Ministerie van Financiën

http://www.minfin.nl/nl/actueel/kamerstukken_en_besluiten,2006/05/BFB06-582.html

Bijlagen Verslag voorjaarsvergadering 2006 van IMF en Wereldbank

Verslag van de vergaderingen van het International Monetary and Financial Committee

(IMFC) en het Development Committee (DC) op 22 en 23 april 2006.


1. Inleiding
Zaterdag 22 en zondag 23 april vonden het IMFC en DC plaats in Washington. Voor het eerst werd het IMFC voorafgegaan door een seminar op vrijdag 21 april over mondiale onevenwichtigheden. Op zaterdagochtend werd tevens een speciale IMFC-ontbijtbijeenkomst gehouden over dit onderwerp. Op zaterdagochtend kwamen daarnaast de G4 van ministers en gouverneurs bijeen. Ook participeerde Nederland op vrijdag 21 april in een persbijeenkomst over het fast-track initiative voor Education for all van de Wereldbank. Op vrijdagavond vond het traditionele overleg met de leden van de kiesgroep plaats (Armenië, Bosnië-Herzegovina, Bulgarije, Cyprus, Georgië, Israël, Kroatië, Macedonië, Moldavië, Oekraïne, Roemenië).

In de bijlagen vindt u:

· schriftelijke interventie die Nederland namens de kiesgroep inbracht in het IMFC
· schriftelijke interventie die Nederland namens de kiesgroep inbracht in het DC
· communiqués van het IMFC en het DC

Dit verslag geeft een weergave van het seminar en de IMFC-ontbijtbijeenkomst over mondiale onevenwichtigheden (§ 2), het IMFC (§ 3), het DC (§ 4) de G4 (§ 5) en de persbijeenkomst (§ 6).


2. Seminar over mondiale onevenwichtigheden en IMFC-ontbijtbijeenkomst Tijdens het seminar op vrijdag 21 april en de IMFC-ontbijtbijeenkomst op zaterdagochtend 22 april werd gesproken over de oorzaken van en oplossingsrichtingen voor de mondiale onevenwichtigheden. Het seminar werd ingeleid door diverse externe sprekers, waaronder professor Blanchard, professor Rogoff en Europees Commissaris Almunia. Het belangrijkste risico dat aan de mondiale onevenwichtigheden werd verbonden, was een abrupte depreciatie van de Amerikaanse dollar. Dat de dollar tot op heden sterk is gebleven, werd als opmerkelijk beschouwd. Deelnemers zagen de onevenwichtigheden als een gedeelde verantwoordelijkheid. Naast de bekende oplossingsmaatregelen zoals het stimuleren van de particuliere besparingen en het consolideren van de overheidsfinanciën in de VS, het verder vergroten van de wisselkoersflexibiliteit in Azië en het verkleinen van structurele rigiditeiten in Europa werd gesproken over de rol van financiële intermediatie. Geconcludeerd werd dat het versterken van financiële intermediatie in met name Azië tot hogere investeringen aldaar zal leiden en dus tot een vermindering van de regionale onbalans tussen besparingen en investeringen. Uiteindelijk heeft ieder land baat bij het verminderen van zijn eigen binnenlandse verstoringen en is dit een
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verantwoordelijkheid van landen zelf. Als deze binnenlandse verstoringen worden opgelost,

zullen de mondiale onevenwichtigheden eveneens verminderen als positief extern effect.

Veel IMFC-leden, waaronder Nederland, benadrukten de noodzaak tot maatregelen, zeker omdat de mondiale onevenwichtigheden nog steeds toenemen. Hierbij merkte Nederland op dat coördinatie er niet toe mag leiden dat landen alleen maar op elkaar gaan wachten. Nederland stelde verder dat structurele hervormingen in Europa belangrijk zijn, omdat deze tot hogere groei en meer flexibiliteit zullen leiden. De effecten van deze hervormingen op de mondiale onevenwichtigheden zijn echter niet eenduidig, omdat structurele hervormingen op de lange termijn zowel investeringen als besparingen zullen stimuleren.

De IMFC-leden concludeerden dat verdere maatregelen voor een evenwichtige oplossing van de mondiale onevenwichtigheden nodig zijn en een gedeelde verantwoordelijkheid behelzen. Gegeven bestaande economische onderlinge relaties hebben alle landen en regio's een rol te spelen.


3. International Monetary and Financial Committee Het IMFC besprak de internationale economische situatie, de strategische heroriëntatie van het IMF en de vertegenwoordiging van lidstaten. Met steun van Nederland heeft het IMFC besloten tot versterking en aanscherping van surveillance, waaronder een nieuwe multilaterale consultatieprocedure. Over vertegenwoordiging werd ­ zoals verwacht - geen overeenstemming bereikt.

Internationale economische vooruitzichten
De hoofdeconoom van het IMF, Rajan, presenteerde de World Economic Outlook (WEO) aan het IMFC. De groei van de wereldeconomie blijft met een verwachte 4,9% in 2006 en 4,7% in 2007 sterk en is evenwichtiger verspreid over verschillende delen van de wereld. Ook de inflatieverwachtingen zijn gunstig. Risico's voor de groei van de wereldeconomie blijven volgens Rajan de mondiale onevenwichtigheden, de hoge olieprijs en protectionistische maatregelen. Ook een mogelijke vogelgriepepidemie vormt een risico. Hoewel de hoge olieprijs tot dusverre slechts een beperkte negatieve invloed heeft gehad op de wereldgroei, zijn toekomstige grotere effecten niet uitgesloten. Olieproducenten, -consumenten en -bedrijven moeten allen een rol spelen in het stimuleren van meer stabiliteit op de oliemarkt. Grotere investeringen in oliewinning en olieraffinage zijn nodig, alsmede beleid om alternatieve bronnen van energie te bevorderen. Ook is verdere actie nodig om de globale onevenwichtigheden op te lossen.


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Managing Director Rodrigo De Rato benadrukte het belang van de komende Doha ronde voor

handelsliberalisering. Een succesvolle uitkomst is essentieel voor de groei van de wereldeconomie en het verder verkleinen van armoede in de wereld. De Rato stelde verder dat de olieprijs de komende tijd op een hoog niveau zal blijven en herhaalde de woorden van Rajan dat verschillende partijen maatregelen moeten nemen om de olieprijs te stabiliseren. Het feit dat de inflatiedruk gematigd is, betekende volgens De Rato niet dat noodzakelijke hervormingen kunnen worden uitgesteld.

De nieuwe president van de Federal Reserve Ben Bernanke ging kort in op de Amerikaanse economie en gaf daarbij aan dat nog geen tekenen bestaan van concrete verbeteringen in het Amerikaanse lopenderekeningtekort.

EU-voorzitter Grasser stelde dat het tijd is "to walk the talk in a coordinated manner" en dus actie te ondernemen. Voor de EU betekent dit dat budgettaire consolidatie, hogere groei en structurele hervormingen om werkgelegenheid te vergroten belangrijk zijn. Verder zijn volgens Grasser met name grotere besparingen in de VS, een open multilateraal handelsregime en meer binnenlands gegenereerde groei in Azië van belang.

Het IMFC riep het IMF op aan modaliteiten te werken die concrete maatregelen van de verschillende regio's en landen stimuleren.

Strategische heroriëntatie IMF
De Rato gaf een korte inleiding over zijn voorstellen voor de implementatie van de strategische heroriëntatie van het IMF.1 Hierbij benadrukte hij onder meer het belang van versterkte surveillance, zowel bilateraal als multilateraal, en van een sterkere rol van het IMF aangaande de financiële sector en wisselkoersaangelegenheden.

De meeste voorstellen werden verwelkomd door de leden van het IMFC, waaronder Nederland. Nederland steunde de voorstellen van De Rato om meer focus aan te brengen in artikel IV consultaties en om de bilaterale en multilaterale surveillance te versterken. Nederland gaf daarbij aan dat het IMF voor alle IMF-leden een artikel IV consultatie moet blijven uitvoeren en dat deze consultaties altijd in de Raad van Bewindvoerders moeten worden besproken, omdat landen zo optimaal van elkaar kunnen leren. Nederland pleitte succesvol voor een volledige betrokkenheid van de Raad van Bewindvoerders bij de consultaties die onder de nieuwe multilaterale­ consultatieprocedure zullen worden gehouden.


