1. RESPONSIBLE MANAGEMENT: TO GET COUNTRIES MORE RESILIENT TO SHOCKS ?
Matthew Martin
Development Finance International 
World Bank DMF Stakeholder Forum
Brussels, 28 May 2018

2. BACKGROUND AND KEY QUESTIONS
DFI has worked for 25 years with 60+ middle- and low-income countries building capacity to manage all types of development finance responsibly, and still doing so in DMF, and for OIF, UNDP, UNICEF
Multiple analyses of shocks, what causes them and what to do about them; + honoured to help smallest and poorest countries get their voices across on this issue in global negotiations on debt, aid, private flows, tax
Based on this, five Key Questions
Are they really shocks ?
Responsible management by whom ?
What are we managing responsibly ?
What does resilience really mean ?
What needs to be done ?

3. ARE THEY REALLY SHOCKS ?
Around 80-90% of shocks are not shocks at all, and the proportion of real shocks is falling all the time – or should be if we are learning any lessons from previous ones, and from better forecasts of the impact of climate change
All markets are cyclical: projecting constant upward trends in commodity prices or growth is unrealistic
Increasing numbers of shocks are climate-related and therefore more and more predictable (hurricanes, cyclones, desertification, droughts)
Even domestic shocks (eg election overspends, descent to war) are foreseeable/foreseen (Ghana) but just not planned for or prevented

4. MALAWI CLIMATE “SHOCKS”

5. RESPONSIBLE MANAGEMENT BY WHO ?
If we know that many or most « shocks » could be predicted, whose job is it to be responsible ?
Next door they are talking about private creditors – of course they share responsibility - GDP bonds etc
But what about the international community: = this is why the IMF was set up, used to be clear main function, and some return to it with DSF shocks, debt moratoria by BWIs etc; one main function of dwindling budget support, appropriate we are in EU capital as one of the last donors clinging to it - and also one of the first institutions to build shocks genuinely into its aid (STABEX).
And we are the « shockers »:  climate polluters, commodity traders, financial crisis causers….

6. WHAT TO MANAGE RESPONSIBLY ?
The Climate and the Environment
Global and regional financial Reserves to protect us all
Poverty, Inequality and Access to Basic Services
Human Capital and Migration
Agriculture, Food and Water
Our Own Money = lending unplanned into a shock environment
The Lending of others - regulation not self-regulation – bond markets, PPPs – not promoting highly volatile, expensive and risky financial flows
Otherwise - Déjà vu all over again

7. WHAT DOES RESILIENCE MEAN ?
The new buzzword = everything needs to be resilient
Implies that we need to accept « shocks » will always be with us and like poverty, get over it ?
Much better to manage so that the 90% of shocks do not occur (genuine resilience) and when they do automatic immediate protection is in place
Resilience for whom - global poor were « resilient » after the financial crisis – they ran down huge parts of their reserves and left themselves with no further buffers. The Queen does not need to be « resilient » as she has endless reserves/wealth to draw on. Focus our efforts on the poor and provide them with lifelong universal social protection.

8. WHAT NEEDS TO BE DONE (1)
Plan and forecast around country-specific and global shocks drawing on history and allowing for all negative (and some positive?) developments
Regulate global markets to make sure the worst examples of shocks cannot occur – the prospect of global pooled risk for Sovereign Wealth Funds investing in high risk countries (currently being worked on by the G20) sounds like an invitation for a subprime bonds style financial crisis cubed !
Provide enough finance for the SDGs to more vulnerable countries (eg SIDS, LLDCs) on grant and concessional terms regardless of their income level, and more to LIDCs and fragile states, so that we dont dramatically worsen an existing debt crisis

9. WHAT NEEDS TO BE DONE (2)
Make large scale low-conditional or unconditional immediate cash transfers across countries – poor countries like poor people often know best what to do ! (especially if governments are accountable)
Have backups in place for individual shocks (climate damage funds, debt relief, insurance) – but none of them will stop shocks or bring resilience
In other words, get the global system to do what it was supposed after World War II – we learned what to do after two world wars and millions of deaths – dont let’s wait for an even bigger financial crash this time ?