Live on Bloomberg TV

00:00This is my kitchen table and also my filing system over much of the past three decades. I've been an investor the highest quality of mankind. I've often thought is private equity. And then I started interviewing. I watch your interviews because I know how to do it. I've learned in doing my interviews how leaders make it to the top. I asked him how much he wanted. He said 250. I said fine I didn't negotiate with him. I did no due diligence. I have something I'd like to sell and how they stay there. You don't feel inadequate now because being only the second wealthiest Matt Miller is that right. The United States has been hard hit by Corbett but even more hard hit have been some of the emerging markets because they now don't have access to Kobe vaccines. They also have the money for those vaccines. One of the people who have been trying to make certain they do have the money is David Malpass the president of the World Bank. His mission as the president the World Bank is to make certain some of these countries have the necessary finances and necessary access to health care that they need for their people. Hello I'm gonna be in conversation today with David Malpass who is the 13th president of the World Bank. David thank you very much for coming today. Thank you David. Good to be here. So for those people that don't know exactly what the World Bank is can you describe what it actually does. It's a development institution. So the goal is to help countries raise their living standards that we give loans and grants to countries in the developing world. It's been around since 1944. It was part toward the end of World War 2. It was part of the rebuilding effort. So part of what the World Bank tries to do is help help countries with infrastructure investments. They'll heavily were involved with health care now with covered with education and with with climate issues all of the range of development topics. Where does the money come from. From the World Bank. The money comes from the shareholders. So the World Bank has several parts actually five parts. One part is like a like an investment bank where there were the equity holders are the governments of the world. The United States is the biggest shareholder. And then in addition the World Bank borrows heavily. So for example in the previous fiscal year we borrowed ninety five billion dollars from global markets from savers around the world. And that then is used to make loans. That's part of the the bank side of the outflow operation. And then another big part of the World Bank is donations from countries. The UK is the biggest donor. United States is the second biggest donor. And on down. China is a major donor. And Saudi Arabia and so on through the through the range of countries. And we are very grateful to all of the donors who put who put money into the World Bank group that is then used for grants and very low interest rate loans for the poorest countries. So a big part of the World Bank's goals and operations are to help people that are in poverty in extreme poverty. Help them with with social safety nets with food programs with food security programs and a range of activities to help them do better in their lives and and help save lives in the current pandemic. Let's talk about the pandemic. So there's been a big concern that the wealthy countries like the United States or Western European countries will get the vaccine readily available to it and that it can afford to pay for it. How do people in the developing countries get access to the vaccine and can they afford to pay for it. These are big challenges. What we did as the World Bank in October our board approved and with the support of all these shareholder countries the idea of wealth 12 billion dollars of financing we can use that money to help set up vaccination systems in the in poor countries also to buy vaccines from manufacturers and also from Kovacs which is an international facility that's getting access to vaccines. So we're already in the process of deploying those vaccines. We've been working since October to do an assessment. One country at a time. And we've done now 96 assessments of their readiness to actually do the vaccines. The World Bank has been heavily involved in vaccination programs for for many years for four decades including polio and Ebola and measles and on on down HPV and AIDS therapeutics. And so that the bank is able to help countries. Last week we announced our first operation to buy vaccines and to begin the deployment of vaccines. And we'll have many more operations coming down the line now. Well when you put up 12 billion dollars to buy vaccines for developing countries that's a grant. You're not going to get that money back. Right. That's not alone. It's actually part in part. So. So some some portion or grants. Some portion are loan. It depends. Country by country. The World Bank works very much on us on a specific relationship with each individual country. We have country directors and country managers in the various countries. And so some countries are receive primarily grants some have grants and very low interest rate loans. This is for example 40 year loans at four point seventy five percent per year. So it's a it's a very concessional funding that makes it possible for them to do good work with the money that that is coming in. So the 12 billion dollars is going to be in the form of both grants and loans and help by the poorest countries but also middle income developing countries. For example Indonesia and the Philippines. We're working with now Bangladesh soon and and so on with countries that are of varying capacity to actually deliver vaccines. And when you make a loan that's a 40 year loan at point zero five percent interest. It's almost a grant but you get paid back those loans and they actually get paid back. Yes there's been a very good track record. The World Bank Group is a triple-A rated credit and does so in the previous fiscal year. We issued ninety five billion dollars of debt and this year it'll be over over that as as part of the surge in financing. And so over the history of the World Bank there's been a very good track record in part because the World Bank and the IMF work together in a preferred creditor treatment with with the borrowing countries. So they need to pay back the World Bank in order for the World Bank to make more grants and loans to other countries. There's a big refloat therefore for form from historical loans. Loans made 30 years ago are still paying into the World Bank and we use that money to make new grants and loans. And recently I thought that some of the poorest countries in the world are unable to repay some of their outstanding corporate and sovereign debt. And you're helping that get them to be able to do that is that right. That's right. There's a there's a distinction. Individual countries make loans to two other sovereigns. So the United States and Germany and Japan and China make loans to countries in Africa. Those are called official bilateral credits. And they've become a very large