1 Zie www.imf.org

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Het IMFC riep management en de Raad van Bewindvoerders van het IMF op om zo snel mogelijk

over te gaan tot de implementatie van de diverse voorstellen.

Vertegenwoordiging
Managing Director de Rato gaf aan dat het onderwerp quota en stem belangrijk en urgent is. Een aantal snelgroeiende economieën zijn momenteel ondervertegenwoordigd en ook lage- inkomenslanden voelen zich onvoldoende gehoord. Het IMF moet legitimiteit behouden en dus zijn hervormingen noodzakelijk.

Alle IMFC-leden onderschreven het belang van een eerlijke vertegenwoordiging en stem voor alle leden en erkenden dat hervormingen noodzakelijk zijn. Veel IMFC leden, waaronder Nederland, gaven aan de oplossing te zoeken in een ad hoc quota verhoging voor de meest ondervertegenwoordigde landen. Daarnaast is Nederland met anderen voorstander van een verhoging van het aantal basisstemmen. Andere leden gaven aan te streven naar een meer rigoureuze verandering in de quota- en stemaandelen op basis van een nieuwe quotaformule.

Het IMFC riep de Managing Director op om samen met het IMFC en de Raad van Bewindvoerders tot concrete voorstellen te komen in de aanloop naar de Jaarvergadering in Singapore.


4. Development Committee
Nederland heeft brede steun weten te verwerven voor een Energy for All-initiatief dat aandacht schenkt aan de toegang tot energie voor de allerarmsten in lage-inkomenslanden. Ook bleek brede steun te bestaan voor de Nederlandse mening dat de bestrijding van corruptie een geïntegreerde aanpak vereist waarbij alle belanghebbenden betrokken zijn.

Clean Energy and Development: Towards an Investment Framework De uitdaging om klimaatverandering tegen te gaan (mitigatie) en de noodzaak tot adaptatie kwamen aan de orde in de discussie over energie. Mitigatie moet worden bewerkstelligd via investeringen in schone energie en efficiënter gebruik. Hervormingen in de energiesector (reduceren van verstorende subsidies) spelen een centrale rol bij het aantrekken van private investeerders, die uiteindelijk het overgrote deel van de financiering van schone energie zullen moeten bekostigen. Daarnaast kunnen markten voor verhandelbare emissierechten, zoals het CDM, een groot deel van de financiering opbrengen. Adaptatie kreeg aanzienlijk minder aandacht in het debat. Waarschijnlijk omdat het denken hierover nog in de kinderschoenen staat.


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Wolfowitz (president van de WB) en Bourguignon (hoofdeconoom WB) benadrukten in hun

inleiding dat investeringen in schone energie leiden tot een zogenaamde double dividend, dat wil zeggen een tweeledige winst bestaande uit het stimuleren van groei en reduceren van armoede, en het terugdringen van milieuvervuiling en mitigeren van klimaatverandering.

Van Ardenne stelde als keynote speaker de toegang van armen tot energie centraal: de investeringen mogen niet alleen ten goede komen aan de middeninkomenslanden. De uitdaging om klimaatverandering tegen te gaan is groot en urgent. De rol van de private sector moet worden verduidelijkt en er moet in dit kader een overzicht komen van het bestaande instrumentarium voordat nieuwe financiële instrumenten worden gecreëerd. De nadruk moet hierbij liggen op armoedebestrijding en ontwikkeling en het halen van de Millennium Development Goals (MDG's). Van Ardenne riep daarom op om een Energy for All-initiatief toe te voegen aan het investeringsraamwerk. Dit moet bij de Jaarvergadering zijn uitgewerkt. Uitvoering ervan zou moeten beginnen in Afrika.

Manteiga (Brazilië) benadrukte in zijn keynote address de handel in biomassa en Zuid-Zuid samenwerking. De minister ging in op de onderhandelingen over het klimaatverdrag en onderstreepte het principe van common but differentiated responsibilities. De minister bevestigde dat we met het verdrag en het Kyoto-protocol op het goede spoor zitten en stelde dat ontwikkelingslanden niet zouden hoeven te betalen voor lage-emissietechnologie. Hij verwoordde hiermee de positie van nagenoeg alle ontwikkelingslanden. Ontwikkelingslanden voerden daarnaast een pleidooi voor flexibele hulp: het raamwerk mag geen aanleiding zijn voor het stellen van conditionaliteiten. Wolfowitz onderschreef in zijn inleidende speech overigens dat armen niet de kosten van de klimaatagenda zouden hoeven dragen.

Wieczorek (Duitsland) benadrukte in haar keynote address het belang van duurzame energie voor ontwikkeling, ook om de prijsvolatiliteit van fossiele energie te verzachten. De discussie zou moeten worden verbreed naar energiegerelateerde sectoren zoals de landbouw en infrastructuur. Voorts gaf ze aan dat nucleaire energie geen oplossing biedt, omdat dit gevaarlijk afval oplevert en kwetsbaar is voor terrorisme. De Wereldbank hield zich er gelukkig niet mee bezig en dat moest zo blijven.

Tijdens de discussie ontstond een brede consensus voor de voorgestelde two track approach en werd de Nederlandse oproep om te komen tot een Energy for All-initiatief breed gesteund: een meerderheid van de leden (Canada, Indonesië, Rusland, VK, China, België, Frankrijk, Saudi- Arabië, Nordics, India, Korea, VS) sprak hun steun uit voor het belang van toegang van armen tot
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energie: de WB mag haar focus op armoedebestrijding niet verliezen. Beide Afrikaanse

gouverneurs uitten hun dank voor deze interventies.

De VS, Nordics, Canada en Frankrijk vroegen om een onderbouwing van de toegevoegde waarde van de WB bij dit onderwerp. Ook bestond er brede steun voor het uitgangspunt dat het bestaande instrumentarium eerst verder bestudeerd moest worden alvorens nieuwe faciliteiten te creëren. De VK gaf hierbij aan dat het vooral ging om schaalvergroting van de inspanning. In dit kader pleitten verscheidene gouverneurs voor een succesvolle vierde middelenaanvulling van het GEF.

Er was een algemene erkenning van de rol van de private sector en van de enorme hoeveelheid middelen die nodig is om het raamwerk te operationaliseren. Gordon Brown (VK) had al eerder een streefbedrag van $ 20 miljard genoemd.

Er bestond geen overeenstemming over kernenergie als een vorm van schone energie. Duitsland sprak zich hiertegen uit, terwijl Frankrijk, Rusland en Korea deze mogelijkheid open willen houden. Een aantal landen vroeg om aandacht voor waterkracht als energiebron (Spanje, Italië, Zwitserland).

In zijn samenvatting gaf Wolfowitz aan dat de Bank met het nieuwe initiatief niet haar focus op armoedebestrijding mag kwijtraken. Er dient maximaal gebruik te worden gemaakt van bestaande instrumenten, waarbij een royale middelenaanvulling van het GEF van groot belang is. Daarnaast gaf hij aan dat nieuwe financiering nodig is, dat ethanol (biobrandstof) belangrijk is en dat er nog te weinig aandacht is voor de aanpassingsagenda. Hiervoor is een extra inspanning nodig. Tenslotte pleitte hij voor een brede coalitie van belanghebbenden bij de aanpak van het klimaat/energie probleem.

Global Monitoring Report 2006: Strengthening Mutual Accountability ­ Aid, Trade and Governance
De leden van het Development Committee verwelkomden het Global Monitoring Report. Van Nederlandse zijde werd gewezen op de veelzijdigheid van het rapport (een "telefoonboek") waardoor het moeilijk was om richting te geven aan de discussie in het Development Committee. Niettemin bestond er onder de leden overeenstemming over het belang van effectieve hulpverlening voor scaling up2, over de belangrijke rol die goed bestuur hierbij speelt en over het belang van een geïntegreerde benadering van de bestrijding van corruptie.

