Annex F
OUTCOMES OF THE 2005 ANNUAL MEETINGS OF THE
WORLD BANK AND THE INTERNATIONAL MONETARY FUND (IMF)
1. The Development Committee and IMFC Communiqués
record the agreed outcomes of those meetings. This note highlights
outcomes from the UK perspective. Our objectives for these meetings
are set out separately in the joint memorandum.
THE DEVELOPMENT
COMMITTEE
2. There were three items for discussion
at this year's Development Committee: Debt Relief; the Bank's
Africa Action Plan; and Trade.
Debt Relief
3. The UK helped secure an extremely good
outcome on multilateral debt relief. The Development Committee
welcomed and supported the G8 proposal for 100% cancellation of
debt owed by eligible heavily indebted poor countries (HIPCs)
to the International Development Association (IDA), the IMF and
the African Development Fund, noting that this provided a valuable
opportunity to reduce debt and increase resources for achieving
the Millennium Development Goals (MDGs). For IDA, the Committee
expressed support for an interdependent package consisting especially
of dollar for dollar compensation for IDA that is truly additional
to existing commitments and which maintains the financial integrity
and capacity of IDA to assist poor countries in the future.
4. The joint letter from G8 Finance Ministers
to the President of the World Bank on Friday 23 September was
crucial to securing the Development Committee's support for the
package. It set out clearly the specific financing commitments
each G8 country will make. The letter provided a framework for
measuring additionality and ensuring that donor countries provide
financing to compensate IDA fully for forgone reflows resulting
from debt relief. The Committee asked the Bank to finalise urgently
the detailed work necessary to implement the multilateral debt
cancellation package, including preparation of a compensation
schedule and monitoring system for all donor contributions. We
welcome President Wolfowitz's commitment that this will be submitted
to the Executive Board as soon as possible and are pressing for
details of the package to be sorted out by the end of December.
5. The Committee also reviewed the implementation
of the HIPC Initiative. It welcomed continued progress in providing
debt relief to HIPCs, noted the need to fill the current funding
gap, urged full creditor participation and looked forward to receiving
a final list of eligible countries in early 2006.
Africa Action Plan
6. The UK welcomed recognition by Ministers
and President Wolfowitz (in his opening speech) that Africa was
changing and providing grounds for optimism. Despite enormous
challenges, some African countries had been remarkably successful
in recent years in promoting economic growth, reducing poverty
and improving governance. Many African leaders were now taking
responsibility for good leadership.
7. The UK welcomed the Committee's endorsement
of the ambitious Africa Action Plan. Ministers commended its results—oriented
approach; the action it proposes to ensure that increased aid
is used effectively; and its focus on building state capacity
and improving governance, and promoting broad participation in
growth and sharing its benefits. The Committee also commended
its comprehensive approach toward developing the African private
sector, creating jobs, enhancing exports, expanding infrastructure,
raising agricultural productivity, strengthening human development,
building capacity (including in conflict-affected and fragile
states), and increasing regional integration.
8. We welcome the Committee's support for
the development of the Africa Action Plan's Catalytic Fund, which
would be financed from voluntary contributions, complement IDA
resources and enable the Bank to provide additional resources
to countries and programmes with potentially high development
impact. The UK has subsequently become the Fund's first donor,
committing £200 million out of £250 million resources
for scaling up development assistance announced by the Secretary
of State for International Development at the conclusion of the
14th replenishment of IDA in March. The use of the Fund will be
guided by the priorities of the Africa Partnership Forum (APF),
whose membership includes African governments, the African Union
(AU) and New Partnership for Africa's Development (NEPAD). By
promoting the involvement of the APF with the Fund, we have also
helped increase Africa's voice in the Fund's work and priorities.
Trade
9. The Committee agreed that developing
countries will not achieve the economic growth needed to meet
the MDGs without a timely and ambitious outcome for the Doha Development
Agenda. The Hong Kong Ministerial meeting in December must succeed
if the Doha Round is to be successful. Several Ministers emphasised
that the potential gains from a successful round are larger than
aid and debt relief.
10. The Committee agreed that poorer countries
also required support for trade capacity building, to help them
to boost their competitiveness and manage their international
trade effectively. It endorsed the proposal for an enhanced Integrated
Framework for Trade-related Technical Assistance, including expanding
the latter's resources and scope and making it more effective.
We urged Ministers to act now. There was no need to wait for the
completion of the Round before offering increased trade-related
technical assistance. We welcome the Communiqué's call
on the Bank and IMF to better integrate trade-related needs into
their support for country programmes and to continue their advocacy
role on trade and development.
11. Although not discussed by the Committee
as separate agenda items, the UK also progressed its objectives
on the following issues at the Annual Meetings:
Climate Change
12. The Secretary of State for International
Development and the Bank President co-chaired a special meeting
on the G8 Climate Change Action Plan in the margins of the Meetings.
It was well attended and Finance Ministers from Brazil, India
and South Africa spoke in positive terms about the proposed Energy
Investment Framework, Kyoto Protocol and the United Nations Framework
Convention on Climate Change. The Development Committee's Communiqué
supported the Bank's efforts to assist member countries to mitigate
and adapt to the impact of climate change, and to improve energy
efficiency and access to renewable and cost-effective energy.
The Bank will report to the Spring Meetings on progress in developing
dialogue with partner countries and institutions and a future
investment framework.