burden on the country on the poorest countries. And so I've advocated that the countries be given a chance to to defer payment on those loans. And then for those countries that are most heavily indebted we need to look for a way for them to actually reduce the outstanding balance the burden of their of their debts to the two richer countries. And so that process is going on. And it also extends. You mentioned the commercial creditors. That includes banks and hedge funds for example that own their own bonds issued by these countries. The burden of the debt especially with the pandemic is too heavy for some of them to repay. And it falls on the poorest people in the world. The governments themselves often are made up of of people that have the resources have means but the people of the country. That's where the burden falls. And we're trying to lighten that burden. How have you been running the bank during cobia. Are you been. Are you at home yourself and running the bank from there. Is everybody working remotely. How's that been doing. You know it's been remarkable. I've been mostly working at home and most all of our employees are doing that. We're relatively decentralized by. By world standards. So different offices have different rules based on what's going on in their own local in the countries that they're serving. So some of the offices are open others are are in lockdown of various sorts. But it's been working pretty well fortunately. The World Bank had prepared or had most of the people able to have access to a laptop. And so people have been working from home quite effectively. In fact one of the problems that we've encountered is people are working harder because they're always online. You know you're almost 24/7 because your phone can ring. Your emails are going on. Your boss may ask for a report or a piece of data. And so one of the things we've been trying to do is get people to pace themselves during the work from home. Period. Let's talk about your own background for a moment. Where did you grow up. I was born and raised in northern Michigan a small town. And your father was in the manufacturing business. That's right. My father his father and his father were all in the East Jordan iron works itself. If you look around wherever you are in the United States if you look at some of the castings in your streets whether manhole covers or fire hydrants they're often made by the East Jordan Iron Works now called E.J. Co. So I'm proud of it. I'm proud of it because my my ancestors built it. My father worked very hard at it. And my cousins now run it in northern Michigan. And it's a it's a very important employer which I'm proud of. How did you escape from running. Get yourself first thing in the company where you're just not interested in that. You know. You know family businesses are hard to hard to keep in tact. So other other cousins were more involved. And my my family had moved to Colorado. So my my attention with elsewhere. But I did stay. I'm very interested in Ireland but also in steel. So my first job out of college was where were the steel mills. So you went to college at Colorado College and you got your MBA at University Denver. Did you know you wanted to be an economist when you were in college and graduate school. Is that what you really wanted to be. So Colorado College and University of Denver I was very grateful to have a better foundation scholarship which was which kept me in Colorado at that time. You know that was the 70s. So I graduated from college in 76. And people in those days didn't have such a focused sense of where they were going. So I was looking for work. You know just getting a job in those days was hard. By the summer after my college graduation I worked at McDonald's and was proud to get a promotion at McDonald's. And then I worked for the steel company that I mentioned to you. And so that was a way to begin doing tasks and do them better and better. At that time you know I knew that I wanted to be an international affairs so I gradually gravitated that way when I could get jobs. And ultimate you went to work in the George Bush administration also the Reagan administration's. So your goal in life was presumably to tell other people about where the economy's going now. It's your expertise is that right. I was in the Treasury Department the State Department. And so my my original approach from age 10 it was all about geography and about geopolitics and where countries are going. And then you ultimately gravitated to Wall Street. You worked on Wall Street as an economist for a while. That's right. Well for over 20 years I'm afraid from 1993 until 2016. So that was that was pure Wall Street. I did a lot of markets a lot of international markets around the world. So from China to Turkey to South Africa to all points in between. And it was very much related to where will growth occur. What will happen to interest rates. What will happen to currencies in terms of their upward and downward movements. There seems to be an understanding that the IMF which is also headquartered in watching the International Monetary Fund that the head of it would be picked more or less by Europe and that the head of the World Bank would be picked more or less by the United States president. And you were picked by President Trump. But is that going to continue forever where the U.S. gets to pick the World Bank and the IMF gets to be selected by Europe. Is that going to continue you think. I don't know what the future will bring. I'm trying to do my job well. I was proposed by President Trump but then I met with the major shareholders and was unanimously chosen by the board of the World Bank. Based on experience based on commitment to development. So I'm looking forward to that job. And I don't know how the future relationships will go. It's been very interesting to see the IMF with Kristalina Georgieva who's a good friend. She's from a small country in Europe. So that's that's a diversification. Traditionally the IMF had wanted the big European countries be the head of the IMF. So there's change going on. I welcome that. So the term of being the president the World Bank is five years and you're you were appointed in April of 2019. You took your job. So you've got a number of years to go. But there's also a tradition that the new president even if he is from a different party doesn't usually replace the president a World Bank if he's from a different party. Is that fair. It's not. It's kind of an apolitical position. Yeah that's right and that goes with the character of the World Bank itself which is non-political. And also the historical relationship between the World Bank and its various large shareholders. So I'm really looking forward to working with the Biden administration on your uncommon interests. You know everyone really wants to see development. B B well done and have a lifting effect for people all over the world. That's the goal. And I think we're having a positive impact. We're in the beginning of 20 21 ISE going to be a good year for the global economy or what are your biggest