Sinha: While we discussed the issue of strengthening growth and fighting poverty in the developing countries, the emphasis in this meeting was clearly on the HIPCs [Heavily Indebted Poor Countries] and largely, therefore, on Africa. We took note of the joint visit to Africa of the President of the World Bank and the Managing Director of the IMF. They held discussions with African leaders and at the end of it they addressed communications to Chancellor Brown and to me in our respective capacities. That was a very important input for the discussions this afternoon.
On all of the issues that we had before us, we have received some very valuable insight and advice with regard to our future direction. I think the world community is completely committed to the processes of poverty reduction and growth, to debt forgiveness, to enhanced flows of official development assistance, to peace and conflict resolution, and to the question of better market access for the products of the developing countries, especially the HIPCs, to all markets, especially the markets of the developed countries.
The joint meeting has been extremely useful. Once again, the world community has come together to reconfirm, reaffirm, reiterate its commitment to poverty reduction in the developing countries and especially in Africa.
Brown: I think you’ll find the communiqué is the strongest statement yet that what we can achieve together—developed countries and developing countries, IMF and World Bank—is so much greater than what we can achieve on our own, and to achieve it not simply for debt relief as we move forward with that program. By creating a virtuous circle of debt reduction, poverty reduction, and sustainable development, we can meet the 2015 international development targets to which we have all subscribed—World Bank, IMF, and individual countries.
You will see in the communiqué also a recognition of the importance of the resumption of the multilateral trade talks so that we can open up markets to developing countries in a way that has not been done before. Almost all the speakers around the table emphasized that point, the importance of the development aid budgets, the importance we attach to the poverty reduction strategy papers, and the praise we give to IMF and World Bank cooperation to make these an essential instrument of poverty reduction and development.
We looked at the issue of debt, and we are of the view that the sustainable exit from debt burdens should not be undermined by changes in the terms of trade or by our inability to bring together a postconflict program or indeed by the financing available to the institutions themselves. We resolved that we must look carefully at these issues and ensure that we can build on the 22 countries that have achieved debt relief, make sure that that position for them is sustainable. Equally, we need to bring in additional countries, and particularly, of course, we are concerned about the 11 postconflict countries that so far cannot benefit from debt relief, as well as those countries still facing conflicts.
There was one other area where we are in agreement as well. To meet the 2015 targets, there will have to be a special emphasis on education and on health. The IMFC communiqué this afternoon draws attention to the Dakar commitments on education. You can see in the statements made by a number of countries the interest that is now growing in a health initiative that can tackle the problems not simply of HIV/AIDS but also the problems of tuberculosis and malaria, which are responsible each year for more than four million deaths, most of them unnecessary and avoidable deaths, around the world. I believe that we will see in the next few weeks and months a new initiative on health that will bring together the international organizations; individual countries, including Group of Seven countries; and perhaps also the private sector. There was a recognition today that just as prosperity is indivisible, the reduction of poverty is a duty for us all.
Brown: I’ll ask Jim Wolfensohn to say something about this, because he has already written about it and its importance. But there has been a proposal from the Italian government backed by the United Kingdom at the Group of Seven for a health fund. There’s been a suggestion that it would concentrate on drugs, commodities, and vaccines for tuberculosis, malaria, and AIDS. There is growing support for that from a number of other countries as well as the work being done by the international organizations. I believe it is possible over time also to involve the pharmaceutical companies.
Some governments, like the U.K. government, are also considering a research and development tax credit that would encourage research into diseases, in particular diseases that carry off so many people in the poorest countries. When we know that only 10 percent of pharmaceutical research covers diseases that affect 90 percent of the people, we know that there is an urgency in moving forward with the research program into diseases and the development of vaccines and drugs.
Wolfensohn: We don’t yet have any final numbers or, indeed, any assurance of the form of this, but it will include the World Health Organization and the United Nations. The World Bank has said it’s ready to administer the fund. It would work with the other organizations, but it is as yet premature to say how much or where until the donors decide. Anything that’s done in the fund would complement what the Bank is doing on HIV/AIDS. My guess is we’ll be north of $1 billion this year just from the Bank alone, but as to the scope of the fund, it’s yet to be determined.
Brown: The U.K. Secretary of State for International Development, Clare Short, and I are hoping to attend a meeting in New York on Tuesday to discuss some of the elements of the fund with interested parties. This is a window of opportunity that we will miss at our peril. It is important that we make progress as soon as possible.
Fischer: There is a global slowdown taking place, but the international community is helping the countries most affected, which are Turkey and Argentina. We have made significant progress. We’re very close to signing an agreement with Turkey and one with Argentina, possibly in a day or two. The IMFC expressed unanimous and very strong support for the actions the IMF proposes to take in both of these cases. The Mexican economy is slowing down, but it is speaking to the IMF about the possibilities of Contingent Credit Lines in the future, and it has strengthened enormously in the seven years since the crisis. It has been very vibrant. What the IMFC emphasized is that there is a growth slowdown, but there are good prospects that it will be turning around by the end of this year. Most important, we stand ready to help countries, whether they be in Latin America or Asia or Africa, if they are affected by this slowdown.
Fischer: On the IMF and conditionality, the Managing Director has been emphasizing very strongly the desire to streamline conditionality. That process has already started with guidelines that went into place last September. It’s visible in the number of conditions and the focus of conditions in our programs. If you check on the web (www.imf.org), you’ll find what has been done since then. This is part of an ongoing discussion to focus conditionality on macroeconomics and financial sector matters, and that’s happening. There was unanimous support for that in the IMFC today.
“The world community is completely committed to the processes of poverty reduction and growth.”
The process is not over. We need to look at what problems may arise as we continue to do this, and then decide on formalizing precisely how we want to move. But that there will be fewer conditions, more streamlined conditions designed to strengthen conditionality and make it more effective, there is no doubt.
There was also a lot of discussion of governance. Those are very complicated issues. But the notion that macroeconomic conditionality would be replaced by governance conditionality is wrong. There is no intention of doing that. The IMF will focus on macroeconomic conditionality.
Brown: On HIPC, we were asked at the IMFC to consider the debt sustainability of the 22 countries and others coming through the debt-relief process. We were asked to look at the question of postconflict countries and the position of countries still in conflict and their debt relief. We were asked to look at instances where circumstances change for countries generally. I believe that the IMFC and the joint meeting have shown that we will be alert to the problems that arise in the debt reduction process.
First of all, on sustainability, we say we will agree on the importance of regular monitoring of the debt situation. In exceptional circumstances, when external factors cause fundamental changes in a country’s circumstances, we reaffirm that within the HIPC framework the option exists at the completion point to consider additional debt relief.
On conflict countries, there were special measures that we are prepared to look at to help the 10 or 11 countries trying to escape from conflict that would need to achieve greater help more quickly. And equally, we’re looking at the causes of the debt problem and focusing on the 2015 targets and sustainable development for these countries and the importance of the poverty reduction strategies. All the issues that have been raised with us have been addressed in this important meeting. The international community will remain alert to these problems.