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2004 Spring Meetings - Development Committee Press Briefing

Washington, D.C, April 25, 2004

Development Committee Acting Chairperson,
the Minister of Finance from Nigeria, Ngozi Okonjo-Iweala;
World Bank President James Wolfensohn;
IMF Deputy Managing Director Agustin Carstens;
Executive Secretary of the Development Committee Tom Bernes;
World Bank Vice-President for United Nations and External Affairs and Communications, Ian Goldin


MR. GOLDIN:  Good afternoon, everyone.  I'm very pleased to welcome you to the closing press conference of our Development Committee.  We have on the podium the acting Chairperson, the Minister of Finance from Nigeria, Ngozi Okonjo-Iweala; World Bank President James Wolfensohn; IMF Deputy Managing Director Agustin Carstens; and Executive Secretary of the Development Committee Tom Bernes, and I'm the Vice-President for United Nations and External Affairs and Communications at the Bank, Ian Goldin.

We'll begin with a brief statement from Ngozi, followed by a brief statement by Jim Wolfensohn, and then we'll turn to questions and answers.  Thank you.

THE CHAIRPERSON:  Thank you very much, Ian.  We've had very useful and good meetings, and I'll just make some points, the main highlights that we would like to draw out of the meetings.  All of you have the communique.  Since the adoption of the Millennium Development Goals, the Development Committee has clearly signaled that it intends to play an active role in moving the implementation agenda forward.

This resolve was very much on our minds in the meeting today.  We reviewed the first Global Monitoring Report on progress towards the MDGs.  This report recognizes that there has been progress on many fronts, including, in particular, the significant reforms undertaken by developing countries and important gains in reducing income poverty.

The Ministers generally found the Global Monitoring Report very useful as a way of tracking what is happening on the delivery on the Monterrey Consensus.  However, with less than 11 years to go, based on current trends, most MDGs will not be met by most countries, particularly in my continent, Sub-Saharan Africa.  The Committee expressed its concern and called for all parties, developing and developed and institutional partners to urgently enhance actions to accelerate progress.

On the part of developing countries, the need is to continue to deepen the structural reforms that are already underway and to continue to tackle the issue of corruption and improving governance, and of course, for the developed countries, it is an issue of matching the progress with the commitments made to deliver on additional financial aid.

Recognizing that faster growth will be essential for achieving greater progress, we emphasized that sustainable and inclusive growth needs to be accelerated in many developing countries, in particular through improving the environment for investment and private sector activity; strengthening capacity and governance in the public sector, as I said; scaling up investment in infrastructure; and ensuring access to health care, education and other basic services.

We underlined that specific priorities must be determined at the country level, in the context of country-owned and monitored development strategies as reflected in the Poverty Reduction Strategy Papers, PRSPs, in the case of low-income countries and Respective National Strategy Frameworks in middle-income countries.

While welcoming the recent progress on the Fast Track Initiative for Education for All, we recognize that much more needs to be done to fund not only this but the other Millennium Development Goals.  We requested a report from the Bank on progress in ensuring that sound policies and efforts by developing countries are supported by adequate and appropriate financing.

As set out in the partnership agreed in Monterrey, efforts to address these need to be matched with stronger support from developed countries, in particular through increased market access for developing country exports.  We stressed our commitment to a constructive and determined effort to move the multilateral agenda forward.

More aid, which is predictable, timely, long-term and more effective is also required.  We called for a substantial and timely agreement on the funding of IDA-14, but much more resources will be necessary, and we expect to receive a report on policy options and financing mechanisms for mobilizing additional resources at our next meeting.

These increased resources must be effectively used, and we called for strengthened efforts to implement the declaration of the Rome High-Level Forum on Harmonization as well as the core principles of Marrakech (Multilateral Development Banks conference on results, February, 2004), including strengthening country capacity to manage for results.  We reviewed implementation of the HIPC Initiative and considered the new proposed framework for debt sustainability in low-income countries.  We welcomed the work by the institutions and called for further progress in operationalizing this new initiative.

Finally, enhancing the voice and participation of developing and transition countries in international economic policy decision making and norm-setting continues to be an important issue for us.  The Boards of both institutions have recently taken a number of steps to enhance capacity in the offices of the largest multi-country constituencies.  We welcome these initial steps and ask the Boards to continue their working, including looking at more far-reaching reforms.  We will return to these issues at our next meeting, where the Boards will report.

