challenge of knowledge transfer and climate change are some of the global public … And finally, we took note of the Joint Management Action Plan, which has been … As the region implements reforms and builds its resilience, the … land, Latvia, Lithuania, Norway, Sweden, and Denmark. Let me … Jonathan Rothschild*.
We, the World Bank, are working with our Board to significantly step up our assistance to the international efforts to address climate change.
The 2006 Stern Review: Economics of Climate Change asserts and I quote, “the impacts of climate change are not evenly distributed—the poorest countries and people will suffer earliest and most” (end of quote). For many developing countries, this is already a harsh reality!
In the Caribbean, we are already experiencing some of the impacts of climate change. Higher atmospheric temperatures are already nega- tively impacting the region’s economy and environment through the need for increased use of energy derived from imported fossil fuels; increased loss of water through higher evaporation rates; higher use of limited water resources for agriculture irrigation; salt-water intrusion into coastal aquifers and increased prevalence of vector-borne diseases.
In addition, as a result of warmer sea temperatures, the Caribbean has experienced extensive social, economic, and environmental impacts of intensive storms and hurricanes. Climate change will affect all sectors within the region but most critically tourism, agriculture, fisheries, human habitat and physical infrastructure, all of which impact the region’s prospects for sustainable development.
Many developing countries (large and small) have taken steps to integrate adaptation into their national development strategies but financial support is desperately needed for implementation especially with infrastructure. The international community has a moral obliga- tion to provide financing for adaptation and mitigation efforts in devel- oping countries including small island developing states. As the Stern Review notes, “without such support there is a serious risk that devel- opment progress will be undermined.” In this regard, the Caribbean Community strongly supports the Alliance for Small Island States in urging the operationalization of the UNFCCC Adaptation Fund.
This brings me to a more general point about the need for the Bank Group to work with its 45 Small States to develop a clear results-based framework to systematically address these countries’ requirements. This imperative was recognized by the Development Committee in April 2000 when it declared that “the circumstances of Small States should be taken into account in the policies and programs of the multi- lateral trade, finance, and development organizations.”
In June of this year, the Bank in collaboration with 18 Caribbean countries and territories and some key development partners launched the Caribbean Catastrophe Risk Insurance, the first ever multi-island climate insurance facility. This is an example of the type of innovation the Bank can create in partnership with small states and should serve as a model for replication in other regions.
Though pleased with this innovative Facility, we must register our disappointment that notwithstanding combined damages of approximately US$500 million in Jamaica, Dominica, St. Lucia, and Belize fol-lowing the passage of Hurricanes Dean and Felix, policies were not triggered because recorded wind speeds were not strong enough. We urge the Bank to work with us to incorporate recent lessons learned and make the Facility more responsive to our needs. In short, the paramet- ric indicators must better reflect the structure of our economies, many of which are agriculture-based and payout must be more closely aligned with the damages on the ground. We would also reiterate our previous appeal that the Facility should provide flood coverage.
Global Economic Outlook, Risks, and Challenges
Since the last Spring Meeting of the World Bank and the IMF, global growth has remained strong. However, recent disruptions in the finan- cial markets have once again demonstrated the potential for rapid and destabilizing spillovers among markets and countries and raised the prospect of a more challenging environment to come. Adverse credit conditions, the possibility of negative consequences of further adjust- ments originating from the U.S. housing market, and the rapid appreci- ation of some currencies are some of the key risks going forward.
With enhanced and well- focused assistance from the World Bank and the IMF, is crucial to sus- taining high, private-sector-led growth and job creation.
the President and the Board of Executive Directors of the World Bank Group have recently reviewed the new challenges posed by recent aid trends and the role of IDA in the global aid archi- tecture. We encourage the World Bank Group, as the world’s leading development partner, to continue its efforts to adapt to the ongoing evolution of global aid architecture and the increasing fragmentation that characterizes the provision of aid. We encourage the World Bank Group to help developing countries strengthen their aid coordination capacity in order to improve aid efficiency, and to insure that donor sup- port is integrated coherently into national development strategies. The Bank should also move decisively to increase the use of country systems in all client countries. I also encourage other international organizations and donors to make greater efforts to improve aid alignment and harmonization in keeping with the principles set forth in the Paris Dec- laration. Such a dynamic could only be sustained if additional resources are provided. We therefore welcome the Bank Group’s recent pledge of $3.5 billion to IDA-15. Following the example of the Bank, I call on other donors to increase their contributions to a level that meets the challenges.
