TOUGH SELL
Egypt gets another $1bn in assistance
In a familiar refrain, the World Bank’s new chief defends globalisation while in China.
BEIJING: The World Bank’s newlyappointed chief executive gave a spirited defence of globalisation during her first official visit to China, saying it had helped richer and poorer countries, and economic integration made it hard for any nation to walk away.
Kristalina Georgieva, a Bulgarian who took up her post at the multilateral development lender at the start of this year, also praised China for its commitment to economic reforms and open markets.
“Open markets, trade, division of labour has worked extremely well for the poorer countries,” she told Reuters in an interview late on Monday.
“But wealthier countries also have benefited from rising middle classes, which are demanding more exports from advanced economies,’’ said Georgieva, a former vice president of the European Commission.
In Germany over the weekend, finance ministers and central bankers from 20 rich nations dropped a former pledge in their communique to keep global trade free and open, acquiescing to an increasingly protectionist US administration.
Georgieva called for an “intelligent, calm conversation” about sharing the benefits of globalisation more broadly.
Warning against protectionist policies, she said every country would be hurt if decades of integration and interdependence were unravelled.
“It’s impossible to say, now we are in this boat, but it is only your end of the boat that is sinking,” Georgieva said.
“Rather than erect trade barriers, economies should encourage competition which boosts innovation and raises productivity,’’ she said.
Georgieva called for China’s government to continue opening up the domestic market to competition, and move forward with reforms to create “a more dynamic economy”.
“In 2016, 35% of growth in the world came from China,” she said. “While this contribution is going to gradually decline somewhat, it is very significant.”
China has said it is targeting economic growth of about 6.5%, after it reported growth of 6.7% last year.
The World Bank, through the International
Bank for Reconstruction and Development, is now providing about $2 billion annually in lending to
China, and is involved in projects ranging from pollution controls to urban and rural development.
Georgieva said the biggest challenges facing the World Bank “remain in those countries torn apart by conflict and facing famine.
“It is horrible to have the shadow of famine in the 21st century,” she said, pointing to situations in South Sudan, Somalia, Yemen and northern Nigeria.
“Our biggest fear is related to that kind of devastation combining the force of nature with the evil of men.”
In a separate development, the World Bank has disbursed another $1 billion in financial assistance to Egypt out of its $3 billion loan programme with the country.
Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy hit by political upheaval since a 2011 revolt and to ease a dollar shortage that has crippled imports and hampered its recovery.
“The government has taken important steps in implementing key policy and institutional reforms that are laying down the foundations for accelerated job creation and inclusive growth,” said Dr Asad Alam, World Bank country director for Egypt, Yemen and Djibouti in the statement on Monday.
The World Bank issued the first $1 billion tranche of the loan in 2015, with two more instalments of the same size to follow, linked to additional reforms that the government planned.
Faced with a gaping budget deficit, Egypt began a series of painful economic reforms and has taken steps to l ower f uel subsidies, introduced a new valueadded tax (VAT) and let its currency float freely in the foreign exchange market in November to attract foreign inflows.
Sahar Nasr, Egypt’s minister of investment and international cooperation, said in a statement that the second tranche would help spur private sector investment and development projects and services, which should help improve people’s standard of living.
Hafez Ghanem, the World Bank’s vice president for the Middle East and North Africa, told Reuters this month that Cairo’s next set of economic reforms should focus on making its bureaucracy more transparent for investors.
Egypt expects to receive the second tranche of a $12 billion International Monetary Fund loan in May or June, Finance Minister Amr El-Garhy told Reuters last week.