Multilateral Agencies
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The World Bank and the International Monetary Fund (IMF) |
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2007 Annual Meetings of the International Monetary Fund & World Bank UK
Objectives note
This year’s Annual Meetings come at an important time for the Bank. President
Zoellick has just set out his ideas for the Bank’s strategic direction and the
negotiations on the fifteenth replenishment of the International Development
Association (IDA 15) are entering their final stages. The Annual Meetings will
provide an opportunity to discuss both these and other topics including how the
Bank can best contribute to international efforts to tackle the urgent challenge
of climate change.
Strategic direction of the World Bank Group
The Bank is one of the most effective international development actors, and
plays a central role in efforts to assist the poorest countries to achieve the
MDGs. But it has been some time since there was a comprehensive look at the
World Bank Group’s strategy. We therefore appreciate the President setting out
early in his tenure the challenges he sees for the Bank and possible responses
to promote inclusive and sustainable globalisation. This together with the Chief
Economist’s work on the Bank Group’s Long-Term Strategy, provides a solid basis
to work up a clear medium-term strategy for the Bank Group.
We will seek agreement to define a process for taking this work forward and
delivering a strategy. The process should set out priorities for the Bank under
the major themes proposed by the President. It should then define what the
implications are for the Bank Group in terms of its operations, finances,
management and organisational structure.
We will seek to gain support for the development of clear approaches in the
areas highlighted by the President and the Chief Economist’s report, including
how best to help the poorest countries (especially in Africa), better addressing
the challenges facing post-conflict countries, increasing support to the Global
Public Goods agenda particularly climate change, a differentiated business model
for Middle Income Countries and strengthening the sharing of knowledge and
learning.
Each of the areas poses its own challenges. So we will seek further
discussion on them including, what more the Bank can do to encourage sustainable
economic growth, how can it work better with the private sector to boost
activity and investment in the poorest countries, how the Bank can adapt its
engagement in fragile states, how the Bank can better support less creditworthy
countries, what the Bank can do to engage better with emerging private and
official donors, how the Bank can use opportunities afforded by its large
capital reserves and how the different parts of the Bank Group can work more
effectively together as whole.
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Scaling up and the role of IDA
IDA is a key vehicle for helping countries to achieve the Millennium
Development Goals (MDGs). The Bank should continue to make Africa a priority for
its financial and non-financial support. We expect that Africa will receive at
least 50% of commitments under IDA 15.
We will call on the Bank to continue to adapt to the changing international
aid architecture to ensure that IDA funds are well spent. We will call on the
Bank to improve its collaboration with donors, especially emerging donors, and
multilaterals, both at a country and headquarters level. This will include
greater and more systematic use of Results and Resources Processes (RRPs) and
looking at ways of accelerating statistics capacity building in developing
countries. As well as supporting transparency and accountability in poor
countries, improved statistics capacity is crucial for maintaining and
strengthening public support for development.
Country Level Effectiveness
The Bank has shown a strong commitment to improving its performance and
impact on poverty reduction. There are however a number of areas where the Bank
needs to do more. The most important issue is the need to base more Bank staff
in country. This is especially true in Africa and in both good performers and
fragile states. Staff based in-country better understand the context and
political economy of the work that the Bank supports. They are also better
placed to join the policy dialogue with government and other donors, support
country ownership and harmonise with other donors. Decentralisation needs to be
coupled with increased decision-making authority at the country level. We will
call for both.
The Bank signed the Paris Declaration on Aid Effectiveness in 2005. One of
the areas of the Paris Declaration where the Bank has performed less well to
date is on using country systems and avoiding the use of parallel project
implementation units. We will press the Bank to identify remedial actions.
To ensure more effective country-level working we will call on the Bank to
consistently apply the 2005 Good Practice Principles on Conditionality and make
progress on the areas highlighted in the 2006 progress report, including early
disclosure of its analytical work. Bank analysis is often high quality, but late
dissemination can sometimes hinder its impact. We will also encourage an
increased use of Poverty and Social Impact Analysis.
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Climate change and the Clean Energy for Development Investment Framework
Climate change is the greatest threat to development that we face today. It
threatens to undermine the progress we have made on poverty reduction and will
impact most those who are least responsible and least able to cope. The cost of
inaction far outweighs the cost of taking appropriate and timely action.
We will strongly encourage the Bank to scale-up its work on climate change.
This will involve setting out a new climate strange strategy to help mainstream
into all of its operations and policies climate change mitigation, energy access
for the poor, and adaptation. In addition to mainstreaming, the Bank should use
its knowledge and skills to develop innovative financing instruments to fund
climate change mitigation, access and adaptation to support the Clean Energy
Investment Framework (CEIF). The UK stands ready to provide financial support
for new Bank initiatives in this field and to help seek broader support among
donors and recipients.
We will seek agreement that the World Bank will put in place a mechanism to
work more effectively with the other multilateral development banks (MDBs) on
the CEIF. We will press the Bank, as well as the other MDBs, to agree a global
level of ambition for the CEIF which means setting out what level of resources
could be generated by the MDBs and leveraged from the private sector and
independent organisations. The Bank and its partners need to agree on what the
collective effort will be, and publicly commit to it. To ensure that this level
of ambition is credible, the Bank also needs to agree a set of smart targets
across the three CEIF pillars.
Global public goods – a framework for the role of the World Bank
The importance of the global public goods agenda for poverty reduction is
clear. A framework for the Bank’s engagement in global public goods is therefore
to be welcomed and should form an integral part of the Bank Group’s long-term
strategy.
