Speech

The Monterrey Consensus and Beyond: Moving from Vision to Action -- Introductory Remarks by Horst Köhler, Managing Director, IMF

March 21, 2002

I would like to join in giving thanks to President Fox, for hosting this Conference on Financing for Development. And I would also salute the leadership of Kofi Annan, who has been a constant source of wise advice and friendship.

Mr. President, ladies and gentlemen, this conference should become a milestone in the fight against world poverty. I do think it is possible to achieve the Millennium Development Goals. The IMF is deeply committed to playing an active part in this effort. It is an honor to share my vision of the IMF's role, and to seek your input and support.

I welcome the intensive and critical debate about globalization. We need to work for a better globalization—one that provides opportunities for all, and one in which risks are contained. But let us not confuse ourselves—integration into the global economy is good for growth, and growth is essential for fighting poverty. The world needs more integration, not less. But it also needs stronger international cooperation, to guide and shape the process of globalization. We must do our utmost to ensure that people at the local level understand this process, are engaged, and have the means to take advantage of its opportunities. We need to build bridges through dialogue, cooperation, and inclusion, to create a sense of global ethics. And the interactions between people and nations must respect human rights, while recognizing personal and social responsibility.

I am encouraged that there is an unprecedented degree of agreement about what is required to overcome world poverty. The Monterrey Consensus defines the right priorities. It makes clear that nothing will work without good governance, respect for the rule of law, and policies and institutions which unlock the creative energies of the people and promote investment—including foreign direct investment. It also recognizes that when poor countries are ready to live up to these responsibilities, the international community should provide faster, stronger, and more comprehensive support. I see four priorities for that support:

The IMF itself is in a process of reform, learning from experience and driven by our desire to make globalization work for the benefit of all.

• We are making the IMF transparent, and advocating transparency for our member countries.


• Knowing that financial crises can undo years of economic and social progress, we are concentrating more than ever on crisis prevention.


• We are actively promoting rules of the game for the global economy, through our work on standards and codes.


• We are helping our members to strengthen their domestic financial sectors, and to combat money laundering and the financing of terrorism.


• In our work on international capital markets, we are looking equally at risks in emerging markets, and risks coming from the advanced countries.


• We are trying to define more clearly the roles of the IMF and private creditors in financial crises. I believe it is essential to be able to resolve unsustainable debt situations in a more orderly, faster, and less costly manner. I therefore welcome the ongoing debate on IMF Management's proposal for a sovereign debt restructuring mechanism.


• We have become more focused on the IMF's core responsibility for macroeconomic stability—not as an end in itself, but as a precondition for sustained growth, and because the poor suffer most from high inflation, unsound public finance, and volatility.


• We are also taking steps to focus IMF conditionality and make room for true national ownership of reform programs.


• And we are working in close cooperation with other international institutions, especially the World Bank and the broader UN family.

We recently completed a thorough review of the Poverty Reduction Strategy Paper (PRSP) process, pioneered two years ago by the IMF and World Bank, and the IMF's Poverty Reduction and Growth Facility (PRGF). Our worldwide outreach, including the UN and civil society, has confirmed that the PRSP process is a promising approach for tackling poverty systematically. Why?

• First, because it is a country-led approach.
  
• Second, because it is a comprehensive, long-term approach, which integrates the economic and social perspectives.
  
• And third, because it aims at broad consultation and engagement with domestic stakeholders and development partners.

Our reviews showed that there is room for improvement. We want to make sure that every PRSP and PRGF-supported program is tailored to the circumstances of individual countries. We will be working for an open dialogue with stakeholders about the content of reforms and possible alternatives. We need to pay more attention to the sources of sustainable growth, and to poverty and social impact analysis. And donors must better align their assistance with PRSP's, simplify and harmonize their procedures, and work for a more predictable aid flows.

It would be right to adopt the proposed "Monterrey Consensus" as an outcome of this conference. Beyond Monterrey, we must transform this consensus into concrete action, with a sense of urgency. And we need to develop a comprehensive and transparent system to monitor progress toward the Millennium Development Goals. As part of this process, we should identify more clearly the respective responsibilities of poor countries and their development partners—donor countries, international institutions, the private sector, and civil society. On this basis we can establish better accountability. I would have no hesitation in subjecting the IMF to the scrutiny of such a monitoring system, provided that it did not produce bureaucracy and would apply equally to all the parties involved.

Mr. President, ladies and gentlemen, with a concerted effort, I am optimistic that we can achieve the goals we have set. The global economy appears to be in a process of recovery. The United States has demonstrated leadership through timely policy action to minimize the risk of a more severe downturn. And I am confident that developing countries will benefit. The resilience of the global economy and financial system shows that the initiatives to strengthen the international financial architecture are beginning to pay off. The implementation of the Monterrey Consensus should be a next chapter in our efforts to create a better world.