Finance Chiefs Agree More Aid Needed, Haggle Over Numbers

International Monetary Fund and World Bank meetings closed on Sunday with a broad sense that more aid is needed to help poor nations, but with donors still haggling over numbers and the best approach, reports Reuters.

The two-day meetings - a rare opportunity for world financial leaders to meet in one place - concluded with no firm agreements on canceling debts of poor countries or on how to increase aid to them. World Bank President James Wolfensohn said, however, there was broader recognition than before that more aid and debt relief are essential. "My sense of it is that actually things did move at this meeting, but that it's (above) the pay grade of finance minister to deal with it," Wolfensohn said on the sidelines of the meetings, which are his last as World Bank president, before he steps down at the end of May.

But Wolfensohn urged that donor countries must act now to increase the amount and quality of development financing if they were serious about global goals to halve poverty by 2015. Wolfensohn, a concert cellist, likened the current debate to an opera overture. "You have a lot of the themes coming out of in the overture, but the arias are going to be sung by the stars who are the leaders of the countries, and they'll have two acts to do that in," he said. "One is at Gleneagles and the other one is in the UN Millennium Assembly."

Frankfurter Rundschau (Germany) notes Wolfensohn proposed a five-point action plan to reach the Millennium Development Goals. First, developing countries have to increasingly develop and implement their own anti-poverty strategies. The countries also have to create a better investment climate. Third, poor countries need to expand – with the support of donor nations – the provision of social services, including education and healthcare. Fourth, Wolfensohn said it was crucial to continue with the liberalization of global trade, though that necessitated additional support and the provision of advice to poor countries. Finally, the volume and efficiency of development aid must be increased. Wolfensohn said the World Bank was currently reviewing the conditionality of its own aid programs. In the future, the Bank would only set the framework for the medium-term, which recipient countries would then complement with their own reform concepts.

Reuters further reports that Britain's finance minister Gordon Brown broke off from election campaigning at home to press international colleagues to back his gold sales plan for debt relief and an international financial facility (IFF) that would double aid to poor countries. But as The Financial Times reports the US has stated that it will not take part in the UK's proposal for an IFF to borrow money against future aid flows. France and Germany have said they will support an IFF pilot program only in return for UK support for an airline tax to repay the IFF.

Dow Jones also adds that the sale of the IMF’s gold reserves to fund debt relief for poorer countries has slipped off the Group of Seven's agenda. Despite Brown's past assertions that a G7 deal on gold sales is close, his plan has been frustrated by lack of support among other nations, critically including the US. The G7 went as far as to commission detailed plans from the IMF as to how its gold reserves could be used to fund debt relief. But though those plans were presented to finance ministers this weekend, they were not made public, and there was little outward sign that other leading nations are on board with the UK.

Reuters further adds German Deputy Finance Minister Caio Koch-Weser said on Sunday he saw almost no chance a plan to sell IMF gold to fund debt relief for the world's poorest nations would be adopted. French Finance Minister Thierry Breton echoed the sentiment and highlighted strong opposition to the idea from some quarters.

The Guardian (UK) meanwhile writes that Europe will launch a funding initiative to provide cheap drugs for poor countries over the next few weeks after failing to persuade the United States to join a global coalition. Gordon Brown said a pilot project to sell bonds on the financial markets and then use the proceeds to purchase vaccines would soon be "off the ground". Brown is hoping the scheme will show the worth of his IFF. He conceded for the first time, however, that implacable opposition from Washington meant the IFF might have to be a "coalition of the committed". La Repubblica (Italy) meanwhile notes that the Governor of the Bank of Italy, Antonio Fazio, has announced Italy’s support of the IFF.

Dow Jones finally reports that Japanese Finance Minister Sadakazu Tanigaki said Sunday budget constraints make it difficult for Japan to participate in the IFF. The UK-proposed facility to fund development aid "will be more costly than traditional aid financing," Tanigaki said in a statement to the joint meeting of the IMF and the World Bank. Japan is "concerned" that the creation of new institutions for this purpose will "lead to overlaps with existing organizations" and increase administrative costs, Tanigaki said.

Xinhua also notes the Joint Development Committee of the World Bank and the IMF said on Sunday that the Millennium Development Goals (MDGs) will not be realized without tangible action to accelerate efforts. The committee said that at stake are prospects not only for hundreds of millions of people to escape poverty, diseases, illiteracy and gender inequality but also for long-term global security and peace, which are intimately linked to development. It called on the World Bank to undertake further analytical and institutional work, together with partners, to develop an ambitious action plan for African countries and said that developed nations must meet their commitments to help accelerate progress in the developing countries. The committee also stressed the need of "aid for trade" and called on the World Bank and the IMF to work with others to develop proposals to help developing countries adjust to and take advantage of the Doha Round trade negotiation.

Il Corriere Della Sera (Italy) finally reports that Biagio Bossone, the Executive Director for Italy, said at the weekend that Italy ranked last in terms of aid to development. Rich countries have committed to increase their aid to development to 0.7 percent of GDP, but except for northern European countries, all remain far below their committment and are also far away from the intermediate target set at 0.32 percent for 2006. Italy, which remains at 0.15 percent, shows to be even less generous than the US. Bossone said the reasons for Italy’s disengagement can be traced to a widespread indifference both of political forces and media [to development aid]. Italy lacks a constituency of interest that is able to channel additional aid funds, while the media has not shown the interest that exists in the country on these issues.