In summary, the Development Committee is striving to play its role in creating a virtuous circle of actions by developing and developed countries with the international institutions that can help make significant progress on achieving the Millennium Development Goals.  Success will require a continuous effort on the part of us all.  That is the task and the challenge that we face.

Thank you.

MR. WOLFENSOHN:  I really have nothing to add to that statement other than to thank Ngozi for her remarkable Chairmanship of the meetings.

THE CHAIRPERSON:  Thank you, Jim.

MR. GOLDIN:  Thank you very much.

Please identify yourselves, and if you have a particular person you would like to direct your questions to, please specify that.

The gentleman over here?  Sorry, yes.

QUESTION:  Paul Blustein with the Washington Post.

I wanted to ask about the U.S. proposal for expanding the use of grants in IDA financing.  I wanted to know how you feel about it and whether it got any support or any--for that matter, any opposition or if you know of any opposition.  I don't see any mention of it in the communique; I see something here about innovative financing techniques or something like that, but anyway, I just wanted to know where that is likely to go and where it should go.

MR. WOLFENSOHN:  I'll do it.

THE CHAIRPERSON:  Shall we take a number or--

MR. GOLDIN:  Let's do one at a time.

MR. WOLFENSOHN:  Let's do one at a time.


THE CHAIRPERSON:  Why don't you go ahead, Jim?

MR. WOLFENSOHN:  I think there's a general agreement that grants are easier for countries than loans, and there is no question that for the poorest countries that cannot repay their existing obligations that where it's appropriate to provide funding, grants are the preferred source.  I don't think there is any doubt in the Committee about that.  I think the question is, which I hope will be reviewed before next time, is the extent to which institutions can provide grants when, in some cases, as in the case of IDA, the providers of funds rely on repayments to buttress the amount of money that they can lend for future lending.

For example, at the moment, in IDA, half the funds that are loaned in IDA are repayments of earlier loans, so that if you're lending $8 billion a year, $4 billion is essentially new money, and $4 billion is money that is coming in.

Now, I'm sure that the American proposal is very valid and correct in the case of trying to see whether it would not be much better to provide grants to the poorest countries, and indeed, the initiative that they took last year in getting a billion dollars-plus in grants has been extraordinarily helpful. 

So I don't think there is any doubt amongst the poorest countries that grants should be a very strong element.  I think the only debate at the moment is to what level do you go into grants?  And I believe that that is the current situation, which will be explored particularly in the IDA-14 negotiations, when all of the countries will come together and tell us first how much money will be coming in IDA-14 and, secondly, what is the proportion of loans in IDA-14 that will be constituted as grants?  And my guess is that by the time of the Annual Meetings, we should have an answer to that question.

MR. GOLDIN:  Thank you very much.

The lady over here?

QUESTION:  Thank you; Joan Vian, USA Radio.

This is an open question for anyone.  Could you provide specific information regarding the ideas and concepts over global taxation?  I know that some of these were in the UNDP in 1994; they were in Our Global Neighborhood, and of course, some of them were suggested, recommended, hashed over at the Financing for Development meeting.

What are, like, the lead proposals?  And what details can you provide as far as timing and even the next meeting?

MR. CARSTENS:  Well, certainly, the issue of global taxation was mentioned.  No definite agreement was reached on it.  I think that it is a very complex topic.  It has many different angles that need to be overlooked and really be able to assess if it will provide the resources that are necessary without generating higher distortions and have not a net benefit.

So the agreement was that this is an issue that needs to be addressed and that the Committee will come later on to have an additional discussion on it, an evaluation of it.

MR. GOLDIN:  Thank you very much.

Do you want to add anything?  Thank you.

The gentleman over there.

QUESTION:  Harry Dunphy, AP.

Mr. Wolfensohn, can you tell us a bit more about the conference on the Middle East that Secretary Snow said this morning the World Bank would be hosting in the fall?  And is the Bank exploring with Israel developing settlements in Gaza that eventually will be vacated?

MR. WOLFENSOHN:  Is the World Bank doing what, did you say?

QUESTION:  Exploring with Israel developing settlements in Gaza that eventually will be vacated under Sharon's plan.

MR. WOLFENSOHN:  No, the answer is no.  We're not exploring anything with the Israelis on Gaza.

Our role in the Middle East is to try and deal with the Palestinian issue in terms of providing sustenance at this moment, and were there to be an agreement on the transfer of lands, then, I would expect that we would be part of that group and maybe the leading part of the group that would look to put together the needs assessment and then seek to raise the funding that would give hope to the Palestinians in Gaza and in those areas of the West Bank that have been given up.

