Annex B
STATEMENT TO THE DEVELOPMENT COMMITTEE BY
THE RT HON HILARY BENN MP, SECRETARY OF STATE FOR INTERNATIONAL
DEVELOPMENT AND THE RT HON GORDON BROWN MP, CHANCELLOR OF THE
EXCHEQUER, UNITED KINGDOM, WASHINGTON DC 25 SEPTEMBER 2005
This year has been an important one for development
with the fight against global poverty at the centre of international
debate. The G8's meeting in Gleneagles achieved a significant
agreement to help poor countries—but it was only one in
a series of international meetings this year at which practical
steps were taken to move towards our goal of a world free of poverty.
Commitments were made to relieve poor countries of their debts,
increase aid and make it more effective, remove trade barriers,
improve governance, and build stronger development partnerships.
But the commitments that we have made are only
the first stage. We must act on our commitments, and act now.
As agreed this weekend, we will provide the financing for a debt
deal to relieve 100% of the multilateral debts owed to the World
Bank (IDA), AfDB and IMF by all countries that have completed
the Heavily Indebted Poor Country Initiative. We must provide
the increased aid that we have promised some US$50 billion a year
by 2010, compared to 2004—in particular, the EU commitment
to spend at least 0.56% of their Gross National Income on aid
by 2010, and G8 commitments to double aid to Africa. And, as promised
at Paris in March, we must provide this aid as predictable long-term
finance so that countries can, for example, buy the drugs and
hire the teachers needed to build their health and education systems.
The commitments made to increase aid are very positive steps.
To bring forward the delivery of these commitments we need innovative
financing mechanisms. We urge countries to support the International
Finance Facility as a mechanism for frontloading aid, improving
its predictability, stability and efficiency, and able to deploy
a critical mass of aid when it will have the most impact. As a
first step, on 9 September we and other countries launched the
$4 billion pilot International Finance Facility for Immunisation,
which will prevent 5 million childhood deaths, and demonstrate
the effectiveness of the IFF mechanism. Developing countries too
must act on their commitments to improve their governance, tackle
corruption and prioritise the fight against poverty. And in Hong
Kong this December we must take action to remove barriers to trade—in
particular the rich country tariffs and subsidies which undermine
developing countries' ability to share in the benefits of globalisation.
The year of development is not yet over—there are many challenges
ahead. Let's work together to ensure that we achieve our common
goals.
Africa Action Plan
Things are changing on the continent of Africa.
Recent years have seen improvements in economic growth and in
governance, and African leaders are showing new commitment to
tackling the problems Africa faces.
The Bank has a central role to play in taking
forward the commitments made this year. It must do more itself
to assist Africa and it must play a major role in the international
effort to increase international development assistance and to
make it more effective. It must reflect Africa's voice, and should
work closely with the Africa Partners Forum.
We therefore welcome the Africa Action Plan,
which sets out an ambitious programme. We welcome plans to do
more to build capable states and improve governance; to play a
frill 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 urge donors to support the proposed Catalytic
Fund which provides a real opportunity to scale up assistance
in priority areas. We hope that the Fund will be designed so as
to push the boundaries of what the Bank is able to do in Africa,
and in a way that increases Africa's voice in establishing the
Fund's strategies and priorities.
Debt Relief
This year, we must write off once and for all
the debts owed by the poorest indebted countries. The Heavily
Indebted Poor Country (HIPC) Initiative has done much to relieve
the world's poorest countries of their debts and so free up money
for health, education and other essential investments. We must
all ensure that the HIPC Initiative is fully financed and implemented
in the most generous way possible, including for those countries
that may enter the Initiative under the extended Sunset Clause.
We will continue to urge those countries that have not yet completed
the Initiative to establish the strong record on poverty reduction
that is required.
But more can and should be done, and now is
the time for action to free these countries of their residual
multilateral debts, so that they can make the investments that
are essential to achieve the Millennium Development Goals. The
G8's proposal to cancel the outstanding International Development
Association, International Monetary Fund and African Development
Fund debt stock of qualifying countries is a crucial opportunity
to do this. With assured financing from donors, it will not erode
the financial viability of the International Financial Institutions,
and will free up to $55 billion for spending on health, education
and other key areas. It is an opportunity to be seized, and we
are pleased that the proposal has rapidly gained support and will
be discussed at this Meeting. We hope to see it agreed this weekend.
And looking forward, we would like to see further relief extended
to all low-income countries that need—and can use—additional
debt forgiveness in order to achieve the MDGs. The UK will continue
to unilaterally pay its share of multilateral debt service for
a wider group of countries.
Trade
Trade is an engine of economic growth and poverty
reduction. It is vital that developing countries are able to draw
on this. To do so, first, they need greater access to markets.
The Doha Round can deliver this. We will be seeking an ambitious
pro-development outcome from the World Trade Organization's ministerial
conference in Hong Kong in December and beyond. If the Round is
really to deliver for the world's poor, it will need to include
not only greater market access but also reductions in agricultural
subsidies, as well as effective special and differential treatment
across all agreements. We believe that developing countries should
also have the flexibility to decide and sequence trade reforms
within their own plans for development and poverty reduction.
But greater market access alone will not be
sufficient for poorer countries to reap the benefits of trade.