This is all the more important because our countries are facing new challenges resulting from globalization. Indeed, many global externali- ties are affecting our economies and having an impact on the develop- ment processes. Good governance and financial stability frameworks, cohesive agreements on trade and aid, effective measures to address the challenge of knowledge transfer and climate change are some of the global public goods on which sustained and coordinated action is required from us. This must be done in a manner consistent with the principles of common but differentiated responsibilities adopted by the international community in the context of the United Nations Frame- work Convention on Climate Change.
Most of all, We need to summon the political will to bring this impor- tant set of issues to a fruitful conclusion. This assumes mutual under- standing and a genuine desire to change, for any failure in this key area would undermine the legitimacy and effectiveness of our institutions.
We should acknowledge that, day after day, a more complex world confronts the World Bank and the IMF. The often unforeseeable nature of the new challenges, which we face, obliges us to ensure that the mul- tilateral system is preserved and strengthened. I hope that you will entrust our institutions with the much-needed legitimacy and instru- ments to succeed in this endeavor. I have every confidence that the World Bank and the IMF will be able to take the action needed to respond to the challenges ahead.
I now declare the 2007 Annual Meetings of the World Bank Group and International Monetary Fund open.
Globalization has become the defining mark of our time. It has lifted barriers and boundaries, and unleashed movements of ideas, goods, capital, and people. It has created opportunities where there was none.
Yet globalization has not embraced all. Many remain on the fringes, and some are falling further behind. Exclusion, grinding poverty, and environmental damage create dangers. The ones that suffer most are those who have the least to start with—indigenous peoples, women in developing countries, the rural poor, Africans, and their children.
It is the vision of the World Bank Group to contribute to an inclu- sive and sustainable globalization—to overcome poverty, enhance growth with care for the environment
An Inclusive and Sustainable Globalization: A Multilateral Approach
Nearly one billion people live on just $1 a day. Globalization must not leave this “bottom billion” behind. Poverty breeds instability, dis- ease, devastation of common resources and the environment. Poverty can lead to broken societies that can become breeding grounds for those bent on destruction and for migrations that risk lives.
Globalization has brought uneven benefits to the billions in middle income countries who have started to climb the ladder of development since the end of the Cold War. In many lands, social tensions are weakening political cohesion. These middle income countries need to continue to grow, to offer inclusive development, and to adopt environ- mental policies for sustainable prosperity.
The greater influence of developing countries presents another question: What will their place be in this evolving global system? This is not only a question of how large developing countries will interact with developed countries, but also with the poorest and smaller states of the world. It would be ironic indeed for the Bank Group to withdraw from work with middle income countries at a time that governments are rec- ognizing the need to integrate these countries more effectively in diplo- macy and political-security institutions. Why not integrate them as partners in the institutions of the multilateral economy, too?
Two years ago, I suggested that China build on its success by becom- ing a “responsible stakeholder” in the international system. This is, of course, a challenge for others, too, if we are to achieve an inclusive and sustainable globalization. And with responsibility, there should be greater voice and representation. We need to advance the agenda to strengthen the participation of developing countries throughout the Bank Group’s work and workforce. I am particularly pleased that Dr. Ngozi Okonjo-Iweala, the former Finance Minister of Nigeria, has agreed to return to the Bank, where she worked for 21 years, to serve at the top rank as a Managing Director.
Developed countries are also facing the opportunities and strains of globalization. The common sense of publics in developed countries leads them to recognize there is no successful recourse to isolation. Common decency—as well as self-interest—drives them to recognize the interdependence, even as they debate how best to pursue it.