2 Dezerzijds werd gewezen op de constatering van het GMR dat voedselhulp tot 50% duurder is dan financiële hulp. De wijze waarop hulp gegeven wordt is dus wel degelijk van belang is voor de effectiviteit ervan.
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Wolfowitz (WB) en De Rato (IMF) gaven in hun inleiding aan dat dankzij de toegenomen economische groei in de wereld de kansen verbeterd zijn om de MDG's te halen. Desondanks was er nog een lange weg te gaan om on track te komen, vooral in de regio's Sub-Sahara Afrika en Zuid-Azië. Hiertoe moesten volgens Wolfowitz ontwikkelde landen hun hulpinspanning vergroten en ontwikkelingslanden hun instituties ontwikkelen. De Paris agenda moest de leidraad vormen om de kwaliteit van hulp en aansluiting bij de behoefte van landen zelf te verbeteren. Wolfowitz ging in het kader van goed bestuur in op het belang van transparantie en het afleggen van verantwoording. Meer dan in het verleden legde hij hierbij de nadruk op een geïntegreerde aanpak van corruptie: er dient overeenstemming te bestaan over de aanpak tussen alle belanghebbenden, het beleid dient vooral gericht te zijn op preventie en er moet een instrumentarium komen voor het terugvorderen van gestolen gelden.3

Benn (VK) vroeg in zijn keynote address aandacht voor de onevenwichtige geografische spreiding van de hulp en het feit dat een steeds kleiner deel hiervan ongebonden is. Van verschillende kanten werd hij gesteund om te komen tot beter voorspelbare hulp. Hij wees in dit kader op de Britse meerjarige committering aan het Education for All Fast Track Initiative (FTI), waarbij hij nadrukkelijk Nederland prees voor het nemen van dit initiatief.

Manuel (Zuid-Afrika) wees er in zijn keynote address op dat 70% van de schuldkwijtschelding pas na 2015 effect heeft.

Tijdens de hierop volgende discussie werden donoren van verschillende zijden opgeroepen hun financieringsverplichtingen na te komen. Dezerzijds werd gewezen op de korte termijn waarin donoren hun instrumenten voor de financiering van het multilaterale schuldverlichtingsinitiatief ratificeren wil dit initiatief op 1 juli 2006 van start gaan. Naast Frankrijk kondigde ook Korea de invoering van een belasting op vliegtickets aan voor de financiering van hun ontwikkelingsinspanning.

Er bestond consensus over het feit dat goed bestuur een wezenlijke voorwaarde is voor vergroting van de effectiviteit van de hulp, bijvoorbeeld door betere service delivery of een beter ondernemingsklimaat. Manteiga (Brazilië) wees op het gunstige effect van macro-economische stabiliteit op de armoedesituatie in zijn land.

3 In dit kader was het opmerkelijk dat de Deiss (Zwitserland) een pleidooi voor tracing hield en aandacht vroeg voor de successen die zijn land met de teruggave van zwart geld aan Nigeria ($ 458 miljoen!) en Peru had behaald.
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Van Ardenne wees op de noodzaak om, naast de indicatoren die het rapport voor goed bestuur

ontwikkelt, indicatoren te ontwikkelen voor factoren als politieke wil tot verandering en het functioneren van politieke instellingen. Ook onderschreef zij Wolfowitz' geïntegreerde aanpak voor corruptiebestrijding maar voegde hieraantoe dat deze niet in isolement tot stand kan komen, dat het niet op incidenten gebaseerd kan zijn en dat het development driven en niet sanction driven moet zijn. Meer dan één gouverneur viel haar bij in haar opmerking dat bij bestrijding van corruptie in ontwikkelingslanden de ontwikkelde landen niet buiten schot kunnen blijven, maar dat het hier mutual accountability gaat, ofwel: "It needs two to tango!"

Van verschillende zijden, waaronder Van Ardenne en Rato (IMF), werd in lijn met de Doing Business-rapporten van de WB gewezen op het belang van het terugdringen van administratieve lasten als een bron van corruptie en de betrokkenheid van het bedrijfsleven in ontwikkelingslanden. Minder regels betekent ook minder mogelijkheden voor het geven of vragen van steekpenningen.

Ontwikkelingslanden spraken hun steun uit voor het aanpakken van corruptie. De gouverneur voor Francofoon Afrika vroeg uitdrukkelijk om steun bij het opstellen van nationale anti- corruptiestrategieën. Alleen China stelde uitdrukkelijk dat corruptiebestrijding niet mag leiden tot inmenging in binnenlandse aangelegenheden.

Verscheidene gouverneurs bevestigden dat corruptiebestrijding nooit prohibitief mag zijn voor het geven van hulp: het volledig stopzetten van hulp is niet de oplossing. Indonesië en de VS gaven in dit kader aan dat corruptiebestrijding financiële gevolgen met zich mee brengt.

Wolfowitz benadrukte in zijn samenvatting van de discussie dat zero tolerance ten aanzien van corruptie niet hetzelfde is als het streven naar perfectie, en dat corruptiebestrijding tijd kost.

Van verschillende zijden werd opgeroepen om in het volgende GMR meer aandacht aan gender te besteden. Een ander thema dat werd geopperd is handel.

5. G4 ministers en gouverneurs
Ter voorbereiding van het IMFC vond een G4-bijeenkomst plaats tussen België, Zweden, Zwitserland en Nederland. Nederland zat de bijeenkomst voor. De ministers en gouverneurs spraken over de implementatie van de strategische heroriëntatie van het IMF en over het vertegenwoordigingsvraagstuk. De G4 steunde de voorstellen van Managing Director De Rato voor versterking van bilaterale en multilaterale surveillance en de Nederlandse lijn dat een voortdurende betrokkenheid van de Raad van Bewindvoerders en het IMFC bij de nieuwe
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multilaterale consultatieprocedure essentieel is. Ook bestond er overeenstemming over het

voorstel meer focus binnen artikel IV consultaties aan te brengen. Ten aanzien van vertegenwoordiging deelde de G4 de Nederlandse mening dat het IMF zijn legitimiteit moet behouden; dit pleit voor ad-hoc quota verhogingen voor de meest ondervertegenwoordigende landen, alsmede voor een verdubbeling van het aantal basisstemmen. Voorts benadrukte de G4 het belang dat voorstellen van De Rato voor veranderingen in de vertegenwoordiging via de Raad van Bewindvoerders naar het IMFC worden geleid.

6. Persbijeenkomst Education for all ­ Fast Track Initiative WB-president Wolfowitz, de Britse minister van Financiën, Gordon Brown, zijn Nigeriaanse collega, Ngozi Okonjo-Iweala en de Nederlandse bewindvoerder bij de WB, Jan Willem van der Kaaij, droegen tijdens de persbriefing de boodschap uit dat er meer en beter voorspelbare financiering van goede kwaliteit onderwijsprogramma's nodig is om het tweede Millennium Ontwikkelingsdoel te behalen: basisonderwijs voor alle kinderen (100 miljoen kinderen hebben momenteel nog geen toegang tot basisonderwijs). Ook onderstreepten zij de rol van het Fast Track Initiative (FTI) bij het behalen van deze doelstelling. Via het FTI wordt US$ 115 miljoen gekanaliseerd, terwijl via bilaterale kanalen nog eens US$419 miljoen wordt geïnvesteerd in onderwijsprogramma's op landenniveau. Dit is echter niet voldoende en er bestaat nog een financieringsgat van US$ 510 miljoen. De belangrijke rol die Nederland heeft gespeeld bij de oprichting van het Catalytic Fund voor het FTI en de solide financiële bijdragen van US$ 228 miljoen op een totaal US$ 453 miljoen die Nederland tot nu toe heeft gedaan werden alom geprezen. Ook werd de recent in Maputo aangekondigde bijdrage van US$15 miljard over tien jaar voor Education for All van het VK verwelkomd. Brown voegde toe dat het VK voor de komende twee jaar US$170 miljoen zou doneren aan het Catalytic Fund om het financieringsgat te dichten. De aanwezigen riepen andere G8 landen op ook met additionele bijdragen over de brug te komen.

7. Overig
Nederland heeft en marge van het kiesgroepoverleg Israël gesproken over het lage ODA- percentage van dit land. Gezien de economische situatie verwacht Israël niet dat dit percentage binnenkort snel zal stijgen. Nederland zal via de ambassade in Tel Aviv de dialoog met Israël aangaande het lage ODA-percentage vervolgen.

