growth in trade over the last 5 years. We would like to see trade boosted, and we especially think that reducing trade barriers in Africa will have a very positive impact. Again, I think, you know, this movement toward isolationism and the movement away from trade is very bad for poor people. It’s a very bad thing for efforts to reduce poverty.

QUESTIONER: Thank you. Sandra Zonk, China Business News. Dr. Kim, China asked you to offer a policy for the health care reform. What concerns you the most in the current China health care system? What are the issues that you would suggest China to look at? Thank you.

DR. KIM: So, every few years, we take on a new project with China. You may remember the China 2030 report that was led by my predecessor, Bob Zoellick. It was a brilliant report. It really did outline the growth strategy that China has adopted and is implementing right now.

The next study that we did was on urbanization. It tackled difficult issues like reform of the Hukou System. You know, if you look at that report and look at what China is doing right now in terms of its urbanization, they are implementing what we wrote together.

So, we are just now in the final phases of finishing a report on the healthcare system. We saw many bright spots in China, some systems that seem to be working well, but generally what we saw was expenditures that have reached five percent of GDP with health outcomes not getting better.

You know, the health outcomes and health system in China is very controversial. So, we were very encouraged to see that the Chinese were so committed to trying to reform the system, so what we did was we looked at innovations in China, but we also brought innovations from all over the world. We brought some of the best thinkers around healthcare quality and improvement from all over the world to provide input.

Now, after the report is finished, we are expecting that they will borrow from us, and then we will do demonstration projects in at least three or four provinces, and our hope is that we can demonstrate that by bringing together the best examples from within China and from around the world, that China’s healthcare system can be lower cost with much better outcomes.

We think there is tremendous capacity for improving both the quality — for improving the quality and at the same time lowering the growth of the cost of healthcare in China.

Now let me just say, this is a problem for every middle income country in the world. I think what every middle income country in the world wants to avoid is going to a very high cost system, very technology intensive that actually doesn’t improve health outcomes. Now, this is an area that I’ve worked in for a long time and we are very hopeful that these demonstration projects can illustrate a different path for the growth in the Chinese healthcare system that will lead to healthier people.

The next project we’re taking on actually though is — now that the healthcare project is beginning to reach a steady state, Premier Li Keqiang asked us to tackle the question of future drivers of growth in China. I’m also very encouraged by that. That that’s what he would be thinking about. That’s what he would be asking us to do.

MR. DONNELLY: Shawn?

QUESTIONER: Hi. It’s Shawn Donnan from the Financial Times. I just wanted to come back to the question of politics. As you mentioned on trade and politics you’re concerned about the rhetoric on isolationism there. I wonder if the same applies to force migration and the issue of forced migration? The conversation here in the U.S. has been about building walls. The conversation in Europe is about closing borders to migrants or tightening borders to migrants. Do you worry that there’s too much focus on that? On the internal, on putting up new barriers at the border rather than the problems that you’ve outlined on the ground in the Middle East and the areas that are most affected by conflict, the source areas?

DR. KIM: Well, you know, Shawn, in a report where we looked at sort of the demographics of labor markets between high and middle income countries. You know, many, many high income countries are going to need to encourage migration. They’re going to need migrants to tackle certain jobs that their own people don’t want anymore.

But also, you know, I think that migration and immigration has been a very powerful force in countries that have explicitly tried to be more multicultural, even multilingual, certain societies. I mean, I’m a migrant myself. I’m an economic refugee from a very poor country, at the time, South Korea in 1964. I think the task of envisioning, especially in high income countries, societies that are multicultural, multilingual, more diverse, more inclusive is, actually, a very good economic strategy.

This is as true for the European countries as it is for Japan and Korea. Japan and Korea as struggling with this right now as well. So I think that smart leaders have to sit back and say, we are going to need migrants. We are going to need it to increase the diversity and inclusiveness of our societies over time. Not only because it’s the right thing to do, but for economic reasons. And so right now in the middle of crisis it’s hard to see that, but overall that’s the way we see it.

We think that the demographic bulge is in places where not necessarily all the jobs are, and that the need for young workers is in the places where they don’t have a demographic bulge. So there’s a great opportunity, but, yes, I’m worried that that’s not how the populations in many high income countries are seeing this right now.

MR. DONNELLY: Thank you. Sorry, we have a hard stop right now. So thank you very much for attending. We will distribute a transcript later today to all of you. Thank you.

Source: The World Bank