33581 THE WORLD BANK GROUP 2004 ANNUAL MEETINGS OF THE BOARDSOFGOVERNORS Summary Proceedings Washington D.C. October 3, 2004 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page i THE WORLD BANK GROUP 2004 ANNUAL MEETINGS OF THE BOARDS OF GOVERNORS SUMMARY PROCEEDINGS WASHINGTON D.C. OCTOBER 3, 2004 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page ii 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page iii INTRODUCTORY NOTE The 2004 Annual Meetings of the Boards of Governors of the World Bank Group, which consists of the International Bank for Reconstruc- tion and Development (IBRD), International Finance Corporation (IFC), International Development Association (IDA), Multilateral Investment Guarantee Agency (MIGA) and International Centre for the Settlement of Investment Disputes (ICSID), held jointly with that of the International Monetary Fund, took place on October 3, 2004 in Washington D.C. The Honorable Lim Hng Kiang, Governor of the Bank and the Fund for Singapore, served as the Chairman. The Summary Proceedings record, in alphabetical order by member countries, the texts of statements by Governors, the reports and resolu- tions adopted by the Boards of Governors of the World Bank Group. The texts of statements concerning the IMF are published separately by the Fund. W. Paatii Ofosu-Amaah Vice President and Corporate Secretary THE WORLD BANK GROUP Washington, D.C. June, 2004 iii 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page iv 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page v CONTENTS Page Opening Address by the Chairman Lim Hng Kiang Governor of the Bank and the Fund for Singapore . . . . 1 Annual Address by James D. Wolfensohn President of the World Bank Group . . . . . . . . . . . . . . . . . 5 Report by Trevor Manuel Chairman of the Development Committee . . . . . . . . . . . 14 Statements by Governors and Alternate Governors . . . . . . 17 Afghanistan . . . . . . . . . . . . 17 Israel . . . . . . . . . . . . . . . . . . 87 *Bahrain . . . . . . . . . . . . . . . 19 Italy . . . . . . . . . . . . . . . . . . . 89 Bangladesh . . . . . . . . . . . . 23 *Jamaica . . . . . . . . . . . . . . . 92 Belarus . . . . . . . . . . . . . . . . 25 Japan . . . . . . . . . . . . . . . . . 95 Belgium . . . . . . . . . . . . . . . 28 Korea . . . . . . . . . . . . . . . . . 102 Bulgaria . . . . . . . . . . . . . . . 33 Lao, PDR . . . . . . . . . . . . . . 103 Burkina Faso . . . . . . . . . . . 35 *Lithuania . . . . . . . . . . . . . 105 Cambodia . . . . . . . . . . . . . . 41 Macedonia, FYR . . . . . . . 107 Canada . . . . . . . . . . . . . . . . 48 Malaysia . . . . . . . . . . . . . . . 109 China . . . . . . . . . . . . . . . . . 53 *Micronesia . . . . . . . . . . . . 113 Croatia . . . . . . . . . . . . . . . . 56 Myanmar . . . . . . . . . . . . . . 118 Denmark . . . . . . . . . . . . . . 60 Nepal . . . . . . . . . . . . . . . . . 121 Fiji . . . . . . . . . . . . . . . . . . . . 62 Netherlands . . . . . . . . . . . . 124 *Finland . . . . . . . . . . . . . . . 65 New Zealand . . . . . . . . . . . 126 France . . . . . . . . . . . . . . . . . 69 Pakistan . . . . . . . . . . . . . . . 131 Georgia . . . . . . . . . . . . . . . 70 Papua New Guinea . . . . . . 135 Germany . . . . . . . . . . . . . . 73 Philippines . . . . . . . . . . . . . 138 Ghana . . . . . . . . . . . . . . . . . 74 Poland . . . . . . . . . . . . . . . . 140 Greece . . . . . . . . . . . . . . . . 76 Portugal . . . . . . . . . . . . . . . 142 India . . . . . . . . . . . . . . . . . . 77 Russian Federation . . . . . . 145 Indonesia . . . . . . . . . . . . . . 80 Spain . . . . . . . . . . . . . . . . . . 150 Iran, Islamic Republic of . . 82 Sri Lanka . . . . . . . . . . . . . . 153 Ireland . . . . . . . . . . . . . . . . 84 Switzerland . . . . . . . . . . . . 155 * Speaking on behalf of a group of countries. v 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page vi Page Thailand . . . . . . . . . . . . . . . 158 Ukraine . . . . . . . . . . . . . . . 163 Tonga . . . . . . . . . . . . . . . . . 160 United States . . . . . . . . . . . 166 Turkey . . . . . . . . . . . . . . . . 162 Vietnam . . . . . . . . . . . . . . . 168 Concluding Remarks by James D. Wolfensohn . . . . . . . . . . 171 Concluding Remarks by the Chairman Lim Hng Kiang . . . 174 Remarks by Andre-Philippe Futa, Governor of the Bank for Democratic Republic of the Congo . . . . . . . . . . . . . . . . . 176 Documents of the Boards of Governors . . . . . . . . . . . . . . . . 178 Schedule of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Provisions Relating to the Conduct of the Meetings . . 179 Agendas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 Joint Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 181 Report II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 Report III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 MIGA Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . . 186 Report I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Resolutions Adopted by the Board of Governors of the Bank between the 2003 and 2004 Annual Meetings . . . . 189 No. 556 Transfer from Surplus to Replenish Trust Fund for Gaza and West Bank . . . . . . . 189 No. 557 Transfer from Surplus to Low-Income Countries under Stress Implementation Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 No. 558 Direct Remuneration of Executive Directors and their Alternates . . . . . . . . . . . . 189 No. 559 2004 Regular Election of Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 No. 560 Framework for Remuneration of the President . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 No. 561 Remuneration of the President . . . . . . . . . . . 191 Resolutions Adopted by the Board of Governors of the Bank at the 2004 Annual Meetings . . . . . . . . . . . . 192 No. 562 Financial Statements, Accountants' Report and Administrative Budget . . . . . . . . 192 No. 563 Allocation of FY04 Net Income . . . . . . . . . . 192 vi 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page vii Page Resolution Adopted by the Board of Governors of IFC at the 2004 Annual Meeting . . . . . . . . . . . . . . . . . . . . 194 No. 240 Financial Statements, Accountants' Report and Administrative Budget . . . . . . . . 194 Resolution Adopted by the Board of Governors of IDA between the 2003 and 2004 Annual Meeting . . . 195 No. 207 Slovenia--Change in Membership Status . . 195 Resolution Adopted by the Board of Governors of IDA at the 2004 Annual Meeting . . . . . . . . . . . . . . . . . 197 No. 208 Financial Statements, Accountants' Report and Administrative Budget . . . . . . . . 197 Resolution Adopted by the Council of Governors of MIGA between the 2003 and 2004 Annual Meetings . . 198 No. 68 Election of Directors . . . . . . . . . . . . . . . . . . . . . 198 Resolutions Adopted by the Council of Governors of MIGA at the 2004 Annual Meetings . . . . . . . . . . . . . . 199 No. 69 Financial Statements and Accountants' Report . . . . . . . . . . . . . . . . . . . . . 199 No. 70 Parity of Voting Power in MIGA . . . . . . . . . . 199 Reports of the Executive Directors of the Bank . . . . . . . . . 201 Transfer from Surplus to Replenish Trust Fund for Gaza And West Bank . . . . . . . . . . . . . 201 Transfer from Surplus to Low-Income Countries under Stress Implementation Trust Fund . . . . . . . . . 202 Report of the Boards of Governors of the IMF and the World Bank by the Joint Committee on the Remuneration of Executive Directors and their Alternates . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 2004 Regular Election of Executive Directors . . . . . . . 213 Rules for the 2004 Regular Election of Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Statement of Results of 2004 Election of the Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . 219 Remuneration of the President . . . . . . . . . . . . . . . . . . . . 225 Allocation of FY04 Net Income . . . . . . . . . . . . . . . . . . . 228 vii 3645_p00i-viii_FrontMatter.pdf 8/24/05 9:30 AM Page viii Page Report of the Board of Directors of IDA Slovenia--Change in Membership Status . . . . . . . . . . . 229 Reports of the Board of Directors of MIGA 2004 Regular Election of Directors . . . . . . . . . . . . . . . . 230 Rules for the 2004 Regular Election of Directors . . . . 233 Statement of Results of 2004 Election of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 Accredited Members of the Delegations at the 2004 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 Accredited Members of the Delegations (MIGA) at the 2004 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Observers at the 2004 Annual Meetings . . . . . . . . . . . . . . . . 283 Executive Directors and Alternates, IBRD, IFC, IDA . . . . 288 Directors and Alternates, MIGA . . . . . . . . . . . . . . . . . . . . . . 290 Officers of the Boards of Governors and Joint Procedures Committee for 2004­05 . . . . . . . . . . . . 292 Officers of the MIGA Council of Governors and Procedures Committee for 2004­05 . . . . . . . . . . . . . . . . . 293 viii 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 1 OPENING ADDRESS BY THE CHAIRMAN THE HONORABLE LIM HNG KIANG GOVERNOR OF THE BANK AND THE FUND FOR SINGAPORE Introduction Welcome to the 2004 Annual Meetings of the International Monetary Fund and the World Bank Group. It is indeed a great honor for Singapore and for me personally to be chairing these meetings. On behalf of all the Governors, I would like to extend a warm wel- come to the new Managing Director of the IMF, Mr. Rodrigo de Rato. We look forward to his leadership of the IMF. Together with Mr. Wolfensohn of the World Bank, we believe that the two of them will play a critical role in leading the IMF and the World Bank during this critical juncture in the global economy. I would also like to express our deepest appreciation to the former Managing Director Horst Köhler for the energy and focus he brought to the IMF. I am sure all of you join me in congratulating him on his assumption of the Presidency of the German Federal Republic. 60 Years of the Bretton Woods Institutions Fellow Governors, this year's meetings coincide with the 60th anniver- sary of the founding of the Bretton Woods Institutions. The past six decades have been a period of general stability and rising prosperity. Economic growth and development have improved the quality of life for millions of ordinary people. However, given the ever increasing pace of globalization, important challenges remain: poverty still plagues much of the world's population; not enough people have benefited from the positive scale of globalization; and the voices of the poor have some- times been drowned out. It is vital that we learn the right lessons from the past sixty years, so that we can all work together to secure greater prosperity and equity going forward. Let me highlight three key lessons. First, a stable macroeconomic framework and sound economic policies are prerequisites for sustain- able growth. For developing countries, we need rapid economic growth to raise living standards and reduce poverty. Through its surveillance work, the IMF has encouraged and assisted member countries to imple- ment policies that will reduce the risk of crisis and make their economies more resilient. The IMF also emphasizes the soundness of economic policies, including a greater focus on debt sustainability, financial sector health, and sound institutions and governance. 1 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 2 Second, structural and macroeconomic reforms are necessary to strengthen prospects for growth and poverty reduction. The develop- ment record of the past sixty years has shown that the main drivers of economic growth--entrepreneurship, investment, and innovation by the private sector--depend strongly on the right environment. And the right environment includes sound macroeconomic policies, openness to trade, good governance and institutions, strong financial markets, and the availability of key physical infrastructure. Third promoting free and open trade. We have also witnessed how important international trade has been for economic development and poverty reduction. In this regard, we are optimistic about the agreement reached in July on a negotiating framework for the next stages of the Doha round of international trade talks. While there will be transitional difficulties in some countries, there is no doubt that a successful Doha round will benefit all countries, especially those in the developing world. These benefits will be much more substantial and far-reaching than the existing levels of concessional assistance to developing countries. The IMF and the World Bank have played crucial roles in promot- ing the global agenda. Going forward, they must ensure that their sup- port for members--in terms of policy advice, capacity building, and financial assistance--remains effective and relevant. For instance, IMF surveillance should increasingly focus not only on the financial systems of individual countries, but on their systemic implications on global financial stability. In trade, the World Bank, as well as the IMF, should continue to strongly support efforts to promote trade and investment liberalization. Developmental Experiences in Asia Fellow Governors, the positive development experiences of the last six decades could be illustrated by the example of the Asian economies. Rapid economic growth in East and South Asia has pulled hundreds of millions of people out of poverty. The lesson from Asia's economic per- formance is that, with appropriate policies and strong commitment, it is possible for countries to grow rapidly over an extended period of time. The Bretton Woods Institutions have contributed significantly to the development of Asia. In recent years, particularly after the financial crisis in the region, IMF initiatives and surveillance have focused on helping countries to strengthen their policymaking processes. This has helped bolster the ability of the Asian economies to generate growth, prevent future crises, and withstand shocks. The World Bank, meanwhile, is moving toward a longer-term accelerated development framework in Asia, focused on achieving high rates of economic growth, improving global 2 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 3 and intra-regional integration, enhancing social stability, achieving the Millennium Development Goals and strengthening governance. Asia's role in the world economy is growing. Many important devel- opments in this century will originate from the region and will likely have important implications not only within Asia, but on global affairs. An example is China's and India's increasing prominence in the global economy. Their continued economic success and stability will become increasingly more important for other countries in the region and around the world. This underscores the importance for the two institutions to strengthen their engagement with Asia, as there are and will be many developments within the region that will have an impact on global financial stability. A significant development in Asia is the greater urgency for regional financial and economic integration. Asian economies have started pursuing Free Trade Agreements very aggres- sively both at the bilateral and regional levels. For instance, the Associ- ation of South East Asian Nations, or ASEAN, is negotiating Free Trade Agreements with China, India, Japan, and Korea. In recent years, there have also been suggestions to work toward an East Asia Community, where there will be free movement of goods, capital, and people. On the financial front, ASEAN plus the three partner countries, China, Japan, and Korea--what we affectionately term as the ASEAN+3 countries--have also launched a number of important ini- tiatives, including the Asian Bond Market Initiative and the Chiang Mai Initiative to strengthen regional financial cooperation. These ini- tiatives are aimed at peer surveillance, additional mutual support during balance of payments liquidity problems, and developing the domestic bond markets. These will contribute toward the overall resilience and dynamism of Asian markets. Going Forward Fellow Governors, although it has been sixty years since the found- ing of the Bretton Woods Institutions, the core principles and mandate of the two institutions continue to be relevant. However, some adjust- ments will have to be made to respond to the challenges of the current realities. First, the threats of terrorism and violence have added new com- plexities to the work of the IMF and the World Bank. We have seen-- for the first time--aid workers and staff of the United Nations and the Bretton Woods Institutions being targeted by extremists. While these threats are real and current, we must not allow them to impede the growth and developmental efforts that the IMF and the World Bank 3 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 4 have actively been pursuing. We have to find ways to continue life as normal, while being prepared for the unthinkable. Second, the world is more closely integrated than sixty years ago, and will become increasingly so. Events in one part of the globe will quickly affect the rest of the world. To be effective, our response must be comprehensive; our actions must be more timely; our commitment must be global. Third, the structure of the global economy is quite different from what it was sixty years ago. As we look ahead, we see the need for fun- damental reforms to give all member countries a voice in the two Bret- ton Woods Institutions. This is crucial for equity and proper governance, and ultimately for the political credibility and legitimacy of the two institutions. Only in this way can we maintain the framework of cooperation that has worked so well in the past and remains critical in the period ahead. Conclusion Fellow Governors, the strength of the economic and financial system established in 1944 has been its multilateral character and its ability to adapt to the changing economic and financial landscape. On this 60th anniversary of the Bretton Woods Institutions, let us all reaf- firm our commitment to this framework of cooperation. Let us be bold and innovative as the global economy continues to change at a rapid pace. But most important of all, let us spread progress and prosperity to all countries so that no one is left behind. With these remarks, let us now turn to the work at hand. I hereby declare the 2004 Annual Meetings of the International Monetary Fund and the World Bank Group open. 4 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 5 OPENING ADDRESS BY JAMES D. WOLFENSOHN THE PRESIDENT OF THE WORLD BANK GROUP Introduction Let me warmly welcome you to these Annual Meetings in the 60th year after the founding of the Bretton Woods institutions. I salute my new colleague Rodrigo de Rato as Managing Director of the IMF. We have already begun to work closely together and I have come quickly to appreciate his experience and judgment. My colleagues and I would like also to congratulate my friend Horst Koehler on his appointment as President of Germany, and thank him for his significant contribution to the work of our two institutions. The World Bank Group has a long and proud history. We con- tributed to global reconstruction after World War II before taking on our new role seeking to reduce poverty throughout the world. We have been an agent for growth with equity. With only $11 billion contributed from shareholders to the IBRD, we have made almost $400 billion in loans. The IFC, founded in 1956, has brought $67 billion into the emerging markets. MIGA has issued $13.5 billion in guarantees. ICSID, meanwhile, has registered 159 cases where it has helped settle disputes. On the strength of donor contributions and reflows from borrowers, IDA has committed $151 billion. The countries eligible for IDA are home to 80 percent of the world's poorest people who live on $1 a day. IDA is a truly remarkable instrument, designed to be effective and accountable. I hope our shareholders will increase their contributions to the next replenishment. We must keep IDA strong. I am proud of our achievements over the last 10 years. We may be 60, but we are young. We are a united institution, determined in our goal of "fighting poverty with passion." We seek to support our clients as partners, respecting their culture and aspirations. We ourselves are diverse, with staff from 140 nations. More than two-thirds of our country directors are now in the field, with our offices linked by satellite, making videoconferencing and dis- tance learning a part of all our lives. We are one of the most modern global businesses. During these years, we have sought to put our client countries clearly in the driver's seat. We listen more and lecture less. And we are not afraid to be self-critical. We provide financing for projects, and knowledge--offering our global experience to clients. Our greatly expanded World Bank Institute 5 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 6 plays a key role in this respect. So does our affiliate, the Development Gateway, which makes available on the internet information on develop- ment projects as well as synthesis of experience. We have broadened our approach to development to make it com- prehensive. We have confronted the issue of debt with the creation of HIPC, and attacked corruption, working with governments in more than 100 countries. Our strategy is based on two pillars--investing in people, and creat- ing a stable business climate so that investment is facilitated and jobs are created. Working with the private sector is a central part of our Group's activities. We continue to benefit from both the support and criticism of a vibrant civil society throughout the world. Development is about people. We focus on the important role of women and youth in development, and the special needs of indigenous communities, the Roma, and other excluded minorities. We are sup- portive of the special needs of people with disabilities. The environment is also central to our work for we know that true and lasting development without preserving our planet is simply not possible. We know that we can only be effective in partnership with others. We have reached out to the UN, and all other multilateral and bilateral agencies. To further improve our effectiveness, we are strengthening harmonization with others. We have much to do. It seems that the challenges and problems are never ending. But great progress is being made and I would like to thank all my colleagues for their extraordinary work and commit- ment. There is no more dedicated nor more able group of people working to improve the world than our team at the World Bank Group. Let me also express my profound appreciation to the Executive Directors of the Board, and to their predecessors for their many con- structive contributions. They play a vital but sometimes difficult role as officers of the institution and as representatives of their countries. An Insecure World At annual meetings in the past, I have spoken to you on many sub- jects, including the challenge of inclusion, the cancer of corruption, the importance of comprehensive development, and the need for a new global balance between rich and poor. Today, I would like to discuss what perhaps the most difficult chal- lenge is for the coming years. How do we better manage the big global 6 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 7 issues--poverty, inequity, the environment, trade, illegal drugs, migra- tion, diseases, and yes, terrorism? This year, we are reporting record economic growth. And yet, some- how, we feel less secure about the future. Deep down, there is a nagging concern about the way the world is evolving. One need only look at the cement barriers surrounding these buildings to understand the big difference from past years. They are not there for protestors. They are there for terrorists. A computer found in Pakistan showed that the Bank and Fund have been targeted by Al Qaeda. Terror Has Reached Our Door In recent times, we have seen things that cause us to question our basic humanity. Bloody wars in Afghanistan, Iraq and large parts of Africa. Unspeakable genocide and killing in Darfur. Despicable acts of terror in Bali and Madrid. Growing violence between Israel and Pales- tinians of Gaza and the West Bank. In Beslan, we have seen children taken hostage and shot in the back. In Baghdad, innocent men are bru- tally beheaded on television. In reaction, we have become preoccupied with security. It is absolutely right that, together, we fight terror. We must. The danger, however, is that in our preoccupation with immediate threats, we lose sight of the longer-term and equally urgent causes of our insecure world: poverty, frustration, and lack of hope. Over the past decade, Elaine and I have visited more than 100 coun- tries. We have met with poor people in all of them--in villages and shanty towns, in remote rural areas, and in the slums. Just like all of us in this room, they want to live safely and peacefully. Women want to build their lives free of violence against them both inside and outside their homes. They want education for their children. They want voice and respect. They want to retain their cultural integrity. They want hope. They want security--but they define it differently than we do. For them, it is not about concrete barriers and military force. For them, it is the chance to escape poverty. If we want stability on our planet, we must fight to end poverty. Since the time of the Bretton Woods Conference, through the Pearson Commission, the Brandt Commission, and the Brundtland Commission, through to statements of our leaders at the 2000 Millennium Assembly-- and today--all confirm that the eradication of poverty is central to sta- bility and peace. It is still the challenge of our time. 7 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 8 We Can Meet the Challenge We know that development works. Over the last two decades alone, the proportion of people in poverty in the world fell by half--from 40 per- cent to 21 percent. Life expectancy in developing countries has increased by 20 years. Adult illiteracy has been halved to 22 percent. The Bank's chief economist Francois Bourguignon, and I, have pub- lished a paper for these meetings that looks back on the lessons of development over the last decade, and looks ahead to the challenges of the future. We can build on these lessons. At a conference in Shanghai that we organized with the Chinese government earlier this year, developing countries shared their experience of what works and what does not. Over 100 case studies showed that we can accelerate development rapidly if poor people are treated as agents of change, not objects of charity. Many of you participated in the meetings in Doha, Monterrey, and Johannesburg. The developed countries made promises on aid, trade and debt relief. And let me add that we are very supportive of the pro- posals on aid and debt reduction that have been put forward by the US, UK, France, Brazil, and others. The developing countries, for their part, promised to do much more to build capacity and institutions, strengthen legal and judicial frameworks, improve financial systems, transparency, and fight corruption. Next year we will meet at the UN to review progress in achieving the Millennium Development Goals--with 10 short years to go until 2015. Thanks to China and India, we know that the overall objective of cut- ting poverty in half, will likely be met. But we also already know that most of the other goals, for most countries, will not be met. Africa, in particular, will be left far behind. So what are we going to do about it? What are our children going to do about a world that, in 2015, threatens to be even more out of balance--even more insecure--than it is today? I believe, Mr. Chairman, that we must raise our game as an interna- tional community. We must do a better job of managing the key global issues that will determine our future. As I see it, there are three urgent priorities: · Protecting the planet--through better stewardship of our environment; · Scaling up poverty reduction; and · Educating our youth differently for the 21st century--and giving them hope. Let me touch on each of these. 8 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 9 Protecting the Planet: Environmental Sustainability First, protecting our planet. We must promote growth with a full awareness of the natural sys- tems on which all life depends. Economic growth does not have to come at the expense of the natural environment. They work together. We all must do a better job of protecting our planet's fragile envi- ronment and addressing global warming. It has been three decades since the Stockholm environment conference, and despite progress made in some areas, the way we have abused the earth since then is alarming. People in the rich world have overused and wasted tremendous amounts of energy. The average US citizen or Canadian uses nearly 9 times more energy than the average person in China--12 times more than the average African. And as the climate changes, it is the poor in small island states, Latin America, South Asian countries, and sub- Saharan Africa who will be the most vulnerable to ravages of drought and floods. Forests are cut down relentlessly. Of the world's species, a quarter of the mammals, and a third of the fish are either vulnerable or in danger of immediate extinction. Ninety percent of the big fish in the oceans have been killed off. We have proven ourselves better at menacing the planet than pre- serving it. This was brought home to me two weeks ago when we had a visit from a poor but proud farmer who lives near Machu Picchu in the Peru- vian highlands. He was in Washington for the opening of the National Museum of the American Indian, along with thousands of other repre- sentatives of Indigenous Peoples. As part of the opening celebrations of the museum, we at the Bank had a forum on culture and development. He was wearing a traditional hat and dress, and his face was weath- ered by years of living at windy, high altitudes. Speaking in his native Quechua language, he told me that his mountains were "sad". The gla- ciers formed on them for thousands of years had been the "smile" on the face of the mountains and those glaciers are now getting smaller every year, he said. As they recede, there is no water to refill the lakes and rivers. The animals suffer--the alpaca yield is half the normal size. The income of the valley has dropped 50 percent. Farmers are aban- doning their homelands. So this man from Machu Picchu had a simple question: "Can you help me get my glaciers back? For those who doubt the impact of global warming, this was an urgent cry for help. For him, this was not some abstract, long-term issue. It is an issue of immediate concern. For him, it is a matter of security. 9 3645-p001-016_OpenAddress.pdf 8/24/05 9:32 AM Page 10 Perhaps his cry for help is being heard. I welcome the recent deci- sion of the Russian Government to ratify the Kyoto Protocol. Let us build on this effort, and other signals of support, to get political com- mitment by our leaders to fulfill our common responsibilities that were agreed at the Johannesburg Summit. Environmental challenges affect all of us, but poor people are par- ticularly vulnerable. We must give higher priority to renewable energy. New and clean technologies can allow the poor to achieve the benefits of development without having to face the same environmental costs the developed world has experienced. We must keep the promise to preserve our planet Scaling Up the Fight Against Poverty The second urgent area where we must keep our promise is in scal- ing up poverty reduction. We all know the basic facts. Half the people in the world live on less than $2 a day. A fifth lives on less than a $1 a day. Over the next 25 years, two billion more people will be added to the global population-- 97 percent of them in developing countries, most of them born into poverty. Over the past decade, a quiet revolution has taken place in the effec- tiveness of development assistance: with countries taking ownership of their own programs; with aid being focused on good policies; and with increasing coordination among donors. Taken together, these changes can help us double or triple the impact of aid in the coming decade. We can also multiply the effect of projects to reach more people. As you know, this has been a real issue for the Bank and our partners. We complete a project for five schools, or 100 miles of road, or 10 commu- nity programs--when the need is for 5,000 schools or 10,000 miles of road or 5,000 community programs. At the Shanghai conference, we learned how we can build on small, successful projects--and scale them up. Common to all them was con- sistent management over a period of years, simple replicable models, and full participation of poor people. I have seen it happen. In 1996 while visiting China, I met a woman from the Loess Plateau where we supported an agricultural project in that arid, mountainous region. Living in a cave, she had no power or running water, and had little prospect of improving her life. This spring, I had an emotional reunion with her and she told me about how her life had improved, how she now has two caves, doors, windows, water and power. How she had bought her son a motorcycle. How her son had found a wife. How she was now looking to educate her daughter. 10 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 11 She was one of three million people who found hope through a series of 32 similar projects in the plateau completed over 10 years. Pro- jects that were carried out by thousands of individuals with spades liter- ally turning rocky land into arable soil. The area is no longer dry and threatening, it is lush and full of crops and animals. We and our Chinese partners provided management for 10 years, repeating the process while benefiting from lessons learned. These les- sons are now being implemented elsewhere in China for the benefit of millions of people living on marginal lands. The message is clear--we can scale up poverty reduction and thus build a more secure world. Youth and Education Poverty, of course is of major concern to young people--and youth is the third global issue that I believe we must deal with urgently. Almost half the world's population is under the age of 24. Half of the 14,000 new HIV infections that occur each day are in young people aged 15­24. More than 50 percent of young people of working age cannot find a job. With alarming frequency, youth are becoming involved in conflict--either as victims or, just as tragically, soldiers. What then can we do for them and for ourselves to lead to peace? One thing I have learned is that we must engage young people in finding the solution. Last month, when I met with youth leaders from 83 countries in Sarajevo, I was struck by their genuine desire to build a better future of harmony, respect, and peace. The young Bosnians, Serbs, and Croats I met were eager to put the country's past behind them. But they felt it was the adults who were holding them back. As they did in Paris the year before, they told me they are not the future-- they are the now. We must support our youth through education to create their better world. And it begins with early childhood development-- because we know that a child's future is largely determined in the first six years of life. I am very proud that the Bank is a leader in this field. We have invested over $1 billion in childhood education, and we make our global experience available to all via our website. We are also actively pursuing the Millennium Goal of getting all children into primary school by 2015. But we have to recognize that education is not just about getting kids into school. Content and quality are key--and children need to stay in school. Children in developed and developing countries also need to learn more about each other. I fear that today there is too much education for hate that will not be reversed in later years. 11 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 12 Providing children with a quality education is not only the right thing to do, it also has a huge development impact. If the 115 million children now out of school were to enroll, some 7 million new HIV infections could be avoided over the next decade. That is why, two years ago, we launched the Fast Track Initiative--to accelerate access to pri- mary education for children not in school today. What has been our experience? We estimated that $3.6 billion in additional aid flows is needed each year, for the next few years, to ensure that all children complete primary school. That comes to $1,200 per class of 40 children to pay for the teacher, books, and classroom, or just $30 per year for each child who is not now in school. This compares with the $150 per person that is cur- rently spent on military and defense expenditures. Sadly, the international community has not yet been able to mobilize the money. We are letting the children down--just as we did in 1990 in Jomtien, in Dakar in 2000, and again in Monterrey in 2002. We are not keeping our promise. Global Leadership for the 21st Century These issues--protecting our planet, scaling up the war on poverty, and educating our youth, are among the most critical for a more secure world. We know what needs to be done. Why is it not happening? I think it is because, as an international community, we are not man- aging global issues well enough. And yet, more than ever in the past, the most important issues facing us are global, not domestic, and long-term not short-term. The way our system works today is that, at a sequence of global meetings, we agree on objectives. On everything from environmental targets, to the importance of gender equity, to education. In recent years, under the remarkable leadership of Secretary-General Kofi Annan, the UN has convened a number of international conferences. In the year 2000, as we all know, the Millennium Assembly set goals for 2015 and they were adopted unanimously. National governments supported by international agencies and responsible institutions then try to achieve those objectives. Every five years or so, another global meeting is held to review progress. Usually that meeting concludes that we have not achieved the objectives. New targets are set. Blame and praise is attributed and we set out on the next five years. During those five years, various groupings of heads of state and min- isters spend a day or two per year discussing one or other of the global targets and commitments. The most visible annual gathering is the G8. But there are many others: the G10, G20, G24, and G77. And there are 12 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 13 regional groupings of leaders in Asia, Africa, Latin America, Europe, and elsewhere. Although these meetings have contributed to the enormous gains in development over the past decades, we are falling behind on the goals we have set. We need stronger leadership and we need more continuous engagement on the key global issues. Actually, this was the original idea behind the G7 when it first met a quarter century ago. It was a recognition by the leaders of the major countries that they needed to set aside two days a year and consider long-term global issues. Their meetings are hugely visible and impor- tant. They bring the attention of the entire world to key issues. But global challenges have only grown more demanding. And the balance between the developed and developing world has changed greatly in the past 25 years, and is set to change further. Perhaps the G8 leaders, who have achieved so much, would con- sider coming together on a more frequent basis, with a broad represen- tation from other parts of the world to seek new ways of supporting urgent global issues. In this way, they could report on global progress, publicize efforts in pursuit of the goals, and help ensure that promises are fulfilled. In today's world, we are not only national citizens, but global citi- zens. Without greater visible engagement by global leadership, we will not make the breakthroughs we need to ensure real security and peace. Conclusion: Promises to Keep We are one world. Damage to the environment somewhere is damage everywhere. Poverty somewhere is poverty everywhere. Terror somewhere is terror everywhere. If there is a bombing in Bali, or Madrid, or Moscow, we all get scared. We all feel insecure. Making our planet equitable and safe is an issue that we all need to come together on--and we need global leadership and political will to do it. That is the only way we can keep our promises to the farmer of Machu Picchu, the woman on the Loess Plateau, and the young people in Sarajevo. It is our duty to ourselves. It is our duty to our children. It is the choice we must make for security and peace. 13 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 14 REPORT BY TREVOR MANUEL CHAIRMAN OF THE DEVELOPMENT COMMITTEE As Chairman of the Development Committee, I am pleased to report to you on the Committee's work during the two meetings held in 2004. When I last reported to you in Dubai, I advised you that the central focus of our meetings had been the implementation of the strategies, partnerships and actions agreed in Monterrey and Johannesburg to achieve the Millennium Development Goals. The partnership set out in Monterrey identified the clear need for strengthened efforts by both developed and developing countries, as well as international institu- tions. For developing countries, three areas in particular were empha- sized: improving the environment for investment and private sector activity, strengthening governance, including public financial manage- ment and increasing human capital through broader and more effective delivery of basic services to the poor. For developed countries, increased market access, debt relief and increases in the volume, pre- dictability and effectiveness of aid were highlighted. We have continued to focus on these same critical issues during the last year. At the Committee's Spring meeting, we reviewed the first Global Monitoring Report prepared, at our request, by the staff of the Bank and the Fund to assess progress on the policies and actions needed to achieve the MDGs. Despite progress on many fronts, including significant reforms undertaken by developing countries and important gains in reducing income poverty, it is not adequate. We are concerned that, based on current trends, most Millennium Development Goals will not be met by most developing countries, particularly in sub-Saharan Africa. Progress in the reform effort in many developing countries has been demonstrated not only in the reduced levels of global poverty--but also in the strong growth being witnessed in the global economy today. This has had a direct and positive effect on the capacity of these countries to carry out country-led efforts to reduce poverty. At the same time, we are mindful that not all developing countries have benefited from this rise in global growth and that further efforts are required to spread the opportunities for private sector-led growth. In that regard, we have stressed the importance of a successful con- clusion of the Doha Development Agenda. We noted with satisfaction the many positive signs emerging from Geneva and elsewhere. The challenge is now to seize the opportunity to turn the recently agreed frameworks into tangible results. To take advantage of new opportunities, we have to help developing countries strengthening their capacity to compete. This means in addi- 14 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 15 tion to improved trade access and support to address potential adjust- ment costs, helping them to strengthen their investment climates. We have welcomed the renewed focus in the Bank being given to private sector development and urged an intensification of work on potential sources of growth and ways to mobilize them. Strengthening the foundations for growth also depends critically on addressing the large infrastructure needs in many countries. We have considered progress on the Bank Group's Infrastructure Action Plan and called for an acceleration in support of country efforts, including at the regional level. These and other actions required to lay the basis for sustained stronger growth are critical to our ability to achieve the MDGs, as is the progress in providing effective health systems, education for all and other basic social services. Regrettably, reform efforts in many develop- ing countries continue to suffer from a lack of adequate funding. We are on the verge of missing the first MDG next year which is to achieve gender equality in primary education. We have called urgently on donor countries to respond to this initiative and provide the necessary finan- cial support. The world cannot allow any more generations of children to have their lives wasted. As we stated in Monterrey, sound policies by developing countries must be supported by adequate and appropriate financing. Ensuring this and enhancing aid absorptive capacity through policy and institu- tional reforms is critical to the virtuous cycle of actions needed to meet the MDGs. We urged all countries, without delay, to take specific steps to meet their commitments to provide additional aid resources by 2006. We have also examined a report by the Bank and the Fund on inno- vative mechanisms that could provide additional financial support-- including an International Finance Facility, global taxes and voluntary contributions. In considering these options, we agreed on the need to ensure additional resources and that too little resources are currently available. We also acknowledged the flexibility that could be achieved through the use of variable geometry in the implementation of new financing options. We have asked the Bretton Woods Institutions to continue their work and to report back to us at our next meeting on how to take such options forward. While welcoming the broad agreement within the international com- munity to harmonize and align support behind country-owned policies, we recognize that further concrete actions are required to turn this into clear and specific commitments and timetables. We have urged that the Second High Level Forum on Harmonization in Paris next Spring agree to indicators and benchmarks. At the same time, while welcoming progress on implementing the Poverty Reduction Strategy, we called for 15 3645-p001-016_OpenAddress.pdf 8/24/05 9:33 AM Page 16 further efforts to address remaining challenges and have called for a review of efforts by the Bank and the Fund to streamline their aggre- gate conditionality. The Committee has reviewed progress under the HIPC initiative. We have reconfirmed our commitment to its implementation and full financing, and agreed to extend its sunset clause for another two years. The achievement of long-term debt sustainability is an essential under- pinning for growth. We have welcomed the development of a forward- looking debt sustainability framework to help low-income countries manage their borrowings and avoid a buildup of unsustainable debt, while pursuing the MDGs. We have asked the Bank and the Fund to complete the remaining work on making this new framework opera- tional as soon as possible. At the same time, we have also called on staff to accelerate their work on ways to help reduce the vulnerability of these countries to exogenous shocks. Finally, as called for at Monterrey, we have continued our discussion of innovative and pragmatic ways to enhance the voice and effective participation of developing and transition countries in the work and decision making of the Bank and the Fund. As I have said before, there is no single approach to accomplish this, but rather action is required over time across a range of issues. Some progress has been made. However, as to the most challenging issues of quotas, voting struc- ture and composition of the Boards, it is recognized that these will require time and effort to arrive at the necessary political consensus. We are committed to continue our efforts on these matters. We have asked the Boards to provide us with a report regarding the feasibility of a number of options, so that we might address the necessary political decisions at our next meeting. 16 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 17 STATEMENTS BY GOVERNORS AND ALTERNATE GOVERNORS AFGHANISTAN: ASHRAF GHANI Governor of the Bank Afghanistan has reached a fork in the road, either it will move towards becoming a polity, economy, and society that is democratic, dynamic and open, or it will descend into a narco-mafia state that per- petuates misery internally and threatens the well-being of our children globally. The choices and actions we take together in the next year will determine which road Afghanistan travels. On October 9, the people of Afghanistan will become sovereign. Direct Presidential elections will conclude our political transition, and usher in a government with a popular mandate for a five-year term. These elections represent a critical milestone in a journey that begun three years ago with the UN-Brokered Bonn Agreement, but that jour- ney is far from over. If we are to stay on the path to lasting peace and prosperity, we must focus on three things: public finance, credible insti- tutions, and stability. In each of these areas, much has already been accomplished. In public finance, the Karzai Administration issued a new currency in a fraction of the usual time; promulgated a simplified tariff regime, intro- duced strict accountability and reporting mechanisms, established a single treasury account, and developed mechanisms for centralizing and streamlining our revenue collection. Our main challenge, however, is still to transform the budget into the central instrument of policy, a chal- lenge that cannot be overcome without the full commitment of the donor community. Credible institutions flow from the rule of law. We have built a national army of 18,000, and trained a national police force. We have begun the process of disarming and reintegrating our militias into civil- ian life. We have focused on the security sector as a central pillar of our reform process. The Afghan people, however, differentiate between security and stability. While the army and the police are becoming instruments of security, they cannot deliver stability on their own. To be stable, Afghanistan must be prosperous. Our greatest challenge, there- fore, remains poverty. There is a gap between the expectations of our people and the resources at our disposal. In our Constitutional Convention, delegates from around Afghanistan presented their urgent needs for electricity, schools, health, roads, dams, communications and so on. The costs of 17 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 18 these requests amount to between $80­120 billion dollars. This is not an unreasonable request. According to the World Bank, Afghanistan lost $240 billion in destroyed infrastructure and lost opportunity between 1978 and 2001. The generous pledge of the international community in Berlin in 2004 was only $8.2 billion. The gap between our aspirations and our means leads to three conclusions: · First, the Public Investment Program should harness the aid system to results, both institutionally, and in terms of visible outcomes. · Second, we must create an enabling environment for private sector investment. · Third, we must fulfill Afghanistan's potential as a land bridge between South Asia, Central Asia and the Middle East. Reliable access to transit trade is key to our survival. We need our neighbors to join us in conceiving and implementing win-win strategies that will ensure rapid and inclusive growth of our economies. Afghans want to partner with the international community to achieve a social and economic transformation. A lot has been achieved through a sustained multilateral engagement that recognized country leadership and insured that resources for the next three years were assured through the April 2004 Berlin Conference. In that regard, we would like to thank the World Bank and the Fund, in general, and Mr. Jim Wolfensohn, in particular, for their sustained engagement. As the aid community reviews its lessons from the sixty years of engagement, we would like to contribute some lessons we have learned ourselves. We have seen what happens when aid is not harmonized. Flows of money outside the budget are undermining our efforts at creation of credible institutions, sound public finances, and stability. In this context, replenishment of IDA 14 and creation of financial instruments, such as the International Finance Facility, are critical for ensuring predictability and flows of resources. We know that the contracting and consulting industry needs a major overhaul. While the advice of a select group of consultants remains indispensable, the irony of technical assistance on cost-plus contracts lecturing our government on performance-based budgeting should not be lost. The lack of a credible vetting system is also becoming a source of resentment against international engagement. Moreover, the policy of donors funding two civil services--the government bureaucracy at an average wage of $50 per month; and a parallel bureaucracy of their own at $500 per month--draws talented people out of government in the short term and fundamentally undermines the creation of a sustainable state in the medium to long term. Aid has too often been an inhibitor of private-sector-led growth rather than a catalyst. The entrepreneurial spirit of Afghans must be 18 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 19 cultivated and not crippled by the rules of the aid system. While our partners agree with us that the private sector should be our engine of growth, practice has not always matched the international consensus. Getting Afghanistan right is a challenge for all of us. Now is the time for a new economic coalition between the international financial insti- tutions, bilateral donors, the private sector, the Afghan government, international and national civil society, and the Afghan people to over- come the challenge of poverty and instability. Our aims are high. In the next seven years, we believe that with enough of the right kind of support, we can achieve the Millennium Development Goals. In one of the poorest countries of the world, this challenge will test our combined will to the core, but we must succeed. The stakes have never been higher. Afghanistan can provide a much needed victory in the international wars on poverty and terror. Or it can once again fail the hopes of its people and threaten global security. Whatever path we take, we will take that path together. Today, we know that in Afghanistan, and that is why we want to participate in an open global economic system. We believe that our partners--the aid commu- nity and the global private sector--now see that too. BAHRAIN: ABDULLA HASSAN SAIF Governor of the Bank and the Fund (on behalf of the Group of Arab Countries) It is a great pleasure for me to deliver, on this day and on behalf of the Group of Arab countries, the joint speech for this year's IMF and World Bank (WB) annual meetings. To begin with, please allow me, on behalf of all Arab governors, to congratulate Mr. Rodrigo de Rato y Figaredo on appointment for IMF Managing Director position. At the same time, I would like to express the support of the Arab region for him personally and aspiration for more constructive cooperation between IMF and the Arab region in the coming years. It is comforting to see signs emanating from economies of the US, Japan and Europe, as well as economies of some other Asian countries, indicating imminent end of the weakness affecting global economy in the past few years. Such a development, along with efforts aimed at eco- nomic reform, has contributed to strengthening growth in many devel- oping countries, our Arab countries included. This recovery in the global economy has also led to noticeable increase in the demand for oil at a time marked with political tensions in some oil-producing areas. At the same time, price speculations got active and low stocks occurred in oil-consuming countries. This led to increased pressure on oil prices pushing them to unprecedented levels. Based on international responsibility and deep-rooted conviction that 19 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 20 market stability is in the interest of all countries, oil-exporting coun- tries, particularly in our Arab region, increased oil-production to keep prices within the limits set for them. We look forward to more improvement in the global economy. At the same time, we are concerned about the repercussions of some risks mostly emanating from imbalances in the balances of payments of major countries. It is likely that interest rates will raise, thereby reduc- ing debt sustainability of developing countries. This will increase volatility of capital flows and escalate political tensions in some regions of the world, as happened in the late 1990s. These concerns motivate us to urge the international community not to belittle such risks and to urge major actors in the global economy to cooperate with IMF to strengthen its oversight role in the face of cur- rent account imbalances, particularly in major economies with large- scale impact. Due to past difficulties experienced by the global economy as a con- sequence of such risks, the Arab group of countries attach special attention to the question of avoiding fiscal crises in member countries and tackling the same as they occur. We applaud efforts put forth by IMF in the past few years to introduce a number of new diagnostic tools which help in monitoring and detecting crises before they hit. We hope that IMF will continue pursuit of such efforts to stop such crises from occurring or spreading in the future. It may be useful in this respect for IMF, when designing reform programs, to take into account the need for producing quality designs and rationalizing respective conditionality. Whenever possible, circumstances of each country should be taken into account and more than one option should be pro- vided to enable each country concerned to achieve the goals specified in respective programs. Since technical assistance provided by IMF to member countries is an effective means of addressing weaknesses in the economies of such countries, we propose allocation of more resources to meet growing demand for such assistance. In this regard, we welcome the establish- ment of the Middle East Technical Assistance Center (METAC) and call upon donor countries and institutions to participate in financing this Center. With a view to enabling IMF to strengthen its activity towards this goal as emphasized in previous meetings, developing countries should have more voice and enhanced representation in ownership and man- agement of both IMF and the World Bank. This will strengthen prudent management and good governance in both institutions and enhance their legitimacy, thereby increasing efficacy of their respective economic- policy recommendations, as only a little progress has been achieved in this respect so far. 20 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 21 We fully agree with the drive to meet the Millennium Development Goals (MDGs) which set a timeframe for poverty reduction among a range of social development indicators. We particularly applaud the monitoring methodology implemented by the Ministerial Development Committee, of which I am honored to be a member, to monitor efforts of developed and developing countries as well as international financial institutions in this respect. Since most MDGs will not be met by many developing countries as scheduled, we urge the countries concerned to double their efforts in the area of reform. Moreover, we appeal to donor countries to increase support for such efforts. As revealed by findings of monitoring reports, developed-country contribution to strengthening of reform efforts, in both provision of financial resources and adaptation of their trade policies, has fallen well short of the level unanimously agreed in Monterey and the Doha Round. In this regard, we applaud the principle framework reached in the recent World Trade Organization meeting. We hope that such frame- work will be implemented pretty soon and followed by more actions of trade liberalization. We look forward to positive results in the current proceedings for the 14th Replenishment of Resources of the Interna- tional Development Association (IDA 14), as this will support efforts by developing countries to reduce poverty and meet the other Millen- nium Development Goals. Allow me now to turn to World Bank Group activities and role in our Arab region. As we all know, the main focus underpinning World Bank Group's policies and activities in our region has been poverty alle- viation and the raising of living standards, particularly for low-income groups. This direction has met with satisfaction and support from all countries in our region, In view of severe problems faced whether by individual countries or commonly with other developing countries. Such problems often involve low income levels, poor growth rates, sharp volatility in terms of trade as well as unfavorable regional circum- stances. Countries of our region have always sought to strengthen coop- eration with the World Bank Group and other international institutions to benefit from expertise and resources needed to address such prob- lems and to strengthen undertaken reform programs. From this podium, and on behalf of Arab country governors, I express gratitude to World Bank management, particularly to Mr. Wolfensohn, for attention to strengthened cooperation with countries of our region. I would like to particularly indicate periodical consulta- tive meetings held between governors representing our countries and World Bank management. We look forward to more cooperation with World Bank management in areas of concern to all of us. I would like to avail myself of this opportunity to emphasize, as agreed with Bank management, the need for flexibility in dealing with 21 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 22 our countries due to different situations and needs. In this respect, we hope that the Bank will take into account, when designing financing and development programs, the various and different circumstances of each country in our region. We also hope that the World Bank Group will continue to direct increased attention to middle-income countries as many of our countries fall in this category. The greatest challenge facing countries in our region is certainly the need to create enough job opportunities to absorb the growing numbers of young people entering the workforce. There is full agreement between our countries and the World Bank Group on the need to give this concern top priority. Consequently, Arab countries appreciate stud- ies conducted by the Bank to analyze dimensions of this issue and envi- sion necessary interventions which should include actions to facilitate transitions into economies more open and less dependent on natural resources and the public sector. Undoubtedly, private sector strengthening and improvement of investment climate top the list of means to accelerate growth rates and job creation. Hence, our countries look forward to a more effective role played by the World Bank Group in these respects. Such a role will eliminate impediments to meeting financial and technical needs of our region, including streamlining of lending conditionality and reducing borrowing cost. Arab countries particularly look forward to a specific action plan by the World Bank Group to increase activities of the Inter- national Finance Corporation and the Multilateral Investment Guaran- tee Agency in our region, as their role is still below required level. Despite volatility and record low levels of funding volumes from the World Bank Group to our region in some years during the past period, we would like to applaud the role played by the World Bank Group and IMF in supporting countries going through extremely difficult circum- stances due to local conflicts. We particularly indicate the sufferings of the Palestinian people due to escalating destruction caused by occupa- tion forces. This situation warrants the doubling of support to the Pales- tinian Authority by the two Bretton Woods institutions, in close cooperation with donor countries and other financial institutions. We also emphasize the need for consolidated international community efforts to reach a final solution to this question. At this juncture, we indicate the actions of Israeli occupation authorities such as the raiding of some branches of Jordanian banks operating in Palestinian territories and seizing large amounts of money deposited in such branches, in addition to tampering with files pertain- ing to clients of affected banks. Undoubtedly, such actions violate all international laws and agreements, including the IMF Articles of Agreement, and hamper efforts by our Arab countries to create the enabling banking environment and establish peace and stability aspired 22 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 23 by all peoples in our region. We must also note that economic sanctions imposed on the Syrian Arab Republic contravene the objectives of our two institutions as enshrined in the need to ensure freedom of trade and payments. The same sanctions hamper Syria's efforts aimed at achieving economic development and reform. Concerning Iraq, which is still suffering from war's destructive impact on its economy and society, we look forward to transition by the World Bank Group, IMF and other donor organizations from the stage of preparation and management and technical capacity building into active involvement in projects, particularly those contributing to: job creation, utilization of resources from our two institutions, elimination of debt burden, and provision of resources needed for reconstruction efforts. We also welcome re-engagement with the Sudan and look forward to re-engagement with Somalia. We hope that the World Bank Group and IMF will effectively resume activities in both countries. In conclusion, there are positive signs calling for optimism in our region. Some countries have achieved progress in their economic indi- cators, particularly in respect of: growth rates, price levels, financial bal- ances, current accounts and external debts. Nevertheless, we are still faced with many challenges that we need to overcome through effective partnership between our countries on the one hand and the World Bank and IMF on the other hand. BANGLADESH: M. SAIFUR RAHMAN Governor of the Bank and the Fund We meet today in a truncated Annual Meeting under the gloomy shadow of global terrorism which is a threat to security as well as pros- perity throughout the world. We condemn terrorism in all its forms and manifestations. Military intervention may be necessary but not a suffi- cient condition for winning this war. The roots of terrorism lie deep in poverty, hunger, disease, joblessness, hopelessness and injustice in an environment of uneasy economic transition. The Bretton Woods Insti- tutions must join the fight against terrorism by rekindling hope in the minds of the unemployed youth and providing opportunities for better- ment of the deprived and disadvantaged. Despite recent encouraging trends in poverty reduction, more than one billion people still live on less than a dollar a day. Given the magni- tude of the problem, the world cannot afford the luxury of complacency or fatigue in the war against poverty. Millennium Development Goals are steps in the right direction. However, the resource gap for attaining these goals remains overwhelming. Globally the pledges of develop- ment assistance stand at no more than one third of what is needed for 23 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 24 achieving the agreed targets. The poor must be given access to useful education, health, and adequate physical infrastructure--so that they can participate in the global market on equal terms. In addition to sig- nificant increase in conventional ODA, the feasibility of innovative financing such as proposed International Financing Facility and global taxation for aid should be actively explored. The International Finan- cial Institutions (IFIs) should be strengthened by providing adequate capital and quotas, and by replenishing the facilities for concessional assistance including IDA. Steps should also be taken by IFIs to scale up investment and minimize inappropriate constraints on public invest- ment in infrastructure. Development is a process in which technology and know-how of the developed countries interact with local resources, entrepreneurship and creativity. This process would not be fruitful unless the impediments to development are removed and existing resources are efficiently utilized through reforms in all sectors. Reform is a continuous process. In a democratic political order, reforms can not be sustained without broad- based public support within the constitutional, parliamentary and judi- cial framework. The direction, sequencing, and phasing of reforms must, therefore, be left to the countries themselves. Furthermore, the performance of a country cannot be properly measured without an appreciation of its historical, cultural and socio-political context. We welcome the recent signs of global economic recovery based on robust growth in 2004. Despite this happy development, we are deeply concerned with the sharp rise of oil prices. The oil shock is likely to compound the effects of multilateral trade liberalization including the phasing out of the MFA. The relief provided by Trade Integration Mechanism may turn out to be too little in the face of historically high oil prices. The IFIs must remain ready to respond quickly to emerging shocks. In Bangladesh, the Government is striving hard to attain the Millen- nium Development Goals. We have already graduated from low human development to medium human development category and has already reached some MDGs in the social sector. Since the assumption of office, the present government has pursued vigorously reforms in fiscal consol- idation, and despite shortfall in disbursement of anticipated external assistance has restored foreign exchange reserves to a satisfactory level through efficient economic management and adjustment to a floating exchange rate. GDP growth in real terms accelerated to 5.5 per cent in the last fiscal year in the face of external shocks. We have met from our own resources the immediate relief requirements in the wake of three successive devastating floods in recent months which engulfed the entire country. The scale of damages is massive and immediate ade- quate assistance is required for the rehabilitation of agriculture, physi- 24 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 25 cal and social infrastructure. Despite an unfavorable international cli- mate and devastations caused by recent floods, the Government is determined to continue with the implementation of comprehensive reform program as envisaged in our Poverty Reduction Strategy to accelerate growth in the immediate future. I would like to conclude by wishing the Bretton Woods Institutions happy sixtieth anniversary and their continued success in the future. BELARUS: ANDREI V. KOBYAKOV Governor of the Bank The year that has elapsed since the last Meetings was a year of diffi- cult trials for the international community as a whole, and a rigorous test of the strength and stability of the current system of international economic relations. The processes of globalization and integration, which are unfolding in a highly complex manner, have intensified the unevenness of various nations' economic development. The trends that have emerged have also had a substantial impact on our Republic's development, whose effectiveness has depended in large part on the precision with which worldwide political and economic processes are coordinated with national interests and capabilities. What was this year like for our country? The Economic Develop- ment Strategy of the Republic of Belarus, its goals and tasks, its basic principles, priorities and phases, are based on an analysis of our nation's place and role in the international community and on an assessment of domestic and external preconditions and factors of economic growth and social development. Despite a number of objective challenges, Belarus continues to be a dynamically developing nation with sustainable growth in GDP as well as industrial and agricultural production, a relatively stable banking system, insignificant external indebtedness and a well-developed export capacity. Since 1996 we have consistently pursued a chosen course of phased economic reforms, seeking in every phase to combine the state's regula- tory functions and the market mechanisms in a reasonable manner. This has enabled us over the past nine years to ensure sustainable economic growth and social stability and to make progress towards achieving the strategic goal of the country's socioeconomic development--to improve the living standards of the Belarussian people and bring them closer to the level of the developed European nations. For example, from 1996 through 2003 Belarus increased its gross domestic product 1.5 times, or by an average of 6 percent a year (6.8 percent in 2003). This made it possible to increase real personal mone- tary income 2.6 times during the 1996­2003 period (including 7.5 per- cent in 2003). 