Annex A
UK OBJECTIVES FOR THE 2005 ANNUAL MEETINGS
OF THE WORLD BANK AND THE IMF
The Chancellor of the Exchequer (the UK Governor
of the IMF) and the Secretary of State for International Development
(the UK Governor of the World Bank) will attend the Annual Meetings
of the IMF and World Bank on 24-25 September in Washington. The
Chancellor will chair the International Monetary and Financial
Committee, at which the Governor of the Bank of England will represent
the UK (as UK Alternate Governor of the IMF). The Secretary of
State for International Development will represent the UK at the
Development Committee.
UK OBJECTIVES FOR
THE DEVELOPMENT
COMMITTEE (DC)
The Development Committee will discuss three
main issues this year: the World Bank's Africa Action Plan, Debt
Relief, and Trade. In addition, ministers will receive progress
reports on the World Bank's Conditionality Review, Aid Financing
and Aid Effectiveness, Infrastructure, the 2005 Review of the
PRS Approach, the HIPC Initiative, Voice and Participation of
Developing and Transition Countries, and Climate Change. The Chancellor
and Secretary of State will submit a joint written statement to
the Development Committee setting out the UK's views for the discussion.
Africa Action Plan
We will be seeking agreement to an ambitious
Africa Action Plan that will set out what more the Bank will do
to assist Africa, and will ensure the Bank plays a major role
in a better coordinated international effort to support faster
progress in Africa towards the MDGs. This includes increasing
development assistance and making it more effective. The Bank
should take a lead in improving aid effectiveness.
We will encourage the Bank to do more to build
capable states and improve governance; to support the drivers
of growth, including playing a full part in the Africa infrastructure
consortium; and to promote the ability of poor people to participate
in and benefit from growth. The Bank should strengthen its work
in fragile states and those affected by conflict, as well as in
those performing well.
We will urge the Bank, working with the DAC
and the Africa Partnership Forum, to increase its focus on outcomes
and on measuring and managing for development results, at both
the country and the development community level. We will push
the Bank to strengthen partnerships at country level, working
closely with other donors in support of country-led programmes,
and to take a lead in pursuing harmonisation.
Debt Relief
Debt relief is a vital source of development
assistance. At the Annual Meetings we will press for agreement
of the G8 debt proposal, to cancel 100% of the remaining post-HIPC
debts of qualifying countries to International Development Association
(IDA), the IMF and the African Development Fund (AfDF). We will
also seek similar agreements at the IMFC and the Board of Governors
of the African Development Bank.
We will also be reaffirming the need to ensure
that the Heavily Indebted Poor Countries (HIPC) Initiative is
fully implemented. We note from the HIPC Update that several additional
countries are eligible for the exceptional debt relief provided
by HIPC. We will be urging these countries to demonstrate the
strong commitment to poverty reduction required by the international
community for this relief. We will also be pressing the Bank and
the Fund to support these countries to ensure that they qualify
as soon as possible. We will continue to press for realistic conditions
to be set that are clearly drawn from national plans.
Trade
Increased trade is vital to increased growth
and can contribute significantly to global development prospects
and the achievement of the Millennium Development Goals. A key
priority for the UK this year is to achieve a successful outcome
to the World Trade Ministerial conference in Hong Kong in December
which delivers on the ambition of the Doha Development agenda.
To achieve this we must all redouble our efforts to progress with
negotiations in Geneva and beyond. We will underline the importance
and urgency of progress on market access and reductions in export
support for the Round to live up to its development promise, as
well as effective special and differential treatment across all
agreements. The UK believes that developing country governments
should have flexibility so that they are able to design and sequence
trade reforms within their own broader plans for development and
poverty reduction. Trade liberalisation should not be forced on
developing countries, whether through trade negotiations or aid
conditionality. But developing countries also need support to
integrate and adjust their economies. We need to provide a credible
signal of our willingness to support developing countries if we
are to achieve a successful trade round.
