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Global Monitoring Report: Press Conference - IMF/World Bank Spring Meetings 2006

     P R O C E E D I N G S

 

   [3:05 p.m.]

   MR. NEAL:  Good afternoon, ladies and gentlemen, and thank you for coming.  My name is Chris Neal.  I'm External Affairs Officer for the Development Economics Department of the World Bank, and we're here today to give you a briefing on the Global Monitoring Report 2006:  Mutual Accountability, Aid, Trade, and Governance.  This was mentioned and discussed at some length this morning by President Wolfowitz.  Our purpose this afternoon is to offer you some more details on it and give you a chance to pose some questions to the authors of the report, who are sitting here in front of you.

  
This is the third annual Global Monitoring Report of the Millennium Development Goals, and it emerges from the Monterrey Conference that some of you may recall and may have covered in Monterrey, Mexico, in 2002, at which the rich countries, the developed countries, agreed to increase and improve the quality of their aid, while the developing countries agreed to improve governance.  It was called the Monterrey Consensus.

  
I will now just introduce the panelists very briefly.  Francois Bourguignon on my immediate right is the World Bank Vice President for Development Economics and Chief Economist, and to his right is Mark Sundberg, who is the lead author of the Global Monitoring Report this year.  And to his right is Brian Levy, who is the lead author of the governance part of the Global Monitoring Report and finally Mark Plant, our colleague from the IMF, who also contributed substantially to the report.

  
So without further ado, I will pass the floor to Francois Bourguignon, who will make some overview remarks.

  
MR. BOURGUIGNON:  Thank you very much, Chris, and good afternoon to everybody.  The Global Monitoring Report is a joint report by the World Bank and the IMF.  It was initiated three years ago in response to the Development Committee's request for a framework by which to monitor implementation of policies needed to achieve the MDGs as defined in the 2002 U.N. conference in Monterrey.

  
In what is now known as the Monterrey Consensus or the Monterrey Compact, developing countries agreed to improve their policies and governance, while developed countries pledged to increase aid, debt relief, and trade.  The spirit of the Monterrey Consensus is mutual accountability, and this is the subtitle of this year's Global Monitoring Report.

  
This year's report also goes beyond the pure monitoring of the MDGs and to the request of the Development Committee last year to also tackle the issue of monitoring governance.

  
I will leave my colleagues in the table the care to go over the main messages of the report.  I would like simply to make a few general points.  Maybe the first general message of the report is that the Monterrey Compact is beginning to show some results in some developing countries, among donors, and among international financial institutions.  We can see that in some countries, very substantial progress has been made on the social front, in education and health.  We know that last year, bold commitments have been made by donors to increase and harmonize aid and debt relief, and we also know that IFIs are moving toward more effective, results-oriented strategies.  Of course, much more is needed, and many poor countries and many regions in middle-income countries are still lagging severally behind.

  
And the second message of the GMR is that better aid and better governance are necessary to support faster progress toward the MDGs.  And here again, this improvement in aid and governance must take place across all actors in the international community.  Better aid for recipient countries means better policies, means more efficiency in delivering social services, means a better investment climate, means enhanced investments in infrastructure.

  
Better aid for donors means holding on their commitments made in 2005 to provide additional aid and to have it done in a harmonized and coordinated way.  Harmonization, in particular, is essential to save the time and energy of policy makers in recipient countries and to ensure consistency of the action of the various donors.  There are too many countries where the number of missions by donors coming to monitor the project they are responsible for is going beyond one mission a day.

  
And on the side of the IFIs, it is important to effectively switch to results management and to monitor outcomes rather than to monitor inputs.  It is more important or at least as important to look at the employment effect or the income generation effect of building rural roads as to measure the number of kilometers which have been built.

  
All these improvements require better governance, and this better governance is necessary to increase the efficiency of service delivery, to reduce the cost of public investment and to improve the delivery of aid.  Reforming governance involves a complex set of issues, and the GMR provides a framework that commits taking into account the multiple dimensions of governance.  However, it also insists on the need to better and more regularly monitor governance and the means for doing so.  In particular, it identifies various indicators that are both specific actionable and will permit checking the process made in countries in various dimensions of governance:  the quality of public finance management, of the public procurement, some specific indicators of corruption, et cetera.