25 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 26 Belarus has a developed industrial capacity, which can produce goods that are competitive in the world market both in price and qual- ity. And this is confirmed by economic performance. Since 2000 we have steadily increased exports of goods and services. In 2003 it rose by 24.6 percent, and in the first six months of 2004, by 27.8 percent. Reducing the inflation rate and ensuring stability in the foreign- exchange market have contributed to favorable macroeconomic condi- tions for production operations and investment activity. The stable growth in GDP and personal monetary income, as well as the improvement in the financial performance of businesses in the real sector of the economy have resulted in increased budget revenues, and created a realistic opportunity to reduce the tax burden on the econ- omy. It is no secret that the tax level in Belarus remains quite high. For example, in 2003, the overall level of the tax burden in the Republic, calculated as the ratio of imputed and paid taxes and levies to GDP, was 32.1 percent, and when deductions for social insurance are factored in, it was 42 percent. In 2004 it will drop by 1.8 percentage points, but will still be high. The tax system is being improved primarily by lowering taxes and levies, simplifying procedures for paying them and reducing tax rates. In 2002, for example, we were able to reduce the corporate income tax rate from 30 to 24 percent, which yielded certain results in increas- ing investment activity. In order to keep Belarussian goods competitive and lower the infla- tion rate, the standard value-added tax rate was lowered from 20 to 18 percent at the start of 2004. All the preconditions are now in place for a changeover on January 1, 2005, to the "country-of-destination basis" in the taxation of foreign trade with the Russian Federation, and all the necessary documents are being prepared to ensure this changeover. The reform of a second area of fiscal policy--government expendi- tures is equally urgent. There is much truth in the folk saying, "Getting rich depends not on income but on spending." While preserving the social orientation of the budget, budgetary policy in the near term will be aimed at optimizing government expen- ditures and significantly improving the effectiveness of the use of budg- etary funds. Along these lines, in 2003 we began to take measures to reduce pref- erential benefits. State support is now being provided to business enti- ties mostly in the progressive forms that are in worldwide use. At a time when domestic financing sources and the budget are lim- ited in their capacity for increasing investment and innovative activities, we welcome foreign investment. Many experts have concluded that Belarus has indisputable capabilities for attracting foreign capital to its economy on a wide scale. They cite such obvious arguments as the fact 26 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 27 that Belarus is the gate to the Russian market for the EU, retains polit- ical stability, has a pretty good regulatory and legal framework, fine social and living conditions, highly skilled and cheap labor and a small foreign debt. A few words about cooperation with the World Bank. The imple- mentation of the Bank's Country Assistance Strategy for the Republic of Belarus for 2002­2004 is being completed in 2004. Its results were dis- cussed in detail with Bank vice-president Shigeo Katsu during his recent visit to the Republic. An understanding was reached that there is now a need for a fundamental review of the format of cooperation with this international financial institution. The lessons of past years dictate the need for a more balanced and flexible approach to defining a program of cooperation with the World Bank, which takes account of its changing priorities and the trends in the Republic's macroeconomic situation. The rigid framework of the three-year Country Assistance Strategy program does not afford this kind of flexibility. It would be more acceptable, in our view, to consider a cooperation option that is based on a Country Partnership Strategy, which does not include a rigid operational program. We have proposed to the Bank a broad spectrum of areas for coop- eration in the near term. We hope this dialogue will be productive and will take account of the lessons of previous years of cooperation, which, as "The World Bank Country Assistance Strategy for the Republic of Belarus in 2002­2004" properly notes, show that "there is little to be gained by pushing the policy dialogue (and conditionality) envelope beyond what the government can consider part of its own program." With respect to cooperation with the International Monetary Fund, several disagreements have persisted between the Government and the IMF for quite some time concerning the rate and areas of the Republic's economic development. I want to emphasize in this regard that the Belarussian authorities have never rejected the Fund's recommenda- tions as a whole. We completely agree with the strategic approaches-- the formation of an effective market economy. In early 2004 the Government and the National Bank adopted a joint decision not to attract the Fund's financial resources at this stage. Considering that there are several other mechanisms of cooperation with the Fund that provide for the use of that international financial institution's financial resources solely in the event of unforeseen cir- cumstances, we think it is possible to work with the Fund in this direc- tion in the future. The technical assistance provided by the World Bank and the Inter- national Monetary Fund has made it possible to accomplish a number of the Republic's pressing tasks. Work with the IMF in this area has pro- duced concrete results in improving the functioning of the National 27 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 28 Bank and the system of collecting, tabulating and disseminating statisti- cal information and in working out actions designed to combat the funding of terrorism and the legalization of illegally obtained income. We would like to take note of the productive dialogue and coopera- tion with the World Bank within the framework of technical and advi- sory assistance on issues of environmental protection, social protection, pension system reform, poverty assessment, business climate improve- ment, and other areas. We have an interest in expanding cooperation both with the Bank and the Fund, and are ready to do so. The Republic of Belarus favors keeping the position of IMF repre- sentative in the country on a permanent basis. In conclusion, I would like to urge the World Bank and the Interna- tional Monetary Fund to develop their highly important activities with a view toward enhancing their effectiveness, client focus and trans- parency, and to wish everyone success. BELGIUM: DIDIER REYNDERS Governor of the Bank Let me at the outset warmly welcome Mr. de Rato, as Managing Director of the IMF and ensure him of my full cooperation in his impor- tant mission. Crisis Prevention and Surveillance Transparency lies at the heart of crisis prevention. It is encouraging that the Fund and its membership are continuing their efforts in this field, most recently by the decision that the publication of all country staff reports will be presumed. At present 76 percent of these reports are published, but this proportion needs to increase. Therefore, we urge all members to agree to the publication of their reports. Further improvements in transparency inevitably focus on the deci- sion making process within the Fund. Increasingly, governments are responding to this call and are taking steps, in accordance with national conditions, to engage with parliament, civil society and other relevant actors to address this issue. Regular surveillance is an essential element of the Fund mandate. The recent biennial review of surveillance has proposed measures to increase its effectiveness and reorient its priorities. We welcome the tighter integration of regional and global surveillance in country analy- sis and the increased emphasis on financial sector vulnerabilities. A clear and candid review of the choice of exchange rate regime also remains central to Fund surveillance. 28 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 29 The present surveillance process often identifies vulnerabilities and country analysis reports regularly contain balanced and well- argued remedies. However, an adequate policy response can be lack- ing even after successive rounds of surveillance. Article IV consultations need to explicitly monitor the implementation of previ- ous recommendations and the findings of such monitoring should be an integral part of any country analysis report. A lack of policy response over several rounds of surveillance should lead to escalated signaling to the authorities concerned. Crisis Resolution The widespread adoption of collective action clauses (CACs) in recent sovereign bond issues promises to make the crisis resolution process more orderly. Moreover, the inclusion of CACs has not had a perceptible impact on the risk premium that investors charge for these bonds. However, CACs in themselves are unlikely to guarantee an orderly resolution of financial crises. We, therefore, support existing ini- tiatives on a code of good conduct between sovereign debtors and their private creditors. A purely voluntary approach to the resolution of financial crises might not provide adequate guidance when a crisis is complex, involv- ing many creditors and/or debt instruments. Under such conditions, communication between debtors and creditors could break down. The Fund should, therefore, continue working out a more rules-based approach to crisis resolution, e.g. in the short run, in the field of the aggregation of claims. Fund Instruments A reorientation of surveillance priorities needs to be matched by the use of appropriate instruments. Debt sustainability analysis (DSA) plays a central role in identifying vulnerabilities and its use in Fund sur- veillance should be generalized. The conclusions of a DSA should form an integral part of all country analysis reports. Belgium is currently participating in a financial sector assessment program (FSAP) and we strongly urge countries that have not yet done so to do likewise. The universal adoption of such programs is an impor- tant instrument minimizing risks to global financial stability. We fully support the widespread adoption of internationally recognized stan- dards and codes. Implementation of existing standards and codes will be a key issue in the years to come. Recently, the Executive Board discussed a proposed new instru- ment for intensive non-financial engagement by the Fund with member 29 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 30 countries, tentatively called a Policy Monitoring Arrangement. This new instrument would have a pure signaling role, as no financing would be available. The Fund already provides frequent signals through its surveillance process and initiatives such as FSAP and reports on standards and codes. Members wanting a high frequency, non-financial engagement with the Fund can enter into a precaution- ary arrangement or a low-access arrangement where the financial assis- tance provided would be largely symbolic. The creation of an additional signaling instrument would certainly overlap with existing Fund instruments. Moreover, a recent paper by Fund staff has shown that numerous problems have plagued similar proposals previously made. However, the issue is an important one and we are willing to continue discussing it. For the Fund to execute its lending operations smoothly, a liquid SDR market is essential. The Fund relies on arrangements with mem- bers in order to match demand and supply in this managed market. Bel- gium is in the process of reactivating its two-way SDR agreement, thereby deepening our continued engagement with the Fund. The Role of the IMF in Low-Income Countries (LICs) The IMF must continue to play a major role in helping the LICs to face the challenges of stabilization, growth and development. The Fund should concentrate on the creation of an environment of macro- economic stability, conducive to economic growth and poverty reduc- tion. I invite the Fund to strengthen its capacity to deliver strong policy advice and technical assistance to these countries. At the same time, the Fund must also continue to be able to deliver financial assistance to LICs whenever appropriate, through the PRGF. Therefore, I support the creation of a so-called self sustained PRGF after 2005, augmented if needed. I encourage the countries concerned to further develop their own poverty reduction strategies which should provide a clear and solid framework to tackle poverty through well-defined strategies and help channel external assistance efficiently. Reaching and preserving debt sustainability is of crucial importance for developing countries. In order to allow all eligible countries to come forward for debt relief, I welcome the limited extension of the sunset clause of the HIPC initiative. With respect to debt sustainability in LICs, I fully endorse the devel- opment of a framework allowing assessments that take into considera- tion the specific circumstances of the country concerned. International institutions, creditors and donors should take fully into account the results of these Debt Sustainability Analyses. However, the system 30 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 31 should not be applied in a mechanical way, in order to avoid perverse effects on the availability of financing for development. The joint work on the framework for debt sustainability analysis in LICs is a good example of the close cooperation needed between the IMF and the World Bank in order to arrive at an objective and undis- puted assessment of the situation. More generally, I call on both institu- tions to constantly seek ways to improve their cooperation, with respect for each other's core responsibilities and competencies, to the benefit of the developing countries, in order especially to reconcile the twin objec- tives of short term stabilization and longer term developments. Against this background, let me now turn to the World Bank and its development agenda. Financing for Development My country is committed to achieving the objective of allocating 0.7 percent of its gross national income to development assistance. Already in 2003, we had increased our total contribution to 0.61 percent. Bel- gium is following closely the efforts of the international community and the various proposals to mobilize additional resources for the financing of the Millennium Development Goals. Our national parliament has supported the introduction of a Tobin like tax on financial flows, while making its implementation conditional on broad international support. Against this background one has to recognize that the clock is ticking and that all of the specific proposals need time to muster sufficient sup- port to reach the implementation stage. This is why Belgium remains convinced that the best solution so far remains that all the parties involved do their utmost to fulfill their commitments: the donor coun- tries to provide the resources they have pledged and the recipient coun- tries to mobilize domestic resources and improve their absorptive and institutional capacity. Trade Trade can play a central role in fostering growth and development. Much remains to be done for a successful conclusion of the Doha Development Round (DDR).The Bank should continue providing advice in order to help bring the process to an outcome that would ben- efit both the developing countries and the world as a whole. Trade is still not fully integrated within PRSPs. Given their compar- ative advantage in agriculture, developing countries have much to gain in that field. It is, therefore, important that they get the needed support from our institutions, to seize the opportunities offered, to face the chal- lenges of competition and undertake the needed internal adjustments. 31 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 32 Belgium welcomes the Bank's efforts to work increasingly through strong partnerships with local and regional institutions, to deepen coun- try ownership and help build capacity in critical areas. However, good coordination between donors and a division of labor are necessary to avoid duplication and contradictions in advice, particularly with the regional development banks, which have regional integration and trade as a key priority. World Bank Strategy on Investment Climate, Growth and Infrastructure Belgium welcomes the work done on improving the investment cli- mate. Its findings are most valuable and the initiative worth being pur- sued. We are particularly convinced that the investment climate can improve substantially, sometimes at a very low cost, through a series of micro-reforms in the relations between the administration and the pri- vate sector. Simultaneously, the Bank should increase its efforts to help member countries set up a global framework, and policies conducive to fostering clarity and confidence in close cooperation with other institu- tions also involved in this field. The reliability of the statistical system is of particular importance. Belgium also welcomes the new pragmatic approach of the Bank to the financing of infrastructure in an effort to promote a balanced and holistic approach among the various policy actions and strategies required to foster development. We invite the Bank to exercise pru- dence in its innovative approaches since most of the ones that have been proposed would need substantial improvement in institutions, regulations and transparency before they can be successfully imple- mented. Again, close cooperation with the other institutions involved is essential. Decision Making On the issue of voice, we welcome the progress that has been made so far to enable mainly Sub-Sahara African countries to be involved more efficiently in important decisions. Of particular relevance are strengthened capacity of African ED offices, improvement in communication, the funding of independent advice and program for capacity building as well as strengthened politi- cal dialogue in preparation of Poverty Reduction Strategy Papers and Country Assistance Strategies. Belgium has earmarked 100,000 euros to help finance the strength- ening of African ED's offices. 32 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 33 Moreover, we remain open to examining in a broad multilateral framework other suggestions that would have a meaningful impact on the situation of the poor countries, and rally the necessary degree of support. Let me conclude by stressing the need to continue to rely on our unique institutions in order to foster macroeconomic stability, economic growth and development in a cooperative manner and in a true multi- lateral framework. BULGARIA: MILEN VELTCHEV Governor of the Bank It is a great honour and a privilege for me to address this year's Annual Meetings of the Governors of the IMF and the World Bank at a time when they celebrate the 60th anniversary of the Bretton Woods conference. There is little doubt that since their establishment, the two institu- tions have been playing a prominent role in world history. Over the years, there have been great achievements, there have been some fail- ures and disappointments, too, but one thing is certain--the Fund and the Bank have never failed to provide financial support, policy advice, and technical assistance whenever justifiably needed. I do believe that the staff of both institutions has spared no efforts to facilitate member countries in preventing crises and fighting poverty, while promoting financial stability and sustainable growth. The merit and efficiency of these respectable institutions could be plausibly illustrated by the crucial role they have played in Bulgaria over the last decade. Comprehensive and deep economic reforms were launched in our country soon after the political changes took place in 1989. The initial conditions along the road to building market economy were extremely unfavorable--Bulgaria was greatly dependent on the COMECON and had a huge external debt burden that was impossible to serve. After some initial hesitations, stemming from a stop-and-go policy (of a succession of governments with vague economic platforms), since mid-1997 Bulgaria committed to decisive economic reforms, within the framework of a Currency Board Arrangement. Since then, the country has achieved and maintained macroeconomic stability and enhanced economic growth. To a considerable extent, this success was due to the close cooperation between the Bulgarian authorities and the Bank/Fund expert teams and management. At present, it is gratifying to point out the fact that since 1997 Bulgaria has achieved a cumulative real GDP growth of about 30%, cutting down inflation to low single-digit levels while maintaining a broadly balanced 33 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 34 budget. The results achieved have even greater added value as they were accomplished in a period, when the global economy suffered several crises, including a recession in leading economies, and a growing uncer- tainty worldwide. The Bulgarian authorities highly appreciate the recent ex-post assessment (EPA) of the Fund, which scrutinized past developments, but also put into perspective anticipated future policy challenges. The authorities were encouraged by the key message of the EPA report, namely, that most of the possible drawbacks, identified in the case of longer-term program engagement, do not apply to Bulgaria. Some two months ago Bulgaria signed another Stand-by program with the IMF, designed as a low-access, precautionary arrangement which would also serve as an explicit exit from Fund program engagement. The Bulgar- ian authorities consider such a precautionary program as an adequate exit vehicle, offering a framework that is familiar both internally and externally. The policy framework under the last arrangements with the Fund has been complemented and further developed by reform programs supported by the World Bank. In 2001, the Bank began to focus its assistance on a series of Programmatic Adjustment Loans aimed at pro- moting sustainable growth. The shared view that private sector initia- tives and entrepreneurship are the major engines of growth provides the key to the successful implementation of current reforms. The strat- egy during the last several years has been targeted at the divestment of the state's non-infrastructural assets along with the enforcement of financial discipline on the remaining state-owned enterprises. The sub- sequent stages of the strategy have aimed at unleashing private initia- tive by establishing a favorable investment environment in order to increase the level of investments and improve the utilization of existing investments. Building on the successful experience from the last few years, the Bulgarian authorities are fully aware of the challenges ahead, and remain strongly committed to continuing the ambitious reform agenda. However, as the transition to market economy is already completed, the reform agenda has changed as well. Bulgaria is now preparing for its accession to the EU and this year has witnessed remarkable progress along the road to European integration. On June 15, 2004 Bulgaria closed the last remaining negotiation chapters thus allowing the country to sign the treaty next spring and accede to the union in early 2007, as planned. The successful completion of the EU pre-accession negotia- tions has substantially increased foreign investors' interest in the coun- try. As a result, FDI reached a record high level in 2003, and even more investments are expected as Bulgaria stands out as an attractive invest- ment location not only for its macroeconomic indicators, but also for its 34 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 35 highly skilled yet low-cost work force. These features have been recog- nized by the major rating agencies, some of which recently raised Bul- garia's sovereign rating to investment grade level. In the medium term, the main challenge that Bulgaria will face is keeping up the momentum and integrating successfully into the EU. In the last month, the Bulgarian authorities adopted a strategy that clearly outlined the intentions of the country with regard to completion of the last stage of integration--the membership of the Economic and Mone- tary Union. Taking into account the current macroeconomic framework and the results achieved so far, Bulgaria intends to follow a strategy of acceding to the Economic and Monetary Union without undue delay. In conclusion, I would like to thank the International Monetary Fund and the World Bank management and staff for the continuous support they have provided to my country over the years. I wish both institutions every success in their mission to achieve stability and pros- perity in all their member countries. BURKINA FASO: JEAN-BAPTISTE COMPAORÉ Governor of the Fund Introduction I am greatly honored to address this important gathering on behalf of African Governors of the International Monetary Fund and the World Bank. Let me first take this opportunity to thank the American authorities for their hospitality. I would also like to congratulate the organization committee for the efficient preparation of this meeting including all the security measures provided This year's annual meetings take place in the context of increasingly challenging social and economic outlook for the African continent. On the basis of actual trends, the global monitoring report noted that, Sub- Saharan Africa would not be able to achieve most of the MDGs, partic- ularly those related to health (maternal and child mortality) and those related to environment (access to clean water et sanitation) where almost all the countries are at risk. In spite of these trends, our countries are committed to eradicate poverty and to put the continent on the path of sustainable growth and development. To take up this major challenge, our heads of state met recently in Ouagadougou, Burkina Faso to discuss employment issues, given that employment is at the heart of the fight against poverty. Our countries reiterated their commitment to accelerate reforms and to per- severe in their efforts to improve the investment climate. To comple- ment these efforts, our development partners made the commitment at Monterey to provide adequate financing. Nevertheless, there remains a 35 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 36 huge financial gap that needs to be addressed. Beyond the issue of addi- tional financing and to be selective, my speech focuses on areas where actions of international financial institutions are needed to allow coun- tries to move quickly toward the MDGs. The Role of the IMF in Low Income Countries We welcome that the Fund is undertaking a comprehensive review of its support for low-income countries (LICs). Below are our proposals which we hope to contribute for this review. We believe that the Fund should remain engaged in LICs for the long-term, providing policy advice, technical assistance, and financing where there is balance of payments need. The Fund should also con- sider extending the standard time horizon of its programs from three to five years to ensure greater continuity and predictability in the reform process and its financing. We urge the IMF to pay particular attention to program design and the need to adapt it to the special circumstances of our countries. We hope that work in the pipeline should address the following key issues: greater focus in the macroeconomic frameworks under PRGF on employment creating growth over the long-term, in order to reduce poverty; design of alternative policy options in the PRGF negotiation process to strengthen country ownership; realism in program assump- tions, accelerating the PRSP-PRGF alignment and development of macro frameworks to support the MDGs, systematic poverty and social impact assessments of key reform; support for productive investment and economic diversification; more flexibility in accommodating higher aid flows and attention to political and social constraints. As noted in the recent discussion on fiscal adjustment in Fund- supported programs, development needs of LICs have been unduly constrained by stringent fiscal targets, many of which are observed at the expense of key public investment. We urge the Fund to ensure that adequate resources are provided for essential government services, and particularly for the development of basic infrastructure that is necessary to promote private sector investment. Many LICs are vulnerable to external shocks. To cushion the impact of these shocks, there is need to promote diversification of the produc- tive and export base and to build contingency financing mechanisms into programs that could be activated in the event of exogenous shocks. We also call upon the Fund to explore modalities for assisting non- program LICs countries that are affected by external shocks. There is need to provide for an appropriate bridge in the form of Emergency Post-Conflict Assistance (EPCA) with adequate conces- sional resources, without daunting conditionalities to allow countries 36 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 37 emerging from conflicts to move to PRGF, HIPC and to meet the MDGs. We also encourage the Fund to strengthen collaboration with the World Bank and other institutions such as the African Development Bank, in areas that are beyond the core activities of the Fund but are essential to ensuring higher growth and sustained poverty reduction in low-income countries. These areas include, among others, trade, finan- cial sector, investment climate, public enterprises, civil service reforms and institution building. A major shortcoming of the Fund's work in LICs is that the Fund devices the policy framework, but the bulk part of the financing is pro- vided by others. Hence the access limits under PRGF remain low and have not changed from those under its predecessor, the ESAF. We urge the Fund to accelerate the mobilization of resources to enable the increase in access limits under the PRGF, and to enable the self-sustaining PRGF to lend at more than the projected SDR 660 million per annum. Finally, the Fund should have in place a strategy to prepare coun- tries for an orderly exit from the use of its resources. In addition to low access PRGF, precautionary PRGF and the PRSP should be used to trigger donor disbursements, especially for successful performers. The Fund should also facilitate these countries' access to capital markets. Debt Sustainability in Low Income Countries We welcome the decision by the G-8 to extend the sunset clause. The main concern is for HIPC to deliver debt relief in line with the established framework by the completion point. There are four issues at the moment. First, the need to adequately fund the HIPC Initiative to ensure all eligible countries reach sustainable debt levels. Second, recent experience shows that there is an attempt to link the HIPC and debt sustainability frameworks, undermining the significance of topping up resources for those countries that have suffered unanticipated shocks before and after reaching completion point. We firmly believe that this attempt to link the two frameworks is counterproductive in our efforts to accelerate growth and poverty reduction. Third, there is need for more flexibility in the use of resources released under the HIPC Ini- tiative to also finance infrastructure. Four, there is the issue of low income countries which are non-HIPC but still suffer heavy debt burden. We urge you to initiate works on those countries with a view to mitigating their debt burden We agree with the main message of the proposed new debt sustain- ability framework that for low income countries, the scope for more debt is becoming increasingly limited; and more grant resources will be required to finance development. However, experience with the imple- mentation of the MDGs and the Monterrey Consensus, more especially 37 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 38 the Education for All Initiative, implies that a more robust financing framework will be required to substantially scale up IDA resources to provide the appropriate mix of financing. We also know that donor assistance alone will not be sufficient to unleash the desired growth rates to significantly reduce poverty and achieve the MDGs. The new framework seems not to pay enough atten- tion to the design of policies as the ultimate solution to debt sustainabil- ity. In this connection, there is need to improve policies aimed at new sources of growth and exports. There is also need to sharpen work on alternative scenarios and stress tests to capture country's vulnerability to exogenous shocks and mechanisms to mitigate them. We also urge you to address the mounting domestic debt burden which is also a source of concern for debt sustainability. To ensure high growth and sustainable debt, there is need to seri- ously address issues related to trade and market access. We commend the heads of the BWIs for promoting market access for developing countries. Following the failure of the Cancun round of negotiations, there is need to step up the effort. While AGOA, EBA and other initia- tives have provided temporary relief, long-term growth can only be more assured with a multilateral free trading system. At their recent COMESA summit in Kampala, the African Heads of States called upon industrial countries to accelerate the removal of agricultural subsidies, to desist from tariff escalation on manufactured products from develop- ing countries and for Africa to step up the export of manufactured products. We urge the BWIs to do more in exposing unfair trade poli- cies practiced by industrial countries against developing countries. Infrastructure and Regional Integration NEPAD has put infrastructure as a central issue for our economic development Indeed, our countries face an enormous infrastructure deficit. Less than half of Africa's population has access to safe water and only one in five has electricity. Total public infrastructure investment in Africa is now about $6 billion per year, roughly half of which is financed by donors. Estimates suggest that $18 billion is necessary annually to sustain levels of economic growth needed to reach the MDGs. This gap of $12 billion is far greater than IDA's current annual infrastructure commitment of $1.5 billion. Therefore, we welcome the Bank's commit- ment to leverage funds for infrastructure services using a blend of IBRD/IDA, IFC and MIGA instruments and products and urge it to scale up the financing of infrastructure in Africa. The observance of very stringent fiscal targets in IMF programs by our governments leaves them with very little or no fiscal room to invest in infrastructure. In this regard, and as noted in the IMF's recent paper 38 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 39 on public investment and fiscal policy, we urge the Fund and the Bank to reinforce the importance of public investment in the design of their programs, policy advices and technical assistance. In the same vein, we urge the BWI to address the issue of overoptimistic growth assumptions in their country analysis so as to avoid excessive fiscal policy tightening and unwarranted compression of public investment. The volatility of public investment is another source of concern to us. Therefore, we urge the Fund to ensure that in its programs, the level of public invest- ment is more predictable, given the clear links between infrastructure and poverty. We urge also the Fund to adopt adjusted fiscal targets in order to smooth out investment over "good times" and "bad times". We welcome the creation of a department for regional integration in the World Bank African Region and call for the establishment of a trust fund for capacity building in regional institutions in Africa and the design of sub-regional PRSP so as to invest in regional infrastructure projects. We call upon the Fund to step up its policy advice to promote regional integration in Africa. Finally, we urge the Bank to include within IDA14 a regional resource allocation for regional projects, hence, departing from the current IDA practice of financing regional projects through country allocation. Private Sector Development We welcome the World Bank's analytical work aimed at improving the investment climate and initiatives to support private sector develop- ment, including the recent joint IDA/IFC initiative to micro, small and medium size enterprises in Africa. For this initiative to succeed, there is an urgent need to resolve the tension between the financing policies of IDA and IFC. The experience so far shows that it is imperative to har- monize the policies on the use of IDA and IFC blend resources if indeed the Bank's initiatives towards supporting private sector develop- ment in Africa are to succeed. Also, MIGA needs to be an integral part of these initiatives in order to leverage its impact in Africa. We urge the Bank and the Fund to go beyond assisting countries with generic investment climate issues and to also focus on industry, sector or firm specific issues that still constrain competitiveness. In this respect, we would like the Bank to play a major role in encourag- ing linkages between SMEs and large corporations through produc- tion or supply chains in order to benefit from economies of scale, innovation, and access to markets. In this regard, we urge the Bank to deliberately support the establishment of growth clusters and firm linkages, including proactively promoting contracting (or sub- contracting) to private sector enterprises, especially to small ones, in public and or Bank procurement. 39 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 40 Other Issues We welcome the Bank's decision to enhance its support to middle income countries (MICs). This is very timely in view of the steep decline of Bank's lending to MICs, which is not consistent with the need for scalping up support to achieve the MDGs. We support the Bank's pro- posals to streamline the Bank's internal processes which will aim to reduce the burden of fiduciary and safeguard requirements on borrow- ers and loan conditionalities. This will help (i) reduce the cost of doing business with the Bank; (ii) increase the flexibility in scaling-up the volume of lending for a well performing operation; (iii) the use of wider range of instruments such as programmatic analytic work and swaps. There is also a need for the Bank to rely on country's systems. We urge the Fund to complement the role of the Bank in MICs, especially in developing modalities for alleviating the external and domestic debt burden in many middle-income African countries. The issue of voice and participation in the decision making processes of the BWIs remain a major concern to us and our political leadership. Most of the BWI work related to programs, projects, policy advice and technical assistance is in SSA yet we are deprived of reasonable voting power and participation within the BWI Boards. We urge the heads of the BWIs to canvas for international support around our proposals, namely to increase our representation in the Boards of the BWIs, to ensure that we are represented at the Deputy Managing Director level in the IMF, to stop the precipitous decline in SSA's quota in IMF Quota reviews, to increase basic votes for individual countries and to increase professional staff from our regions in the BWIs. The UN will undertake a comprehensive review of progress towards the MDGs in 2005. It is clear that all our initiatives for the MDGs are being constrained by lack of adequate resources at appropriate terms. Since the Monterrey Consensus, it appears that attempts to mobilize financing on a large scale have so far not been successful. Instead, this effort has been substituted by bilateral windows that most of our coun- tries find difficult to access. In this regard, we look for concrete actions towards achieving ODA level of 0.7 percent of GNI and welcome inno- vative approaches of additional resource mobilization, in particular the International Finance Facility (IFF). Conclusion In conclusion, we welcome the ongoing commitment of the Bret- ton Woods Institutions to helping African countries, including the LICs to achieve the MDGs. We urge them to provide additional financial and technical assistance and economic policy advice, and 40 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 41 advocate on our behalf for greater market access and mobilization of international resources. CAMBODIA: CHEA CHANTO AND KEAT CHHON Governors of the Fund and the Bank It is an honor and pleasure for us, on behalf of the Royal Govern- ment of Cambodia (RGC), to participate in this the 2004 Annual Meet- ings of the International Monetary Fund and the World Bank here in Washington DC. We would like to take this opportunity to express our gratitude to the Funds and the Bank, as well as the Government of the United States for their efforts in arranging the meetings. This statement will provide an overall assessment of the status of the economy of Cambodia, the Economic Policy Agenda, and provide information on the initiatives of the Royal Government of Cambodia to advance its reform agenda aimed at reducing people's poverty and pro- moting development. Political Platform The Royal Government of Cambodia enters into its third mandate of the second era of the Kingdom of Cambodia, humbled by the people's will and fully committed to the cause of peace, national recon- ciliation, political stability, social order, enhanced democracy, respect for human rights and dignity, national independence, integrity and cred- ibility, sovereignty and sustainable development that will bring progress, prosperity, harmony and dignity to the nation and people at all walks of life. The successful solving of the unusual political situation within a peaceful and stable environment and in a spirit of national reconcilia- tion and democracy has provided us with a renewed and hopeful oppor- tunity to embark on faster pace, more diversified and in-depth reforms in all the sectors where we have started in earlier terms. At the forefront of the political and economic agenda of the Royal Government in its third term 2003­2008 are: (a) promotion of economic growth; (b) generation of employment for Cambodian workers; (c) implementation of its Governance Action Plan (GAP) and thereby ensuring equity, social justice and enhanced efficiency and effectively of the RGC; and (d) implementation of broad reforms in all sectors to reduce poverty and accelerate sustainable development. The Royal Government of Cambodia stands fully committed to the Millennium Declaration adopted on 8 September 2000 by the General Assembly of the United Nations. The Leaders of the UN member states have agreed on the strategic targets and timetables in their common 41 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 42 cause to combat poverty, hunger, disease, illiteracy, inequity, gender bias and environmental destruction. The Royal Government shall, with full determination, exert its utmost efforts to bridge the gaps between universally-held goals and national progress, and between the national development and regional disparities. The Economic Performance Cambodia has displayed positive economic performance over the last few years, especially on the macroeconomic front. During the last five years, the Cambodian economy grew at an annual average rate of 6.7%, while the exchange rate was stable. On average, industrial pro- duction increased 19% per annum, services 5.3% and agriculture 1%. Inflation was kept very low and on average increased by 1.6% a year. The international reserves doubled to USD 670 million in 2003. Despite the political uncertainty related to the elections and despite the pandemic and insecure international situation, Cambodian econ- omy grew by 5.2% in real term 2003, led by continued growth in gar- ment exports, a rebound in investments and strong increase in agriculture production. Overall, during the first half of 2004, the RGC has exerted serious efforts to ensure our country's take-off toward sus- tainable economic development. Recognizing the positive developments, the Executive Board of the International Monetary Fund completed the sixth review of Cambodia's economic performance under the Poverty Reduction and Growth Facil- ity program (PRGF) and the result was satisfied. Fiscal Development The country's fiscal position deteriorated in 2003, as revenue perfor- mance in 2003 experienced worse difficulties, due to the outbreak of SARS, problems with revenue collection and political uncertainty during the election year, while the overspending associated with the elections and international obligation put significant pressures on the budget. As a result, the 2003 fiscal deficit, including grants, widened to 7.4 % of GDP. To reduce budget deficit, the RGC will ensure substantial expenditure compression, while increasing revenue to at least 11.9 % of GDP in 2004. This will require tax and non-tax collection measures equivalent to about 0.8 % of GDP. Monetary Policy Money supply increased by 15% during 2003 due mainly to increas- ing bank loans to the private sector. The bank credit to the private 42 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 43 sector grew by 27%, while net claims on government fell by 7%, foreign assets rose by 11% and foreign currency deposit increased by 15%. The external balance is expected to slightly deteriorate in 2004. The interna- tional reserves were kept at the equivalent of 2.8 months of imports. Cambodia's level of inflation remains relative low through the use of monetary and exchange rate policy, supported by a prudent managed fiscal position. At the end of 2003, the year-on-year inflation rate was just 0.5 %, while the national currency depreciated by some 1.4% against the US dollars as compared to the end of the previous year. Nev- ertheless, services and income partly offset the negative evolution of exports, so that the balance of current accounts shows a lessening deficit. The National Bank of Cambodia (NBC) remains committed to the maintenance of price stability as the principle objectives of its monetary policy in order to control the liquidity and credit growth by utilizing more direct instruments, as indirect policy tools such as statutory reserve requirement and refinancing facilities for commercial banks remained largely ineffective due to dollarization. The tight domestic credit stance and official intervention in foreign exchange market have been so far successful to contribute to the stability of the domestic cur- rency and the sustaining of low inflation. Outlook of External Sector The overall balance of payments slightly deteriorated. The current account deficit, excluding transfers, increased from 10.2 percent of GDP in 2003 to 10.8 percent of GDP in 2004, reflecting the impact of higher petroleum prices and service receipts. However, improved fiscal control following the elections has been accompanied by a gradual increase in foreign currency deposits. Together with the expected increase in foreign direct investment due to improved political stability, gross international reserves are expected to increase to US$782 million, or about 3 months of imports, by the end of 2004. Outlook for Growth The government's program and policy measures are supportive of further economic stability, with stable prices and low inflation, a stable exchange rate with concurrent economic growth, higher output and export. The growth in 2004 is expected to increase to around 4.3 percent as tourism recovers and garment exports continue to increase, but at a slower rate of 13 percent. Tourism is expected to rebound by at least 43 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 44 17 percent, boosting growth of services by over 6 percent. Manufactur- ing growth will thus slow to about 8.7 percent. Agriculture production is projected to growth at an unpleasant level of only 0.4 percent, with crops projected to grow on average by 3.2 percent. The end of the garments quota system will adversely affect growth in 2005­06, with GDP slowing to around 2 to 4 percent. The slowdown is expected to dampen growth in services and construction, but the impact will be somewhat offset by continued strong growth in tourism. Improving performance of the agricultural sector will further offset any manufacturing decline. Logging is expected to resume, but given tight controls for sustainability, forest sector growth will not exceed 4 percent. Sustainable future economic growth in Cambodia remains heavily dependent on the ability of the government to diversify the economy and broaden the base for growth. The Royal Government recognizes that strong efforts are needed for Cambodia to improve economic infra- structure, deliver basic services, and enhance governance. The impedi- ments of high transaction costs, poor infrastructure and hidden costs need to be addressed. The Reform Strategy for 2004­2008 The Royal Government has implemented structural reforms in all aspects, encountering enormous challenges, difficulties and obstacles. Soon after the July 2003 elections, the RGC drafted a comprehensive reform agenda, which selects from and prioritizes actions arising from the NPRS and the Socio-Economic Development Plan 2001­2005, and has "good governance" as its backbone. In the first of the Council of Ministers' Meeting for the third man- date of the National Assembly on the 16th of July 2004, Samdech Prime Minister Hun Sen introduced the "Rectangular Strategy" for Growth, Employment, Equity and Efficiency in Cambodia. The core of the Rec- tangular Strategy is good governance focused at four reform areas: (1) anti-corruption, (2) legal and judicial reform, (3) public administra- tion reform including decentralization and deconcentration, and (4) reform of the armed forces, especially demobilization. Environment for the implementation of Rectangular Strategy con- sists of four elements: (1) peace, political stability and social order; (2) partnership in development with all stakeholders, including the private sector, donor community and civil society; (3) favorable macroeco- nomic and financial environment; and (4) the integration of Cambodia into the region and the world. Four strategic "growth rectangles" are: (1) enhancement of agricul- tural sector; (2) private sector development and employment generation; 44 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 45 (3) continued rehabilitation and construction of physical infrastructure; and (4) capacity building and human resource development. In Public Finance, the government is embarking in a comprehensive reform so that Cambodia can afford a Public Finance System reaching the international standard by year 2015. The first platform aiming at building a credible budget to be achieved before the end of 2006. More than 200 actions are underway from now on. After the first platform, three more will follow. Promoting Tourism Development Tourism has indeed played a key role in the socio-economic devel- opment as it creates employment opportunities, enhances living stan- dard of local people and generates national revenues. At the same time, tourism brings in foreign direct investment and hard currency, thereby contributing principally and actively to the core objective of poverty reduction. Furthermore, cultural tourism is a dynamic source of the influx of tourists, who admire and are aspired to explore cultural her- itage. Therefore, the diversity of culture and heritage needs to be appropriately conserved, safeguarded and maintained for the benefit of next generations. Culture has played an important role in promoting tourism in Cambo- dia. The creation of natural recreation areas and tourism sites based on geographical criteria with the abundances of attractiveness from nature and rare culture and with the construction of road network to link all of these areas, such as an airport in Ratanakkiri province, are the priorities for the Royal Government in this sector. On the other hand, based on these advantages, the government set the development of tourism sector in Cambodia as the "Cultural and Natural Tourism". These potentialities will play a role as an important energy for the economic growth in Cam- bodia. In this sense, the Royal Government has considered tourism sector as the most prioritized sector among the 6 prioritized sectors in the strategy to promote economic growth to reduce poverty. Complementing the policies and programs in support of competi- tiveness is more intensive attention to the promotion of tourism oppor- tunities. In this regard, the private sector constitutes the main thrust to develop tourist destinations. They are working to promote attractions that enable greater tourist traffic in underserved areas, as well as longer stays and increased spending by tourists. Streamlining Trade Facilitation Cambodia's accession to the WTO in September 2004 can be seen as an important step forward in attracting FDI. Cambodia will use this 45 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 46 membership to implement a comprehensive policy reform agenda aimed at the achievement of sustainable development. In order to effec- tively integrate the country into the regional and world economy and market, Cambodia must deepen reforms in all sectors, especially in institutional capacity building and human resource development, a process which takes time and requires strong commitment and political will at all levels. Moreover, to reap the benefits presented by the WTO accession, the Cambodian administrative system needs further improvement to allow for an expansion of industrial base in light of small domestic market. The RGC's policy on trade facilitation is aimed at (i) rationalizing all agencies that contribute to high costs and delays including those in the Customs and Excise Department, the Ministries of Interior, Commerce, Public Works and Transport, Industry, Health, Agriculture and Labor; (ii) decreasing the total import and export transaction costs to the pri- vate sector while at the same time increasing formal revenue flow to the RGC; (iii) decreasing unnecessary and redundant operational costs to the RGC to manage the trade process; (iv) decreasing the overall time it takes to import and export products; (v) increase the visibility and pre- dictability of the process with respect to both time and cost, and (vi) con- sistent with WTO and WCO guidelines. On August 20, 2004, during the Government-Private Sector Forum the Government decided to have a single document for export by Sep- tember 1, 2005 and to set up one single window for import-export oper- ations by December 31, 2005. Private Sector Development The Royal Government entrusts private sector as the engine of the economic growth. Therefore, strengthened partnership between the Government and Private Sector must be harmonious or consistent with the State's rational intervention in the economy, combined with thorough development and enforcement of laws and regulations, as well as the effective support and facilitation by the relevant Government agencies. The Private Sector Growth and Employment Platform covers the following aspects: (1) strengthened private sector and attraction of investments; (2) promotion of SMEs; (3) creation of jobs and ensuring improved working conditions; and (4) establishment of social safety nets for civil servants, employees and workers. The challenge for Cambodia in the next five years is to broaden the base of economic growth driven by private investment and trade. To this end, the RGC is taking actions to remove impediments to private sector development by taking serious strides to combat red tape and hidden cost in the business, while to train human resources and build up 46 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 47 institutions. With the private sector it is formulating the policy and law and the implementing regulations for the private participation in infra- structure (PPI) notably the rule of law, rehabilitate physical infrastruc- ture. The reform will focus on the improvement to the investment climate, including the legal, regulatory and administrative environment. The reform should also allow for improvements in access to key factor inputs, including skilled personnel and competitive access to finance. To help strengthening the private sector, the Government continues to develop the financial sector by following 2001­2010 Road Map. The first phase of this Road Map 2001­2004 contributed to the successful restructuring of the banking sector. As regular, the Government is also strengthening and cleansing the insurance sector, while efforts has been voted to build legal infrastructure for the financial sector. Continuing Partnership for Development The Royal Government considers as top priority the strengthening of partnership with all stakeholders in national development. Strength- ened partnership will help ensure effective coordination with donors, international financial institutions and civil society organizations. The parameters of partnership shall be based on the resolutions of the UN General Assembly, principles adopted by the Development Assistance Committee of the Organization for Economic Cooperation and Devel- opment (DAC OECD) the Rom Declaration on Harmonization. The roles of donors and multilateral institutions in Cambodia's development process shall be determined on the basis of capacity and comparative advantage of each partner. Such partnerships will require the nurturing of mutual trust, respect and flexibility in accordance with the exigencies of the cooperation process. In September 2004, during the consultation with donor community and with their consent, the Royal Government announced the setting up of coordination umbrella mechanism to strengthen and rationalize different RGC-development partner working groups, i.e. Public Finance Reform, Administrative Reform, Management of Natural Resources, Social Development, Land Management, Partnership. Ownership by the Royal Government of the working group mechanism is crucial to the further pro- motion and progress of reforms. It is also crucial that all donors and multi- lateral institutions strive to be better organized and coordinated among themselves in order to streamline their partnership with Cambodia. Toward Integration and Peace Economic integration and international cooperation will help Cambo- dia to ensure its economic growth. Market access is critical for promoting 47 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 48 growth and poverty reduction. Therefore, Cambodia's membership in ASEAN and the WTO, as well as cooperation within the framework of the Greater Mekong Sub-Region (GMS), and providing opportunity to push further reforms in investment and foreign trade regime. The Gov- ernment is focusing on the liberalization and decentralization of deci- sion making process, reducing the bureaucratic red tapes, removing impediments to investments. Implementing reform programs and initi- ating the modernization of the national economy will enhance Cambo- dia's competitiveness, while working to reach the regional and international standards. The Royal Government is strongly committed to ensure full benefit from the reforms advanced by membership in the WTO. To gain the benefits in full, Cambodia must strengthen its cooperation with its neighbors through mechanisms such as "Four Countries, One Econ- omy," and the establishment of Growth Triangles and joint Export Processing Zones (EPZs). One of the most important achievements of the Royal Government over the recent decade is the establishment of peace, security and safety for all, while ensuring sustainable macro-economic stability for the country. The Royal Government of Cambodia secured full peace by implementing its "win-win" strategy. Henceforth, the main task of the Royal Government is to strengthen the fabric of peace that has already hardly been won. Cambodia is very pleased with the fact that it is not left alone with its own problems and efforts. We do hope that these Annual Meetings will provide stronger impetus for the Bank and Funds, and for the interna- tional community to contribute more effectively to the development process of the poor and poorest countries in the world, including Cam- bodia. And we also strongly hope that a new PRGF and new CAS can be arranged for Cambodia to ensure sustainability of economic reforms in this country. In conclusion, we would like to assure this international gathering of the strong willingness and commitments of the Royal Government of the Kingdom of Cambodia to work actively in partnership with the international community towards achieving our common goal of reduc- ing poverty, starting by committing itself to reforms and development in its national domain. CANADA: RALPH GOODALE Governor of the Bank and the Fund Sixty years ago, Finance Ministers assembled in Bretton Woods and created the World Bank and the International Monetary Fund (IMF), endowing them with the noble mandate of raising economic growth and 48 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 49 of increasing economic and financial stability, thereby reducing poverty. These remain relevant and worthy goals. While many have witnessed unprecedented growth and prosperity over the last six decades, hundreds of millions remain marginalized. The Bretton Woods Institutions are needed now more than ever to support international efforts to promote peace and prosperity for all citizens of the world. The global recovery has advanced in most regions and the prospects for strong growth are good in the short run. Nevertheless, there are vul- nerabilities that need to be addressed to help ensure that global recov- ery can be sustained. Canadian Economic Prospects The Canadian economy has performed well, notwithstanding sev- eral unforeseen shocks in 2003. Healthy business and consumer confi- dence, solid job gains, strong fiscal fundamentals, and low inflation should continue to support robust Canadian growth for the remainder of this year and 2005. Private sector forecasters expect growth of 3.0 per cent in 2004 and a pick-up to 3.4 per cent in 2005. IMF Surveillance and Crisis Prevention Sound economic policies and macroeconomic stability are essential prerequisites for sustainable growth and poverty reduction. Financial crises exact significant economic and social costs, especially on the poor. One of the Fund's primary goals is to reduce the frequency and severity of international financial crises. Surveillance is one of the most impor- tant instruments in the IMF's crisis prevention toolkit. The Fund has made considerable progress in strengthening its surveillance operations, especially by promoting enhanced transparency in member countries and improving its analytical tools for the early identification of a coun- try's vulnerability to crisis. The surveillance function needs to continue to evolve in light of changes in the world economy. In the spring, the International Mone- tary and Financial Committee (IMFC) called for further efforts to enhance the focus, quality, persuasiveness, impact, and overall effec- tiveness of surveillance. The Fund's recent biennial review of the imple- mentation of surveillance efforts focused on how to make surveillance more effective across the whole membership. We endorse the key con- clusions of the review: a sharper focus on the Fund's core areas of expertise, clearer and more candid treatment of exchange rate issues, enhanced financial sector coverage, and better regional assessments. As well, in our view, debt sustainability assessments would be enhanced if 49 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 50 they were conducted independently of regular country work. Finally, the new exceptional access framework should be strictly adhered to going forward, to help shape the expectations of members and markets alike, provide a benchmark for decisions regarding program design and access, safeguard the IMF's resources, and ensure uniform treatment of members. Need for a Stronger Focus on the Millennium Development Goals We are at a critical juncture. Given the long lead times between pro- gram and project approvals and their impact on reducing poverty, we need to increase our efforts now in order to ensure that we meet the Millennium Development Goals (MDGs) by 2015. Making headway in reducing poverty in Sub-Saharan Africa remains our greatest challenge. If we fail Africa, we fail the Millennium Challenge. Real increases in Official Development Assistance are essential for achieving develop- ment and progress towards the Millennium Development Goals in least developed countries in general, and Sub-Saharan African countries in particular. We must also ensure that resources are targeted wisely to achieve maximum results. We are fully convinced that a major effort is needed now and both developing and developed country partners must strengthen their collaborative efforts to fulfill the commitments we made in Monterrey. Financing Development Mobilizing sufficient resources to support development programs remains a pressing challenge, but one worth tackling head-on as the more than one billion people living on less than one dollar a day depend on our collective efforts. Canada has delivered on its Monterrey com- mitment, increasing international assistance by 8 per cent per year. We are fully committed to working towards the timely conclusion of the fourteenth replenishment of the International Development Associa- tion and African Development Fund X replenishment exercises. Strong Foundations for Growth and Private Sector Development Growth will depend on deepening of sound economic policies, improved governance and a more open global trading environment. We welcome the adoption of the Doha Round negotiating framework in July 2004. Although many difficult issues remain, this development gives hope for renewed momentum in meeting the Doha development agenda with its promise of raising millions out of poverty. The IMF and World Bank must continue their efforts to support this process through 50 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 51 advocacy, analytical work, local capacity building programs, and assis- tance to countries in their transition process. We encourage the World Bank and IMF to continue their support to low-income countries in mainstreaming trade-related issues through the Poverty Reduction Strategy Paper (PRSP) process and in their operations. Equally important, the UN Commission on the Private Sector and Development has stressed that "poverty alleviation requires a strong private sector. It is the source of growth, jobs and opportunities for the poor." Clearly, private investment (both foreign and domestic) will only be attracted in sufficient volumes and produce results if there is an enabling environment, where the conditions in which businesses oper- ate are transparent and predictable and where there is appropriate gov- ernance, sound macroeconomic policies, fair competition, good physical and social infrastructure, smart regulations and the rule of law. In this regard, we welcome the progress that many member countries have already made, often with the assistance of the World Bank Group, in strengthening business environments as well as in addressing invest- ment climate issues and infrastructure bottlenecks. We need to build on recent successes to promote more business- conducive policies and to provide access to affordable infrastructure services. One message came through strongly and clearly during my recent trip to Africa: improving infrastructure, especially in the trans- port and energy sectors, is key to promoting private sector develop- ment and poverty reduction. Africans across the political and business spectrum all underscored the vital importance of reducing the cost of doing business. The Bank and IMF are definitely well-positioned to offer the kind of support African countries need to improve access to affordable infrastructures and therefore provide an enabling environ- ment for economic growth. Critical Attention to Debt Sustainability As we invest more heavily in development, we must not repeat past mistakes. The Heavily Indebted Poor Countries (HIPC) Debt Initiative has taught us an invaluable lesson on the financial and social costs of debt overhang. Twenty-seven countries are already benefiting from relief under the HIPC Initiative and are having their overall debt stock reduced by two- thirds. Their debt service as a percentage of exports has also been sub- stantially reduced to an average of 10 percent. The HIPC Initiative remains a valuable instrument to give other heavily indebted poor countries a fresh start, namely by freeing up fiscal space for productive investments. Eleven countries, most affected by conflict, have yet to be considered for HIPC assistance. We therefore 51 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 52 support the proposed extension of the sunset clause, which will give them until 2006 to initiate the process. The key to poverty reduction is broad-based and pro-poor growth. For most HIPC countries, deeper reforms are necessary to promote long-term growth. Over the short and medium term, while reforms will require funding, this may come in the form of loans that will add to the financial burden of the poorest countries. Development finance must be provided strategically and responsibly, either on highly concessional terms or on a grant basis, in order to protect the gains of the HIPC Ini- tiative and to minimize the risk of debt distress. We recognize the progress made in fine-tuning the framework for debt sustainability analyses. Having the results of these analyses inform the lending deci- sions of the IDA and the Poverty Reduction and Growth Facility as well as those of other development partners is vital to ensure that unsustain- able borrowing is avoided. We urge World Bank and IMF Executive Directors to fully consider the merits of the proposed debt sustainability analysis (DSA) operational framework and to refine it as appropriate with a view to having it guide lending decisions going forward. The Role of the IMF in Low-Income Countries Besides a strengthened focus on country ownership and the joint Bank/Fund work on debt sustainability, the IMF's approach to low- income countries in other areas must also change. Most users of Poverty Reduction and Growth Facility (PRGF) resources no longer have a bal- ance of payments need. It is time to reconsider the nature of the rela- tionship between poor countries and the IMF, including, in particular, the relationship between IMF concessional assistance and the surveil- lance process. Simply put, the Fund and low-income countries alike need mechanisms other than lending to support strong surveillance relationships, and to help signal donors. This is why, prior to the spring meetings in Washington, Canada advocated the creation of a country-led intensified surveillance mecha- nism. Unlike a formal IMF program, there would be no Fund financing or IMF developed conditionality attached. Instead, the country would present a medium-term economic and fiscal plan developed with the benefit of advice from the Fund staff, but clearly "country-owned" with widespread internal support among key groups in society. The Fund would be asked to provide more frequent monitoring than typical sur- veillance, and the Board would consider staff assessments of the extent to which the country is achieving its own economic and financial goals. Since the spring, this proposal has made progress. Jamaica, a pio- neer in developing the new approach, is now embarked on an intensi- fied surveillance relationship. Several other countries have indicated 52 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 53 their interest in this instrument. Moving forward, we should aim to sup- port countries requesting intensified surveillance, to ensure that the sur- veillance resulting from this intensified relationship is of the highest possible quality, and to build capacity in countries to define and imple- ment their own programs. Looking Forward Little more than a decade remains until 2015. Scrutiny of our actions and policies will only increase as we come closer to the deadline for meeting the MDGs. It is encouraging that we know that, on a global scale, we will likely meet the goal of halving global poverty. However, the challenges of meeting this target at the country level, especially for most African countries, are daunting. In this global effort against poverty and despair, all development partners have critical roles to play. The Bretton Woods Institutions are needed now more than ever and they, more than ever, need to heed the voices of their smaller share- holders. Developing and developed countries, the public and private sectors, democratic institutions, and civil society must all work closely together and improve the focus of our efforts to guarantee a better future for the world's poorest. CHINA: ZHOU XIAOCHUAN Governor of the Fund We are very pleased to see increasing evidence of the global recov- ery, with growth rates in most regions exceeding original expectations. While this is apparent in the world's major economies--the United States, Europe, and Japan--economic growth rates in the developing countries and many regions have also been remarkable. Undoubtedly, countries can take advantage of these developments to resolve inconsis- tencies and imbalance problems in their economic operations by making structural adjustments, while at the same time creating sound conditions for the developed countries to carry out their obligations in promoting global sustainable development. However, we cannot ignore the risks and challenges to sustained growth of the global economy. Complex geopolitical issues and terror- ism pose threats to global peace and development. The economic struc- tural problems of the major developed countries are having a potentially negative impact on global economic development, exchange rates, and even financial market stability. Affected by the geopolitical situation and the dynamics of supply and demand, the rise in interna- tional oil prices has triggered widespread concern, with a marked corre- lation between financial market volatility and changes in oil prices. The 53 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 54 new round of interest rate increases not only will narrow the long- and short-term interest rate spread and squeeze the profitability of financial institutions, but will also increase the financing costs of developing countries. Emerging markets' resilience to external shocks is still weak, and the many low-income and developing countries have a formidable task in revitalizing their economies through structural reform. In addi- tion, the unfair trade system and lack of external financial assistance are seriously hindering development in these countries. Over the past year, China's economy has maintained the momentum of rapid growth. In the first half of 2004, GDP growth was 9.7 percent y-o-y, 0.9 percentage points higher than the growth rate last year. For- eign trade continued to grow, with total imports and exports for the first eight months of 2004 reaching US$722.1 billion. Fiscal revenue increased significantly to RMB1.4307 trillion yuan in the first half of 2004, up 30.6 percent y-o-y. Since 2003, China has introduced a series of macroeconomic man- agement measures in response to over-investment in certain sectors of the economy with the result that the unstable and unhealthy factors in the economy have been curbed. Based on updated statistics, the growth of money supply slowed in August, with all intermediate tar- gets for monetary policy lower than expected at the beginning of the year. The consumer price index rose by 5.3 percent, due mainly to rising food prices compared with the same period last year. Inflation, which excludes food and oil prices, remains relatively low, demon- strating that China's macroeconomic management measures have played an important role in lowering credit and investment growth, leading to brighter prospects for a soft landing. The Chinese govern- ment is firmly resolved to curb over-investment in certain economic sectors and to promote economic and financial reform. We will pay close attention to macroeconomic developments and remain prepared to take the necessary steps to consolidate the gains in macroeconomic management. In 2004, we have taken important steps to reform state-owned com- mercial banks and capital markets. Learning from international prac- tice, we have begun to restructure two state-owned commercial banks as share holding companies, which are scheduled to be listed in 2005. Furthermore, reforms are also underway at banks and non-bank finan- cial institutions--including the two other state-owned commercial banks, joint stock commercial banks, urban commercial banks, and rural credit cooperatives. We have also introduced the Qualified For- eign Institutional Investors scheme, allowing the investment of foreign capital in China's security markets. Through these reforms, we will build a strong financial system able to support the sustained, stable, and rapid growth of China's economy. 