There is certainly a readiness on our part to assist the Palestinians in that way if it is their wish that we should do so, and there have been some discussions, some broad discussions prior to the Sharon visit on how we might work in conjunction with the Ad Hoc Liaison Committee, which is the existing committee that administers funds in Palestine and the territories.  But we have not, in recent days, had discussions of that.  We are essentially waiting and seeing how things go, but we have expressed our willingness within the context of the existing framework to assist.

And with regard to the conference, again, I'm not aware of when that conference will take place.  Certainly, we're always ready to participate in anything that can be done with the Middle East.  So far as I know, the next conference will be held by King Abdullah in Jordan in May, and I expect to attend that.  So my guess is that in the Abdullah conference, you will have most of the players there, and I would think that one would do that first and then see what would emerge afterwards.

MR. GOLDIN:  Thank you very much.

The gentleman over there?

QUESTION:  Thank you; Andrew Balls of the Financial Times.

A question for Mr. Wolfensohn and then for other members of the Committee.  The communique talks about the Millennium Development Goals.  It also talks about debt relief under HIPC.  Should there be a formal way of linking those two subjects to show the commitment of the international community to meeting the Millennium Development Goals, assessments based not on ratios of debt to exports but based on resources needed for meeting the Development Goals?

MR. WOLFENSOHN:  Well, I think the two are integrally related, and you will see that from the DAC statistics, the (OECD) Development Assistance Committee statistics, which, in 2002, showed $56 billion of development assistance--or $58 billion of development assistance, of which $6 billion was debt relief.

So in the minds of the DAC, the two are exactly the same:  how much money is being put up for development and how much is being done in debt forgiveness.

So the two issues are integrally linked.  I don't think we need to go beyond that in terms of saying that it all comes out of the same pocket and the same donors or creditors.  What we've been addressing our mind to at these meetings is what are the financial needs to meet the Development Goals, and what are the responsibilities on the part of developing countries that they need to follow if there is to be a successful use of funds?

And I thought that the meetings were very well-balanced in saying that the developing countries need to deal with capacity, legal and judicial reform, financial sector reform, and fighting corruption, but on the other side, there's a need for the rich countries to assist on building capacity, to open their markets for trade, and to provide additional aid, included in which is consideration of debt.

So I think that it was a very balanced discussion, not just, you know, we need more money.  I think it was balanced to the extent that it was let's look at what each side needs to do.  And I think if you look at the report that we have put out, there is reference made to what is needed on both sides.  The thing I should say is that the report itself was very, very well-received and will become a feature of all future meetings.

MR. GOLDIN:  Thank you very much; that's the Global Monitoring Report, which is available to all of you.

Did you want to add something?

THE CHAIRPERSON:  Yes; I just wanted to add one point. 

One issue that was also touched upon, and maybe work will be done later, is the issue of those countries that are low-income, not HIPC, that fall between the cracks and some middle-income countries with heavy debt burden and the need to also look at those in terms of the ability to get resources to reach the MDGs.

MR. GOLDIN:  Thank you.

The lady over here?  Sorry; could you identify yourself, please?

QUESTION:  African Sun-Times.

The communique is talking about tackling corruption, and you have been in charge of such a task in Nigeria for the past two years, if I'm right.  And we have been told that you are doing some good job.  And recently, you have been subject to--your salary has been the subject of a lot of debate all over Africa.  Do you think somebody or some people are trying to impeach you to do your job as you want to, and what have you accomplished so far in tackling corruption in Nigeria?

THE CHAIRPERSON:  Well, thank you very much; very good question.

First of all, I've been in the job nine months, not two years, and I think that in that amount of time, we have developed, with the complete backing of President Olusegun Obasanjo, a reform program in Nigeria that is designed to really put the country on a sustainable platform for growth and poverty reduction.

And the first issue, first plank of that reform program is fighting corruption and increasing transparency and accountability, because we admit in our country that corruption has undermined development.  That's the starting point.  And we've been very specific about what are the elements of the fight on corruption.  We are reviewing completely and implementing a program of value for money audits of government contracts, because that is where the issue of corruption is most joined in Nigeria.

And so far, my colleague, who is leading this effort, has been able to save the equivalent of $750 million within the past two years.  She started earlier for the Government.  We have joined the Extractive Industries Transparency Initiative, and we have gone beyond that.  The EITI took budget transparency. 

