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World Bank Calls for New Compact to Fight Global Poverty

May 14, 2001 World Bank President James D. Wolfensohn called today for a "new compact" between rich and poor countries to fight global poverty.

"In an interdependent world, we must recognize that fighting poverty is a challenge that affects us all," Wolfensohn said in his address on the opening day of the Third United Nations Conference on the Least Developed Countries (LDCs). Citing the unique resources now at hand to help poor people, he added: "Never before has there been such broad consensus about what needs to be done to reduce poverty. We have the resources, and we have the knowledge. Now, we must show that we also have the commitment to make globalization work for all. It is time to forge a new compact between rich and poor countries, in which each does its part. It is time to recognize that we sink or swim together."

Citing the need for action by LDC governments and donors alike, Wolfensohn urged developing countries to adopt sound economic and social policies that would spur economic growth and reduce poverty.

"Poor governance, weak institutions and conflict still plague some LDCs, hampering their ability to attract and effectively use development resources," he said. "These countries can certainly benefit from advice and technical assistance, but ultimately it is up to them to reform institutions, implement regulation, and fight corruption. The costs of not acting—both human and economic—rise every day."

At the same time, industrialized countries must move ahead on debt relief, increase aid (particularly for HIV/AIDS and other communicable diseases), and open their markets to developing country exports. Currently, rich countries spend close to $300 billion on agricultural subsidies, more than five times the official financial flows to all developing countries.

"Rich countries must get serious on trade," he said. "Integrating LDCs into the multilateral trade system benefits rich and poor countries alike. We have to level the playing field on trade. Let us work to make the next round of multilateral trade talks a Development Round. Meanwhile, current levels of aid, at 0.22 percent of annual GDP, fall far below the 0.7 percent target OECD countries pledged to meet. It is time for developed country governments and major donors to put an end to this tragic decline in assistance. Development assistance is not a handout, but an investment in global peace and prosperity, health and security."

Useful links: Read the A New Compact to Meet the Challenge of Global Poverty speech.



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