54 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 55 The recovery of the Hong Kong SAR economy continues. For the first half of 2004, real GDP registered robust growth of 9.5 percent. Growth was broadly based, supported by further implementation of the Closer Economic Partnership Arrangement between Hong Kong SAR and the Mainland and gradual expansion of travel deregulation to more mainland cities and provinces. Consumer confidence continued to recover, putting an end to almost six years of deflation. Driven by service exports, real GDP in Macao SAR grew by 36.0 percent for the first half of 2004, and the unemployment rate dropped to 4.9 percent. The further strengthening of economic cooperation between the Mainland and Macao SAR contributed not only to the con- tinued growth momentum in the tourism industry and strengthening the role of its trade platform, but also to the development of the financial sector and new industries. We believe that the global recovery combined with the stable growth of the Mainland--with the full support of the central government--will help the economies of Hong Kong SAR and Macao SAR maintain the momentum of strong growth. We appreciate the Fund's efforts to promote global economic and financial stability by strengthening surveillance. Nevertheless, we believe that the Fund should place greater focus on surveillance of the major developed countries that have a significant impact on the global economy. These countries should be encouraged to better coordinate their economic policies, maintain exchange rate stability for the major currencies, increase financial aid to the developing countries, and open their markets to them. While we support the efforts of the international multilateral institu- tions to develop standards and codes and introduce them to facilitate global economic and financial development on a voluntary basis, we suggest that the Fund and the World Bank should fully consider coun- tries' different stages of development and their specific circumstances. In developing and introducing these standards and codes, the Fund and the World Bank should listen more to the voice of the developing coun- tries while adhering to the voluntary principle and the gradual approach. As the number of international standards and codes increases, the Fund and the World Bank should be more selective, focusing on those that are closely related to their core areas of expert- ise, avoiding those areas that are not. After many years of effort, the international community has made considerable progress in development matters; however, the develop- ing countries still face serious bottleneck constraints. Many develop- ing countries lack development funds and can hardly achieve sustained and effective structural reform. Therefore, we hope that the developed countries can implement the Monterrey Consensus as soon 55 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 56 as possible, increase their development aid funds, and reach at an early time the ODA level of 0.7 percent to GNP, set by the United Nations. Promoting fair trade will not only help the developing coun- tries, but will also benefit the developed countries. The developing countries have long faced an unfair trade environment. We are pleased that the Fund and the World Bank are promoting the Doha Round of trade negotiations and advocating an open and fair multilat- eral trade mechanism. At present, the Doha Round of trade negotia- tions has made some progress. We hope the international community will continue their efforts. We urge the developed countries to lower their trade barriers and reduce their subsidies on agricultural prod- ucts, so that the Doha Round of trade negotiations can achieve sub- stantive progress. CROATIA: ZELJKO ROHATINSKI Governor of the Fund It is a great pleasure and privilege to address the 2004 Annual Meet- ings of the Boards of Governors of the World Bank and the Fund here in Washington D.C., the place close to Bretton Woods where our sister institutions were founded 60 years ago. Over the past six decades the global economy has changed quite a bit, it has become far more inte- grated to say the least. Both the Bank and the Fund made an important contribution in there, as their role in promoting international economic cooperation was indispensable. Looking forward, this role of Bretton Woods institutions will continue to be a cornerstone of prosperous global economy, but at the same time, this role will also present the main challenge, since universal sense of the global economy working for all is not entirely there yet. Having said that, I would like to express my warm appreciation to Messers. de Rato and Wolfensohn for their dedi- cated service to our institutions, and I wish them much success and wisdom in steering the institutions in years to come. Also, my gratitude goes to former Managing Director of the Fund, Mr. Köhler. In the remainder of my statement, allow me first to cover major eco- nomic developments related to Croatia. Thereafter, I will say a few words about Croatia's relations with the Fund and the Bank. And finally, I intend to touch on a couple of policy issues relevant for the Bank/Fund business. To start with the major Croatia's economic developments, I cannot resist mentioning first a big political event, obtaining a candidacy status for EU membership in June this year, the event everybody in Croatia had waited for. We expect accession negotiations to commence early next year. Without doubt, the accession process will anchor future reforms and economic policies, hence helping us to preserve macroeco- 56 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 57 nomic stability and to deal effectively with some of the challenges our economic policy faces. Having mentioned challenges, it should be noted that relatively high and increasing foreign debt represents a major challenge at present. Foreign debt almost doubled over the past few years (it accounts to approx. 80 percent of GDP at present), and roots for such a debt dynamics could be found both in lack of government's will to consoli- date public finances more decisively, and in low interest rates, which in combination with relatively easy access to credit spurred private con- sumption too. On one hand, such a strong domestic demand helped Croatia to weather the global downturn after 2000/01. In fact, Croatia hardly felt global downturn, it achieved relatively high growth rates in both 2002 and 2003 (5.2 percent and 4.3 percent, respectively) at low single-digit inflation. However, on other hand, strong domestic demand came at the cost of strongly increasing foreign debt, high budget and current account deficits. Against this background, the main objective of the current policy stance is to narrow the domestic savings-investment gap in order to stabilize foreign debt. Strong fiscal consolidation (together with a shift in budget deficit financing to domestic resources) is seen as a main vehicle to achieve the aim. Only this year budget deficit is pro- jected to be cut by 1.8 percentage points of GDP. And in the follow- ing two years by additional 1.6 percentage points of GDP, notwithstanding the expenditure pressures related to EU accession. All this should bring down the budget deficit to 2.9 percent of GDP by 2007. At the same time, monetary policy will continue to be geared towards low inflation and exchange rate stability, which is entirely consistent with Croatia's EMU aspirations. Though such a monetary policy itself should not necessarily help curbing domestic demand, the central bank will continue to assist the efforts of fiscal policy to stabilize overall external debt. That said it is noteworthy that the cen- tral bank implemented temporary measures to limit credit growth already last year. And this year, it introduced a temporary measure to discourage commercial banks' borrowing abroad. From a somewhat longer-term perspective, the central bank has been continuously improving banking supervision, which paid-off, as recent credit boom has not been reflected in a deterioration of portfolio quality. On the contrary, commercial banks' portfolio quality continued to improve and profitability remained high. (NPLs account to some 5 percent of total loans at present). This overall macroeconomic policy will be supported, no doubt, with a number of structural measures. Some of the major measures involve enhancing fiscal transparency, improving expenditure and debt manage- ment, and perhaps most importantly judicial and public administration 57 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 58 reforms. These reforms should have a positive impact on business envi- ronment, hence helping to attract non-privatization related FDI and facilitating private sector activity in the medium term. After all, these reforms, together with before mentioned economic policies, should pave the way to EU accession. In turning to my second point--Croatia's relations with the Fund and the Bank--I want to stress first that Croatia continues to have open and fruitful discussions with the Fund/Bank staff. That said, just out- lined economic policies and structural reforms are supported by the Fund's precautionary Stand-by arrangement signed two months ago. They are also to be supported by the World Bank too. In fact, a World Bank Programmatic Adjustment Loan (PAL) is currently under prepa- ration, and it is expected to come on-board early next year. Besides program arrangements with the Bank/Fund, Croatia is par- ticipating in a number of initiatives aimed at strengthening architecture of the international financial system. To quote some of them, I may start with quoting a joint IMF/WB's initiative--Financial Sector Assessment Program (FSAP). Croatia is one of the 70 countries for which FSAP has been already completed. Based on the FSAP mission report, a couple of The Reports on the Observance of Standards and Codes (ROSC) were made, and some of them have already been updated. In addition to that, an assessment of the legal and institutional framework for anti-money laundering and combating the financing of terrorism was also under- taken. By making this step, Croatia tried to make its contribution to the worldwide efforts aimed at resolution and prevention of the most terri- fying global threat we all witness these days. Separately, but still on strengthening the global financial system, Croatia has recently wel- comed a comprehensive Financial Soundness Indicators (FSI) Coordi- nated Compilation Exercise project. As one of about 60 countries, we are participating in the project, hence actively supporting development of efficient tools for assessing the strengths and vulnerabilities of finan- cial system. Before turning to my third and final point, let me note a few more completed for Croatia. In particular, Safeguard Assessment was com- pleted early last year, and the subsequent one is currently underway. Then, the World Bank has done recently a Country Financial Account- ability Assessment study in which it helps us identify weaknesses of our public financial management system. A fiscal ROSC was also com- pleted a few months ago. All in all, through all these assessments Croa- tia is actively supporting a number of the Bank/Fund's initiatives, but at the very same time it is receiving an increasingly valuable advice for which we are very much grateful. To this end, I wish to thank both the Fund and the Bank for providing us with expertise technical assistance, which is very much appreciated. 58 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 59 Finally, I wish to touch on a couple of policy issues relevant for the Bank/Fund business. First, as Croatia is now the EU candidate country, and currently in the process of the Bank country assistance strategy preparation, I would like to highlight the importance of the Bank's assistance not only for our country but also for all other countries in the similar status, to have an operational focus with clear strategic fields of intervention defined in the present context of need for EU alignment. Second, I support wider application of the sector wide approaches as they support country-led programs for a coherent sector in a comprehensive and coordinated manner. As they are character- ized, among other things, by country-owned sector policies and strate- gies and by a common program and an expenditure framework based on agreed priorities and strategies, a setting up such sector programs through adjustment financing instruments should promote easier future inclusion of the EU pre-accession and later structural funds. Third, I very much support the idea that all decentralized Bank offices should be able to really represent the Bank at whole, meaning the IFC and the MIGA as well. Recipient country sees the Bank's presence through a country or a regional office, and it is difficult to understand constant excuses that the IFC and the MIGA are represented through their separate office in other countries. Cooperation among all institu- tions of the Bank group, not only at the country assistance strategy level, but also in the field, is of utmost importance for an improved effectiveness of the Bank as a whole. Fourth, as Croatia is a middle- income country, and all of the above issues are closely correlated, let me kindly ask for future support to the Middle Income Countries Strat- egy as well as for a promotion of the country systems adoption, espe- cially for EU candidate countries. Such approach will further decrease the cost of doing business whereas letting us stay involved with the Bank in order to perform crucial structural adjustment within a joint effort. Finally, regarding the Fund business, I wish to underscore that Croatia attaches a great importance to the Fund's transparency policy, especially given its general role in supporting strengthened domestic economic discussions and market assessment. I am pleased to see the country staff reports' publication rate standing at 76 percent now and I welcome a recent step forward in this area--presumed publication of all staff reports. I would like to point out that Croatia has supported the initiative to publish country reports from its early days, when report publishing used to be very voluntary. Thus, it is indeed a plea- sure to see the initiative progress, achieving its aim. Allow me in concluding to thank our hosts for their warm hospitality and outstanding organization of these meetings. I wish the Fund and the Bank well in their future undertakings and thank them for the help pro- vided to my country. 59 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 60 DENMARK: BERTEL HAARDER Governor of the Bank In my remarks today, I would like to focus on the Millennium Devel- opment Goals (MDGs) and draw your attention to three issues that we--the Nordic countries--believe are very important in our strive to reach those goals. I will argue that: · We must give special attention to Africa, · We must become more engaged in conflict prevention, and · We must attach higher priority to promoting human rights, democ- racy and good governance. All countries can and should reach the MDGs. Is it realistic? Yes, but only if we strengthen and focus our efforts and apply all available instru- ments. An important determinant for achieving the MDGs is the devel- oping countries' own policies. In many recipient countries, the administrative systems are still too weak to ensure efficiency and accountability. Governments must do more to strengthen governance and public institutions and the donor community must stand ready to support such reforms. Otherwise, efforts in other areas will not be effective. It is widely acknowledged that we must mobilize substantially more aid to achieve the MDGs. Donors should move towards the UN objec- tive of 0.7 percent. The Nordic countries will maintain our high level of development assistance. We, the donors, must keep our promises. Having said that, we do welcome the work on innovative financing mechanisms, as a supplement to our collective efforts. Our partner countries are still using far too many human and eco- nomic resources navigating different donor priorities and procedures. To reach the MDGs, we need to continue our efforts to ensure develop- ment effectiveness--through alignment of the assistance to the Poverty Reduction Strategies (PRS), harmonization, joint reviews and use of common monitoring systems. PRS constitute a strong framework for implementing programs in an effective way. The Bank deserves much credit for taking the PRS- initiative this far. But there is room for improvement. National owner- ship, including the involvement of national parliaments, is one such area. The latest progress-report provides the Bank with a good basis for initiating a consultative process with all relevant partners to further improve the framework. An important question in this connection is, whether the Bank is able to join and push the harmonization agenda at country level. We believe that the Bank's interaction with partners in the field could be improved through decentralization and delegation of more responsibility to coun- try offices. We encourage the Bank to move further in this direction. 60 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 61 I would now like to bring to your attention three issues, which we believe are important for reaching the MDGs worldwide. We Must Give Special Attention to Africa A stronger global effort to support Africa's fight against poverty and instability is urgently needed. Africa is a mosaic of steps forward and backwards, good results and unresolved problems. We are encouraged by the progress made in several African countries. But let us not forget that Africa is the region facing the greatest challenges and furthest away from reaching the MDGs. HIV/AIDS is the biggest threat to development in a number of African countries and needs to be urgently dealt with. The latest review of the Bank's HIV/AIDS programmes in Sub-Saharan Africa showed the Bank's success in scaling up its support in fighting the disease. We would like to encourage the Bank to continue the good work, also by further mainstreaming HIV/AIDS prevention in other sector pro- grammes and projects supported by the Bank. Africa will remain the main recipient of development assistance from the Nordic countries--and we will take the initiative to strengthen our dialogue and co-operation with African countries. Amongst con- crete initiatives, we are convening a ministerial conference on trade and development in the first quarter of 2005 in Tanzania. The conference is meant to identify areas where we can help the African countries to achieve a stronger position in the international trade system. We Must Become More Engaged in Conflict Prevention Armed conflicts are a big threat to the fulfillment of the MDGs. Areas suffering from conflicts also risk becoming refuges for terrorist groups. Neighboring countries are affected as well. Often the help has come too late--and the costs in terms of lives lost and infrastructure destroyed have become far too high. Ensuring peace and stability should, therefore, be one of our main priorities. But many such conflict- ridden countries have weak policies and institutions and widespread corruption. Traditional aid programmes have not worked well, and many donors have disengaged. Disengagement has, however, proven risky and contributed to increasing instability. We highly value the steps taken by the Bank to strengthen its role in Low-Income Countries Under Stress (LICUS) and encourage the Bank to stay engaged with well defined strategies in these countries. Needless to say, close co-operation with the UN-agencies remains essential. The ultimate goal is to make full use of different strengths of the various actors. We strongly urge the International Financial Institutions and the 61 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 62 UN to work closely together to ensure an effective response to ongoing and emerging conflicts. We Must Attach Higher Priority to Promoting Human Rights, Democracy and Good Governance Human rights and democracy are decisive contributions to the cre- ation of the political and economic framework that is necessary for a country to attract foreign investments and ensure growth and develop- ment. By the opposite token, human rights violations, political oppres- sion, the lack of free exchange of opinion can breed political radicalization and become a cause of violence and conflict. During President Wolfensohn's tenure, we have been encouraged by the progress made by the World Bank Group to integrate human rights issues in its work. IFC's new safeguard policies are an important step forward in this regard. Also, the Bank's legal considerations regarding human rights seem to be under evolution. The Bank has an important role in assisting its members to progressively realize their human rights commitments and should work to exert a positive influence. We look forward to further discussions about integrating human rights in the Bank's work. Let me conclude by stressing that the Nordic countries see the fight against poverty as a fight for global security--a global common good. Partner countries and donors, including the World Bank, should strengthen their effort for the populations of the poor countries to live in freedom and dignity in open societies, under responsible govern- ments and with growth and progress. In our view, this is the golden path to achieving the Millennium Development Goals. FIJI: SAVENACA NARUBE Governor of the Fund It is an honor and a privilege for my delegation to attend this year's annual meeting of the International Monetary Fund and the World Bank on behalf of the Government of the Fiji Islands. I congratulate you Mr. Chairman for your appointment to chair these joint annual dis- cussions. I also warmly congratulate Mr. de Rato on his appointment as Managing Director of the Fund. We see and face the effects of the heightened global security meas- ures in our meetings here in Washington. It brings home to us the seri- ousness and the huge cost of providing security for these meetings and indeed for many parts of the world. The developments since our Dubai meeting last year have again confirmed that we are all vulnerable to the world threat of terrorism. It can affect us all, even us in the South 62 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 63 Pacific. We therefore join the call to harness every effort and resources to eradicate terrorism and combat money laundering. In Fiji, we are doing our part to prevent terrorist financing and combat money laundering. An independent review last year by the Asia Pacific Group on Anti Money Laundering concluded that generally Fiji had in place adequate systems in this area. But, we are doing more. A Financial Reporting Transactions Bill will be introduced in the next sit- ting of Parliament. This will strengthen the exchange of information and surveillance of suspicious transactions. At the same time, a Finan- cial Intelligence Unit, which has been operating since last year, will be formalized through this Bill. Fiji has also agreed to undertake a Financial Sector Assessment Pro- gram (FSAP) in 2006. We believe that Fiji is perhaps the smallest island member country of the Fund that has volunteered to undertake this comprehensive review. It reflects the Government's ongoing commit- ment to comply with international standards and codes. This FSAP will complement our participation in the Fund's review of the Codes of Good Practices in Fiscal Transparency last year and the completion ear- lier this year of the Report on Observance of Standards and Codes of Transparency in Monetary and Financial Policies (ROSC). We are working at implementing the findings of these reviews. We believe that these measures will further strengthen good governance and enhance the resilience of our economy to the vulnerabilities and shocks that we face. Our compliance to these international codes will also help us combat terrorist financing and money laundering. However, with our limited resources and capacity, compliance to these codes is very expan- sive and we call for more support of our efforts in this area, particularly in institutional capacity building. I am pleased to announce that Fiji has successfully concluded its Article IV consultation with the Fund. The Fund confirmed that Fiji was now enjoying four consecutive years of good growth, a perform- ance that has been difficult to achieve in the past. We expect this year's growth to again be close to the 5 percent government target as was the case last year. Our economic fundamentals remain firm with low infla- tion, adequate foreign exchange reserves and moderate debt level. The Fund also commended the Fiji Government for its economic management that had successfully and rapidly rebuilt the economy since the 2000 crisis. The accommodative monetary and the expansion- ary fiscal policy have worked well to raise domestic demand which has driven growth in the last four years. This has resulted in rising incomes and employment for our people. However, we fully agree with the Fund that, with economic growth well on its way, there is a need to re-orient our economic strategy towards sustaining this performance into the future. In fact, we have 63 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 64 started addressing this concern by tightening monetary policy in May this year. We also fully understand the critical role of fiscal consolida- tion in protecting macroeconomic stability. Our 2004 budget deficit has been suppressed to 3.5 percent of GDP from 5 percent last year. Further fiscal consolidation is planned in the medium term. While the Fiji Gov- ernment realizes the challenge of fiscal consolidation, it nevertheless remains committed to the reforms of the public service, public enter- prises and financial management. Last year, greater transparency and accountability of the responsibilities of senior government positions were introduced. Furthermore, a new Financial Management Bill will be tabled in the next Parliament session, which will pave the way for the implementation of financial reforms to improve the management, reporting and control of government spending. This will be supported by the introduction of a new financial management information system and improvements in budgeting where corporate planning will drive the process. At the same time, the government has just completed a com- prehensive review of all aspects of our fiscal policy, which will help us continue to improve our revenue collections and taxation schemes. In our reform effort we will obviously need technical assistance to properly manage and coordinate these interrelated programmes. I also wish to report that the Fiji Government is addressing other strategic issues which, inter alia, include the management of government assets; reforms in the sugar industry; reassessment of the tertiary and voca- tional system to ensure that we continue to meet the changing needs of the country; and development of a regulatory framework that will enhance competition in the telecommunication industry. Fiji, as a small island nation with a population of less than a million, faces much vulnerability. These vulnerabilities Mr. Chairman, may threaten our entire economy. We are doing all we can to minimize these vulnerabilities including setting a firm macroeconomic foundation. But it is clear from global experiences that we cannot do this on our own. We need the support of the international community, in particular the two Bretton Woods institutions. Our needs are concentrated in capacity building in its many forms and we call for assistance in the areas of train- ing, technical assistance, policy advice and institutional strengthening. So far, the achievements of the Millennium Development Goals (MDGs) are uneven and slow, particularly in the area of poverty reduc- tion. In my opinion, this reflects the enormous burden on developing countries to progress towards these goals while dealing with country spe- cific challenges and the increasing volatility in global developments. The resources and the capacity that are needed to achieve these challenging goals are enormous. I therefore join the call on the International Finance Institutions and donors to accelerate assistance to help developing coun- tries progress to the MDG. In particular, I request the Fund and the Bank to actively play their part in assisting member countries reach these goals. 64 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 65 The global focus on the governance and decision making of the Bret- ton Woods institutions is sharper than ever before. I believe that it is an opportune time for the Fund and the Bank to strengthen the voice and representation of developing member countries in the two institutions and address the structural misalignments that currently exist. In this regard, Fiji continues to support the 13th review of the IMF quotas to help address the erosion of the voting powers of small members of the Fund. In the Bank, I believe that the strengthening of capacities in the Execu- tive Directors Offices will be a useful first step. I therefore urge the Fund and the Bank to agree on the way forward and develop a clear implemen- tation road map to complete the work on this issue as soon as possible. Remittances have become an important balance of payments sup- port and a source of development finance for developing countries including many Pacific Island countries. In Fiji, these remittances have rapidly grown in the last two years to become our second highest net foreign exchange earner. We therefore welcome the recognition of the G8 in their Sea Island Summit of this growing source of external devel- opment financing. We would support any work by the Bank to study these flows and in particular how to reduce the transaction costs. We welcome the resumption of the Doha Round of multilateral trade negotiations. In this respect, it will be crucial for the Fund and the Bank to develop clear strategies to ensure that trade liberalization ben- efits are shared by all, including the developing countries and small island states. We are grateful to the Fund for their continuing technical assistance to Fiji in the areas of financial supervision, payment systems and mone- tary policy. The Pacific Financial Technical Assistance Center, in our view, is an excellent model for delivering assistance to the scattered countries in the Pacific region and we thank the IMF and other donors for their support of the Center. I am glad to report that an independent review of the Center has been completed and it fully endorsed the work and the structure of the Center. We also thank the Bank's Representa- tive Office in Sydney for their support. We wish the Fund and the Bank all success in their future endeavors. FINLAND: ERKKI LIIKANEN Governor of the Fund (on behalf of the Nordic Baltic countries) Introduction I am honoured to address this distinguished audience on behalf of the Nordic-Baltic constituency consisting of Denmark, Estonia, Iceland, Latvia, Lithuania, Norway, Sweden, and Finland. We are gathered here in Washington at a time when the IMF has just passed the 60 year mark. 65 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 66 This milestone gives us an excellent opportunity to reflect on the main challenges of this institution. I start with a comment on the economic outlook. The overall picture is quite comforting, even though higher oil prices have added to the downside risks. The main challenge now is to establish a firm founda- tion for sustainable growth. The opportunity offered by the present situation should be used to address global imbalances, to move towards more sustainable fiscal positions and to press ahead with structural reform. The recent agree- ment to continue the Doha trade round was a welcome step forward in our efforts to bringing the fruits of sustainable growth to all. Industrial countries must shoulder their responsibilities for the progress made in trade liberalization, and low-income countries need to take action to ensure the reduction of trade barriers between them. I want to focus first on surveillance and the Fund's internal gover- nance, second on our way of dealing with crises, and third on the Fund's involvement in low-income countries. The Fund Needs to Become More Candid in Its Surveillance First is the question of surveillance. In Fund terminology, surveil- lance has a positive ring; it is about shared economic security. In recent years, increased transparency has made the Fund's surveillance more accessible. The move to presumed publication of the Fund's reports is the latest achievement in this field, and it is important that we continue to encourage all member countries to follow this new policy. The recent biennial review provided us with valuable information about the state of surveillance and guidance on the way forward. It is important to deepen the coverage of regional and global spill-over and to improve the integration of bilateral, regional and multilateral surveil- lance. The Fund's surveillance over euro area policies is a good example in this respect. We might sometimes disagree on policy conclusions, but I appreciate the comprehensive and candid view given on the policies of our region. The Nordic-Baltic constituency includes countries either inside or closely linked to the European Union, and for that very reason we have a wider interest on the issue. Having been personally involved in European cooperation for a long time, I appreciate the "outsider view" that the Fund can bring to the European discussion. Of course, becoming better at multilateral and regional surveillance is dependent on the quality and efficiency of bilateral surveillance. The Fund staff's own report, together with the Independent Evaluation Office's (IEO) report on the Fund's Role in Argentina, served as an eye-opener for many of us. The evaluation report makes a convincing case concerning the shortcomings of surveillance in this instance. I 66 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 67 quote, "Little substantive discussion took place with the authorities on whether or not the exchange rate peg was appropriate for Argentina over the medium term, and the issue received scant analysis within the IMF" unquote. The Fund gave the authorities the benefit of the doubt for too long and did not acknowledge that temporary positive developments were not supported by structural changes. None of us want to see a repetition of this, and therefore we need to emphasize reform and insist on having structural issues of macroeconomic importance adequately addressed in Fund surveillance and programs. While Further Improving Internal Governance The evaluation report also shows that there is a need for further discussion on how to enhance internal decision-making and ensure that our representatives in the Executive Board are fully informed about all issues relevant to the decision-making process. Critical deci- sions are, however, sometimes made outside the Board. This under- mines the ability of the Board to exercise the powers that we as Governors have given them. It also calls into question the accounta- bility of this institution. On top of this, it may weaken the credibility the Fund vitally needs. In this respect the clarity that the exceptional access criteria bring to decision-making is most welcome. The use of this promising vehicle has been limited to date. The exceptional access criteria focus on the early involvement of the Executive Board. A well-informed and alert Board is the best guarantee that the staff and management do not prejudge the Board's decisions. It is up to all parties concerned to make sure that the agreed rules are followed. Enhancing the voice and participation of developing countries in the Fund's decision-making process is another important area. The Nordic-Baltic constituency is in favour of improving developing countries' participation in international fora and is ready to consider realistic measures to achieve this. One way to do this is to increase basic votes. There is a Need to Change Our Way of Dealing with Crises Second is the question of the way we prevent and handle crises. The Fund's success in preventing and handling crises is not measured by the amount of finance it disburses. Precautionary arrangements have become more and more common in recent years. I have noted the latest suggestion to create a so-called policy monitoring arrangement. How- ever, it is an open question whether there would be demand for such an 67 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 68 arrangement or whether the existing tools can serve the same purpose that a policy monitoring arrangement is supposed to do. Another interesting discussion has centred on the exceptional access framework and on considerations of its proper functioning. In general, I feel that the existing framework with early Board involvement should be left unchanged for the time being. We should make sure that we apply the exceptional access criteria, as they are defined, in order to have a predictable and equitable framework in place. The call for a strong exceptional access framework is reinforced by the fact that there has been limited progress on other aspects of the crisis resolution framework. Issues related to private sector involve- ment have been put on the back burner for too long, making the cur- rent system still tilted towards bailing out the private sector. It is a welcome development that the use of collective action clauses has become so widespread, but we should also develop other tools to involve the private sector. The Fund's lending into arrears policy pro- vides guidance on how to react in such a situation, but I believe that the policy would benefit from more operational criteria that would make the policy easier to apply. Well-defined rules on debt restructuring do not have to lead to easier defaults but rather to a more predictable and orderly process. Stepping Up Our Efforts to Reduce Poverty in Low-Income Countries Third is the question of the international community's efforts to reduce poverty in low-income countries and on the role the Fund can play in this, without compromising its core function. The attainment of the Millennium Development Goals depends on sound policies, good governance, and adequate financing. Trade liberalization espe- cially in agricultural products would give a boost to low-income coun- tries. Ensuring better and equal access to basic services such as education and health care, reducing poverty and underpinning a more equal income distribution, would help to enhance and sustain growth. An operational framework for debt sustainability would enable both the countries themselves and the donors to better tailor policies to be consistent with the countries' long-term debt sustainability. Fur- ther work on a debt sustainability framework would also facilitate our discussion about what is needed beyond the present HIPC Initiative. The decision to extend the initiative for two more years was a welcome move in order to ensure equal treatment of eligible countries. How- ever, there is a need to consider new ways of addressing long-term growth and sustainability issues in both HIPC as well as in other low- income countries. 68 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 69 FRANCE: CHRISTIAN NOYER Alternate Governor of the Fund Firstly, the strengthening economic recovery must be sustained through the steadfast curbing of global imbalances. In recent months, the world economic recovery has strengthened, but risks remain. The trend in oil prices is a first concern and its repercussions can be damag- ing to industrial countries and even more detrimental to emerging and developing non-oil producing countries. Finding the appropriate fiscal and monetary policy mix is also a sig- nificant challenge. The adoption of accommodating fiscal and monetary policies helped support economic activity and promote recovery at a time of global economic slowdown. However, the sustainability of such policies is of concern, as they can magnify global imbalances. Fiscal con- solidation must therefore be a priority. Secondly, the work of the international community to improve crisis prevention and resolution must be stepped up. Enhanced Surveillance Must Be Consolidated Renewed attention to exchange rate issues, as well as the new frame- work for analysis of debt sustainability in low-income countries, which has to be a joint product of the World Bank and the IMF, is key steps. Additions Are Needed to the IMF's Toolkit for Crisis Prevention and Resolution For the poorest countries frequently exposed to exogenous shocks, precautionary arrangements with concessional financing are a response to an actual need. In parallel, the IMF should remain at the heart of dis- cussions on crisis resolution. The large spreading of collective action clauses is one side of the response. I hope that the proposal for a Code of Conduct, which is being considered by several emerging countries together with the pri- vate sector, will rapidly lead to useful results. We welcome the progress which has been achieved and encourage the international community to incorporate all of this work in actual crisis management and resolution. Progress toward Greater Financial Transparency Is Warranted The focus on greater transparency also helps prevent the use of the international financial system for criminal or terrorist purposes. I wel- come the Executive Boards' decision in March of this year to fully 69 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 70 integrate anti-money laundering and combating the financing of ter- rorism into the assessments of member countries' financial systems and to adopt a common methodology with the FATF for conducting these assessments. France, which this year is chairing the FATF, would like to see this cooperation between the Bretton Woods institutions and the FATF continue. Thirdly, efforts of the international community in favor of develop- ment should be strengthened in two directions. Ensuring debt sustainability for developing countries in the context of a financing policy tailored to each country. First, France welcomes the fact that the sunset clause for the HIPC Initiative has been extended for two more years, as this will provide a window of opportunity for the eli- gible countries to benefit from the Initiative. The next step is to ensure the debt sustainability of developing countries beyond the implementa- tion of the HIPC Initiative. It is necessary, in particular, to ensure as soon as possible the perpetuation of the FRPC financing so as to maintain the continued momentum of its activities beyond 2006. We are pleased to see that a consensus among Fund members supports this development. But beyond debt, our second priority should be to mobilize addi- tional resources for development. We know that to achieve our objec- tives, financial needs are estimated to amount to 50 billion dollars per year for the next ten years. The international community should there- fore allocate additional resources to this goal. However, we need to be realistic. Increasing fiscal efforts can offer only a progressive response; and financial needs to achieve the millen- nium goals are pressing. That is the reason why we need to keep an open mind in considering innovative mechanisms of financing, includ- ing the IFF and global taxes. France welcomes yesterday's International Monetary and Financial Committee and the Development Committee's decisions on this issue. We should take the opportunity of the current recovery to imple- ment reforms necessary to strengthen a non-inflationary and thus sus- tainable growth and to deepen our commitment to fight against poverty. The IMF and the World Bank are the key instruments in this endeavour and we want to reaffirm our support to these institutions which embody the spirit of the international cooperation which we advocate, and in which all voices should be listened to. GEORGIA: ZURAB NOGAIDELI Governor of the Bank and the Fund The new Georgian authorities embarked on a very ambitious reform program in December of 2003. The main elements of the government reform agenda in the short-term were to fix the decrepit fiscal sector, to 70 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 71 strengthen the governance, to combat corruption and smuggling, to foster economic growth and reduce poverty, and restore the general public confidence. In February 2004 the government negotiated a new IMF program which again envisaged very bold targets for the coming years. For instance, according to the program scenario the tax revenue to GDP ratio was planned to increase by 2 percentage points to reach 16.3 percent by the end of 2004. Such a dramatic increase was unprece- dented in Georgia since its independence. However, the government not only delivered on its results but in many areas and aspects even sub- stantially outperformed the program targets. In fact, the tax revenues almost doubled relative to the last year and for the first time since its independence the budget expenditure allocations were revised upward. According to the established tendency in revenue collections, the tax revenue to GDP ratio may reach 18 percent that would be almost 4 per- centage point increase compared to the previous year. Enhanced revenue mobilization allowed the government to timely meet its spending obligations and especially in the social area. More- over, the government started to clear the domestic expenditure arrears accumulated in the previous years. Again, the government outper- formed the program indicators in this respect and by the end of 2004 arrears in the amount 2.4 percent of GDP will be cleared instead of ini- tially programmed 1 percent of GDP. All of the achievements above have been possible owing to the political will and intensified efforts of the new administration. Struc- tural reforms implemented in the fiscal sector have been particularly effective in delivering on the results. Specifically, the reforms were implemented at multiple fronts simultaneously and targeted the anti- corruption, anti-smuggling and governance enhancing objectives. Within the context of these reforms the tax and customs departments have been significantly downsized and their functions have been con- solidated. Furthermore, a new excise tax inspectorate was established to enable the tax administration to concentrate its efforts primarily on the excisable goods. The last but not least the Adjara tax administra- tion was effectively integrated into the national tax authority and the Adjara customs was abolished and its functions taken over by the regional customs. Financial police was set up shortly after abolishing the parallel struc- tures within ministry of interior, ministry of state security, ministry of finance, customs and tax departments. The financial police today is the sole investigatory state agency responsible for the economic crimes, including tax evasion and smuggling. Rather than having these func- tions scattered along different state bodies today they are concentrated into one single state agency with its staffing being at only 20 percent of what it has been previously. 71 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 72 Significant reforms have been implemented in the treasury depart- ment of the Ministry of Finance in the current year. Three major devel- opments are worth mentioning in particular: (1) Full commitments control system was introduced to ensure that the spending units did not incur expenditures in excess of their respective appropriations and to prevent accumulation of arrears; (2) Single revenue account was intro- duced that enabled to close down about 10 thousand transit accounts and substantially simplify the revenue reporting and accountability; (3) Effective tax refund mechanism was introduced. Along with the major structural changes the government developed new fiscal policy agenda. The proposed tax reform has been developed to create investor- and business-friendly environment, reduce under- ground activity and tax evasion and promote voluntary compliance with the ultimate goals of fostering economic growth and development. The new draft tax code of Georgia envisages the elimination of 13 out of 21 different taxes, simplification of administrative procedures and the rate reduction on some of the major taxes. Specifically, the VAT will be reduced from 20% to 18%, the personal income tax will be lowered from 20% to a flat 12% and the social tax will be down from 33% to 20%. However, in order to make the tax reform revenue-neutral the counter revenue-losing measures have been proposed, like broadening the tax base by eliminating many existing tax exemptions and increasing excise tax rates and strengthening tax administration efforts. These positive developments in the country have substantially boosted the confidence in the government from the international community. On June 4, 2004 the IMF board approved a new PRGF program for Georgia and shortly afterwards the World Bank board approved credits for three new operations including the budgetary support reform support credit. On June 15, 2004 at the donor confer- ence in Brussels the government received substantial pledges of donor assistance over the next coming years in the amount of over US$ 1 billion. Finally, on July 21, 2004 the Paris Club creditors agreed to restructure the bilateral debts of Georgia on the so-called Houston terms that helped to relieve the debt burden of Georgia in the medium-term. Despite the fact that substantial progress was recorded in all reform components of the government major challenges are still ahead. The intention of the government is to intensify the reforms even further and concentrate on the key priority areas. In the fiscal sector the main challenges will be to effectively implement the proposed tax reform and make the transition from existing system to the new one as smooth as possible. Moreover, the government plans to introduce the multi- year budgeting and link more closely the policies and the national pri- orities with the annual budgetary allocations. The government also 72 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 73 plans in the medium-term to target the socially most vulnerable and eliminate extreme poverty in the country in the medium-term. GERMANY: HANS EICHEL Alternate Governor of the Fund First of all, let me congratulate Rodrigo de Rato for his election as Managing Director of the IMF. I know Rodrigo since quite some time and I am sure that he will do an excellent job in his new capacity. I wish him all the best. At the same time, I would like to thank Horst Köhler for his outstanding job as Managing Director. The outlook for the global economy remains positive. However, the volatility of oil markets represents a risk. Together, we must alleviate this risk by making markets more transparent and by implementing adequate measures on the supply and demand side. At the same time, high growth must be supported by appropriate monetary policy, fiscal consolidation, and structural reforms. For Europe it is important to strengthen consumer confidence, to create more jobs, and to implement structural reforms. Higher domestic growth is needed so that Europe can contribute to global economic growth. Germany has initiated important structural reforms that will increase growth and employment permanently. Sixty years after their foundation, the mandates of World Bank and IMF are still valid. However, these institutions have to adapt to a chang- ing global environment while being credible and transparent. Their work must lead to sustainable results. For Germany the key issues are: well-defined priorities, a clear division of labor and an effective meas- urement of results. For the IMF, improved crisis prevention is key. This includes a strengthening of surveillance and advice in order to detect risks so that early corrective action can be taken. Core objectives of surveillance must include: Stable domestic finan- cial markets and effective financial market supervision, reasonable exchange rate regimes, prudence with regard to external debt, and stable fiscal policies. If a crisis did occur, the IMF should continue to provide the neces- sary and, in cases of severe capital account crises, extensive credit pack- ages. However, these loans must strictly comply with the agreed access criteria. The most important challenge in the years to come will be to over- come extreme poverty in low-income countries. IMF and World Bank have a key role to play in this regard. The World Bank should focus even more systematically on institution building. The IMF should continue to promote macroeconomic stability 73 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 74 and well-targeted technical assistance as well as to provide financial sup- port as appropriate. Germany stands ready to contribute substantially to a continuation of the IMF's PRGF and to the World Bank's assistance to low-income countries. One important step is the extension of the HIPC Initiative until 2006. New lend-and-forgive cycles must be avoided. Therefore, I welcome the work on a new debt sustainability framework. Furthermore, I am per- sonally convinced that open markets are the most effective support industrial countries can provide to developing countries. Thus, Germany remains committed to a successful completion of the Doha Round. Let me also assure that Germany remains fully committed to the Millennium Development Goals and will provide its share to meet these goals. GHANA: YAW OSAFO-MAAFO Governor of the Bank May I take this opportunity to welcome Mr. Rodrigo Rato, the Man- aging Director of the IMF to his new job. The enthusiasm and interest with which he has already taken to his work is impressive. We also want to thank the former Managing Director of the IMF, Mr. Kohler, now President of the Federal Republic of Germany for his efforts and his special attention to Africa during his tenure as Managing Director. I am glad to note that the World Economic Outlook indicates that the prospects for the global economy, including African economies, are improving. While this is good news, the downside risks for non-oil pro- ducing African countries, that are inherent in crude oil price develop- ments cannot be underestimated and are worrisome and could put their reform programs at risk. In an already resource-constrained environ- ment, the rising oil import cost will call for additional resources in the short term to underpin the macro stabilization and other reforms that have began to deliver increasingly rapid growth. As to the development agenda, we are all agreed that on current trends many of our countries in Africa will not meet the Millennium Development Goals (MDGs). The development agenda, which is essentially a growth agenda, should therefore be given urgent attention. We need growth to achieve poverty reduction. We need growth to resolve the serious unemployment problems facing most developing countries. But how do we generate growth without adequate resources? The simple fact is that we need additional resources. Timely avail- ability of resources in adequate and predictable amounts is essential if we are not to lose more time in pursuing the MDGs. It is in this con- text that the recent initiatives by the U.K. Government to write-off the U.K. portions of debts owed by low-income countries to the multi- 74 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 75 lateral institutions is a welcome addition to the International Financ- ing Facility proposal that has been made by Chancellor Gordon Brown. The Millennium Challenge Account facility designed by the United States is also very welcome in this regard. We would like to urge our development partners to accept the challenge and commit significant additional resources that will allow countries undertake the sort of investments and policies that would promote the attainment of the MDGs. I am sure we are prepared to do our part of the Monterrey Compact. Many African countries are undertaking reforms in the area of polit- ical and economic governance. In Ghana for example, the Government, after assuming office in 2001 set about the task of establishing macroeco- nomic stability, establishing transparency and accountability in public resource management and introducing new standards for governance. A new anti-corruption strategy was put in place, including Codes of Conduct for state officials, reform of the procurement system, and strengthening of anti-corruption agencies. Press freedom was encour- aged by for example repealing the criminal libel law which sought to muzzle the press. Today, the Press is alive, alert, robust and vociferous. We see the reforms of economic and political governance as funda- mental in creating the environment for the generation of resources from the private sector. A private sector friendly environment is indispensa- ble for tapping the synergies of public and private sector partnerships to improve absorptive capacity and transfer technology required to bolster productivity and output for the achievement of the MDGs. Peace and Security are prerequisites for development and Africans are pursuing a proactive foreign policy focussed on regional peace and security and good neighbourly relations. We see the work of NEPAD, ECOWAS and the African Union as very important in this regard and their efforts need to be supported. While aid is important, free and fair trade is even more so as a key and sustainable source of growth for all countries. This is why it is nec- essary that developing countries have access to markets of the devel- oped countries and subsidies, especially on agriculture, reduced if not eliminated. It is our hope that the Doha Round of Multilateral negotia- tions will be concluded promptly and result in improved market access for developing country exports. Political will is needed to resolve this problem of access to the markets of developed countries. We hope and pray that this crucial decision can be made very soon. I am pleased that it has been possible for me to voice my views in this forum. We do take the issue of Voice and representation in the Bretton Woods institutions very seriously and urge all parties to work toward a speedy compromise to achieve appropriate balance between the interests of the developing and developed countries. 75 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 76 GREECE: GEORGE ALOGOSKOUFIS Governor of the Bank The global recovery that started in 2002 is still unfolding, though at a slower pace than expected earlier in the year. Rising oil prices raise the risk of a slowdown in global growth. The pace of activity remains uneven across regions and the recovery appears fragile. Global growth is driven by the U.S. and Asian countries, while in the Euro area growth remains heavily dependent on external demand. In many developing countries, adjustment efforts and structural reforms are bearing fruit. The key to strong economic performance has proven to be fiscal consol- idation, reinforcement of market forces, and the removal of obstacles to the efficient allocation of resources. Greece's growth performance remained robust last year as strong domestic demand compensated for weak exports. Investment spending, underpinned by low interest rates and strong construction activity asso- ciated with the Olympic Games, was the major contributing factor. Con- sumer spending also remained on a rising trend. Labour market conditions improved slightly during the course of 2003, while inflation decelerated; however, the differential vis-à-vis the euro-area average remains at relatively high levels. Economic activity is expected to remain robust in 2004 and 2005. Growth is expected to remain well above the euro-area average, mainly on the back of easy monetary con- ditions, the recovery of tourism following the successful Olympic Games, the faster implementation of the Third Community Support Framework and the revival of world trade. Fiscal consolidation in the near future remains a key concern of the Greek government. The far-reaching auditing of fiscal accounts launched in March resulted in an upward revision of the general gov- ernment deficit and debt for the period 2000­04. These revisions, which have been long overdue, have led to an increase in transparency that provides a more solid basis for the assessment of the fiscal policy stance. We are committed to correcting the current situation as rapidly as possible, aiming at a deficit for next year of 2.8% from a projected 5.3% in 2004. This effort will be based on moderate wage growth for the public sector, the reduction of operating expenditure for Ministries and measures to contain costs and borrowing by public organizations and enterprises. A tax amnesty has also been announced, while significant savings will be achieved through cuts in the military budget and, most notably, through the drastic reduction in Olympics-related expenditure. Our economic strategy aims at strengthening potential growth, employment and social cohesion. It is a strategy that will promote real convergence between Greece and the more developed economies of the European Union. In parallel with fiscal consolidation, we have 76 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 77 launched efforts to improve the competitiveness of the Greek economy by promoting competition, reducing administrative barriers, and cutting corporate taxes while improving tax administration. The goal we are all pursuing is sustainable, noninflationary growth. The pursuit of this goal is greatly facilitated through international policy coordination and the smooth functioning of international and regional institutions that provide a stable and predictable framework for world trade and financial flows. We must commit ourselves to taking the actions needed to improve the prospects for global growth and prosper- ity, reduce vulnerabilities, and strengthen our financial systems. At the national level, we need growth-enhancing economic reforms; at the international level, we need to improve the financial architecture; and in our aid commitments, we need to reduce poverty around the world. The coordinated actions of all of us are critical for the achievement of our common goals. INDIA: P. CHIDAMBARAM Governor of the Bank and the Fund Since we met the last time, the global economic outlook and policy prospects appear to have strengthened considerably. World output growth is expected to touch its highest level in the last thirty years. The recovery is also broad based across the membership, with US and Emerging Asia continuing to show stronger growth. Diversified expansion, and different regions mutually supporting and reinforcing growth-enhancing prospects, can trigger a virtuous cycle. We must strengthen this process, and that will require international coopera- tion in achieving stability, crafting better policies and building robust institutions. No doubt, risks to the expansion, too, have increased in recent months. A shadow has been cast by volatility in the oil market and geo- political uncertainties. While supply constraints have surfaced in addi- tion to demand pressure, speculative forces also seem to have contributed to added volatility. An enduring solution to these problems will call for strengthening cooperation between oil producing and con- suming countries in stabilizing the oil market. Equally, multilateral institutions must be ready to support countries exposed to any potential threat of oil or commodity price shocks. Inflationary pressures across regions are primarily supply driven by oil and commodity prices. Compared to earlier periods of oil price shocks, many countries have strengthened their macroeconomic and prudential policies and have become more resilient. Central banks in these countries have developed more effective tools and more transpar- ent communication policies to achieve price stability without disrupting 77 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 78 growth. We, therefore, believe that the reversal of interest rates by cen- tral banks should be, and will be undertaken cautiously. Growth and price stability cannot be viewed as two irreconcilable goals. However, the combination of risks of oil prices and reversals in monetary policy regimes make the management of macro-policies in oil importing emerging economies a particularly complex task. In terms of policy response, the problem of the twin deficits in the US and structural reforms in the Euro area remain a challenge. In emerging market economies, the current upturn should provide the necessary leeway for fiscal and debt consolidation, and for pushing ahead with institutional reforms for sustaining growth and reducing poverty. Financial market conditions remain sanguine with gradual strength- ening of balance sheets and capital buildup across institutions. The demographic transition in several countries, particularly in developed countries, points to the need for pursuing pension fund and social secu- rity reforms. In some Emerging Market Economies (EMEs), policy-makers have--in my view, wisely--built up foreign exchange reserves as self- insurance against the possible effects of reversal of capital flows. Rather than fault them, we should reflect on the inadequacy of the existing international financial architecture in providing a viable collective insurance to well-managed economies. Steps to scale up assistance to developing countries should remain high on the agenda for achieving the Millennium Development Goals (MDGs). Two years after Monterrey, the implementation of the Com- pact appears uncertain. The promised additionality of resources has failed to materialize. Without additional resources, the MDGs will remain a distant dream. Even the best performers among developing countries may not realize the dream. I should also point out, with some regret, that when concessional resources are allocated, that appears to be done on considerations other than the twin criteria of `need' and `performance.' When a country is prepared to commit its own resources towards MDGs, and has a proven record of performance, the developed countries must keep their part of the compact. Aid continues to be delivered in a piecemeal, uncertain and inequitable manner rather than through multilaterals with transparent allocation criteria. We are pleased to note that the Bank and the Fund have put donor coordination and harmonization high on their agenda and we hope they will sustain and further enhance their efforts to make the promised levels of additionality in Overseas Development Assis- tance (ODA) a reality. The negotiations for IDA's fourteenth replenish- ment are well underway. The time for the donor countries to deliver on their Monterrey commitment for a substantial scale up in ODA is now. 78 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 79 The International Financial Institutions (IFIs) have had a very posi- tive influence in creating an appropriate international environment for multilateral trade negotiations. Enhanced trade has the potential to yield over $325 billion in additional resources by the year 2015. The global trade agenda calls for renewed vigor on the part of the Bank and the Fund to strengthen their advocacy role to phase out protectionist policies in developed countries. Negative net flows from the Bank in recent years continue to be a matter of deep concern. Against this backdrop, the recent initiatives to modernize and simplify procedures and reduce (non-financial) costs of doing business are welcome. More needs to be done, especially more initiatives to check the rising trend in administrative costs, reduce bor- rowing charges and rationalize the safeguard compliance framework. I wish to make a special mention of the need to step up--in a big way--lending to infrastructure. Middle income countries have the human and physical resources to raise their people from poverty. They have been the Bank's best customers so far. What they lack is infra- structure that can make them efficient and competitive. Your best cus- tomers ask the Bank to lend a helping hand to create this world-class infrastructure. Many of the world's lowest-income countries are faced with acute debt-distress. This makes allocation of resources difficult. Therefore, recently, the Bank and the Fund have been rightly preoccupied with devising an ex-ante framework to assess sustainability of the debt sit- uation in low-income countries, and helping borrowers, lenders and the IFIs take informed decisions. Assisting such countries without adding further to their debt burden, and at the same time, avoiding the moral hazard implicit in lending and forgiving, are extremely del- icate exercises. We wish the IFIs and the IDA well in carrying out these crucial tasks. Lack of effective voice in the functioning of the IFIs remains a matter of deep concern for the developing and transition countries. At Monterrey, we heard positive assertions by world leaders but, so far, we have not found sufficient political resolve to address the structural inconsistency that lies at the root of this lack of voice. The allocation of quotas at the Fund and the pattern of shareholding at the Bank have ceased to reflect the economic realities of the day. The search for a greater voice for developing countries must begin with a review of the quota allocation formula. Without the necessary resolve to move in this direction, the voice issue will continue to remain a mere distraction from the core business of the IFIs. Eighty percent of the people who inhabit the earth enjoy a mere 20 per cent of the global income. That is the cause of poverty, discrimina- tion and injustice. We must ensure that all parts of the global compact 79 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 80 agreed at Monterrey are in place by the time we meet next year. And if we do that, it will still leave us just about a decade to realize our dream of Millennium Development Goals. INDONESIA: BOEDIONO Governor of the Bank Allow me to use my time today on three topics. First our view on the evolving international economic situation, some comments on the situa- tion in Indonesia and finally on policy direction at the IMF and World Bank. We are pleased that global recovery in 2004 remains solid and is becoming increasingly broad based. So far, Indonesia has benefited from this growth and we would like to build on strengthening world economic foundations. However, we fear the balance of risks may be tipping toward external shocks. The world recovery and our own face increased risks from geopolitical events, high oil prices, and persistent global imbalances. We urge the international community to address these common risks. For Indonesia 2004 has been an eventful year. Last week brought to a peaceful conclusion a series of three nationwide elections that began in April, marking a significant step for the country toward a full-fledged democracy. We now have our first directly elected President and there is a tangible air of excitement as new and stronger executive and legisla- tive branches take office. On the economic front, we have had a strong performance as we exit from the IMF program. You might recall that among countries in the region, Indonesia was hit by the last crisis hardest and longest. That was the worst financial crisis the present generation can remember. The sit- uation was much aggravated by the occurrence of the most severe drought in many decades and a massive social and political upheaval. Perseverance and consistency in macroeconomic policy and financial sector reform in the past few years have eventually led to the return of economic stability and economic recovery. The balance sheets for cor- porations, financial institutions and households have improved consid- erably since the crisis and have underpinned the recovery. Economic growth has edged up steadily--from 1.3% during the crisis year of 1998 to around 5% this year and around 5.5% next year. The financial sector, which had been shattered by the crisis, has undergone a fundamental restructuring and the process will continue. The last of the banks taken over during the crisis is now being sold. Bank lending is increasing robustly and more loans are going to indus- try and there is more regional dispersion in lending. A new Deposit Insurance Law has been passed and the institution is now being estab- 80 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 81 lished. Finally, bond and stock markets have rebounded spectacularly, providing an increased source of government and corporate financing. The transition from the present government to the new government this month is widely expected to be smooth. The Parliament has just passed the budget for 2005 that sets the stage for the continuation of the prudent macroeconomic policy. Next year the budget deficit is pro- jected to be less than 1% of GDP and the debt to GDP ratio to fall below 50%. Only 3 years ago our debt stood at almost 100% of our GDP. The 2005 budget also projects acceleration in growth, moderation in inflation and stable domestic interest rates. The government has delivered on a broad set of reform measures promised in the "White Paper" as part of our exit strategy from the IMF program. In the finance area I would note with special satisfaction the passage of 3 basic laws: the State Finance, Treasury and Audit laws. These laws along with a major reorganization at the Ministry of Finance should improve significantly the quality of our fiscal policy operations and raise the overall standard of governance in public finances. We have also just passed an amendment on the Bankruptcy law that requires Ministry of Finance approval to bring insurance and other non-bank finance companies to court for bankruptcy. There have also been revi- sions to the laws governing regional autonomy to reinforce fiscal equal- ization and require prudent borrowing. The next government seems equally committed to continuing, even accelerating, the reform agenda. Let me switch to my final topic that is the policy direction at the World Bank and IMF. But first let me wish the Breton Woods institu- tions a happy 60th birthday. This is an important moment for all of us to reaffirm our commitment to building better and more prosperous global communities. Faced with the dynamic risks and opportunities of globalization, the Fund has rightly concentrated on strengthening crisis prevention and resolution. At the World Bank, the shift in emphasis from Adjustment to Devel- opment Policy Lending is also positive. Lending addressed to structural and institutional change matches Indonesian government priorities. Increased flexibility, greater program ownership and stronger links to the budget cycle are also attractive features. However, more is needed if we are going to reach our MDGs. Thus we welcome the innovative thinking behind the International Financing Facility and global taxation. Let me close with a few words about the recent bombing in Jakarta. First, the government, police and security agencies are resolved to track down, apprehend and prosecute all those involved. There is already some early progress in the investigation. Terrorism cannot be allowed to succeed. Indonesia stands ready to actively participate in the international effort to combat terrorism. Second, the economic and 81 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 82 political resilience after the bombing reflected well on Indonesia's improved fundamentals. All in all 2004 has seen further progress in our recovery. A positive election outcome should accelerate the recovery and allow us to push ahead with renewed vigor on our reform agenda. IRAN: SEYD SAFDAR HOSSEINI Governor of the Bank At the outset, I would like to welcome and congratulate Mr. de Rato for accepting to lead the International Monetary Fund in this sensitive juncture in the world international financial and economic system. I also wish to express my gratitude and deepest appreciation to this august Board for giving me the opportunity to deliver my approaches on some of the basic and fundamental economic issues and concerns which will have a continuous effect on the world development. The IMF has estimated the world economic growth at around 4.9 percent for 2004. This considerable growth in the World Gross Domestic Product--which is the highest in the past three decades-- is with no doubt evidence to economic improvement in most of the developing countries. In spite of the high average GDP growth rate in the world and the regulatory performance and reforms in most of the developing countries, the poor nations that desperately need new enter- prises and job opportunities, are falling even further behind the devel- oped countries that are simplifying regulations and making their investment climate more attractive and friendly. The heavy business regulation in most of the developing countries, especially in the African region, conspire to exclude the poor from joining the formal economy. Therefore, the World Bank Group--as a leading organization in assist- ing the poverty alleviation in the developing countries--should put more emphasis on helping these countries to enact macroeconomic, structural and social policies and program, as well as providing them with associated external financing needs, in order to promote growth and reduce poverty. Fortunately, the World Bank has introduced the new Development Policy Lending, which pays a special attention to governments' ownership of reforms, in order to develop programs that are in compliance with their needs and thus abandoning the prescriptive character of the Bank's old policy. Reducing poverty through sustainable development is a crucial global strategic priority for today's world. This is actually emphasizing on and in compliance with the comprehensive nature of development in the developing countries, and could be achieved through project imple- mentation in collaboration with the public and private sectors. In other words, participation promotion, strengthening the institutions and 82 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 83 NGOs, and concentrating on the poor, in general, and the rural poor, in particular, are necessities to sustained and effective economic growth in developing counties. The World Bank Institute is expected to play an important role in this regard, along focus on good governance and anti- corruption policy as key criteria in the mission of poverty alleviation. The institution could also assist member countries in improving gover- nance and controlling corruption as well as taking benefit from its funded projects as a pilot plant to practice anti-corruption activities that could be utilized and applied by the member countries in a larger scale. No doubt that some external variables have deviated the develop- ment equations in developing countries. Recent military expeditions, especially in the Middle East, have negative impact on the free flow of capital in the region. The consequences of these expeditions, such as civil war, insecurity and disorder, as well as some psychosis and instabil- ity, have caused a lot of infrastructure damage and have resulted in extra costs in the international capital flow to the region. Another important factor, which serves and accelerates the eco- nomic growth in developing countries, is promoting and developing the private sector. Developments in this sector provides opportunities for the poor through a friendly competitive market, enterprise-led growth, and better and cheaper services through efficient delivery systems and smart and targeted subsidies. In this regard, the role of the World Bank, in general, and of IFC and MIGA, in particular, is distinguished. As we are all aware of the difference between unique corporate characteristic of developing countries and the structure and corporate governance standards of the developed countries, there is no need to mention that this task cannot be fulfilled unless the public sector institutions are restructured in a way that could turn them into more efficient and accountable public sector entities. We have continuously expressed our concerns and have urged the serious presence of these two important entities of the World Bank Group; however, it seems that there are still some hesitation and unex- pected delay in their approaches toward contribution in some countries, including mine. Therefore, once again, I reiterate the importance of the IFC and MIGA active interaction with the Iranian entrepreneurs and in developing eligible private sector entities. Knowledge-based economy (KBE) is now recognized as the driver of productivity and economic growth. As a result, there is an increasing focus on the role of information, technology, and learning in economic performance and activities. In this transitional phase, the most impor- tant concern of the developing countries should be understanding the dynamics of the KBE and its relationship to traditional economics. Applying a new range of skills and continuously adapting it is key to learning economy and effects employment, and is a reminder to all gov- 83 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 84 ernments of developing countries of their outstanding duty to develop and maintain the knowledge base and learning in their economies. The Islamic Republic of Iran has pursued the economic reform strategies in the framework of the country' Development Plans. In this regard, a package of economic reform policies concentrating on economic liberalization in financial and commercial sectors was designed and enacted through the Third Development Plan. Restruc- turing and strengthening the banking system, promoting the capital market, and reducing the qualitative and quantitative supervision and monitoring policies have been considered and implemented in the same line. Greater transparency in the macroeconomic regime and required regulatory frameworks, budget reforms, tax reforms, unification of for- eign exchange rate, downsizing the government's role in economic activities through privatization of SOEs, dismantling of monopolies and promoting competitive structures, reducing of non-tariff trade barriers, adopting smart targeted subsidies, developing an effective social secu- rity system, attracting foreign investments and protecting private sector investments, establishing private commercial banks as the facilitator for privatization of the state-owned banks are indicators serious commit- ment of the Islamic Republic of Iran in fulfilling and implementing the structural economic reforms. In light of these employed programs and reforms, along with the efficient management contributed to these strategies, an average eco- nomic growth of 5.5 percent in the first four years of the Third Devel- opment Plan was achieved, and a 7.4 percent growth was experienced in the year before. At the same time, Iran witnessed almost 100 percent growth in the country's non-oil exports and a total amount of US$7 bil- lion foreign investment for manufacturing activities and infrastructure projects. It should also be noted that the total value of transactions in the capital market indicates a 73 percent growth during the same period, which, altogether, have resulted in satisfactory growth in the country's economy throughout the Third Development Plan. In conclusion, it is highly expected that the world economy, in gen- eral, and developing countries, in particular, will benefit from the achievements of this fruitful meeting. IRELAND: JOHN HURLEY Alternate Governor of the Fund When these institutions were founded sixty years ago, most of Europe was in ruins. Industry and infrastructure were shattered after a long and intense conflict. Many were cold, or were hungry, and they feared for the future. 