In comparison to the scale of these global challenges, the World Bank Group is a modest institution. Yet along with its multilateral part- ners—the United Nations and its specialized agencies, the IMF, the WTO, and regional development banks—the World Bank Group needs to play an important role in advancing an inclusive and sustainable globalization. The multilateral institutions have been buffeted and bat- tered. They need to combine deliberations with effective results. They must overcome internal weaknesses and build on their strengths. Together, we must show that multilateralism can work much more effectively—not just in conference halls and communiqués—but also in villages and teeming cities, for those most in need.
We also have the opportunity to build new partnerships to assist the poorest. The Bank Group is now working with Russia, China, Brazil, and India to support the needs of poorer states.
Second, we need to address the special problems of states coming out of conflict or seeking to avoid the breakdown of the state.
When the visionaries at Bretton Woods conceived of the IBRD over 60 years ago, the “R” stood for the reconstruction of Europe and Japan. Today, the “R” points us toward the challenge of reconstruction in states harmed by modern conflicts.
Sadly, these conflicts not only lead to extraordinary suffering for the people directly involved, but the spillover effects drag down their neigh- bors too.
Frankly, our understanding of how to deal with these devastating cases, is modest at best. I suspect we will need a more integrated approach involving security, political frameworks, rebuilding local capacity with quick support, reintegration of refugees, and more flexi- ble development assistance. The Bank Group’s constructive work in Bosnia, Rwanda, and Mozambique shows what is possible. IDA’s adapt- ability and quick disbursements have proven vital in post-conflict envi- ronments, and we are working with other development partners to increase our effectiveness.
Today, we are at work in Southern Sudan, Liberia, Sierra Leone, Democratic Republic of Congo, Burundi, Côte D’Ivoire, Angola, Timor Leste, Papua New Guinea, Pacific island states, Afghanistan, and Haiti, among others. If there were an effective peace accord in Darfur, backed by a strong UN-African Union security force, the World Bank Group would want to help.
Third, the World Bank Group needs a more differentiated business model for the middle income countries. Today, about 70 percent of the poor live in India, China and the middle-income countries served by IBRD. In many cases, rapid economic growth has failed to provide opportunities for the poor. Social services remain underfunded. Envi- ronmental and energy problems are acute. And there remains a contin- uing potential for volatility in the flow of capital to these countries—like those we witnessed through the 1980s and 1990s.
Recognizing these challenges, our middle income members want the World Bank Group to remain engaged with them through a diversified menu of “development solutions.” But this engagement needs to reflect major improvements in their financial position and institutional capac- ity over the past decade. They want IBRD to provide much more flexi- ble and better-priced banking services, with less red tape and shorter turn-around times. They want customized, just-in-time knowledge and advisory services. They are looking to IFC to help develop private sec- tor solutions for undeveloped markets and even social needs. And they are holding us to ever-higher standards of quality, consistency, and cost- effectiveness in our advisory services. In short, they want performance, and that is what we intend to give them.
For some middle income countries, our services will be increasingly in the areas of risk management and applying global know-how to local needs. We can offer credit enhancements, hedging, and neutral expert- ise that will help build the capacity for asset management. We can encourage local securities markets by helping construct local currency bond funds and indices. We can finance in local currencies to help com- bine our lending with the management of currency risk. To encourage inclusive growth within countries, we can work with subnational author- ities. We are now developing contingent financial instruments to assist with emergency liquidity needs during financial shocks, as well as insur- ance and capital market facilities to broaden availability and lower the cost of coverage for natural catastrophes, such as hurricanes and earth- quakes. Some of these activities will lead us to explore how best to pro- vide services and knowledge for fees, offering our client countries a choice of delivery with or without financing.
Fourth, the World Bank Group will need to play a more active role in fostering regional and global public goods that transcend national boundaries. It is our calling to ensure that this agenda is linked to the aims of development. Our work on regional and global public goods will require close cooperation with other agencies that have specialized expertise, such as WHO, UNEP, UNODC, and the WTO.
