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) NINETY-SIXTH MEETING WASHINGTON, D.C. – OCTOBER 14, 2017 DC/S/2017-0055 October 14, 2017 Statement by Hon. Scott Morrison Treasurer Australia On behalf of the constituency comprising Australia, Cambodia, Kiribati, Korea (Republic of), the Marshall Islands, the Federated States of Micronesia, Mongolia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tuvalu and Vanuatu Statement by Hon. Scott Morrison Treasurer Australia On behalf of the constituency comprising Australia, Cambodia, Kiribati, Korea (Republic of), the Marshall Islands, Federated States of Micronesia, Mongolia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tuvalu and Vanuatu 96th Meeting of the Development Committee October 14, 2017 Washington, D.C. Global economic conditions Global economic conditions continue to improve with increases in industrial activity, global trade and commodity prices. Global growth is projected to rise to 3.6 percent in 2017, up from 3.2 percent in 2016, before strengthening further to 3.7 percent in 2018. Nevertheless, investment and productivity growth remains weak, particularly for advanced economies and commodity-exporting developing economies, and over the medium-term risks persist. We are also witnessing increasing policy uncertainty at a global level which may erode confidence and dampen investment. Protectionist pressures, if translated into trade restrictions could stall the recovery in trade and undo gains from past liberalisation efforts. Further, rising geopolitical tensions, increasing frequency and severity of extreme weather events and shocks resulting from famine, displacement and weak governance and corruption threaten to undermine economic gains achieved and weaken growth. We must nurture this recovery for growth to be sustained over the longer-term. We must recognise that these are regional and global challenges and so require concerted, collective action. And we must ensure the returns from growth are shared more widely. Failure to do so risks fuelling protectionist sentiment, lowering global growth and productivity, and in turn negatively impacting on the living standards of our citizens. We welcome the efforts of the World Bank Group (WBG), working in partnership with the International Monetary Fund and other international financial institutions, to support developing countries in addressing these challenges and achieving sustainable and inclusive growth. Institutional Effectiveness Through its financing and investment, technical assistance and knowledge services, the WBG is a valued partner for developing countries. The WBG also occupies a unique leadership role in the international development finance architecture and we encourage it to continue to deepen its relationships with its fellow multilateral institutions. The Twin Goals and the 2030 Agenda for Sustainable Development are ambitious objectives and their achievement will require sustained, collective effort and a clear vision. The WBG’s Forward Look serves us well in this regard and we are encouraged by the implementation update. We welcome the WBG’s renewed commitment to serve all its clients. We also support WBG initiatives aimed at achieving operational efficiencies and simplifying policies and procedures without compromising the WBG’s high standards. We note that work on realigning shareholding and strengthening the IBRD and IFC’s balance sheets has not progressed as quickly as envisioned in the Lima Roadmap. Our constituency continues to support ongoing discussions on the options available to strengthen the Bank’s financial capacity, including through further optimisation of its balance sheets. Our constituency believes that it is important for emerging economies to have an increased representation at the WBG. As part of the ongoing review, we will continue to support shareholding allocation options that balance increased representation for emerging economies with a measured transition for countries that will have less representation and, at the same time, preserve the voice of small states. As the Lima Roadmap makes clear, progress on these matters is important to the future of the WBG and its ability to effectively deliver its Twin Goals. Small Island Developing States The recent extreme weather events in the Caribbean serve as a stark reminder of the vulnerability of small states, particularly small islands states. Our constituency welcomes the WBG’s renewed focus on these countries as articulated in the Small States: a Roadmap for World Bank Group Engagement released in April 2017. Given the severe climate and macroeconomic vulnerabilities faced by these small states, irrespective of income levels, the Roadmap is a timely response by the WBG to the seven priorities identified by members of the Small States Forum. These priorities: vulnerability as a criterion for concessional financing; predictability of affordable financing; debt sustainability; access to climate financing; capacity building and technical assistance; economic diversification; and access to financial markets, are key in achieving sustainable economic growth in small states. The WBG is a critical partner in efforts to address these challenges and we look forward to working together in executing the Roadmap. In this regard, we recall the commitment made by the WBG in the Forward Look to serve all its members and note that two countries in our constituency, Nauru and Palau, continue to be unable to access WBG finance. We note with satisfaction the progress made to date in implementing IDA18. The record replenishment of US$75 billion and its new financial model create a strong foundation from which to deliver against our shared priority areas of focus: jobs and economic transformation; gender; climate change; governance; and fragility, conflict and violence. We welcome the increase in financial resources available to the Pacific under IDA18 and call on the WBG to ensure commensurate in-country staffing resources are provided so the potential of this increased financing can be realised. We are pleased with the WBG’s emphasis on facilitating private sector investment to boost growth for the poorest and most vulnerable. In this regard, we recognize the importance of IDA18’s IFC MIGA Private Sector Window to mobilize private investment and create markets in challenging economic environments, including the Pacific. 2