84 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 85 The newsreels of that bleak time seem to show a wholly different world from the Europe of today, yet it is only a generation ago. It seems hard to credit this now, as we look out at the success story of economic and political reconstruction that is the Europe of today. Twenty-five states, including some that were once bitter enemies, are now united in the European Union, since May of this year. It was a particular pleasure for Ireland to hold the EU presidency on that day that we became a Union of twenty-five. Experience has shown that the added impetus of the accession of the new states will help give a new momentum to the economy of Europe, which will be to the bene- fit of all. In contrast to that divided and damaged continent, we now see a Europe of wealth, a Europe of strong democratic values and with active social and aid programmes aimed at countering the problem of poverty. While not paradise and with many problems remaining, we see a Europe that has moved very far on from being a recipient of aid under the terms of the Marshall Plan, that generous and farseeing gesture by the United States to aid postwar recovery and reconstruction. Europe is itself now the largest donor of overseas aid in the world and it has a strong commitment to the expansion of overseas development aid that was agreed as necessary by all at Monterrey. It is generally accepted that a doubling of official development assis- tance (ODA) flows from their 2001 levels is the minimum required to achieve the Millennium Development Goals (MDGs) by 2015. It is also recognized that meeting these goals will merely deal with some of the symptoms of underdevelopment in poorer states. Additional financing will be required to allow for debt sustainability and create the stable conditions needed for growth. It is good to see that the issue of debt sus- tainability, which we constantly raise in this and other fora, is continuing to get attention. In Europe we have passed from aid recipient to aid donor. An EU aid target of 0.39% of GNI in 2006 was agreed at Barcelona. Ireland's own strong ODA commitment already exceeds that level and, on cur- rent trends, the 25 EU Member States could collectively easily exceed the agreed 0.39%, giving a very significant pool of new aid money to bear on the problems we need to address. It is not yet enough finance to meet the Millennium Development Goals but it is a lot more than was on offer before. European countries have more to do in relation to development aid, as do some of the larger industrialized nations. We must continually review our performance in assisting less developed countries, in the light of the enormous chal- lenges facing many countries and peoples. It is indispensable that, in the future discussions on the IDA 14 replenishment, account is taken of the overall needs of the poorest 85 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 86 countries, as we agreed to do in setting the MDGs. Neither can we agree to accelerate the outflows from IDA, as some would have us do, without asking all countries to put in their fair share of the IDA replen- ishment burden. Water is one of the most basic human requirements for life. We know that almost 4,000 children die each day and many millions are infested with roundworms or whipworms because of poor hygiene. A clean water supply, and the associated sanitation, are some of the most basic requirements for any society to be healthy and thrive. The provi- sion of even very basic facilities would have a significant impact on dis- ease resulting from poor hygiene. Sub-Saharan Africa is far behind the rest of the developing world in access to clean water. A large proportion of the population still relies on unsafe sources of drinking water, such as ponds and rivers. In nearly half the households of rural Africa, women and girls devote a significant part of each day to fetching water. While progress has been made over the past decade, governments need to redouble their efforts in striving to meet the UN goal of providing 75% of the population with safe drinking water by 2015. As we mark this annual meeting, in our birthday year, can we take from Europe messages that can be replicated in places where hunger, fear, cold and grinding poverty are worse than those that citizens of Europe faced in 1946? While Europe has essentially reconstructed itself, with good gover- nance and sound economic policies as the central planks of economic and social reconstruction, we need not be shy to give thanks for the favorable trade conditions and support from others that helped to rebuild our Continent. We did not do it alone or without help. Neither can others. The governance and economic policy issues they will have to address mainly on their own, but with some support from us. Initiatives to build capacity in developing countries deserve our full support. As Gerrit Zalm said, on behalf of the EU, sound fiscal policies have a central role to play in all major zones and in all countries. The trade and aid issues are ones we must address. All countries, including the EU, must now maintain the commitment and flexibility they have shown so far in advancing the Doha Develop- ment Agenda Framework Agreement. An agreement is almost within our grasp and we must not let it slip away. While we all wish to focus the Bank and the Fund resources at the cutting edge, in the poorest places and on the most necessary tasks, there is a very high level of concentration of IMF credit currently extended to certain borrowers, some of whom are repeat customers, if not necessar- ily satisfied ones. To mitigate this exposure, it is critical that greater pri- 86 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 87 ority should be given to the implementation of already-agreed Fund policies, most notably to the exceptional access framework. We must also accept that the Bretton Woods institutions have an image problem. Criticism often comes from people who actually have an insufficient understanding of the work of the IMF and World Bank. In that context the move to greater transparency within the BWIs and a further emphasis on media relations is needed. We commend the efforts of the senior management of the Bank and the Fund to engage with civil society in programme countries in particular. ISRAEL: BENJAMIN NETANYAHU Governor of the Fund Reform Is the Only Choice It is said that we live in a world full of choices. Whether we are walk- ing into a supermarket, clicking our television remotes, or surfing the internet, the range of options available to consumers seems almost infi- nite. For investors, the choices are no less abundant. With the press of a button, billions of dollars in capital can be moved across the globe, and with the ability to ship goods at a pace scarcely imaginable a few decades ago, plants and even whole industries can be transferred to the country that offers the most business-friendly environment. Yet because consumers and investors have more choices, govern- ments have fewer. More choices means more competition, and more competition means that governments, regardless of their political and ideological composition, must enact policies that will enable their national economies to compete in an increasingly uncompromising and unforgiving global marketplace. Economies that do not provide a good investment climate will lose investors to economies that do. And economies that fail to unleash the creative potential of their workforce will see their best and brightest flock to economies that can. The formula for economic success in the global marketplace is clear: Lower taxes, reduce government spending, streamline bureaucracy, invest in infrastructure and de-monopolize industry. Enacting these reforms demands political courage. Leaders can try to delay reform in the hope of avoiding unpopular decisions. But what may be politically prudent for the individual leader proves disastrous for his or her nation. When the reforms that enable a country to share in the enormous prosperity generated by globalization are delayed, that country falls further and further behind, becoming even less fit to compete. Eventually, the costs of procrastination are painfully felt, as thwarting the slide into relative poverty necessitates even more drastic measures. Indeed, the question is not whether a given economy will reform, but when and at what price. 87 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 88 Israel's government has decided not to wait. We have already dras- tically cut government spending. Just two years ago, that spending accounted for nearly 56% of our GNP. Today, it accounts for less than 52%. These cuts were designed to streamline the bureaucracy, decrease the dependency on welfare and provided incentives to enter the workforce--and they have worked. While unemployment remains high, more Israelis are entering the workforce than ever before as tens of thousands of jobs are created in the private sector. Our government con- siders this an enormous achievement because, as has been well docu- mented, the best way to fight poverty is to provide jobs to poor parents. No less important, for the first time in Israel's history, tax burdens are being reduced. Income taxes on the middle class have been cut, a regressive value added tax (VAT) has been rolled back and sky-high taxes on imported consumer durables have been slashed. Just as tax cut- ting has proven an effective engine for economic growth in countries across the world, it has proven the same in Israel. In little more than a year, the current Israeli government has taken a shrinking economy and placed it on a path that is expected to yield 4% growth this year and even more in the years ahead. In addition to our reverse tax and spend policies, we have embarked on an ambitious program of privatization that includes our national air- line, banks, ports, refineries, the state's sole electricity provider and others. We are also pouring money into infrastructure, creating a high- speed rail line that will link every city with a population of over 50,000 people and which along with a new highway that runs down the spine of the country will revolutionize Israel's transportation system. Most important of all has been the reform of our state-funded pen- sion system. Within a few years, at best a couple of decades, most indus- trialized countries will face the prospect of not being able to provide pensions for their rapidly aging populations. Rather than place its head in the sand as so many other governments have done, Israel's govern- ment has taken the politically unpopular steps that are necessary to address this problem: We have gradually raised the retirement age of both men and women and increased workers' contributions to the funds. The benefits Israel has gained by embracing reform are already evi- dent. Growth has returned, the stock market is skyrocketing and the rise in unemployment has been checked. Israel's success is easily replic- able in countries that courageously embrace reform. The more rigorously that international donor institutions and coun- tries link aid to reform the better. The greater the incentive for reform, the sooner indebted nations will be able to repay their loans and lift them out of poverty. Israel, which has never defaulted on a loan, knows that reform can be a difficult road. But it is the only road that leads to a prosperous future. 88 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 89 In the last half-century, the economic efforts of national govern- ments were largely directed at providing various forms of state benefits to citizens. The primary economic challenge facing governments during the next half-century will be directed at reducing the scale of those ben- efits so that their economies can compete in the 21st century market- place. Israel is proving that it is up to the challenge. ITALY: DOMENICO SINISCALCO Governor of the Fund The Global Outlook The Annual Meetings of the IMF and the World Bank are taking place this year in a context of unprecedented global economic growth. The world is not only growing at a rapid pace but the recovery is broadly based. Some areas and countries, like China and India, which have success- fully joined the process of trade globalisation, are continuing to expand at considerable rates. Sub-Saharan Africa, the poorest region in the world, is expected to grow by 4.7 percentage points in 2004, and by 5.6 over the next year. In the industrialised world, Europe is the only region experiencing difficulties in taking full advantage of the international recovery. Persis- tent structural rigidities and delays in implementing the Lisbon reform agenda are hindering potential growth. The growth momentum would benefit from progress in the WTO negotiations that have recently been given a fresh impetus. Despite the favourable outlook, global imbalances are showing little sign of adjustment as markets continue to finance such imbalances. Oil prices remain high and extremely volatile due to persistent oil market exposure to shocks. In addition to these global risks, several emerging market economies remain vulnerable to further interest rate increases given the still very high level of debt and the persistence of currency and maturity mismatches. Crisis Prevention and Surveillance Even in a favourable environment, the Fund continues to play an essential role in identifying and monitoring vulnerabilities. Surveil- lance is a crucial element in the Fund's work on crisis prevention. Sig- nificant progress has been achieved over recent years, but more still needs to be done. We urge the full implementation of the framework for assessing debt sustainability. Debt Sustainability Analysis (DSA) must become a 89 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 90 common feature of all Article IV consultations. The Fund should undertake DSA independently of lending decisions. This may require organizational changes in the Fund's departments. Analyzing exchange rate regimes remains a central task for Fund surveillance. A better identification of the linkages between the exchange rate and the country's policy requirements would strengthen the Fund's advice on exchange rate issues. We welcome the growing emphasis on the regional aspects of sur- veillance, in order to take into account the global impact of the eco- nomic conditions and policies of the systemically important Fund members. The Fund should continue to work to improve the framework for crisis management and resolution. The procedures for exceptional access should be fully implemented. These procedures will help prevent debtor countries and market participants from placing excessive reliance on the financial support provided by the IMF. For countries benefiting from IMF financial assistance, the defini- tion of sound exit strategies from IMF programs is essential to avoid the prolonged use of the Fund's resources. This includes better program design, macroeconomic and structural conditions to achieve debt sus- tainability, more effective conditionality and a careful consideration of the timing to regain market access. The Role of the Fund in Low-Income Countries The Fund has a key role in helping Low-Income Countries achieve the Millennium Development Goals, by providing policy advice, techni- cal assistance and temporary balance of payments concessional support. Surveillance needs to be tailored more effectively to the specifics of low-income countries, by looking into how a country's policies relate in the broader context of the MDGs and which corrective actions--if any--should be taken in that setting. The new framework for debt sustainability in low-income countries, which takes into account the degree of institutional strength, should provide additional information on the capabilities of countries to carry on additional debt while ensuring that additional resources are not allowed to endanger medium term sustainability. It should therefore guide a country's authorities in defining policies, and inform the deci- sions of multilateral and bilateral donors. Bank-Fund collaboration in this area is necessary. Debt sustainabil- ity assessment for Low-Income countries should be the result of a col- laborative effort between the two Bretton Woods Institutions. Without this, there is a risk of sending out confusing signals to the international community on the macroeconomic viability of a member country. 90 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 91 In the next few months important decisions should be taken concern- ing the future of the Poverty Reduction and Growth Facility (PRGF). After 2005, the resources available for the PRGF might prove inadequate to satisfy the expected demand without bilateral additional financing. The Fund should explore the option of an additional bilateral contribu- tion from member countries in order to preserve its concessional lending capacity while allowing for more selectivity in PRGF loans. At the same time, we must work together to help countries that are moving from concessional financial assistance to a surveillance-based rela- tionship with the Fund; low access PRGF and precautionary PRGF may serve this purpose. However, more work is needed to design a precaution- ary PRGF and to assess the potential demand for this new instrument. We support Policy Monitoring Arrangements (PMA) as a means of addressing the demand of countries which are pursuing sound policies and can benefit from stronger IMF signals to markets or donors, while not requiring Fund financing. PMA should have the same standards as a borrowing program and entail the same level of conditionality and involvement of the IMF Board. The Fund needs to be engaged in a constant dialogue with other development partners. In this respect, it could leverage upon its catalytic function and help mobilize additional aid flows for low-income countries. We welcome progress with the HIPC Initiative. Since last September six more countries have reached completion point, bringing the total to 14 countries. So far, the Initiative has been able to provide substantial debt relief to countries that have reached the decision or completion points. While debt servicing continues to decline, social expenditure is growing and now accounts for almost one half of government revenues. Thanks to the recent extension of the sunset clause, the remaining countries will also be able to join the Initiative. However, the recent deteriorating trend in the debt dynamics of many post-completion point countries is worrying. Vulnerabilities in these countries' debt structure should be closely monitored, also by using the new framework for debt sustainability in low-income countries. Debt relief should be granted on the basis of a country-specific debt sustainability analysis. Any deviation from this principle is likely to sig- nify a failure of the HIPC Initiative itself. Indeed, any proposal to cancel 100 per cent debt of all the HIPCs, would imply a relaxation of the HIPC criteria which, as we all know, are intended to prevent avoid the risks of creating disincentives and morally hazardous behavior. We call on all the remaining creditors that have still not done so to join the Initiative and provide debt relief under the agreed terms. More can be done to ensure that all creditors are on board. The IMF and the World Bank can play a more active role in persuading all creditors to participate in this Initiative. 91 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 92 More resources are needed to achieve the MDGs. Since the Monter- rey Conference some progress has been made. The EU countries are on the right track to fully deliver on their commitment to achieve 0.39 per- cent of GNI by 2006. We remain committed to defining national mecha- nisms and instruments, also in collaboration with the private sector, to raise additional resources for development. However, aid effectiveness requires strong absorptive capacity in receiving countries. The effective deployment of resources toward the MDGs, therefore, requires mapping specific absorptive capacity con- straints against the identification of MDG-related priority areas. This analysis should take place on a country-by-country basis in the context of the existing processes. The Fund should play a greater role in the context of Art. IV consultations in addressing the constraints that undermine a timely and efficient use of additional resources. We welcome the technical work of the Fund and the Bank on some options for financing the MDG agenda, such as the IFF and global taxa- tion. At present, Italy is not in a position to adhere to the Facility because of its legislative, accounting and budgetary rules and procedures. Never- theless, we can support the setting up of the IFF on a voluntary basis. In our view, additional analysis for other preferences is needed, such as the use of incentives to attract remittances to development-oriented programs or mechanisms to involve the private sector in voluntary aid schemes. Low-income countries should have appropriate voice in the Fund and in the Bank. With respect to representation, we are open to consider efforts to align the voting power of member countries more closely with their current economic status, and to explore the feasibility of other measures, provided a broad consensus could be reached. A more effec- tive voice is first of all assured by effective participation of LIC to Board activities and deliberation. Recent decisions to strengthen such capacity go in the right direction. And further initiatives should be pursued. JAMAICA: OMAR LLOYD DAVIES Governor of the Bank and the Fund (on behalf of CARICOM) It is a great honor for me to speak on behalf of the Member States of the Caribbean Community (CARICOM). Our delegations would like to express appreciation to the management and staff of the Fund and Bank as well as the Government of the United States of America, for the arrangements made for these meetings. I wish to focus on an issue which is of greatest importance to the mem- bers of the Caribbean Constituency at this time that is the role of our insti- tutions in responding to external shocks to our small island economies. In particular, I refer to the devastation caused by natural disasters. 92 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 93 Economic globalization has brought challenges and opportunities to the small states of the Caribbean. Within recent weeks, the challenges facing the small states in the Caribbean have taken on new proportions in the wake of the recent spate of hurricanes which have passed through the Caribbean. In the Bahamas, Barbados, Grenada, Haiti, St. Vincent and the Grenadines and my own country Jamaica, the loss of life and the scale of destruction and damage to infrastructure and property have been catastrophic. Trinidad and Tobago and St. Lucia were also affected, but to a lesser the extent. In the case of Grenada, the economy was completely ravaged, with estimates of damage being approximately 150% of Gross Domestic Product (GDP). The agricultural sector was completely wiped out. Approximately, eighty percent (80%) of the housing stock was virtually demolished. Hurricane Jeanne has further aggravated the tremendous problems in Haiti, where over 1,300 persons died from the onslaught. Due to the severity of the damage sustained, these two countries, in par- ticular, need urgent and sustained assistance, and I urge the interna- tional community to respond generously. External shocks such as natural disasters are, of course, not unique to the region, but their impact on small island states is exceptional. Given the size of these islands, and less diversified economies, a hurricane, can within the space of a few hours obliterate the entire economic base. In the past, losses from hurricanes in the Caribbean have exceeded the annual GDP of some countries. Even where the devastation is not as widespread, as in the case of Jamaica, the impact is felt throughout the entire economy, particularly through the effect on government revenues, as well as damage to infrastructure, and major economic sectors. The capacity of the State to respond is constrained as the resources required for rebuilding cannot be accommodated through the usual expenditure budget. Therefore ways to address the immediate and long-term needs must be developed. In the aftermath of recent hurricane, regional members have banded together to provide assistance in cash and kind and technical assistance. Assistance has also been provided even by countries which themselves have been affected. But the requirements for rebuilding are well beyond the region's capacity to deliver. The logical question which arises is the appropriateness of the pres- ent means of response by the international financial community to these disasters. It is quite obvious that the response has to be multifaceted with an immediate, medium-term and long-term reconstruction objec- tive. In this regard, what is the appropriate role for the Bank and the Fund in these situations? The immediate response of the IFI's is usually constrained by the nature of their Emergency Reconstruction Facilities which focus on the medium to long term. This is the major area of weakness at present. 93 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 94 There is need for a facility which would enable the institutions to respond quickly to meet the immediate needs in a post-disaster situa- tion. We suggest the creation of a facility which would give the Bank the flexibility to respond swiftly, particularly in mitigating the impact on the poor, with few bureaucratic constraints. Concessional financing must be part of the resource mix available to finance recovery. The region continues to view with disbelief, the deci- sion to exclude IDA-blend borrowers from access to the grant facility for disaster recovery which was created during the 13th replenishment negotiations of the International Development Agency (IDA). This sit- uation needs to be corrected, given the vulnerability of these countries to natural disasters. The normal approach to a post-disaster scenario by the Bank is the diversion of financing from ongoing projects in order to finance recov- ery and the reconstruction efforts. While this is an option which might be appropriate in the short run, where time is of the essence, additional resources must be provided for the medium to long-term reconstruc- tion. Therefore, the usual lending ceilings must be removed in order to respond to the devastation in a meaningful way. Furthermore, members of the Constituency, who might not normally borrow from the Bank, should be granted access to resources to finance the rebuilding of physical infrastructure, hospitals and schools. Quick disbursing loan funds are needed, with several years' morato- rium to ease fiscal and balance of payments pressures. Quick disbursing loans in this context imply a maximum of say two months from a formal application to disbursement. We also suggest the creation of a funding mechanism to provide grant funding to ensure debt sustainability, as for some time revenues to the government will be adversely affected by a downturn in economic activity. Where loans already exist there needs to be a moratorium on both principal and interest payments. Disaster management is a long term development issue, and there is need to focus on mitigation, prevention and the reduction of vulnerability of the poor to these occurrences. There is also a clear need to develop some sort of insurance mechanism to deal with the problem. When one considers the damage sustained by our economies through natural disasters, it clearly implies that: · Greater urgency is needed to implement the recommendations of the Barbados Program of Action on the Sustainable Development of Small Island Developing States · Achieving the Millennium Development Goals (MDGs) will be adversely affected in several countries of the region; and 94 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 95 · There should be a speedy implementation of the Monterrey Consen- sus to release additional resources to developing countries. We also urge the Bank and Fund to continue to support CARTAC as it has been a key player in providing technical assistance to countries of our region. The region, as usual, is prepared to work with our international financial institutions to improve the welfare of their people and would urge the IFIs and in particular the Fund to have closer policy dialogue with countries outside of the traditional lending relationship and within the Fund's surveillance activity. Within this context, we wish to com- mend the Fund for its flexibility in agreeing with an "intensified surveil- lance program" with Jamaica. This paves the way for other countries wishing to have a non-borrowing relationship with the Fund, but with the Fund oversight of its macro-economic programme. JAPAN: SADAKAZU TANIGAKI Governor of the Bank and the Fund Introduction I am pleased to take this opportunity today to address the IMF- World Bank Annual Meetings as Governor for Japan. At the outset, I would like to extend my heartfelt welcome to Mr. de Rato, who is attending his first Annual Meetings since assuming the position of the Managing Director of the IMF. I trust that Mr. de Rato will provide strong leadership in guiding the IMF to play a constant cru- cial role in the stability and growth of the world economy, in close coop- eration with its member countries. Global Economy and Financial Markets-- Outlook, Risks, and Policy Responses World Economy I welcome the continued recovery of the global economy at a faster pace and with more strength than expected, as more and more national economies become increasingly interrelated amid the evolving trend of globalization. The current global recovery, initially driven by the United States and Asian countries, notably China, has now broadened its horizon to almost worldwide to include Latin America, the Middle East, Africa, 95 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 96 and now Europe. It is hoped that the momentum of this recovery will continue. While welcoming these developments, risks for the outlook remain. In addition to lingering geopolitical risks, uncertainties about the prospects for and the effects of rising oil prices, inflationary pressures, and the pace of rising interest rates clearly warrant continued vigilance. Against this backdrop, it is essential for each country to take advantage of the current favorable environment and to continue with a strong commitment their efforts to reduce remaining vulnerabilities, including structural reforms, so as to achieve sustainable growth. The major challenges facing advanced economies are to pursue medium-term fiscal consolidation and social security reforms, and to implement structural reforms to increase the flexibility of the economy, against the backdrop of an increasingly aging population. In emerging market economies, it is important to strengthen their resilience to shocks and to cement market confidence by continuing to implement structural reforms, including on the fiscal front, and to improve their financial and capital markets. With respect to Argentina, where the debt restructuring process is under way, I hope that the authorities will, following good-faith negotiations, reach agreement with external credi- tors on a comprehensive debt restructuring, thereby restoring the confi- dence of international markets. Asian Economy Owing to buoyant trade and investment, the Asian economy as a whole is projected to grow by 7.6 percent in 2004, higher than the world average. I applaud the fact that Asian countries have recovered success- fully from the economic crises in the late 1990s and continue to increase their significance in the global economy. However, some concern has been expressed that increased capital inflows could induce overheating, which begs our attention because of the increasing impact of the Asian economy on the global economy. Meanwhile, appropriately sequenced liberalization of capital transactions and a move to an exchange rate regime with greater flexibility would contribute to stable economic growth in the long term. In addition, regional cooperation in East Asia has made progress centering on trade, and the move to conclude free trade agreements (FTAs) has now gained considerable momentum as in other regions. Concurrently, East Asian countries have recently been promoting their cooperation on the monetary and financial fronts, as evidenced by active regional policy dialogues, establishing a network of financing arrangements among countries to provide short-term liquidity on demand, and nurturing efficient and liquid bond markets. All of these 96 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 97 regional initiatives complementing the international trade, monetary, and financial systems, are open to the outside world, and Japan is actively contributing to these initiatives. Japanese Economy The Japanese government has made every effort to overcome pro- longed deflation and revitalize the economy through reforms in the financial sector, as well as in regulatory, expenditure, and tax policies, and these efforts are gradually paying off. The impact of the improved profit situation in the corporate sector has increased business invest- ments and has permeated the household sector through better labor market conditions and buoyant private consumption. The economic recovery led by domestic private demand is expected to continue. Our government views the current recovery as a good opportunity to make further strides in structural reforms, which would lead to sus- tainable economic growth. We will pursue and accelerate vigorously structural reform efforts aimed at prompt resolution of major banks' nonperforming loan problems, a comprehensive review of the social security system, reform of the fiscal relationship between central and local governments, and privatization of the postal service. On fiscal policy, we are implementing fiscal consolidation, aiming at achieving a primary surplus in the early 2010s. Given the expected expenditure increase stemming from acceleration of the aging popula- tion, this reform should be well balanced, giving due consideration to both the expenditure and revenue fronts. Regarding monetary policy, the Bank of Japan (BoJ) continues to provide ample liquidity under its commitment to maintain the current quantitative easing framework until the year-on-year change in the con- sumer price index registers zero percent or higher on a sustainable basis. This aggressive monetary easing has given further impetus to pri- vate investment and expenditure as economic recovery unfolds. To sup- port the private sector's efforts to move forward, the BoJ will maintain the current accommodative monetary conditions. While persistent deflationary pressure has eased, overcoming defla- tion remains high on the policy agenda. Therefore, the government and the BoJ will continue to join together to ensure overcoming deflation during FY2005 and FY2006, periods defined as the "Concentrated Con- solidation Period." IMF Surveillance and Crisis Prevention and Resolution While ensuring international financial stability and preventing crises first call for countries' efforts to strengthen their policies and institutions 97 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 98 with a view to reducing external vulnerabilities, IMF surveillance is expected to play an even more important role against the backdrop of increased interdependence among countries and a vast increase in inter- national capital flows amid globalization. In this regard, I welcome the progress made by the IMF, including refinement of the framework for debt sustainability analysis and strengthened analysis of the financial sector. Overall, I believe that the current surveillance framework, includ- ing its organizational structure, is effective, and that the next step for the IMF at this stage should be to steadily implement measures to strengthen the existing framework. The Policy Monitoring Arrangement (PMA), which was recently discussed at the IMF Board, could be worth considering as an instru- ment to serve the member countries, if any, that have no need for IMF resources but that seek close IMF engagement in promoting sound economic policies, or to obtain the IMF's external signaling on the strength of these policies. I expect the IMF to examine thoroughly whether the demand for such a mechanism actually exists among mem- bers, and whether the chosen IMF signaling would actually meet the needs of multilateral and official bilateral creditors or donors. In doing so, it is critical to distinguish clearly between the new mechanism and the existing instruments in order to avoid overlap with various existing IMF instruments and to ensure that introduction of a new instrument would not hinder members' access to IMF resources via existing arrangements. In this connection, I believe that precautionary arrangements would be an effective and practical means for member countries with sound policies to cope with potential capital account crises stemming from sudden changes in capital flows. Therefore, I hope that the IMF will continue its work on adapting precautionary arrangements for crisis prevention purposes, regardless of whether a PMA is introduced. Regarding crisis resolution, I welcome the introduction of Collective Action Clauses (CACs) begun last year by many countries issuing their international sovereign bonds in the New York market where there had been no such market standard. I hope to see other countries follow suit by introducing CACs in their bond issues under foreign jurisdictions. I also hope that further progress will be made in reaching agreement on developing a Code of Conduct, following further discussions among various related parties, such as debtor countries and the private sector. In order to play its expected role in crisis prevention and resolution effectively, it is essential for the IMF to maintain a sufficient level of financial resources, thereby underpinning market credibility. Changes in the world economy and financial markets can be abrupt and difficult to predict. The IMF, therefore, should continue to examine quota issues and be prepared to act promptly whenever the need for a general quota 98 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 99 increase arises. In the review of quotas, their distribution should reflect the current realities of the world economy as well as the relative posi- tions of member countries' economies. With regard to the issue of enhancing voice and participation of developing countries in the IMF and the World Bank, I believe that the discussions on this matter have to be closely coordinated between the two institutions. Issues in Development This year marks the 50th anniversary of Japan's Official Develop- ment Assistance (ODA). Next year, there will be the UN mid-term review of progress in meeting the Millennium Development Goals (MDGs) by 2015. Even in Asia, where progress in poverty reduction has been remarkable, most part of this progress has been achieved through high economic growth in China and India, while a number of challenges remain in other Asian countries. The sub-Saharan African region will have to overcome more difficult challenges. Investment Climate and Infrastructure Development The key to poverty reduction is sustainable economic growth. As seen in China, India, and Vietnam, high economic growth and poverty reduction are closely correlated. "Getting a job" is regarded the top pri- ority as a means for the poor to break out of poverty. To achieve this sustainable growth, improvement in the investment climate and infra- structure development is of particular importance. Improvement in the investment climate is essential to secure stable inflows of foreign direct investment and to foster small and medium enterprises (SMEs). In this regard, strengthening the financial sector is an indispensable part. In November, we will co-host with the World Bank and other organizations the Tokyo International Conference on African Development (TICAD), Asia-Africa Trade and Investment Conference. At this conference we plan to deepen our discussions on the region's development through promotion of trade and private investment in Africa, as well as private-sector business exchanges between Asia and Africa. We welcome that the IMF and the World Bank will further explore the issue of fiscal space for infrastructure projects to properly treat these expenditures within developing countries' budgets, recog- nizing that infrastructure projects could generate further return. With regard to public-private partnerships, it is essential that developing countries establish adequate regulatory frameworks. Although we experienced a number of difficulties at the operational level to pro- mote these partnerships, we have to make our best efforts to over- 99 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 100 come them. It is necessary to deepen our discussion on the delivery of infrastructure services, financing for these services, and promotion of discussions among policy makers, operators, and users. In this con- text, we welcome the work of the World Bank Group to explore new tools of support on this issue, such as support at the sub-sovereign level and by local currency-denominated loans. Financing Modalities In order to increase aid flows for development, various financing modalities, such as the International Finance Facility and global taxes, are currently being considered. However, these instruments require careful examination on various issues such as the institutional or political feasibility for each country, the additional administrative cost to introducing the new mechanism, overlap with existing interna- tional organizations, and future drastic decrease in aid flows after aid funds are frontloaded. Thus, we are afraid that delving into this matter and having further discussions might not reach productive outcomes. Instead, we should focus our efforts to reach agreements on replen- ishment negotiations for the existing international organizations as scheduled. In this regard, we welcome the successful conclusion of AsDF9 in May of this year. The ongoing negotiations on IDA14 and AfDF10 are extremely important, and we encourage donor countries to make serious efforts to finish these negotiations by the end of this year. Debt Sustainability in Low-Income Countries To avoid further debt distress, we believe that it is important to suf- ficiently analyze low-income countries' debt sustainability and utilize the results to consider each debt holder's future support, including the IMF and the World Bank, and to promote the formulation of appro- priate borrowing strategies by these countries. In this regard, to effec- tively operationalize the framework for debt sustainability analysis, which is jointly elaborated by the IMF and the World Bank, we call for prompt deliberation on specific indicators for policies and institu- tional environment and debt burden thresholds and look forward to taking an active part in such a deliberation. However, we have to be prudent in debt reduction beyond the Heavily Indebted Poor Coun- tries (HIPC) Initiative and an increase in the volume of grants for the following reasons. First, the multilateral development banks (MDBs) are established as lending institutions. Second, further debt reduction and the increased grant might cause moral hazard in low-income countries. 100 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 101 Iraq Reconstruction and restoration of security in Iraq are extremely important for its people, and also for peace and stability of the interna- tional community, including the Middle East and Japan. Later this month, Tokyo will host the third donor meeting of the International Reconstruction Fund Facility for Iraq. As host, Japan will make utmost efforts to steadily implement the assistance that it has already commit- ted. We welcome that the IMF Board approved credit under the Emer- gency Post-Conflict Assistance (EPCA) for Iraq last week, and look forward to an early project implementation through the World Bank- administered trust fund. Japan will also expedite consultations on the Iraqi debt issue with the other countries concerned so that we can reach a conclusion in the Paris Club by the end of this year. Measures against the Financing of Terrorism While three years have passed since the tragic events of September 11, 2001, recent terrorist attacks in several countries remind us that the threat of terrorism remains serious. It is, therefore, paramount for the international community to continue its efforts to combat the financing of terrorism. In this regard, it is important for member countries to steadily imple- ment the international standard for anti-money laundering and combat- ing the financing of terrorism (AML/CFT). Japan will continue to provide technical assistance in this area, based on the needs of recipient countries. Conclusion This year coincides with the 60th anniversary of the agreement on the establishment of the IMF and the World Bank. In those 60 years, the world economy has changed dramatically, as witnessed by the end of the fixed exchange rate regime and the rise of emerging market economies. In response to these drastic changes, both these institutions need to articulate their respective roles and to review their policies vigorously in various areas, including crisis prevention, crisis resolution and support to low-income countries. While it is essential for the IMF and the World Bank to help low-income countries progress toward the MDGs, they must contribute to this cause in a sustainable manner based on economic rationality, without losing their perspectives as financial institutions. I would like to conclude my remarks by extending my best wishes to each of these institutions in their successful pursuit of policy efforts in a challenging world. 101 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 102 KOREA: HUN-JAI LEE Governor of the Fund Let me first welcome Mr. de Rato to his new post of Managing Director of the IMF. The Bretton Woods institutions have played an influential role in promoting financial stability and economic growth over the past six decades. They have done so despite the challenge of an ever-changing environment. Indeed, the past decade has seen financial crises in Latin America, Asia, and Russia, and the bursting of the IT bubble. That said so much has changed since the birth of these two institutions. The time has come for these institutions to transform themselves, both substantially and quickly, to become better suited to face today's challenges. In the new world, capital flows have increased exponentially, such that only 5 percent of these flows are now related to current account transactions. At the same time, the digital divide has become perhaps the greatest threat to our efforts to reduce income gaps. These challenges are compounded by the existence of large eco- nomic imbalances that could start unwinding faster than expected and pockets of what may be called "housing bubbles", that could start deflating. In this new world, trusty policymakers must continue to carry out prudent policies to maintain market confidence and stability. Given present circumstances, patience in tightening monetary con- ditions will probably prove to be a virtue. At the same time, I do not think it wise to risk maintaining large imbalances and pressure points for too long. After all, while the market may be a voting machine in the short term, it is a weighing machine in the long term. Given time, fundamentals will prevail. And in today's world, events can unfold and spread very quickly. The IMF and the World Bank must respond vigorously to today's new challenges. They must each undertake major structural reforms. The IMF must improve its effectiveness in surveillance and crisis prevention. This is particularly important now when huge, volatile capi- tal flows can quickly give rise to crises, not only in the country of origin, but across the globe. Concurrently, it is essential that the IMF enhance its financial resources to deal effectively with crises, once they develop. The IMF must sizably increase its total quota. In this connection, I would also urge the membership to address imbalances in IMF quotas, where in some cases size of quota is clearly out of line with the eco- nomic weight and strength of particular member countries. 102 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 103 Beyond reform of the IMF, I would venture to suggest that the inter- national community explore alternative means through which it can deal with problems that can stem from today's huge and volatile capital flows. As for the World Bank, I believe there is a need to concentrate fur- ther the institution's efforts on reducing poverty around the world. Clearly, achieving the MDGs will be an essential element of this. I believe we must make significant progress in both increasing finan- cial support and improving aid effectiveness. So success of the IDA-14 Replenishment Meeting will be critical. So will be success in the imple- mentation of the World Bank's agenda to improve aid effectiveness including through the Result-Based Management System. In this connection, I have two specific recommendations regarding the Bank's poverty reduction efforts. With continued advances in IT, overcoming the digital divide is likely to be a key factor in determining the success of poverty reduction efforts. So I believe the Bank should focus much more on bridging the digital divide, for example by focusing more on education aid. Second, I believe aid effectiveness would be greatly improved if financing support became more user-oriented. Korea is ready to share its development experience, including its various e-experiences. At the same time, Korea is eager to expand the reach of its development aid. Finally, Korea will shortly take an Executive Director seat at the IMF for the first time. Let me assure you that we will make maximum effort to properly represent all the members of our constituency. LAO, PDR: SOMDY DOUANGDY Governor of the Bank It is an honor and a great pleasure for me to represent the Govern- ment of the Lao People's Democratic Republic at the 2004 Annual Meetings of the Boards of Governors of the World Bank and Interna- tional Monetary Fund. Let me join my fellow Governors in congratulating Mr. Chairman, the President of the World Bank, the Managing Director of the IMF, and the Government and people of the United States of America for the excellent arrangements made for this important meeting and for the very warm hospitality extended to our delegation. The Joint Annual Meetings of this year are in the midst of an envi- ronment where the Bank and the Fund are furthering their cooperation with the international community on poverty reduction and fulfilling their "normal role." In this context, the Lao PDR continues to maintain close cooperation with the international community. Cooperation with the international financial institutions (IFIs), the Bank and the Fund in 103 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 104 particular, has been eminent in helping us to implement the reform pro- grams in support of our development goals. I would like to take this opportunity to inform the meeting on the Lao PDR's current economic situation. In 2003, our economic growth was at 5.9%, showing an increase of 0.2% compared with the previous year. Growth in the industrial sector was at 11.5%, while growth in the service and agricultural sectors were at 5.8% and 2.2%, respectively. The high rate of growth in the industrial sector was partly due to the export of US$60 million of gold ore from the Sepone Gold Mine, one of the major foreign direct investment projects in the country. There was also an overall increase in the country's exports, resulting from the improved economic performance of the countries in the region. Despite the fact that the economic growth rate was quite high, led by a large volume of exports from foreign investment projects, which helped to stabilize the exchange rate, inflation remained high, averag- ing 15.5% for 2003. Among the main factors contributing to the high inflation rate are the rise in world petroleum prices, which resulted in higher import prices, the increase in prices of domestic commodities and foods, and the shortage of some commodities, particularly the con- struction materials. This high inflation has placed the lives of the Lao people in a more difficult situation and has also discouraged domestic investment because of the high interest rate. With regard to our efforts toward achieving our 2020 strategic goal of exiting from the least developed country status, the Government has completed the consultation process on the National Growth and Poverty Eradication Strategies (NGPES). The Government has also established the Central Government Level Unit under the Committee for Planning and Investment to coordinate and monitor the implemen- tation of goals and priorities of NGPES, which are in perfect harmony with the Lao PDR's international commitments, particularly the Millen- nium Development Goals, and the LDC Summit's objectives. Our partners for development, namely the donor countries and international organizations, including the international financial institu- tions have extended the strong support to the Lao PDR in working for- ward these strategies through the direct support to the sectoral development in the country. In addition, the international financial institutions have also assisted in the efforts of the Government in the areas of macroeconomic stabilization and structural adjustment. Many actions under these adjustment efforts are well under way, particularly those relating to the Financial Management Adjustment Credit (FMAC), the program supported by the World Bank, which was com- pleted in June 2004. We also worked closely with the IMF in August 2004 on the completion of the fourth review of the arrangement under the Poverty Reduction and Growth Facility. 104 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 105 Under the adjustment programs, the Government has completed the first stage in the reform of the state-owned commercial banks and the restructuring plans for the important large and medium state-owned enterprises. The Government will continue the reform process in the telecommunication, water supplies and electricity sectors, as well as in the area of public finance management, in compliance with the law and with the Government's regulation and reform plans. Furthermore, in order to promote more investment, the Government will put more effort into enhancing the investment environment of the country. In the meantime, partners in development need to adhere to their commitments made in the Monterrey Consensus, particularly to make available the necessary financial and technical assistance in support of the development efforts of developing countries. As export-led growth is the key to attaining poverty reduction goals at the national and global level, we strongly urge the developed countries to remove existing trade distortions and barriers to enable developing countries to have access to their markets, in order to achieve the targets of the Doha Round. The potential for our country's economic development lies largely in the productive and sustainable use of our natural resources and in export-oriented production, particularly in the areas of mineral extrac- tion such as gold, copper, and zinc, as well as hydropower. In this con- nection, we greatly appreciate the international financial institutions' support in the preparation for the proposed Nam Theun 2 Hydropower Project. We will continue to work closely with the IFIs and the parties concerned to realize this very important project, which we believe, will benefit not only the Lao PDR, but also its neighboring countries. In conclusion, in the name of the Government of Lao PDR, I would like to express my sincere appreciation to the managements and staffs of the Bank and the Fund and fellow member countries for the support given to the Lao PDR. I wish the meetings a great success. LITHUANIA: VITAS VASILIAUSKA Governor of the Bank (on behalf of the Republics of Estonia, Latvia, and Lithuania) It is a great privilege for me to address this distinguished audience today at this year's Annual Meeting and to speak on behalf of the Republics of Estonia, Latvia and Lithuania. In my speech, I will con- centrate on the general issues of cooperation between the Baltic coun- tries and the World Bank. The year 2004 witnessed two historical events for the Baltic coun- tries. Estonia, Latvia and Lithuania, together with seven other countries, 105 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 106 joined the European Union. The Baltic States also became fully-fledged members of NATO. For small open economies like Estonia, Latvia and Lithuania, both events are of utmost importance in light of the transition process challenges our countries have had to overcome. Membership in the EU has raised new challenges with membership requirements as well as new opportunities for the future development of our countries. EU membership provides an additional stimulus in the form of inflows of grants from the Structural Funds and the Cohesion Funds, as well as the Transitional Facility. At the same time, we will have to look for synergy between World Bank operations and interven- tions under the EU financial instruments in the attainment of our common goals. An outstanding economic performance achieved during the past few years and a sustained upturn this year are common features of all three Baltic countries. The average growth rate for the Baltic countries was above 7.6 percent in 2003. Sound economic policy maintained by all three Baltic countries creates preconditions for a favourable economic development outlook in the years ahead. The Baltic countries pursuing their Convergence Programmes aim to comply with the key Maastricht criteria by 2007, and as a result, Estonia and Lithuania were admitted to enter ERM-2 this year, with Latvia expected to be admitted in January 2005. These achievements will allow us to fulfil the necessary require- ments for early Euro introduction in all Baltic countries. Over the past year, we continued fruitful and intensive cooperation with the World Bank through the implementation of investment proj- ects. The presence and advice of the Bank and the IMF in many cases served the governments well in keeping track of undertaken reforms and commitments. From now on, the European Union membership will open a new stage in the relationship between the World Bank and the Baltic countries, with a transition from a borrower-lender relationship to a partnership featuring in particular analytical work and technical advice--targeted at the key challenges the Baltic countries face--to secure growth and to enhance competitiveness. The issues of economic growth and sustainable development are receiving greater attention by the World Bank. We welcome this shift not only from the viewpoint of operational implications for the Bank but also from the perspective of relevancy for all new EU Member States. In this regard, I would like to emphasize the new dimension of the Bank's analytical work programme for the 8 new EU members covering the next 2­3 year period. We support the idea of cross-country analyti- cal work for the EU8 and hope that this would contribute to the flexi- bility and cost-effectiveness of the Bank's assistance. 106 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 107 We welcome particular priority areas of the Bank's analytical work, such as labor market analysis, knowledge economy, public and private partnerships since these areas are not only interrelated but at the time relevant to sustained economic growth and competitiveness of all new EU Member States. The Bank's experience and advice in traditional sectors, such as education, including tertiary education financing, rural development, would also be beneficial for the Baltic countries. On this occasion, I would like to convey our appreciation for the useful and productive cooperation with the World Bank and the Interna- tional Monetary Fund and wish them every success in their future work. MACEDONIA: NIKOLA POPOVSKI Governor of the Bank Respectable Ladies and Gentlemen, it is my honor to be offered the possibility to participate in the Annual Meetings of the Interna- tional Monetary Fund and the World Bank, together with all of you. I would like to avail myself of this opportunity to express gratitude to both the International Monetary Fund and the World Bank for the so- far cooperation and financial support these institutions have extended to Macedonia. Macedonia, during the last decade and a half, experienced diffi- cult, long-lasting process of economic and political reforms, aimed at building modern democratic society with developed system of market economy. Current Situation in the Macedonian Economy Following the stagnation, the Macedonian economy stabilized in 2003 and realized GDP growth of 3.2%, with low inflation rate of 1.2%, being certain signal of the end of the adverse shock in the economy and return of the economic activity on track. These macroeconomic indica- tors in 2003 were realized by notable reduction of central government budget deficit from 5.6% to 1.1% of GDP, supported by disciplined monetary policy constantly in correlation with the fiscal one. Although the country managed to successfully stabilize in macroeconomic point of view, still there are additional challenges in the macro-economy, such as the high deficit in the BOP and the high unemployment rate, remain- ing to be one of the main challenges in the economic policy in the forth- coming period. During the past period, we have been all assured that Macedonia has the capacity to surpass the problems and the existing reform path has never been abandoned. 107 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 108 Macroeconomic indicators during this year as well show similar per- formance. In 2005, the Government of the Republic of Macedonia will focus on the following strategic priorities: · Further steps for integration of Macedonia in the EU; · Completion of the preparations for membership of Macedonia in NATO; · Implementation of the obligations arising from the Framework Agreement; · Government decentralization and development of local government; · Judiciary reform; · Further strengthening of the combat against organized crime and cor- ruption; · Accelerating the economic development and stimulating domestic, and attracting, foreign investments; · Strengthening the market model of running the economy and reduc- ing unemployment and poverty. · Relations with the IMF and the World Bank We will also continue to implement the policy of maintaining mone- tary and fiscal balance. · Further maintaining the price stability with inflation that would not exceed 3% and stability of Denary foreign exchange rate in relation to the Euro; · Realizing 4.5% real GDP growth in 2005; · Continuing the policy of rational budget spending; · Maintaining the level of external debt at less than 40%, with a ten- dency for medium-term reduction by 2%; · Creating conditions for more aggressive investment policy, especially in the private sector, as well as improving the business environment in the country; · Stimulating foreign investments by creating modern, open and com- petitive economy; · Constant employment increase on annual level by 1.5­2%. Fiscal policy will support the efforts for approximation to the Euro- pean Union, including managing the fiscal pressure arising from the implementation of the transition reforms and the decentralization processes. In the forthcoming period, the Republic of Macedonia is strongly committed to continue the structural reforms, being important basis for promotion of the investment climate, aimed at realizing 4.5% economic growth and job creation. In 2004, supported by the World Bank, public administration reforms gained pace. To the end of attracting foreign direct investments, Government program will be supported by several World Bank projects. In the period to come, the transformation and pri- 108 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 109 vatization process of the public enterprises will be realized, mainly "Macedonian Railways" public enterprise, and "Electric Power Com- pany of Macedonia", a joint stock company, owned by the state, where EBRD participates actively as well. Macedonia, as WTO member, and taking into account the active Stabilization and Association Agreement with the EU, as well as the free trade bilateral agreements concluded with 9 other countries, has already reached an impressive level of liberalized trade relations with the countries throughout the world. The Government of the Republic of Macedonia will continue to develop the relations with the International Monetary Fund and the World Bank, as partners in the implementation of credible macroeco- nomic policy and structural reforms program. Cooperation with the IMF will continue with the negotiations for concluding long-term arrangement, thus strengthening the reform and structural component of the existing economic and financial policies. Cooperation with the World Bank is evolved within the three-year Country Assistance Strategy (2004­2006), whereby Macedonia has met the requirements for high-case scenario, which the World Bank Board of Directors confirmed on 13th May 2004 and approved a package of three reform loans--Public Sector Management Adjustment Loan in the amount of US$ 30 million, and two investment loans in the amount of US$ 10 million each intended for health sector management support and support in implementation of the social protection and pension reforms. Honorable Ladies and Gentlemen, we are aware that on its develop- ment path, the Republic of Macedonia will face many temptations and serious challenges. Nevertheless, we have a clear vision for the future of our country and we are committed to work hard towards realizing the priority objectives. We want a peaceful region, region integrated in the EU and therefore we expect that both the IMF and the World Bank will extend full support in attaining this goal. I would like to assure you that we will continue making efforts for building ever stronger mutual cooperation. MALAYSIA: TAN SRI NOR MOHAMED YAKCOP Governor of the Bank and the Fund Global Economic Outlook We welcome the strengthening and broadening of the global eco- nomic recovery since our meeting in Dubai last year. We are further encouraged by the strong performance and recovery in many develop- ing economies, which has been aided by improved fundamentals and a rebound in the external sector. 109 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 110 An outstanding concern is the need for appropriate policies involv- ing authorities in major financial centres, especially the G-3, to mitigate risks emanating from the extent and severity of the global imbalances. Such policies entail cooperation to maintain orderly market conditions to facilitate the smooth adjustment of the external imbalances, while cognizant of the need to encourage measures to strengthen growth fur- ther. Key elements of such policies should incorporate strategies of the US to restore medium-term fiscal balance, to advance the pace of struc- tural reforms in the Euro area, to ensure further progress in the banking and corporate sector reforms in Japan, and for Asia, to continue with structural reforms to support domestic demand. We welcome the greater resilience and stability of the global finan- cial system and the broadening of global growth. These have resulted in improved corporate and banking sector earnings, as well as low infla- tion, which led to stable and low yield in major bond markets. Accom- modative monetary policies have made available low cost external financing especially for emerging markets. Notwithstanding the above, the question remains as to how much interest rate should rise as econ- omy continues to expand. During the transition toward higher interest rate, it is important to manage the rise in interest rate to ensure that global growth is sustained. Malaysia's Economy Malaysia has benefited from the continued strengthening of the global economy, reinforced by the strong domestic demand that had supported growth for the previous couple of years when the external environment was less than encouraging. Thus, for the first half of 2004, Malaysia's economy expanded at an accelerated pace of 7.8%, with the manufactur- ing and services sectors as key contributors to growth. More importantly, private investment activity recovered strongly to become the engine of economic growth. The robust economy further strengthened the nation's macroeconomic fundamentals and resilience as indicated by the low inflation, 81 consecutive months of trade surplus, rising international reserves, full employment, as well as a healthier banking system. Given the strong economic performance during the first half of the year and a generally encouraging external environment, the economy is expected to record the highest GDP growth since 2001 that is at 7% for 2004. Going forward, monetary policy will remain accommodative and will continue to support growth and ample liquidity is expected to continue supporting financing needs of the private sector. The financial system experienced a smooth transition to a new market-based interest rate framework introduced in April 2004. The average base lending rates of financial institutions is on the decline with the overall financial position of 110 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 111 the banking system remaining sound. On the exchange rate, the current regime continues to facilitate increasing trade and investment flows. The present exchange rate regime is supported by the rising international reserves, low external debt, low inflation and sound banking system. The significant domestic restructuring undertaken since the Asian crisis and strengthened economic fundamentals continue to underpin the sustained growth performance of the Malaysian economy. We antic- ipate the growth momentum to continue for 2005. Forward-looking indicators continue to point towards strong and sustainable growth. Improved consumer and business confidence, favourable commodity prices, stable employment conditions, low inflation and rising incomes are expected to support further growth in the Malaysian economy. Meanwhile, Malaysia is resilient to high oil prices given that it is a net oil exporter. The impact of imported inflation should be modest. In the context of the uncertainties in the external environment, the Budget 2005, which was tabled recently in Parliament, continues to build from past achievements to strengthen the foundation and competitiveness of the economy. The focus will be on enhancing the effectiveness of Gov- ernment financial management, improving the delivery system and com- petitiveness, accelerating the shift towards a higher value-added economy, developing human capital and improving the quality of life, particularly those in lower income groups. The Government will also continue its prag- matic fiscal policy of striking a balance between prudent financial manage- ment and pro-growth strategies which has resulted in the gradual declined in the deficit from 5.6% of GDP in 2002 to 5.3% in 2003, with an expected further reduction to 4.5% in 2004 and 3.8 % in 2005. IMF Surveillance The IMF should be more focused on surveillance issues central to its mandate; and that the quality of policy dialogue between IMF and member countries should be improved by making better use of cross- country experiences. In addition, the IMF should not overdo the need for transparency at the expense of its role as a confidential advisor to members. Equally important, considerations to make IMF surveillance more effective should include the accountability factor where the IMF should be held responsible for the policy advice that they provide to member countries. Aid Effectiveness and Financing Modalities We agree that larger and more effective aid flows are critical in imple- menting the international development agenda. We also agree that con- certed efforts are needed on several fronts; in particular reform of the 111 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 112 international trading system and in improving the ways aid is delivered. At the same time, development assistance must be aligned to country priori- ties. Equally important is the need to strengthen the capacity of countries to absorb and effectively use aid. We also support continuing work on efforts to look at innovative mechanisms to provide additional aid. In this regard, we support the agenda on financing modalities as proposed, namely: · Continue working on the feasibility of the more promising global taxes: and · Exploring the blending of aid and other financial sources to augment existing resources. · Investment Climate The investment climate is a very important factor to sustain and gen- erate economic growth. The increasing mobility of capital flows across borders, facilitated by the more liberal investment regime, globalisation as well as ICT necessitated that economies pay special attention to pro- viding at least the basic facilities required to retain and attract new busi- ness activities. Of course, with increasing competition for FDI, resulting from the slow growth in FDI from source countries coupled with increased demand for such flows from new and emerging market economies in recent years, the basics will just not be enough. Countries are coming under increasing pressure to go beyond the basics to provide highly attractive fiscal and non-fiscal incentives to attract potential investors and even retain those who are already in the country. However, in trying to outbid one another, the capital recipient countries have to be cautious that they do not fall into a trap ala a `price-war' which could ultimately reduce the returns from such capital flows for all involved. Infrastructure Development Malaysia fully agrees that infrastructure is an indispensable pre- requisite to support investment, trade and other economic activities as well as to address poverty. We have on many occasions and in many international fora leading to the Monterrey Consensus emphasised the critical importance of infrastructure and the need to identify new and specialised sources of financing to support infrastructure development particularly among developing countries. In this regard, Malaysia strongly supports the initiatives undertaken by the World Bank. Malaysia requests serious consideration on our proposal for an appro- priate kind of global infrastructure tax and a specialised global fund to actively promote and aid infrastructure development particularly for developing economies. 