For this, they need a second element: support for trade capacity
building, to help them to boost their competitiveness and manage
their international trade effectively. At the G8 summit in July,
the G8 committed themselves to help developing countries build
the physical, human and institutional capacity to trade. We now
need to agree swiftly how best to deliver this support. We welcome
the Bank's and Fund's proposals in this regard. We need to support
countries' own priorities, through the Poverty Reduction Strategy
process and by enhancing the Integrated Framework for trade-related
technical assistance. It is vital that we are able to reassure
developing countries that the commitment will translate into additional
support on the ground. We call on the IFIs to work with others
to implement these proposals and to report back to our next meeting.
Infrastructure
Investment in infrastructure, alongside health
and education, is essential for trade, growth and poverty reduction.
The World Bank's participation in the Africa Infrastructure Consortium
initiative, announced at Gleneagles, is especially welcome. Given
the scale of the infrastructure investment needs in Africa, we
will look to the World Bank to secure funding from a range of
public and private sources.
We also welcome the Bank Group's proposals for
innovative approaches to sub-sovereign lending for local infrastructure
provision and the facilitation of cross-border and regional projects.
World Bank Conditionality Review
Many of us have been grappling with the issue
of conditionality. The UK published a policy paper this year calling
for a new approach between donors and developing countries. Our
approach focuses on using agreed benchmarks to monitor progress
against poverty reduction, rather than imposing conditionality
on specific policy choices. At Gleneagles this year, the G8 also
agreed that developing countries should decide, plan, and sequence
their own economic policies, to fit with their own development
strategies.
Last year the World Bank was asked to review
its policy and practice on conditionality, and the findings of
this review have been published at these Meetings. We endorse
the good practice principles set out in the Review. Our priority
is to ensure these principles are now applied consistently across
countries. In particular, we place great importance on the Bank
management ensuring that conditions are not used to impose particular
economic policies on countries, especially in sensitive areas
such as privatisation and trade liberalisation. We are pleased
that a commitment has been made to monitor the implementation
of the good practice principles, and call for the Bank to report
back at the 2006 Annual Meetings on how this has been taken forward.
We would like to see the Bank place a greater emphasis on assessing
countries' progress towards poverty reduction and less on countries
carrying out specific policy actions.
Aid Effectiveness
We also need to improve how aid is delivered.
Progress has been made in 2005, in particular at the Paris High-Level
Forum. We urge all countries to agree the proposed targets on
aid effectiveness. And we need to look at implementing the targets
at the country level. The UK intends to publicly monitor our own
practice against the targets.
We call upon all donors attending these meetings
to work together to elaborate a programme for action on "scaling
up" country led development. Developing Countries need to
be able to take forward their plans to tackle poverty with confidence
that donors will honour their commitments. We need to look for
opportunities to fill financing gaps in existing country and sector
plans where there is scope to make faster progress now. The Africa
Action Plan and Catalytic Fund provide a good starting point but
we need to do much more to help deliver sustainable growth, universal
access to free healthcare and primary education and better lives
for poor people in the years to come. We look forward to discussing
these issues further at the Development Assistance Committee meeting
on Monday and we hope follow up action will be agreed so we can
make rapid progress on scaling up in the coming months.
2005 Review of the Poverty Reduction Strategy
Approach
We welcome the analysis of the 2005 Poverty
Reduction Strategy review, which supports our view that ambitious,
country-led poverty reduction strategies are essential for development.
But we believe that the World Bank should suggest specific actions
on how its own and other donors' performance can better support
poverty reduction strategies.
Voice and Participation of Developing and Transition
Countries
The World Bank and IMF have made good progress
in improving the voice of developing countries in the design of
programmes and projects in-country. There has also been progress
on improving voice through reducing conditionality and increasing
transparency and decentralisation. But we are frustrated by the
continuing lack of progress in improving voice in the Bank and
Fund's governance structure. It seems that there is still no consensus
between shareholders on these structural issues. We urge the Development
Committee to come together on a package of proposals that can
be agreed by all parties.
Climate Change
Climate change poses one of the greatest threats
to the world today, and could erode progress towards the MDGs.
At Gleneagles a consensus was achieved regarding the scale and
urgency of the problem. Adopting cleaner technologies will help
significantly. Countries vulnerable to climate variability will
need assistance to adapt to the impact that climate change will
have on the poor. The G8 agreed a programme of action to widen
access to low-carbon energy; and on a process to continue discussions
between the G8 and developing countries on how to tackle climate
change beyond 2012.
A number of climate change initiatives require
sustained World Bank leadership. We commend the World Bank for
rapidly acting on the G8 call to put forward proposals at this
Meeting on helping developing countries to access affordable low-carbon
energy. We welcome the Bank's work plan on climate change, and
we look forward to a report on this work at the Spring Meetings
in 2006.
A special meeting on the G8 Climate Change Action
Plan will take place in the margins of these Meetings. The UK
will co-chair this with the World Bank President. This will be
an important opportunity to consult the growing economies of the
world on the proposed Energy Investment Framework. It will be
important that the Bank, working with regional development banks,
complete work on this by the Spring Meetings in 2006.
CONCLUSION
Many countries have risen to the challenge to
make this the year of development. We have made new commitments
to cancel the debts of the world's poorest countries, to increase
aid dramatically and make it more effective, and to improve governance
to allow the poor more of a say in their lives. We now must turn
these commitments into action to ensure that we keep our promises
to the world's poor.
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