World Bank Conditionality Review
13. Ministers welcomed the review of World
Bank conditionality and endorsed the good practice principles
the Bank has put forward to streamline conditionality and strengthen
country ownership and leadership. The Development Committee called
for regular monitoring to ensure the consistent implementation
of these principles by the Bank in its operations. The Committee
also called on the Bank to produce a report on progress next year.
We will draw on DFID country offices for evidence of progress
in implementation.
Aid Financing and Aid Effectiveness
14. The Development Committee welcomed the
joint Bank-Fund review of the poverty reduction strategy (PRS)
approach and its emphasis on country ownership, mutual accountability
and using the PRS as a vehicle for scaling up development assistance.
We were pleased to see references to the harmonisation targets
in the Communiqué and will monitor progress on this again
in collaboration with DFID country offices.
15. In the margins of the Meetings, the
OECD Development Assistance Committee (DAC) and World Bank organised
a donors' meeting on 26 September on scaling up development assistance
to support more ambitious country plans to meet the MDGs. There
was wide-ranging discussion on the challenges of scaling up, particularly
on how to improve aid predictability through better collective
indications of financing and how to utilise these indications
to address financing gaps. It was agreed that the DAC and Bank
should do further work on how donors plan to deliver on their
aid pledges in advance of a further meeting in Paris on 6 December
2005.
Infrastructure
16. Ministers gave strong support to scaling
up investment in infrastructure. The Communiqué welcomed
the progress made by the Bank Group in implementing the Infrastructure
Action Plan and strengthening public-private partnerships, including
the newly established Africa Infrastructure Consortium where African
institutions and donors will work together to achieve more effective,
larger scale activity behind infrastructure priorities set by
Africa.
THE INTERNATIONAL
MONETARY AND
FINANCIAL COMMITTEE
(IMFC)
17. The Chancellor chaired a successful
IMFC meeting with key UK objectives being met. Key outcomes included:
Debt Relief and Low Income Countries
18. The Committee gave its support to the G8
proposal to deliver up to US$55 billion of multilateral debt for
Heavily-Indebted Poor Countries, including US$5 billion by the
IMF; welcoming the firm commitments that were made by many countries
on providing additional finance. Agreement was reached on all
the elements of the proposal, including the approach to ensure
the IMF's resources are used consistently with the principle of
uniformity of treatment; and on ensuring the IMF's capacity to
provide financing to low-income countries is maintained. The Managing
Director will call the Executive Board together to complete its
approval of the arrangements to deliver debt relief by the end
of 2005.
19. The Committee also welcomed the progress
which has been made on new instruments. It endorsed the Policy
Support Instrument which will allow the IMF to provide policy
advice and support to members that do not need or want IMF financial
assistance. It strongly backed the creation of a new window in
the Poverty Reduction and Growth Facility (PRGF) to support low-income
countries facing exogenous shocks, calling on countries to contribute.
Global Economy
20. The Committee discussed the global economy
focusing on the increasing risks to global growth. It reaffirmed
the importance of meeting the challenges created by large and
widening imbalances with a need for each continent to do its part:
with the US to increase fiscal consolidation; Europe to accelerate
structural reform; and Asia to increase the degree of exchange
rate flexibility.
21. In the face of high oil prices, the
IMFC recognised that oil producers, oil consumers and oil companies
all have their part to play in working together to stabilise the
oil market. Agreement was reached on a five point plan on oil,
including:
1. Welcoming the action taken by oil producing
countries and members of the International Energy Agency to increase
oil supplies to the market;
2. Calls for further investment now and in
the long term throughout the supply chain, particularly in exploration,
production, energy infrastructure and refinery capacity; and emphasis
on the need for the creation of a favourable investment climate
in oil-producing countries;
3. Stressing the importance of policies to
promote energy conservation, efficiency and sustainability, including
through new technologies, alternative sources of energy and reducing
subsidies on oil products;
4. Enhanced dialogue between oil producers
and consumers, along with further efforts to increase the quality
and transparency of oil market data to improve market efficiency;
and
5. Provision of assistance by the IMF to
members, particularly poor countries, to deal with oil price shocks.
Trade
22. Following its meeting with Pascal Lamy,
the Director-General of the WTO, the Committee agreed that a successful
outcome of the Doha Round remains of critical importance for both
poverty reduction and for global growth. Serious challenges remain
in reaching agreement at the WTO meeting in Hong Kong in December.
The Committee called on all countries to ensure progress on an
ambitious trade liberalisation with the urgency that the timetable
now demands. This must include:
— increasing market access, especially
for developing countries;
— significantly reducing trade-distorting
domestic support;
— eliminating all forms of export subsidies
in agriculture; and
— making significant progress on services,
including financial services and on intellectual property.
IMF Strategic Review
23. The IMFC welcomed the broad priorities
set out in the IMF Managing Director's Report on the IMF's Medium
Term Strategy and looked forward to specific proposals and timelines
on the main tasks identified by the review within the context
of the IMF medium-term budgetary framework and the staff compensation
review. The IMFC also agreed that the IMF needs to deepen its
analysis of globalisation and continue to develop its strategy
for responding to the long-term challenges posed.
24. The IMFC supported the IMF's efforts
to implement its intensified Anti Money Laundering/Counter Terrorist
Financing programme, noting the critical importance of well-targeted
and co-ordinated technical assistance.
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