Pangestu stressed during an exclusive interview with Al-Ahram the necessity of diversifying sources to meet needs as well as setting priorities, reducing public spending and increasing social protection programs.
She added that setting paths for countries to get out of the current crises while continuing to monitor developments is what the World Bank is trying to do in this period to help countries overcome the current situation, and integration between development requirements and the environment is no longer an option for countries, but a vital necessity that must be adhered to.
Pangestu also warned that the escalation of the climate crisis is threatening the planet, stressing to Al-Ahram that the world is now witnessing three successive crises that need to be confronted in light of the slowdown in global growth.
Sarah El-Issawi: What are the most important cooperation programs with Egypt?
Mari Pangestu: There are several projects being implemented with Egypt, including the Upper Egypt development project, the Cairo air quality improvement project, and a number of other projects, in addition to discussing the strategic framework for the partnership between Egypt and the World Bank during the next five years, which will include more attention to development projects and the environment.
A number of programs will be financed in this framework to support the green economy and renewable energy, in addition to the completion of country climate and development report (CCDR) prepared by the World Bank in a number of countries, including Egypt, which aims to assess the risks to development due to the climate and identify the necessary measures to mitigate this impact, which will have a role in supporting the strategy.
We are also working with the Egyptian government on new programs, including the Development Policies Financing Program, which aims to achieve economic recovery after the COVID-19 pandemic and enhance prospects for sustainable and comprehensive growth in Egypt.
SE: How can the World Bank cooperate with Egypt in hosting the COP27 climate conference?
MP: We discussed with the officials in Egypt the possibility of helping to organise the (COP27) climate conference, which Egypt hosts as a representative of the developing countries as well as the African continent. The conference will present successful models for environmental adaptation, integrating development and environment policies, and expanding sustainable projects. The World Bank is ready to provide technical support, provide Egypt with the necessary information and provide all aspects of support.
SE: How can integration be achieved between environment and development issues?
MP: Integration between environment and development issues is no longer an option for countries, but has become a necessity and priority in light of the escalation of the climate crisis and its effects on the planet. Government and official policies must work to achieve the two goals together, which is not easy and we know that, but work must be done to reach it and to be translated through the framework of the partnership between Egypt and the World Bank, and this requires defining Egypt’s priorities because there are funding pressures due to the financial problems that the budget suffers from.
Therefore, it is important that priority areas be identified. In the case of Egypt and African countries, I think that building a sustainable system for food, cities and water is an important matter that requires that it is translated through new policies, structural changes and in several sectors, as well as targetting a specific type of investment that serves this goal, in addition to providing financing, whether through the state budget, development partners or the private sector.
SE: At this critical time the world is witnessing, what are the most important challenges facing developing countries, including Egypt, and how can they be faced?
MP: The world is now going through several crises, first there was the climate crisis, then the COVID-19 crisis, followed by the Ukrainian war, and the three crises are still continuing. These crises are dominant and they led to the slowdown in global growth. Despite the recovery witnessed in 2021 with the start of recovery from the pandemic, it is expected, according to World Bank estimates, that the year 2022 will witness a sharp slowdown due to the continuation of the pandemic, in addition to reducing financial support measures and continuing bottlenecks of supply chains for basic commodities and products due to increasing demand.
The expected continuation of rising inflation rates due to the rise in commodity prices and the Russian-Ukrainian war came to complicate the situation.
Among these expectations is the extent of the continuation of the Russian-Ukrainian war, as well as the extent of the damage it will cause.
SE: How can countries face the challenge of rising food prices?
MP: The current crises are characterised by uncertainty, but there is no time to feel panic, which requires special dealings by governments with communication, transparency and calm.
There are several steps that can be taken in terms of rising food prices. We must know that global stocks of rice, wheat and corn are still high, and wheat stocks remain, which is the most affected commodity. The Russian-Ukrainian war is much higher than its levels during the food crisis that swept the world in 2008, and managing this crisis depends on concerted policies at the national and international level to create a more resilient food system, protect people from shocks, and ensure the free movement of goods and trade.
It is necessary to support social protection networks and the provision of food to the neediest groups, in addition to providing support to farmers.
Although global food stocks are still sufficient, we need to protect the next season’s crop by providing production requirements and fertilisers, in addition to directing more spending on research, development and innovation for the production of vital fertilisers, as well as dealing with water scarcity and all climate-related issues that affect the agricultural process with a detriment. We need the vision of adopting green development systems that are comprehensive for all.
SE: What about the energy crisis?
MP: Securing energy sources has become an important matter and requires a strategy to diversify energy sources. At this time, the importance of expanding renewable energy and clean energy projects is increasing, which can play an important role in securing energy for the country. It can be exploited, and the World Bank confirmed in a recent report important and good news regarding the production of renewable energy stating that the cost of producing renewable energy has become less and its technology has become cheaper and can be saved, and, therefore, the cost of producing energy from these sources has become less.
SE: The slowdown in economic growth and inflation strongly affect developing countries, including Egypt, so how can we deal with this situation that is likely to continue?
MP: There must be a quick response through monetary policy tools, most notably the interest rate and the exchange rate, and Egypt has already taken important steps in this field, as it began targetting inflation rates and using monetary policy tools to adjust the interest rate and flexibility of the exchange rate, which are good steps.
Considering the budget and limiting government spending and prioritising spending according to the current situation, I think that one of the most important ones is education, and social solidarity networks must be supported, as well as supporting the social protection programs that were launched during the COVID-19 crisis by providing in-kind or cash support along with good public debt management.
SE: Has the Russian-Ukrainian war covered the world's interest in the COVID-19 pandemic and its variants?
MP: The Ukrainian war has taken the world’s attention at the moment from many other issues, but we must not forget the COVID-19 pandemic that is still going on, as well as the climate crisis that affects all human activities. Dealing with medical needs, supporting health systems, providing vaccinations, providing data and information, and developing systems for work from home and distance education, all of which are still important and we need to increase vaccination rates, especially in Africa.
SE: Can the current crises create a new world order?
MP: The current crises are serious and important, and they must be dealt with on the basis of cooperation and coordination between states. It is difficult to return to the principles of self-sufficiency and dependence on the capabilities of the state only because this is a very costly and impractical matter and it is difficult to achieve even if the state tries to achieve it because it affects the quality and efficiency of goods and services available to its citizens.
More important than independence and self-reliance is to ensure the diversity of sources of food, energy and goods and not to rely on one source, which exposes the country to danger in the event of a crisis.
Countries must also work to control inflation rates and high prices in local markets and stabilisation of macroeconomic indicators, in addition to reducing spending and focusing on priorities and searching for new sources of growth, and in the case of Egypt, for example, it is possible to search for alternatives to increase income from tourism, which was greatly affected by the COVID-19 crisis and then the Russian-Ukrainian war.
These alternatives may be tourism - internal or other sources of foreign tourism - as well as diversifying the sources of energy and securing the supply of goods.
The focus of Egyptian products and interest in innovation, technology and digital transformation: this is an important field in which Egypt can be distinguished, as it was distinguished before in the field of call centres. Egypt can excel in the field of program design, data entry and processing, in addition to focusing on investing in education.