In de schriftelijke interventie voor het DC heeft Nederland de Wereldbank opgeroepen om in het kader van de discussie over begrotingsruimte met praktische aanbevelingen te komen over het al dan niet optoppen van salarissen in de gezondheids- en onderwijssector door donoren.


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---- -- Communiqué of the International Monetary and Financial Committee of the Board of

Governors of the International Monetary Fund April 22, 2006

1. The International Monetary and Financial Committee held its thirteenth meeting in Washington, D.C. on April 22, 2006 under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom. The Global Economy and Financial Markets--Outlook, Risks, and Policy Responses
2. The Committee welcomes the continued strong expansion of the global economy, despite higher oil prices. The expansion is becoming geographically more broadly based, and global growth is expected to remain strong in the next couple of years. Inflation and inflationary expectations remain well contained--although with excess capacity diminishing, continued vigilance will be required. The Committee notes that downside risks arise from continued high and volatile oil prices, the potential for an abrupt shift in global financial market conditions, a rise in protectionism, and a possible avian flu pandemic. The major risks posed by underlying vulnerabilities, including from widening global imbalances, have yet to be comprehensively addressed.

3. The Committee reiterates that action for orderly medium-term resolution of global imbalances is a shared responsibility, and will bring greater benefit to members and the international community than actions taken individually. While progress has been made, more concerted and sustained implementation--with every country doing its part--is needed to help reduce medium-term risks associated with the imbalances. Following the discussion at the Global Imbalances Conference held at the IMF on April 21, the Committee confirms that the agreed policy strategy to address imbalances remains valid. Key elements include raising national saving in the United States--with measures to reduce the budget deficit and spur private saving; implementing structural reforms to sustain growth potential and boost domestic demand in the euro area and several other countries; further structural reforms, including fiscal consolidation, in Japan; allowing greater exchange rate flexibility in a number of surplus countries in emerging Asia; and promoting efficient absorption of higher oil revenues in oil-exporting countries with strong macroeconomic policies. Given economic interlinkages, all countries and regions will have a role to play by increasing the flexibility of their economies and adapting to changing global demand patterns. The Committee therefore

asks the IMF to work on modalities, in consultation with country authorities, aimed at

encouraging actions needed to reduce the imbalances, and calls for a report at its next meeting. More generally, the new multilateral consultations, as outlined in the Managing Director's report on implementing the IMF's medium-term strategy, can play a role in promoting multilateral action.

4. The Committee welcomes the actions already taken to address capacity constraints in oil production. Building on this progress, it calls for further measures to improve the supply- demand balance in oil markets over the medium term, with oil producers, oil consumers, and oil companies all playing their part, including through closer dialogue. The Committee emphasizes the importance of further upstream and downstream investment, policies to promote energy efficiency, conservation, and alternative sources of energy, reducing subsidies on oil products, and further efforts to improve the quality and transparency of oil market data. The Committee will review progress on these issues at its next meeting.
5. Steps to strengthen medium-term fiscal positions remain crucial to support growth and stability, and improve resilience against future shocks. Greater advantage should be taken of the economic expansion to reduce fiscal deficits, and to move forward with reforms to ensure the sustainability of pension and health systems. The Committee also underscores that faster progress to remove constraints to growth in labor and product markets and improve the business and investment climate is essential to reap the benefits of globalization. The Committee welcomes the continued strength of the global financial system, and calls for continued vigilance by financial supervisors, especially regarding the potential impact of a turn in the credit cycle. The Committee calls on members to ensure the robustness of essential economic and financial infrastructure as part of a broad strategy to address the risk of an avian flu pandemic and, in this context, supports the IMF's outreach initiative to promote business continuity planning among financial institutions.
6. The Committee emphasizes the importance of an ambitious and successful outcome to the Doha Round by the end of 2006 for global growth and poverty reduction. The Committee calls on all members to resist protectionism in both trade and foreign direct investment. With time running increasingly short, all members must urgently contribute to reaching agreement on the key elements of a comprehensive package supporting a strengthened multilateral trading system. The Committee also calls for continued efforts to help countries take full advantage of the opportunities of global integration arising from ambitious trade

liberalization. For poor countries in particular, the Committee urges Aid for Trade assistance

firmly grounded in national development strategies and full use of existing and enhanced mechanisms for trade-related technical assistance.
7. The improving growth prospects in poor countries, including in Sub-Saharan Africa, are encouraging. The Committee emphasizes that achieving the Millennium Development Goals (MDGs) requires a partnership between poor countries and donors. Developing countries should continue to pursue sound macroeconomic policies and growth-critical reforms, including further substantial efforts to build sound, accountable, and transparent institutions. The international community should follow through expeditiously on its commitment to provide additional resources.
Implementing the IMF's Medium-Term Strategy

8. The Committee welcomes the Managing Director's report on implementing the IMF's medium-term strategy, and appreciates the public debate on the role of the IMF. It calls on management and the Executive Board to complete their considerations and then move rapidly to implementation.

9. The Committee reiterates that the IMF's effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, emphasizing the importance of fair voice and representation for all members. We underscore the role an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy. The Committee agrees on the need for fundamental reforms. The Committee calls upon the Managing Director to work with the IMFC and Executive Board to come forward with concrete proposals for agreement at the Annual Meetings.

10. The Committee reiterates the importance of making IMF surveillance more effective and supports a review of the 1977 Surveillance Decision. In the context of the Managing Director's medium-term strategy, the Committee proposes a new framework for IMF surveillance which will consist of four elements. First, a new focus of surveillance on multilateral issues, including global financial issues, and especially the spillovers from one economy on others. Second, a restatement of the commitments which member countries and their institutions make to each other under Article IV on which surveillance can focus on

monetary, financial, fiscal and exchange rate policies. Third, the Managing Director should

implement his proposal for a new procedure, which will involve the IMFC and the Executive Board, for multilateral surveillance. Fourth, the IMFC should set a new annual remit for both bilateral and multilateral surveillance through which the Managing Director, the Executive Board and the staff are accountable for the quality of surveillance. This should involve the independence of Fund surveillance, greater transparency and the Independent Evaluation Office.

11. As emerging market members pursue sound policies and integrate effectively into world trade and capital markets, they make a welcome contribution to global economic stability and avoidance of financial crises. The Committee welcomes the IMF's efforts to respond to the new challenges and needs of emerging market members. Financial and capital markets issues should be increasingly at the center of the IMF's work in these countries. The Committee supports further examination of the Managing Director's proposal on a possible new instrument to provide high access contingent financing for countries that have strong macroeconomic policies, sustainable debt, and transparent reporting but remain vulnerable to shocks. The Committee encourages the IMF to explore the role it can play in supporting regional arrangements for pooling reserves. A review is also needed of the operational aspects of the IMF's policy on lending into arrears.
12. The Committee stresses that the IMF has a critical role in low-income countries, including in helping to ensure that expected increases in aid flows and debt relief are absorbed effectively and in a manner consistent with macroeconomic stability. The IMF needs to play its part within its areas of core competence in monitoring progress toward the MDGs. The Committee welcomes the establishment of new instruments that will strengthen the IMF's support for low-income countries, including the Policy Support Instrument and the Exogenous Shocks Facility, and underlines the importance of further contributions to enable the IMF to provide timely concessional shock financing. The Committee welcomes debt relief provided by the IMF and other institutions under the HIPC Initiative and Multilateral Debt Relief Initiative (MDRI). It also welcomes the agreement on the final list of potentially eligible members that meet the criteria of the HIPC Initiative. The Committee underscores the importance of ensuring debt sustainability in countries receiving debt relief by refining the joint IMF-World Bank debt sustainability framework, and helping countries to implement sound medium-term debt strategies and strong public expenditure management and tax

systems. The Committee notes the importance of countries avoiding the re-accumulation of

unsustainable debt and the potentially adverse consequences of nonconcessional borrowing for debt sustainability. It urges all creditors to work with the IMF and the World Bank to adhere to responsible lending. The Committee considers it critical for the effectiveness of the IMF's work in low-income countries that its policy advice, support for capacity building, and financial assistance are closely aligned with the countries' evolving needs and poverty reduction strategies, and focused on macroeconomic issues, including institutions relevant to financial stability, trade, and economic growth.

