Press Notice
12 April 2005
UK objectives for the 2005 spring meetings of the World Bank and the IMF
The Spring Meetings of the IMF and World Bank are taking place on 16-17 April in Washington. The meetings will comprise the International Monetary and Financial Committee (IMFC) and the Development Committee (DC).
UK Objectives for the International Monetary and Financial Committee (IMFC)
The IMFC will discuss the World Economy and Financial Markets, including the outlook, risks, and policy responses; IMF support for low-income members’ efforts towards poverty reduction and strong sustainable growth; and shaping the IMF’s strategic direction.
World Economy
The IMFC will discuss the outlook for the world economy and financial markets, focusing on potential risks and vulnerabilities and the appropriate policy responses to these. The UK will continue to emphasise that all countries share responsibility for the management of the global economy. Countries from all continents should seek to address both the existing global imbalances and the longer-term challenges brought about by globalisation. We will encourage a balanced assessment of the prospects for the world economy, with a full acknowledgement of the associated risks. The UK will also promote further discussion on the need for structural reform in order to support a more stable pattern of world growth.
Strategic Review
The UK will seek to ensure that the Fund’s Strategic Review takes forward key priorities including enhancing the credibility of surveillance through greater independence, ensuring the Fund is equipped to continue to support its low-income members, and the need for continued improvements in the management framework of the IMF. The IMF’s review should reflect the priorities of all IMF members and so we hope members will identify their key priorities in the review. We will also seek to identify those proposals on which sufficient consensus exists for the Fund to produce concrete proposals in time for the Annual Meetings.
Low-income countries
The UK expects discussions at the IMFC to further confirm the Fund’s role in low-income countries, and will seek to build on the broad agreement reached by IMF members on this issue earlier in 2005. In addition to this, we look forward to the Managing Director’s innovative proposals on the use of the Fund’s gold holdings and other resources to provide the Fund’s share of 100 per cent multi-lateral relief for low-income countries’ debts, in the context of similar relief of debts to IDA and the African Development Fund. We will seek to build on the G7 agreement to the principle of up to 100 per cent multilateral debt relief, and to emphasise the importance of providing additional resources for IDA and African Development Fund debt relief.
The UK welcomes the profile given to our proposal for an International Finance Facility (IFF) and IFF for Immunisation (IFFIm) in the World Bank and IMF paper “Moving Forward: Financing Modalities Toward the MDGs”. We will seek to reinforce and deepen international support for the IFF and IFFIm ahead of a 2005 launch, and to secure an acceptable way forward on other innovative financing proposals such as international taxation.
UK Objectives for the Development Committee (DC)
The Development Committee agenda will focus on a discussion of the Global Monitoring Report: From Consensus to Momentum (GMR). In addition, papers have been received on Financing the Development Agenda, and Voice and Participation of Developing Countries, for comment in Ministerial statements. The Secretary of State for International Development and the Chancellor will submit a joint written statement to the Development Committee setting out UK views for the discussion.
Global Monitoring Report: From Consensus to Momentum
The Global Monitoring Report prepared by the Bank provides a useful overview of the challenges to be overcome if the world is to achieve the Millennium Development Goals (MDGs). We welcome the central message of the Report that more aid is required, and the inclusion of evidence that a substantial increase in aid can be spent effectively. We also support the focus on Africa, and will be calling on the Bank to develop a specific action plan to demonstrate how it will respond to the continent’s needs over the next few years.
Increasing aid flows
There is wide recognition of the urgent need to substantially increase aid flows if we are to accelerate progress towards the MDGs. The UK Government supports the main recommendations of the UN Millennium Project report, and will be seeking agreement from donors this year to provide now the extra funds needed urgently to meet the MDGs by 2015, and in particular an immediate doubling of aid to Africa as recommended by the Commission for Africa report published in March. We will also be seeking agreement from other donors that the Millennium Project report’s call for additional aid is delivered in ways that respects developing countries’ own priorities, plans and systems, and particularly Poverty Reduction Strategies (PRSs).
We welcome the paper and the profile given to the UK’s proposal for an International Finance Facility (IFF) and IFF for Immunisation (IFFIm) as the most advanced solution to provide immediately the resources to meet the shortfall in funding to meet the MDGs. We will be seeking from other donors a firm commitment to launch the IFF and the IFFIm in 2005, and also to take forward work on other innovative financing options. In parallel, we will be pressing all developed country members of the Development Committee to agree firm timetables for allocating 0.7% of their GDP for development assistance. We will also be calling on the World Bank to start preparing its own role in managing these increased flows.
Debt relief is another vital source of development assistance, and we will be calling on the Development Committee to ensure that the Heavily Indebted Poor Countries (HIPC) Initiative is fully financed and implemented in the most generous way, so as to benefit as many countries as possible. However, this alone is not enough. The UK has announced that we will provide our share of 100% debt relief on International Development Association (IDA) and African Development Fund loans for all low-income countries with sound systems of public expenditure management. The UK will continue to call for a revaluation or off-market sale of further IMF gold to fund the IMF’s share of further multilateral debt relief. We now expect others to join us in doing more, and will be seeking a firm commitment to this effect at the Spring Meetings.
Aid effectiveness
It is recognised that country-led development frameworks such as PRSs provide key vehicles through which donors can coordinate their efforts and support progress towards MDGs at the country-level. In order to make these frameworks more effective, it is essential for PRSs to be firmly embedded in government systems, and responsive to different country contexts. Donors must then ensure that their programmes are aligned with these strategies, and be prepared to provide predictable financial support. Finally, these poverty reduction strategies should be used to strengthen mutual accountability between donors and national governments.