Please visit our website and you will see information loaded on what revenues goes to different tiers of government; performance indicators for ministries; and a lot of information on our program, our structural reform program.  We are also fighting crime with a new agency called the Economic and Financial Crimes Commission that has arrested over 200 people, economic criminals, in under a year; has recovered the equivalent of $300 million, of which $82 million to the Government treasury; and over 50 of these people are in court being prosecuted.

We have dismissed two judges recently, suspended one, are trying two ex-ministers and one formerly-sitting minister, and I could go on and on.  But these are a few examples of very specific things Nigeria is doing.

And as regards the debate concerning me personally, I leave people to judge.  Of course, there are vested interests who want to stand in the way of doing these reforms, but I want to tell you that the President and the country are absolutely committed.  We know we have to do this, and we have implemented a lot of things.

Thank you.

MR. WOLFENSOHN:  And could I just add something, since I know something about this attack, is that there is no one that I know in Africa that is either more correct or more idealistic than Ngozi.  And I think when you start to get close to crooks, they hit back with everything they can.  And it would be my guess that there will be a lot of other things that will be said about Ngozi and about everybody else that is trying to deal with the issue of corruption.

But I would stake my life on Ngozi's integrity, and as you can see from what she is doing, you shouldn't mess with her.


MR. GOLDIN:  Thank you very much, Minister and Mr. Wolfensohn.

Given the constraints of time and the number of people that want to ask questions, I will appeal to you to focus your questions on the Development Committee issues.

The gentleman over here?

QUESTION:  Parasuram, with the Press Trust of India.

Is it possible to state what exactly is the shortfall in money for reaching the Millennium Development Goals?  Are you confident as a result of your discussions that the money can be raised?

Secondly, there is a program for Education for All, but how do you make sure that the education provided is the right kind of education and that you have the well-equipped schools and trained teachers to give the education?  Otherwise, you will get the wrong type of people who are educated.

MR. WOLFENSOHN:  Well, on the first question, I think you know that the broad understanding is that somewhere between $50 billion and $60 billion is being transferred in development assistance today, of which about half goes in cash; the rest goes in services and in debt relief and in specifically-directed assistance, which may be to Iraq or to Afghanistan or some such things.

And so, the first thing that we are all concentrating on is both the volume of the existing funding and, secondly, the efficiency of that funding.  And onto that, you then add, well, how much is the shortfall financially in terms of reaching the goals?  And the general estimate that has got currency at the moment is an amount of cash transfer in the order of $50 billion over the next several years.  That means building up to the level of $50 billion over the next several years, because the absorption capacity might start with $30 billion, $40 billion, $50 billion, and this is the reason for the Gordon Brown initiative on the International Finance Facility and the reason that we have been asked to look at alternative methods of raising money.

So, those are the parameters.  And as to the content of education, you put your finger on something extraordinarily important, because the Education for All can get kids into school, but if there is no school, and if what they are taught is disruptive and incorrect and of poor quality, then, you haven't achieved very much.  And so that is literally part of the program of Education for All.  It is not just getting the kids to the school door or to the tree under which they will be studying.  It is to deal with the question of the mechanics of it as well as the issue of substance.  And that is included in the $3 billion to $5 billion that is needed.

MR. GOLDIN:  Thank you very much.

The gentleman at the back there?

QUESTION:  I'm John Fraher from Bloomberg News. 

I have a question for Mr. Wolfensohn.  Are you concerned that the unrest that we're seeing in Iraq and the disruption of oil supplies that we have seen this weekend could impact on the needs assessment for Iraq?

MR. WOLFENSOHN:  I think the needs assessment is actually quite broad and its order of magnitude, I think, correct, which is fifty-odd billion over a five-year period.  And I think that the sort of damage which we've seen is certainly unattractive, but I don't think that it would cause us to go do an immediate needs assessment or additional needs assessment. 

I think the general feeling is that after a year or two, we're going to have a much better picture, when there is peace, as to what flows of funds are going to be generated internally and how we do in terms of the application of the funds.

I think funding at the moment is not the issue in Iraq.  More than $30 billion has been committed; $1 billion or so has been committed to be made available even before the transfer of power to an official government.  So it is not funding which is the issue at the moment.  The issue, the more significant issue of the weekend is that it is not yet peace, so we can't get people in there to do a lot of the work that we would like to get done.

And so, I think the issue is not money; the issue is security and peace.

