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2001 IMFC
Statements Statement by H.E. Didier Reynders, Speaking on behalf of Austria, Belarus, Belgium, Czech Republic, Hungary, Kazakhstan, Luxembourg, Slovak Republic, Slovenia and Turkey Joint Meeting of the International Monetary and Financial Committee and the Development Committee, on Fighting Poverty and Strengthening Growth, Washington, D.C., April 29, 2001 From the work of the IMF and the World Bank since the Prague meetings and the mixed results so far, I conclude that our strategy to reduce poverty and strengthen growth in the poorest countries should include the five following elements. First, let us all use our influence to bring armed conflicts to an end. It is of course commonplace to say that peace is an essential element for growth and poverty reduction. It must nevertheless be emphasized, in view of the numerous conflicts that have been ruining the productive capacity and the social fabric of too many countries in Sub-Saharan Africa. Until peace is restored, humanitarian assistance is essential to alleviate human suffering. But, as long as war goes on, aid is ineffective to revive economic growth and reduce poverty. Worse, it can be misused to intensify or prolong conflicts. Central Africa has many resources to contribute to the international community, notably a unique richness in mineral resources. Trading them for arms undermines its own future prosperity. It must stop. We should all work, in particular, to bring the war in the Democratic Republic of Congo to a rapid end. Second, once peace is restored, it is essential that the IMF and the World Bank contribute, early on, to the international community's assistance to post-conflict countries. Early assistance by the Fund to develop a macroeconomic framework and by the Bank to rebuild physical and social infrastructure and restore the socio-economic conditions for growth is indispensable to mobilize donor support. I support the Managing Director's request for SDR 10 to 20 million from donors to subsidize the interest charges of the Fund's emergency post-conflict lending. Belgium is considering its contribution. As for the World Bank's role in this area, I support an increase of contributions to the Post-Conflict Fund for technical assistance and capacity building. As far as the application of the HIPC framework to post-conflict countries is concerned, the right balance will have to be struck between the need to provide HIPC assistance as early as possible and the necessity to build an adequate track record of policy performance, as requested from all eligible countries. Third, poor countries must implement strong economic, financial and social policies. Aid and debt relief are ineffective at boosting growth and reducing poverty when macroeconomic and financial policies are loose, social policies weak, corruption rampant, trade polices inward-looking, and structural distortions pervasive. The initiation of Poverty Reduction Strategies designed, implemented and monitored by the authorities in close collaboration with all stakeholders is a major regime shift that should unleash growth and reduce poverty. But the utmost care should be taken not to rush the drafting of Poverty Reduction Strategy Papers (PRSPs) for the sake of delivering rapid debt relief to a pre-announced number of countries. In doing so, we would compromise their ability to promote the ownership and the effectiveness of programs supported by the international community. The improvement of Public Expenditure Management Systems must be an essential component of all PRSPs: better systems are essential to make sure that public expenditures, including poverty reducing ones, are productively spent and improve living conditions. I expect that, over time, the gradual increase in World Bank programmatic lending will strengthen the poorest countries' Public Expenditure Management in a fully owned and sustainable manner. Fourth, the poorest countries must increase their share of world trade. Free trade, as a complement to sound domestic policies, has a strong potential for leveraging growth and poverty reduction. If they peacefully resolve conflicts and radically orient their economies towards growth and poverty reduction, poor countries will raise their share of world trade and share the benefits of globalization. Advanced and middle income countries must play their part by fully opening their markets to the poorest countries' exports, as the European Union has just done with its "Everything But Arms" initiative. But the poorest countries must also act. They must liberalize their still restrictive trade regimes, harmonize African sub-regional trade arrangements, and reduce the high transaction costs imposed by underdeveloped or damaged transport, telecommunications and financial infrastructures. Finally, the poorest countries will need more Official Development Assistance (ODA) in order to maintain the sustainability of their external debt beyond HIPC debt relief, and meet the well defined and widely shared International Development Goals by 2015. Identifying the resources to help the poorest countries reach these goals is the key objective of the UN Summit on "Financing for Development" next year. I call on the IMF and the World Bank to engage actively in the preparations for this summit, by providing an estimate of the external financial support needed to meet the International Development Goals. The technical expertise and leadership of the Bretton Woods Institutions are crucial to the success of this initiative. Raising ODA from its present level is a major challenge for many industrial countries, in view of the mixed results of past aid. Aid fatigue is a reality that cannot be denied. Increasing ODA can only be justified by the faith in a better future where the poorest countries live in peace and implement strong and effective policies for growth and poverty reduction. The Bretton Woods institutions and the donors' community should do all they can to make this vision a reality. Clear indications that poor countries' authorities are helping their people are indispensable to convince industrial countries' parliaments to help them more. I look forward to our next meetings, when I hope to hear further evidence that we all have made progress in implementing our parts of this common strategy to strengthen growth and reduce poverty in the poorest countries. |