13. The Committee supports efforts to clarify the division of responsibilities and accountabilities of the IMF and the World Bank, and to improve their collaboration. It welcomes the establishment of the External Review Committee on World Bank-IMF Collaboration, and looks forward to its conclusions.
14. The Committee notes that the IMF's budgetary position has changed following the recent decline in IMF credit, and this requires actions on both income and expenditure. The Committee calls on the Managing Director to develop proposals expeditiously for more predictable and stable sources of income. The Committee welcomes that the medium-term strategy is formulated in a budget-neutral way, and encourages the IMF to further prioritize and streamline its work.
Other Issues

15. The Committee recommends members' acceptance of the Fourth Amendment of the Articles of Agreement. The Committee calls for continued actions by all countries to develop strong programs on anti-money laundering and combating the financing of terrorism (AML/CFT), and supports the comprehensive assessment of these programs within the context of the Financial Sector Assessment Program.
16. The Committee notes the upcoming discussion by the Executive Board of the external evaluation of the Independent Evaluation Office (IEO), and looks forward to the continuing contribution of the IEO to the IMF's work.

17. The next meeting of the IMFC will be held in Singapore, on September 17, 2006.

FOR IMMEDIATE RELEASE

DEVELOPMENT COMMITTEE
JOINT MINISTERIAL COMMITTEE OF THE BOARDS OF GOVERNORS OF THE BANK AND THE FUND ON THE TRANSFER OF REAL RESOURCES TO DEVELOPING COUNTRIES 1818 H Street, N.W., Washington, D.C. 20433 Telephone: (202) 458-2980 Fax: (202) 522-1618

Washington, DC, April 23, 2006

DEVELOPMENT COMMITTEE COMMUNIQUÉ


1. Following the important commitments made last year to increase the quantity, quality and effective use of resources for development, we reviewed progress towards the Millennium Development Goals (MDGs) based on an assessment in the third annual Global Monitoring Report. We reaffirmed the principle of mutual accountability of developing countries, developed countries, and the international financial institutions for making progress on this agenda, focusing on aid, trade and governance. We also discussed clean energy and development, an issue that requires as a priority the attention of global policy makers.


2. We welcomed recent progress made in reducing income poverty, reflecting both a favorable global economic environment and improved economic management in many countries. We are encouraged that growth in Sub-Saharan Africa exceeded 5% for the third consecutive year. We recognized that progress is uneven and insufficient, particularly in Sub-Saharan Africa and in some regions of middle income countries (MICs). There are also signs of better progress towards the human development MDGs. Yet, on current trends many developing countries will fail to meet the MDGs, in particular those related to human development. Achieving rapid, sustained, and shared growth will require further actions to improve the business climate, access to infrastructure, enhanced market access and trade opportunities as well as measures to address issues of equity, including gender equity.


3. We welcomed the rising trend in the volume of official development assistance (ODA), not only from the OECD Development Assistance Committee members, but also from non-DAC countries. We called on all donors to fully implement the commitments they have made for substantial increases in aid volumes. We urged those donors that have not done so to make concrete efforts towards the target of 0.7 percent of GNI as ODA in accordance with their commitments. We noted progress made on the International Finance Facility for immunization and on Advance Market Commitments for vaccines, increased support for an

airline ticket solidarity levy and its implementation by several countries, and continuing work on the scope for greater use of blending arrangements. We noted the key role of the World Bank and the IMF in helping countries ensure that increases in aid volumes can be absorbed effectively, consistent with macro-economic stability and growth objectives. We welcomed creation of the Exogenous Shocks Facility and Policy Support Instrument at the Fund, both of which help improve its flexibility in engaging with low-income countries. We also noted the rising trend of net private flows to developing countries, including remittances.


4. We called for rapid progress in implementing the framework agreed in the Paris Declaration for enhancing aid effectiveness through improved modalities and a stronger focus on results. Developing countries need to strengthen their management of financial resources, and improve their domestic resource mobilization as well as governance and delivery of basic services. Donors and other partners need to improve the quality of aid, modalities of aid delivery to reduce volatility, achieve greater predictability, and provide stronger alignment with national poverty reduction strategies. To this end, we encouraged donors where possible to move towards multiyear plans and commitments, and to be ready to finance recurrent costs where sector policies are sound and fiduciary conditions are adequate. We asked the World Bank and other partners to intensify their coordination at the country level, particularly in strengthening health systems and improving access to good quality education, to reduce transaction costs and to help increase absorptive capacity. We emphasized the importance of universal access to primary education and sustained support for good quality education plans, and the key role the Education for All - Fast Track Initiative could play in all qualifying low income countries. We called on donors to fill the current financing gap. We asked for a progress report on Education for All by our next meeting. We encouraged the Bank to implement the proposal to hold annual Results and Resources Consultative Groups in its Africa Action Plan. We also emphasized the need for the multilateral development banks (MDBs) to strengthen their results orientation, so as to contribute better to improved country outcomes. We look forward to the first World Bank report on results monitoring and systems to strengthen both country and institutional incentives and assure learning from results. In this context, we urged all MDBs and all donors to step up support for strengthening statistical and related institutional capacity in partner countries.


5. We noted the importance of continued development progress in MICs and emerging market countries, and asked the Bank to refine and enhance its engagement strategy with these countries by our next meeting, taking into account their contributions to poverty reduction and global public goods, access to market financing, and remaining development challenges.


6. Promoting good governance, including fighting corruption, and mutual accountability are essential to efforts to achieve the MDGs. We agreed on the need for efforts to improve governance in all countries, to help build effective states with strong national systems and to work together on implementing global initiatives to improve governance, increase transparency and build demand for good governance at the country level in a way that strengthens ownership. The Bank and Fund should play a full supporting role. We asked the Bank to further develop disaggregated and actionable indicators in areas such as quality of public financial management, and procurement practices. We noted the diagnosis in the

Global Monitoring Report that a significant level of corruption is a symptom of poor governance. Building on work over the last decade, we called on the Bank to lay out a broad strategy, to be discussed at our next meeting, for helping member countries strengthen governance and deepen the fight against corruption, working closely with the Fund, other multilateral development banks and the membership, to ensure a coherent, fair and effective approach. This strategy should lead to clear guidelines for operations.


7. We welcomed the progress made in implementing the Multilateral Debt Relief Initiative (MDRI) in the Fund, the International Development Association (IDA), and the African Development Fund, and, in particular, cancellation by the IMF of the MDRI debt of the first 19 countries, and, in the Bank, the approval of the required Resolution by the IDA Governors leading to final agreement on the Initiative. We urged donor countries to secure their financing commitments to achieve full compensation of IDA's foregone reflows and to ensure that this initiative is truly additional to existing commitments. We called on the Bank and the Fund in consultation with the membership to bring forward proposals to further refine the debt sustainability framework for low-income countries to support growth and avoid accumulation of unsustainable debt, and, in this context, to further elaborate and implement an effective approach to deal with the issue of "free-riding" where non- concessional lenders may indirectly obtain financial gain from IDA's grants and debt forgiveness. We called for participation of all export credit agencies, IFIs, and other official creditors, in such an approach and encouraged them to use the debt sustainability framework in their lending decisions. We also noted the final list of potentially eligible countries for the HIPC initiative and the initial cost estimate of debt relief for these countries.


8. Implementation of the Doha Development Agenda is a critical complement to other efforts to increase growth and reduce global poverty. After modest progress at the Hong Kong ministerial meeting in December 2005, we urged all WTO members to step up their efforts to reach a successful conclusion to the Doha Round by the end of this year. We welcomed a significant increase in donor commitments for aid for trade, and creation of a task force in the WTO to make recommendations on how to operationalize aid for trade, recognizing that this is a complement not a substitute for a successful Doha Round. We asked the Bank and the Fund to further examine cross-country and regional aid for trade needs by our next meeting and deepen their work to integrate trade-related needs into their support for country programs. We also asked the Bank and the Fund to continue their global advocacy on trade and development.


9. The global community faces a major challenge in securing affordable and cost-effective energy supplies to underpin economic growth and poverty reduction while preserving the environment. These need not be conflicting goals. We recognized lack of access to energy as an acute problem in many low income countries. We agreed to explore ways to help developing countries enhance their access to affordable, sustainable and reliable modern energy services over the long term, while paying attention to local and global environmental considerations. We also urged them to do so through policy reform to attract domestic and international investment in clean and efficient energy services. We also noted that adaptation to climate change for poor countries is a critical development issue. We reaffirmed our commitment to the goals of the United Nations Framework Convention on Climate Change.

