The sixty-first meeting of the Development Committee was held in Washington on April 17, 2000, under the chairmanship of Tarrin Nimmanahaeminda, Minister of Finance of Thailand. The Committee’s deliberations took place against the background of growing public debate about the appropriate roles of international institutions at a time when governments and people throughout the world confront the opportunities and rapid changes brought about by globalization. In their discussions of how to strengthen efforts to reduce poverty, to intensify the attack on HIV/AIDS, and to expand the benefits of trade to all countries, ministers emphasized the importance they attach to preserving and further strengthening the family of multilateral institutions as a powerful force for global progress, equity, and stability.
Intensifying action against HIV/AIDS
Ministers emphasized that the HIV/AIDS epidemic, which has already infected about 50 million people, is not only a very serious public health concern and the cause of great human suffering, but a severe danger to development progress itself. Ministers recognized that HIV/AIDS weakens economic growth, governance, human capital, labor productivity, and the investment climate, thereby undermining the foundations of development and poverty reduction. Ministers noted that the epidemic now poses not only an acute danger to development in sub-Saharan Africa but also a rapidly growing threat in Asia and the Caribbean and a probable threat in many eastern European countries and elsewhere as well. As HIV spreads quickly, even countries with currently low infection rates cannot afford to delay strengthening anti-HIV/AIDS programs.
In view of this alarming situation, the Committee called for rapid intensification of international action on the global HIV/AIDS crisis. Given the urgency of prevention and the vast needs for care and treatment, the Committee stressed the importance of effective partnerships to encourage each actor in the international system to focus on its comparative strength. Ministers urged governments, international agencies, civil society, the media, and the private sector, including the pharmaceutical industry, to step up their efforts, building on experience gained in ongoing activities. They urged developing and transition countries to increase their political and economic commitment to combating HIV/AIDS, to address the epidemic on a multisectoral basis, to scale up programs to nationwide—and in some cases regional—scope, to strengthen the primary health care systems needed for effective delivery of services, and to provide more resources directly to local communities. The Committee encouraged industrial countries and international organizations to mainstream HIV/AIDS in their development programs and to devote increased financial and institutional resources on a scale commensurate with the scope of the crisis. Ministers recognized that support for capacity building is particularly important in addressing this long-lasting development problem.
Ministers welcomed the World Bank’s expanded efforts against HIV/AIDS, in particular its active participation in the UNAIDS partnership, its new HIV/AIDS strategy for Africa, and its work with the Global Alliance for Vaccines and Immunizations. They urged the Bank to intensify its HIV/AIDS work on a global basis, focusing on its areas of expertise, and called on the Bank and the IMF to take full account of HIV/AIDS in their support for poverty reduction strategies and the HIPC [Heavily Indebted Poor Countries] Initiative.
Trade, development, poverty reduction
Ministers emphasized the critical importance of trade for development and poverty reduction. They noted that accelerated and sustainable growth is a necessary condition for reducing poverty and that more open economies tend to grow faster than closed ones; evidence suggests that substantial benefits could be gained from further liberalization of trade regimes in both developed and developing (including transition) countries. Ministers recognized that developed countries have much to do to improve market access for developing countries’ exports (for example, agriculture, textiles). Developing countries need to implement appropriately sequenced outward-oriented reforms that will permit trade expansion to promote development and poverty reduction. Ministers noted that the majority of the poorest countries lag behind in their integration into the world trading system. Additional domestic and international reforms are needed, including special consideration of enhanced market access for these countries (for example, by extending comprehensive and predictable duty-and quota- free market access). Ministers also noted the potential of regional integration to help developing countries increase their share in global markets. Ministers strongly endorsed a timely initiation of WTO [World Trade Organization] multilateral trade negotiations that address, among other issues, those of most concern to developing countries.
Ministers emphasized that countries should ensure that their efforts to expand trade are integrated into a comprehensive framework for development that includes the necessary complementary reforms and investment in institutions, infrastructure, and social programs. Ministers endorsed the commitment of the World Bank and the IMF to use their programs to support these efforts, which are increasingly reflected in countries’ poverty reduction strategies. Ministers reiterated their call on the Bank, the IMF, and the WTO to cooperate with other parties in developing effective programs of capacity building for trade, including through an improved Integrated Framework for Trade-Related Assistance for the Least-Developed Countries. The Committee urged the Bank to mainstream trade in its country assistance programs by providing greater financial and technical support to improve trade-related infrastructure and institutions, including building domestic capacity for trade policy and negotiations, and by undertaking a strengthened research program on, among others, trade barriers to developing country exports, the issues developing countries face in implementing the Uruguay Round agreement, and the complex links between trade and poverty.