  
The issue of governance arises in developed countries as well as in developing countries.  Money laundering or bribing foreign governments reflects the behavior of firms and banks in developed countries.  Conventions like the U.N. or OECD conventions against corruption or initiatives like the Extractive Industries Transparency Initiative need to be implemented rigorously.

  
Based on this year's report, governance will become part of the monitoring of the implementation of policies required for the achievement of MDGs in future reports, and for more detail, I now turn to my colleague, Mark Sundberg.

  
MR. SUNDBERG:  Thank you, Francois.

  
As you know, there are two parts to this report.  The first part is on the core monitoring of MDG performance and on accountability of the global partners in development.  The second part is the special focus on governance, and Brian and Mark will take up the discussion of the second part.

  
Let me briefly summarize the key messages in Part One of the report.  The first message is on extreme poverty.  Continuing favorable growth in the global economy is helping to make substantial inroads into reducing extreme poverty, but the gains are quite uneven.  In South Asia and East Asia, the gains have been the greatest; in Sub-Saharan Africa, the gains have been the least.

  
The importance of growth could hardly be overemphasized in reducing poverty.  To accelerate growth, the report argues for two important areas to improve the domestic business environment.  One is to strengthen infrastructure and access to infrastructure, core infrastructure, power, roads, water, and the other is to improve the investment climate.  This is particularly important for Sub-Saharan Africa, which has the weakest performance across regions in both of these dimensions.

  
The second key message is on progress in meeting the human development MDGs.  Here, the news is much more sobering.  Africa and South Asia are off track in all of these dimensions.  Gains in child mortality have been particularly slow.  Over 10 million children continue to die each year from causes that are readily preventable and readily treatable.  Only one-fourth of countries are on track to meet the nutrition targets, and several countries in Africa are actually slipping backwards.

  
But there is also evidence of remarkable progress in some countries.  Nine out of 10 countries for which there is recent survey evidence show gains in reducing child mortality.  Madagascar has seen 6 percent annual reduction in child mortality between 1997 and 2003, a remarkable pace of decline.  Immunization programs are expanding, and there has been a 90 percent drop in measles in Africa since the year 2000, and in many countries, the poor are clearly participating in this process.  Immunization delivery in Mozambique, for example, improved by 18 percent among the poorest households annually between 1997 and 2003.  That is four times faster than the national average.

  
To strengthen performance, two areas are highlighted in the report:  first, there is a need for more flexible aid to meet the recurrent costs of social service delivery, to hire teachers, to hire health care workers, and to maintain structures.

  
Second, better governance is required to improve and strengthen accountability and service delivery.  The link between better development outcomes and better governance is very important, and the second part of the report will highlight these dimensions.

  
The third key message is about donor commitments to aid, trade, and debt relief.  Significant new commitments have been made in 2005 to a doubling of aid to Africa, to increasing aid to other countries.  A new multilateral debt initiative was launched, and there have been real steps to improve aid coordination through the Paris Declaration in March of last year.

  
The report highlights, however, three important risks to implementing these commitments:  first, will the aid be delivered?  There are fiscal pressures on the rich countries themselves.  Will they be able to meet their commitments, which are quite substantial over the next few years.  Also, will debt relief be counted against this?  The new initiative is to be additional, not to be counted against aid commitments.

  
Secondly, will aid quality improve?  Aid remains poorly aligned with Country Assistance Strategies.  It is unpredictable.  It is often inflexible.  Only one-third of aid can be flexibly used to meet the needs for hiring teachers and health care workers, for example, and there are issues over allocation.  This is vital to the MDG agenda.

  
Finally, will fiscal improvement through the debt relief initiative be made sustainable?  How will it ensure that new borrowing is sustainable in these countries receiving it?  The bottom line of the report is that donors can and should be doing a better job to improve aid quality and aligning their support with development strategies.  Monitoring these commitments will be quite important in strengthening donor accountability.