We will call on the Bank to help countries integrate national development
priorities with regional and global priorities, including climate change,
tackling communicable diseases, supporting trade and the sharing of knowledge.
The Bank must demonstrate global leadership in addressing the global public
goods agenda, but must also be sensitive to the needs and views of developing
countries and work towards an inclusive and sustainable vision of globalisation
based on a country-led approach.
We will urge the Bank to work with all of its partners, using its knowledge
and expertise to develop new and innovative policy solutions, and financial
mechanisms that will generate new resources to support global public goods
provision.
Middle-income countries (MICs)
MICs are home to more than 70% of the world’s poor living on less than $2 per
day. The engagement of the Bank in MICs is therefore crucial for the fulfilment
of its mandate of poverty eradication, and we will continue to press for full
and proper implementation of the MIC strategy.
We will call on the Bank to ensure that the products that it offers to MICs
are of the highest quality and tailored to the particular needs and development
agendas of these countries. We will encourage the Bank to work more closely with
the Regional Development Banks.
We will seek further progress on reducing the non-financial cost of working
with the Bank by making greater use of country systems and streamlining
procedures and costs. We will call for concrete proposals and a results
framework to further embed this agenda in the business model of the Bank.
We will press for further progress in developing a menu of approaches and
principles for blending finances. Proposals include exploring lending against
expected carbon revenues, and further developing contingent instruments to
mitigate financial vulnerabilities such as those arising from catastrophic and
climatic risks.
Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt
Relief Initiative (MDRI): Status of implementation report
The HIPC initiative and MDRI have provided substantial benefits to the
world’s poorest countries, delivering debt relief of over $100 billion and
freeing up resources for increased investments in health, education and
infrastructure. The Debt Sustainability Framework provides the basis for
countries to continue investing to achieve the MDGs without running into
problems of debt distress. Continued close engagement by the Bank and Fund both
with countries and creditors is needed.
We will continue to support full, prompt and fair implementation of the HIPC
and MDRI initiatives; this will include advocating measures to publicise the
debt relief granted by each bilateral creditor with a view to increasing
participation of all creditors in the initiative, supporting on-going work to
develop a systematic framework for arrears clearance at the World Bank, and
working to tackle so-called vulture fund activity by encouraging the Bank to
consider making the Debt Reduction Facility available earlier in the HIPC
process.
Countries themselves have the primary responsibility for ensuring their
long-term debt sustainability. We will press for the Bank and Fund to play a
more effective role in supplying technical assistance to improve debt management
capacities, and particularly in supporting each country to develop its own
medium-term financing strategy.
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Aid-for-trade: Harnessing globalisation for economic development
The importance of trade in the fight against poverty cannot be overstated.
That is why a successful completion of the Doha round is so important. A Doha
deal could deliver billions of dollars of gains to the global economy and lift
millions out of poverty. In the margins of the Annual Meetings we will meet with
key stakeholders to share analysis, but also to ask them to show flexibility in
the negotiations and to do their utmost to reach a deal that is good for
developing countries.
Aid for trade is an important complement to any trade deal. Poor countries
need more help to improve their competitiveness in the globalised economy. This
could be to build their infrastructure, diversify their economies, deepen
regional integration, and simplify red tape so that they can get tradable goods
across national borders into the right markets at the right time and the right
price. The Bank has a critical role to play, be it through technical assistance,
analytical work or lending, in supporting countries and regions and enabling
them to take advantage of the opportunities provided by globalisation. We will
encourage the Bank to support poor countries to include trade, competitiveness
and growth related priorities in their national development plans and PRSPs We
will also encourage the Bank to strengthen its role in the provision of trade
related assistance through enhanced regional programming and increased
collaboration and alignment with other major donors including the EU and the
regional development banks.
Voice and participation of developing and transition countries in decision
making at the World Bank and IMF
We strongly support the calls of developing and transition countries to
increase their voice and participation at the Bank and Fund. Progress in the
Board on this area is vital for the credibility, accountability and legitimacy
of the two institutions. We will encourage other shareholders to press for
building early consensus on an overall package of reforms to promote the ‘voice’
agenda. We will seek support for the two phase approach and call for a realistic
schedule going forward which maintains momentum whilst showing results and
allowing time to build consensus.
Gender
We will continue to press for the Bank to take stronger leadership on women's
economic empowerment, and to integrate gender equality across Bank strategy,
programmes, lending and staff training - with an associated increase in funding.
We will call for effective implementation of the Bank's Gender Action Plan,
'Gender Equality as Smart Economics' (2007-2010), and for it to be strongly
reflected in the Bank's portfolio.
International Health Partnership (IHP)
The IHP was launched in September in London and is part of a renewed global
push to make progress towards the health MDGs. We will seek to gain commitment
from Finance Ministers in the first wave countries to implement the IHP. We will
also continue to encourage the World Bank in its efforts to implement IHP
through regional and country programmes and stress that we are looking for
evidence of real change in behaviour and accountability for results.
Bank-Fund Collaboration – Joint Management Action Plan - Follow-up to
External Review Committee (Malan Report)
We welcome the concrete steps to improve cooperation between the Bank and
Fund set out in the Joint Management Action Plan. The two institutions, in their
respective mandates, must work well and complement each others’ comparative
advantages.
We strongly welcome the country based approach and emphasise that better
collaboration in country is key. We believe that substantive changes to staff
incentives and sustained high level commitment are required for effective
change. We look forward to further reports on progress.
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