86977 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) EIGHTY-NINTH MEETING WASHINGTON, D.C. – APRIL 12, 2014 DC/S/2014-0015 April 12, 2014 Statement by Mr. Gunnar Bragi Sveinsson Minister for Foreign Affairs Iceland on behalf of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden Statement by Mr. Gunnar Bragi Sveinsson Minister for Foreign Affairs Iceland on behalf of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden 89th Meeting of the Development Committee April 12, 2014 Washington, D.C. • The Nordic Baltic constituency remains supportive of President Jim Kim and his efforts to firmly commit the World Bank Group to the goals of sustained poverty reduction and shared prosperity, as well as fostering an organization that better exploits synergies across the WBG. • For sustainable poverty reduction, a focus should be placed on fostering inclusive growth, driven by private investment, trade and job creation, ensuring that all people in developing countries have equal opportunities to benefit from economic growth. We therefore urge the Bank to employ strategies and prioritize projects that are effective in promoting social inclusion. The aim should be to create virtuous cycles in which growth and social inclusion go hand in hand. • Empowering women and girls is vital in order to achieve our twin goals. We have high expectations for the new cross-cutting solution area on gender and look forward to working together with the Bank on developing an ambitious group-wide gender strategy in the coming months. • Sustainable use of natural resources is a prerequisite to reaching long-term sustainable economic growth. We urge the World Bank Group to promote green growth and facilitate improvements in efficiency of natural resources utilization and investments in green technologies. The Bank possesses unique tools to help tackle climate change – including by helping to link the global agenda to the national priorities of our client countries. • We encourage the consideration and incorporation of human rights as a core component of the development process. Human rights have the potential to play a key role in development with the aim to achieve better results and meeting the twin goals. A changed World Bank Group The Nordic and Baltic countries welcome the progress made in the change process and appreciate the good work of the World Bank Group staff and management in this regard. We strongly support the effort to build a more effective and efficient World Bank Group as we encourage President Jim Kim in his work to bring the change process forward in an open and transparent manner. As the implementation framework for the change process takes shape, it is important to ensure the WBG’s ability to advance the twin goals of sustainably eradicating extreme poverty and promoting shared prosperity. The successful IDA17 replenishment– both in terms of financing and the strong policy package – plays a significant role in this endeavor. The challenge ahead lays in delivery and implementation of the policy commitments. The Nordic-Baltic constituency stands ready to support you in the efforts ahead. The transition of the global economy to a post-crisis phase poses substantial risks to developing country growth. It is thus important that the WBG is prepared to assist the developing countries to manage macro- economic risks and ensure continued advancement of the twin goals, for which strong, inclusive and sustainable growth is fundamental. Social inclusion and human rights, a foundation for shared prosperity Although poverty rates have declined globally during the past decades, inequality has risen considerably in many parts of the developing world. In fact, certain groups remain excluded from reaping development benefits. For sustainable poverty reduction, a focus should be placed on fostering inclusive growth, ensuring that all people, men and women, young and old, in developing countries have equal opportunities to benefit from economic growth. Social inclusion is indeed central to ending extreme poverty and fostering shared prosperity. We therefore call for empowerment of the poor and marginalized to participate in growth and to take advantage of opportunities on an equal basis. We need to ensure that people have a voice in decisions that affect their lives and that they enjoy equal access to markets, services as well as political, social and physical spaces – regardless of race, ethnicity, gender, age, disability or sexual orientation. We need to level the playing field. Social inclusion is also imperative if we are to address central drivers of conflict such as marginalization and inequality. We welcome the increased focus on fragile and conflict-affected states in the World Bank Group Strategy and in IDA-17 - and note that concrete actions need to be taken at the country level to meet the diverse challenges of these countries. Of particular concern is the current situation in Ukraine. We commend the Bank and the Fund on their stepped-up engagement in the country and encourage moving forward with further support without delay. In this work we stress the importance of close coordination with the IMF, the EC and other donors. Promoting social inclusion, ensuring non-discrimination and equal treatment for all is vital to underpin long term economic growth, sustainable poverty reduction and peace, as well as boosting shared prosperity for the bottom 40%. We urge the Bank to employ strategies and prioritize projects that are effective in promoting social inclusion. The aim should be to create virtuous cycles in which growth and social inclusion go hand in hand – continuously reinforcing each other. As rightly mentioned by a recent publication of the World Bank, “Inclusion Matters”, an inclusive society must have institutions, structures, and processes that empower local communities, so they can hold their governments accountable. In our view, it also requires a well-functioning domestic financial system that promotes financial transparency. Sound and transparent institutions, as well as predictable and non- distortive tax systems are needed to increase the general trust and willingness to pay taxes, and efficiently collect and allocate public resources. Mobilization of domestic resources through tax collection capacity and widening the tax base as well as enhancing greater transparency is critical to development and in creating equal opportunities for all. Furthermore, curbing illicit financial flows is a part of mobilizing increased financing for development. Closely related to the social inclusion agenda, we encourage the consideration and incorporation of human rights as a core component of the development process. Human rights have the potential to play a key role in development with the aim to achieve better results and meeting the twin goals. The 2 explicit reference to the protection of human rights in the WBG strategy