Annex A
UK OBJECTIVES AT THE 2003 ANNUAL MEETINGS
OF THE WORLD BANK AND THE IMF
The Chancellor of the Exchequer and the Secretary
of State for International Development will attend the International
Monetary and Financial Committee (IMFC), the Development Committee
and the Annual Meetings of the IMF and World Bank on 21-24 September
in Dubai. The Chancellor (the UK Governor of the IMF) chairs the
IMFC, and as UK Alternate Governor for the IMF, the Governor of
the Bank of England represents the UK at the IMFC. As UK Governor
of the World Bank, the Secretary of State for International Development
will represent the UK at the Development Committee.
UK Objectives for the International Monetary and
Financial Committee (IMFC)
The proposed agenda for the IMFC includes: the
Global Economy and Financial Markets, outlook, risks and policy
responses, including the Doha Development Agenda; strengthening
crisis prevention, including enhancing the effectiveness of IMF
surveillance and promoting policy reforms for improving resilience
to crises in industrial and developing countries; progress with
crisis resolution initiatives; and accelerating poverty reduction
and strengthening sustainable economic growth in low-income countries.
For this last item, Ministers will consider the IMF's role in
low income countries, the Poverty Reduction and Strategy Paper
(PRSP) approach and the Heavily Indebted Poor countries (HIPC)
initiative. In addition, the IMFC will receive progress reports
on Combating Money Laundering and the Financing of Terrorism,
IMF quotas and governance, and the Activities of the Independent
Evaluation Office.
THE GLOBAL
ECONOMY AND
FINANCIAL MARKETS
The IMFC will discuss the outlook for the global
economy, the prospects for a gradual recovery and the potential
risks and vulnerabilities. Ministers will wish to identify the
appropriate policy responses, including the right combination
of monetary and fiscal policy, the necessary structural reforms,
and the steps needed to strengthen the global financial system.
The UK will want to emphasise that all continents need to play
their part in order to achieve a sustainable, broad-based global
recovery. We will also emphasise the contribution of trade to
global economic growth in the medium term in all countries, developed
and developing, and vital importance of bringing the Doha Trade
Round to a conclusion on time.
CRISIS PREVENTION
We will again emphasise the central importance
of improving the effectiveness of crisis prevention, including
enhancing the transparency, authority and independence of the
IMF's surveillance process. We will welcome the work which is
already underway to strengthen IMF surveillance and the "fresh
perspective" initiative in programme countries, as well as
steps underway to improve transparency of Fund documents. We will
seek to encourage greater take-up and more effective follow-up
of the standards and codes initiative, and seek to ensure that
the ongoing review of the Contingent Credit Lines (CCL) finds
ways to achieve the CCL's original objectives, in particular providing
incentives for good policy making.
IMPROVING CRISIS
RESOLUTION
We will stress the importance of the involvement
of the private sector in the prevention and resolution of financial
crises, and the importance of implementing the IMF's procedures
and criteria regarding exceptional access to Fund resources. We
will want to see continued progress in the use of Collective Action
Clauses (CACs) in international sovereign bond contracts, and
also welcome work under way towards the development of a voluntary
code of good conduct. We will also want to ensure that the IMF
continues to pursue its work programme on the issues relevant
to the resolution of crises.
INITIATIVES TO
SUPPORT LOW-INCOME
COUNTRIES
We will reiterate our firm commitment to the
Millennium Development Goals, and the key role of the IMF in helping
to achieving them. The UK will want to establish the principles
of the Fund's engagement in low-income countries over the medium
term. In addition, the UK will be emphasising the need for:
— better alignment of the PRGF with
PRSPs;
— early IMF engagement in the PRSP
process and macroeconomic dialogue; and
— improved use of poverty and social
impact analysis in programme design.
We will also continue to emphasise the need
for a broader approach to financing the Millennium Development
Goals to ensure longer-term debt sustainability in HIPCs, and
for further progress in the Enhanced HIPC Initiative, including
further assistance from the Fund and the Bank in helping countries
overcome the obstacles and delays in reaching Decision and Completion
points. We will stress the importance of sufficient topping up
at Completion Point, the importance of full creditor participation,
and action to tackle HIPC to HIPC debt and address creditor litigation.
We will also seek to take forward the issue of strengthening developing
country voice, an issue that will also be considered in detail
at the Development Committee. We will stress the urgent need to
find ways of raising additional finance in order to meet the Millennium
Development Goals by 2015. We will be seeking Ministers' support
for the establishment of a multi-nation Working Group that will
examine options for making the International Finance Facility
a reality.