MR. GOLDIN:  Thank you very much.

The gentleman in the front row here?

QUESTION:  NHK Japan Broadcasting Corporation. 

I have a question to Mr. Wolfensohn.  Yesterday, you heard Secretary Snow and Japanese Finance Minister Tanigaki agreed to continue to cooperate in supporting the reconstruction of Iraq and Afghanistan.  So how do you evaluate Japan's contribution to help Iraq and Afghanistan reconstruction so far?  And what specific area do you expect from Japan?  Is there anything that other countries cannot do, and Japan can do?

MR. WOLFENSOHN:  Well, I think Japan is a country that has shown great capacity in terms of construction of all types in the developing world.  You have had a significant penetration in terms of your competitive qualities, both in terms of technical capacity and very often in terms of financing.

What you have agreed to do here is to provide financing and, in many cases, grants, so it's a very attractive package, as far as I can see.  But I, candidly, am not familiar with the agreement that was made between the two Ministers yesterday.  They didn't ask me to the meeting, and they haven't yet reported.  It's unlikely that I will get that report in short order, but what I can say is that as far as I can see from the outside is that Japan and the United States are working very well together on Iraq.  But you had better ask the Secretary of the Treasury.

MR. GOLDIN:  I'm afraid we only have time for two more questions:  the lady over there and then the lady over here.

QUESTION:  Thank you; Maria Isabel Rivera, the German Press Agency.

In the Monitoring Report of the Millennium Goals, it says that one of the three main ways of attaining those goals is empowering the poor, which it seems to me that is very much in accordance to the theories that Amartya Sen and (Joseph) Stiglitz have put forward lately.

But in the IMF, it seems that there is still a question about this.  Mr. Anoop Singh said in this meeting that the question for Latin America is if it is possible to have economic growth with the levels of poverty and inequality of Latin America.  So it seems to me that there is a difference, because in the World Bank, it seems to be very clear that tackling poverty is, like, an urgent goal, and in the IMF, Anoop Singh said that it's a question still.

In particular, I would like an answer in general but also in particular with Argentina and the current debate about what to do with the fiscal surplus, if to pay the debt or to invest it in social programs.

MR. CARSTENS:  Well, certainly, as the Fund has been demonstrating in its partnership with the World Bank, with other multinational institutions, in the many programs that we have, poverty is--the abatement of poverty is a real priority for the institution.  We have certainly recognized the relationship between growth and the relationship of reduction of poverty.

Now, the issue is that what the Fund really looks for is to have sustainable reduction in poverty and sustainable--to get the countries to go into sustainable patterns of growth.  And each factor supports each other.  I won't say that only in Latin America, but in general, in general, the work of the Fund in trying to establish first a macro stability is the foundation for poverty alleviation and for growth, and they both go together.

Certainly, there are some cases under which and certain scenarios under which you can have growth and still have poverty, and probably, that's what Anoop Singh was referring to.  But that doesn't take away the fact that a lot needs to be done to reduce poverty and to accelerate growth.  And in case of having fiscal discipline, for example, as is the case of Argentina and many other countries, it is well-documented that the impact of undisciplined fiscal policies hurt the most poor.

Therefore, fiscal discipline over the medium- and long-term provides the government the necessary space and necessary resources, really, to concentrate on essential programs to make more effective the combat against poverty.  So I think that there is really no quarrel between the IMF and the Fund, and more than that, there is a very tight partnership.

MR. GOLDIN:  Thanks very much.

I'm afraid we're running out of time; just very briefly, the lady over here.

QUESTION:  Anna Willard from Reuters.

Was there any discussion at all of the need to write off Iraq's debt and the relationship with finding more money for HIPC countries?

THE CHAIRPERSON:  No, we did not discuss that issue in quite those terms.  There was a lot of discussion of how to complete the work on the HIPC countries, and I think everybody in the Committee was agreed that this is a very urgent problem.  The commitment is still there.  We talked about the issue of the sunset clause for the HIPC and the fact that when we reconvened in October, we need to carefully consider action on this and perhaps looking at the sunset clause and extending, so that countries in the HIPC can fully benefit, those that have not benefitted.

So we discussed all these issues, and I think there was a good agreement on the need to move forward on the HIPC.

MR. GOLDIN:  Thank you very much to everyone.

The transcript of this will be posted in the press room and on our Website, and thanks to the panelists.

[Whereupon, at 3:35 p.m., the press conference was concluded.]

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