  
The final message of Part One concerns the need for improvement in the international financial institutions in shifting their practices from managing inputs:  staffing, reports, loans, to managing for results on the ground, as Francois just mentioned.  This is a complex undertaking and involves both host governments and the institutions themselves.

  
But there are signs of progress:  a new comparative assessment system was launched last year among the multilateral development banks; an awareness of the results agenda is increasing.  There has also been more effort placed on impact evaluation, on better understanding how interventions and policies are delivering results.

  
The bottom line is that advancing this agenda will require strong management commitment, and it will be a long-term task.  Support for developing countries to improve their statistical capacity is also very important.

  
Turning to Part Two, let me just mention that it is very important, the role of governance in global development outcomes, and strengthening governance is both the responsibility of developing countries as well as the international community, which Brian and Mark will elaborate on.

  
Thank you.

  
MR. LEVY:  Thank you, Mark.

  
As Mark and Francois underscored, there is a consensus that better governance and achieving the Millennium Development Goals go hand-in-hand, and I would just like to make three points on the governance sections of the Global Monitoring Report.

  
First, what do we mean by governance?  It's helpful to begin by clarifying what governance is not.  Governance and corruption are not the same thing.  Corruption is the abuse of public resources for private gain.  Governance comprises the institutional arrangements for state action and accountability.  Corruption is thus an outcome of dysfunctional governance systems.

  
So what are governance systems?  A governance system has three parts.  The first part comprises the bureaucracy through which governments make things happen:  ministries of education and health, ministry of finance, urban water utilities are examples.

  
Second part comprises the checks and balances institutions which hold governments accountable:  courts, a vibrant media, reporting systems like audits to parliament.  This also includes statistics in the public domain on public performance and results.

  
The third part of a governance system comprises the way citizens themselves are engaged as an active part of the governance process; for example, this ranges from parental participation in schools to civil society watchdog organizations to community participation in local governance.

  
As Mr. Wolfowitz underscored in his Jakarta speech, there are two parts to addressing corruption.  One part of addressing corruption is how donor agencies such as the World Bank can safeguard their own operations.  The second part comprises the strengthening of transparent and accountable governance systems for making policy and managing resources.  This report focuses on the latter.

  
The second set of points that I'd like to make is that there is no single unique path from weak to good governance, and this follows directly from the fact that a governance system has multiple parts, the three that I highlighted.  Some countries improve governance by seeing rapid gains in the capability of their bureaucracy, even as other parts of the governance system lag.  A good example there would be Indonesia in the 1970s and 1980s under President Suharto's rule.

  
Other countries see a political opening but with much slower gains in bureaucratic capability.  Many African countries in the early 1990s embarked on that route; Albania in the early 1990s was another example.  Yet others have a more balanced part of improving governance, often underpinned by external intervention:  Mozambique in the 1990s is an example of a success story; Sierra Leone and Bosnia are more recent examples.

  
In the short run, no one of these different paths is better than the other, but in the longer run, for sustainability, the gains need to be more balanced across the three parts of the governance system.  Note, though, that while there is no unique path, one clear message of the report is that regardless of the path, greater transparency in how public resources are used is desirable and should be encouraged.

  
There are many examples across the range of development activities through which transparency can be enhanced.  The World Bank has supported all of these; for example, strengthening public bureaucracy, the posting of budgetary transfers to primary schools and community centers is an example of transparency.  So is open and competitive public procurements.  On checks and balances institutions, audit reports to parliaments that are timely, comprehensive, and of good quality is an example of transparency.  So is the publication of judicial decisions.

  
When it comes to citizen participation and oversight, civil society organizations sponsored service delivery scorecards, as in Bangalore, India, an example of transparency.  So are asset declarations by politicians, and so are freedom of information acts.  So that is the second theme:  no unique path from weak to good governance, but better transparency is always desirable.