Ministers noted the progress made in implementing the enhanced HIPC framework endorsed by the Committee at its last meeting. Five countries—Bolivia, Mauritania, Mozambique, Tanzania, and Uganda—have thus far reached their decision points under this new framework, bringing total committed debt relief under the HIPC Initiative to more than $14 billion; moreover, up to 15 additional country cases could be considered by the Bank and the IMF Executive Boards this year. Ministers encouraged the governments of HIPC-eligible countries to continue to work closely with the Bank and the IMF and other partners in pursuing sound policies and delivering effective reform programs, so that the delivery of HIPC debt relief, and the related poverty reduction strategies, can move forward as swiftly as possible. The Committee welcomed the establishment by the Bank and the IMF of a joint implementation committee to facilitate effective implementation of the enhanced HIPC Initiative and the new poverty reduction strategy approach.
Ministers appreciated that participation in the enhanced framework had now been approved by the governing bodies of a majority of multilateral institutions, although they recognized that successful implementation of the initiative will depend upon the timely availability of adequate financing to meet their full debt relief costs. While these institutions were encouraged to utilize their own resources for this purpose to the greatest extent possible, ministers recognized that many multilateral institutions needed additional bilateral support on an urgent basis. Ministers welcomed donor pledges and commitments of resources, including those announced since September, and urged that these pledges be turned into actual commitments as soon as possible. They also recognized that even with these pledges, the initiative remains underfunded. Donors that had not yet done so were urged to make generous contributions to the HIPC Trust Fund. Ministers reiterated the need to ensure that debt relief does not compromise the financing from concessional facilities such as IDA [International Development Association]. Ministers also reiterated the importance of the principle that all bilateral creditors should participate fully in the provision of relief under the enhanced initiative, while recognizing the need for flexibility in exceptional cases.
Countries should ensure that their efforts to expand trade are integrated into a comprehensive framework for development.
Poverty reduction strategies
Ministers welcomed progress in implementation of the poverty reduction strategy approach. The Committee had endorsed this approach at its last meeting as a means to strengthen the link between debt relief—and external assistance more generally—and poverty reduction and to enhance the poverty focus of all Bank and IMF concessional lending. Ministers noted that many governments in low-income countries had begun to develop, through transparent and participatory processes, country-owned, comprehensive strategies that addressed key issues in tackling poverty, such as equitable growth, governance and corruption, and institution and capacity building. Ministers welcomed the steps taken by governments to develop and implement interim strategies that permit HIPC debt relief and concessional lending to be provided while governments prepare more comprehensive poverty reduction strategies.
Recognizing that this approach involves new ways of assisting low-income countries, ministers urged the IMF and the World Bank to allocate adequate resources to support the poverty reduction strategy paper process. The institutions were urged to continue to work collaboratively with member countries and other development partners to develop full poverty reduction strategies, integrated with macroeconomic and fiscal policies. These strategies should incorporate lessons learned as implementation proceeds, including concentration on a limited number of clear, realistic, and measurable performance targets and including those related to the international development goals. As poverty reduction strategies need to be mainstreamed, ministers emphasized they should be fully integrated into countries’ budget cycles. They also emphasized the importance of increased efforts, including both technical assistance and funding, to improve statistics and other data and the analytical skills at the country level needed to make the approach a success. Moreover, they encouraged bilateral and multilateral agencies to support governments in the preparation of their strategies. These agencies were also encouraged to participate in the discussion of the design of these strategies with the objective of increasingly aligning their assistance programs to these strategies as they are put in place, thereby strengthening donor coordination and reducing excessive burdens on developing country governments.
Commonwealth Secretariat/ World Bank Joint Task Force on Small States
Ministers welcomed the report to the Development Committee and its analysis of the special characteristics of small states that make them particularly vulnerable, while noting that a number of larger states shared some or all of the same characteristics. They noted the report’s conclusions that tackling small states’ development challenges will take a combination of correct domestic policy action, continued external assistance, and—where achievable—improvements in the external environment. They also noted the report’s recommendation that the circumstances of small states should be taken into account in the policies and programs of the multilateral trade, finance, and development organizations. The Committee supported World Bank and IMF proposals for their future work programs on the issues of small states, as set out in the report, and agreed that these steps could make a valuable contribution in helping small states face their development challenges.
International financial architecture
Ministers welcomed the Bank’s continuing contribution to global efforts to reduce the risk, and mitigate the impact, of future financial crises, noting that actions and policies that reduce vulnerability to crises also support successful development. The Committee welcomed the close collaboration that had developed between the Bank and the IMF on the program of financial sector assessments, the reports on the observance of standards and codes, and the work on debt management. Ministers encouraged the Bank to make systematic use of these assessments in designing, delivering, and mobilizing support for capacity building.
World Bank financial capacity
Ministers reviewed an updated report on this subject from the World Bank and confirmed that the Bank’s finances remain sound. At the same time, ministers recognized that the Bank’s financial capacity may at some point limit its ability to respond to future demands. Ministers requested management and the Executive Board to keep this subject under review and continue to report regularly to the Committee.
The Committee’s next meeting is scheduled for September 25, 2000, in Prague, Czech Republic.