At the Development Committee we will seek commitments
from the Finance and Development Ministers present to provide
poor countries with increased aid to enable them to strengthen
their trade capacity and adjust to and take advantage of more
open global markets.
World Bank Conditionality Review
The UK's policy paper on conditionality, published
in March 2005, called for a new approach between donors and developing
countries. The paper established that agreed benchmarks for measuring
progress on the reduction of poverty will be the basis for the
UK and partner government to be accountable to their citizens.
This new approach will focus on the impact of the government's
overall programme, rather than specific policy choices. At Gleneagles,
the G8 also agreed that developing countries should take the lead
on planning and sequencing their own economic policies, to fit
with their own development strategies, and to be accountable to
their own citizens. The UK will use the Annual Meetings as an
opportunity to work with our G8 partners to implement this commitment.
Last year the UK led calls for the World Bank to review its policy
and practice on conditionality, the findings of which will be
issued at the Annual Meetings. The Bank has put forward a set
of good practice principles that staff should abide by when setting
conditions. These accord well with the principles set out in the
UK's policy paper and the UK fully supports them. Country ownership
of World Bank programmes—ensuring reforms are agreed rather
than imposed on governments—is the foremost principle. The
UK is keen to see significant changes in the Bank's practice and
Ministers' priorities are to ensure these principles are fully
endorsed and a commitment is made to monitor their implementation.
Aid Financing and Aid Effectiveness
We welcome the Bank's participation in the G7/8
process that produced the strong commitments on development finance
necessary to accelerate progress towards the Millennium Development
Goals. Our objective now is to agree how to turn these commitments
into action, in order to increase the quantity and quality of
development assistance. This is why the UK is working towards
the early launch of the International Finance Facility (IFF) with
international partners. The IFF will help countries to meet their
aid commitments, and frontload that aid over the next few years,
when it will have the greatest impact on the MDGs. The effectiveness
of frontloading will be demonstrated by the International Finance
Facility for Immunisation (IFFIm), which was successfully launched
earlier this month.
Scaling up and improving the effectiveness of
aid will ensure faster progress towards the Millennium Development
Goals. Our strategy in scaling up will be to use country-led approaches.
This will mean using existing in-country systems such as recipient
countries' Poverty Reduction Strategies, and providing appropriate
financial support through national budget processes. We envisage
a three-stage process. Firstly, donors should provide firm long-term
indications of aid volumes to developing countries, as a basis
for planning; secondly, developing countries should prepare plans
to tackle their specific MDG needs and priorities; thirdly, donors
should deliver the long-term predictable finance required. In
doing so, donors must develop policies and instruments to better
cope with the particular circumstances in fragile states, and
ensure these countries are not excluded from the development process.
An additional objective is to consider the roles of the Bank,
Fund, UN, EC and others in supporting developing country strategies
and plans, and delivering on the Paris Aid Effectiveness commitments
on predictability, harmonisation and accountability.
The UK will also use the Annual Meetings to
press the Bank and Fund to explain how they plan to develop their
programmes in the light of the 2005 Review of the Poverty Reduction
Strategy Approach. We will be looking for specific action on macro-economic
dialogue. The 2005 Review notes the strength of the PRS approach
as a basis for scaling up aid, delivered in a flexible, predictable
manner. We will be looking for ways to take this forward both
in the context of existing aid and future pledges. We will also
be looking to encourage all donors and partner countries to move
towards greater mutual accountability as part of the taking forward
the principles on aid effectiveness agreed in Paris in March 2005.
Infrastructure
Investment in infrastructure, alongside health
and education, will be key if developing countries are to put
in place the basic building blocks for growth and poverty reduction.
We believe there is a need to scale up infrastructure investment,
particularly in Africa; this must be Africa-led and harmonised
across donors. The Infrastructure Consortium for Africa can play
an important facilitating role and the UK welcomes the World Bank's
active participation. Given the scale of the investment needs,
the UK looks to the World Bank to lead on leveraging and optimising
funding from other sources, including public and private and ensuring
the right balance in facilitating these partnerships.