  
Third set of points, as Mr. Bourguignon highlighted, a key contribution of this report is to provide a way forward for governance monitoring.  The report highlights 14 core indicators that between them provide a basis for this monitoring.  Some of these indicators measure overall governance performance, and corruption is one indicator.  Others measure the quality of bureaucracy, and here, there are detailed and sophisticated measures that have been developed on the quality of management systems, how well resources are allocated, how well the use of these resources is implemented, and the quality of public reporting.  All of this is, of course, key to achieving the Millennium Development Goals.

  
Yet other indicators focus on the quality of checks and balances institutions:  measures of the rule of law, measures of voice and accountability.  As you can tell from the examples, some of these indicators measure broad aspects of governance; others focus very narrowly on specific subsystems.

  
The report is very clear that the quality of governance cannot and should not be monitored using a single measures.  Different measures have different purposes, and the report highlights in particular the value of specific, actionable indicators capable of surfacing in a very precise way which specific problems need addressing, whether agencies, for example, provide timely reports of their standing.

  
As Mr. Wolfowitz has often emphasized, we manage what we measure.  The GMR thus calls for further investment in the development and systematic use of governance monitoring indicators, focusing especially on the specific actionable indicators.

  
Thank you.

  
MR. PLANT:  Thank you.

  
My colleagues from the Bank have described in quite a bit of detail what the report says.  Let me just underscore first of all that we fully endorse all the conclusions.  It was fully a joint report of the two institutions.

  
And let me just highlight a couple areas of particular interest to the Fund.  First, to talk a bit about growth and macroeconomic stability, which is very much in our mandate:  the report is very clear that global growth has been favorable to poverty reduction, which is very good news.  We are observing increases in per capita GDP of almost 5 percent in most low and middle-income countries or across the board, rather, and even in Sub-Saharan Africa, per capita GDP growth is now around 3 percent and is forecasted to go up a little bit in the next year or two.

  
And this growth is essential if we are going to get poverty reduction down the road.  It is not the only thing we need, as the report clearly highlights and as my colleagues have highlighted, but it is an essential component to forward movement.

  
Key to growth are proper macroeconomic conditions:  price and stability, policy reversals are bad for investment and discourage consumption, and for that reason, the Global Monitoring Report monitors the quality of macroeconomic policies, and what it shows is that there continues to be improvement among low and middle-income countries in the quality of their policies in the macroeconomic area.  Inflation is coming down into the single digits in both low and middle-income countries, and the fiscal and current account balances are improving.  So the overall macro setting is propitious for further inroads to be made in poverty reduction if we can get all these other pieces going as well.

  
On governance and transparency, the report underscores that governance is very much a cross-cutting issue.  It affects all aspects of public resource management:  revenues, expenditure, debt, reserves, debt management, reserves management, public enterprises, privatizations.  Therefore, it can't be assigned to one particular group.  It can't be just the Bank, just the Fund, or any particular donor.  Everyone has to deal on the issues of governance together.

  
In order to ensure that progress in governance takes place, the key will be transparency:  transparency of the low-income countries involved but also transparency of the institutions that deal with those low-income countries.  It is one of the pillars of our policies and our interventions in low-income countries to improve governance and combat corruption, that is, to increase transparency.  For instance, last year, Fund staff issued a guideline on resource revenue transparency, and it is a complement to our longstanding code on fiscal transparency, and it highlights for emerging countries good practices of how enhanced transparency can help particularly resource-rich countries deal with their acute governance challenges.

  
But as my colleagues said, governance is not just for poor countries.  There needs to be a system of global checks and balances which demonstrates that everyone is involved in the governance effort.  There are benefits and responsibilities for all, and this notion of governance as being a mutually accountable system fits well within the Monterrey framework of mutual accountability that we have adopted for the MDGs.  It really offers industrial countries a chance to take up their responsibility for international corruption originating in their countries and companies or facilitated by their institutions, and it offers developing countries support with their homegrown, good governance anticorruption efforts.

  
Fighting corruption, first of all, requires well crafted, international anticorruption conventions.  Therefore, it is terribly important that all countries rapidly ratify the U.N. Convention Against Corruption, which recently came into effect.  I believe the number of ratifications stands at about 50 now.

