Via IMF (Den Internationale Valutafond)

Address by the Chairman of the Boards of Governors

2019 Annual Meetings
Attorney General Hon. Aiyaz Sayed-Khaiyum
Governor of Fiji

October 18, 2019

Bula Vinaka and Good morning.

It is a pleasure to welcome you all to the 73rd Plenary of the Boards of
Governors of the World Bank Group and International Monetary Fund – 75
years on from the Bretton Woods Conference, which marked the inception of
these institutions and our multilateral system.

I would also like to welcome World Bank Group President David Malpass and
IMF Managing Director Kristalina Georgieva to their first plenary session
in their new roles. Let’s put our hands together for them. And I want to
extend our sincere gratitude to their predecessors, Jim Yong Kim and
Christine Lagarde – who is here today.

Ladies and gentlemen, when our predecessors gathered in New Hampshire in
the summer of 1944, the world was suffering from monumental failures of its
political and economic systems. With the fires of the Second World War
still raging and decades of devastating conflict behind them, those leaders
rightfully shut the door on the painful folly of unilateralism. Instead,
they looked to cooperation – through a visionary multilateral system – as
the ultimate guarantor of global peace and economic stability.

But while multilateralism has shown impressive endurance over the past 75
years, recent trends have proven, it is only as strong as the faith world
leaders hold in global solutions.

We’ve seen the damage that inward-looking policy-making is having on market
sentiment and business confidence. As the growth of the global economy
slows, those who turn away from multilateralism give way to the same forces
that once drove our world into devastating conflict. We cannot dismiss the
lessons of history. We cannot squander the power of global partnerships –
we must harness that potential for the sake of our young people and to
foster enduring cooperation between the nation-states of the world.


The truth is, multilateralism matters even more today than it did in 1944.
We may not be in the throes of a world war, or just come out of one, but we
face a threat of even deadlier potential: The intensifying fury of a
changing climate.

The Bahamian and the Japanese people are the latest to suffer the tragic
reality of climate change, following the suffering wrought by Hurricane
Dorian and Typhoon Hagibis (Hah – Gee- Bis). In 2016, Tropical Cyclone
Winston claimed the lives of 44 Fijians and, within 36 hours, wiped off
one-third of the value of our GDP.

But existential threats posed by the climate crisis are not contained by
the shorelines of island states. As the Climate Action Summit last month
made clear: this threat is global. Whether it is the super-storms wreaking
havoc in Asia and the Southern-eastern regions of the United States of
America, the desertification across Africa, changing weather patterns in
the Mediterranean, the melting glaciers in Pakistan, or the rising seas
lapping at the coastlines of cities from Miami to Jakarta and Dakha, the
entire world is vulnerable. As the Fijian Prime Minister Frank Bainimarama
often reminds us, “we are all in the same canoe” when it comes to dealing
with climate change.

The growing severity of the climate threat has driven us into a complex and
challenging landscape. But if we show the courage and creativity to evolve
our global frameworks, there are opportunities waiting to be unlocked.

In the case of small states, tragedy has taught us that economic
development and climate resilience must be one and the same. The
investments we make in adaptation save lives and save us the costs of
continuous rebuilds many times over – granting our economies the resilience
to bounce back after climatic events without restarting and recharting our

But adaptation investments are not conventional outlays. The upfront costs
are far higher and the returns pay back over a far longer haul. We cannot
build stronger bridges, bury electrical cables or relocate entire
communities with the expectation of immediate financial pay-offs. These are
investments that build long-term durability, stability and sustainability
into our economies, even as the seas rise, worsening storms bear down upon
us and changing weather patterns diminish agricultural output and food

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But the traditional metrics used to measure debt sustainability do not
capture the intrinsic benefits of adaptation nor the opportunity costs of
failing to build resilience now. This narrow focus has forced some states
to make the impossible choice between what is currently considered debt
sustainability and desperately needed investments in adaptation.

It is becoming clear that the old frameworks for measuring debt
sustainability cannot stand the heat of a warming world. With every notch
in global temperature rise, these systems will struggle to address climate
realities they were never designed to solve.

We need to recalibrate and revamp the development finance architecture to
keep pace with the rapid changes in our climate and the resulting effects
on nation-states.

The indisputable benefits of adaptation must form the basis of new metrics
and measures of debt sustainability. MDBs and financial institutions must
sharpen the frameworks they employ to assess a nation’s ability to service
debt and recognise that debt-to-GDP ratio is never the full story. Asset
values and other underlying indicators in our economies should be
considered. And the system must accurately reflect the rising costs of
climate impacts and the long-term value of effective adaptation. The World
Bank Group and the IMF must keep those realities top of mind when
re-designing finance frameworks. I urge the new leadership of the World
Bank Group and the IMF to give this issue urgent attention.

The world’s larger economies must also continue to play their role to grow
the pool of accessible and affordable finance. And we look forward to the
replenishment of IDA 19 and beyond.

But even the full weight of public-sector finance, coupled with MDB
financing, cannot fill every gap in resilience. We must also enlist the
resources, expertise and ingenuity of the private sector.

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As ministers for finance and economy, and leaders of financial
institutions, it is on us to bring innovation to this conversation. Our
business-as-usual mentality has unlocked only a tiny fraction of private
finance in the adaptation space. Let’s re-engineer the conventions. Let’s
market the real opportunities in resilient investments. Let’s ramp up
liquidity support and credit guarantees. Let’s create new markets for
insurance. Let’s develop new means of assessing risks. And let’s build new
tools and make smarter use of the ones already at our disposal.

International financial institutions can also wield their convening power
to leverage support from new partners; investment funds, sovereigns, and
philanthropic organisations to lighten the burden of the costs on nations
without disrupting the securities market. We can also encourage
conscientious investing that supports resilient sustainability.

These are vital pathways to a vibrant and resilient global economy. Only by
building resilience can we bring certainty to economies, empower growth and
create the stable and growing demand for goods and services that fuels
domestic, regional and international markets.

My fellow Governors, the Bretton Woods System undoubtedly restored
stability to the international economic order in the aftermath of World War
Two. But we’re not living in the world as it was in 1944. Our world is
rapidly warming, new inequalities are arising, and the climate crisis is
exposing those gaps and, in some cases, ripping them wide open.

We need to bring new tools, new perspectives and new mindsets in tackling
our world’s greatest development challenges. If we do so, we are confident
that at the ripe age of 75, our rules-based multilateral system will still
be agile enough to live up to its highest founding ideals and, indeed,
leave no nation behind.

Vinaka vakalevu. Thank you very much.

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