We found broad support for the Bank's approach in addressing 1) developing country energy needs and access to energy services, 2) efforts to control greenhouse gas emissions, and 3) helping developing countries adapt to climate risks, and the two track work program. We asked the Bank to review, in close coordination with other partners, existing financial instruments, taking into account the role of the private sector; and to explore the potential value of new financial instruments to accelerate investment in clean, sustainable, cost effective and efficient energy; so as to report on progress towards an investment framework by our next meeting. We urged member countries of the Global Environment Facility to conclude the fourth replenishment negotiation as soon as possible.


10. Avian Influenza poses a major risk for all countries but more particularly for developing countries. We called for continued coordination and planning by countries and agencies at the international and regional levels and, within countries, continued coordination across relevant ministries. We also welcomed the Bank's rapid operational response under the Global Program for Avian Influenza.


11. We welcomed the interim report on how fiscal policy can best support long term growth, and its emphasis on specific country experiences. We look forward to the final report in early 2007.


12. We noted the creation of the External Review Committee to review various aspects of Bank- Fund collaboration, and look forward to considering its findings and recommendations. We ask the Bank and Fund to ensure that their institutional responsibilities continue to cover all the critical issues relating to reaching the MDGs within their mandates.


13. We welcomed the discussion of quota and voice issues in the Fund, and confirmed our intention to continue our discussions with a view to building the necessary political consensus on the voice issue in the Bank.


14. We welcomed the new Chairman Alberto Carrasquilla. We thanked Zia Qureshi for his services as Interim Executive Secretary to the Committee and welcomed the appointment of Kiyoshi Kodera as new Executive Secretary.


15. The Committee's next meeting is scheduled for September 18, 2006 in Singapore.


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International Monetary and
Financial Committee

Thirteenth Meeting
April 22, 2006

Statement by Mr. Nout Wellink President Nederlandsche Bank, Netherlands On Behalf of Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, FYR of Macedonia, Moldova, Netherlands, Romania, Ukraine

Statement by Nout Wellink, on behalf of Gerrit Zalm, Minister of Finance of the Netherlands International Monetary and Financial Committee Washington, April 22, 2006

Representing the constituency consisting of Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Republic of Macedonia, Moldova, the Netherlands, Romania, and Ukraine.

This statement presents the view of my constituency on the topics to be addressed at this year's IMFC meeting: the global economy, the IMF Strategic Review and debt relief and debt sustainability. In addition, this statement gives our opinion on the Fund's income policy and capital account liberalization.

World Economic Outlook

1. Despite the run-up in oil prices over the last two years, world GDP growth in 2005 remained strong, while inflationary pressures were relatively modest. Looking forward, short- term global prospects continue to be bright. For the United States (US), robust growth is set to continue and Japan's expansion is expected to remain solidly on track. Furthermore, the outlook for economic activity in Europe suggests a firm recovery. Finally, economic activity in China, as well as in most other emerging markets and developing economies is expected to remain strong. Notwithstanding this positive short-term outlook, there are continued significant downward risks.


2. In the first place, the current account deficit of the US, which now stands at 6.4% of GDP, is set to remain large this and next year. To secure an orderly adjustment pro-active policies are required. The policy recipe is well-known: a structural increase of public and private savings in the US, more exchange rate flexibility in Asia and oil-exporting countries and increased domestic demand in surplus countries.


3. Secondly, the development of energy prices is an ongoing risk to the global economy, also in relation to external imbalances. The higher import bill has worsened the current account of the US. The de facto dollar peg of oil exporters may also contribute to the build-up of imbalances, as it limits the role of the exchange rate as adjustment channel. It is crucial that
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second-round effects through prices and wages be kept at bay, especially as the disinflationary

effects of globalization diminish. In addition, policy should contribute to a reduction of the energy intensity of economic activities, by diversifying the sources of energy and thereby increasing the supply share of renewable sources. Stepping up investment in exploration and refining capacity also remains necessary.


4. Thirdly, the rising tide of protectionist pressures constitutes a real risk for the world economy. Sustainable economic growth should remain the overriding objective of trade policy. Restricting the movement of goods, services, labor, and capital is economically unwise; it may only give short term relief and has major costs for the domestic and global economy. Globalization requires much in terms of flexibility, not just of countries, but also of firms and employees. When the globalization process is accompanied by structural reforms at the national level, the benefits of integration can be reaped more quickly as adjustment costs will be lower. At the same time, adequate levels of social protection, in combination with incentives to acquire new skills are crucial in facilitating the adjustment process.


5. Fourthly, a correction related to global external imbalances could potentially disrupt the capital flows that finance current account deficits. This could trigger a (sudden) increase in long-term interest rates, which may undermine growth prospects in regions where the economic recovery is still fragile. It may also seriously affect the housing sector, particularly in countries where house prices are elevated and where household debt levels are high. Moreover, even though many emerging market economies have been able to improve the structure and level of their external debt markedly, many remain vulnerable to a change in financial market sentiment.


6. Fiscal positions in several countries are unsustainable in the medium term and pose a final ongoing risk to the world economy. In many industrialized countries, fiscal positions have improved only marginally despite the ageing population. To prepare the economies for this challenge, it is crucial to benefit from the present favorable economic climate and to step up consolidation efforts. Besides, labor participation should be raised, while pension and health care systems should be reformed. Increasing the flexibility and dynamics of labor and product markets contributes to higher growth. This is particularly relevant for the euro area, where the key challenge remains raising its economic potential.


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The IMF Strategic Review


7. My constituency welcomes the report of the Managing Director on implementing the Fund's medium-term strategy and would like to address the following issues of the review: i) surveillance, crisis prevention and crisis resolution, ii) the role of the IMF in low-income countries, iii) capacity building and technical assistance and iv) quota and voice.

Surveillance, crisis prevention and crisis resolution
8. My constituency fully supports the proposals of the Managing Director to strengthen financial sector surveillance and to better integrate financial sector issues into Article IV reports. We welcome the establishment of a taskforce to develop an analytical framework aimed at ensuring this integration. Some of the instruments currently used for the FSAP, such as stress-tests, could be part of the Article IV template that is currently being developed.


9. The introduction of this new template should go hand in hand with an increased focus and streamlining of Article IV consultations, by concentrating surveillance first and foremost on the core areas of expertise of the Fund. Since the Fund should remain relevant for all its members, focus should be adjusted according to the case and risks at hand. Thus, simplification of bilateral consultation procedures should be explored for all countries and focus and timeliness should be the norm rather than the exception. In addition, the legitimacy of Fund advice, experience sharing and best practice dissemination among members are maximized when all Article IVs are discussed in the Board.


10. At the same time, more attention should be given to multilateral surveillance and its linkage to bilateral surveillance. By increasing the integration of bilateral and multilateral surveillance, the IMF can strengthen its analysis and policy advice on the impact of international economic and financial developments in individual article IV consultations. Vice versa, the IMF can raise authorities' awareness of the regional and multilateral effects of their policies. In the view of my constituency, the proposal to strengthen multilateral surveillance by starting a new supplemental multilateral consultation procedure, in which the IMF consults with selected groups of countries, does not yet constitute a compelling way forward. Such a procedure should in any case be transparent and secure the central role of the Board and the IMFC. More forcefully bringing together the policy recommendations of bilateral consultations in the Board could also strengthen multilateral surveillance.


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11. My constituency welcomes the objective of the Managing Director to strengthen

exchange rate surveillance and to review the 1977 decision on guidance on exchange rate regimes. We also endorse the proposal to expand the work of the Consultative Group on Exchange Rates (CGER) to include all major emerging markets, but are hesitant about publishing equilibrium level analyses. More contemplation is needed on the effects this can have on markets and policies. Exchange rate surveillance should be enhanced foremost by more analysis on whether a chosen policy is appropriate within its macroeconomic context.