112 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 113 Infrastructure is a major contributor to economic growth, poverty reduction and achievement of the Millennium Development Goals. Malaysia has always given emphasis to infrastructure development as evidenced from the allocation of funds throughout the years. The focus of infrastructure development in Malaysia is moving towards improving quality of service, efficiency of delivery, affordability as well as the user pay concept. Hence the private sector has been and will continue to be encouraged to participate in the provision of infra- structure facilities and services, with emphasis on public-private partner- ships, particularly for operation and maintenance as well as financing. Voice and Participation of Developing and Transition Countries Malaysia takes note of the work that has been carried out by both the Bank and Fund in addressing institutional and structural issues to enhance the voice of developing and transition countries in the opera- tion and the decision making of the Bretton Woods institutions. While we have made further progress, particularly on capacity building assis- tance for the most over-stretched Executive Directors and constituen- cies, we have yet to achieve much progress on the more challenging institutional and structural changes, such as quota, voting power and the under-representation of developing countries in the Board. Debt and Debt Sustainability At the Spring Meetings, we broadly supported the principles under- lying the proposed framework for debt sustainability in low-income countries while acknowledging that the modalities and operational implications remained to be thrashed out to provide lenders with a measure to determine the appropriate level of debt. Today, we welcome the opportunity to discuss this in the upcoming debt agenda especially in view of the recent extension of the Heavily Indebted Poor Countries (HIPC) Initiative sunset clause. MICRONESIA: NICK ANDON Governor of the Fund (on behalf of the Pacific Constituencies comprising Kiribati, the Republic of the Marshall Islands, the Republic of Palau, Samoa, the Solomon Islands, Vanuatu, and the Federated States of Micronesia) Introduction I am deeply honored and privileged to address these fifty-eighth Annual Meetings of the International Monetary Fund and the World 113 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 114 Bank Group on behalf of the Pacific Constituency comprising Kiribati, the Republic of the Marshall Islands, the Republic of Palau, Samoa, the Solomon Islands and Vanuatu, and the Federated States of Micronesia. May I also echo the sentiments made by previous speakers by expressing our deep appreciation and gratitude to the management and staffs of the Bank and the Fund for their tireless efforts and hard work in arranging and preparing our meeting venue at the Headquarters here in the beautiful city of Washington DC, and to express to you, Mr. Chairman, our congratulations on your election. I also would like to welcome and congratulate Mr. Rodrigo de Rato on his recent accession to the post of IMF Managing Director. Finally, I would like to thank the city and the people of Washington DC for the warm hospitality extended to us since our arrival, and for their continuous efforts in making sure our meetings are given the maximum security attention the world has ever seen. Since the 1980s, just as our Asian neighbors were propelling into eco- nomic center-stage, it was projected that the next century will be the `Pacific Century'. And as the new millennium dawns on us, there is still little sign of the `Pacific Century' in the Pacific island countries. Regard- less we are hopeful that through our works with the Bank and the Fund the realization of the `Pacific Century' will come sooner than later for us. World Economic Outlook Over the last twelve months, there has been a significant expansion in the global economy, fuelled by a sharp rise in industrial production and global trade. Business confidence and to a lesser extent consumer confidence also rose during this period. And in most regions around the world, investment growth has turned solidly positive. In the second half of 2003, for instance, global GDP growth averaged nearly 6 percent on an annualized basis, the highest since 1999. Likewise, global GDP growth for 2004 and 2005 is likely to exceed expectations, projections being 4.5 percent for 2004 and 2005. In short, the global economic recovery over the last 12 months and more likely into 2005 is laudable and would not have been achieved without the economic reforms many nations around the world have undertaken. Economic Performance in the Pacific Constituency In the context of the Pacific region, aggregate GDP rose by 2.7 per- cent this year over last year. However, on an individual basis amongst our Pacific island member countries, the growth rate ranged from 0.1% to 7% per annum, and favorable international primary commodity 114 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 115 prices had much to do with our relatively benign GDP growth rates, which have benefited Samoa, the Solomon Islands, and Vanuatu--our big three commodity exporters. Like many other small open economies around the world, the Pacific island member countries in our constituency have also been ben- efiting from the recent expansion in the global economy. Such a benign global economic outlook has also enabled the island members to with- stand the impact of the terrorist attacks of September 11, 2001, the SARS outbreak that started in 2003, and the ongoing war in Iraq and the recent increase in oil prices. Notwithstanding this relatively good progress against these odds however, it is important to note that our regional economic growth is still being hampered by our high annual population growth of 3%, which continues to put pressure on, and to restrict our governments from providing adequate key essential services in health and education for our people. Questions still remain as to whether the region is actually on a sus- tainable growth path or perhaps is only experiencing a temporary knock-on effect from the expansion of the global economy. Time will tell, but we are confident that with the right policy mix, we should be able to harness the success of the past 12 months to ensure sustainable growth and development that will lead to higher quality of life in our region. Challenges Ahead and the Way Forward The development characteristics of our Pacific island members are quite similar to the world's other small states. They have small popula- tions, small domestic market, small landmass, narrow resource base, limited economic opportunities, weak institutional capacities, and they lack adequate financial capital needed for development. In addition, they are scattered across a vast Pacific Ocean and are relatively far away from many of the world's major commercial markets therefore, the transport costs including cost of doing business in these countries, are quite high. Many of the islands are no higher than two feet above sea level and are very susceptible to environmental risks such as rising of the sea level. Being small open economies, they are also highly vulnerable to exogenous shocks such as changes in the global economy and changes in the economies and policies of their bilateral development partners. It is within these development constraints that our islands' ability to take full advantage of the opportunities presented by globalization is marginalized. In August this year during their Pacific Islands Forum Annual Meet- ing, our Pacific island leaders adopted a Vision for the Pacific, which 115 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 116 enunciates the ideals the region must work towards to secure its future prosperity and stability. In the Pacific Vision, our leaders "believe the Pacific region can, should and will be a region of peace, harmony, secu- rity and economic prosperity, so that its entire people can lead free and worthwhile lives." We agreed to give effect to this Vision through the development of our Pacific Plan, which is a development framework for implementation of the vision created by our leaders that envisages developing stronger links between our sovereign countries and would identify the sectors where we would gain most from sharing good governance and aligning our policies. Our leaders have also agreed that the goals for development of our region are economic growth, sustainable use of our scarce financial and natural resources, good governance and security. These goals have become the principal focus of our efforts at both the national as well as the regional levels. We have already engaged the Pacific Islands Forum and its Secre- tariat in these processes and would welcome a more active role by our development partners such as the Bank and the Fund. We have recognized that the Pacific Vision cannot be achieved by Governments alone, but can only be attained through a broader plat- form for partnership. In building a more resilient economic base, it is vital that the region collaborate with the Bank and the Fund to formu- late practical strategies to mitigate the region's exposure to shocks and more broadly to achieve the Vision which we have set for ourselves. Over the last several years, all countries in the Pacific Constituency have undertaken some form of structural and institutional reforms aimed at improving economic performance in order to achieve sustainable growth and development. These reform programs are still ongoing and although we are making good progress, these oftentimes difficult and painful, reforms cannot be successfully implemented by our countries themselves without the ongoing support of our development partners such as the Bank and the Fund. We are grateful for the Fund's support through the Pacific Financial Technical Assistance Center (PFTAC), which has been very instru- mental and effective in assisting our countries in our reform efforts over the years, and we would like to call for and urge increased funding support for PFTAC, to bring it up to par with similar institutions in other parts of the world. When we are discussing the need for increased donor coordination and harmonization, PFTAC is one effec- tive avenue in which we would like to encourage and see closer Bank and Fund collaboration. The thematic focus by the Bank and the Fund on poverty reduction is one that is equally vital for our region. If I may, at this juncture, recall 116 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 117 Dr. Henry Kissinger, the former US Secretary of State's famous 1974 declaration that, "by 1984 no child, woman, or man would ever go to bed hungry." Three decades later, and notwithstanding our world lead- ers' endorsement of the Millennium Declaration in New York in 2000, Dr. Kissinger's declaration remains grossly unfulfilled. This, in itself, is an indication of how important it is for us to redouble our efforts if we are to achieve the Millennium Development Goals (MDGs) by 2015. We note recent advancements in the international efforts against money laundering and terrorist financing. We also note the Bank's and the Fund's pivotal role in ensuring the convergence not only of interna- tional standards, but equally important the convergence of assessment methodologies. Our region has benefited greatly from better coordina- tion in the assessment processes in that we now are able to devote more time and efforts to actual implementation as opposed to being locked into an assessment fatigue. And as the international community embraces the Revised Forty and Special Eight Recommendations, there will be increasing need for our region to align our implementation programs with the new standards. We therefore will welcome any assis- tance from the Bank and the Fund to further strengthen our anti-money laundering and counter terrorism initiatives. Over the years many studies and analyses have been undertaken to better understand our economic and social development needs. While we remain grateful for these studies, there is some concern among us that some of these resources could be better utilized as direct assistance towards our social and economic programs. For instance, those pro- grams that will have a positive impact on our goals to reduce poverty, curb population growth, create jobs and enhance our food security. We also would need to strengthen our democratic processes and improve our governance but we would need to have the necessary expertise and training support, therefore the Bank and Fund's support in this area will be very invaluable. Our three productive sectors of tourism, fisheries and agriculture will continue to be important foreign exchange earning sectors for our economies. And given the absence of heavy industries in small island countries like ours, we would still not be able to compete with major industrial regions of the world, and would continue to depend on our development partners' support for the development of our light indus- tries, which we believe are appropriate and would complement our important primary and service sectors. We very much welcome the Bank's rekindled interest and hence its focus on infrastructure which is an essential element for a good invest- ment climate and key to development of the private sector. Our islands, having varying stages of development, share the same need for infrastructure development which is an important pillar for 117 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 118 growth, poverty reduction and for the achievement of the MDGs. We would therefore be grateful for adequate Bank involvement in the development of our infrastructure. We are cognizant of the importance of the Bank's engagement in our Pacific region but, we are also aware the Bank's involvement in our region over the last 12 years or so has not been up to expectation. We therefore echo the sentiments expressed in the Bank's recent Opera- tions Evaluation Department (OED) report which shows that the Bank's lending to the region has not only been low compared to the other regions which have similar development challenges, but also has been uneven as some islands have received support from the Bank while others have received nothing at all. The OED report lamented that although the Bank was able to pro- duce its 2000 strategy for the region, the strategy was broad and offered no clear strategic direction, therefore, the Bank as a "knowledge bank" ended up with "a lack of strategic objectives, weak relations, and inade- quate resources" to do a great job for the islands as an effective devel- opment partner. Since the Bank is in the process of creating its second Pacific Regional Assistance Strategy (PRAS) for the island members in our constituency, which is expected to be coming to the Board of Executive Directors sometimes in the early part of next year, we would like to strongly encourage, and urge, the Bank to seriously take into account, the sentiments expressed in the OED report and develop this new strat- egy accordingly and then put its weight, and its resources, behind its implementation. Conclusion I would like to now take this opportunity and express our sincere appreciation to the managements and staffs of both institutions for their ongoing commitment and support for our islands' development efforts. MYANMAR: HLA TUN Governor of the Bank I am honored, in representing Myanmar, to have the opportunity of addressing the 2004 Annual Meetings of the Fund and the Bank. At the outset, I would like to join my colleagues in congratulating the chair on his election as chairman for this meeting. I strongly believe, Mr. Chairman, that under your guidance today's meeting would be a very successful one. We are heartened to learn that the pace of global growth has contin- ued to exceed expectations. Global recovery has become increasingly 118 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 119 well established with strong growth in industrial countries and excep- tionally rapid expansion in emerging markets. However, risks and chal- lenges, including global imbalances, increase in oil prices and inflationary pressures, still remain and therefore we should be diligent in addressing these issues. Let me now brief you on Myanmar's economic development. As have been stated in previous years, Myanmar has been striving to achieve economic stability, with our own resources, in order to fulfill the basic needs of its populace. For that, a series of short-term economic plans have been formu- lated and implemented which have resulted in significant growth rates for the country in recent years. We are now implementing the fourth year of the third short-term plan. During the first three years, remark- able growth rates have been achieved. As an agro-based country, Myanmar's economic growth has been led by the growth of the agricultural sector which accounts for about 45 per cent of the economy. However, in recent years, strong growths in the energy, livestock and fishery, mining, and manufacturing and processing sectors have also contributed quite significantly to the country's eco- nomic growth. We are happy to say that the Myanmar economy is growing at a sus- tainable up-ward trend. We are sufficient in agricultural produce and self sufficient in food supply. The authorities are also encouraging industrial development and at present there are 18 industrial zones. Moreover, for the future long-term growth of the economy, the government is investing in building necessary infrastructure, including construction of dams, reservoirs, roads, bridges and major Hydro Power Projects. Due to the Government's foresight in investing in the above men- tioned infrastructure development, although there had been severe flooding this year, we were able to safely store our harvested agricul- tural produce including paddy. We remain committed to continue our efforts to improve the living standards of our people, especially in the rural areas. According to the development needs of the country, appropriate policies have been implemented. With regard to fiscal policy, the gov- ernment is giving high priority to its fiscal consolidation efforts. How- ever, for the past few years, in the absence of external financial assistance, Myanmar had to use its own resources for the development of its infrastructure, which has resulted in budget deficits. However the budget deficit is now in a declining trend as efforts, such as strengthen- ing tax administration and collection system, reducing tax exemptions, educating the public for tax compliance and reduction of tax evasion, have been taken in order to increase tax revenue, while on the other hand unproductive expenditures have been cut out. 119 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 120 The main objective of monetary policy in Myanmar is for sustain- able economic growth with relative price stability. In order to do so, the Central Bank of Myanmar has adjusted its monetary policy according to the changes in the economic needs of the country. The Central Bank of Myanmar, in ensuring stability and soundness of the banking system, is also strengthening its supervisory and regulatory activities. The Myanmar authorities do not accept any form of abuse of the financial system including money laundering and terrorist financing. We know that money laundering and financing of terrorism undermine the global economic growth and stability. We support the efforts, both at international and national levels, to combat them. We would also like to inform you that we have strengthened our regulatory policies and guidelines. We have enacted relevant laws and rules, and have also issued necessary instructions and directives. We are now working closely with the respective regional and international organizations on these issues and are also building the capacity and efficiency of our human resources. We are determined to forge ahead with our efforts to be in compliance with international norms and standards with regard to Anti Money Laundering and Combating Terrorist Financing. The successes we have thus far achieved have been attained by using our own limited resources, as we have been unfairly deprived of inter- national assistance for more than 15 years. There is no denying that national efforts, if supplemented by external assistance would have been more beneficial for the economy. Although Myanmar has been a legitimate member of the IMF and the World Bank since 1952, both of the institutions have suspended their assistance to Myanmar based mainly on political considerations. In actual fact, the objectives of the founders of these two institutions were purely economic in their nature and character. We would therefore urge these institutions to adhere to their founding principles. There are differences in the structure of economic and institutional capacities among countries of varying levels of development. Thus, the institutions should not use one size fits all policies, but should adopt appropriate policies in advising member countries according to their needs and development. There is also need for equal voice in these institutions. However, it seems that developed countries monopolize the policy decision making and the developing countries find it hard to speak out their needs. Both institutions have an important role to play in the world econ- omy. But there may be need to improve their activities. For the mem- bers to achieve our common goal of sustained economic development and poverty alleviation, the IMF and the Bank should avoid any bias that favor some while discriminating others. According to the changing needs and time of the world economy and its environment, the institu- 120 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 121 tions should be adaptable to those changes so as to meet the require- ments of the developing countries. There is no doubt that the organizations have a pivotal role in the global economic development and they have undertaken some joint activities in recent years such as the HIPC and PRSP. In undertaking their leading role they should not forget their core mandates and increase the representation of developing countries in the decision making process. In conclusion I would like to call the IMF and the Bank to further enhance their assistance in supporting countries facing macroeconomic difficulties without any discrimination. For Myanmar, I would like to reiterate that we would continue with our efforts in maintaining our economic growth momentum and look forward to resuming normal relations with both of the institutions. NEPAL: BHARAT MOHAN ADHIKARI Governor of the Bank I feel greatly honored to represent the Kingdom of Nepal in these 2004 Annual Meetings of the Boards of Governors of the Fund and the Bank. Let me thank the government and the people of the United States of America for the generous hospitality extended to myself and the delegates. I would like to extend our deep appreciation to the man- agement and the officials of the Fund and the Bank for the impressive arrangements made for the meeting. The world economic situation as well as the international financial environment has been gradually improving. The economic growth sce- nario in the US looks strong followed by modest recovery in the Japan- ese economy. Though the prospect of the world economy as a whole is now better over the years since 2000, the situation of prevailing unbal- anced growth performance and continuing disparities among countries has been aggravated with the continuation of the geo-political uncer- tainty and the emerging oil price risks. Modest recovery in the Asian region has been realized with the adoption of the prudent macroeconomic policies and flexible exchange rates along with the recovery in the trade and IT sectors. The Asian developing countries are now registering higher economic growth, with the upturn getting rapid particularly in China and India. However, the disparity in the growth rates among the countries persists. Therefore, a broad-based and sustainable growth as well as pressing forward in areas like structural reforms, good governance, and transparency comprise the most important economic policy challenges. The financial crises across the nineties teach us the need of a healthy financial sector for allocating resources efficiently. Sound, deep and strong financial sector 121 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 122 is a prerequisite to attaining the benefits of an open, liberal and global- ized economy. Enabling low income countries to reap the full benefits of a globalized economy should be the focus of the international efforts. In order to enhance the competitiveness of their respective economies, the need for the governments in the developing countries to be more responsible to consolidate their fiscal position has become urgent. Combating poverty is one of the greatest challenges facing low- income countries. Although poverty reduction initiatives and necessary policies are put in place, implementation weaknesses persist. Hence, attaining the Millennium Development Goals (MDGs) requires strengthened efforts from international community backed by increased resources. I believe that trade would work as an engine of economic growth and low-income countries need to be given special space in realizing this potential. The Fund and the Bank are, therefore, advised to be serious in realizing the goal of poverty reduction and eco- nomic well-being on a global basis. In Nepal, the overall economic development indicators have con- tinued to improve despite unfavorable peace and security situation. The Nepal Development Forum (NDF) meetings held in Kathmandu in April 2004 provided the opportunity to apprise the donor commu- nity about the overall development problems and prospects and also the commitments from the development partners. Preparations for the post-membership of the World Trade Organization (WTO) and the implementation of the ongoing development and reform programs including the Poverty Reduction and Strategy Paper (PRSP) and the Poverty Reduction and Growth Facility (PRGF) have remained the national priority. As a result, notwithstanding the prevailing adverse situation of the peace, improvement has been observed in the overall economic situation as GDP in 2003/04 grew by 3.7 percent, agriculture by 3.7 percent and non-agriculture by 3.3 percent. The growth projec- tion for the current fiscal year is 4.5 percent. Government revenue mobilization has recorded an impressive improvement. The growth of broad and narrow money accelerated by 13.5 percent and 12.6 percent respectively and the inflation rate remained stable at 4.0 percent in 2003/04. The restoration of peace has now become the topmost priority for the people of Nepal. Therefore, the government is taking serious initiative to settle the ongoing conflict through negotiation. Exports rose by 5.6 percent and imports rose by 11.9 percent in 2003/04. Due to higher growth rate of imports, trade deficit has been expanding. The balance of payments, however, remained favorable by Rs. 16.5 billion due to the rise in the private remittances and loans. The present foreign exchange reserve level at US$ 1.3 billion is sufficient to finance merchandise imports of 11.2 months or merchandise and service imports of 9.2 months. 122 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 123 While the overall public sector finances have witnessed prudent management, the initiation and implementation of some important projects have suffered on account of the unfavorable peace situation. Despite the growth rate of capital expenditure and current expenditure at 9.5 percent and 8.9 percent respectively, the principal repayment rose by 14.2 percent in 2003/04. With the resources registering a growth of 9.1 percent, the budget deficit/GDP ratio remained at 3.7 percent, recording only a marginal increment over such ratio of 3.6 percent in 2002/03. With a per capita income level of around US$ 250, i.e. about 69 cents a day, the need for vigorous development endeavors in Nepal has become urgent. Accordingly, the ongoing Tenth Plan/PRSP (2002­07) aims to reduce the poverty ratio from 38 percent to 32 percent over this period. GDP is estimated to grow by 6.2 percent, agriculture by 4.1 percent and non-agriculture by 7.5 percent and per capita GDP by 4.1 percent, with a number of other socio-economic targets envisaged during the period. In view of the huge financial requirements for tackling the problems of poverty, unemployment, and the inadequate level of socio-economic infrastructure, a substantial level of financial and technical resources needs to be extended to Nepal at generous terms and conditions. Even for the sake of global peace and stability I use this platform to appeal the industrial countries to comply the commitment on ODA. We are very grateful to the Fund and the Bank for their continued sup- port to help Nepal improve the economic conditions of the people. I believe that the PRSP and PRGF are primarily oriented toward this objec- tive though much needs to be done. The government especially needs the consideration and adoption of special packages for socio-economic revival in a least developed country like Nepal. The role of the Bretton Woods institutions in this endeavor would be of utmost importance. I would, therefore, like to request the Fund/Bank and the entire donor community to make arrangements to include Nepal in the Highly Indebted Poor Countries (HIPC) Debt Initiative framework so as to assist Nepal allevi- ates the gravity of the development challenges. Greater support is also expected in the context of the opportunities and challenges associated with the WTO membership, especially in the transitional phase of the reform process, so that small and underdevel- oped economies like ours will be able to participate in the global econ- omy more meaningfully. I would like to assure our full support and participation in every action of the Fund and the Bank in this direction. I would like to reiterate our sincere thanks to the Bank and the Fund as well as the entire donor community for rendering valuable technical as well as financial assistance in our development endeav- ors. We are always effortful to make optimum use of resources along with carrying our further reform programs in all our important 123 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 124 socio-economic spheres. I seek more considerate support from the Fund and the Bank as well as our entire donor community in our endeavor of poverty reduction and sustainable socio-economic development in Nepal. NETHERLANDS: AGNES VAN ARDENNE Alternate Governor of the Bank Let me join fellow-governors in congratulating the Fund and Bank with their 60th anniversary. In this statement, I would like to focus on four topics. First, the recovery in the global economy. Second, crisis res- olution and exceptional access to Fund resources. Third, debt sustain- ability in low-income countries. And fourth, the mobilisation of resources for development. The world economic outlook points to continued strong growth in most parts of the world, although global imbalances still represent a downside risk. The key challenge for all regions is supporting and con- solidating this economic recovery through sound fiscal and structural policies. I would like to highlight three issues with respect to the eco- nomic outlook. First, the urgency to take appropriate measures to ensure medium and long term sustainability of public finances in view of the costs of ageing. At present, the Fund's debt sustainability analyses for industrial countries have a five-year horizon. The major impact of ageing in Europe will be felt after 2010, however. It would therefore be appropri- ate to extend this horizon. The long term impact of ageing can then be mitigated by measures in the short term. Second, the present economic momentum should be effectively used to implement budgetary consolidation in all major economic areas of the world. It is of paramount importance to increase budgetary discipline in good times with the objective to gradually achieve budgetary surpluses. Third, the opportunity to foster economic growth by reducing the administrative burden for the business sector. I refer to it as `oppor- tunity' since this growth-promoting policy does not lead to budgetary costs. The World Bank's `Doing Business' report clearly demon- strates that reducing the administrative burden for the business sector could significantly accelerate economic growth in both devel- oping and developed countries. But deregulation and a better invest- ment climate have to go hand in hand with strong institutions as illustrates the World Development Report 2005 "A Better Invest- ment Climate for Everyone". That means that we should also invest in capacity building. Turning to crisis resolution. The Fund's involvement in crises has in some cases led to a prolonged and high exposure of the Fund to a 124 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 125 small group of borrowers. This might jeopardize the principle of equal treatment of member states and risk the revolving character of Fund financing. Therefore, a strict implementation of existing IMF policies, especially the exceptional access framework, is required. Further- more, we favor the presumed use of the Supplemental Reserve Facil- ity in exceptional access cases. In addition, I invite the Fund to design a specific exit strategy for existing exceptional access cases. The development of a Code of Conduct could foster an ongoing dia- logue between sovereign debtors and the private sector. We therefore encourage these parties to swiftly agree on such a Code. A positive development is the increased attention for Fund arrange- ments to provide a signal on good policies without significant financing. The Fund should not be peddling loans to countries that do not need the Fund financing, or have precarious debt levels. The quality of a country's policy can be demonstrated by adherence to Fund's condition- ality, Board involvement, and an appropriate level of ownership. This can induce the private sector and donors to provide a country with nec- essary funds. These three crucial elements determine the value of Fund arrangements as a signaling device. Examples of these arrangements that have proven effective in the past are (low access) precautionary stand-by arrangements and low access arrangements under the Poverty Reduction and Growth Facility. The third issue I would like to address is the need to ensure long- term debt sustainability in low-income countries. HIPC has been a useful tool to deal with intolerable debt burdens and I fully support a limited extension of the HIPC initiative with two years, while ring fenc- ing eligibility. However, it is time to focus on the future and prevent new debt problems from arising. We have to break the vicious circle of lend- ing, new unsustainable debts and subsequent debt relief. Against this background, we should assess the various proposals for further debt reduction that are now on the table. I call upon both the Bank and the Fund to show leadership and accelerate the development and implementation of a framework for Long-term Debt Sustainability in low-income countries. This frame- work and joint Debt Sustainability Analyses should be the sole determi- nants for the allocation of grants and credits of all development partners, including the regional development banks. Of course, this could imply that also IDA will provide grants in certain circumstances. However, I would caution against turning IDA into a 100% grants window. Not because I am per se against grants but, more fundamen- tally, because I am very much against weakening important develop- ment institutions that are grant based as a consequence, notably the UN Funds and Programmes. 125 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 126 I would like to stress the need for a strong multilateral system. In a globalizing world with increasingly a common international agenda, we have to ensure that our multilateral institutions can live up to the chal- lenges. This principle should in my view guide the ongoing UN reforms. A stronger multilateral system should ensure more co-ordination and co-operation and less overlap and ineffectiveness. This implies the avoidance of mission creep and a clear division of labor, for instance between the World Bank and the UN Funds and Programmes. Of course, we should also step up our support to developing countries. At least an additional $50­60 billion needs to be raised to achieve the Mil- lennium Development Goals. As countries improve their policies and institutions, this amount could be used effectively by developing countries. This is taxpayers' money well spent. As a believer in equal burden sharing among donors, I urge countries to formulate a convincing time frame within which to raise aid levels to the UN norm set some 35 years ago. Finally, next to aid volumes, the delivery of aid should be improved. I thus call on Fund, Bank, and donors to further align their policies with recipient country policies and harmonies their procedures and policies. Furthermore, aid should also focus on private sector development and be supported by better international trade opportunities for developing countries. Let us use the coming year to do whatever we can to finalize the WTO negotiations. This in itself will already lift hundreds of mil- lions of people out of poverty. NEW ZEALAND: MICHAEL CULLEN Governor of the Fund Introduction I am delighted to participate once again in this meeting. This year holds special significance as the 60th anniversary since the formation of the Bretton Woods Institutions. The two sister institutions have played an influential and leading role in economic and development issues over the past 60 years. While neither institution is quite in the form envis- aged by Keynes or White in 1944, the outcomes achieved support the need for the formation of both institutions: · Greater stability to economic growth and cycles; · Stronger fiscal policies; · Greater surveillance of financial and monetary systems; · Widely observed standards and codes; and · Greater transparency. 126 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 127 Development Effectiveness and Harmonization This is a time of great challenge for the international community. A major UN review will take place next year of progress against the Mil- lennium Development Goals (MDGs). We are lagging behind and we must turn this situation around. We need to look closely at development financing and effectiveness issues. The Bretton Woods Institutions, and the World Bank, in particular, have vital roles to play. New Zealand strongly supports the international efforts to turn development assistance towards a focus on results. The Bank has made good progress on this front. New Zealand endorses the Bank's Results Management agenda, including its work on statistical capacity building. It is important to follow through on the outcomes of the Marrakesh conference on Managing for Development Results. This work is critical to improving the effectiveness of development outcomes. When Official Development Assistance (ODA) resources are scarce, and numerous contending priorities exist, the multilateral system must play its part to demonstrate impact and results. I have been interested in the discussions on the need to improve linkages between the United Nations and the Bretton Woods Institu- tions. The United Nations and Bretton Woods Institutions have dif- fering mandates, funding bases and representation, but there are overlapping responsibilities and both are striving to deliver more effective and sustainable development outcomes, and do so more efficiently. Better coordination and harmonization between the two sets of institutions, and other donors, would improve the effective- ness of their operations and, importantly, reduce the transaction costs for developing countries. Much more needs to be done, particularly at the country level. Fundamentally, we need international actors assisting developing countries by harmonizing their support around country owned priorities and plans. The world is too small, and devel- oping countries face enough pressure on their administrations already, to have unhelpful competition, duplication and overlap of external assistance. New Zealand is responsive to the need to provide more stable and predictable aid flows. Through our aid programme we are moving towards multi-year commitments with our development partners which will enable them to plan and budget over a longer time frame. We are also looking to improve the effectiveness of the assistance provided to support poverty reducing expenditure in core partners through greater use of sector wide approaches, in coordination with other donors, and budget support. This has been most apparent in the Pacific, where New Zealand has worked closely with Australia and other regional donors in Pacific partner countries. 127 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 128 Pacific I look forward to reading the review by the Bank's Operations and Evaluation Department of its engagement in the Pacific over the past 10 years. I am concerned that the review of the Pacific has reached some disappointing conclusions about the Bank's performance in the region. I strongly encourage the Bank to act on the findings of the review and ensure that the conclusions are taken fully into account in the develop- ment of a strategy for future engagement in the Pacific. I also encourage the Bank to consult widely on its strategy with stakeholders in the Pacific. The need for a coherent Bank strategy that takes full account of the efforts of other players is as great as ever. The Bank and Fund have valuable expertise to offer their partners in the Pacific, and it is impor- tant that they remain engaged in an effective and appropriate manner. The best way forward is learning from the past and building an effective programme for the future. Last year New Zealand's Prime Minister chaired the Pacific Island Forum. In a recent strategic review by the Forum, members adopted a "Pacific Vision" and identified four priority topics for the forum to address: economic growth, sustainable development, good governance and regional security. The review identified these issues as ones leading to: · Enhanced regional cooperation; · Greater sharing of resources; and · New thinking about the relationships between sovereign states. Following the review, Forum leaders have taken a number of deci- sions that are likely to have far-reaching implications for the Forum, including how it interacts with the rest of the world. Leaders have approved the development of a Pacific Plan for intensified regional cooperation. It will be a basis for stronger and deeper links between the sovereign countries in the Pacific region. The Pacific Plan will also affect the way that international agencies interact with the Forum region in the future. The development of the plan would benefit from input and assistance from the Fund and the Bank. I encourage both the Bank and the Fund to be actively involved when views and opinions are being sought on the Pacific Plan, and to actively seek out opportunities to strengthen its engagement with the Pacific Island Forum. We have, for the first time in decades, a chance to unite behind one vision, one regional response. Let us not see the opportunity foregone. 128 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 129 Debt Sustainability New Zealand is concerned about the high debt levels in a large number of developing countries. New Zealand has supported the Heav- ily Indebted Poor Countries Initiative and the efforts to reduce debt levels to sustainable levels. New Zealand commends the Bank and Fund for their recent work on a debt sustainability framework. New Zealand is supportive of this work and would like to see a consistent approach applied to future lending by the Bank, Fund and other multi- lateral institutions. High debt servicing costs are an impediment to growth. Strong insti- tutions and policies, and accountability arrangements are necessary pre- conditions for growth. The resources that the Bank and Fund provide for technical assistance and capacity building are very important so that the underlying causes behind the debt distress and poor performance are addressed. New Zealand supports a comprehensive and balanced approach to development, including effective ODA contributions and trade liberal- ization to open markets for poor countries. Looking ahead, New Zealand continues to consider concessionary financing to be a valuable source of development financing. We are pleased to be participating in the international Development Agency (IDA 14) negotiations, and look forward to their successful conclusion in the next few months. WTO: Doha Development Agenda The agreement to the framework package on 31 July of this year was an important and historic milestone for the World Trade Organization (WTO). The agreement brings many benefits to the nations involved and also brings credibility to the multilateral trading system and the WTO. I am pleased with the agreement and see it as an important step for the Doha Round and for the WTO in general. Agriculture remains at the heart of the Doha negotiations, offering the greatest potential for gains to developing countries. While many details are still to be negotiated, many of the difficult political decisions have been taken, ensuring technical work can continue. The outcomes in other areas such as non-agricultural market access, services, Singapore issues, trade facilitation and other development issues are encouraging. We recognize that there are reservations, partic- ularly from developing countries, to further liberalization but hopefully the positive outcomes on agriculture will encourage developing coun- tries to engage effectively on these other issues. 129 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 130 We encourage both the Bank and Fund to be active participants in the process. Areas such as trade facilitation and providing financial sup- port for improvements in ports, customs, and other trade-related infra- structure, are areas where the Bank and Fund could be involved. Into the future, New Zealand remains committed to a multilateral trading system and the pursuit of further liberalization. There is still much work to be done including improving access to markets and improved trade rules that can benefit everyone. It is important to remember that a comprehensive package in the future could stimulate worldwide increases in income and lift millions out of poverty. The stakes are very high and we hope the momentum from this historic agreement will continue. Internal Reform New Zealand is an advocate of the internal reforms to improve the transparency, effectiveness and efficiency of the Bank and the Fund. We would like to voice our support for the Bank and Fund's work in rela- tion to internal governance and external transparency. We would like to see more work on budget reforms to encourage more explicit linkages between resource allocation and outcomes. One area of reform from within the Bank that has resonated well with New Zealand is the replacement of Adjustment Lending with Develop- ment Policy Lending. We support this change as the new policy acknowl- edges that each country has its own set of unique circumstances and that governments must take ownership of reforms to develop a program that meets their countries' needs. Hopefully the new policy will lead to broader participation in government policy making and a greater under- standing of the social and environmental impact. It is unfortunate that the handling of remuneration issues by both institutions in this anniversary year has been untidy and has highlighted the governance problems that still need to be addressed. The handling of the issue has given no credit to either institution and has shown that sibling rivalry between the two sisters has not been constructive, and that more professional and transparent remuneration and promotion systems need to be put in place. Concluding Comment Finally, allow me to close by restating that the Fund's and Bank's contribution to the Pacific region is important. We look forward to increasing dialogue with the Bank and our development partners on the issues facing small states in the Pacific in the coming year. 130 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 131 PAKISTAN: SALMAN SHAH Governor of the Bank It is a great honor for me to address the 2004 Annual Meetings of the World Bank and IMF. Let me also take this opportunity to thank our hosts for their warm hospitality and also express my appreciation for the admirable arrangements for these meetings. We meet at a time that present great opportunity, yet is fraught with great risk and momentous challenges lie ahead. Security issues threaten many countries of the world and rightly demand our focus. Yet we risk loosing sight of a fundamental principle--global security and prosperity are not only intimately linked but are indivisible. We cannot have a secure world when it is full of grave imbalances, where the absolute number of poor are growing and continue to live in abject poverty and despair. Mr. Chairman, only if we succeed in providing hope, can we win the war against terror. The Monterrey consensus was a historic global compact that pro- vided both hope and the framework for a unique partnership between developed and developing countries to serve as a road map to a better world. Never before in the history of global dialogue did we achieve such unity of purpose. However, two and a half years after Monterrey there is little real progress on the commitments made at Monterrey. Even as developing countries continue to strengthen their macroeconomic framework and deepen the process of painful structural reform, ODA levels have increased marginally. On the voice issue peripherally changes have been made without addressing substantive issues that would enhance the voice and participation of DTCs in the decision making process at the Bretton Woods Institutions and the Doha round has yet to move for- ward meaningfully. We need now to be courageous and far sighted. We know that these are complex issues, yet we must not continue to debate, discuss and ana- lyze. What is really required is the political will to move forward, lest we loose entirely, the momentum gained from Monterrey. That would be an irreparable loss to all of us and our coming generations. Unless the levels of ODA are increased to close the financing gap estimated at $50 billion, the MDGs will not be met by most countries by 2015. Let us clearly understand this stark reality and let us act before it is too late. The primary responsibility for lifting our people out of poverty and deprivation rest with us in the developing world. Yet by no amount of reform or any other effort can we bridge the financing gap in time to meet the MDGs unless there is front loading of ODA now. We acknowledge and deeply appreciate U.K.'s efforts in this regard and 131 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 132 their tabling the IFF, which has support amongst some donors and nearly all developing countries. Only the IFF has the potential of speed- ily frontloading ODA and therefore we should focus efforts primarily on operationalizing IFF. Donors who cannot participate in this mecha- nism will need to scale up their ODA, consistent with their budgetary and legislative frameworks. The target of 0. 7 % of the GNI of devel- oped countries was set over 34 years ago. We must move towards achieving this goal. Yet far more important for private sector led sustainable growth and poverty reduction in the developing world, is the issue of market access. Improvement in investment climates will be given a strong impetus by market access, more than any change procedures and practices. Unless the developed world allows this access and reduces significantly trade distorting subsidies, developing countries will continue to rely on ODA, and continue to be vulnerable to debt crisis. We have to address the gaps between the international economic conceptual framework and practice. We want to achieve MDGs by 2015, yet the requisite increase in ODA is not forthcoming; we want private sector led sustainable poverty reducing growth, under-pinned by investment climates, yet market access is denied; we urge democ- racy, the world over, yet we fear democracy at the BWIs. We have to address these inconsistencies squarely if we are to really be partners in economic development and transformation, as was our joint vision at Monterrey. On the 60th anniversary of the BWI, there is much to celebrate. The Bank and the Fund have undergone transformation from organizations that prescribed one size fit all, take it or leave it solutions, to institutions that genuinely try to listen and be real partners with developing coun- tries. Mr. Wolfensohn has spearheaded this change and has earned respect the world over for this. We thank him. We welcome the Bank's several initiatives on infrastructure lending to MIC, streamlining processes and procedures. However, much remains to be done. We would like to see more work in a larger number of countries on the fiscal space issue, to accommodate the burgeoning financing require- ment of social and physical infrastructure, without which growth will be choked. We would like to see greater harmonization within the Bank Group, harnessing the synergies that exist to provide support for infra- structure development. Our private sectors, too, need to be supported strongly by a far more proactive IFC, as well as MIGA. IDA is doing a tremendous job and playing an enormous role in reducing poverty, supporting growth and reform in our countries. We look forward to a successful completion of the IDA-14 replenishment process, at a level that is consistent with the magnitude of the challenges before us. 132 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 133 The world economic outlook is stronger than at most anytime in the recent past but risks to the expansion have increased in recent months. While global growth has become increasingly broad-based geographi- cally, it remains heavily dependent on the momentum generated by the U.S. and Chinese economies. The growing recovery in the euro area and in Japan is relying to a much greater extent on external demand rather than on domestic spending. The developing world continues to contribute strongly to the global recovery, which extends beyond the emerging market economies of Asia and Latin America to encompass sub-Saharan Africa as well. The risks to the favorable outlook have both a short-term and a medium-term dimension. Among the former, the volatility of oil prices, despite strenuous efforts of the major oil exporters to stabilize the market, is a matter of concern, especially where possible supply disruptions are associated with geopolitical developments in a major producing region. The movement towards a higher interest rate envi- ronment in international capital markets has implications for private capital flows to the periphery countries. The large and persistent pay- ments imbalances among the major industrial countries create risks of disorderly exchange rate and interest rate movements; together these factors generate a high degree of uncertainty that is inimical to the prospects for investment revival in several regions of the develop- ing world. Among the medium-term risks perhaps the most significant is the perverse direction of official capital flows, in the form of accumulating dollar reserves, that is the counterpart of growing U.S. external and fiscal imbalances. Only second to that is the negative transfer of official resources from the multilateral development finance institutions to their borrowers in the developing world; even net disbursements have turned negative in the case of the World Bank Group in the last two years at a time when there are enormous needs for infrastructure finance and other capital investments in their client countries. Given this background, current proposals for reform of international financial arrangements being released as "trial balloons" appear to us to bear little relation to the magnitude and character of the problems con- fronting the poorer countries. It is being suggested, for example, that the International Monetary Fund, our premier monetary institution, gradually withdraw from its financing responsibilities to its low-income members and instead devise a kind of signaling instrument (called a Policy Monitor- ing Arrangement) to providers of debt relief and to serve as a "gate- keeper" for other sources of funding. We don't think it is yet time for IMF to give up its traditional role. Moreover, there is no precautionary type of facility envisaged that would help emerging market countries prevent tem- porary difficulties from turning into full-blown capital account crises. Nor 133 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 134 are there any moves to improve upon the Compensatory Financing Facil- ity to help other countries deal with exogenous shocks. In the same line of temporizing reforms, the World Bank is being pushed to convert loans into grants, with no clear assurance that there would be truly additional official funds to cover the resulting gaps in pro- jected re-flows of its "soft-window" resources. Grants must be funded incrementally; otherwise, they will cut into the Bank's resources for development lending in the years ahead. As we approach the MDGs, we need to strengthen, not undermine, the Bank's ability to provide scaled up assistance to poor countries. A debt sustainability analysis (DSA) is being proposed as a framework for determining the ceilings on external debt that each low- income developing country could carry, with the rest of its external funding requirements for attaining the Millennial Devel- opment Goals (MDGs) to be met, presumably, through grants. While this clearly represents an advance on the "one-size-fits-all" criteria that were incorporated into the HIPC Initiative, there is again no assurance that grant funds would be forthcoming to fill the gap that has already emerged for several countries that have reached their "completion points" but find their remaining debt burdens to be in excess of the DSA thresholds. These thresholds are meant to apply not only to HIPIC- eligible countries but to the generality of low-income countries, thereby opening up a void that will require large amounts of grant money. Pakistan A few words about Pakistan: Pakistan's economic scene and prospects have undergone a sea change in the last five years. Exchange rates and foreign exchange reserves, inflation and interest rates, fiscal and current accounts--all points to stable and improving macroeco- nomic performance. External debt, though still high, has declined appreciably as a proportion of GDP, as has the debt service burden, thanks to lower interest rates, debt re-profiling and prepayment of some expensive debt. We are targeting a growth rate of 8% in the medium term. Implementation of wide ranging structural, institutional and governance reforms, which were initiated in the face of most diffi- cult challenges, are on track and beginning to show results. Growth rate has reached its historical average of 6% plus. Domestic capital markets are buoyant and access to international capital markets has been restored. The stage is also set for Pakistan to exit from IMF's PRGF at the end of this year. These measures, supported by the IFIs, have enabled the Govern- ment to substantially increase social expenditures. Yet no one can deny that, going forward, the challenge remains formidable. The benefits of growth must be meaningfully shared by, not just trickle down to, the poor. 134 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 135 While we remain committed to relentlessly pursue our poverty reduction strategy and make progress toward the MDGs, we also need to improve the investment climate in the country. Enhance the competitiveness of the economy, to compete in world markets, foster private sector develop- ment, and boost FDI to expand the economy and generate employment. We cannot do this alone. We need scaled up support of the Bank Group, and I do mean the whole of the Bank Group--IDA, IFC and MIGA--to mobilize substantial incremental resources. Now that the country has demonstrated a better than expected economic performance, we look forward to a substantially bigger envelope under IDA14, in order to sus- tain the momentum going into a second generation of reforms. Developing countries today are faced with a huge challenge and tough choices. The challenge is to lift their people out of poverty. And this requires investing in growth that provides quick economic returns, and jobs and incomes to the poor. Without economic expansion, poverty reduction will remain an illusion. Let us, as developing and developed countries work together to create hope, towards global peace and prosperity, the twin yet inseparable goals. PAPUA NEW GUINEA: BART PHILEMON Governor of the Bank I join my fellow Governors to convey my delegation's appreciation to the President of the World Bank Group, Managing Director of the IMF, and the Government of USA for the warm hospitality and excel- lent arrangement in making our stay a pleasant one. I also convey my Government's congratulations to Mr. Rodrigo de Rato on his appointment as the new Managing Director of the IMF. I am confident that he will continue to advance the good working rela- tionship with all member countries. In my first address to this forum during the 2002 Annual Meeting, I highlighted a number of difficulties and challenges that Papua New Guinea would have to overcome, in order to achieve macroeconomic stability and sustain economic growth over the medium term. These challenges will always be present now and in future, in part to Papua New Guinea's comparatively small and open economy, which will continue to be affected by events and developments in the global economic and political arena. I, therefore, reiterate that meetings such as this provide an impor- tant forum for us to have continuous dialogue with these two institu- tions, and our bilateral and development partners from around the world. The forum also gives us the opportunity to share and inform the international community, and in particular, our donor friends, on the latest developments in our economy and the challenges that lie ahead. 135 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 136 Since late 2002, the Government has acted responsibly by undertak- ing a mixture of macroeconomic and structural reforms to restore fiscal discipline and improve economic conditions, which was further aided by the improved global economic conditions. The Government continued to implement the structural reform pro- gram of promoting good governance, sustaining macroeconomic stabil- ity, improving public sector performance, and removing impediments to business and investments, because it believes that continued adherence to these reforms represents the best means of enhancing economic and human development. The country is now benefiting from the Government's prudent fiscal management and some of the reforms undertaken so far. Economic growth has picked up and employment is growing, while inflation and interest rates have declined sharply. On the external front, the exchange rate has stabilized and foreign exchange reserves are at record levels. Whilst economic conditions have improved, there is still a lot of hard work to do, particularly in the areas of public expenditure and continu- ous implementation of structural reforms. The various fiscal issues and the challenge of mobilizing resources to address many of the social issues threatening Papua New Guinea's development aspirations will exert considerable pressure on the budget framework over the medium-term. The Government is aware that accelerating and sustaining growth requires not only quick fixes but sustained period of political and macro- economic stability, and continuous adherence to structural reform. The Government will, therefore, continue to pursue short and medium-term fiscal and structural reforms to sustain and build on this growth. The medium-term picture, and more immediately, the outlook for next year, will depend not only on how well the Government manages the immediate pressures and the challenges that it is confronted with today but also the supportive role that its development partners such as the Bank and the Fund have to play in the whole process. The Government is keen to address the challenges that lie ahead and has undertaken a number of policy initiatives, together with the public expenditure review and rationalization exercise with the World Bank and the Enhanced Co-operation Program with the Australian Government. Our Budgets over the next couple of years will be framed against a background of improving economic conditions and an on-going reform agenda but with spending constrained by a legacy of excessive debt and a misallocation of resources--with the aim of getting the balance right through the "adjustment and prioritization" exercise. The Government intends to achieve a target budget deficit of 1.0% of GDP in 2005, with a view to achieving a balanced-budget over the medium-term, and reduce the debt-GDP ratio from the current level of 136 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 137 60% of GDP to around 55% of GDP by 2007. The full details of the medium-term debt management strategy will be announced in the upcoming 2005 Budget. Consistent with new Medium Term Development Strategy (MTDS) 2005­2010, more attention will be focused in priority areas of transport infrastructure, rehabilitation and maintenance, basic education, pri- mary health care, law and justice, and programs that promote rural income earning opportunities. The MTDS 2005­2010 will be an integral component of the Govern- ment's overall economic and public sector reform program, which will map-out an appropriate development strategy for the period 2005 to 2010 and a matching policy framework that will guide the Government's bud- getary allocations and wider policy initiatives. The objectives of the MTDS 2005­2010 are consistent with the Millennium Development Goals. This document would also set the basis for productive discussions between the Government and the development partners, in order to ensure that all development programs, whether government or donor funded, have to subscribe to its development strategy--MTDS. This implies that improved harmonization of donor support is cru- cially important in achieving the Millennium Development Goals. Aid coordination and delivery mechanisms in Papua New Guinea were reviewed this year, with a view to moving towards improved harmoniza- tion of aid and towards sector wide and whole of Government budget support forms of delivery. The Government, in collaboration with the United Nations Devel- opment Program (UNDP), has successfully completed its first Country Report on its performance in the implementation of the Millennium Development Goals. The Draft Report is now before the Government for approval. The implementation of the Enhanced Co-operation Program is underway with the placement of Australian officials in key economic, spending agencies, law and justice agencies, border management and transport security agencies and police. The Australian officials will work side-by-side with Papua New Guineans to strengthen Papua New Guinea's ability to develop and implement sound economic policies, manage our finances, maintain law and order, tackle corruption, and improve border security, so that investor confidence is maintained and an environment for broad based development is facilitated. The Government is also engaging in closer dialogue with the private sector. The Consultative Implementation Monitoring Council is an important forum that allows the private sector and civil society to engage with the Government and provide meaningful input into the National Budget and contribute towards the policy framework. 137 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 138 In response to the call for greater responsiveness of the Government to private sector concerns, a National Working Group on Removing Impediments to Business and Investment was established by the Gov- ernment in August last year to assist in facilitating the Government's policy of fostering economic growth through increased exports and improved business and investment climate. The National Working Group is currently considering various initiatives to facilitate and pro- mote commerce and business within Papua New Guinea. The main thrust of adhering to reforms and adjustment, as well as maintaining the on-going and future dialogue with our development part- ners, is to stress that the achievements of the current reforms and adjust- ment are the beginning of a process of evolutionary development to put PNG back on a path to sustainable economic growth and development. The task is enormous and requires a collective and partnership approach with the development partners, including the World Bank and the Fund. In concluding, I would like to acknowledge and express my Govern- ment's sincere gratitude to the management and staff of the World Bank and the Fund for their continuous support in PNG's development effort. PHILIPPINES: JUANITA D. AMATONG Governor of the Bank After their establishment, the role and relevance of multilateral institutions have never been discussed more extensively until now. On the one side, the Bank and the Fund are both challenged to assist countries attain the objectives of the Monterrey Consensus. They must put their resources in activities that enable countries to meet the MDGs by 2015. Disturbing assessment is that many countries, at existing growth rates, will be unable to meet the MDGs. Multilateral institutions will need to scale up to move closer to the goals. On the other hand, the sustainability of their operations has been put to question as both institutions have suffered from big declines in lending operations. Idle resources piled up even as sovereign middle- income country borrowers opt for private international banks and bond markets to satisfy their huge appetite for funding. Both the Bank and the Fund will need to reverse deteriorating income outlook to keep their topnotch credit ratings and sustain their roles as MDG movers. In both of these issues, there is now increasing recognition that the middle-income countries hold the key in their resolution. The middle-income countries are home to 2.7 million people, almost a half (44%) of the world's population. Of these, over 300 million sub- sist below US$1 per day and almost a billion below US$2 per day. These represent a hefty 29 and 34 percent, respectively, of the impoverished people on this planet. 