is a good starting point, underlining the importance of this issue. We also look forward to integrating human rights in the framework on environmental and social safeguards currently being revised. Gender equality is both a right in itself and smart economics In this context we especially want to underline the importance of gender equality. Gender equality and the empowerment of women are key elements in responding to the challenges ahead. Investing in women has a multiplier effect on productivity, efficiency and sustained economic growth. Therefore, focus should be placed on increasing women’s access to economic opportunities and resources, including jobs, financial services, property and other productive assets, as well as market information. In addition, reinforcing incentives and abilities of women to pursue these opportunities through training and skills development as well as strengthening their voice, agency and participation in households, the economy and the broader society is essential. At the same time, we must recognize that gender equality is not only means of achieving economic growth and social inclusion, but also a fundamental right in itself. Ensuring equal access to resources and opportunities is an important part of women’s empowerment. We appreciate the important steps taken by the World Bank to develop targeted gender interventions and deepen gender integration in its work. However, while gender efforts have been strengthened, gaps persist and it is clear that the road ahead remains long. Continued vigilance is needed. Gender equality should be systematically integrated into all activities of the Bank, in all sectors – not least the core economic ones. Words are important, but action must follow. We therefore need to ensure that gender equality is not only adequately addressed in the policy and design phases, but also in the implementation and results reporting phases of our work. The IDA17 gender commitments represent an important step in this direction. We particularly appreciate the intensification of the efforts in collecting and disseminating gender-disaggregated and gender-relevant data. In order to generate tangible results, promising policies and research must be translated into evidence- based practices to close the gaps. Developing sufficient capacity calls for sufficient “on-budget” resources to support gender equality, incentives to encourage staff to consider gender dimensions throughout the project cycle, and dedicated gender expertise at country level. In this light, we urge the Bank to deepen gender integration, way beyond efforts funded through Trust Funds, to reach the desired outcomes. We have high expectations for the new cross-cutting solution area on gender and look forward to working together with the Bank on developing an ambitious group-wide gender strategy in the coming months. Only a rigorous identification and analysis of the existing gaps, challenges, and priorities in integrating gender in WBG work can provide a solid basis for a sound gender strategy going forward. Environmental sustainability and natural resources Growth should not be achieved at the expense of the environment - it has to be compatible with the limits imposed by the resources of our planet. Focusing only on economic growth without taking ecological and climate related constraints into consideration may yield short-term gains, but will deplete the natural resource base and thus undermine opportunities for future development. Environmental sustainability has therefore to be fully integrated in all work of the World Bank Group. Sustainable use of natural resources is a prerequisite to reaching long-term sustainable economic growth. We urge the World Bank Group to strongly promote green growth and facilitate improvements in 3 efficiency of natural resources utilization and investments in green technologies. Responding to the enormous needs for access to energy, in a sustainable manner, is one of the pressing development challenges of our times. In our view, and in line with the Sustainable Energy for All initiative, the Bank is well placed to help meet these challenges effectively by promoting renewable and clean energy in developing countries. Viable solutions should include increased usage of geothermal energy, which is an underutilized energy source in many developing countries. Moreover, sustainable use of natural resources will contribute to a more peaceful world. Extractive industries have fueled conflict and violence in numerous places and we encourage the World Bank to continue its important work with improving natural resource management and enhance its efforts to break the links between natural resources, armed conflicts and human rights abuses. We hence welcome the WBG’s support of the Extractive Industries Transparency Initiative (EITI), aimed at ensuring transparent and sustainable natural wealth. Finally, climate change is speeding up environmental degradation. The world’s poorest countries are the most vulnerable to the effects of climate change. Natural disasters, the impact of man and corresponding climate change effects pose a threat to the global goal of eradicating extreme poverty by 2030. These are certainly risks that cannot be overlooked on the pathway toward reaching the twin-goals. Urgent action on climate change is thus essential to address the threat it poses to poverty reduction and sustainable economic growth. The Bank possesses unique tools to help tackle climate change – helping to link the global agenda to the national priorities of client countries, as well as assisting in mobilizing substantial funds for climate interventions, including through collaboration with the private sector. We welcome recent progress made in this direction with the establishment of the Vice-Presidency to address climate change, and the renewed identification of climate change as a special theme in IDA-17. We welcome the Bank’s prudent approach to working with the Green Climate Fund, and continue to urge the Bank to actively contribute to the work on the Sustainable Development Goals and to frame its new strategy with flexibility in the context of the formulation of the post-2015 agenda. The last twenty years have seen a reduction in poverty which presents an opportunity to visualize the end of extreme poverty. However, many challenges remain for developing countries in the post-crisis global economy, not least in fragile and conflict-affected countries that are on the dual quest of peace and development. If we are to bend the arc of history, a shift to a greener and more socially inclusive pathway towards growth and development is necessary. For lasting progress in our fight against poverty, we maintain high hopes for a more agile, action-oriented and results-minded World Bank Group urgently and effectively responding to the multiple economic, social and environmental challenges of our times. 4