We will use these meetings to raise the profile
of the Infrastructure Consortium, and to stress the importance
of clear poverty reduction objectives in infrastructure planning,
recognising the indirect and direct roles of infrastructure in
addressing poverty and inequality. We will continue to emphasise
the importance of finding innovative approaches for meeting infrastructure
needs. These may include working across the World Bank Group and
with other donors to address the challenges of lending to local
government, the promotion and implementation of cross-border and
regional projects, and new approaches to financing to overcome
the constraints to infrastructure investment. We welcome the Bank's
proposals to work on these challenges and report back.
Voice and Participation of Developing and Transition
Countries
The UK remains convinced that progress on enhancing
the voice and participation of developing and transition countries
is crucial to the effectiveness and legitimacy of the World Bank
and IMF. We welcome the ongoing work being done to improve voice
at country level. On other voice issues, there is little consensus
on the way forward. We will continue to work with other shareholders
to find ways to move beyond the impasse on structural issues.
Climate Change
The Gleneagles plan of action identified a number
of climate change initiatives for which World Bank leadership
will be required. The G8 called on the Bank to put forward specific
proposals at its Annual Meetings on how it could accelerate developing
country adoption of affordable and lower-carbon technologies.
In particular, it was asked to develop, together with others,
an investment framework to enhance the use of concessional and
other funds to mobilise greater investment in clean energy. To
support the Bank in its work, the UK will be co-chairing a special
meeting on the G8 Action Plan in the margins of the Annual Meetings.
This will be an opportunity for all countries, but particularly
the growing economies of the world to learn about and respond
to the Bank's work and the G8 recommendations. The UK looks forward
to learning of the Bank's plans to address these challenges, in
alliance with others, including the regional development banks.
UK OBJECTIVES FOR
THE INTERNATIONAL
MONETARY AND
FINANCE COMMITTEE
(IMFC)
Overall Objectives
To gain conclusive political agreement from
the whole membership to move to implementation of the G8 debt
deal and build on successful launch of IFFIm and the UN Millennium
Review Summit to garner additional support for this and the IFF.
Demonstrate the determination of the international
community to meet the challenge of high oil prices and to ensure
prices which support sustainable global growth.
To gain re-commitment of the international community
and the international institutions to the countering the financing
of terrorism.
To use the Managing Director's Strategic Review
to ensure that the IMF is focused on maximising the benefits and
meeting the challenges of globalisation.
Maintain consensus of shared responsibility
to address global imbalances, building on recent moves towards
Chinese exchange rate flexibility.
Deliverables
Endorsement of the debt deal in the communiqués
of the Development Committee and the IMFC. Impetus provided to
the implementation process.
Strong messages of support for an ambitious
conclusion to the Doha Development Round reinforced through a
commitment to further concrete measures of support from the IFIs
to support building the capacity to trade and meet the adjustment
costs.
Strong communiqué language in G7 and
IMFC reaffirming the importance of efforts to deal with money
laundering and countering terrorist financing. Gain specific commitments
from the IMF on the adequacy of technical assistance to countries
and to regional bodies.
Commitment by countries and IFIs to further
efforts to tackle high oil prices including improving analysis
and developing an investment climate conducive to increasing oil
supply.
In the strategic review of the IMF:
— To take forward those elements of
the Strategic Review which support UK objectives notably the positive
messages on globalisation and internally the efforts to reform
the budgetary process.
— To ensure that UK priorities on the
conduct of surveillance and the importance of RoSCs (Reports on
Standards and Codes) are taken on board in the review.
— To avoid a damaging discussion about
quota shares and representation in the IMFC.
— Establish the need for examining
further long term issues affecting the IMF.
Hold a successful and productive BMENA (Broader
Middle East and North Africa) meeting satisfactory to all participants.
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