138 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 139 Likewise, in terms of volume, it is the middle-income countries that have the greatest need for resources and assistance. They accessed the international markets for funds and avoided borrowing from multilat- eral institutions. In 2001 and 2002, they issued, on a net basis, US$25.9 billion in international bonds while they, excluding two large Latin American countries that obtained emergency funding, shunned Bank and Fund financing, recording only US$8.5 billion in net borrowings from these two institutions during those two years. Preliminary infor- mation shows that recent net borrowings of middle-income countries from the Bank and the Fund have dwindled to a trickle more recently. Why this development has escaped the notice of these two institutions, the knowledge banks, the repositories of economic information so vital to policy decision making, is somewhat perplexing. However, winds are shifting directions after a period of denial. The Bank's study on middle-income countries early this year included some interesting findings. The main conclusions--The cost of borrowing from the Bank has increased tremendously. The Bank's financial products are inappropriate for middle-income countries' evolving needs. To stay rele- vant to their middle-income country clientele, the Bank must strengthen their voice in the formulation of country assistance strategies. The Bank and the Fund should engage in a new type of partnership with middle-income countries--one that is more efficient, flexible and one that is more responsive to middle-income countries' needs. Reforms to use country systems are in the right direction. At the same time, we are eager to see increased progress in decentralization, harmo- nization and streamlining of conditionalities and procedures. In addition, we call for greater flexibility. If central government programs and projects are slow in coming, let's look at the programs and projects of local governments and communities. In almost every country, there are gems of governance among local government units and communities. In fact, the Shanghai Conference recognized many of these. Since a large number of middle-income countries are in dire fiscal straits, products should be tailored to avoid further fiscal deterioration. The Bank's SWAPs should be adopted in more countries and used more often. The Bank does not need to invent new projects; it just has to look at the projects already listed in countries' budgets. Likewise, infrastructure deserves a second look as many private sector participants have shunned from infrastructure provision and gov- ernments wean away from costly enhancements earlier provided. The infrastructure requirements of developing countries are huge at 7% of GDP but only a half of this has materialized. As of today, private infra- structure investment has dwindled to less than a third of its peak levels in the 1990s. 139 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 140 The Fund should pursue ways to redefine the public finance condition- ality to avoid depriving developing countries of productive investments for future growth. We urge the Fund to remove expenditures on produc- tive infrastructure from the definition of "fiscal deficit", use "primary sur- plus" as criterion and/or exclude the operations of commercially-run public enterprises from the coverage of fiscal conditionality. Likewise, while the Fund and the Bank play an important role as knowledge disseminators, they have not played a more active role in assisting developing countries in coming up with policies steadfastly dedicated to growth and in ways that biases income gains towards the poor. Information counts heavily in making intelligent policy deci- sions. Given at the right time, the right venues and appropriate approach, I believe that success stories are to be emulated. We just have to make good governance irresistible. It is a product that should be attractive to sell. We are living in tough, uncertain, volatile times. Exchange rates, interest rates, oil prices move frequently in directions that are difficult to predict. In a borderless world, imbalances could occur and recur, intensify and spill over into neighboring countries with all its dire effects on growth and poverty. In such times, the roles of the Bank and the IMF become even more profound. Both are uniquely placed to intentionally smooth the markets with their products. Both target their services to attain greatest impact on poverty reduction. The knowledge they share is the best foundation for future reforms. Their operations should move ahead with the times; they should make their products and services more accessible and more useful to their clients. They should be more aggressive; they should develop closer linkages with their clients and policymakers. The fates of the multilaterals and middle-income countries are inex- tricably intertwined. Multilaterals help middle-income countries attain the MDGs by expanding and improving their lending and analytical services. The middle-income countries provide the clientele that enables the multilaterals to enhance their resource positions and the Bank, in particular--can then allocate more funds at lower costs for the programs of low-income countries. POLAND: LESZEK BALCEROWICZ Governor of the Bank I am pleased to participate in the Annual Meetings during the 60th anniversary of the World Bank and the International Monetary Fund. The year 2004 is of paramount importance for Poland, which--together with the other seven Central European transition economies and Malta and Cyprus--has joined the European Union. This is a sign that the tran- 140 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 141 sition process which started in 1989 from a communist central planning model to a market-based system is well advanced. I would like to use this opportunity to express my appreciation and gratitude to the Bank and the Fund for their outstanding contribution to reforms in Poland. Poland is ready to share lessons learned during the transition process with other countries and has already begun to do so. In 2002, in cooperation with the United States Agency for International Develop- ment (USAID), Poland established the Training Initiative for Banking Supervision (TIBS)--a training centre and forum for banking supervi- sors of Central, Eastern, and Southern Europe to share practical experi- ences relative to advancing their supervisory framework and capacity. TIBS holds two one-week training seminars in Poland each year and is starting to arrange training sessions for banking supervisors in other countries, like recently in Kiev. Poland also organizes study visits and internships for staff of governmental agencies in Poland and sends Poland's experts to other countries to help in strengthening institutional capacity and provide advisory assistance. In 2004, a conference on exchange rate regimes and monetary policy for officials from countries of Southern and Eastern Europe and Central Asia was organized in Warsaw together with the Swiss National Bank. Poland is ready to scale up these training and technical assistance activities, including in cooper- ation with the Bank and the Fund. The lessons learned by Poland and the post-communist transition in general are like those of other emerging countries: to succeed in con- vergence, a country needs an institutional system with a rationally lim- ited state, which gives rise to an open market economy within the rule of law or the successful transition to such a system. It means that an appropriate program of reforms must free up the forces of growth by strengthening the propelling institutions as well as ensure a stable macroeconomic framework by enhancing the stabilizing institutions and good monetary and fiscal policies. Let me focus here on of the first category of actions, which in recent years have regained much deserved ground in economic debates on development. In order to stay within time limits, I will concentrate on four key principles. First, the state needs to grant its citizens and entrepreneurs a suffi- ciently large scope of real economic freedom. The creation and devel- opment of private companies in virtually all sectors of the economy should not be restricted. The economy must be open to foreign trade and investment. Second, the rights and freedoms of entrepreneurs may not be attenu- ated by excessive regulation. Governments must recognize that excessive, overcomplicated regulations are damaging to economic development and very often fail to achieve their declared goals. Such burdensome regula- tions should also be seen as a major cause of corruption. This includes 141 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 142 inter alia the overregulation of the labor market by restrictive labor prac- tices and too much job protection, which contribute to unemployment. Third, governments need to strengthen their capacities to protect the property rights of all its citizens, not only the privileged minority. And fourth, taxes should be low and simple and public finances should be healthy. Many governments impede long-term develop- ment by having excessively high public expenditures that result in increased taxation and/or unsustainable fiscal deficits and can also be linked to unemployment, tax evasion, and the growth of a shadow economy. Thus, I would like to commend the World Bank for focusing on the need to improve the investment climate as indicated by the Elements of the Growth Agenda paper submitted for the Development Committee meeting and the fact that this is the topic of this year's World Develop- ment Report. I would like to especially praise and thank the Bank for launching the Doing Business project. By benchmarking and providing comparable, systematic data on how burdensome and costly the obser- vance of the existing regulations is, Doing Business gives valuable information on which areas of firms' institutional environment consti- tute major barriers to growth. Therefore, it is a useful tool for defining priority areas for the reforms necessary to improve the investment cli- mate. The information provided by the Doing Business report that demonstrates the weaknesses in a country's business environment may not be enjoyable to everyone, but it is crucial for creating incentives for policymakers to undertake needed reforms. Everybody needs right incentives, politicians and policymakers, too. PORTUGAL: LUIS MIGUEL MORAIS LEITAO Governor of the Bank It is a great pleasure for me to be here. In Portugal, the economy is recovering, with domestic demand contributing to expand economic activity. For 2005, we expect a GDP growth above 2%, a rate that has not been recorded for the last five years. We are also on the way to collect the benefits of important structural reforms adopted in the last two years--health, education, social secu- rity, public administration, labor market and tax system--allowing us now to focus on growth as the major goal of our policies. Concerning fiscal policy, we continue strongly committed to fulfilling the objectives of the Stability and Growth Pact. In 2004 the deficit will remain below 3% of the Gross Domestic Product and the debt ratio will be 60% of GDP. Keeping in mind last years' negative economic growth of ­1.3%, these results show the strong commitment of the Portuguese govern- ment to the budgetary consolidation process. Inflation has been 142 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 143 decreasing, more in line with the European Central Bank's objective, and is presently contained. As recent events have shown, promoting peace and security worldwide must be a priority and requires global co-ordinated action. Defending the integrity of the World's Financial System and avoiding its mismanagement for irregular purposes are crucial features for Peace, as well as creating conditions for access to better living standards and freedom of faith. Portugal has stood at the forefront of the fight against the financing of terrorism and money laundering, having ensured that legal measures to make our financial system resilient to these phenomena are swiftly imple- mented, and cases are quickly detected and addressed. Full adherence to the Financial Action Task Force's recommendations on money laundering and on the prevention of terrorism financing is crucial, and this is an area where the success of our action is highly dependent on strong co-ordina- tion, both among domestic institutions and at the international level. Portugal remains fully committed with the global effort to fight poverty. As the World Development Report 2005 highlights, the pro- motion of a better investment climate in developing countries is central--it allows official development assistance to be leveraged by private sector development. We firmly believe that economic growth is the key for poverty reduction and that is the combined result of good governance, improvements in health and education systems and private investment. As a measure of our common efforts, the Millennium Development Goals (MDGs) continue to provide the major framework for our action. We look forward to discussing our major achievements and shortcomings next year. The new partnership for development between developed and developing countries established during the Monterrey, Johannesburg and Doha summits remains the best way to provide urgent, concerted and sustained action in order to make faster progress towards the achievement of the MDGs. The first of the MDGs, poverty reduction, has been the Bank's overreaching objective for many years and it is also the priority of Portuguese cooperation. The Comprehensive Development Framework that includes the Poverty Reduction Strategy Papers (PRSP) and the Country Assis- tance Strategies is, in our opinion, a useful tool for the definition of national development strategies and we reaffirm the importance of a closer link of these documents with the budget process. The World Bank plays a crucial role in providing technical assistance and capacity building for the implementation, monitoring and evaluation of this framework. Portugal encourages the World Bank to fully implement its Infra- structure Action Plan and its growth agenda, as economic growth is the 143 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 144 driving force for development. In this context, we welcome the Bank's renewed commitment to infrastructure and private sector development. Strengthening aid effectiveness requires concerted efforts and coor- dination of donor actions. We support the efforts made for the defini- tion of a framework for monitoring coherence, coordination and cooperation of the World Bank with other multilateral organizations. It's a tool that can contribute to enhancing the overall development impact of aid, as well as provide feedback in real time to influence key decision-making processes. Emphasis should be given to the importance of aligning aid resources more closely with countries' priorities and processes and of harmonizing donors' requirements and practices. This exercise is partic- ularly relevant for Portuguese cooperation, which has made efforts to concentrate its assistance in a small group of countries with whom Por- tugal has strong historical and cultural ties, namely in the Portuguese speaking countries in Africa and Timor-Leste. We are aware that developed countries will need to provide stronger support through increased market access. The breakthrough achieved on August the 1st in the Geneva World Trade Organization negotia- tions gives hope to a positive outcome of the Doha Development round. Its benefits will be felt worldwide, particularly in developing countries. In order to be prepared to take full advantage of a new trade regime, developing countries should also reform their government structures, improve governance, enhance democratic and participatory decision-making and implement sound and coherent macroeconomic policies. When it comes to aid, we should be prudent not to create misguided expectations, promising additional resources beyond those we can commit, especially at a time when national budgets are under severe constraints. We must focus on the need to make aid flows more effec- tive, namely through a better alignment of donors' aid with the coun- tries' development priorities. In terms of Official Development Assistance (ODA), Portugal is firmly determined to reach at least 0.33% of Gross National Income to Official Development Assistance (ODA) by 2006, thus contributing to the EU collective commitment of reaching an EU average ODA of 0.39% of Gross National Income (GNI) by 2006. With respect to debt, we encourage the World Bank and the Fund to continue exploring new solutions that provide a tool for ensuring long- term debt sustainability. After the positive results of the HIPC Initia- tive, we must remain vigilant to avoid the repetition of debt distressed situations. Developing countries must improve institutional capacity, develop good governance and above all seek peace and security condi- tions. For low-income countries, especially those that benefited from 144 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 145 HIPC, where the challenge to maintain macroeconomic stability is greater, due mainly to being more exposed to external economic shocks, access to financing on appropriate terms is clearly needed. It is impor- tant to appropriately tailor the mix of grants and loans to the countries' circumstances so as not to increase the risk of debt distress in already highly indebted countries. I would like to finish by thanking the Bank and the Fund Staff and Management for their excellent work, the Boards of Directors for their strategic view and guidance and President Wolfensohn, for his marked leadership. I would also like to welcome and congratulate Mr. Rodrigo de Rato for his recent appointment as IMF Managing Director. I wish him every success in his new assignment. RUSSIAN FEDERATION: ALEKSEI KUDRIN Governor of the Bank and the Fund The Global Economy and Financial Markets Over the last 6 months there was a noticeable increase in the rate of global economic growth, surpassing earlier expectations in practically every region. Thus, the forecast of global GDP growth for 2004 was revised to 4.9%, which is almost one percentage point above the year- old estimate. We welcome the encouraging improvement in the world economic situation. At the same time, we are concerned by the fact that as before, the global economy is recovering against a backdrop of per- sisting imbalances and risks. As previously, the U.S. growth rates con- tinue to play a central role in supporting global growth, while current account imbalances among the main regions not only persist but even continue to deepen. This means that there is still the risk of a significant drop in the dollar's exchange rate and a slowdown in the U.S. Under these circumstances, there is continuing urgency in the appeals for a cooperative strategy that would include components such as a medium-term fiscal consolidation in the U.S., enhancing growth potential in the euro area and Japan through structural reforms, and more exchange rate flexibility in emerging Asia. The increase in world oil prices in 2004, which was unexpected in many respects, has become a new risk to the recovering global econ- omy. Persistence of these prices at today's level may lead to some slowing of global growth (by 0.3 percentage points in 2004­2005), and to higher inflation. As it became obvious by now, in view of capacity constraints and the limited throughput of pipelines in the main oil exporting countries, the increase in deliveries of oil to the world market is not keeping up with the vigorous growth of world oil 145 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 146 demand. Together with ongoing political instability in a number of key exporting countries, this may lead to persistence of high oil prices at least until the end of this decade. Measures to expand the produc- tive capacities of oil exporting countries and to restrain growth of the demand for energy resources take on special importance under these conditions. A pick-up in inflationary pressures has been observed recently, con- nected in part with the increase in oil prices. Should these pressures per- sist, tightening of monetary policy at a faster rate than anticipated today may be needed in a number of advanced economies, which may adversely affect their housing markets and consumer demand. This could complicate the conduct of monetary policy. The economic situation in advanced economies has not undergone significant changes compared to April 2004. Some slowdown in the U.S. growth in the second quarter of 2004 has added another element of uncertainty. The intensity of economic recovery in Japan looks optimistic. Some recovery in the euro area takes place against a back- drop of persisting weakness of domestic demand. The tasks of medium-term fiscal consolidation, including through reforms of pen- sion and healthcare systems, are becoming increasingly pressing in all developed countries. We welcome the continuing improvement of the economic situation in developing countries and emerging market economies. This is con- nected in many respects with acceleration of growth in developed coun- tries. At the same time, we would like to make note of the gradual increase in the role of new regional "centers of growth," such as China and India in Asia, and Mexico and Brazil in Latin America. In 2004 high economic growth was observed once again in coun- tries of the Commonwealth of Independent States. This was facili- tated to a significant extent by solid growth in the largest economies of the region (Russia, Ukraine, and Kazakhstan). It is necessary to mention that high growth was observed both in oil-exporting and oil- importing countries and in terms of its growth rates for 2003­2004 the CIS region was second only to China (7.8 and 8% as opposed to 9.1 and 9% respectively). The dependence of CIS countries on exports of energy resources and metals is their main element of vulnerability over the medium term. In this connection, diversification of the econ- omy is the most important priority for many of these countries. This, in turn, requires improvement of the investment climate and develop- ment of market economy institutions through further structural reform. Significant potential for further increase of growth in the CIS region can be found in intensification of economic cooperation through foster- ing trade and further integration of capital markets. 146 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 147 Making IMF Surveillance More Effective and Strengthening Crisis Prevention Surveillance is central to the work of the Fund. The global economy and international financial markets are changing, and surveillance methods need to adapt to the new realities. We believe that, on the whole, this process moves fairly quickly. After the Asian crisis efforts were made to promulgate standards for provision of statistical data and increasing transparency and for country compliance with best practices for fiscal and monetary policies. The number of countries taking part in Reports on Observance of Standards and Codes (ROSCs) and Finan- cial Sector Assessment Programs (FSAPs) is constantly growing. We should also commend efforts underway to develop Debt Sustainability Assessment (DSA) criteria, the use of alternative economic develop- ment scenarios when preparing Fund programs, and application of the balance sheet approach. At the same time, surveillance methods should be further improved and new approaches should be applied. For example, at the last IMFC meeting we suggested implementing regional surveillance at the Fund. We are pleased to see that the Executive Board has decided to under- take regular discussions of the economic situation at the regional level, thereby taking an important step toward eliminating a large gap in the Fund's surveillance instruments. It seems that another step toward improving our understanding of international financial flows and enhancing surveillance would be to heighten the Fund's attention to the problem of migrant workers' remit- tances. The lack of reliable information in this area is contributing to large errors and omissions in countries' balances of payments, which often are automatically interpreted as capital outflows or inflows. According to preliminary assessments, the total volume of inflows into developing countries from migrant workers' remittances exceeds offi- cial development assistance. We think that work needs to be done to improve the accuracy in assessing volumes of such transfers, which could be of great importance for the conduct of monetary policy, strengthening banking supervision, and simply better understanding the balances of payments of the individual countries. Aid Effectiveness and Financing Modalities The international community is increasingly focusing on the Millen- nium Development Goals, and in particular on the steps necessary to accelerate progress in this important area. In this respect we see the approaching fifth anniversary of the MDGs as an opportunity to review the experience so far, and to take a fresh look at the problems of 147 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 148 development. The report under consideration takes an important step in this direction. We are particularly gratified to see that the authors of the report have managed to avoid bias and undue simplification in describing the current state of play. We support the analytical approach of the paper, which stresses the need to improve the quality of devel- opment assistance rather than calling for a mechanistic increase in aid volumes. This is not the first time that we turn to the issue of aid effectiveness. The novelty of the latest report is in that it presents a thorough and comprehensive description and analysis of all the options at our dis- posal. The paper correctly recognizes enhanced absorption capacity as a key condition of reaching the MDGs, and takes a pragmatic and realis- tic approach towards identifying and addressing the main obstacles in this area. In our view one of the paper's most interesting conclusions is that many such obstacles are found at sub-national levels, and that the IFIs can help to address them. Another noteworthy conclusion con- cerns the link between country absorptive capacity and sectoral distri- bution of aid, which we see as yet another argument for increasing the share of infrastructure lending. We share the concern about the lack of resources for develop- ment, and therefore support the work aimed at augmenting aid vol- umes. Several proposals have been put forward in this area, including some ground breaking ones. We are ready to consider any construc- tive proposals leading to progress on the basis of international con- sensus, which, in the case of the more novel initiatives, would likely require piloting as the first step. However, in view of the utmost importance of this issue, we believe that our first priority should be exhausting the opportunities implicit in the existing international financial architecture. Although we strongly support the efforts to increase aid volumes and improve aid effectiveness, we are also convinced that this work should not distract us from the more important goal, that of fostering economic growth and sound economic policies. Experience has proven that this is the only sure and sustainable way for the developing countries to reach the MDGs, while external assistance can at best play a supporting role. If we look at the record of growth from the early 1960s to today, we will see that the countries that made the most spectacular progress did so almost entirely on their own, without any significant external aid. At the same time all successful countries based their growth strategy on the traditional recipe of macroeconomic stability, trade liberalization and the use of market systems--adapting it as necessary to local conditions. On the other hand, countries that have been receiving massive volumes of concessional financing, often to the tune of 10% of their GDP annually, not only failed to produce comparable growth results but became dependent on external aid for the foreseeable future. 148 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 149 Strengthening the Foundations for Growth and Private Sector Development Investment Climate and Infrastructure Development The Development Committee has not addressed the issues of pri- vate sector development and infrastructure since the mid-1990s, and in our view this discussion is long overdue. We find it especially appropri- ate because it responds to the concerns raised recently by many bor- rowing countries about maintaining the capacity and relevance of the World Bank Group in crucial areas of development. We welcome the respective papers, which are concise and direct in dealing with these issues. We also appreciate an explicit link between these papers and the document on aid effectiveness and financing modalities, which empha- sizes the crucial role of economic growth underpinned by private sector and infrastructure development in attaining the MDGs. We are also pleased to see that access to infrastructure services is identified as a major component of overall investment climate, regardless of the sources of infrastructure development--public or private. These initial studies should be expanded to cover not only the areas pertaining to governance and business regulations but also other important components of investment climate, such as access to credit, financial sector development, competitiveness and productiv- ity factors, and so on. It is now clear that the decline in the Bank's infrastructure lending during the 1990s was a serious strategic miscalculation. This experience needs to be critically analyzed in order not to repeat these mistakes in the future. Another area that needs to be addressed is sub-sovereign lending for infrastructure development without sovereign guarantee. Bank's inabil- ity to engage in this type of operations despite their increased rele- vance, large potential demand and direct links to poverty reduction represents a serious gap in WBG services. We look forward to possible solutions in this area and stand ready to support any proposal, including the creation of a special entity dedicated to sub-sovereign lending if this type of activity could not be accommodated within the existing struc- ture of WBG. Debt and Debt Sustainability We believe that the issues of debt management and debt sustainabil- ity cannot be considered in isolation from the implementation of the HIPC Initiative. We cannot increase lending, even for the noblest of purposes, while at the same time continuously forgiving earlier debts. Such a practice impedes fiscal transparency, undermines international 149 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 150 financial architecture and distorts incentives for the borrowing coun- tries. It is time we took a fresh look at this problem and address it in a firm and comprehensive manner. We cannot attain the Millennium Goals through uncontrollably and unsustainably inflating the level of indebtedness. We hope that the latest extension of the HIPC Initiative for another two years is the last action of this sort, after which no more extensions will be considered. We would also urge the international community to adhere to the existing December 31, 2004 deadline for including new members into the Initiative. We need to confront the problem of financial discipline and display restraint in extending new credit to low-income countries. The mechanism for maintaining debt of the poorest countries at sustainable levels, which is currently being developed, should give us an adequate tool for addressing this prob- lem. At the same time, we are concerned that the proposed frame- work for assessing debt sustainability may encourage the quick accumulation of external debt by low-income countries to levels above the thresholds of the HIPC Initiative. In this respect we should also make an effort to develop new financing mechanisms that do not lead to debt accumulation. SPAIN: PEDRO SOLBES M. Governor of the Bank and the Fund World Economic Outlook The current recovery phase of the world economy is consolidating. Throughout this year, the recovery of growth rates will be evident in most areas and indicators suggest that this situation will be sustained in the very near future. This will be more feasible as progress is made towards the correction of the main imbalances that impinge on the international financial order: gradual correction of the current account disequilibria (of vital importance to emerging countries) and, hence, gradual and firm adjustment of the public deficit in those cases in which it constitutes an important determinant in the accumulation of external liabilities. It is acknowledged that all areas face important challenges. Allow me to make particular reference to the ones faced by the Spanish economy. The Spanish Economy. Over the last years the Spanish economy has been satisfactorily growing, being capable of creating employment; however with a major weakness that has become increasingly acute: the little contribution of productivity to growth. Therefore, the Spanish economy needs a balanced and durable economic growth pattern, based on productivity and employment increases, which fosters its competi- tiveness in an increasingly open framework. 150 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 151 Under these premises, the economic policy which has been designed by the Government will be articulated around three fundamental axes: budget stability, productivity boosts and transparency and quality of the regulatory framework. The benefits of the budget stability in the short and long run func- tioning of the economy are obvious. Thus, the government has expressed its most determined commitment towards the achievement of the stability objective, which has been captured in the first budget pre- sented towards the end of last month. Productivity driven policies will tackle several areas, as this is the outcome of multiple factors which refer to the framework in which eco- nomic and social agents operate and develop their activity. Hence, measures which reinforce the liberalization process in the goods, serv- ices and productivity factors markets will be undertaken; improvement in the antitrust institutional framework will be fostered, endowing authorities with enhanced independence and action capacity; due to their direct impact on productivity, special attention will be given to education, innovation, and infrastructures, both from a budget and reg- ulatory perspective; and entrepreneurial environment in which entre- preneurial activities take place will be improved. Finally, the third economic policy axis will seek a profound reform in the government's action, aiming at making it more transparent and efficient. Surveillance and Crisis Prevention Surveillance. Going into more specific issues related to the Interna- tional Monetary Fund, we welcome the improvements that have been introduced in the Fund's surveillance activities during the last biennial review. I also judge that it is interesting to maintain the debate related to a possible reinforced supervision without associated financing facil- ity, which will enable those countries that wish to signal their commit- ment to implement sound economic policies without the need to neither increase their indebtedness nor alert markets on possible liquidity ten- sions. Likewise, I would like to insist on the need to count on excep- tional access to the IMF's resources framework that is sufficiently predictable to the markets. Low-Income Countries IMF's role. The IMF fulfills an irreplaceable role in low income coun- tries, through a macroeconomic and microeconomic analysis, as well as, in the event, the design of the necessary programs for the simultaneous achievement of growth and balance of payment's structural tensions 151 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 152 relief. To that end, technical assistance as well as surveillance, creditor signaling and financing are of utmost importance and none of them should have a subsidiary position with respect to the others. All of this, without prejudice that, in the event that debt sustainability conditions in those countries entail serious risks, adequate concessionality graduation on external funding is achieved, as well as on its origin. Millennium goals. Spain is a determined supporter of the Millen- nium Development Goals, as long as poverty eradication must consti- tute a moral imperative in a developed and increasingly prosperous world. We believe that important volumes of additional financing will be necessary in order to progress on their achievement that it must be supplied to the beneficiary countries in parallel to the evolution of their absorption capacity. The materialization of this progress will crucially depend on the identification of new sources of financing, based on con- cessional credit (basically of multilateral origin) as well as other alterna- tives that are being studied. The Initiative against Hunger and Poverty is a first step forward in this sense, with proposal that must be examined thoroughly in order to guarantee their compatibility with growth, eco- nomic stability and financial viability. ODA. Nonetheless, its is essential to stress that the objective to increase ODA flows must be something that accompanies and sup- ports country macroeconomic stability and policy compromise, insti- tutional strength and good governance. Both elements must be closely linked as, regardless of the relevant role that the ODA may play under adequate circumstances, experience reveals that the key to success is that developing countries, especially poorer ones, achieve higher growth rates that can be sustained in time. It is by these means that the most important resources upon which develop- ment depend on, may be mobilized: domestic resources and foreign direct investment. Trade and development. Trade openness and market access are also a necessary condition in order to consolidate economic growth and to reduce poverty. To that end, we insist on the importance of the prompt conclusion of the Doha Round. Developing countries must establish the necessary conditions in order to take advantage of the benefits that the trade liberalization will bring about. World Bank We definitely support the work carried out by the World Bank Group aimed at promoting private sector development as an engine for growth and the revitalization of its strategy in support of the infrastruc- tures services provision. The World Bank has experience and knowl- edge in order to play a crucial role in the mobilization of public and 152 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 153 private necessary financing in order to ensure that stable, predictable and transparent regulatory frameworks are established. Abuse of the Financial System and Fighting Against Terrorism We welcome the collaboration and coordination of the IMF/World Bank and the FATF (Financial Action Task Force on Money Launder- ing) to evaluate the situation of the countries in the fight against the money laundering and the terrorist financing. We consider that this fight is essential to combat a very serious threat for the democracy, the human rights and the stability of the financial systems. IFIs cannot forget these issues, and we want to remark the essential role of the IMF/World Bank. SRI LANKA: SARATH LEELANANDA BANDARA AMUNUGAMA Governor of the Bank and the Fund It is encouraging that there has been a firming of the global eco- nomic recovery. The buoyant global demand has led to a pick up in commodity prices that have benefited many emerging economies. How- ever, the high price of oil and its volatility are a major concern to oil importing countries, such as my own. Co-operative efforts by suppliers and consumers are required to mitigate the adverse effects. The world is entering a period of higher inflation and interest rates. The policy responses by many countries have helped to bring about orderly changes in interest rates. Nevertheless, the transition to the new phase needs to be carefully managed so as not to stifle the on going recovery. There are significant vulnerabilities in both industrial and emerging market countries. If the current positive developments in the world economy are to be sustained, fundamental problems such as difficult fiscal positions, structural weaknesses, financial vulnerabilities and global current account imbalances need to be addressed. This requires a further strengthening of international cooperation, particularly in macroeconomic policy co-ordination, by the industrial countries. The Fund and the Bank have important roles to play in strengthen- ing the global economy, and we appreciate the efforts being made by these institutions. We welcome the cooperative efforts by the Fund and the Bank to support multilateral trade liberalization and in this regard, we welcome the activation of the Trade Integrating Mechanism by the Fund to help ease the related temporary balance of payments pressures. In its Strategic Review, the Fund should critically examine how the streamlined conditionality has worked in the context of political reali- ties in different countries and their stage of economic development. The 153 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 154 attention being paid by the Fund and the Bank to assist countries to reduce poverty and achieve the Millennium Development Goals is extremely important. The Fund needs to make its resources more flexi- bly available to support stabilization, growth and poverty reduction efforts of member countries. We would also stress the importance of having a contingent facility, which could be applied in covering all major types of contingencies, an example being the current rise in oil prices. All these imply that the Fund resource base needs a significant expansion. Let me now focus on the economic and policy developments in my own country, Sri Lanka. The economic recovery has continued, although we have been affected by a severe drought and the very high interna- tional prices for oil. Growth in the first half has been 5.7% and we expect the annual growth for 2004 to be in the region of 5­5.5%. The high oil prices have increased our expenditure by 50% and strained the balance of payments position. Our government is committed to promoting regionally distributed pro-poor pro-growth within a consistent and sound macroeconomic framework. In particular, we are taking steps to ensure that the disad- vantaged segments of our population would rapidly reap the benefits of economic growth. We envision that the public sector and the private sector together will play proactive roles in developing our economy. We are increasing investment, particularly in infrastructure and in rural development. Increased emphasis is being placed on developing agri- culture, small and medium scale enterprises and tourism. We are deeply conscious of the fact that a significant portion of our population is in poverty and we are confident that we would succeed in our efforts to generate employment opportunities necessary to meet the needs of a growing labor force, achieve a steady reduction of poverty and provide the necessary safety net for vulnerable segments of our population. We are convinced that generating productive employment could be a rapid means of alleviating poverty and are happy to note that the G-24 in its communiqué has called on the Bretton Woods Institutions to stress this aspect in their programs. Our government is making a determined effort to carry forward the Peace Process and establish a permanent peace through a negotiated process. Those of you who come from conflict affected countries would understand the difficulties that my country faces from the ill effects of war. We are resolute in our efforts to achieve peace and thus create an environment conducive to sustainable economic growth and improved well being of our people. In this process, the role of the donor commu- nity in supporting the reconstruction and economic development as part of the Peace Process is greatly appreciated. In all these efforts, we appreciate the support that we have been receiv- ing from the international community, including the Bank and the Fund. 154 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 155 SWITZERLAND: H.E. HANS-RUDOLF MERZ Alternate Governor of the Fund In the year of the 60th anniversary of our two institutions. When the founders met in Bretton Woods, the world was still caught in the strug- gle of World War II. It took remarkable vision to devise the new finan- cial order that should provide the wealth and standard of living we are now experiencing. Sixty years later, the Bretton Woods Institutions' original mandates are still valid. Today's challenge is to transform the Fund and the Bank into learning organizations that permit them to adapt to a constantly changing world, while allowing them to keep focussed on their mandates. The background of our 60th anniversary is very encouraging. The global economic outlook is better today than we would have expected a year ago, in fact better than in nearly three decades. Today we are expe- riencing a more and more broad-based recovery that is also increasingly well distributed across regions. The inflation outlook is still relatively benign and incipient gradual monetary tightening did not lead to adverse financial market reactions. Global financial stability has strengthened, with corporate, financial sector and household balance sheets generally strengthening. While global growth has picked up, the down-side risks of increas- ing oil prices, emerging inflationary pressures and imbalances in both advanced and emerging market countries remain. However, the posi- tive current outlook provides an excellent opportunity to move ahead with the unfinished agenda of fiscal and structural reform in most member countries. This is indispensable to sustain the recovery and ensure that it is also benefiting the poor. Every country must address its own shortcomings. While every country individually benefits from its reforms, it will also contribute to the adjustment of the significant global imbalances. Acting on the reform agenda today is all the more important, given the medium and long term challenges of aging populations. The Fund and the Bank should support these efforts. They each have their role in assisting members in their reform efforts by providing advice to promote good policies, technical assistance to strengthen insti- tutions and financing at appropriate terms to alleviate adjustment cost, and make the necessary investment in people and national systems of developing and transition countries. For the Fund, surveillance remains the key instrument to assist mem- bers. Given the virtually universal country membership in the Fund, it should put to use its global expertise and draw from lessons from around the world, but nevertheless provide tailor-made country specific advice. I welcome the efforts to enhance effectiveness of surveillance by increasing 155 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 156 the focus on each country's specific vulnerabilities and highlighting the regional and global impact of each individual country's economic policies. Effective surveillance is also the best crisis prevention. In that con- text, the idea of a program without Fund resources for a country that does not want or need Fund resources, is appealing: A country may wish a sort of strengthened policy cooperation with the Fund to provide a clear signal of its sound policies. However, the Fund must be careful setting up such an arrangement's design. Experience shows that the ability of an arrangement to provide that signal depends very much on its program requirements. Yet, I do not think we need an additional instrument providing large amounts of precautionary funds to hedge against the possibility of a crisis. We have seen in the past that Fund membership provides ample insurance with readily available resources. I think such an instrument is a diversion from the centrality of sound economic policies and it would tie resources of the Fund, thus weakening its financial position. I warmly welcome the significant steps that the Bretton Woods Insti- tutions have taken to further strengthen the effectiveness of their work in low-income countries. The Poverty Reduction Strategies have become the cornerstones of Bank and Fund support in the context of country-led efforts for poverty reduction. Close cooperation between the World Bank and the IMF is crucial to achieve the Millennium Development Goals. In my view, the primary task of the IMF is to support low-income members through policy advice and capacity building in their efforts to implement sound macro- economic policies. The IMF's concessional resources are limited. More- over, the core mandate of the Fund is of a monetary policy nature. Therefore, its role should not be to provide long-term development finance. Instead, its programs must be designed to maximize the cat- alytic impact on concessional financing from donors and private sector investment. The World Bank has a key role in helping countries make more effective use of limited aid resources. It must help strengthen local insti- tutions and systems so that donors can increasingly operate through country-based systems. It should also continue allocating its aid based on policy and institutional performance of recipient countries. At the end of the day, it is the developing countries themselves that have to take the lead to improve the effectiveness of aid, among other things by strengthening governance and fighting corruption. Looking towards 2015, I note with some concern that many coun- tries, in particular in Sub-Saharan Africa, continue to lag behind the schedule set to meet the MDGs. All stakeholders, developing and developed countries as well as the international organizations, must step up their efforts to achieve their commitments given in Monterrey. 156 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 157 The focus on increasing the effectiveness of finite aid resources is criti- cal, not only from an economic, but also from a political point of view. The credibility of the international community is at stake. Switzerland is therefore ready to participate in the examination of alternative proposals to identify new and additional sources of financ- ing. In this, we should be guided by the following principles. First, our efforts should be targeted at the poorest countries. Second, aid must, to the largest extent possible, be allocated based on performance. Third, we need to avoid creating new institutions or additional cumbersome procedures and conditionality. Fourth, we should avoid using instru- ments, such as transaction taxes, whose distortionary effects on capital flows exceed their potential benefit. With respect to the International Finance Facility, we recognize the opportunity provided by a facility that would allow to frontload aid. Yet, we remain concerned that global aid would experience a sharp drop following the maturity of the IFF. We believe that we should not borrow against future commitments. In addition, imple- mentation constraints of national budgeting systems would have to be taken into account--which, in the case of Switzerland, would not allow participation. Finally, we should not lose sight of the fact that the most straightfor- ward approach rests in appropriately endowing the existing develop- ment vehicles. In this sense, we urge that the IDA-14 negotiations will be concluded in time, and with a policy and financial framework that allows it to play the role expected of it with respect to achieving the MDGs. The most important source of development finance will not come from the public, but the private sector. Private sector investment is indis- pensable to create employment, generate revenues and promote growth. In the case of foreign direct investment, it also provides an important channel to transfer technology and know-how. The World Bank plays a key role in identifying and addressing the structural, regulatory and insti- tutional changes required for private sector development to happen, while the IMF guarantees the necessary macro-economic framework and helps strengthen the financial systems. Lastly, I am pleased with the joint work of the Bretton Woods Insti- tutions on debt sustainability. While I support the extension of the sunset clause of the HIPC-Initiative, I regret that there still remain 11 countries that have not been able to meet the criteria for debt relief under the Initiative. Looking forward, we must make sure that the countries that have benefited from a substantial reduction of their external debt will not fall back into a situation of unsustainable debt. Therefore, I support the forward-looking framework for debt sustain- ability in low-income countries presented by the Bank and the Fund. 157 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 158 Some important methodological issues remain, including the need of full collaboration between the Bank and the Fund in preparing debt sustainability analyses. This is an urgent matter since the framework is key for a timely completion of IDA14. We will therefore monitor fur- ther work carefully. I closing, I would like to thank the staffs of both the Bank and the Fund for their contributions towards a prosperous, financially stable world without poverty. THAILAND: VIRACHAI VIRAMETEEKUL Governor of the Bank On behalf of the government of Thailand, let me first join others in thanking the World Bank, the IMF and the United States' authorities for their warm hospitality and the perfectly organized Meeting of the Board of Governors. I also would like to welcome Mr. Rodrigo de Rato y Figaredo as the new Managing Director and is looking forward to work with his new leadership in increasing the voices of developing countries as well as improving the governance system. The faces of the world have changed dramatically since the meeting in Dubai. Global prospect is now challenged by the rising energy prices and interest rates as well as threats of terrorism. As always, these chal- lenges would be overcome if we work together as one people, each doing its own part. There are still exciting times ahead. Thailand is on the move, with all major agencies upgrading our sovereign rating. The World Economic Forum places Thailand among the top ten from more than 100 countries in the macroeconomic sta- bility index. The state of our economy is strong, and strong in every indicator. Our growth rate is recorded at 6.8 percent in 2003, and is expected to continue into 2004. Inflation remains within target. Foreign reserves have raised to 43 billion US$. The Thai Baht is stable, and becoming a trade currency in our prospering neighbors. Things have improved so much that we now have a balanced budget for the first time in contemporary history. This is a balanced budget that does not lose sight of its balance. A balance between fiscal consolida- tion and our values towards building a better future for all. The policy blueprint for the next five years is now clearly laid out in the Economic and Social Sustainability Framework. This Framework entails, for example, an annual GDP growth over 6% and unemploy- ment below 2%, keeps foreign reserves at least 3.5 times short-term foreign debt, maintains a balanced budget and reduces public debt to 35% of GDP. 158 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 159 Thailand welcomes the recent outcome in the WTO, where progress is made on agriculture and the main source of income for the poor. The richest countries need to be reminded that only fair trade can provide a sustainable exit from poverty. So there are to be new responsibilities for the richest countries to stop trade-distorting export subsidies, and to stop them completely under an agreed-upon timeframe. There should be no turning back. Thailand appreciates the UN plan to raise an additional US$50 bil- lion a year for development aid. However, we need to do more if we are to succeed in our fight against global hunger. It is disappointing to note that the Millennium Development Goals of halving world poverty by 2015 would not be achieved. This is the one time we should do more than giving a statement. The world should not come together to make this promise of historic significance, and then to break it. What we are going to do with it will test the character of our generations. This is the ultimate challenge of our time. On our part, Thailand has been active in regional development through various activities under the Greater Mekong Sub-region (GMS) framework as well as the framework of Economic Cooperation Strategy (ECS). Such cooperation is expected not only to bring millions out of poverty but also facilitate deeper economic integration within the region. The establishment of an ADB resident mission in Bangkok con- firms the increasing role of Thailand in the region. On this note, Thailand would like to express our support for the Bank proposal in trying to increase the voices of the developing coun- tries and urge the Bank to step up its efforts while taking into consider- ation the limited resources of developing countries. On the Fund matters, Thailand joins other developing and emerg- ing market countries in the urge for concrete reforms in the way the Fund is being governed. The Fund needs to ensure its commitment to increase the voice and participation of developing countries by expe- diting the 13th quota review. In accordance with a more transparent governance structure, the Fund needs also to institutionalize the selec- tion process of the Managing Director. This is the only way to go for- ward in the world, where freedom is on the march and democracy is flourishing. In conclusion, Thailand recognizes the importance of the Bank and the Fund work. Let us show that world economic growth is not an end in itself. Let us use our material prosperity, abundant more than ever, to build a foundation where the strong are just and the less strong are fairly treated. Let us join hands to write the next chapter of our future. Together. As One. 159 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 160 TONGA: SIOSIUA T.T. `UTOIKAMANU Governor of the Bank It is an honor to attend the Annual Meetings of the Board of Gover- nors of the International Monetary Fund and World Bank Group for 2004 on behalf of the Government of the Kingdom of Tonga. I would like to begin, by congratulating and welcoming Mr. Rodrigo de Rato to this annual meeting in his capacity as Managing Director of the IMF. Although recent global economic growth remains strong not all regions have benefited. Some countries, such as those in the Caribbean, remain adversely affected by depressed tourism earnings and by the most damaging hurricane season in many years while the growth prospects in Sub Saharan Africa appear unlikely to be suffi- cient for these countries to achieve the Millennium Development Goals. It is important for policy makers to take appropriate action to sus- tain the current global economic recovery. These actions include addressing the fiscal and balance of payments imbalances in the US while implementing structural reforms to sustain stronger growth in Japan and the euro area. Developing countries policy makers ought to continue to implement policies needed to promote faster growth and poverty reduction and to improve the environment for domestic and foreign direct investment, supported by increased external resources. Furthermore, all countries need to work together to maintain stability in the international oil market with prices consistent with long term growth and at the same time making rapid and substantial progress in agreeing and implementing the Doha Development Agenda, in particu- lar on agricultural trade liberalization. On credit arrangements, the efforts of the Fund to explore precau- tionary credit arrangements that include minimization of risks to the Fund's liquidity, debtor and creditor behavior are supported. The issue of representation at the Board calls for consideration of an appropriate revision of present quotas to ensure that the formula, variables and weights reflect positions representative of many countries profile in the world economy. Furthermore, the Fund's strategy of remaining engaged with its low- income country members, and its recognition that in many cases their economic problems are deep seated, and requires many years of suc- cessful macro-policy implementation to address, is particularly wel- comed. We also support the forthcoming Fund review of its conditionality guidelines and at the same time, we encourage the Fund to further develop its capacity to support country-led intensive surveil- lance for those countries desiring enhanced Fund surveillance without the need for them to seek more Fund borrowing. 160 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 161 The work to date of the Bank in terms of enhancing the participa- tion of developing countries in the decision making of the institution by separating the issues into administrative issues and structural issues is supported, as this will strengthen the capacity of developing coun- tries to interact with the Bank. We hope that these changes will benefit small member countries like Tonga and we support further initiatives that the Bank will take to assist in strengthening our capacity for effec- tive interaction. We support the efforts being made towards a successful outcome of the 14th IDA Replenishment, as it continues to focus on helping devel- oping countries to meet social and economic challenges, especially small island states which are vulnerable to frequent natural calamities and other external shocks. Moreover, the Bank's efforts to improve the process of assessing the performance ratings of IDA eligible countries are supported especially through the use of transparent processes that ensure that members are fully involved and consulted throughout all stages of the process. The Bank's regional office has been proactive in consulting the Pacific member countries in the preparation of the Regional Country Assistance Strategy and we commend the Bank's work in this respect. We express our gratitude to the Bank for its continued assistance to Tonga through providing credit lines and technical assistance. Overall, the two Bretton Wood Institutions continue to be valued partners in Tonga's efforts to address the challenges of poverty and ensuring that essential services are made available to its citizens. Moreover, the Government of Tonga continues to take necessary steps to pursue its reform objectives, clearly recognizing that the most appropriate policies ought to be based on a market-based, out- ward-oriented private sector led growth. Tonga's reform program to date includes structural changes to the public service to achieve higher levels of efficiency and measures to enhance the strengthening of regulatory and supervisory skills and operational systems. Despite the progress made the challenges of a lower than expected GDP growth, high inflation and fragile external and fiscal accounts remain. These economic indicators reflect the vulnerabilities and activities in the agriculture, tourism, transportation and construction sectors of the economy. Finally, we would like to acknowledge with appreciation the techni- cal and financial assistance that both institutions have provided to the government and people of Tonga. The assistance continues to improve the standard of living of our people and we look forward to a continued partnership for the future. May I conclude by wishing the Bank and the Fund continued success in resolving the difficult challenges that lie ahead. 161 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 162 TURKEY: ALI BABACAN Governor of the Fund I am pleased and honored to have the opportunity to address these 2004 Joint Annual Meetings of the World Bank Group and the Interna- tional Monetary Fund which mark the 60th anniversary of these institu- tions. On this occasion, I would like to express our thanks to the Managing Director of the IMF and the President of the World Bank for their efforts, and the wisdom they have shown in leading these impor- tant institutions in this era of uncertainties, complexities, and chal- lenges. 2004 has been a good year despite higher than projected oil prices. The global economy is experiencing the fastest growth in several decades, the volume of world trade has picked up and private capital flows to emerging markets remain strong. However, there are also important risks that we should be aware of. Namely, the recent developments in oil prices; transition to higher inter- est rate environment; fiscal deficits and high public debt of both devel- oping and developed countries and persistence of large global external imbalances. I would particularly emphasize that transition to higher interest rates in mature markets should be managed skillfully, not only in the interest of financial stability in those markets themselves but also to avoid financing difficulties for emerging markets. At the same time, the emerging market countries should strengthen their fundamentals to limit the negative impact of such a transition to a higher interest rate environment. Turkey, as an emerging market country, is implementing a strong economic program to reduce its vulnerabilities. I also would like to discuss some development issues. It seems that with the current level of Official Development Assistance (ODA), most countries will not achieve the Millennium Development Goals (MDGs) by 2015. Therefore, we welcome the efforts that are being made to move forward with a new aid framework designed to emphasize the fight against poverty and achieve improvement in the living conditions in the less developed countries. Ensuring sustained growth is the most essential requirement for last- ing poverty reduction. I would like, therefore, to stress the importance of multilateral trade liberalization. We also welcome the additional technical and financial assistance being provided by the Bretton Woods institutions to developing countries to promote capacity building. A sound investment climate and adequate level of infrastructure are crucial for private sector led economic growth and sustained poverty reduction and hence for the achievement of the Millennium Develop- ment Goals. Good governance and anti-corruption measures are essen- 162 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 163 tial for stimulating domestic investment and attracting foreign direct investment. We urge the World Bank Group to continue to further develop and apply instruments for risk mitigation in the developing countries to encourage foreign direct investment. Enhancing the voice and participation of developing and transition economies in the World Bank is extremely important not only to make sure that the position of all members of the Bank is properly expressed, but also to preserve the Bank's basic principle of representation and to improve the effectiveness of the Board. Better communication between the Bank and the stakeholders about the projects financed by the Bank is also important to enhance country ownership of Bank operations. In this context we also favor higher representation of developing country nationals in senior management level of the Fund and the Bank to enhance the voice of these countries as a group. Finally, I would like to mention briefly recent developments in Turkey and prospects for the Turkish economy. Our government has made great progress on the economic front. Growth is strong, inflation is coming down and interest rates are declining. The growth is expected to significantly surpass the end year target of 5% as inflation keeps falling down. As a strong sign of our prudent policies, we increased the public sector primary surplus to more than 6 percent of GNP in 2003, the highest ever recorded in Turkey. Moreover, we are confident that we will meet and even exceed this year's target of 6.5 percent. We have enacted comprehensive structural reforms in the fiscal, monetary and financial sectors. We shall continue our efforts on this front, including fighting against the informal sector, improving tax policy and tax administration, reforming the social security system and rapid privatization. Lowering unemployment, bringing inflation closer to EU levels, maintaining a strong fiscal stance, and improving the investment climate will be our priorities in the coming years. We will also continue close cooperation with the Fund and the Bank. We believe that the new economic program that we are finalizing will be supported by the International Monetary Fund and the World Bank. It is designed to meet the Maastricht criteria and to start accession talks with the European Union which will open a window of opportunity for Turkey to usher in an era of sustained high growth, low inflation and declining unemployment and poverty along with increasing credibility in world financial markets. UKRAINE: ARSENII YATSENUK Governor of the Fund While appreciating the efforts undertaken by the meetings' organiz- ers and the host country to counteract potential security issues, Ukraine 163 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 164 believes that the Annual Meetings should ideally be conducted in a normal and usual format. The world economy, trade, and the state of financial markets can be characterized by rather positive current trends, although not without some risks for oil importers and heavily indebted countries. Countries depending to a significant extent on external demand for their products and services are very much interested in a better assessment of the sus- tainability of these current positive trends. Ukraine, for example, was able to almost double its exports in just three years. This to a large extent is the result of the implementation of our reform agenda, of suc- cessful trade diversification, but it also reflects our increased interaction with and interdependence on the rest of the world. We are now closely watching developments in some regions which are not even our major trading partners, but which are nevertheless important trading partners of our export destinations. We therefore appreciate additional research and recommendations on how the international community and different groups of countries can better deal with abrupt changes in global demand. The volatility of capital flows and of international trade (from zero growth only 3 years ago to an expected 8-9% this year) confirms that IMF surveillance should not discount the importance of the volatility of current receipts and capital flows. Discussions about new Fund quota formulas should also take external openness and variability of trade and capital flows into account. As it seems, the current account surpluses of developing and emerg- ing market economies should be explained not only through the angle of the levels of their exchange rates, or exchange rate misalignments and/or fiscal challenges of major industrialized nations, but also as a possible result of some more fundamental changes in the world econ- omy. We appreciate more attention to these longer term fundamental challenges, including global changes in the division of labor, demo- graphic trends, challenges to health and pension systems which may be affecting competitiveness and capital flows. We would also appreciate more attention to the emergence of a few new major producers and consumers of the world's output, and better surveillance of regional and sectoral interdependencies. Further progress in trade negotiations also seems essential for smoothing excessive global cyclicality. We hope the IFIs will contribute to the success of multilateral trade liberalization by providing more sub- stantial and timely temporary financial assistance and advice on how to deal with the immediate effects of liberalization of the previously pro- tected sectors. Work on capital markets may concentrate more on providing insights into why current trends are happening, and how to anticipate 164 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 165 the likely changes in global financial flows and instruments. The official sector will benefit from recommendations on how to better react to the reemergence of national and global market participants willing to take on more risks. Addressing existing gaps in regulations of the financial sector may also need to be better tailored to the levels of development of the national capital markets and financial systems. Instruments that help to diversify risk in a more developed market may contribute to concentrating risk in a less developed environment. It is rather discouraging to note that not all regions of the world are on track in meeting the major Millennium Development Goals. IFIs may contribute to faster progress by preparing non-politicized profes- sional assessments of national poverty reduction strategies and by pro- viding different scenarios of various mixes of adjustment and financing. This menu of options and of policy mixes may help the national author- ities and donors to make better choices. To this end, the promoted intensified non-financial engagement of the Fund, be it some new form of monitoring, or a precautionary PRGF, may eventually prove to be a suboptimal instrument for improving the prospects of low-income countries in attracting necessary inflows of aid and investment. Addressing infrastructural gaps, inadequacies of health and educational systems, and developing more modern public administration in low- income countries require not only macroeconomic prudence, but sub- stantial and well-targeted technical assistance and financing. We have been learning by doing--that growth is essential for lasting poverty reduction. A good investment climate is vital for sustained growth and productive employment creation. We very much welcome this year's discussion on the topic of "Elements of the Growth Agenda: Investment Climate and Infrastructure." Developing this topic further and addressing outstanding issues requires more careful analysis of developing and transition countries' experiences. We acknowledge that perspectives on what best influences growth have become more nuanced with additional experiences and policy experimentation. We would like to encourage the World Bank to strengthen their specific capacity building initiatives and knowledge transfer programs used to assist countries interested in improving their investment climate. IFIs may also contribute to the progress of low and medium income countries by more systematically making available the accumulated positive experience of other countries. Greater accountability of the IFIs for the quality of their advice to member countries can be enhanced. One of the venues for such enhancement--wider dissemina- tion of the experience of other countries, which followed similar advice, as well as more systemic integration of the research and self evaluation work done by IFIs into their operations. Organizing more conferences, workshops and using other dissemination vehicles could be considered. 