The UK will use the Spring Meetings to press Bank to strengthen the alignment of its country programmes with poverty reduction strategies, and to adopt a mechanism to monitor progress in this area. We will also call on the Bank and other donors to demonstrate how the commitments they made at the High Level Forum on Aid Effectiveness in March will be integrated into their operations and programmes, and how they will support monitoring of the Paris Indicators. We will also be calling on bilateral donors to link their financial commitments to national budget cycles.
Delivery of health and education services
We support the view in the Global Monitoring Report, as well as the Millennium Project and Commission for Africa Reports, that greater attention needs to be given to building health and education systems in order to meet MDGs in health, education and AIDS, particularly in Africa. We will encourage the World Bank to maintain engagement in the High Level Forum on health, particularly regarding the health worker crisis in Africa. We welcome the emphasis in the GMR on providing flexible, predictable finance through national systems (preferably as budget support), so that countries can make long-term decisions about how to strengthen their health and education systems and implement sector policies. We will therefore be pressing the Bank to contribute to making sure that the overall financing in these sectors is predictable in the medium term.
We will also call on the World Bank to support the position in the Millennium Project and Commission for Africa Reports that removal of school fees can have an important impact on improving education outcomes and that user fees are also not the right way to finance basic health care. We would like the World Bank to support all countries that wish to remove user fees by helping them identify ways to replace lost revenue and by committing long term, predictable finance.
Infrastructure
We welcome the recognition in the GMR that progress towards the MDGs will require a strengthening of infrastructure in developing countries. This is particularly relevant in Africa, and the UK will be pressing other donors to support the recommendation in the report of the Commission for Africa that developed countries should provide significant extra resources for infrastructure in Africa. These resources are needed to support African regional, national, urban, and rural infrastructure priorities, to encourage greater integration of Africa’s regions, and to enable Africa to break into world markets.
With this in view, the UK believes that all the major donors and Multilateral Development Banks (MDB) involved in funding infrastructure in Africa should work together under African leadership to share information on needs, programmes, and current financing, and develop mechanisms for filling gaps in funding. We will be calling on all Development Committee members to join us in taking this forward.
Conditionality
In March the UK published a new policy on conditionality. It called for a new approach between donors and developing countries based on a shared commitment to poverty reduction and achieving the MDGs, strengthening financial management and accountability, and respect for human rights. In this new approach, the UK established that agreed benchmarks for measuring progress on the reduction of poverty will be the basis for the UK and partner government to be accountable to their citizens. The benchmarks will focus on the impact of the government’s overall programme, rather than specific policy choices. The World Bank and IMF are both undertaking reviews of their approach to conditionality this year. In the context of these reviews, the UK will work to ensure that these institutions only support programmes which are agreed rather than imposed, and where benchmarks to assess progress are focussed on the impact of a country’s overall policy programme rather than any particular policy decision.
Trade
Increased trade is vital to increased growth. Governments must drive this process and be allowed to develop their own trade policies. The UK’s priority this year is to ensure that the World Trade Organisation Ministerial in Hong Kong in December agrees measures that will benefit the poorest countries. We will stress the urgency of developed countries achieving progress in market access, cuts in agricultural subsidies and simplification of rules of origin, so that developing countries can buy the inputs they need from the most competitive sources. We will also be working with others to support developing countries improve their own capacity to trade, including by improving infrastructure, simplifying tariff and customs systems and improving regional economic integration, and provide support to help the most vulnerable countries and their most vulnerable people adapt and reap the benefits of more open global markets.
Climate Change
Climate change is the world’s greatest environmental challenge. The destruction caused by recent extreme weather events demonstrates our potential vulnerability. The adverse effects of climate change present significant risks to the sustainable growth and development of many developing countries and threaten the full achievement of the MDGs.
Access to energy services is critical for poverty elimination in low and middle-income countries. A key challenge is to improve their access to affordable and efficient energy technologies. The UK believes that increasing developing country uptake of lower carbon energy technologies can contribute to both development and climate change objectives. We welcome the World Bank commitments to energy efficiency and renewable energy, but believe it could do more. We will press the Bank to make greater efforts to facilitate the uptake of lower carbon energy technologies in providing reliable and affordable energy to the poor.
New infrastructure in developing countries must be designed to cope with current climate variability and anticipated climate change over the life of the investment. One option is the development of a climate-risk screening tool, to help ensure Bank investments mitigate/reduce recipients' future vulnerability to weather events. We intend to work with the Bank and members of the G8 to make climate change a priority in 2005.
Financing the Development Agenda
We welcome the World Bank and IMF paper “Moving Forward: Financing Modalities Toward the MDGs”, and its acknowledgement that at least a doubling of ODA will be needed within the next five years to support adequate progress toward the MDGs. We are pleased with the profile this paper gives to the UK’s proposal for an IFF and IFFIm as the most advanced solution to meet the funding gap. The UK will be seeking to build on this analysis to reinforce international consensus on the need to double ODA resources. In particular, the UK aims to reinforce and deepen international support for the IFF and IFFIm ahead of a 2005 launch. The Bank/Fund paper sets out that the IFF and IFFIm “can respond to immediate needs and also provide assurance of funding predictability over a sustained period.” We also aim to secure an acceptable way forward on other innovative financing proposals such as international taxation.
Enhancing the Voice and Participation of Developing Countries in the International Financial Institutions
We remain convinced that enhancing the Voice and Participation of Developing Countries is crucial to the effectiveness of the International Financial Institutions (IFIs). We commend the Bank for the work that it has done in improving the voice of developing countries at the country level, but we feel that there is still more to be done at the structural level. We welcome the recent efforts of the UN Secretary-General to bring about positive change in the structure of the UN Security Council. We look forward to proposals from developing countries on how to improve their voice in the IFIs. There is a growing need to make progress on this issue, so whilst recognising that there are considerable differences between the views of different shareholders, we should work to build a consensus behind deliverable proposals.