  
But in order for these kinds of conventions to be effective, there has to be compliance and monitoring, and this requires a sustained support from all stakeholders.  And here, the report emphasized the importance of peer review, that peer review has proved to be an effective instrument for both developed countries and developing countries to monitor each other, to comment on how their peers are doing in applying codes, in complying with conventions.  And that, in fact, is a very effective way of getting the type of enforcement you need.

  
In this regard, the international financial institutions have a special role to play in supporting this international system of global checks and balances, because we have a global reach, and because we have a global experience to draw on for all the countries in our constituencies.  In our areas of mandate and expertise, we can provide important technical support, and the report highlights ways that we have done that and will continue to do that.

  
So again, let me underscore that this is very much a joint effort of the World Bank, of the IMF, but also of the entire international community to look once a year at where we are and what we're doing, and we hope that it proves useful to those who are interested in the subject.

  
MR. NEAL:  Thank you, Mark Plant.

  
I guess we can now go to questions.  If you have a question, could you please identify yourself and your media just so that we know where you're coming from?

  
Yes, lady at the back.

  
QUESTION:  Thank you.  Jen Vian, USA Radio.

  
With regard to poverty, what effect has there been in Third World countries with regard to petrodollars, in other words, those countries having to convert their currencies into dollars to buy oil?  And how does that affect the future of looking to help stabilize and to help some of these Third World countries overcome their poverty, number one?

  
Number two, global checks and balances, can you tell me the future of rules and regulations and enforcement with regard to global checks and balances, especially as it would pertain to developed countries?

  
Thank you.

  
MR. NEAL:  Okay; maybe the first one, could you handle, Francois, and then the other, perhaps, to Brian Levy?

  
MR. BOURGUIGNON:  Okay; on petrodollars and oil prices, it is certainly the case that the surge in oil prices has reduced the power of low-income countries, of all oil consumers in the world.  And our estimate is that on average, the loss in terms of purchasing power in real income due to the increase in oil prices is around 2 percent in oil importing countries.

  
So it is certainly the case that poverty reduction is being slowed down by that evolution, but we also have to take into account the fact that GDP per capita is increasing at the same time in most of these countries, which compensates the first effect.

  
So it is difficult for the moment to say what is the overall balance.  We have a detailed estimate of the extent of poverty country by country, which is taking place every third year.  For the moment, we can only rely on long run projects, which indicate that poverty is being reduced.  On the global checks and balances,

Brian?

  
MR. LEVY:  Let me just say a few words and then hand it over to Mark on this.

  
Clearly, this set of institutional arrangements are very much nascent at this time.  I believe this is the first time that the Global Monitoring Report has looked at global checks and balances.   And I think it is fair to say that while this is a new area for this report and for monitoring, all of us who were involved were quite impressed at the amount of activity that's underway, at some of the seeming impact and enthusiasm surrounding some of the conventions on corruption, surrounding the Extractive Industries Transparency Initiative, but of course, there's no way of telling the degree to which this will become a system with binding rules of enforcement globally.  This is very much at the beginning.

  
MR. PLANT:  I think Brian is correct.  It's very much at the beginning.  You have efforts in particular areas that are successful.  The Extractive Industries Transparency Initiative is one where you have both developed and developing countries adopting it and trying to make it into a useful tool.  The OECD Convention on Combating Bribery of Foreign Public Officials is another area where peer review has proved effective and where there seems to be an emerging consensus among the developed world as to how they should proceed; the Financial Action Task Force implementation of anti-money laundering.

  
So you have it in bits and pieces around the world, in areas that are of critical strategic interest to certain international players.  What we have to do is build on that, if you will, piecemeal system and try to build it into a more robust and global system.

  
That will take lot of political will.  It will take a lot of compromise.  The important thing is that both the developed countries and the developing countries need to see the benefits from that collective action, which we think are there.

  
QUESTION:  Fernando [inaudible] from Folio de Sao Paolo, Brazil.