165 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 166 It is being done in a rather effective way, for example, in spreading the best practices in implementing various Standards and Codes. Ukraine continues to demonstrate rather impressive economic per- formance: the economy is expected to grow by over 12 percent this year. The average annual growth rate since 2000 has been 8.4 percent under reasonable single digit inflation. Public debt to GDP ratio decreased from 48 percent in 2000 to 27 percent today, debt service as a share of exports is below 5 percent. We are currently paying substantial attention to preventing over- heating of the economy, strengthening our financial sector, further reforming the tax system, enforcing anti-monopoly policies, and improving our pension system. The business climate has improved and this is reflected in a very substantial increase in domestic investment and overall factor productivity. The current account has recently demonstrated healthy surpluses, our international reserves have also substantially increased to about 12 billion dollars, while we feel that global uncertainties warrant build- ing additional buffers against future contingencies. The government in partnership with private sector entities, is work- ing on improving the transportation infrastructure, and activating the research and development capabilities in order to move to an economic model based predominantly on knowledge and innovation. After almost a decade of output collapse, our industrial capacity in many sec- tors is still used to quite an insufficient extent. The introduction of a reasonable 13% flat income tax rate, simpli- fied taxation of small businesses, combined with pension reform and a reduction by 10% in the enterprise profit tax rate, accompanied by some widening of the tax base, and recent improvements in tax admin- istration have all helped to reduce the size of the unofficial economy, although its share still remains excessively high. Addressing our developmental bottlenecks requires primarily more structural reforms, especially in the areas of public finances and the enterprise sector, where there is a need for introducing greater trans- parency and improved protection of the minority shareholders' rights. Among our priorities are also reducing red tape, more efficient bank- ruptcy proceedings, and reform of the judiciary, and further progress and in increasing the efficiency of the services provided by the public sector. UNITED STATES: JOHN W. SNOW Governor of the Fund Each year, we gather to review the state of the world economy and discuss how to carry forward our shared mission of promoting growth and stability, advancing development, and improving the lives of all our 166 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 167 peoples. Today, we meet at a time when global growth is stronger than it has been in three decades--a time that gives us the opportunity and the obligation--to build on what has been accomplished. We cannot be complacent--too many people depend on us. We must do all we can to ensure that all people can enjoy the benefits that come from sound eco- nomic policy. The U.S. economy has been a strong engine of growth in the global economy, so I am pleased to report that the U.S. economy is on a very positive path. Although growth slowed slightly in the second quarter this year, real GDP was up more than 4 1/2 percent over the past year. Capital spending has risen at a double digit pace over the last year. Manufactur- ing output is strong. And the economy has now added more than 1.7 mil- lion jobs over the last year. This recovery didn't occur by accident. It occurred because the U.S. economy is open, dynamic and flexible, and because of the implementation of sound fiscal and monetary policy-- including implementation of President Bush's Jobs and Growth Plan. U.S. economic fundamentals are sound: productivity growth contin- ues; inflation remains modest; interest rates remain low; and job creation is continuing. And at a little over 3.5 percent of GDP in the current fiscal year, the federal deficit remains low compared to the levels in the 1980s and 1990s. But deficits are always too high and so we expect to reach the President's goal of cutting the deficit in half over the next five years. In the global economy, we still want to see growth be more broad- based. The G-7 countries are working to increase economic potential through their commitment to structural policy reforms under the Agenda for Growth. We are already seeing results from this effort. For our part, President Bush has introduced a plan to make tax cuts perma- nent, make health care costs more affordable and predictable, reduce the lawsuit burden on the economy, and ensure an affordable and reli- able energy supply, and streamline regulations and reporting require- ments. Other G7 countries are implementing reforms appropriate to their own economic conditions. The international financial institutions are vital agents in delivering the resources and advice necessary to achieve broad-based growth and raising living standards. It is a key priority of President Bush that the institutions are focused and prepared to achieve these goals. President Bush delivered this message, and innovative proposals, when addressed the World Bank in the summer of 2001. I am proud to have worked with our fellow shareholders and the leaders of the IMF and World Bank to achieve an important policy shift in the institutions--bringing tighter focus, more predictability and transparency, and greater emphasis on delivering measurable results. Specific changes--including greater use of grants instead of loans to the poorest countries, the introduction of limits for exceptional access 167 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 168 to the IMF's financial resources, and the advent of collective action clauses as the market standard in sovereign external bond issues--are already making a tremendous difference in individual countries and the system as a whole. The successes we have had together thus far should inspire and embolden us to extend our drive for reform. We all know that we must continually strive for excellence at the IMF and World Bank so that they can work more effectively in the modern global economy. I hope we can work together to make it happen. In my view, there are several particularly key areas for reform. In addition to strengthening the analysis and advice provided all members, I support introduction of a new tool facilitating the active policy engagement of the IMF with countries that seek such a relation- ship but do not need financial support. Such a policy monitoring arrangement should serve to increase the emphasis on countries' own policy programs and maintain a high standard for reforms. The World Bank must maintain its focus on areas critical to eco- nomic growth and poverty reduction. Greater priority on the private sector, particularly small and medium-sized enterprises is important. Good progress has been made in introducing results-based programs; these tools need to be more fully integrated within the World Bank and other development banks to help us measure and learn from successes. Finally, President Bush and the G-8 Leaders in Sea Island reiterated a strong commitment to the HIPC initiative and to helping the heavily indebted poor countries achieve sustainability. We must do more to pre- vent the build-up of unsustainable debts in poor countries. Increased reliance on grants is an important first step. But we need to do more to put these countries on a path to the future. Employing both grants and debt relief together would give the poorest countries a chance to reach their international development goals of the Millennium Declaration without adding to debt burdens. I am working with my colleagues in the G7 and other donors, with the institutions, and with recipient countries to achieve a consensus on the best way to solve the debt sustainability problem and ensure that our reforms only result in greater, not fewer, resources to poor countries. I hope that we can all work together--shareholders, donors, and institutions--to succeed in achieving these goals. VIETNAM: LE DUC THUY Governor of the Fund On behalf of the delegation from the Socialist Republic of Vietnam, I would like to express our warmest congratulation to the Chairman for being selected to chair the Annual Meetings of the International Mone- 168 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 169 tary Fund and World Bank Group this year. It is our high appreciation to these two leading international financial institutions of their recent efforts in supporting member countries to ensure financial stability, sustainable growth and poverty reduction. Also on this occasion, may I send a special congratulation to Mr. Rodrigo de Rato as these are the first Annual Meet- ings Mr. de Rato has attended as Managing Director of the IMF. In retrospection of the two institutions' activities last year, apart from general efforts in improving and strengthening international financial systems, the IMF and the WB have also focused on supporting developing countries, particularly the poor in order to facilitate growth and poverty reduction and strengthen their debt sustainability. While the WB concentrates on such areas as strengthening the financial sup- port to developing countries for the purposes of infrastructure develop- ment, creating more favorable investment environments and reinforcing supports to poor countries, the IMF has strengthened its surveillance as a contribution to international community's efforts in preventing crises, strengthening financial stability and fostering high and sustainable growth. Ladies and Gentlemen, since the last Annual Meetings, the global economy has experienced a fundamental recovery, evidenced by signifi- cant improvements in many aspects such as stronger reforms and poverty reduction in developing countries, substantial growth in trade and industrial production, and sharp, though unstable, increases in international capital flows. The world economy, however, is facing with certain risks such as potential terrorist dangers, unresolved and unpre- dictable political instability, irregular movements of hard currencies, and large increases in prices of crude oil and some raw materials, etc. Moreover, the recovery is uneven across countries, which makes it much more challenging to reach the Millennium Development Goals and to maintain sustainable poverty reduction. Nevertheless, it is hoped that the expected promising economic outlook for the near future will create favorable conditions for strengthening the policies which aim at addressing the macroeconomic imbalances and the vulnerability of the banking and financial system, and deepening structural reforms to promptly improve the investment environment. In the overall picture of the global economy, Asia-Pacific is recog- nized to be the region which achieves the highest and most stable eco- nomic growth in the world. Despite difficulties resulted from oil price hikes following the Middle East region chaos, and the SARS epidemic, Asian-Pacific as a whole still have its growth rate reached 6.3% in 2003 and expected to reach 5.8% between 2004 and 2008, higher than that of any other region. Ladies and Gentlemen, right from the beginning of 2004, the imple- mentation of Vietnam's socio-economic development goals has faced with 169 3645-p017-170_Statements.pdf 8/24/05 9:32 AM Page 170 many challenges such as the avian flu, the unfavorable natural conditions, and the sharp increases in prices of certain raw materials and consumption basic necessities, which induced inflation to accelerate in the first months of the year and slightly mitigated the first quarter growth rate. Neverthe- less, real GDP growth rate for the year is projected to be at 7.5 percent or higher. The current account registered a deficit but at a controllable level, and export-import activities showed positively developments, with exports in the first eight months being projected to increase by 25.7% from the same period last year. International donors and investors are of the view that in Asia, Vietnam is among those countries that have developed favor- able business environment, thanks to the Government's efforts in improv- ing the investment environment for all economic sectors. Donors continue to support the reform program in Vietnam and assist the Government's efforts in accelerating growth and fighting against poverty, specifically in implementing the Comprehensive Poverty Reduction and Growth Strat- egy (CPRGS, the name of the Vietnamese PRSP). Also, the Government of Vietnam is determined to accelerate trade reforms and continues its efforts in negotiating to access WTO in 2005. In order to fulfill the socio-economic development tasks set for this challenging year, the Government of Vietnam has initiated major solu- tions, including the continued focus of effort on stronger improvement of business environment, more enhancement of investment efficiency, higher progress in external economic development, pushing up the preparation for WTO accession, and strengthening the administrative reform program. In facing with the accelerating inflation in the first months of the year due to exogenous factors, the Government of Viet- nam has prioritized the task of stabilizing the macroeconomic environ- ment in order to facilitate the sustainable growth of the economy. I am convinced that, with the utmost determination and efforts by the Government and people of Vietnam, and the continued support from international community including the International Monetary Fund and the World Bank, our country will overcome the challenges ahead to successfully achieve the objectives set forth for 2004, therefore creating a firm momentum for a faster and steady development in 2005, the final year in the 5-year program for 2001­2005. Finally, I would like to wish all the delegates good health and suc- cess, and wish the 59th Annual Meetings a successful accomplishment. 170 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 171 CONCLUDING REMARKS BY JAMES D. WOLFENSOHN PRESIDENT OF THE WORLD BANK GROUP Let me also thank the United States authorities and, in particular, the District of Columbia authorities for the remarkable work that they have done to help us run these meetings and to keep us all safe. Cer- tainly, I had a feeling as I came in that it would have been impossible to get through the barriers, and I'm sure all of you were impressed at how important you are. I want to thank you also, Mr. Lim, for your chairmanship, which has been wonderful, and thank you for all that you have done in this past year, and congratulate the Democratic Republic of Congo for being selected for next year. We look forward to working with you, Mr. Minister. And finally, let me thank all of you for coming. These shorter meet- ings of two days really test your loyalty, and I am very grateful to you for coming because it is a unique opportunity for us to meet with clients and friends. Next year is an important year, 2005, as has been commented on by many during these discussions. Gordon Brown and Trevor Manuel were particularly focused on this. And it is also the 10 years after Beijing and Copenhagen, and it is a year, unfortunately, in which we will miss the first goal that we were seeking, which was equality of education for girls and boys in both primary and secondary school. Nonetheless, we will be reviewing the Millennium Summit Goals and reporting on them. That will happen after the Spring Meeting, for those of you who are here. The Spring Meeting will take up the Global Monitoring Report which we put together. So, if you want an advance set of thinking about what will happen at the Millennium Summit, come in the spring and listen to what the Development Committee considers. There are a number of specific issues which emerged that related to us, some more to the Bank than to the Fund, but clearly, we are united on the issue of growth. And several speakers spoke of the investment climate and infrastructure, and I was happy that there was recognition of the increased activity of the Bank in infrastructure. Certainly, we understand the needs are enormous, and I am delighted that the Fund and the Bank are working together to see whether there are country-specific solutions that may be able to deal with the financ- ing of infrastructure. I was also happy to hear in many of the speeches a focus on gover- nance and an occasional focus on corruption, which remains a serious issue. Like the Managing Director, we are committed to the Doha Round. We believe that it is crucially important for our work that 171 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 172 trade be liberalized, and you can rely on us for help in any way that you want. I think you know we have a pretty active trade group, and it is available to you. Also coming up is the issue of harmonization and alignment, which will be considered in the spring of next year. We have asked you during the meetings here to help us on this. We need for both the donor and the recipient countries to work together, but I believe that the Paris Forum next year could be a milestone. It was an excellent start in Rome, and I think Paris is likely to take it to a new level, and one that is extremely important. Another issue that was recurrent in the speeches was the issue of capacity building, and there is a lot that has to be done to improve the coordination of capacity. There are far too many individual efforts in capacity building that are not monitored, and with the African Gover- nors this weekend, I talked about the initiative that we will take in Africa to try together again to pull all the initiatives that have been taken into one track and see how we can improve both capacity building and thereafter, the absorptive capacity in countries. Let me repeat what Mr. de Rato said in relation to the best solution in terms of resources is to increase aid, and nowhere is that more impor- tant for us than in the delivery on IDA14. The Finance Minister of Afghanistan made a statement that one dollar of IDA is worth four dol- lars of other support. I was so excited about that that I have been look- ing for his speech to get an exact quotation, and he has left it out of his speech. So, I'm going to get him to rewrite the version that he distrib- uted and add what apparently was a generous gesture, thinking that no one would catch it. Well, I did catch it, and I think he is right. The dona- tions from IDA are very useful, because you can count of them, and of course, the help that comes with the IDA work is unmatchable. We are also examining with our colleagues the issue of alternative or complementary sources of financing that relate to debt forgiveness and to the funding of the given-up debt flows that would otherwise have been paid to IDA and particularly to the African Development Bank. And together with our colleagues in the Fund, we will be taking a look at these alternative sources of funding, particularly the IFF and the pro- posal on taxes that has recently been made. Finally, I think in a number of the speeches, we were touching on some of the substantive areas in health, in water, in education, and rather few references to HIV/AIDS, which I remind you remain one of the great challenges for all of us. It may be that everyone is doing so much that it didn't need to be mentioned, but I have to say that I think it remains one of the key issues that should unite us because of the impact of this. 172 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 173 On the question of voting rights, I agree with Mr. de Rato that this is a political issue on which we hope a consensus will be built and that progress will be able to be reported at the next meeting. So, let me close simply by saying thank you for attending, thank you for the very, very thoughtful speeches which were made by you today, and I look forward to seeing you in the spring. 173 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 174 CONCLUDING REMARKS BY THE CHAIRMAN THE HONORABLE LIM HNG KIANG My fellow Governors, we have almost come to the end of the 2004 Annual Meetings. We made very good progress this year. We addressed critical global economic issues and established an important work agenda in coming months. But before we conclude, allow me to recapit- ulate some of the key themes that emerged over the weekend. First, we agreed that the global economy is set for a broad-based expansion this year. Accommodative monetary and fiscal policies have helped us to achieve this recovery. It is now time for many countries to manage the transition toward more neutral interest rate levels, which will help to ensure that inflationary pressures remain moderate. In addi- tion, fiscal deficits--where they exist--should be consolidated during the global upswing, and it is important for countries to achieve this in the context of clear medium-term fiscal frameworks. The upcoming period of strong growth will also provide an opportunity to enact struc- tural reforms that will make our economies more efficient, flexible, and productive. We should ensure broad ownership of these reforms, reminding ourselves that stronger growth will benefit everyone. Second, we discussed the important effects of oil price volatility, and the risks that this can pose to the global outlook in the near term and beyond. Governors agreed that producers and consumers should endeavor to cooperate to promote stability in the oil market, including through dialogue to increase transparency in that market. Suppliers should make efforts to meet rising demand, while many oil-importing countries may wish to find policies aimed at promoting more sustain- able use of energy. Third, we discussed the fight against global poverty and the efforts to make progress toward the Millennium Development Goals. We agreed that there are some important ways to make aid more effective. While developing countries must improve their policy environments, the more advanced countries should provide the necessary support for the developing countries, including technical advice, concessional financing assistance, and increased market access. Governors welcomed the progress in discussions on granting comprehensive debt relief to some low-income countries that commit themselves to maintaining strong policies. Governors also noted the importance of recent deci- sions to extend the HIPC Initiative for two more years. Fourth, on trade, we welcomed the important progress that has been made under the Doha Development round. The greater flexibility and spirit of cooperation of all parties in these negotiations led to the agree- ment in July on the World Trade Organization's framework for achiev- ing timely implementation of liberalization measures. We look forward 174 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 175 to a successful conclusion of the Doha Round. Multilateral trade liber- alization has been a key driver of growth in the last sixty years, and it will continue to be a cornerstone for promoting global prosperity. Finally, Governors emphasized the need for the IMF and the World Bank to be adaptable and forward-looking to ensure that their support for member countries remains in step with the fast-changing global eco- nomic and financial environment. My fellow Governors, I would like to conclude the 2004 Annual Meetings by thanking all of you for your valuable support. I commend Mr. Wolfensohn for his continued admirable stewardship of the World Bank, and I would like to welcome Mr. de Rato to his leadership posi- tion at the IMF, and thank him for the efforts he has already made to promote a listening culture at the Fund. I would also like to praise the commitment of the staffs of the two institutions for their expertise and hard work. We also extend deep appreciation to Mr. Anjaria and Mr. Ofosu-Amaah; to Mr. Bernes, in his capacity as Executive Secretary to the Development Committee; and to the staff of the Joint Secretariat, particularly Ms. Patricia Davies, for their excellent arrangements for these meetings. I am also very grateful to the staff assigned to me in the Office of the Chairman. Thank you, as well, to the U.S. authorities, who have hosted this conference, and shared their warm hospitality and tire- less efforts. We are also grateful to the security officials of the IMF and the World Bank, and the various law enforcement agencies that have ensured our safety at this important event. Finally, I would like to share that we in Singapore are already working diligently to plan for the Annual Meetings in our country in 2006. We hope to be a good host for the 2006 Annual Meetings. Fellow Governors, it has been a great honor for me to serve as Chairman of the Annual Meetings of the Board of Governors of the IMF and World Bank Group. I would like to congratulate the Finance Minister of the Democratic Republic of Congo, who succeeds me as Chairman of the Annual Meetings, and I thank him for the kind words that he has just extended to me. This concludes the 2004 Annual Meet- ings. I wish everyone safe travels home, and we look forward to meeting again next year in Washington, D.C. 175 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 176 CONGO: ANDRE-PHILIPPE FUTA Governor of the Bank for Democratic Republic of the Congo Governors, dear colleagues, Mr. Chairman, Mr. de Rato, Mr. Wolfensohn, ladies and gentlemen: it is a great honor for the region of Africa and for the Democratic Republic of the Congo to accept the chairmanship of the Boards of Governors for the year ahead. We thank His Excellency Lim Hng Kiang for the remarkable manner in which he conducted these meetings; we will certainly demonstrate that we are up to the task. These meetings have provided us with an opportunity to conduct global financial and economic assessments from the perspective of our two institutions. The picture emerging is that the recovery and revival of the global economy have gotten off to a vigorous start. However, this trend does not guarantee us sustainable and lasting growth, as long as the path to globalization remains fraught with a multitude of great risks and uncertainty. Also, it should be acknowledged that the inequality of this growth among countries on the one hand, and regions on the other, is a source of concern that should prompt the international community to focus on a better allocation of resources in order to ensure a certain degree of equity among member countries. In addition, social conflicts, wars, and the threat of terrorism still cast a shadow on the tenuous gains that have been made. We have a duty to act in a manner that demonstrates that our commitment to peace in the world is beyond reproach and guarantees success and social progress. The challenges facing the international community in its efforts to mobilize additional resources to achieve the Millennium Development Goals still represent the backdrop for any strategy and action to be carefully crafted by the World Bank and IMF, in concert with all nations, so that by the year 2015, our pessimism will be lifted by the miraculous defeat of poverty the world over. We have noted with satisfaction the genuine will of all development partners to pool their efforts to enhance aid effectiveness and signifi- cantly reduce the debt burden of highly indebted poor countries. It behooves us therefore to be resolute in our encouragement and support of the International Monetary Fund and World Bank Group. The two institutions have as their mission to contribute to the main- tenance of financial stability and to pursue sound economic policies geared toward creating a climate conducive to sustainable growth and poverty reduction. Under the enlightened leadership of Mr. De Rato and Mr. Wolfensohn, and with the support of their capable and dedicated staff, the institutions are our best hope for accomplishing the tasks with which they have been entrusted. We are grateful to 176 3645-p171-177_ConclRemarks.pdf 8/24/05 9:32 AM Page 177 them for their achievements in the past year and we know that they are deserving of our confidence. In closing, we would like to express our appreciation to all those who have placed their confidence in us and we look forward to seeing you again at future Annual Meetings. 177 3645-p178-180_Documents.pdf 8/24/05 9:32 AM Page 178 DOCUMENTS OF THE BOARD OF GOVERNORS SCHEDULE OF MEETINGS1,2,4 Sunday October 3 9:30 A.M. Opening Ceremonies Address from the Chair Annual Address by Managing Director, International Monetary Fund Annual Address by President, World Bank Group3 Annual Discussion 2:30 P.M. Annual Discussion Procedures Committees Reports Comments by Heads of Organizations Adjournment 1 The meetings were held at Constitution Hall (A.M. session) and Preston Auditorium (P.M. session) and all sessions were joint sessions. 2 The International Monetary and Financial Committee and Development Commit- tee met on Saturday, October 2, 2004. 3 The World Bank Group consists of the following: International Bank for Reconstruction and Development (IBRD) International Finance Corporation (IFC) International Development Association (IDA) International Centre for Settlement of Investment Disputes (ICSID) Multilateral Investment Guarantee Agency (MIGA) 4 The balloting for the elections of the Executive Directors of the IBRD and MIGA closed on Sunday, October 3, 2004 at 12:00 Noon. 178 3645-p178-180_Documents.pdf 8/24/05 9:32 AM Page 179 PROVISIONS RELATING TO THE CONDUCT OF THE MEETINGS1 ADMISSION 1. Sessions of the Boards of Governors of the International Monetary Fund and World Bank Group will be joint and shall be open to accred- ited press, guests and staff. 2. Meetings of the Joint Procedures Committee shall be open only to Gov- ernors who are members of the Committee and their advisers, Executive Directors, and such staff as may be necessary. PROCEDURES AND RECORDS 3. The Chairman of the Boards of Governors will establish the order of speaking at each session. Governors signifying a desire to speak will gen- erally be recognized in the order in which they ask to speak. 4. With the consent of the Chairman, a Governor may extend his statement in the record following advance submission of the text to the Secretaries. 5. The Secretaries will have verbatim transcripts prepared of the proceed- ings of the Boards of Governors and the Joint Procedures Committee. The transcripts of proceedings of the Joint Procedures Committee will be confidential and available only to the Chairman, the Managing Direc- tor of the International Monetary Fund, the President of the World Bank Group, and the Secretaries. 6. Reports of the Joint Procedures Committee shall be signed by the Com- mittee Chairman and the Reporting Members. PUBLIC INFORMATION 7. The Chairman of the Boards of Governors, the Managing Director of the International Monetary Fund and the President of the World Bank Group will communicate to the press such information concerning the proceedings of the Annual Meetings as they may deem suitable. 1Approved on July 22, 2004 pursuant to the By-laws, IBRD Section 5(d), IFC Section 4(d) and IDA Section 1(a). 179 3645-p178-180_Documents.pdf 8/24/05 9:32 AM Page 180 AGENDAS BANK1 Annual Report Financial Statements and Annual Audit Allocation of FY2004 Net Income Administrative Budget for FY2005 Annual Report of the Development Committee 2004 Regular Election of Executive Directors Selection of the Members of the Joint Procedures Committee and its Officers for 2004­2005 IFC1 Annual Report Financial Statements and Annual Audit Administrative Budget for FY2005 IDA1 Annual Report Financial Statements and Annual Audit Administrative Budget for FY2005 MIGA2 Annual Report Financial Statements and Annual Audit Parity of Voting Power in MIGA 2004 Regular Election of Directors Selection of the Members of the MIGA Procedures Committee and its Officers for 2004­2005 1Approved on August 18, 2004 pursuant to the By-laws, IBRD Section 5(a), IFC Section 4(a) and IDA Section 1(a). 2Approved on August 18, 2004 pursuant to Section 4(a) of the MIGA By-Laws. 180 3645-p181-185_Joint.pdf 8/24/05 9:32 AM Page 181 JOINT PROCEDURES COMMITTEE Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Vice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . Barbados Greece Reporting Member . . . . . . . . . . . . . . . . . . . . Nigeria MEMBERS Belgium Papua New Guinea China Paraguay Colombia Saudi Arabia Democratic Republic of Congo Spain France Ukraine Gabon United Kingdom Germany United States Guatemala Republic of Yemen Japan Zambia Norway 181 3645-p181-185_Joint.pdf 8/24/05 9:32 AM Page 182 REPORT OF THE JOINT PROCEDURES COMMITTEE REPORT II1 October 1, 2004 At the meeting of the Joint Procedures Committee held on October 1, 2004, items of business on the agenda of the Boards of Governors of the Bank, IFC, and IDA were considered. The Committee submits the following report and recommendations on Bank and IDA business: 1. 2004 Annual Report The Committee noted that provision had been made for discussion of the 2004 Annual Report and the activities of the Bank and IDA at these Annual Meetings. 2. 2004 Regular Election of Executive Directors The Committee noted that the 2004 Regular Election of Executive Directors of the Bank would be completed on October 3, 2004 and that the next Regular Election of Executive Directors will take place in 2006. . . .2 3. Financial Statements, Annual Audits, and Administrative Budgets The Committee considered the Financial Statements, Accountants' Reports, and Administrative Budgets contained in the 2004 Bank and IDA Annual Report, together with the Report dated June 24, 2004. The Committee recommends that the Boards of Governors of the Bank and IDA adopt the draft Resolutions. . . .3 1Report I related to business of the Fund. 2See page 190. 3See page 192 and 197. 182 3645-p181-185_Joint.pdf 8/24/05 9:32 AM Page 183 4. Allocation of FY04 Net Income of the Bank The Committee considered the Report of the Executive Directors, dated August 3, 2004, on the Allocation of FY04 Net Income . . . .1 The Committee recommends that the Board of Governors of the Bank adopt the draft resolution . . .2 The Committee submits the following report and recommendations on IFC business: 1. 2004 Annual Report The Committee noted that provision had been made for discussion of the 2004 Annual Report and the activities of the IFC at these Annual Meetings. 2. Financial Statements, Annual Audit, and Administrative Budget The Committee considered the Financial Statements and the Accountants' Report contained in the 2004 Annual Report, together with the Administrative Budget attached to the Report dated June 22, 2004. The Committee recommends that the Board of Governors of IFC adopt the draft resolution. . . .3 Approved: /s/ Lim Hng Kiang /s/ Haruna Usman Sanusi Singapore--Chairman Nigeria--Reporting Member (This report was approved and its recommendations were adopted by the Boards of Governors on October 3, 2004) 1See page 228. 2See page 192. 3See page 194. 183 3645-p181-185_Joint.pdf 8/24/05 9:32 AM Page 184 REPORT III October 1, 2004 The Joint Procedures Committee met on October 1, 2004 and sub- mits the following report and recommendations: 1. Development Committee The Committee noted that the Report of the Chairman of the Joint Ministerial Committee of the Boards of Governors of the fund and the Bank on the Transfer of Real Resources to Developing Countries (Devel- opment Committee) would be presented to the Boards of Governors of the Fund and Bank on October 3, 2004 pursuant to paragraph 5 of Reso- lutions Nos. 29­9 and 294 of the Fund and Bank, respectively. . . .1 The Committee recommends that the Board of Governors of the Fund and of the Bank note the report and thank the Development Committee for its work. 2. Officers and Joint Procedures Comittee for 2004/05 The Committee recommends that the Governor for the Democratic Republic of the Congo be Chairman and that the Governors for Peru and Saudi Arabia be Vice Chairmen of the Boards of Governors of the Fund and of the World Bank Group, to hold office until the close of the next Annual Meetings. It is further recommended that a Joint Procedures Committee be established to be available, after the termination of these meetings and until the close of the next Annual Meetings, for consultation at the dis- cretion of the Chairman, normally by correspondance and, if the occa- sion requires, by convening; and that this Committee shall consist of the Governors for the following memebers: Australia, Bangladesh, Bul- garia, the Democratic Republic of the Congo, Dominican Republic, France, Germany, Ghana, Hungary, Italy, Jamaica, Japan, Libya, Malaysia, Nicaragua, Peru, Poland, Russia, Rwanda, Saudi Arabia, South Africa, the United Kingdom and the United States. 1 See page 14. 184 3645-p181-185_Joint.pdf 8/24/05 9:32 AM Page 185 It is recommended that the Chairman of the Joint Procedure Com- mittee shall be the Governor for the Democratic Republic of the Congo, and the Vice Chairman shall be the Governors for Peru and Saudi Arabia, and that the Governor for Bulgaria shall serve as Report- ing Member. Approved: /s/ Lim Hng Kiag /s/ Haruna Usman Sanusi Singapore­Chairman Nigeria­Reporting Member (This report was approved and its recommendations were adopted by the Boards of Governors on October 3, 2004.) 185 3645-p186-188_MIGA.pdf 8/24/05 9:32 AM Page 186 MIGA PROCEDURES COMMITTEE Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Vice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . Barbados Greece Reporting Member . . . . . . . . . . . . . . . . . . . . Nigeria MEMBERS Belgium Papua New Guinea China Paraguay Colombia Saudi Arabia Democratic Republic of Congo Spain France Ukraine Gabon United Kingdom Germany United States Guatemala Republic of Yemen Japan Zambia Norway 186 3645-p186-188_MIGA.pdf 8/24/05 9:32 AM Page 187 REPORT OF THE MIGA PROCEDURES COMMITTEE REPORT 1 October 1, 2004 At the meeting of the MIGA Procedures Committee held on Octo- ber 1, 2004, the items of business on the agenda of the Council of Gov- ernors of MIGA were considered. The Committee submits the following report and recommendations on MIGA business: 1. 2004 Annual Report The Committee noted that provision had been made for discussion of the 2004 Annual Report and the activities of MIGA at this Annual Meeting. 2. Financial Statements and Annual Audit The Committee considered the Financial Statements and Accoun- tants' Report contained in the 2004 Annual Report. The Committee recommends that the Council of Governors adopt the draft Resolution. . . .1 3. Parity of Voting Power in MIGA The Committee considered the Report of the Board of Directors of MIGA, dated May 6, 2004, on the Parity of Voting Power in MIGA. The Committee recommends that the Council of Governors of MIGA adopt the draft Resolution . . .2 attached to the said Report. 4. 2004 Regular Election of Directors The Committee noted that the 2004 Regular Election of Directors of MIGA would be completed on October 3, 2004 and that the next Regu- lar Election of Directors will take place in 2006. 1See page 199. 2See page 199. 187 3645-p186-188_MIGA.pdf 8/24/05 9:32 AM Page 188 5. Officers and Procedures Committee for 2004/05 The Committee recommends that the Governor for the Democratic Republic of the Congo be Chairman and the Governors for Peru and Saudi Arabia be Vice Chairmen of the Council of Governors of MIGA to hold office until the close of the next Annual Meeting. It is further recommended that a Procedures Committee be estab- lished to be available, after the termination of this Annual Meeting and until the close of the next Annual Meeting, for consultation at the dis- cretion of the Chairman, normally by correspondence and, if the occa- sion requires, by convening; and that this committee shall consist of the Governors for the following members Australia, Bangladesh, Bulgaria, Democratic Republic of the Congo, Dominican Republic, France, Ger- many, Ghana, Hungary, Italy, Jamaica, Japan, Libya, Malaysia, Nicaragua, Peru, Poland, Russia, Rwanda, Saudi Arabia, South Africa, the United Kingdom and the United States. It is recommended that the Chairman of the Procedures Committee shall be the Governor for the Democratic Republic of the Congo and the Vice Chairmen shall be the Governors for Peru and Saudi Arabia, and that the Governor for Bulgaria shall serve as Reporting Member. Approved: /s/ Lim Hng Kiang /s/ Haruna Usman Sanusi Singapore--Chairman Nigeria--Reporting Member (This report was approved and its recommendations were adopted by the Council of Governors of MIGA on October 3, 2004) 188 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 189 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS OF THE BANK BETWEEN THE 2003 AND 2004 ANNUAL MEETINGS Resolution No. 556 Transfer from Surplus to Replenish Trust Fund for Gaza and West Bank RESOLVED: That the Bank transfer from surplus, by way of grant, US$ 80,000,000 to the Trust Fund for Gaza and West Bank, such transfer to be drawn down by the Association as needed; provided, however, that the amount of such grant may at any time be changed by the Association into an equivalent amount in other currencies. (Adopted on February 4, 2004) Resolution No. 557 Transfer from Surplus to Low-Income Countries under Stress Implementation Trust Fund RESOLVED THAT: The Bank transfer from surplus $25 million as of the effective date of this Resolution to the LICUS Implementation Trust Fund (the `Trust Fund"), established by the International Development Association (the "Association"), such transfer to be drawn down by the Association immediately and used in accordance with the resolution establishing the Trust Fund. (Adopted March on 4, 2004) Resolution No. 558 Direct Remuneration of Executive Directors and their Alternates RESOLVED: THAT, effective July 1, 2004, the remuneration of the Executive Direc- tors of the Bank and their Alternates pursuant to Section 13(e) of the By- 189 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 190 Laws shall be paid in the form of salary without a separate supplemental allowance, and such salary shall be paid at the annual rate of $196,730 per year for Executive Directors and $170,170 per year for their Alternates. (Adopted on July 28, 2004) Resolution No. 559 2004 Regular Election of Executive Directors RESOLVED: (a) THAT the attached Rules for the 2004 Regular Election of Executive Directors are hereby approved; and (b) THAT a Regular Election of Executive Directors shall take place in con- nection with the Annual Meeting of the Board of Governors in 2006. (Adopted on August 18, 2004) Resolution No. 560 Framework for Remuneration of the President WHEREAS the Executive Directors have noted the remuneration package agreed for the Managing Director of the IMF on the occasion of his appointment, effective June 7, 2004; WHEREAS the Executive Directors have recalled the long-standing practice of parity between the remuneration of the President of the World Bank (the President) and the Managing Director of the IMF (the Managing Director); WHEREAS the Executive Directors have reviewed the contract and associated understandings between the President and the World Bank; WHEREAS the Executive Directors have therefore reviewed the remuneration of the President and have recommended that the salary and allowances of the President be increased by 2.8% as required by the end-May 2004 consumer price index and by a further 6.4% to maintain parity, both with effect from June 7, 2004; WHEREAS the Executive Directors have recommended that a framework be established, jointly with the IMF, for the future determi- nation of the remuneration of the President and the Managing Director; NOW, THEREFORE, the Board of Governors hereby adopts the following Resolution: 190 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 191 Having regard to the long-standing practice of parity between the remuneration of the President of the World Bank and the Managing Director of the IMF, the Board of Governors of the Bank: (a) invites the Board of Governors of the IMF to consider a joint framework for deci- sions on the remuneration of the President and the Managing Director, including the potential role in this regard of the Joint Committee on Remuneration of Executive Directors and their Alternates; and (b) requests the Executive Directors of the Bank to prepare proposals on such a framework, in consultation with the Executive Directors of the IMF. (Adopted on September 16, 2004) Resolution No. 561 Remuneration of the President WHEREAS the Executive Directors have noted the remuneration package agreed for the Managing Director of the IMF on the occasion of his appointment, effective June 7, 2004; WHEREAS the Executive Directors have recalled the long-standing practice of parity between the remuneration of the President of the World Bank (the President) and the Managing Director of the IMF (the Managing Director); WHEREAS the Executive Directors have reviewed the contract and associated understandings between the President and the World Bank; WHEREAS the Executive Directors have therefore reviewed the remuneration of the President and have recommended that the salary and allowances of the President be increased by 2.8% as required by the end-May 2004 consumer price index and by a further 6.4% to maintain parity, both with effect from June 7, 2004; WHEREAS the Executive Directors have recommended that a framework be established, jointly with the IMF, for the future determi- nation of the remuneration of the President and the Managing Director; NOW, THEREFORE, the Board of Governors hereby adopts the following Resolution: The annual salary of the President shall be US$302,470, with effect from June 7, 2004. (Adopted on September 16, 2004) 191 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 192 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS OF THE BANK AT THE 2004 ANNUAL MEETINGS Resolution No. 562 Financial Statements, Accountants' Report and Administrative Budget RESOLVED: THAT the Board of Governors of the Bank consider the Financial Statements, Accountants' Report and Administrative Budget, included in the 2004 Annual Report, as fulfilling the requirements of Article V, Section 13, of the Articles of Agreement and of Section 18 of the By- Laws of the Bank. (Adopted on October 3, 2004) Resolution No. 563 Allocation of FY04 Net Income RESOLVED: 1. THAT the Report of the Executive Directors dated August 3rd, 2004 on "Allocation of FY04 Net Income" is hereby noted with approval; 2. THAT the addition to the General Reserve of the Bank of $680 million, plus or minus any rounding amount less than $1 million, and the increase to the pension reserve of $21 million for the reasons given in the Report of the Executive Directors, are hereby noted with approval; 3. THAT the Bank transfer to the International Development Association, by way of a grant out of the FY04 net income of the Bank, $300 million, which amount may be used by the Association to provide financing in the form of grants in addition to loans, such transfer to be made at such time and manner as decided by the Executive Directors; 4. THAT the Bank transfer to the HIPC Debt Initiative Trust Fund, by way of immediate grant out of the Bank's FY04 net income, $240 million; 5. THAT the Bank transfer to the Debt-Reduction Facility for IDA-Only Countries, by way of immediate grant out of the Bank's FY04 net income, $50 million; and 192 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 193 6. THAT the Bank retain $405 million as surplus, of which $400 million would be earmarked solely for subsequent transfers to IDA, HIPC, and/or reserves. (Adopted on October 3, 2004) 193 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 194 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IFC AT THE 2004 ANNUAL MEETINGS Resolution No. 240 Financial Statements, Accountants' Report and Administrative Budget and IFC's Funding Mechanism for Technical Assistance and Advisory Services RESOLVED: 1. THAT the Board of Governors of the Corporation consider the Finan- cial Statements, Accountants' Report and Administrative Budget, included in the 2004 Annual Report, as fulfilling the requirements of Article IV, Section 11, of the Articles of Agreement and of Section 16 of the By-Laws of the Corporation; and 2. THAT the designation of $225 million of the Corporation's retained earnings for IFC's Funding Mechanism for Technical Assistance and Advisory Services reflected in IFC's fiscal year 2004 financial statements as discussed in the Report to the Board of Governors on IFC's FY05 Business Plan and Budget is hereby noted with approval. (Adopted on October 3, 2004) 194 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 195 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IDA BETWEEN THE 2003 AND 2004 ANNUAL MEETINGS Resolution No. 207 Slovenia--Change in Membership Status WHEREAS Slovenia became a member of the Association on Feb- ruary 25, 1993 in accordance with the Resolution of the Executive Directors No. 93-2 entitled "Socialist Federal Republic of Yugoslavia-- Termination of Membership and Succession to Membership" adopted on February 25, 1993; WHEREAS Slovenia has removed all restrictions on the use by the Association of the amounts of its initial subscription in the Association's lending activities; WHEREAS Slovenia has participated in each of the replenishments of the Association's resources by making subscriptions and contribu- tions amounting in the aggregate to $13 million (including its share of the rights and obligations of the Socialist Federal Republic of Yugoslavia); WHEREAS Slovenia has requested that it be considered as a Part I member of the Association, and the Executive Directors have accepted this request and have recommended to the Board of Governors that the voting rights attached to Slovenia's subscriptions and contributions to the Association be adjusted on the basis of its status as a Part I member; NOW, THEREFORE, the Board of Governors hereby RESOLVES: 1. The terms and conditions of the membership of Slovenia in the Associa- tion other than those specifically provided for in this Resolution shall be those set forth in the Articles with respect to the membership of original members listed in Part I of Schedule A thereof (including, but not by way of limitation, the terms and conditions relating to subscriptions, pay- ments on subscription, usability of currencies and voting rights). 2. Slovenia's votes shall be adjusted as follows: As of the date of this Reso- lution, 31,522 votes shall be allocated to Slovenia in lieu of the votes allo- 195 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 196 cated to it before the said date, on account of its cumulative subscrip- tions and contributions to the resources of the Association through the Thirteenth Replenishment of the Association's resources, consisting of 922 subscription votes and 30,600 membership votes. (Adopted on July 30, 2004) 196 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 197 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IDA AT THE 2004 ANNUAL MEETINGS Resolution No. 208 Financial Statements, Accountants' Report and Administrative Budget RESOLVED: THAT the Board of Governors of the Association consider the Financial Statements, Accountants' Report and Administrative Budget, included in the 2004 Annual Report, as fulfilling the requirements of Article VI, Section 11, of the Articles of Agreement and of Section 8 of the By-Laws of the Association. (Adopted on October 3, 2004) 197 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 198 RESOLUTION ADOPTED BY THE COUNCIL OF GOVERNORS OF MIGA BETWEEN THE 2003 AND 2004 ANNUAL MEETINGS Resolution No. 68 Election of Directors RESOLVED: (a) That the 2004 Regular Election of Directors shall take place in accor- dance with the attached Rules; and (b) That a Regular Election of Directors shall take place in connection with the Annual Meeting of the Council of Governors in 2006. (Adopted on August 18, 2004) 198 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 199 RESOLUTIONS ADOPTED BY THE COUNCIL OF GOVERNORS OF MIGA AT THE 2004 ANNUAL MEETINGS Resolution No. 69 Financial Statements and Accountants' Report RESOLVED: THAT the Council of Governors of the Agency consider the Finan- cial Statements, and the Report of Independent Accountants included in the 2004 Annual Report, as fulfilling the requirements of Article 29 of the MIGA Convention and of Section 16(b) of the By-Laws of the Agency. (Adopted on October 3, 2004) Resolution No. 70 Parity of Voting Power in MIGA WHEREAS, Article 39(a) of MIGA's Convention states that: "(a) In order to provide for voting arrangements that reflect the equal interest in the Agency of the two Categories of States listed in Schedule A of this Convention (emphasis added), as well as the impor- tance of each member's financial participation, each member shall have 177 membership votes plus one participation vote for each share of stock held by that member." WHEREAS, Article 39(c) of MIGA's Convention states that: "(c) During the third year following the entry into force of this Con- vention, the Council shall review the allocation of shares and shall be guided in its decision by the following principles: (i) the votes of members shall reflect actual subscriptions to the Agency's capital and the membership votes as set out in Section (a) of this Article; (ii) shares allocated to countries that shall not have signed the Convention shall be made available for reallocation to such members and in such manner as to make possible voting parity between the above-mentioned Categories; and (iii) the Council will take measures that will facilitate members' ability to subscribe to shares allocated to them." 199 3645-p189-200_Resolutions.pdf 8/24/05 9:31 AM Page 200 WHEREAS, Resolution Nos. 20, 43, 55, and 61 of the Council of Governors postponed the review and reallocation of shares for the pur- pose of achieving parity of voting power; WHEREAS, Resolution No. 64 of the Council of Governors required the Management of the Agency to present a proposal to achieve parity of voting power to the Board of Directors; NOW THEREFORE, the Council of Governors resolves that: (a) parity of voting power should be achieved immediately by using a Parity Factor calculated by using a formula that results in assigning an additional number of votes, called Parity Votes, to every member so that the aggregate number of votes of Category One members would be the same as the aggregate votes of the Category Two member, and that this Parity Factor will be automatically adjusted when there is any change in membership or in the number of shares subscribed that affects parity; (b) in addition to applying a Parity Factor, the review and reallocation of any available shares be done after the payment period for the GCI shares which were reserved by way of an Instrument of Contribution has come to an end but at the latest, in conjunction with the next capital increase, if any, in such a way that the reallocation of any available shares plus the Parity Factor applicable at the time results in parity of voting power; (c) once parity of voting power has been achieved, Schedule A to the Con- vention is no longer applicable, however, the number of shares to be subscribed by a country that has not signed the Convention at that time be that set forth in Schedule A to the Convention, provided however, that, the terms and conditions, including the price of the shares, shall be determined by the Council of Governors on a case by case basis. (Adopted on October 3, 2004) 200 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 201 REPORTS OF THE EXECUTIVE DIRECTORS OF THE BANK December 23, 2003 Transfer from Surplus to Replenish Trust Fund for Gaza and West Bank 1. On October 19, 1993, by the terms of Resolution No. 93-11 and IDA 93-7, the Executive Directors of the International Bank for Reconstruction and Development (Bank) and the International Development Association (Association) approved the establish- ment of the Trust Fund for Gaza. On November 11, 1993, by the terms of Resolution No. 483, the Board of Governors of the Bank approved the transfer from surplus, by way of grant, of US$ 50 million to the Trust Fund for Gaza. On August 1, 1995, by the terms of Resolution No. 95-6 and IDA 95-3, the Executive Directors of the Bank and the Association amended Resolution No. 93-11 and IDA 93-7 by (a) expanding the territorial scope of the activities to be financed out of the Trust Fund for Gaza to include such areas, sectors and activities in the West Bank which are or will be under the jurisdiction of the Palestinian Authority pursuant to the relevant Israeli-Palestinian agreements; and (b) changing the name of the "Trust Fund for Gaza" to "Trust Fund for Gaza and West Bank." On October 12, 1995, by the terms of Resolution No. 500, the Board of Governors approved the trans- fer to the Trust Fund for Gaza and West Bank, by way of grant out of the Bank's FY95 net income, of US$ 90 million. On December 19, 1996, by the terms of Resolution No. 96-11 and No. IDA 96-7, the Executive Directors of the Bank and the Association further amended Resolution No. 93-11 and IDA 93- 7 by (a) introducing flexibility to the terms under which resources may be provided out of the Trust Fund for Gaza and West Bank; and (b) requiring that the repayment of trust fund credits made out of the Trust Fund for Gaza and West Bank accrue to the Association as part of its resources. On February 3, 1997, by the terms of Resolution 511, the Board of Governors approved the transfer from surplus, by way of grant, of US$ 90 million to the Trust Fund for Gaza and West Bank. On July 13, 1998, by the terms of Resolution 519, the Board of Governors approved the transfer from surplus, by way of grant, of US$ 90 million to the Trust Fund for Gaza and West Bank. On Septem- ber 30, 1999, by the terms of Resolution 529, the Board of 201 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 202 Governors approved the transfer to the Trust Fund for Gaza and West Bank, by way of grant out of the Bank's FY99 net income, of US$ 60 million. 2. In view of the material contribution that the Bank's financial assis- tance makes to Palestinian economic welfare and to the search for peace in the Middle East, the Executive Directors consider that the Trust Fund for Gaza and West Bank should be replenished. They recommend that the Board of Governors authorize the transfer from surplus of the amount of US$ 80 million to the Trust Fund for Gaza and West Bank. 3. Accordingly, the Executive Directors recommend that the Board of Governors adopt the draft Resolution. . . .1 (This report was approved and its recommendation was adopted by the Board of Governors on February 4, 2004) January 15, 2004 Transfer from Surplus to Low-Income Countries under Stress Implementation Trust Fund 1. In view of the needs for assistance for Low-Income Countries under Stress (LICUS) and in order to promote the purpose of the International Bank for Reconstruction and Development (the "IBRD") and the International Development Association (the "Association") in these circumstances, the Executive Directors consider that a trust fund should be established forthwith to assist those countries as an initiative for the benefit of the members of the IBRD and of the Association. The Executive Directors recom- mend that the Board of Governors authorize the immediate trans- fer from surplus of $25 million to the LICUS Implementation Trust Fund. 2. Accordingly, the Executive Directors recommend that the Board of Governors adopt the draft Resolution. . . .2 1 See page 189. 2 See page 189. 202 Report to the Boards of Governors of the IMF and the World Bank by the Joint Committee on the Remuneration of Executive Directors and their Alternates Introduction 1. Pursuant to Section 14(e) of the By-Laws of the Fund and Section 13(e) of the By-Laws of the Bank, the undersigned were appointed to the 2004 Joint Committee on the Remuneration of Executive Directors and their Alternates (JCR). 2. The JCR met in Singapore on February 4, 2004, in Washington, D.C. on April 22­23, 2004, and in London on June 7­8, 2004. 3. The JCR undertook an in-depth review of the remuneration of IMF and World Bank Executive Directors and their Alternates. This was in line with the process recommended by the 1997 JCR and followed by JCRs since 1998, which calls for a full-scale review only once every four years, starting in 2000, and streamlined reviews in other years. 4. The approach and methodology followed by the Committee are summarized in Section II of this report.The JCR's views on job con- tent and qualifications of Executive Directors are summarized in Section III. Section IV reviews the salary of Executive Directors in light of developments in external comparator markets and internal relativities, and proposes a structural approach to re-position Execu- tive Directors' salaries at an appropriate level vis-à-vis the salaries of senior staff of the two institutions. Benefits issues are discussed in Section V with particular attention to the implications of the signifi- cant differences that have arisen, since 1999, between the expatriate benefits ofWorld Bank Executive Directors and ofWorld Bank staff. Section VI contains the recommendations of the JCR on the remu- neration of Executive Directors and their Alternates. Section VII makes a number of recommendations about the JCR's process. The recommendations on matters requiring a vote by Governors are in Section VIII, with the draft resolutions in Attachments I and II. Methodology Used by the 2004 JCR 5. The JCR reviewed the studies prepared by outside consultants for the 2000 salary review on: position profiles for Executive Directors 203 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 204 and Alternate Executive Directors in both the Fund and the Bank; the similarities and differences between the roles of Executive Directors in the Fund and the Bank; position profiles of Economic Ministers/Counselors at embassies in Washington and of permanent representatives to a number of international organizations. The Committee did not consider any recent changes in these positions to be such as to warrant new consultant studies, and further noted that the profiles of external comparator positions had not been found to be directly relevant by the 2000 JCR for determining the remunera- tion of Executive Directors. However, the Committee was provided with up-to-date information on Executive Directors' professional backgrounds and recent changes in the workload and nature of the two Boards, which it used as input for its discussion of the job con- tent and qualifications of Executive Directors (Section III). 6. Like all its predecessors, the JCR found it important to be able to assess the remuneration of Executive Directors in light of infor- mation on wage developments for public sector positions in a range of countries, because many Executive Directors come from and return to senior positions in the national administrations of their own country. The Committee was mindful of the views of previous JCRs that there is no single, fully satisfactory external comparator for the position of Executive Director, and it consid- ered it preferable to consider compensation information on an array of positions at various levels and with various functions, which is similar to the approach taken in the comprehensive 2000 review. The JCR accordingly commissioned a consultant to collect and analyze data on remuneration levels for a number of national government positions--in ministries of finance, central banks, Washington-based embassies, and representatives in international organizations--in fifteen countries at various income levels, as well as for the most senior positions in the regional development banks. Information was also collected on the 2003­2004 salary increases and the aggregate increases for civil service positions in these fifteen countries between 2001 and 2004. In reviewing these data, the Committee noted that the lack of responses for some positions and for some countries, and of consistent or meaningful information on housing and other allowances, together with the considerable variations of reported data across countries, make it extremely difficult to draw firm conclusions on the external com- parability of Executive Directors' remuneration. Since previous salary surveys have suffered from similar weaknesses, the Com- mittee suggests that future remuneration surveys might be simpli- fied and focused on a smaller set of the most relevant data on 204 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 205 somewhat fewer positions and a smaller, but still representative, sample of member countries. 7. A major focus of the 2004 review has been the relationship of Exec- utive Directors' salaries to those of the management and of the senior staff of the two institutions. The Committee noted that recent JCRs have systematically stressed the importance of gradually cor- recting the past deterioration of the remuneration of Executive Directors relative to that of the senior management and staff of the two institutions, but that concerns about internal salary erosion nev- ertheless persist. Since the 2004 comprehensive review provided an opportunity to look at this issue in a structural perspective, the Committee examined the evolution of the relationship between the remuneration of Executive Directors and that of Fund and Bank management and staff over the 1990­2003 period, and considered a course of action to re-position Executive Directors' salaries in inter- nal relative terms over a number of years (Section IV). 8. In addition to its review of external salary comparisons and inter- nal relativities, the Committee took also into account a range of other factors that have traditionally contributed to supporting the JCR's recommendations on remuneration: recent and proposed increases in the salary structure for Fund and World Bank staff, and in the consumer price index for the Washington, D.C. area; recent developments in the exchange rate of the U.S. dollar against other major currencies; and the broader political and eco- nomic environment. The Committee also took note of the remu- neration of the Managing Director of the Fund and the President of the Bank, including the pending changes recently recom- mended with respect to the remuneration of the IMF Managing Director and Deputy Managing Directors. Job Content and Qualifications of Executive Directors 9. The Committee notes that the Bretton Woods Institutions and, more generally, the international community have faced exceptionally dif- ficult challenges in recent years: a marked slowdown of world eco- nomic activity in the early 2000s, heightened geopolitical uncertainty, financial crises in some member countries, continued severe poverty among large segments of the world population, and increased strains on multilateralism as evidenced by anti-globalization movements and setbacks in multilateral trade negotiations. To confront these challenges wide-ranging reform measures have been taken to 205 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 206 enhance the Bank's and the Fund's participation in the global effort to achieve the Millennium Development Goals; to strengthen mem- bers' capacity to prevent crises and achieve sustainable growth; to ensure the stability and integrity of the international financial system against the background of increasing integration and globalization of financial markets; and to respond to calls for greater accountability, transparency, and national ownership of the policies supported by the Fund and the Bank. Discussions to translate these reforms into Fund and Bank policies, and ensure their effective implementation at the country level have continued to confront the Executive Boards with heavy workloads, and a range of complex, interrelated issues. 10. Against this background, the JCR stresses the importance of con- tinuing to elect and appoint highly-qualified Executive Directors who are able to cope with--and give leadership to--the increased scope of responsibilities of the Bretton Woods Institutions. · The Committee is re-assured that, over time, the educational and professional profiles of Executive Directors have remained of high standards and relevant to the functions of the institutions, with most Directors having PhD or Masters' degrees and joining the Executive Board after extensive--on average, 20 years--public service experience. · Going forward, the Committee underscores that it will remain important to attract people with both strategic vision and expertise in a variety of areas. Given the dual function of Executive Directors as country representatives and as officers responsible for conducting the business of the institutions, they need to carry significant weight in their capitals to repre- sent their countries adequately and, at the same time, to con- tribute effectively to the institutions' consensus building culture. This is particularly important in view of the increasing role of other--national and supranational--bodies in shaping decisions on the international financial architecture. · To cope with the challenges of financial globalization and the role of private sector development as the engine of growth in low-income countries, the Committee notes the desirability of some increase, over time, in the number of Executive Direc- tors with relevant financial and private sector experience. · The Committee also notes that the average length of service of Executive Directors remains fairly short--ranging from two to four years--in particular in the Bank. Sufficient continuity, includ- ing a somewhat slower rotation in multi-country constituencies, would help ensure the effectiveness of the Executive Boards. 206 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 207 Review of Remuneration Developments 11. Regarding external comparability of the remuneration of Execu- tive Directors, the JCR was confronted, as its predecessors, with the difficulty to make meaningful comparisons with developments in comparator markets, given the absence of a single, fully satisfac- tory external comparator and the shortcomings in the data on public sector remuneration developments in a number of coun- tries that were contained in the salary survey commissioned by the Committee. The available data, together with information on housing allowances for Economic Ministers in a number of Wash- ington-based embassies, nevertheless suggest that the remunera- tion of Executive Directors is at an intermediate level--that broadly corresponds to their responsibilities--of the remuneration of the most senior positions in the central banks and ministries of finance in industrial countries. Aggregate salary increases of Exec- utive Directors over the past three years also are broadly compa- rable to civil service wage increases in a number of major industrial countries during that same period, although these increases vary widely across countries. 12. The JCR examined the internal relativities that are relevant for assessing Executive Directors' remuneration, in view of the con- cerns expressed by several previous JCRs about the importance of correcting the downward shift in Executive Directors' salaries rel- ative to that of the management and senior staff of the institutions. The principal trends identified by the Committee included the fol- lowing: · The ratio of the remuneration of Executive Directors to the total remuneration of the Fund Managing Director and the Work Bank President has been relatively stable, about 46 per- cent over the past 15­20 years. · From 1990 through 2003, after all of the year's salary adjust- ments, the ratio of the remuneration of Executive Directors to the higher levels of the staff salary structure fell by 6­8 per- centage points in the Fund and by 10­11 percentage points in the Bank, largely as the result of upward shifts in the senior staff salary structures in 1999 and 2000. · There has been an increasing proportion of both Fund and Bank professional staff who are paid more than Executive Directors. Between 1990 and 2003, it rose from 4.5 percent (48 staff members) in 1990 to 6.1 percent (122 staff members) in the Fund, and, reflecting different salary administration 207 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 208 procedures, from 2 percent (82 staff members) to 2.7 percent (154 staff members) in the Bank. 13. The Committee is mindful of the desirability, which has been emphasized by previous JCRs, of avoiding a specific or close link between the remuneration of management or senior staff and of Executive Directors in order to avoid any conflict of interest or appearance of conflict of interest. At the same time, however, the Committee considers it important to position the remuneration of Executive Directors at an appropriate level in the organizational hierarchy and relative to the compensation of management and senior staff to reflect their respective roles and responsibilities in the governance of the institutions. The deterioration in the level of Executive Directors' remuneration relative to that of the staff structures over the past 10­15 years appears not consistent with the organizations' need for Executive Boards that are endowed with the necessary standing, authority and qualifications to take difficult policy decisions in the face of a challenging international environment. This has also been emphasized by recent JCRs. 14. The Committee considers it important to undertake a gradual re- positioning of Executive Directors remuneration aimed at restor- ing it to a more appropriate level within the organizations' salary structures. In light of the efforts of the Fund and Bank and many of their member countries to exercise tight budgetary discipline such corrective adjustments should be phased over a period per- haps as long as 7­10 years. The Committee considers that it would be possible to accomplish the desirable re-positioning through a series of annual upward shifts of up to one percentage point within the institutions' overall salary structure. While the specific extent of each year's shift in Executive Directors' remuneration is a matter for future JCRs to consider in light of year-to-year devel- opments--including external relativities and how closely staff adjustments follow the annual cost-of-living increases--the Com- mittee recommends that its successor JCRs and the Boards of Governors make this re-positioning a priority consideration. This Committee's proposed adjustment for 2004, which is set out below, would take an initial step in this direction. 15. The JCR also considered the following data. The increase in salary structure for the Fund staff was 3.6% as of May 1, 2004. The average increase in the salary structure for the World Bank staff has not yet been decided, but is expected to be of the same order. The rise in the consumer price index for the Washington, 208 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 209 D.C. area (May 2003 to May 2004) is expected to be between 2.2% and 2.5%. The JCR also noted the depreciation of the U.S. dollar against the euro and several other currencies since the last general election of Executive Directors in September 2002. How- ever, in many cases this depreciation offsets an appreciation which had occurred in the preceding period. While recognizing that such currency movements could have an impact (in either direction) on savings to be repatriated, the Committee did not consider it feasible or appropriate to adjust for such movements. 16. The JCR reviewed the parallelism between the remuneration of Fund and Bank Executive Directors against the background of the comprehensive examination of this topic by the 2000 JCR. The Committee reconfirms the conclusion of the 2000 review that the advantages of continuing parallelism with respect to the remuner- ation of Executive Directors outweigh the difficulties that separa- tion would entail. The roles and responsibilities of Fund and Bank Executive Directors, as well as their seniority in terms of profes- sional backgrounds, have remained broadly comparable. Ongoing efforts to refocus the activities of the two organizations on their respective mandates should further strengthen genuine collabora- tion between both, based on a clear division of labor. Accordingly, the Committee concludes that there continues to be justification for the remuneration of Fund and Bank Executive Directors to be set at the same level and to have the same annual adjustments. Going forward, the issue of parallelism should nevertheless be kept under review in light of the important differences that have arisen, since 1998, in the remuneration and benefits policies of the staff and management of both organizations. Review of Benefits Issues 17. The JCR noted that no significant changes in the benefits of the Fund and Bank staff had been made since the 2003 review, which would warrant action by the JCR. However, the Committee noted that the 1999 JCR, as well as its successors, had deferred consider- ation of the possible application to Bank Executive Directors and Alternates of the significant changes made in 1999 in the expatri- ate allowances--home leave and education benefits--for Bank staff. Under the Bank's new expatriate benefits policy (1) expatri- ate staff assigned to headquarters and appointed on or after July 1, 1999 receive a "mobility premium" (in lieu of home leave and edu- cation allowances), which is gradually phased out between the fifth and tenth year of employment, and (2) expatriate staff 209 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 210 appointed before July 1, 1999, continue to receive home leave and education allowances, but the cost standard for home leave travel is reduced from business to economy class. This new standard was introduced in a phased manner over a transitional period that ended in mid 2002. 18. The JCR considers that the mobility premium should not be applied to Bank Executive Directors and Alternates. In particular, the mobility premium has been designed to provide incentives for the recruitment of expatriate staff, as part of an overall redesign of the compensation and benefits system for Bank staff, and would-- through its front-loaded nature in the first five years--provide sig- nificant additional cash benefits to Bank Executive Directors, whose average length of service tends to fluctuate between two and three years. Applying the mobility premium to Bank Execu- tive Directors would introduce a significant distinction between Bank and Fund Executive Directors, while extending the premium to Fund Executive Directors as well would place the expatriate benefits for the Fund's Board on an entirely different footing from that of Fund staff. The JCR notes that the Fund's management and Executive Board have, in the past, considered the possibility of adopting the changes made by the Bank to the expatriate allowances, but have not supported the replacement of the Fund's current allowances with a mobility-premium type allowance. The JCR saw no need to recommend changes in the benefits of Execu- tive Directors to take account of the revision of the cost standard for home leave travel by Bank staff appointed before July 1, 1999. 19. The JCR also examined some concerns that were brought to its attention related to the absence of formal annual and sick leave benefits, similar to those of staff, for Executive Directors and their Alternates. It concluded that the present arrangements for Execu- tive Directors and Alternates continue to be on the whole satisfac- tory--a conclusion that was also reached by the 1999 JCR in examining the issue of sick leave entitlement--and no action is therefore recommended in this area. Recommendations with Respect to Remuneration 20. Executive Directors--Taking all the above considerations into account, the JCR recommends an increase of 4.1% in Executive Directors' total remuneration from $188,980 to $196,730. This rec- ommendation takes into account the Committee's assessment of external comparability and the effects on internal relativities of 210 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 211 the recently approved and, in the Bank, pending increases in the staff salary structures. As indicated above, the proposed increase is an initial step in the re-positioning of Executive Directors' remuneration. 