worries. I think a lot of countries are still in in substantial trouble and it is as as you know is still very omnipresent around the world. So when you're an economist you know based on your background how to project what economies do around the world. Tell us. Now we're in the beginning of 20 21 ISE going to be a good year for the global economy or what are your biggest worries. One thing that happened in 2020 was the world didn't slow as much as people had had feared. And so the forecasts for 2021 are actually being brought down because the starting point was a little higher than expected. So I'm pretty cautious on 20 21. I think a lot of countries are still in in substantial trouble. And it is as as you know is still very omnipresent around the world. So we've thought that a critical variable is to get vaccinations done for as many people as possible. That will help in the GDP outlook and the growth outlook. Reopening schools is a critical variable because both from the education standpoint also it enables people to be at their jobs working at if the schools are open. So that's a variable in the World Bank is very involved in education. Now one thing I should mention is the inequality of the current world environment. It's troubling. And I think it's it's actually getting worse which is a big challenge. So are you worried about Kovic really becoming the dominant economic issue for 20 21 as well. In other words it doesn't go away and it really hurts the economies in developing markets much more than they develop markets. Yes and there are many aspects of that. One is simply having global growth slow really hurts poor people because they're dependent on trying to catch up on doing. I'm getting advancement. Also remittances have been down. That's the money that's sent back home by by workers that are across their border outside their borders. And that's gone down a lot. So that's a that's a big blow to the to the developing world. And then new investment simply has has been much slower. One thing the World Bank has tried to do is supply. And I pushed in April of 20 20 that we wanted to be in in working capital and trade finance. This is the short end of what companies need in order to keep their private sector companies and businesses operating. And because the banking system had had really reduced its offerings in these poor countries. So we've been successful in that a big ramp up of working capital and trade finance. And I think that's helped in trying to build resilience. But I am concerned as you as you say that it could be another slow or harmful year and especially that's true of people's health nutrition. One thing we're doing to combat that is social safety net. Just getting cash to people so that they can and especially to women so that they can buy food for their family they can pay for some kind of transport to education or at least survive during the crisis. That's been one priority. Now I would imagine that you have to convince members of Congress from time to time to increase the support of the United States for the World Bank. They're members of Congress. Say whatever you want. We'll give it to you or you have to go up and really lobby for that. There's some of both. You know Congress has been pretty supportive both Republicans and Democrats of the work of the World Bank. The I mentioned the grant making and the very very concessional resources of the part of the World Bank called IDA the International Development Association. It had broad support and it gets an annual appropriation from the U.S. Congress but also from the from Great Britain from from China and other other parts from around the world. And it's strongly supported by this big coalition of countries because of the effectiveness of the work. You know part of this is who does an effective job of getting aid to the poorer countries. So the World Bank's had support in that way. So when you're the president the World Bank if you want to call the president of China or the prime minister of Britain how long does it take to get a car return. Can you just get him on the phone right away. You got to take a day or two. How long does it take to get somebody on the phone when your president. World Bank. I assume not long. Not long. You know I've been very fortunate to have good relations. I when President Trump mentioned me for the World Bank that I met with all the leaders and have maintained those relationships. So for example last week I spoke with President Ramaphosa the president of South Africa. He's the head of the African Union. And those are. Relationship squared the World Bank is very actively engaged in what the countries are are doing what they're trying to achieve. And I try to be very knowledgeable on what they're what the goals of each of the leaders is. President Macron has been heavily involved in various aspects of the global agenda of Prime Minister Johnson of the UK. Same thing very engaged. Canada of course. Prime Minister Trudeau very engaged. And so I. I've benefited from relationships with him through the G7 through the G 20. And that extends to China and India and so on. So how do you as the head of a World Bank keep his ego in check. Because when you go overseas and to some of these poor countries you're a god. They are because you can make a big decision about how much money they get. I assume I can go to your head a bit. And then when you come back to Washington D.C. you might go to a restaurant. People might not even know who you are because well Bankstown is visible here. So how do you deal with that contrast. That's exactly right. I was amazed when I did my first trip at the at the amount of attention that the World Bank president got and the actually the support and the welcome the very warm welcome. I went first to Madagascar and to Mozambique to Ethiopia. And it was a very warm welcome wherever wherever I landed. But you know I keep my eye on that job. I worked for Secretary Baker as a as I mentioned in the Reagan and and then in the Bush 41 administration. And he was very hard working. And the goal as a public servant is to look at that problem try to find solutions and then try to figure out how to actually enact those solutions. So I'm used to that as a as a real goal and I'm not that much into the into the trappings of the office. David I want to thank you very much for an interesting conversation about the World Bank. And thank you for your service to the World Bank and to our country and effect by serving as the president World Bank. Thank you David. Nice to be with you.

No schedule data available.

The David Rubenstein Show: David Malpass

World Bank President David Malpass says inequality is getting worse. He talks about how his organization is helping the poorest countries through the pandemic on the latest episode of "The David Rubenstein Show: Peer-to-Peer Conversations." The interview was recorded Jan. 25, 2021. (Source: Bloomberg)

More From TV Shows
All episodes and clips

Bloomberg Technology
The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Hosted by Emily Chang.
More episodes and clips