Nearly 1.2 billion young people will reach working age in the world’s poorest countries in the next decade, who will react badly if their expectations of a better future are not met, top World Bank official, Paschal Donohoe has warned.
“This is the largest, it’s the best-educated generation of young people the world is ever likely to see,” the former minister for finance said as he delivered the annual Cambridge lecture in honour of Brian Lenihan, the late Irish finance minister.
“These are young people who have grown up connected, who have seen how others live, and their expectations are correspondingly high,” said Donohoe, who is managing director and chief knowledge officer of the Washington-based World Bank.
“Whether those expectations are met with opportunity and prosperity, or frustration instead will shape stability and politics within their countries. That is the challenge,” he said.
RM Block
However, many such countries with burgeoning young populations face growing national debt pressures, with nearly 165 million young people living in countries now spending more than 50 per cent of their revenue servicing such debt.
Every country is facing challenges, but those facing poorer countries are even more stark because their difficulties have “been compounded by rising debt”, with half of them now experiencing debt distress, or at risk of doing so.
High debt levels, combined now with more costly financing, have pushed the cost of servicing that debt alone from an average of around 3 per cent of gross domestic product in 2012 to more than 7 per cent in 2024.
Such debt bills are “are now absorbing an increasing share of scarce public resources, affecting governments’ ability to invest in health and education and skills and infrastructure, the very investments that matter so much to the futures of societies”.
Change and challenges are now thrown at governments at unprecedented pace, said Donohoe, now in post for nearly a year: “At the height of the financial crisis, choices had to be made swiftly.
“They had to be made under extraordinary pressure with incomplete information and with consequences that would be felt for many years. But for many countries today, those conditions are no longer exceptional.
“Governments have been hit with one shock after another. In less than two decades, countries have confronted a global financial crisis, a pandemic that brought the world economy to a standstill, wars in Europe, the Middle East, North Africa, supply chain disruptions of a historic level, and the highest inflation that many have experienced within a generation,” he said.
The central challenge of our time facing governments is how institutions can keep acting, keep adapting, and keep delivering while this pressure and level of challenge is present.
“This is not only because crises keep recurring, but also that the intervals between them are now getting shorter,” said Donohoe.
Resilience today can no longer just mean protection alone: “It is more than buffers. It’s more than safeguards or an emergency response. It has to mean something that is more demanding.”
Instead, states must have the ability to look forward while under sustained pressures today, to pursue reforms, anticipate technological change and make investments that could take decades to bear fruit.
Resilience is “no longer simply the capacity to withstand disruption. It’s the capacity to adapt, to reform while the disruption continues”, said the former Fine Gael deputy.
Trust in national governments is now an even more valuable political currency than ever before, he said: “Stamina depends on trust. Institutions that are trusted can move faster.
“They can support consent at those difficult moments, and they can maintain support for decisions in that space. But that trust cannot be claimed. It has to be earned through making a visible connection with people as they experience change,” he added.