Our people suffer the most from corruption in delivery of public services. We are waiting for the World Bank’s recommendations in this regard, and I can assure you that my government will fully implement those recommendations.
Similarly, we consider fighting narcotics as a joint task for my govern- ment and the international community. In collaboration with some of our donors, soon we will be developing a counter narcotics strategy encom- passing not only eradication and interdiction efforts, but also a focus on better development of alternative livelihoods for rural residents.
However, despite these challenges and recent deteriorations in secu- rity, we are confident that with continued international support, we can build and strengthen the institutions and policies that will facilitate the functioning of a market-based economy.
Let me turn to some issues that require World Bank and IMF deci- sions and which affect us too.
First, we agree with the conclusions drawn in the Development Committee paper on “Scaling Up Aid,” that predictability of aid is cru- cial to its effectiveness, and we share the concern that the average level of aid predictability remains very low. Afghanistan is a good case for the argument that more predictable aid is better aid—particularly when aid volumes are such a large percentage of the overall budget, sensible budgetary planning can only occur when donors and the Government are well coordinated, and aid flows are communicated in advance.
Second, on the issue of IDA’s evolving role, Afghanistan is in a par- ticularly good position to witness the benefits of IDA’s support through its “platform role.” We hope that the IDA-15 negotiations will result in much higher financing so that IDA achieves the “critical mass” neces- sary to achieve its many goals and continue to help guide other donors.
Third, we support the aid-for-trade initiative, particularly the pro- posal to undertake regional initiatives. With some of the lowest tariffs in the region, and membership in regional economic and trade groups, and given its location, Afghanistan is eager to become the bridge between Central Asia, South Asia, and the Middle East, and help the expansion of trade in the region.
And, finally, we are supportive of the recommendations of the HIPC Implementation Report. We hope that the Bank and Fund will continue to encourage other multilateral institutions to participate in the HIPC initiative.
I have the distinct honor of addressing this Joint meeting on behalf of the member states of the Caribbean Community (CARICOM), namely Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Our delegations wish to express our profound appreciation to the management and staff of the Fund and the Bank together with our host, the Government and People of the United States of America, for the excellent arrangements afforded us.
The Caribbean Community wishes to warmly congratulate Mr. Zoellick on his recent appointment as President of the World Bank and expresses full confidence in his leadership of the Bank at this criti- cal juncture in the Bank’s history. We are supportive of current efforts to develop a long-term strategy for the Bank Group and encourage the President to finalize and quickly implement this strategy.
Similarly, we welcome the preparation of The World Bank Group Strategy for the Caribbean, especially on private sector development. We wish to see a clear results-based framework for timely implementa- tion and mutual accountability. The region also places on record its gratitude for the role and support of the Bank for the Conference on the Caribbean held in Washington DC in June this year.
The Community also wishes to express its appreciation to Mr. de Rato for his leadership, especially on some key reforms in the Fund and his demonstrated interest in facilitating a more mature dialogue with the Caribbean. We wish him well in his future endeavors and look forward to a good working relationship with his successor, Mr. Strauss-Khan.
Mr. Chairman, these Meetings come against the backdrop of contin- ued robust growth in the global economy but with some turbulence in the financial markets. Many countries, including the Caribbean, are vul-
nerable to this turbulence in the financial markets given the downside risks for global economic growth.
The role of the international financial institutions in assisting the Caribbean to reposition itself to thrive in the global economy is critical. We welcome the Caribbean-wide research and outreach activities being undertaken by the Fund and the Bank, especially in support of the full establishment of the Caribbean Single Market and Economy (CSME).
As the region implements reforms and builds its resilience, the support of the Caribbean Regional Technical Assistance Center (CARTAC) remains invaluable. Accordingly, we urge donors to pro- vide funding for Phase III of CARTAC.
We are concerned that notwithstanding higher growth and fewer conflicts in low-income countries, far too many are still not on track to achieve the Millennium Development Goals.