  
There is a chart in the report showing that for poverty reduction, the chart for $1 a day for Latin America, the target is 5.7, and it shows that can be achieved 6.2.  I'd like to know if you have the specific number for Brazil, if it is going to reach the target for poverty reduction and also have an assessment about programs like Bolsa Familia in the country.

  
MR. SUNDBERG:  Maybe I'll say a quick word on this but pass it to Francois, who knows quite a lot about the Bolsa Familia program and could elaborate on that.  I know this came up at this morning's press conference with the President as well.

  
I'm sure that there are specific forecasts on the poverty numbers for Brazil.  I do not know those offhand, however, so I would pass on trying to give you those numbers.  But I know there has been some recent reweighting of those figures, and the final performance regionally, which falls just short of targets for 2015, is partly due to the effect of Brazil and revisions to some of the forecasts there.

  
Francois, would you like to say a word about the Bolsa?

  
MR. BOURGUIGNON:  Yes; as a matter of fact, there have been some estimates made not by us but by IPEA [ph] in Brazil on the impact of various policies, in particular, Bolsa Familia on the extent of poverty, and the impact is extraordinarily impressive.

  
Over the last two years, which correspond to the implementation of Bolsa Familia, poverty has been reduced by 3 percentage points, which is quite substantial in such a short time, and it is estimated that practically 75 percent of this drop is due to the change in the distribution of income rather than to growth, which has been on the per capita basis not very fast, and the estimate is that in this drop in inequality, which is almost historical in the context of Brazil, Bolsa Familia played a crucial role.

  
MR. NEAL:  There's a question from Alicia [inaudible].

  
QUESTION:  Thanks, Chris.

  
I wonder if you could explain more about the governance indicators, especially how to read them.  How could we make a comparison between countries or a comparison between year to year, because it's just a beginning?  And when we read it, it could then be useable to see where the country is in this stage of governance or what stage was before or which periods are we comparing?  This is the first one.

  
And the second is you said the last year I remember in the world report that reducing poverty or increasing GDP per capita doesn't mean reducing inequalities.  And do you think this increasing per capita 5 percent in the middle-income countries like Mexico is really translating into reducing inequalities, especially in the country?

  
MR. LEVY:  Just on the question of governance indicators, you're indeed correct that the report does not provide a ranking across countries in detail within each of these indicators, and indeed, that is intentional.

  
One of the important messages of the report is that while governance indicators are useful, they are never precise.  So there are a number of tables in the report where--there's a table that reports on patterns of voice and accountability, which breaks down the country patterns by top third, middle third, and bottom third, and within each of those thirds, it suggests can we have a 95 percent certainty that the country is or is not in that particular group?

  
And the reason we do that is because of the inevitable imprecision of all governance indicators.  Anything that is more precise, a scorecard that says that a country went from 137 to 133 is a number that has no specific meaning.  That does not mean at all that these indicators are not useful.  Over a period of multiple years, the changes can be large enough that even with imprecision, they become statistically significant, and indeed, the more specific the indicator, that is, the more focused it is on a particular actionable part of the governance system, the more one is able to interpret that indicator in terms of patterns of change.

  
So, for example, there is a table in the report which highlights quite significant changes in the quality of countries' public financial management systems, and it suggests that over a 5 to 10 year period, countries committed to improving public financial management can make quite substantial gains.

  
But indeed, as you have underscored, the report is very clear that to try and provide specific country rankings is actually to mislead rather than to sort of help clarify the debate.

  
MR. BOURGUIGNON:  On the second point, on the relationship between poverty, inequality, and GDP per capita growth, two key points:  first thing, we know that the reduction in poverty results on the one hand from what is going on on the front of income growth, GDP per capita growth, and on the other hand, what is going on on the front of inequality.

  
I just mentioned the case of Brazil, where a reduction in inequality due to this cash transfer program called Bolsa Familia produced reductions in poverty despite the fact that growth was not that strong.  But it is quite clear that over the long run, it is very difficult to imagine that poverty could be reduced in any significant way without growth being strong.