12. My constituency is of the opinion that any proposal for a contingent financing facility needs to address convincingly the issues of moral hazard, exit, conditionality, stigmatization and involvement of the Board. We would be prepared to consider such a proposal, but it does not seem to have taken sufficient shape yet. Limited access precautionary arrangements are well suited to signal strong policies to financial markets, as experiences in many countries illustrate.


13. My constituency agrees with the Managing Director that more work is needed on the modalities of the Fund's role in sovereign debt restructuring. In this regard, we believe that the dissemination of timely and accurate information (e.g. debt sustainability analyses) by the Fund is of primary importance. This may facilitate restructuring negotiations between the debtor and private creditors, by providing them with a common starting point. Since these issues are part of the `Principles of stable capital flows and fair debt restructuring', the IMF should clarify its role in the implementation of these Principles.


14. In addition, the Fund needs to develop a consistent approach for exit from exceptional Fund access and should further examine the use of alternative contingency strategies in exceptional access arrangements. Since the exceptional access framework provides clear and important rules for the Fund's role in capital account crises, we are not in favor of modifying this framework.

The role of the IMF in low-income countries

15. The Managing Director provides a number of valuable proposals to strengthen the Fund's role in low-income countries. The IMF has an important role to play in these countries and its policy advice, capacity building and financial assistance should focus on macro-critical areas. Fund program engagement should, as a standard practice, include
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alternative policy scenarios assuming a higher level of aid. Where useful and possible, these

scenarios could include a so-called MDG scenario.


16. As the Managing Director rightly states, the implementation of this approach necessitates a sharper division of labor and subsequent more efficient collaboration with the World Bank and, where needed, other Multilateral Development Banks. My constituency subscribes to the elimination of the Joint Staff Assessment Notes, so as to free up much needed resources. Nevertheless, we feel that the IMF should continue to assess, within its mandate, national development strategies, such as the PRSP. Where possible, the Fund should continue to base its support on these strategies.


17. The Fund has an important role in helping to prevent unsustainable build-up of debt in low-income countries. The Fund should take the outcome of the Debt Sustainability Framework into account when deciding on its own financial support to countries that risk debt distress. Also with respect to non-program countries, my constituency finds that the Fund has a responsibility in assessing debt sustainability and in signaling debt-overhang to donors and the Board.


18. My constituency is not in favor of developing a new instrument for post-conflict countries. We do not see a need for extending IMF involvement in these countries, except possibly in the field of capacity-building. Instead, if the current Emergency Post Conflict Assistance (EPCA) facility is judged to be inappropriate, changes could be considered in its design to further accommodate the specific needs of post-conflict countries. Furthermore, conditionality should be based, where possible, on countries' own reform agendas, without weakening the standard of conditionality.

Capacity building and technical assistance

19. My constituency agrees with the Managing Director's report that capacity-building efforts should become more aligned with the needs of member countries and evolving Fund priorities, especially those identified in surveillance. Therefore, we share his views on priority setting and would like to add that technical assistance programs should get a longer- term focus. In order to increase the effectiveness of technical assistance, a strengthening of ownership is also warranted. To this end, countries receiving technical assistance could be requested to facilitate missions or projects, for instance by extending logistical support. Charging fees could also help to increase ownership and prioritization, but this should
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never prohibit the poorest countriesÂŽ access to technical assistance and not too much

should be expected from this as a source of income. Trust funds could be a useful tool to assist low-income countries in this respect. My constituency supports exploring this issue further, but external financing should not distort priority setting for technical assistance by the Fund.

Quota and voice

20. Good governance is of key importance for the inclusiveness and responsiveness of an organization. Adequate voice in the IMF and a distribution of quotas reflecting developments in the world economy should be assured. My constituency agrees that concrete and durable progress can and should be made on the issue of quotas and voice by the Annual Meetings in Singapore. To accommodate individual emerging markets that are strongly underrepresented on the basis of the current quota formulas, we could support partial ad hoc quota increases for a selected group of countries. Furthermore, we support an increase in the number of basic votes for all members, aimed at strengthening the voice of developing and transition countries. In our opinion, solving the issue of quotas and voice deserves high priority and we are ready to agree on a substantial package of measures ­ including basic votes - at the Annual Meetings in Singapore. In addition, we emphasize the advantages of a mixed constituency as a bridge-building model between borrowing and non- borrowing members of the IMF.

Debt relief and debt sustainability
22. My constituency welcomes the implementation of the Multilateral Debt Relief Initiative by the IMF as of 1 January, and the agreement reached by the World Bank Board to start implementation on 1 July. This debt relief should help recipient countries to achieve the Millennium Development Goals. It is of utmost importance, once debt relief under the HIPC Initiative and the MDRI has been provided, that these countries maintain debt sustainability. We therefore welcome the recent examination of options aimed at preventing creditors from indirectly obtaining financial gain from debt forgiveness, grants and concessional financing activities without paying for it ("free riding") following the improved creditworthiness of the involved countries, since this could undermine the development of these countries and disrupt the intended effectiveness of debt relief. Furthermore, we recommend the adoption of the IMF/World Bank Debt Sustainability Framework by both debtors and official bilateral and multilateral creditors as the main instrument to contain irresponsible accumulation of new debt by borrowing countries.
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The Fund's finances
23. In the view of my constituency, the current business financing model, based almost exclusively on margins on adjustment lending, is no longer tenable. A new, longer-term model is necessary that reduces the Fund's dependency on the level of outstanding credit and reduces the volatility of interest charges for debtor countries. Such a model should also take the Fund's expenditure side into account. To further guarantee its independence, the Fund should look for additional sources of income, such as an investment account, including the proceeds of a limited sale of gold. The strategic review and the introduction of the medium-term budget mechanism offer an opportunity to set priorities and posteriorities, which should lead to expenditure savings. Next to that, a general efficiency drive would be appropriate.

24. My constituency notes the proposal of the Managing Director to establish an external committee reviewing the Fund's finance structure. Although management and staff should be able to provide the Board with adequate proposals, external support may be useful, in order to catalyze political momentum, particularly in the area of modern reserve management. The Fund's audit and risk management institutions should be strengthened, including the role of the Board in this area.

Capital account liberalization
25. My constituency urges the Fund to clarify its approach towards capital account liberalization, as has also been suggested by the Independent Evaluation Office (IEO) in 2005. Regarding the IEO's recommendations, my constituency supports the proposed nuanced approach to capital account liberalization, which, building on the recognition of the ultimate benefits of liberalized capital flows, regards the sequencing and the broader context of necessary reforms as more important than the speed of liberalization. In case capital controls are applied, these should be temporary and designed in such a way as to reduce distortions, while never being seen as a substitute for reforms.


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---- -- DEVELOPMENT COMMITTEE
(Joint Ministerial Committee of the
Boards of Governors of the Bank and the Fund on the
Transfer of Real Resources to Developing Countries)

SEVENTY-THIRD MEETING
WASHINGTON, DC ­ April 23, 2006

DC/S/2006-0021

April 23, 2006

Statement by

Agnes van Ardenne Minister for Development Cooperation The Netherlands

Representing the constituency consisting of Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, the Republic of Macedonia, Moldova, The Netherlands, Romania and Ukraine


1. This Development Committee is not about "business as usual". This meeting is one of the first opportunities for Ministers to deliberate on the implementation of last year's major decisions: the Paris agenda on harmonisation and alignment, the initiatives on multilateral debt relief and climate change and clean energy, the outcome document of the New York Summit and the creation of a Peace Building Commission in which the World Bank will participate.


2. As to the Bank's implementation of the MDRI, my constituency is satisfied that these discussions should draw to a close. It allows debt cancellation to begin on 1 July 2006, and we urge all donors to come up with the additional financing they promised at the 2005 Annual Meeting to compensate IDA. We also welcome the transparent monitor system to track the fulfilment of the donor payments to safeguard IDA's financial viability.

Strategic focus of the World Bank


3. In his speech at the 2005 Annual Meetings, Mr Wolfowitz gave an outline of his priorities for the World Bank and stated his intention to focus on six areas. My constituency supports his observation that the World Bank should be a more focused institution and would like to highlight three issues that merit further consideration: division of labour with other institutions and especially further clarification of the role the WB can play in middle income countries, implementation of the MDGs and especially MDG3 and the Bank's role regarding the global public goods agenda.