OTHER ISSUES
The UK also welcomes the progress made by the
IMF and World Bank on Anti-Money Laundering and Combating the
Financing of Terrorism, and will seek continuing efforts, in cooperation
with the FATF, regional bodies and UN bodies, on the pilot project
of assessments and the delivery of technical assistance.
We look forward to progress reports on IMF quotas
and governance and the activities of the Independent Evaluation
Office.
UK Objectives for the Development Committee
This Autumn's Development Committee has three
main themes: Supporting Sound Policies with Adequate and Appropriate
Financing; Enhancing Voice and Participation of Developing and
Transition Countries; and a Progress Report on Trade. In addition,
papers will be received on: Implementation Report of Policies,
Actions and Outcomes Needed to Achieve the MDGs; Progress on the
Implementation of Poverty Reduction Strategy Papers (PRSPs); Progress
on the Heavily Indebted Poor Countries (HIPC) Debt Initiative;
and the World Bank Group Infrastructure Implementation Action
Plan, for comment in Ministerial statements. The Chancellor and
Secretary of State will submit a joint written statement to the
Development Committee setting out UK views for the discussion.
SUPPORTING SOUND
POLICIES WITH
ADEQUATE AND
APPROPRIATE FINANCING
We welcome the World Bank paper estimating the
additional financing required by individual countries to meet
the Millennium Development Goals (MDGs). We particularly support
the findings that current levels of aid are insufficient to meet
this challenge and that there is an urgent need to find ways of
increasing available resources both in the medium and longer-term.
The UK's proposal for an International Finance Facility (IFF)
seeks to bridge this financing gap and we are seeking support
for the establishment of a multi-nation Working Group that will
examine options for making the IFF a reality. We will be promoting
an ongoing role for the Bank in monitoring financing shortfalls
at the country level and offering guidance to donors in ensuring
that global aid allocation patterns do not leave individual countries
lacking appropriate levels of financing. We will also be pressing
the Bank, in making allocations, to pay sufficient attention to
the balance between poverty and performance in each borrower member
country.
Rising levels of development finance will heighten
the importance of increasing aid effectiveness. Donors' behaviour
will need to improve, with particular emphasis on increased alignment
behind country poverty reduction strategies and harmonization
of practices with other donors. A greater share of resources will
also need to be provided in a form that is untied, predictable
and able (where appropriate) to finance recurrent costs. The IFF
can make a significant contribution to this objective, since it
would provide immediate, predictable finance in grant and concessional
loan form and encourage greater donor co-ordination. Developing
countries will need to implement further reform in the governance
and accountability of public institutions, and show leadership
in encouraging donors to align their programmes with poverty reduction
strategies. We will be urging the Bank and other stakeholders
to implement fully the commitments they have made in these areas.
ENHANCING VOICE
AND PARTICIPATION
OF DEVELOPING
AND TRANSITION
COUNTRIES
We welcome the paper outlining initiatives currently
under way to enhance developing and transition countries' participation
in the decision making process of the Bretton Woods Institutions
(BWIs). We also welcome the paper's recognition that Voice is
a long-term agenda that will require continued effort over time
on a range of issues. We look forward to further mainstreaming
of the Voice agenda in the work of the BWIs, and will press for
a formal progress report to the Annual Meetings in 2004.
On capacity building, we endorse the progress
that has been made in strengthening Executive Directors' offices,
but will also emphasise the need for this to be sustained. In
particular, we will seek formal endorsement from Governors on
the establishment of an Analytical Trust Fund to facilitate independent
research and policy advice for developing countries' Executive
Directors at the Bank and the Fund, and will press other donors
to join us in making a financial contribution to this Fund. We
also believe that action can be taken within the institutions
themselves to increase developing country voice. We will press
Managements to produce a short report on actions they are taking
in both the Bank and Fund to strengthen the Voice agenda. This
should focus, in particular, on issues of diversity, transparency
and decentralisation, and on other issues identified by developing
country members.
In relation to IDA, we will request Bank Staff
to take urgent action to enhance the role of borrowers in the
IDA-13 Mid-Term Review and in the IDA-14 replenishment negotiations.
Further thought should also be given in the context of these negotiations
to options for maximising take-up of IDA subscription votes.
On structural issues at the Board level, we
will reiterate our belief that a 25th seat (for Sub-Saharan Africa)
on the Boards of the IMF and World Bank would be an important
means of increasing the effectiveness of developing country representation
and should be seriously considered, and our belief that there
should be an increase in the Basic Vote as part of any future
revision of the Articles of Agreement. We will also emphasise
that progress on these issues is essential if we are to deliver
on our Monterrey commitments.