  
The other point that I think you are referring to when you mention last year's report, it may not be the GMR, but it might be the WDR, is the fact that there is another relationship between growth and inequality or equity, and the relationship on which we insisted is the fact that in a more equitable society, equity being defined by the equality of opportunities offered to the various persons in society, in such a society, it is likely that growth in the long run will be faster.

  
So it is in that sense that there is a relationship between the degree of equity in an economy and the rate of growth.  But if you want to look at the complete relationship between growth and poverty, you have to take into account those three elements.

  
QUESTION:  Ernesto Riqueda [ph], Associated Press reporter for Latin America.

  
As you know, many developing countries are getting involved in free trade agreements with industrialized countries.  But others, other countries in the development group also are electing populist government that is opposed to those free trade agreements.  So I have two questions:  how would you term the free trade agreements for poverty reduction and growth?

  
And the second question is do you think a populist government is a kind of countercurrent for governance and, of course, against the MDGs' achievement?

  
MR. BOURGUIGNON:  Yes; maybe let me have a first crack at this question.

  
First, on the free trade agreements, this is an issue on which we have worked quite a lot in the Bank, and as a matter of fact, the Global Economic Prospects report that was published two years ago was about free trade agreements, free trade areas in general.

  
What is the impact of free trade areas on poverty reduction and growth?  This is something which is ambiguous in the sense that there are contradictory effects.  You are gaining on the one hand, and you are losing on the other.  You are gaining because you have more trade with your partner, but you are losing on the other hand because you may have phenomena like trade diversion.

  
The thing we know and the agenda we have been advocating for in the Bank is for multilateral trade liberalization.  We know that in that case, there is no ambiguity about the fact that partners in world trade will be gaining.  So there is some uncertainty, some ambiguity about free trade areas, but there is no ambiguity about the impact of multilateral trade agreements, at least when we look at the total gain for the countries which are involved.

  
There may be some impact on the distribution, which means that it may be necessary to take at the same time as trade is being liberalized to take measures to make sure that distribution is not being worsened, but in developing countries, this is unlikely to be the case.

  
About your point about populist governments and whether they are contributing to more or better or worse governance, I may leave my colleagues answering that.  I think that the point is that we know that many populist governments are elected very often on the basis of an improvement of governance, and corruption, which was mentioned before and which was mentioned and there is being tackled very often in our President's speeches is typically an argument which has been used by a populist government.

  
So it is quite possible that they are effective in reducing corruption, in which case, they may be participating in an improvement in one part of the governance system, but it is also possible that at the same time, another part of the governance system is getting worse.

  
But maybe, Brian or Mark, you want to say more on this.

  
MR. LEVY:  Just a little bit to add.  I think as the report highlights, the governance system has three parts, and that for any government, populist or otherwise, one would judge its contribution to governance according to the extent to which it helped or hindered the development of each of those three parts, and the three parts are the quality of the bureaucracy in terms of its capability to deliver services, the quality of the checks and balances institutions of the society, including transparency, and the quality and opportunity for civic participation and oversight.

  
And so, for any government, be it populist or otherwise, if one were to ask what is the impact of this on governance, one would ask what impact is it having in terms of the improvement or weakening of each of these three core parts of a governance system.

  
MR. NEAL:  Any other questions?

  
The gentleman at the back.

  
QUESTION:  Xavier [inaudible], from the French daily La Tribune.

  
You highlight how important it was to fight corruption and how important was good governance.  I'm wondering why the World Bank gave this decision point to Congo while there was plenty of evidence that the country was stealing oil and steel monies through sham companies in the Bahamas and the British Virgin Islands.

  
MR. BOURGUIGNON:  On this Congo business, I think that what is really important is the decision that was taken by the Bank recently about the Congo, which is simply to delay the completion point or to condition the reaching by Congo of the completion point of the HIPC Initiative, and as you know, the decision is to wait until successive audits of the initial oil company will have given a satisfactory result about the transparency of the accounting of this company for allowing the final step in the debt writeoff to take place.

  
MR. NEAL:  No more questions?  If there are no more questions, then thanks very much.  Good afternoon.

  
[Whereupon, at 3:48 p.m., the briefing was concluded.]

 

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