4. The Paris agenda implies a clear division of labour with other multilateral institutions and bilateral donors at country level and we look forward to organisational changes that would enhance such a division of labour. Harmonisation and alignment implies that the World Bank does not necessarily have to be lead donor in every country and in every sector. Nor does it imply that its rules and regulations are to be followed under all circumstances. My constituency encourages the use of country systems in those countries where they are of sufficient quality. Ideally, in low income countries, the Bretton Woods Institutions, regional development banks, the UN and donors should work together under leadership of the developing country on a single national development strategy and agree on a clear division of labour, based on relative strengths and weaknesses.


5. My constituency welcomes the Bank's recent attention to the implementation of the third Millennium Development Goal of gender equality and we would like to encourage the Bank to continue to mainstream gender in its lending practice at country level. We would also like to invite the Bank to take gender equality on board when discussing scaling-up of aid.


6. When considering global public goods (or "bads" as in the case HIV/AIDS) the G8 ­ and in its wake the world community ­ automatically turns to the World Bank for leadership. My constituency is very grateful to the World Bank for providing such leadership in the case of avian flu earlier this year and the investment framework for climate change right now. The Bank's willingness should not, however, detract from the international community's obligation to think about how to deal adequately with global public goods and to critically consider which agency is best mandated to perform specific roles. In 1944 the World Bank was not designed or mandated to deal with such issues.


7. The current ad hoc approach, combined with an overall lack of global leadership and fragmentation of the multilateral response, has led to a variety of special-purpose initiatives, especially in the health sector. This, in its turn, has led to an increasingly unsatisfactory situation where development funding through vertical initiatives has increased, whereas horizontal spending along the lines of one single national development strategy has not kept pace and synergies between the two approaches have been insufficiently explored. We should take this into account before deciding on the institutional set-up of, for example, the investment framework for climate change. With regard to the management of global public goods, Ministers should eventually define the Bank's role and that of a reformed United Nations system in a way that benefits the Bank itself, its clients and the international community. We hope that the recommendations of the International Task Force on Public Global Goods, that are due to be published in June, turn out to be helpful in this respect.

Global monitoring report 2006


8. My constituency welcomes the increased attention to results management, in which outcomes rather than inputs are managed. In this context we welcome this year's Global Monitoring Report, which gives a thorough analysis of where we stand with respect to the achievement of the Millennium Development Goals. It should however have been drafted in cooperation with the UN, and not just the IFIs. In this respect we also believe that in cooperation with the UNDP disaggregated data at country level should have been included to identify specific bottlenecks in achieving the MDGs.


9. We applaud the new chapter on IFI performance and welcome the development of the common performance assessment system, COMPAS. This system not only makes it possible to inform the Multilateral Development Banks about their respective activities, but may also be used to improve the current division of labour amongst them.


10. We welcome the choice of governance as this year's theme and especially the notion that good governance is everybody's responsibility. Further analysis in this area should take into account the importance of political institutions and political will for reform. We also welcome the Bank's reinforced focus on combating corruption, alongside other, broader governance issues. Fighting corruption requires a systematic approach with regard to capacity building coupled with specific measures by donors to avoid misuse of their development funds. Whereas capacity-building measures are part of good governance policies in partner countries, the introduction of safeguards against misuse of development funds is part of the internal financial and accountability policies of donors themselves. We expect the Bank to support the national anti-corruption strategies of the countries concerned, but we also favour a more active approach with regard to the internal measures the Bank can take to avoid misuse of its funding. We call on its management to present a coherent and transparent anti-corruption strategy to avoid ad hoc actions and inconsistencies in decision-making regarding the combating of corrupt practices.


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Clean energy and development


11. My constituency welcomes the report Clean Energy and Development: Towards an Investment Framework. We welcome the two-step approach, but would also like to emphasize that before further elaborating on the proposed financial facilities, the World Bank should first analyze existing facilities. This analysis should determine whether new facilities are really necessary.


12. Developing countries need to gain access to energy in order to reduce poverty and increase productivity. At the same time, they should acquire tools to mitigate their impact on climate change and to adapt themselves to climate change's impact. We feel that the currently proposed framework is mainly directed at larger middle-income countries, where there is a potential market for the use of clean energy. From the perspective of climate change, this is logical: greenhouse gas emissions from low-income countries are much smaller (less than 1% of total emissions). As a consequence, the proposals do not sufficiently address issues of sustainable access to energy for the poor in less developed countries. We therefore propose to include an Energy for Development Window as part of the investment framework for the provision of access to modern energy services to the poor, especially in Sub-Saharan Africa. This window should clearly indicate how many poor will be provided with modern energy services by rationalising existing instruments on infrastructure development and assisting developing countries with policy and market development, project development and financing. The increased ODA funding in the coming years could support such an initiative. The Netherlands is currently working with the World Bank to provide 10 million people in the least developed countries with sustainable access to energy by 2015. Similar initiatives to provide 0.5 billion people in Africa with sustainable access to modern energy services would be welcomed.

Fiscal space


13. My constituency supports the use of the concepts of fiscal and macroeconomic space and welcomes the forthcoming work on the relationship between spending and outcomes, in particular the pilot country case studies. We are much interested in the Bank's recommendations on very practical issues such as the circumstances under which a topping-up of salaries of health and education staff is a solution for strengthening these sectors.


14. My constituency agrees with the notion that fiscal space ­ and in particular the amount of domestic revenues generated ­ benefits from complementary measures in the area of improving the business climate. Preconditions for the creation of fiscal space are the presence of good governance, good quality budget institutions and public sector management. It is therefore crucial that the international donor community and national governments focus on improving governance and accountability.


15. Grant aid presents many challenges, including volatility, unpredictability and undermining of country ownership and accountability. These challenges stress the importance of domestic resource mobilisation by recipient countries, and improving the predictability and reducing the volatility of aid flows by donors. The World Bank and IMF can assist in the effective use of aid flows by developing scaling-up scenarios. New borrowing might also create
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fiscal space and should be allowed within the bounds of current and future debt sustainability. Further refinement and implementation of the Debt Sustainability Framework are crucial in this respect to prevent accumulation of unsustainable debt and deter free riding problems.

Progress report on the Doha Development Round and Aid for Trade


16. We welcome the progress report on the Doha Development Round and Aid for Trade, which points to the double challenge that countries face: to conclude the Doha negotiations with ambitious outcomes and to elaborate adequate mechanisms under the Aid for Trade agenda before the end of 2006. Doha has to translate into concrete results: effective market opening and increased capacity of developing countries to benefit from more open markets under an Aid for Trade package. We would like to call on Ministers to show an active commitment to such an ambitious outcome.


17. The growing attention for Aid for Trade is positive, and we support the work in the Task Force on Aid for Trade that was agreed in Hong Kong. My constituency sees three ensuing issues. (1) Integration of Aid for Trade into a developing country's development strategy is key; (2) Developing countries themselves should decide how to come up and implement National Aid for Trade plans. It is important that these plans are discussed with, and where possible implemented by the private sector, as the private sector is an important instrument in increasing trade on the ground. (3) Donors and the Bank should integrate trade into their policies and programming.

HIPC


18. My constituency supports closing the list of potential HIPC eligible countries, as the HIPC Initiative has always been envisaged as a one-off initiative rather than a permanent one. Although the World Bank and IMF propose to close the list, we agree with the possibility of including other countries in the future on a restricted case-by-case basis. In this respect, we want to underscore that restrictive accession is only applicable for those countries whose data has to be verified to meet the end 2004 debt threshold like Afghanistan. Some countries on the potentially eligible HIPC list may have difficulty meeting the requirements of the HIPC initiative before the end of 2006, the sunset date, and may therefore not benefit from HIPC debt relief, despite being on the list of ring-fenced countries. We look forward to Staff's examination of the potential options (including their financial implications) to deal with this. When the Multilateral Debt Relief Initiative is implemented, debt ratios in the Low Income Countries will become much more sustainable. With the Debt Sustainability Framework already partially implemented, we have put a powerful control mechanism in place to prevent a renewed build-up of unsustainable debt.


19. I will elaborate on my constituency's views on the Global Monitoring Report 2006 and the Bank's report Clean Energy and Development: Towards an Investment Framework during the Development Committee's session on Sunday.


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dinsdag 16 mei 2006