PROGRESS REPORT
ON TRADE
We welcome the expansion in both depth and scope
of the World Bank's trade programme over the past few years. In
particular, there have been significant efforts with others to
ensure that trade-related capacity building activities are supporting
national development programmes. This is absolutely essential
in helping countries exploit new trading opportunities and should
remain a priority for the World Bank in the future.
More generally, the UK is working hard to help
ensure a successful outcome at the 5th Ministerial Conference
of the World Trade Organisation in Cancun. This must include significant
progress on issues of high priority to developing countries, namely
agriculture and special treatment for different countries. It
is also critical that we develop a trade agenda, within the context
of national development plans, which addresses developing country
concerns raised during the WTO's Doha round of trade talks in
November 2001. We welcome the recent joint initiative from the
Bank and the Fund to help the weakest and most vulnerable countries
adjust to trade liberalisation. This should help them cope with
potential negative impacts of reform such as preference erosion
and loss of tariff revenues. We will urge the Bank and the fund
to work more closely with the WTO, UNDP, UNCTAD and donors to
set out the details over the coming months.
IMPLEMENTATION REPORT
OF POLICIES,
ACTIONS AND
OUTCOMES NEEDED
TO ACHIEVE
THE MDGS
We welcome the progress made in developing the
global monitoring framework of policies and actions needed to
achieve the MDGs. We also broadly support the outline for the
first Global Development Review to be presented to the Development
Committee next Spring. However, we will emphasise the importance
of ensuring that this Review contains clear operational recommendations
to ensure a successful discussion at the Spring Meetings. We will
also call for continued close collaboration with other development
partners in the production of the Review. With regards to the
monitoring of developing country policies, we will highlight the
importance of using PRSPs and PRSP annual reports in order to
ensure that assessments are embedded in country owned processes.
We will also welcome the work under way in monitoring IFI policies
and will press for assessments of aid quality—particularly
progress on PRSP alignment and donor harmonisation and coordination—to
be included in this monitoring process.
PROGRESS ON
THE IMPLEMENTATION
OF POVERTY
REDUCTION STRATEGY
PAPERS (PRSPS)
We welcome the joint World/Bank IMF paper on
progress in implementation of Poverty Reduction Strategy Papers,
which provides a comprehensive review of the major issues involved
in PRSP implementation. We also welcome the recognition of the
need to address tensions in the PRSP process, make greater progress
on alignment and harmonisation and strengthen participatory processes.
We look forward to the next PRSP progress report, which we hope
will contain an additional focus on the Bank and Fund's progress
in supporting the PRSP process. In particular, we will be encouraging
the Fund to engage early in the PRSP process and support governments
in their macroeconomic dialogue with civil society and donors.
We will also emphasise that we would like to see more details
about the Fund's work on Poverty and Social Impact Analysis (PSIA),
within its areas of competence. We will also be encouraging the
Bank to undertake further work to strengthen PRS monitoring processes,
which are a key element to embedding the PRSP in national policy
making processes.
PROGRESS ON
THE HEAVILY
INDEBTED POOR
COUNTRIES (HIPC) DEBT
INITIATIVE
The UK would like to resolve the issue of the
calculation of debt relief at HIPC Completion Point, in order
to ensure that the additional relief provided by some bilateral
creditors is truly additional to any `topping up' of debt relief.
The UK is also keen to press forward with the implementation of
the HIPC Initiative, and we are seeking an analysis of the reasons
for delays in some countries reaching their Decision and Completion
Points, as requested by the G8 at Evian. We hope that this will
stimulate debate about what more can be done to speed up implementation.
The key issue for the UK, however, is how to
ensure longer-term debt sustainability in HIPC countries. This
means developing new forward-looking financing strategies to provide
countries with the support they need to meet the MDGs in a way
that does not risk undermining their debt sustainability in the
longer-term. We hope that discussion at the Annual Meetings will
give a clear direction to this debate, so that solutions can be
identified by the time of the 2004 Spring Meetings.
However, debt relief alone, no matter how generous,
cannot guarantee long-term debt sustainability. We cannot achieve
the Millennium Development Goals without greater aid resources.
WORLD BANK
GROUP INFRASTRUCTURE
IMPLEMENTATION ACTION
PLAN
The UK welcomes the Infrastructure Action Plan.
We believe the plan is well balanced and realistic. The UK's objectives
are to ensure that the Bank's drive to increase expenditure on
infrastructure services is achieved without returning to indiscriminate
project lending. Maintenance and management must receive as much
emphasis as the installation of capacity. Lending must not displace
private sector funding where this is a credible alternative (indeed,
any lending should be part of a policy to develop sustainable
markets)—and institutional support including capacity building
must be completely integrated into investment programmes.
| 