21. The Committee stresses that appropriately re-positioning the remuneration of Executive Directors relative to that of the man- agement and senior staff of the organizations will involve a sus- tained, multi-year effort. Accordingly, it will be important for future JCRs to take this structural adjustment component care- fully into account in making recommendations to the Boards of Governors on the remuneration of Executive Directors. 22. Alternate Executive Directors--The JCR reviewed the roles and responsibilities of Alternate Executive Directors in both institu- tions. It noted that, in recognition of the increased responsibilities of Alternates, the ratio of the remuneration of Alternates to Exec- utive Directors has gradually been increased from 85 percent to 86.5 percent in 2000. It considers that this ratio continues to be appropriate, and accordingly recommends an increase in the remuneration of Alternate Executive Directors from $163,470 to $170,170. Recommendations about the JCR Process 23. The JCR considers that the experience with the streamlined proce- dures introduced in 1998 is still relatively new, with the 2003 review having completed the first full cycle of streamlined reviews. The pro- cedures nevertheless appear to have worked well, and the Commit- tee recommends that, following this year's comprehensive review, the reviews in 2005, 2006, and 2007 be held in accordance with the streamlined procedures followed by the previous JCRs, with the next comprehensive review expected to take place in 2008. The JCR nev- ertheless stresses the importance of addressing any new benefits issues as they arise, including in interim reviews, and not to defer their consideration until the next comprehensive review. Going for- ward, it will also be important to streamline the collection of remu- neration data on external comparator positions, in view of the limited usefulness of past surveys and the costs involved. Once the remuneration of Executive Directors will be re-positioned at an appropriate level, it would also be useful to reconsider proposals for further streamlining the entire process, including the possibility of periodic comprehensive reviews with automatic CPI-based adjust- ments in the years in between. 211 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 212 Recommendations Requiring a Vote by the Governors 24. In light of the recommendations on remuneration of Fund and Bank Executive Directors and their Alternates in paragraphs 20­22 above, the Committee recommends that the draft resolu- tions . . .1, for the Fund and the Bank be adopted by the respec- tive Boards of Governors of the Fund and the Bank. 25. The Joint Committee directs the Secretary of the Fund and the Corporate Secretary of the Bank to transmit this report to the Boards of Governors of the Fund and the Bank, respectively, for a vote without meeting in accordance with Sections 13 and 14(e) of the By-Laws of the Fund and Sections 12 and 13(e) of the By-Laws of the Bank. (This report was approved and its recommendation was adopted by the Board of Governors on July 28, 2004). 1See page 189. 212 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 213 July 9, 2003 2004 Regular Election of Executive Directors 1. Pursuant to Resolution No. 547 of the Board of Governors, a Regular Election of Executive Directors would take place in connection with the 2004 Annual Meeting of the Board of Governors. It is proposed that this Regular Election be conducted by rapid means of communica- tion so as to conclude a reasonable time in advance of November 1, 2004, when the term of office of the elected Executive Directors shall commence. 2. The Executive Directors have noted that the size of the Board was increased to 24 in 1992, after a large increase in the membership, in order to preserve broad geographic representation which permits all major groups of countries to be represented. As in past years, there is strong feeling among the Executive Directors that, in the unlikely event that there was lack of such wide geographical and balanced rep- resentation, prompt corrective action would be called for. 3. The Executive Directors recommend that the maximum and minimum percentages of eligible votes required for election of an Executive Director be 10 percent and 2 percent, respectively. They believe that such percentages would provide a range that is broad enough in the cir- cumstances. 4. The Executive Directors recommend that the date from which the 2004 Regular Election will be effective be November 1, 2004. 5. The Executive Directors note that under the Articles of Agreement of the International Finance Corporation (the Corporation) and the International Development Association (the Association) the elected Directors will serve ex officio as members of the Board of Directors of the Corporation and Executive Directors of the Association. 6. The Executive Directors recommend that the subsequent Regular Election of Executive Directors take place in connection with the Annual Meeting of the Board of Governors in 2006. 7. The Executive Directors recommend the adoption by the Board of Governors of the attached Rules for the 2004 Regular Election of Executive Directors, which provide for the conduct of this Election by rapid means of communication. 213 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 214 8. The draft Resolution . . .1 embodying the above recommendations, is proposed for adoption by the Board of Governors: (This report was approved and its recommendation was adopted by the Board of Governors on August 18, 2004) 1See page 190. 214 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 215 RULES FOR THE 2004 REGULAR ELECTION OF EXECUTIVE DIRECTORS DEFINITIONS 1. In these Rules, unless the context shall otherwise require, (a) "Articles" means the Articles of Agreement of the Bank. (b) "Board" means the Board of Governors of the Bank. (c) "Chairman" means the Chairman of the Board or a Vice Chairman acting as Chairman. (d) "Governor" includes the Alternate Governor and, for actions taken at any meeting, a temporary Alternate Governor, when acting for the Governor. (e) "Secretary" means the Corporate Secretary or any acting Corpo- rate Secretary of the Bank. (f) "Election" means the 2004 Regular Election of Executive Directors. (g) "Eligible votes" means the total number of votes that can be cast in the election. 2. All actions taken under these Rules, including communications by the Secretary and the Chairman and nominations and balloting by the Governors, may be taken by rapid means of communication. TIMING OF ELECTION 3. The election shall be held by requesting nominations and conducting ballots so as to conclude a reasonable time in advance of November 1, 2004, when the term of office of the elected Executive Directors shall commence. BASIC RULES--SCHEDULE B 4. Subject to the adjustment set forth in the Rules, the provisions of Sched- ule B of the Articles shall apply to the conduct of the election, except that: (a) "two percent" shall be substituted for "fourteen percent" in Para- graphs 2 and 5 and "ten percent" shall be substituted for "fifteen percent" in Paragraphs 3, 4 and 5 thereof; and (b) "nineteen persons" shall be substituted for "seven persons" in Paragraphs 2, 3 and 6, "eighteen persons" shall be substituted for "six persons" in Paragraph 6, and "the nineteenth" shall be substi- tuted for the "seventh" in Paragraph 6 thereof. 215 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 216 EXECUTIVE DIRECTORS TO BE ELECTED 5. Nineteen Executive Directors shall be elected. SUPERVISION OF THE ELECTION 6. The Chairman shall appoint such tellers and other assistants and take such other action as he deems necessary for the conduct of the election. NOMINATIONS 7. (a) The Secretary shall request nominations from Governors during a suitable period specified by the Secretary. (b) Each nomination shall be made on a nomination form furnished by the Secretary, signed by the Governor or Governors making the nomination and submitted to the Secretary. (c) Any person nominated by one or more Governors entitled to vote in the election shall be eligible for election as Executive Director. (d) A Governor may nominate only one person. BALLOTING 8. (a) Upon the closing of nominations, the Secretary shall send to all Governors entitled to vote in the election the list of candidates for the election, together with an invitation to Governors to vote in the first ballot, and announce the deadline for receipt of ballots. (b) One ballot form shall be furnished to each Governor entitled to vote. On any particular ballot, only ballot forms distributed for that ballot shall be counted. 9. Each ballot shall be taken as follows: (a) Ballots shall be conducted by deposit of ballot forms, signed by Governors eligible to vote, with the Secretary. The first ballot shall take place after the close of nominations, concluding no later than the first day of the 2004 Annual Meeting of the Board. (b) When a ballot shall have been completed, the Secretary shall cause the ballots to be counted and, as soon as practicable after the tellers have completed their tally of the ballots, shall announce the names of the persons elected. If a succeeding ballot is necessary, the Secretary shall announce the names of the nominees to be voted on, the members whose Governors are eligible to vote and the time period for balloting. (c) If the tellers shall be of the opinion that any particular ballot is not properly executed, they shall, if possible, afford the Governor 216 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 217 concerned an opportunity to correct it before tallying the results; and such ballot, if so corrected, shall be deemed to be valid. 10. When on any ballot the number of nominees shall not exceed the number of Executive Directors to be elected, each nominee shall be deemed to be elected by the number of votes received by him on such ballot; provided, however, that, if on such ballot the votes of any Governor shall be deemed under Paragraph 4 of Schedule B1 to have raised the votes cast for any nominee above ten percent of the eligible votes, no nominee shall be deemed to have been elected who shall not have received on such ballot a minimum of two percent of the eligible votes, and a succeeding ballot shall be taken for which any nominee not elected shall be eligible. 11. If, as a result of the first ballot, the number of Executive Directors to be elected in accordance with Section 5 above shall not have been elected, a second, and if necessary, further ballots shall be taken. The Governors entitled to vote on such succeeding ballots shall be only: (a) those who voted on the preceding ballot for any nominee not elected; and (b) those Governors whose votes for a nominee elected on the preced- ing ballot are deemed under Paragraph 4 of Schedule B to have raised the votes cast for such nominee above ten percent of the eli- gible votes. 12. If the votes cast by a Governor bring the total votes received by a nom- inee from below to above ten percent of the eligible votes, all the votes cast by this Governor shall be deemed to have been cast for the benefit of that nominee without raising the total votes of the nominee above ten percent. 13. If on any ballot two or more Governors having an equal number of votes shall have voted for the same nominee and the votes of one or more, but not all, of such Governors could be deemed under Paragraph 4 of Schedule B not to have raised the total votes of the nominee above ten percent of the eligible votes, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot. 1 Paragraph 4 of Schedule B reads as follows: 4. In determining whether the votes cast by a governor are to be deemed to have raised the total of any person above ten percent of the eligible votes, the ten percent shall be deemed to include, first, the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until ten percent is reached. 217 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 218 14. Any member whose Governor has voted on the last ballot and whose votes did not contribute to the election of an Executive Director may, before the effective date of the election, as set forth in Section 18 below, designate an Executive Director who was elected, and that member's votes shall be deemed to have counted toward the election of the Executive Director so designated. ABSTENTION FROM VOTING 15. If a Governor shall abstain from voting on any ballot, he shall not be entitled to vote on any subsequent ballot and his votes shall not be counted within the meaning of Section 4(g) of Article V towards the election of any Executive Director. If at the time of any ballot a member shall not have a duly appointed Governor, such member shall be deemed to have abstained from voting on that ballot. ELIMINATION OF NOMINEES 16. If on any ballot two or more nominees shall receive the same lowest number of votes, no nominee shall be dropped from the next succeed- ing ballot, but if the same situation is repeated on such succeeding ballot, the Chairman shall eliminate by lot one of such nominees from the next succeeding ballot. ANNOUNCEMENT OF THE RESULT 17. After the tally of the last ballot, the Chairman shall cause to be distrib- uted a statement setting forth the result of the election. EFFECTIVE DATE OF ELECTION 18. The effective date of the election shall be November 1, 2004, and the term of office of the elected Executive Directors shall commence on that date. Incumbent elected Executive Directors shall serve through the day preceding such date. GENERAL 19. Any question arising in connection with the conduct of the election shall be resolved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Board. Whenever pos- sible, any such questions shall be put without identifying the members or Governors concerned. 218 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 219 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 2004 REGULAR ELECTION OF EXECUTIVE DIRECTORS STATEMENT OF RESULTS OF ELECTION, OCTOBER 3, 2004 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Mahdy Ismail ALJAZZAF 47,042 Bahrain 1,353 Egypt, Arab Republic of 7,358 Iraq 3,058 Jordan 1,638 Kuwait 13,530 Lebanon 590 Libya 8,090 Maldives 719 Oman 1,811 Qatar 1,346 Syrian Arab Republic 2,452 United Arab Emirates 2,635 Yemen, Republic of 2,462 Yahya Abdullah M. ALYAHYA 45,045 Saudi Arabia 45,045 Gino ALZETTA 77,669 Austria 11,313 Belarus 3,573 Belgium 29,233 Czech Republic 6,558 Hungary 8,300 Kazakhstan 3,235 Luxembourg 1,902 Slovak Republic 3,466 Slovenia 1,511 Turkey 8,578 John AUSTIN 55,800 Australia 24,714 Cambodia 464 Kiribati 715 Korea, Republic of 16,067 Marshall Islands 719 219 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 220 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Micronesia, Fed. States of 729 Mongolia 716 New Zealand 7,486 Palau 266 Papua New Guinea 1,544 Samoa 781 Solomon Islands 763 Vanuatu 836 Biagio BOSSONE 56,705 Albania 1,080 Greece 1,934 Italy 45,045 Malta 1,324 Portugal 5,710 San Marino 845 Timor-Leste 767 Otaviano CANUTO 58,124 Brazil 33,537 Colombia 6,602 Dominican Republic 2,342 Ecuador 3,021 Haiti 1,317 Panama 635 Philippines 7,094 Suriname 662 Trinidad and Tobago 2,914 Sid Ahmed DIB 51,544 Afghanistan 550 Algeria 9,502 Ghana 1,775 Iran, Islamic Republic of 23,936 Morocco 5,223 Pakistan 9,589 Tunisia 969 Paulo F. GOMES 32,252 Benin 1,118 Burkina Faso 1,118 Cameroon 1,777 220 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 221 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Cape Verde 758 Central African Republic 1,112 Chad 1,112 Comoros 532 Congo, Dem. Rep. of 2,893 Congo, Republic of 1,177 Cote d'Ivoire 2,766 Djibouti 809 Equatorial Guinea 965 Gabon 1,237 Guinea 1,542 Guinea-Bissau 790 Madagascar 1,672 Mali 1,412 Mauritania 1,150 Mauritius 1,492 Niger 1,102 Rwanda 1,296 Sao Tome and Principe 745 Senegal 2,322 Togo 1,355 HERWIDAYATMO 41,096 Brunei Darussalam 2,623 Fiji 1,237 Indonesia 15,231 Lao People's Dem. Rep. 428 Malaysia 8,494 Myanmar 2,734 Nepal 1,218 Singapore 570 Thailand 6,599 Tonga 744 Vietnam 1,218 Thorsteinn INGOLFSSON 54,039 Denmark 13,701 Estonia 1,173 Finland 8,810 Iceland 1,508 221 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 222 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Latvia 1,634 Lithuania 1,757 Norway 10,232 Sweden 15,224 Alexey KVASOV 45,045 Russian Federation 45,045 Luis MARTI 72,786 Costa Rica 483 El Salvador 391 Guatemala 2,251 Honduras 891 Mexico 19,054 Nicaragua 858 Spain 28,247 Venezuela, Rep. Bolivariana de 20,611 Marcel MASSE 62,217 Antigua and Barbuda 770 Bahamas, The 1,321 Barbados 1,198 Belize 836 Canada 45,045 Dominica 754 Grenada 781 Guyana 1,308 Ireland 5,521 Jamaica 2,828 St. Kitts and Nevis 525 St. Lucia 802 St. Vincent and the Grenadines 528 Ad MELKERT 72,208 Armenia 1,389 Bosnia and Herzegovina 799 Bulgaria 5,465 Croatia 2,543 Cyprus 1,711 Georgia 1,834 222 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 223 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Israel 5,000 Macedonia, FYR 677 Moldova 1,618 Netherlands 35,753 Romania 4,261 Ukraine 11,158 Jaime QUIJANDRIA SALMON 37,499 Argentina 18,161 Bolivia 2,035 Chile 7,181 Paraguay 1,479 Peru 5,581 Uruguay 3,062 Mathias SINAMENYE 55,190 Angola 2,926 Botswana 865 Burundi 966 Eritrea 843 Ethiopia 1,228 Gambia, The 793 Kenya 2,711 Lesotho 913 Liberia 713 Malawi 1,344 Mozambique 1,180 Namibia 1,773 Nigeria 12,905 Seychelles 513 Sierra Leone 968 South Africa 13,712 Sudan 1,100 Swaziland 690 Tanzania 1,545 Uganda 867 Zambia 3,060 Zimbabwe 3,575 Chander Mohan VASUDEV 54,945 Bangladesh 5,104 Bhutan 729 India 45,045 223 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 224 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Sri Lanka 4,067 Pietro VEGLIO 49,192 Azerbaijan 1,896 Kyrgyz Republic 1,357 Poland 11,158 Serbia and Montenegro 3,096 Switzerland 26,856 Tajikistan 1,310 Turkmenistan 776 Uzbekistan 2,743 ZHU Guangyao 45,049 China 45,049 Total Votes Cast 1,013,447 /s/ /s/ Patrick McCaskie (Barbados) Nicholas Symeonidis (Greece) Teller Teller 224 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 225 August 2, 2004 Remuneration of the President 1. The Executive Directors have reviewed the principles and proce- dures that guide the Bank concerning the President's remuneration, in light of the recent increase in the remuneration of the newly appointed Managing Director (MD) of the International Monetary Fund ("IMF"). The Executive Directors have considered the timing and implications of these recent developments on the President's remuneration in connection with further steps to strengthen the system for determining the President's remuneration. They have also taken account of the terms and conditions of the Bank's current contract with the President, which runs through May 2005. 2. Pursuant to Article V, Section 2(h) of the Articles of Agreement of the International Bank for Reconstruction and Development (Bank) and Section 13 of the Bank's By-Laws, the salary of the President shall be determined by the Board of Governors and shall be included in his contract. The By-Laws also provide for the reim- bursement by the Bank of reasonable expenses incurred by the President in the interest of the Bank, which is paid in the form of an allowance. The Board of Governors also has responsibility for determining the remuneration of Executive Directors and their Alternates on the recommendation of the Joint Committee on the Remuneration of Executive Directors and their Alternates. Under the Articles of Agreement, separate mechanisms exist for determin- ing staff compensation. 3. In their review, the Executive Directors have been aware of the need that the World Bank as a public institution must meet high standards of transparency and accountability, requiring a systemic approach to address questions of remuneration of its President. They noted that this particular moment provided the opportunity of preparing the framework for decisions by Executive Directors and Governors at the time of a new Presidential contract after May 2005. 4. In particular, the Executive Directors took note of the consistent practice under which the MD and the President have had the same total remuneration since 1946, and the same salary and allowance components until 2000. They also noted the strict parity between the remuneration of the Executive Directors and their Alternates at both institutions. The Executive Directors reviewed the recent his- tory and practice in this regard, and noted that the recommenda- tions and decisions by both the IMF and Bank Boards in 1999 and 2000 had established "essential parity" in total remuneration 225 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 226 through the tenure of the previous MD. They observed that this recent history demonstrates the need for greater clarity in the prin- ciples and procedures governing such decisions. Furthermore, they noted that a disparity in total remuneration has occurred as a conse- quence of the June decisions by the IMF's Executive Directors and Board of Governors. 5. The Executive Directors are of the opinion that the interests of the institution and the transparency of the decision-making process are best served by having regard to the long-standing practice in remu- neration between the President and the MD. The Bank and the IMF also share a common history, membership and a governance structure that places responsibility with the respective Boards of Governors for determination of the remuneration of the President and the MD as well as the remuneration of Executive Directors and their Alternates. Consequently, the Executive Directors believe that steps should now be taken to develop, with the IMF, a joint framework for decisions on the remuneration of the President and the MD. 6. The Executive Directors attach importance to the role and mandate of the Joint Committee on the Remuneration of Executive Direc- tors and their Alternates. They believe that the Joint Committee could play a similar and constructive role in such a joint framework. They therefore recommend that the Board of Governors invites the IMF Board of Governors to consider a joint framework for deci- sions on the remuneration of the President and the MD and requests the Executive Directors of the Bank to prepare proposals on such a framework, in consultation with the Executive Directors of the IMF. 7. With regard to the current situation, the Executive Directors noted the specific features of essential parity that have been into force as from 2000. In this connection they have verified that under the Bank's contract and associated understandings with the President it is permitted to take measures to maintain essential parity. Having in mind the 9.2% increase in the salary and allowances that took effect for the MD on June 7, 2004, the Executive Directors recommend that the salary and allowances of the President should be increased by 2.8% as required by the end-May 2004 consumer price index and by a further 6.4% to maintain parity, both with effect from June 7, 2004. Thus, the new salary of the President would be $302,470 and, subject to a favorable decision by the Board of Governors on salary, the allowance would be $141,290 for the remainder of the term. The 226 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 227 total remuneration of the President would then be US$443,760, which is identical to that of the MD. Both the salary and allowance components of the total remuneration would be disclosed to the public. 8. Accordingly, the Board of Executive Directors of the Bank has approved the submission of the Resolutions . . .1 to the Board of Gov- ernors of the Bank for a vote without a meeting pursuant to Section 12 of the By-Laws: (This report was approved and its recommendation was adopted by the Board of Governors on September 16, 2004) 1See page 191 227 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 228 August 3, 2004 Allocation of FY04 Net Income 1. The General Reserve of the Bank as of June 30, 2004 was $21,425 mil- lion. As of that date, the surplus of the Bank was $95 million and the Special Reserve created under Article IV, Section 6 of the Bank's Arti- cles of Agreement totaled $293 million. The Bank's reported net income for the fiscal year ended June 30, 2004 (FY04) amounted to minus $2,404 million. The Bank's Operating Income is used as net income for annual net income allocation purposes. For FY04, Operat- ing Income (which is the same as reported net income prior to FY01) was $1,696 million. 2. The Executive Directors have considered what action to take, or to recommend that the Board of Governors take, with respect to FY04 net income. The Executive Directors have concluded that the inter- ests of the Bank and its members would best be served by the fol- lowing dispositions of the net income of the Bank: (a) the addition of $[680] million to the General Reserve, plus or minus any rounding amount less than $1 million; (b) the pension reserve should be increased by $[21] million, repre- senting the excess of the SRP and RSBP contribution amounts over the accounting expense; (c) the transfer to the International Development Association, by way of a grant of $[300] million, which amount would be usable to provide financing in the form of grants in addition to loans; (d) the transfer to the HIPC Debt Initiative Trust Fund, by way of immediate grant, of $[240] million to be used to provide debt relief on debt owed to the International Development Associa- tion under the HIPC Debt Initiative framework; (e) the transfer to the Debt Reduction Facility for IDA-Only Coun- tries, by way of immediate grant, of $[50] million, to support the extinguishing of commercial debt for low-income countries where high debt burdens have constrained economic growth and poverty reduction; and (f) the retention as surplus of $[405] million, of which [$400] million would be earmarked solely for subsequent transfers to IDA, HIPC, and/or reserves. 3. Accordingly, the Executive Directors recommend that the Board of Governors note with approval the present Report and adopt the draft Resolution. . .1 (This report was approved and its recommendation was adopted by the Board of Governors on October 3, 2004) 1See page 192. 228 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 229 REPORT OF THE BOARD OF DIRECTORS OF IDA June 16, 2004 Slovenia--Change in Membership Status 1. Slovenia is a Part II member of the Association. Slovenia has requested that its membership status in the Association be changed from Part II to Part I. In addition to the technical differences between Part I and Part II concerning members' initial subscription, Part I members are expected to make significant contributions to each replenishment, commensurate with their economic standing. The authorities of Slovenia recognize the financial responsibility associated with Part I membership in the Association. Slovenia has also requested that its voting rights, derived from its cumulative subscriptions and contributions to the resources of the Association, be adjusted on the basis of its Part I membership status. 2. The Executive Directors of the Association have welcomed the expression of a stronger commitment by Slovenia to supporting the activities of the Association, and have accepted its request for a change in its membership status. The Executive Directors recom- mend that the Board of Governors adopt the draft resolution . . .1 which would modify Slovenia's status in the Association. (This report was approved and its recommendation was adopted by the Board of Governors on July 30, 2004) 1See page 195. 229 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 230 REPORT OF THE BOARD OF DIRECTORS OF MIGA July 9, 2004 2004 Regular Election of Directors 1. Resolution No. 63, adopted by the Council of Governors on August 19, 2002, provides that a Regular Election of Directors shall take place in connection with the 2004 Annual Meeting of the Council of Governors. It is proposed that this Regular Election be conducted by rapid means of communication so as to conclude a reasonable time in advance of November 1, 2004, when the term of office of the elected Directors shall commence. 2. Since the 2002 Regular Election of Directors, five Category Two coun- tries (Afghanistan, Gabon, Islamic Republic of Iran, Suriname and Tajikistan) completed all of their membership requirements. 3. The Report of the Ad Hoc Committee on the Rules for the 2002 Regular Election of MIGA Directors stated once again in paragraph 4 that: The Committee expressed the view, as reflected in the Report of the Board of Directors, that at a time when membership in MIGA became equivalent to that of the Bank (International Bank for Reconstruction and Development), the MIGA Board of Directors would become identical in size and composition with that of the Board of Executive Directors of the Bank and would be based on the same principles of preserving a broad geographic pattern of representation and of allow- ing all major groups of countries to be represented. 4. The Board is now composed of 24 Directors, representing roughly the same constituencies as in the Bank; these Directors represent 159 MIGA member countries (as opposed to 183 IBRD, 164 IDA and 175 IFC member countries), while, as stated in paragraph 2 above, at least another five member countries will participate in the upcoming election. 5. This increase in membership since 2002 indicates that efforts should continue toward achieving homogeneity among the Boards of MIGA and the other institutions of the World Bank Group. Moreover, the number of common issues being dealt with by the Executive Direc- tors/Directors of the World Bank Group institutions have continued to increase in number and complexity. 6. In view of these developments and noting that Article 2 of the MIGA Convention mandates the Agency to complement the activities of other members of the World Bank Group, the Board of Directors makes the following recommendations. 230 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 231 Recommendations A. Size of the Board 7. The Board of Directors recommends that the number of Directors remain at its present twenty-four. B. Composition of the Board 8. The Board of Directors urges the Governors to form, as closely as pos- sible, the same constituencies in the MIGA Board of Directors as those for the Boards of other World Bank Group institutions. 9. During the informal meeting held on May 20, 1991, it was the consen- sus of Directors that, beginning with the 1992 Election of Directors, Governors should be urged to nominate candidates based in Washing- ton, D.C., and all Governors complied with this suggestion in the 1992, 1994, 1996, 1998, 2000 and 2002 Regular Elections. It is again recom- mended that Governors be urged to nominate the same persons as Directors of MIGA as those nominated to the Boards of the other World Bank Group institutions. 10. It is further recommended that Directors, particularly those elected by more than one Governor, appoint the same persons as Alternate Direc- tors of MIGA as those appointed to be Alternate Executive Direc- tors/Alternate Directors to the Boards of the other World Bank Group institutions. C. Term of Office 11. Article 32(c) of the Convention and Section 10 of the By-Laws pro- vide that the Council of Governors shall determine the term of office of the Directors. It is desirable that the term of office of MIGA's Directors should coincide with those of the Boards of the other World Bank Group institutions to facilitate elections of persons holding positions on these boards. Thus, the Board of Directors rec- ommends that the Council continue this practice. It is also recom- mended that the 2004 Regular Election of Directors be held by requesting nominations and conducting ballots by rapid means of communication so as to conclude a reasonable time in advance of November 1, 2004, when the term of office of the elected Directors shall commence. 231 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 232 D. Maximum and Minimum Percentages of Votes Applicable to the Election 12. For the purpose of Schedule B to the MIGA Convention, paragraph 9 of the Rules for the 2002 Regular Election of Directors set the maxi- mum and minimum percentages of voting power applicable to the 2002 Regular Election at 15 and 3, respectively, of eligible votes. These per- centages appear appropriate for the election of the number of Direc- tors to be recommended in the attached report, and therefore the Board of Directors recommends that they be made applicable to the 2004 Regular Election of Directors. In the unlikely event that these percentages are inappropriate due to additional new countries having become members of the Agency and subscription to additional shares prior to the 2004 Regular Election, the Council of Governors could modify them before the start of the election. 13. Accordingly, the Board of Directors recommends that the Council of Governors adopt the draft Resolution . . .1 and Rules for the 2004 Regular Election of Directors (attached) embodying the above recommendations. 14. The Board of Directors also recommends that the subsequent Regular Election of Directors take place in connection with the Annual Meet- ing of the Council of Governors in 2006. (This report was approved and its recommendation was adopted by the Council of Governors on August 18, 2004) 1See page 198. 232 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 233 RULES FOR THE 2004 REGULAR ELECTION OF DIRECTORS DEFINITIONS 1. In these Rules, unless the context shall otherwise require, (a) "Convention" means the Convention establishing the Agency. (b) "Council" means the Council of Governors of the Agency. (c) "Chairman" means the Chairman of the Council or a Vice Chair- man acting as Chairman. (d) "Governor" includes the Alternate Governor or any temporary Alternate Governor, when acting for the Governor. (e) "Secretary" means the Corporate Secretary or any acting Corpo- rate Secretary of the Agency. (f) "Election" means the 2004 Regular Election of Directors. (g) "Eligible votes" means the total number of votes that can be cast in the election of the Directors to be elected pursuant to the provi- sions of paragraphs 6 to 11 of Schedule B to the Convention. 2. All actions taken under these Rules, including communications by the Secretary and the Chairman and nominations and balloting by the Governors, may be taken by rapid means of communication. TIMING OF ELECTION 3. The 2004 election shall be held by requesting nominations and conducting ballots so as to conclude a reasonable time in advance of November 1, 2004, when the term of office of the elected Directors shall commence. BASIC RULES--SCHEDULE B 4. The provisions of Schedule B of the Convention shall apply to the con- duct of the election. For this purpose: (a) Twenty-four Directors shall be elected. (b) Six Directors shall be elected separately, one each by the Gover- nors of the six members having the largest number of shares. The person nominated by each of the said Governors shall be deemed to be elected upon being so nominated. (c) The Directors not elected separately pursuant to paragraph 4(b) above shall be elected in accordance with the rules in paragraphs 5 through 11 below. 233 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 234 SUPERVISION OF THE ELECTION 5. The Chairman shall appoint such tellers and other assistants and take such other action as he deems necessary for the conduct of the election. NOMINATIONS 6. (a) The Secretary shall request nominations from Governors during a suitable period specified by the Secretary. As noted in the Report of the Board of Directors to the Council of Governors dated July 9, 2004, Governors are urged to nominate the same persons as the Directors of MIGA as those elected to the Boards of the other World Bank institutions, and to form the same constituencies in the MIGA Board of Directors as those in the Boards of the other World Bank Group institutions. In addition, the Directors, particu- larly those elected by more than one Governor, are urged to appoint the same persons as Alternate Directors of MIGA as they have in the Boards of the other World Bank institutions. (b) Each nomination shall be made on a nomination form furnished by the Secretary, signed by the Governor or Governors making the nomination and submitted to the Secretary. (c) Any person nominated by one or more Governors entitled to vote in the election shall be eligible for election as Director. (d) A Governor may nominate only one person. BALLOTING 7. (a) Upon the closing of nominations, the Secretary shall send to all Governors entitled to vote in the election the list of candidates for the election, together with the invitation to Governors to vote in the first ballot, and announce the deadline for receipt of ballots. (b) One ballot form shall be furnished to each Governor entitled to vote. On any particular ballot, only ballot forms distributed for that ballot shall be counted. 8. Each ballot shall be taken as follows: (a) Ballots shall be conducted by deposit of ballot forms, signed by Gov- ernors eligible to vote, with the Secretary. The first ballot shall take place after the close of nominations concluding no later than the first day of the 2004 Annual Meeting of the Council of Governors. (b) When a ballot shall have been completed, the Secretary shall cause the ballots to be counted and, as soon as practicable after the tellers have completed their tally of the ballots, shall announce the 234 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 235 names of the persons elected. If a succeeding ballot is necessary, the Secretary shall announce the names of nominees to be voted on, the members whose Governors are eligible to vote and the time period for balloting. (c) If the tellers shall be of the opinion that any particular ballot is not properly executed, they shall, if possible, afford the Governor con- cerned an opportunity to correct it before tallying the results; and such ballot, if so corrected, shall be deemed to be valid. 9. For the purposes of paragraph 6 of Schedule B to the Convention, the following percentages of total votes are decided, namely, a maximum of 15 percent of eligible votes and a minimum of 3 percent of eligible votes. ANNOUNCEMENT OF THE RESULT 10. After the tally of the last ballot, the Chairman shall cause to be distrib- uted a statement setting forth the result of the election. EFFECTIVE DATE OF ELECTION 11. The effective date of the election shall be November 1, 2004, and the term of office of the elected Directors shall commence on that date. Incumbent elected Directors shall serve through the day preceding such date. GENERAL 12. Any question arising in connection with the conduct of the election shall be resolved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Council. Whenever possible, any such questions shall be put without identifying the mem- bers or Governors concerned. 235 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 236 MULTILATERAL INVESTMENT GUARANTEE AGENCY 2004 REGULAR ELECTION OF DIRECTORS STATEMENT OF RESULTS OF ELECTION, OCTOBER 3, 2004 Directors elected separately by the Governors of the six member coun- tries having the largest number of shares: Members Whose Votes Candidate Elected Counted Toward Election Total Votes Carole BROOKINS United States 32,066 Yoshio OKUBO Japan 9,156 Eckhard DEUTSCHER Germany 9,113 Tom SCHOLAR United Kingdom 8,742 Pierre DUQUESNE France 8,380 ZHU Guangyao China 5,707 Directors elected by the Governors of member countries other than those listed above: Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Mahdy Ismail ALJAZZAF 6,731 Bahrain 313 Egypt, Arab Republic of 986 Jordan 348 Kuwait 1,816 Lebanon 427 Libya 726 Oman 343 Qatar 418 Syrian Arab Republic 473 United Arab Emirates 549 Yemen, Republic of 332 236 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 237 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Yahya Abdullah M. ALYAHYA 5,705 Saudi Arabia 5,705 Gino ALZETTA 10,681 Austria 1,543 Belarus 410 Belgium 3,754 Czech Republic 961 Hungary 1,171 Kazakhstan 545 Luxembourg 381 Slovak Republic 568 Slovenia 357 Turkey 991 John AUSTIN 5,921 Australia 3,196 Cambodia 341 Korea, Republic of 968 Micronesia, Fed. States of 227 Mongolia 235 Palau 227 Papua New Guinea 273 Samoa 227 Vanuatu 227 Biagio BOSSONE 7,482 Albania 279 Greece 670 Italy 5,147 Malta 309 Portugal 850 Timor-Leste 227 Otaviano CANUTO 6,667 Brazil 2,783 Colombia 947 Dominican Republic 324 Ecuador 498 Haiti 252 Panama 408 Philippines 661 237 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 238 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Suriname 259 Trinidad and Tobago 535 Sid Ahmed DIB 6,643 Afghanistan 295 Algeria 1,321 Ghana 609 Iran, Islamic Republic of 1,836 Morocco 790 Pakistan 1,340 Tunisia 452 Paulo F. GOMES 6,188 Benin 285 Burkina Faso 238 Cameroon 284 Cape Verde 227 Central African Republic 237 Chad 237 Congo, Dem. Rep. of 773 Congo, Republic of 292 Cote d'Ivoire 487 Equatorial Guinea 227 Gabon 346 Guinea 268 Madagascar 353 Mali 320 Mauritania 288 Mauritius 330 Rwanda 309 Senegal 433 Togo 254 HERWIDAYATMO 5,940 Fiji 248 Indonesia 2,026 Lao People's Dem. Rep. 237 Malaysia 1,197 Nepal 299 Singapore 449 238 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 239 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Thailand 919 Vietnam 565 Thorsteinn INGOLFSSON 7,382 Denmark 1,442 Estonia 292 Finland 1,234 Iceland 267 Latvia 348 Lithuania 364 Norway 1,409 Sweden 2,026 Alexey KVASOV 5,705 Russian Federation 5,705 Luis MARTI 5,757 Costa Rica 383 El Salvador 299 Guatemala 317 Honduras 355 Nicaragua 357 Spain 2,442 Venezuela, Rep. Bolivariana de 1,604 Marcel MASSE 8,974 Bahamas, The 353 Barbados 297 Belize 265 Canada 5,402 Dominica 227 Grenada 227 Guyana 261 Ireland 827 Jamaica 358 St. Kitts and Nevis 227 St. Lucia 265 St. Vincent and the Grenadines 265 239 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 240 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Ad MELKERT 10,397 Armenia 257 Bosnia and Herzegovina 257 Bulgaria 820 Croatia 507 Cyprus 360 Georgia 288 Israel 1,012 Macedonia, FYR 265 Moldova 273 Netherlands 3,999 Romania 1,155 Ukraine 1,204 Jaime QUIJANDRIA SALMON 4,021 Argentina 1,431 Bolivia 397 Chile 662 Paraguay 318 Peru 834 Uruguay 379 Mathias SINAMENYE 9,665 Angola 364 Botswana 265 Burundi 251 Eritrea 227 Ethiopia 300 Gambia, The 227 Kenya 480 Lesotho 265 Malawi 254 Mozambique 348 Namibia 284 Nigeria 1,664 Seychelles 227 Sierra Leone 309 South Africa 1,839 Sudan 383 Swaziland 235 Tanzania 425 Uganda 410 240 3645-p201-241_Reports.pdf 8/24/05 9:31 AM Page 241 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Zambia 495 Zimbabwe 413 Chander Mohan VASUDEV 4,552 Bangladesh 776 India 3,225 Sri Lanka 551 Pietro VEGLIO 5,737 Azerbaijan 292 Kyrgyz Republic 254 Poland 941 Serbia and Montenegro 584 Switzerland 2,820 Tajikistan 251 Turkmenistan 243 Uzbekistan 352 Total Votes Cast 197,312 /s/ /s/ Patrick McCaskie (Barbados) Nicholas Symeonidis (Greece) Teller Teller 241 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 242 ACCREDITED MEMBERS OF THE DELEGATIONS AT THE 2004 ANNUAL MEETINGS Afghanistan Angola Governor Governor Ashraf Ghani Carlos Alberto Lopes Alternate Governor Alternate Governor Anwar Ul-Haq Ahady Job Graca Adviser Adviser Michael Carnahan Maria Ricardina Cruz Abdul Qadeer Fitrat Alcino Izata Da Conceicao Omar Ghafoorzai Agostinho Fernandes Said Tayeb Jawad Lourenco Saturnino Nascimento Clare Lockhart Rui Miguens Oliveira Mariam Nawabi Josefina Pitra Diakite Daniel Paul O'Brien Antigua and Barbuda # Albania Governor Errol Cort Governor Arben Malaj Alternate Governor Whitfield Harris Alternate Governor Ramez Farez Hadeed* Mimoza Vangjel Dhembi* Garth P. Nicholls* Adviser Adviser Ermira Haxhi John W. Ashe Sybi Hida Starret D. Greene Kristaq S. Luniku Bridget-Ann Hampden Pajtim Melani Anne-Marie Layne-Campbell Evis Sulka Deborah-Mae Lovell Algeria Argentina Governor Governor Abdellatif Benachenhou Martin Redrado Alternate Governor Alternate Governor Hadj Babaami Jorge Madcur Gerardo M. Hita* Adviser Hadia Amrane Adviser Abdelhak Bedjaoui Jose Octavio Bordon Sid Ahmed Dib Eugenio Diaz Bonilla Ramdane Idir Alieto Guadagni Soraya Mellali Oscar Tangelson * Temporary <> Not a member of IFC # Not a member of IDA 242 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 243 Armenia Alternate Governor Anar Mehman Ahmadov* Governor Vahram Nercissiantz Adviser Hafiz Mir Jalal Pashayev Alternate Governor Andranik Andriasyan Bahamas, The # Adviser Governor Armine Khachatryan James H. Smith Garen Nazarian Alternate Governor Australia Ruth R. Millar Governor Adviser Martin Lee Parkinson Jerry Butler Michael Halkitis Alternate Governor Joshua Sears Hector James Thompson Simon D. Wilson Adviser Bahrain # Ian T. Anderson Nigel Bailey Governor Ric Battellino Abdulla Hassan Saif Nicolas Keith Brown Julia Newton-Howes Alternate Governor Terrence K. O'Brien Yousuf A. Humood* Suzanne Pitson Lachlan Thomas Pontifex Bangladesh Margaret Anne Thomas Governor Austria M. Saifur Rahman Alternate Governor Alternate Governor Thomas Wieser Mirza Tasadduq Hussain Beg Marcus Heinz* Syed Hasan Ahmad* Akbar Ali Khan* Adviser Kurt Bayer Adviser Carl De Colle Imtiaz Ahmed Norbert Feldhofer Fakrul Ahsan Michael Friedl Golam Arshad Hannes Hofer Md. Abul Kalam Azad Hans-Georg Kramer Abdul Quiyum Choudhury Walter Mayr Md. Shahidul Islam Matthias Winkler Zakir Ahmed Khan Azerbaijan Barbados Governor Governor Avaz Alekperov Tyrone Emanuel Barker * Temporary <> Not a member of IFC # Not a member of IDA 243 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 244 Alternate Governor Belize Grantley W. Smith Patrick McCaskie* Governor Said W. Musa Adviser Michael Ian King Alternate Governor Carla Barnett* Belarus # Adviser Governor Michael Bejos Andrei V. Kobyakov Liberty Bohol Eamon H. Courtenay Alternate Governor Angel Gurria Anatoly I. Sverzh Nestor Mendez Lisa Shoman Adviser Georgy Egorov Mikhail Khvostov Benin Gennady Medvedev Vladimir Valerievich Mironovich Governor Mikhail V. Nikitsenka Bruno Amoussou Nikolai Ovsyanko Sergei Roumas Alternate Governor Pavel Shidlovsky Fatiou Akplogan Alyaksandr Sychov Charles Konan Banny* Belgium Adviser Semiou Bakary Governor Didier Reynders Bhutan Alternate Governor Jean-Pierre Arnoldi* Governor Lyonpo Wangdi Norbu Adviser Gino Alzetta Alternate Governor Laurent Burton Phuntsho Wangyel Paul Cartier Luc E. J. Coene Geert Criel Bolivia Armand De Decker Kurt Delodder Governor Ronald De Swert Horst Grebe Lopez Philippe Gerard Bruno G. Guiot Alternate Governor Peter Praet Luis A. Arnal Michel Soudan Frans Van Daele Adviser Michel Van Der Stichele Jaime Aparicio Peter Van der Stoelen Fresia Guzman Koenraad Van Loo Veronica Querejazu Vidovic * Temporary <> Not a member of IFC # Not a member of IDA 244 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 245 Bosnia and Herzegovina Joao Batista do Nascimento Magalhaes Governor Marcelo Amorim Netto Adnan Terzic Sergio Savino Portugal Bruno Walter Coelho Saraiva Alternate Governor Fabiano R. Scarano Dragan Doko Rogerio Studart Jose Augusto Varanda Adviser Arlindo Villaschi Mirsada Colakovic Igor Davidovic Brunei Darussalam <># Mila Gadzic Haris Hadzibegovic Alternate Governor Peter William Nicholl Pehin Dato Hj Ahmad Haji Jumat* Ljubisa Vladusic Bojan Zec-Filipovic Adviser Mohd Sunadi Buntar Botswana Mohd Arbi Hamid Zakaria Serudin Governor Serwalo S.G. Tumelo Bulgaria # Governor Alternate Governor Milen Veltchev Peggy Onkutwile Serame* Alternate Governor Adviser Bojidar Lubenov Kabaktchiev Lapologang Caesar Lekoa Dimiter Ivanovski* Ita Mary Mannathoko Kealeboga Shal Masalila Adviser Ontefetse Kenneth Matambo Gergana Beremska Tsvetan Manchev Brazil Tatiana Mitova Petyo Nikolov Alternate Governor Elitsa Panayotova Roberto Abdenur* Svetlana Dimitrova Panova Afonso S. Bevilaqua* Otaviano Canuto* Burkina Faso Luiz Pereira Da Silva* Murilo Portugal* Governor Alexandre Schwartsman* Francois M. Zoundi Adviser Alternate Governor Jose Ricardo da Costa Aguiar Alves Lene Sebgo Marcio Ayrosa Moreira Sergio Bath Adviser Ronaldo Malagoni de A. Cavalcante Moussa Barry Rinaldo de Freitas Melo Sibiri Sawadogo Evandro S. Didonet Paulo Faveret Burundi Viviane Pretti Feitosa Nestor Forster, Jr. Governor Cassio Casseb Lima Athanase Gahungu * Temporary <> Not a member of IFC # Not a member of IDA 245 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 246 Alternate Governor Adviser Leon Nimbona George Bentley Isabelle Bourgeault-Tasse Adviser Tom Bui Jean Pierre Kantugeko Grant James Cameron Celestin Mizero Rodger Cuzner Mathias Sinamenye John Embury Stephen Douglas Free Cambodia Sharmila Khare Yohanna Loucheur Governor Desiree Mcgraw Keat Chhon Steven Mclaren Ronald Thomas McMorran Alternate Governor Bruce Montador Aun Porn Moniroth Francois Page Vissoth Vongsey* Steve Pugliese Jonathan Rothschild Adviser Patrick Tobin Pich Chhieng Tola May Cape Verde Borrom Ros Sokmuny Thao Governor Joao Pinto Serra Cameroon Alternate Governor Victor A.G. Fidalgo Governor Blaise Essomba Ngoula Adviser Jose Brito Alternate Governor Daniel Njankouo Lamere Central African Republic Adviser Governor Jean-Claude Tchatchouang M'pokomandji Sonny Alternate Governor Canada Dieudonne Padoundji-Yadjoua Governor Adviser Ralph Goodale Leon-Gabriel Bango Alternate Governor Chad Paul Boothe* Aileen Carroll* Governor Andrew Clark* Mahamat Ali Hassan Ann Collins* Mark de Guzman* Alternate Governor Sheila MacDonald* Sobdibet Hinsalbet Marcel Masse* Lee-Ann McKechnie* Adviser Christian Ranger* Hassan Adoum Bakhit Bruce Rayfuse* Aboulaye Beri Greg Reade* Djeki Bilimi Vinita Watson* Breme Ousmane Matar * Temporary <> Not a member of IFC # Not a member of IDA 246 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 247 Chile Colombia Governor Governor Nicolas Eyzaguirre Alberto Carrasquilla Alternate Governor Alternate Governor Santiago Montenegro Trujillo Luis Eduardo Escobar Maria Ines Agudelo Valencia* Gustavo A. Gaviria* Adviser Clara Parra* Jorge Kaufmann Juan Carlos Pinzon* Felipe Sardi* China Adviser Ivan Duque Governor Luis Echeverri Jin Renqing Alejandro Gamboa Ana Catalina Villa Doutreligne Alternate Governor Li Yong Comoros Baoan Wang* Wei Wang* Governor Wu Jinkang* Younoussa Imani Fangming Xu* Tong Zhang* Alternate Governor Zhao Xiaoyu* Abdallah Moindjie Saadi Xiaosong Zheng* Zhu Guangyao* Adviser Zou Jiayi* Mahamoud Zoubert Doulclin Adviser Congo, Democratic Republic of the Zhijun Cheng Feng Gong Governor Guan Xiuzhen Andre-Philippe Futa Xinglan Hu Dongxiang Li Alternate Governor Li Guanghui Tshishimbi Muamba Shubin Mu Xuemin Shao Adviser Zhenyi Tang Mabi Mulumba Guanzhu Wang Yowa Mukendi Hui Wang Emile Ngoy Wang Wei Yalaghuli Sele Shifan Wu Justin Kabange Tambwe Yang Jinlin Nguizani A. Tezo Licheng Yao wa Bilenga Tshishimbi Jiandi Ye Lizhong Zhao Congo, Republic of Quan Zheng Qiangwu Zhou Governor Yong Zhou Rigobert Roger Andely * Temporary <> Not a member of IFC # Not a member of IDA 247 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 248 Alternate Governor Adviser Pierre Moussa Kyriacos Kakouris Adviser Czech Republic Christian Kibwe Ramazani Guillaume Owassa Alternate Governor Oldrich Dedek Tomas Prouza* Costa Rica Adviser Governor Jana Matesova Federico Carrillo Zurcher Tomas Sedlacek Alternate Governor Denmark Mario Riggioni Governor Adviser Bertel Haarder Alberto Franco Mejia William Heyden Q. Alternate Governor Carmen Maria Madriz Contreras Carsten Staur Nanna Hvidt* Cote d'Ivoire Adviser Governor Louise Brincker Boniface Britto Pernille Falck Ole Torpegaard Hansen Alternate Governor Jette Lund Oussou Kouassy Djibouti Adviser Yssouf Bamba Governor Laneine Diaby Yacin Elmi Bouh Frank Douamba Ourmane Tamimou Alternate Governor Aubert Zohore Simon Mibrathu Adviser Croatia Mohamed Ahmed Awaleh Ibrahim Hamadou Hassan Governor Mohamed Sikieh Kayad Ivan Suker Omar Miguil Nouh Roble Olhaye Alternate Governor Rachid Hassan Saban Martina Dalic Dominica Adviser Ana Hrastovic Alternate Governor Hrvoje Radovanic Jennifer Nero* Cyprus Dominican Republic Alternate Governor Governor Leslie G. Manison* Daniel Toribio * Temporary <> Not a member of IFC # Not a member of IDA 248 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 249 Alternate Governor Eritrea Ana Beatriz Rodriguez Temistocles Montas* Governor Julio Ortega Tous* Woldai Futur Adviser Alternate Governor Jaime Alvarez Kubrom Dafla Ivan A. Rondon Sanchez Adviser Ecuador Rahwa Tesfay Governor Estonia # Mauricio Pareja Canelos Governor Alternate Governor Taavi Veskimagi Ramiro Galarza Alternate Governor Adviser Renaldo Mandmets Miguel Babra Ramiro Esteban Crespo Fabara Adviser Juan Manuel Escalante Liisi Bucht Raul Gangotena Madis Muller Edison Ortiz-Duran Kristjan Prikk Marco Varea Veiko Tali Priit Turk Egypt, Arab Republic of Ethiopia Governor Governor Mahmoud Mohieldin Sufian Ahmed Adviser Alternate Governor Mohamed Abdel Gawad Allam Kassahun Ayele* Mohamed Ahmed Dawood Abii Tsige* Mohamed Ihab Zidan Adviser El Salvador Berhaun Getaneh Abebe Mitiku Abeshu Alternate Governor Habba Haaleo Addisu Manuel Rosales Getachew Adem Luz Maria Serpas de Portillo* Moges Chemere Belachew Ato Leikun Berhanu Adviser Admasu Beshaw Nelly Lacayo Anderson Gizachew Bizuayehu Beyene Nebyou Dagne Equatorial Guinea Gezaheen Yilma Damtew Amerga Kassa Governor Tamre Leben Jaime Ela Ndong Kidane Nikodimos Seife Desta Haile Alternate Governor Admasu Techane Jose Ela Oyana Esubalew Tekeste Negatu * Temporary <> Not a member of IFC # Not a member of IDA 249 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 250 Kebede Temesgen Patrick Gitton Fesseha A. Tessema Pierre Jacquet Hambissa Wakwaya Jean-Pierre Jouyet Luseged Weldehama Alain Le Roy Jean-David Levitte Fiji Stephanie Leydier Nathalie Loiseau Ducoulombier Governor Bertrand Lortholary Peceli V. Vocea Franck Louvrier David Martinon Alternate Governor Thierry Mathou Serge Michailof Marika Luveniyali Jacques Mistral Robert Moulie Finland Emmanuel Moulin Regis Pelissier Alternate Governor Denis Pietton Martti Hetemaki* Brice Quesnel Hannu Kyrolainen* Berengere Quincy Pertti Majanen* Anthony Requin Marc Yvon Robert Adviser Etienne Rolland-Piegue Ulla-Maija Finskas Bernard Salzmann Satu Huber Elisabeth Sandor Pekka Hukka Cecilia Sarkozy Pauli Kariniemi Laurent Solly Ari-Pekka Latti David Teillet Laura Torvinen Agnes Von der Muhll Jerome Walter France Claire Waysand Governor Gabon Nicolas Sarkozy Governor Alternate Governor Casimir Oye-Mba Xavier Musca Xavier Darcos* Alternate Governor Pierre Duquesne* Christian Bongo Odile Renaud-Basso* Adviser Adviser Jean Philippe Ndong Biyogho Olivier Basdevant Jules Ogouebandja Claude Blanchemaison Sebastien Boitreaud Gambia, The Emmanuel Cohet Olivier Georges Ma Cuny Governor Delphine D'Amarzit Mousa G. Bala Gaye Nathalie Delapalme Bertrand de Mazieres Alternate Governor Hubert de Milly Karamo K. Bojang Alexandre Draznieks Laurent Duriez Adviser Ramon Fernandez Dodou B. Jagne * Temporary <> Not a member of IFC # Not a member of IDA 250 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 251 Georgia Michael Ayesu Mary Adwoa Boakye Governor Albert Kobina Essien Zurab Nogaideli Paul S.M. Koranteng Jenifer Lartey Adviser Fritz Poku Beka Dvali Sammy Aryee Welbeck Eter Kvintradze Stella Dede Williams Levan Mikeladze Mamuka Murjikneli Greece Germany Governor George Alogoskoufis Governor Heidemarie Wieczorek-Zeul Alternate Governor Plutarchos Sakellaris Alternate Governor Petros G. Doukas* Caio K. Koch-Weser Nicholas Symeonidis* Joerg Asmussen* Eckhard Deutscher* Adviser Karsten Hinrichs* Ioulia Armagou Michael Hofmann* Heleni Dendrinou-Louri Iakovos Georganas Adviser Tryphon Kollintzas Markus Berndt Achilles Paparsenos Siegfried Borggrefe Panagiotis A. Pliatsikas Doris Brauer George Politakis Benoit Chervalier Paraskevi Protopapas Susanne Dorasil Christoforos Sardelis Paul Garaycochea George S. Tavlas Walter E. Hermann Grenada Wolfgang Ischinger Marion Kneesch Governor Hartmut Krebs Anthony Boatswain Johannes Lehne Christoph Rauh Alternate Governor Jurgen Schmid Lennox J. Andrews* Walter Stechel Barbara Wieland Guatemala Uwe Wolff Juergen Zattler Governor Maria Antonieta de Bonilla Ghana Alternate Governor Governor Julio Roberto Suarez Yaw Osafo-Maafo Adviser Alternate Governor Jose Carlos Castaneda Anthony Akoto Osei Guinea Adviser Ernest Ako-Adjei Governor Michael Ansah Alkaly Mohamed Daffe * Temporary <> Not a member of IFC # Not a member of IDA 251 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 252 Alternate Governor Adviser Abdoulaye Diallo* Guillermo Bueso Sandra Midence Guinea-Bissau Hungary Governor Joao Aladje Mamadu Fadia Alternate Governor Laszlo Orlos* Alternate Governor Francisco Correia, Jr. Adviser Sandor Czirjak Adviser Adam Kirchknopf Henrique Adriano Da Silva Paulo F. Gomes Iceland Charles C. Okeahalam Alternate Governor Geir Hilmar Haarde Guyana Hermann Orn Ingolfsson* Governor Adviser Saisnarine Kowlessar Anna Hjartardottir Thorsteinn Ingolfsson Alternate Governor Jon Erlingur Jonasson Clyde Raymond Roopchand Anna Katrin Vilhjalmsdottir Adviser India Gobind Nauth Ganga Lisaveta V. Ramotar Governor P. Chidambaram Haiti Alternate Governor Governor D.C. Gupta Henri Bazin Ashok Lahiri* Chander Mohan Vasudev* Alternate Governor Alfred Fils Metellus* Adviser Vellore Anandarajan Adviser Ranjit Bannerji Fritz Duroseau Sumitra Chowdhury Mathieu Fortunat Q.A.M.A. Rahim Ronald Gabriel Vadapalli Rao Robert Jean Krishnan Saranyan Remy Montas Ranendra Sen Gabriel Verret V. S. Seshadri Kumar Shrestha Honduras Rakesh Sood Kesang Wangdi Governor William Chong Wong Indonesia Alternate Governor Governor Orlando Garner* Boediono * Temporary <> Not a member of IFC # Not a member of IDA 252 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 253 Alternate Governor Adviser Hartadi A. Sarwono Donal Cahalane Soemadi D.M. Brotodiningrat* Adrian J. Kearns Breandan O'Caollai Adviser Earnan O'Cleirigh Anggito Abimanyu Thomas Whelan Indra Gunawan Ibnu Hadi Israel Hadiyanto Linggawati Hakim Governor Herwidayatmo David Klein Jannes Hutagalung Bambang Santoso Marsoem Alternate Governor Marwanto Yossi Bachar Iran, Islamic Republic of Adviser Governor Avner Halevi Safdar Hosseini Mark Nulman Barry Topf Alternate Governor Seyed Jamal Farajallah Hosseini* Italy Adviser Governor Davood Danesh Jafari Antonio Fazio Masoud Mozayani Sharagim Shams Araghi Alternate Governor Lorenzo Bini Smaghi* Iraq Francesca Manno* Governor Adil Mehdi Adviser Carlo Baldocci Alternate Governor Fabrizio Befani Ahmed Ibrahim Ali* Biagio Bossone Maria Cannata Adviser Giannandrea Falchi Huda Abdul-Gafour Francesco Forte Faik Ali Abdul-Rasool Fabio Franceschini Hussain Al-Izrey Isabella Imperato Hazim Hadi Al-Saeed Alessandro Legrottaglie Hilal Aboud Albiati Empedocle Maffia Nasma Faik Dawood Giandomenico Magliano Benham Puttrus Andrea Manzitti Kadim Nasir Shubber Maria Luisa Mattiuzzi Mahmoud Uthman Domenico Nardelli Roberto Natali Ireland Maria Luisa Panzica la Manna Gianmatteo Carlo Piazza Alternate Governor Cecilia Piccioni Elizabeth Beckett* Fabrizio Ravoni Robert Bradshaw* Roberto Rinaldi Brendan Ryan* Arrigo Sadun Michael J. Somers* Marco Saladini * Temporary <> Not a member of IFC # Not a member of IDA 253 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 254 Francesco Spadafora Shigeki Kimura Stefano Stefanini Michio Kitahara Armando Varricchio Takayuki Kobayashi Sergio Vento Harumi Kobe Ignazio Visco Fusako Konishi Vincenzo Zezza Haruhiko Kuroda Takashi Miura Jamaica # Toshiyuki Miyoshi Atsushi Mizuno Governor Shigeki Moriyama Omar Lloyd Davies Shinsuke Naka Mio Nakao Alternate Governor Kiyo Oi Shirley Tyndall* Ichiro Oishi Hideaki Ono Adviser Toshio Oya Gordon Shirley Yuji Sekiguchi Kingsley Thomas Keiji Shibata Yoichiro Sone Japan Go Sugisaki Yasushi Taira Governor Osamu Takemoto Sadakazu Tanigaki Shuichi Taketsugu Takuji Tanaka Alternate Governor Ushio Tashibu Toshihiko Fukui Hiroki Terada Eiji Hirano* Yasuhiro Tokutaka Kiyoto Ido* Takashi Tsunoda Shigeo Kashiwagi* Seiichi Tsurumi Kiyoshi Kodera* Shinichi Uchida Sumio Kusaka* Hirotaka Unami Yoshio Okubo* Naoko Yamaguchi Shiro Sadoshima* Kenzo Yamamoto Naoyuki Shinohara* Nobuo Yamasaki Rintaro Tamaki* Osamu Yoshida Hiroshi Watanabe* Jordan Adviser Masatsugu Asakawa Governor Takashi Ezaki Bassem I. Awadallah Shunichi Hinata Kazunori Hosoya Alternate Governor Kenta Ichikawa Tayseer Radwan Al-Smadi Moriaki Inamoto Tetsuo Kabe Adviser Mikio Kajikawa Omar Al-Wir Naoaki Kamoshida Karim Kawar Yukiko Kase Ema Kato Kazakhstan Hironori Kawauchi Satoshi Kawazoe Governor Daisaku Kihara Grigoriy Aleksandrovich Takashi Kihara Marchenko * Temporary <> Not a member of IFC # Not a member of IDA 254 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 255 Alternate Governor Yoon-Kyung Kim Kayrat Nematovich Kelimbetov Sang-Won Kwon Chul-Hwan Lee Adviser Keon-Hyok Lee Daulet Saudabayev Yong-Jae Lee Choon Won Park Kenya Joon-Kyu Park Kwang Park Governor Hye-Jung Yoon David Mwiraria Kuwait Alternate Governor Joseph Kanja Kinyua Governor Salem Abdulaziz Al-Sabah Adviser Beatrice Karago Alternate Governor Jackson Kinyanjui Bader Meshari Al-Humaidhi Frank Kiriswa Joseph Muchemi Adviser Geoffrey Ngungi Mwau Waleed Al-Bahar Leonard Ngaithe Barrak Al-Mubaraki James Wakiaga Eid Al-Rasheedi Salem Abdullah Kiribati Al Jaber Al Sabah Saleh Y. Al-Sagoubi Governor Hesham Ibrahim Al-Waqayan Taneti Maamau Fahad Khaled Al Zamami Ahmad Mohammed Alternate Governor Abdulrehman Bastaki Peter Tong Kyrgyz Republic Korea, Republic of Governor Governor Bolot E. Abildaev Dong Soo Chin Alternate Governor Alternate Governor Emirlan Toromyrzaev* Joong-Kyung Choi Yeung Kyun Rhee* Adviser Orunbek K. Shamkanov Adviser Yangho Byeon Kwang Hae Choi Lao People's Democratic Republic Kyu-Yun Choi Young Rok Choi Governor Kwang-Won Chung Somdy Douangdy Byung Wha Jang Myung-Soo Jang Alternate Governor Weon-Kyoung Jo Sayphet Aphayvanh* Dae Hyun Kim Phanthong Phommahasay* Gwi Beom Kim Hee Jae Kim Adviser Kyung-Hoh Kim Bounneme Chouanghom * Temporary <> Not a member of IFC # Not a member of IDA 255 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 256 Rithikone Phoummasack Adviser Khouanchay Syphakanranga Natty B. Davis Francis A. Dennis Latvia Richard A. Dorley Charles Greene Governor J. Mills Jones Oskars Spurdzins Lusinee F. Kamara, Sr. Sumo G. Kupee Alternate Governor Charles Minor Andris Liepins* R. Fole Sherman Elfrieda Stewart Tamba Adviser Amelia A. Ward Gints Freimanis David Zarlee Lebanon Libya Governor Fuad A.B. Siniora Governor Ahmed Betamer Alternate Governor Alain Bifani Alternate Governor Ali Ramadan Shnebesh Adviser Farid Abboud Adviser Jihad Azour Yousef Abdelmaula Wafaa Charafeddine Ayad S. Dahaim Rhea Fayad Selim K. Selim Ihmouda Jamal Abdel Rahim Itani Musa Mnsur Saleh Adnan Kassar Mohamed A.B. Shokri Fadi Ali Makki Hisham Nasser Lithuania # Rola Noureddine Rola Saleh Rizk Governor Vitas Vasiliauskas Lesotho Alternate Governor Governor Arvydas Kregzde Moeketsi Majoro Adviser Alternate Governor Jurgita Kazlauskaite Sebongile Nkholise Luxembourg Adviser Likonelo Anne Hlasoa Governor Motheba G. Moeletsi Luc Frieden Tanka L. Tlelima Alternate Governor Liberia Jean Guill Governor Adviser Christian D. Herbert Georges A. Heinen Arsene Joseph Jacoby Alternate Governor Serge Kolb Harry A. Greaves Miguel Marques Gomes * Temporary <> Not a member of IFC # Not a member of IDA 256 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 257 Thomas Rohdewald Malaysia Sandra Thein Francois Zenner Governor Nor Mohamed Yakcop Macedonia, former Yugoslav Republic of Alternate Governor Governor Wan Abdul Aziz Wan Abdullah* Nikola Popovski Adviser Alternate Governor Mohd Anuardi Hajani Dimko Kokaroski Ibrahim Mahaludin Puteh Ahmad Izlan Idris Adviser Agnes Maria John Sam Goran Anceski Ghazzali S.A. Khalid Nikola Dimitrov Johan Mahmood Merican Dzemali Mehazi Kamel Mohamad Ljupka Mindoseva Zoran Stavreski Paskal Stojceski Maldives Madagascar Governor Fathulla Jameel Governor Zaza Manitranja Ramandimbiarison Alternate Governor Adam Maniku Alternate Governor Henri Bernard Razakariasa Mali Adviser Governor Maminirina Andriambelo Abou-Bakar Traore Fara Rajaonarison Robert F. Rakotoarimanga Alternate Governor Alexander Rakotomanga Aboubacar Alhousseyni Toure* Ravoninjatovo Rasolozakanyly Sambou Wague* Harimisa Raveloson-Andriamihaja Adviser Malawi Inhaye Ag Mohamed Mamadou Camara Governor Abdoulaye Daffe Goodall E. Gondwe Abdoulaye Diop Soumana Sako Alternate Governor Mamounou Toure Patrick Chaukakumanda Bakary Konimba Traore Kamwendo* Idrissa Traore Adviser Wilson Toninga Banda Malta <># Charles S.R. Chuka Victor Geddes Governor Chance Mwabutwa Tonio Fenech Bernard Sande Ted Thokozani Sitimawina Alternate Governor Francis Enock Zhuwao Paul Zahra * Temporary <> Not a member of IFC # Not a member of IDA 257 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 258 Marshall Islands Javier Gavito* Luis Alberto Pazos* Governor Ricardo Sanchez Baker* Banny de Brum Adviser Alternate Governor Eugenio Alarcon-Yturbide Bruce Bilimon Adriana Elias Calles Jose Martin Garcia Adviser Edmundo Gonzalez Jefferson B. Barton Timoteo E. Harris Howard Mario Laborin Mauritania Federico Patino Marquez Cecilia Ramos Governor Porfirio Sanchez Sidi Ould Didi Miguel Siliceo Javier Valdes Alternate Governor Mohamed Ould El Abed Micronesia, Federated States of Adviser Governor Abba Ould Ahmed Tolba Henry Asugar Yaye Diaou El Hadj Ely Ould Alternate Governor Tijani Ould Kerim Rose Nakanaga Mohamed El Heyba Ould Lemrabott Adviser Hamadi Ould Meimou Alik Alik Enrico Calderon Mauritius Isaac Figir Tanya L. Harris Governor Jesse B. Marehalau Khushhal Chand Khushiram James Naich Bradley Stam Alternate Governor Guy Wong So* Moldova Adviser Peter Craig Governor U. Jeetah Zinaida Grecianii J. Koonjul Streevarsen Pillay Narrainen Alternate Governor Louis Philippe Ong Seng Dumitru Ursu Nurmahomed Shufeenaz Gujadhur Subhas Adviser Vladimir Ion Munteanu Mexico Mongolia Governor Francisco Gil Diaz Governor Norov Altankhuyag Alternate Governor Andres Conesa Alternate Governor Francisco J.J. Castro y Ortiz* Tserendagva Odongua * Temporary <> Not a member of IFC # Not a member of IDA 258 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 259 Adviser Namibia # R. Bold Zorigt Dashdorj Governor Batsukh Enkhkhuyag Samuel H. Goagoseb Ganbold Sodnom Alternate Governor Morocco Cecilia Ndishishi* Governor Adviser Fathallah Oualalou Amanda Demas Erastus Hoveka Alternate Governor Anna Mbundu Zouhair Chorfi David Nuyoma Bertha Nyembo Adviser Sven Thieme Mohammed Ariad Sabah Benchekroun Nepal Abdeslam Chebli Governor Mohamed El Merghadi Bharat Mohan Adhikari Mustapha Faris Ali Lamrani Alternate Governor Aziz Mekouar Bhanu Prasad Acharya Benyoussef Saboni Adviser Mozambique Binod Kumar Chaudhary Pawan Kumar Golyan Governor K.B. Shrestha Adriano Afonso Maleiane Govinda B. Thapa Alternate Governor Netherlands Antonio Fernando Laice* Governor Adviser Gerrit Zalm Antonio Rodrigues Jose Maximiano Maxlhaeia Alternate Governor Waldemar Fernando de Sousa Agnes van Ardenne Isabel Sumar Wouter Raab* Myanmar Adviser Carla Bundy Governor Freek Janmaat Hla Tun Ron Keller Marie-Christine Lanser Alternate Governor Ad Melkert Myo Nwe Kees-Jaap Ouwerkerk Ruth Schipper Adviser Robert-Jan Sieben Aung Lynn Htut Gerard Steeghs Soe Lin Mark Timmermans Min Lwin Jack Twiss Quarles van Ufford Linn Myaing Heino Van Houwelingen Ye Tun Myat Jacob Waslander Aung Myo Win Andre Westerink * Temporary <> Not a member of IFC # Not a member of IDA 259 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 260 New Zealand Nigeria Governor Governor John Whitehead Ngozi N. Okonjo-Iweala Alternate Governor Alternate Governor Haruna Usman Sanusi Andrew Blazey Mercy Uzo Agbamuche* Taiwo Ajibike Ajulo* Adviser Oby Ezekwesili* Peter William Adams Farouk Lawan* Thomas John Austin Benjamin Chinedum Onyido* Angela Jane Barnes Stephens Osagiede Oronsaye* Tom Hall Zik Sunday* Ian Hill Gabriel Suswam* Kim Mackenzie Gregory Skelton Adviser Phillip Taula Edith Jobunoh Haruna Mohammed Ebunoluwa Bosede Oladunni Nicaragua Abdulkareem Olabanji Olaoye Ojemane O. Orevba Governor Godwin Ugochukwu Owoh Eduardo Luis Montiel Clarita Ndidi Sokei Donald Uduehi Alternate Governor Eduardo Montealegre Rivas* Norway Governor Adviser Hilde Frafjord Johnson Gabriela Arguello Raul Barrios Alternate Governor Paul Lira Nils Haugstveit* Alcides Montiel Trond Folke Lindberg* Juan Carlos Pereira Karen Schneegans Adviser Arturo Wallace Svein Aass Jorge Wong-Valle Theresa Evensen Espen Gullikstad Robert Hovde Niger Merethe Nergaard Per Egil Selvaag Governor Boubacar Moumouni Saidou Oman Alternate Governor Governor Ramatou Diamballa Ahmed Bin Abdulnabi Macki Alternate Governor Adviser Ali Mohammed Redah Jafar Joseph Diatta Alassane Kone Adviser Ari Malla Warith bin Mubarak Al-Kharusi Abdoulaye Soumana Mohamed Ali Al Khusaiby * Temporary <> Not a member of IFC # Not a member of IDA 260 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 261 Pakistan Paraguay Governor Governor Salman Shah Dionisio Borda Alternate Governor Alternate Governor Fernando Masi Waqar Masood Khan Adviser Adviser Manuel Caballero Tanwir Ali Agha Victor I. Vazquez Aranda Waqar Ahmed Bajwa Mushtaq Malik Azizali F. Mohammed Peru Ashraf Jehangir Qazi Aftab Qureshi Alternate Governor Mohammad Sadiq Luis J. Carranza* Talat Waseem Jaime Quijandria Salmon* Adviser Palau Ivan Rivera Governor Philippines Casmir E. Remengesau Governor Alternate Governor Juanita D. Amatong Lawrence Alan Goddard Alternate Governor Amando M. Tetangco Jr.* Panama Adviser Governor Cyd Amador Ricaurte Vasquez M. Edgardo J. Angara Gil S. Beltran Alternate Governor Ma. Elaine G. Bigay Aracelly Mendez Jimmy Blas Albert F. Del Rosario William B. Go Papua New Guinea Corazon P. Guidote Exequiel Javier Governor Joselito Jimeno Bart Philemon Nicholas Mapa Placido L. Mapa, Jr. Alternate Governor Trina Mapa Simon Tosali Antonio H. Ozaeta Moi Avei* Juan Quintos, Jr. Roberto Tan Cesar E.A. Virata Adviser Luca Alkan Robert Igara Poland Mosilayola Kwayaila Igimu Momo Governor Evan J. Paki Leszek Balcerowicz * Temporary <> Not a member of IFC # Not a member of IDA 261 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 262 Alternate Governor Alternate Governor Jerzy Pruski Sergei Ignatiev* Andrei N. Illarionov* Adviser Alexey G. Kvasov* Jaroslaw Beldowski Oleg Vyugin* Jakub Karnowski Krzysztof Majczuk Adviser Remigiusz Nawrat Aleksei Akinshin Marcin Miros Platkowski Vladimir Dmitriev Pawel Samecki Nikolay Gavrilov Romuald Szymczak Vadim Grishin Sergei Guschin Portugal Nadezhda Ivanova Andrei Kasianenko Governor Stanislav Katash Luis Miguel Morais Leitao Petr Kaznacheev Andrei Kondakov Alternate Governor Mikhail Korobkin Mario Lobo Andrei Kostin Nuno Mota Pinto* Andrei Kozlov Dmitry Kvitko Adviser Dmitriy Levchenkov Joao Alfredo Afonso Boris M. Lvin Franquelim Fernando Garcia Alves Eugene Miagkov Rosa Maria Caetano Denis Mikhailov Maria Lucia Leitao Dmitry Pankin Konstantin Panov Tatiana Proskuryakova Qatar <># Elena Sashina Oksana Sergienko Governor Aleksandr Shamrin Yousef Hussain Kamal Andrei Shinayev Sergei Storchak Alternate Governor Denis Ursulyak Hussain Al-Abdulla Yury Ushakov Gennady Yezhov Romania # Irina Zakharenko Governor Mihai Nicolae Tanasescu Rwanda Alternate Governor Governor Cristian Popa* Donald Kaberuka Adviser Alternate Governor Doina Gabriela Cristea Francois Nkulikiyinfura Sorin Duc Aru Dan Enache Adviser Yolande Eyoum Russian Federation Georges Katureebe Matthew H. Martin Governor Gaston Mpatswe Kagabo Aleksei Kudrin Jean Jacques Nyirubutama * Temporary <> Not a member of IFC # Not a member of IDA 262 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 263 Fred Quarshie Sao Tome and Principe <> Juan Carlos Vilanova Governor St. Kitts and Nevis Adelino Santiago Castelo David Governor Alternate Governor Denzil Douglas Americo Oliveira Alternate Governor Adviser Vance Amory* Agapito Mendes Dias Genoveva Jose Da Costa Adviser Jasmin Huggins Saudi Arabia Izben Williams Governor St. Lucia Ibrahim A. Al-Assaf Alternate Governor Alternate Governor Trevor Brathwaite Hamad Al-Bazai Trevor Blake* Yahya Alyahya* Aviva Fredericks* Adviser Adviser Mazen Abdul Majeed Glenice Jerome Eisa M. Al-Eisa Sonia Johnny Hamad Al-Huthaili Ahmed Al-kholifey St. Vincent and the Grenadines <> Saleh Abdulaziz Al-Omair Tarek Al-Qasabi Governor Rashed Saad Al-Rashed Ralph E. Gonsalves Abdallah S. Alazzaz Ahmed Al-Balawie Alternate Governor Abdulrahman Al-Hamidy Laura Anthony-Browne Abdullah I. Al-Hudaithi Abdullah Al-Hugail Samoa Taymour Abdullah Ali Reza Abdullatif Al-Jabr Governor Abdulhamid Al-Khalifa Hinauri Petana Abdulrahman Mohammed Almofadhi Alternate Governor Khalid Abdullah Al-Molhem Iulai Lavea Ahmed A. Al Nassar Khalid Alohaly Adviser Abdulrahman Aloraini Bob Lyon Saeed Al-Qahtani Rashed Abdulaziz Al-Rashed San Marino <># Salah Al-Rashed Mohammad Abdullah Al-Shawi Governor Soliman A. Al-Solaim Claudio Felici Abdulaziz Al-Wahaib Sami Al-Yousef Alternate Governor Jitendra G. Borpujari Luciano Bollini* Sami Ben Daamech * Temporary <> Not a member of IFC # Not a member of IDA 263 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 264 Richard R. Herbert Sierra Leone Abdullah Saleh Kamel Melhem F. Melhem Governor Abdulaziz A. O'Hali Joseph Bandabla Dauda Hutham S. Olayan Khaled Olayan Alternate Governor Nemeh Elias Sabbagh Samura Kamara Bertrand Viriot Adviser Senegal John Karimu Henry Macauley Alternate Governor F.B.L. Mansaray Mamadou Faye Abdul Rahman Turay Adviser Amadou Lamine Ba Singapore Mamadou Woury Diallo Sogue Diarisso Governor Adama Dieye Lim Hng Kiang Amadou Fall Babacar Ka Alternate Governor Mamadou Lamine Loum Laurence Lien Andre Ndecky Diagna N'Diaye Adviser Seyni Ndiaye Chee Koon Lee Evelyne Tall Chivy Li Magatte Wade Moo Yubin Serbia and Montenegro Slovak Republic Governor Governor Igor Luksic Ivan Miklos Alternate Governor Alternate Governor Vesna Dzinic Elena Kohutikova Adviser Adviser Milorad Katnic Tomas Bican Zorica Maric Djordjevic Martin Bruncko Rastislor Kacer Seychelles # Governor Slovenia Jeremie Bonnelame Governor Alternate Governor Dusan Mramor Sylvestre Radegonde Alternate Governor Adviser Irena Sodin Vivianne Simone Fock-Tave Claude Sylvestre Morel Adviser Roger Toussaint Ksenija Maver * Temporary <> Not a member of IFC # Not a member of IDA 264 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 265 Solomon Islands Sudan Governor Governor Francis John Zama El Zubair Ahmed El Hassan Alternate Governor Alternate Governor Shadrach Fanega Abda Y. El Mahdi South Africa Adviser Governor Amal Ahmed Trevor Andrew Manuel El Hassan El Kabeir Mohamed Abdalla Alternate Governor Mohamed Ahmed Elias Lesetja Kganyago Somia Amir Osman Adviser Swaziland Mshiyeni Belle Chris Beyers Governor Christian Green Absalom M.C. Dlamini Kamilla Trille Gumede Tonia Kandiero Alternate Governor Aaron Daniel Mminele Musa D. Fakudze Thoraya Pandy Mmakgoshi Phetla-Lekhethe Adviser Ian Plenderleith Ndumiso Comfort Mamba Lonkhululeko Sibandze Spain Sweden Governor Pedro Solbes M. Governor Gunnar Lund Alternate Governor David Vegara Figueras Maria Jesus Fernandez* Alternate Governor Galo Herrero Villanueva* Carin Jamtin Maria Teresa Tello* Stefan Emblad* Ruth Jacoby* Sri Lanka Adviser Governor Johanna Ahlstrom Sarath Leelananda Karl Backeus Bandara Amunugama Hanna Brogren Dag Ehrenpreis Alternate Governor Erik Eldhagen Sumith Abeysinghe Bjorn Fritjofsson Rajapakse A. Jayatissa* Bjorn Gillsater Devinda R. Subasinghe* Sven-Olof Johansson Caroline Leijonhufvud Adviser Gunnar Pihlgren Parakrama Devasiri Rodrigo Erik Thedeen Dhammika Semasinghe Anette Tornqvist Hennadige N. Thenuwara Clara Von Otter * Temporary <> Not a member of IFC # Not a member of IDA 265 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 266 John Zanchi Joyce Mapunjo Herbert E. Mrango Switzerland Anna Mathias Msutze Athunami Mwinyigoha Governor Joseph Deiss Thailand Alternate Governor Governor Serge Chappatte Virachai Virameteekul Christina Grieder* Oscar Knapp* Alternate Governor Martin Rohner* Naris Chaiyasoot* Monika Ruhl Burzi* Pannee Sathavarodom* Pietro Veglio* Pongpanu Svetarundra* Adviser Adviser Alex Biscaro Chotisak Asapaviriya Liliana de Sa Rapee Asumpinpong Philippe Etienne Nattapon Dejvitak Raymund A. Furrer Taveesak Foongkiatcharoen Eric Martin Michael Hague Peter Siegenthaler Mahesuan Kruewan Alexander Wittwer Sakun Lambasara Manu Leopairote Syrian Arab Republic Ekniti Nitithanprapas Sommai Phasee Governor Kasit Piromya Ghassan El-Rifai Varan Pradittatsanee Chirachai Punkrasin Alternate Governor Lavaron Sangsnit Hussein M. Amach* Subhak Siwaraksa Somchai Sujjapongse Tajikistan Bunchon Songsamhan Sunee Eksomtramate Governor Chularat Suteethorn Shaukat Sokhibov Choompol Suwanakijboriharn Benjarat Tanongsakmontri Alternate Governor Ubolwan Usawattanagul Negmatdzhon K. Buriyev* Porametee Vimolsiri Perames Vudthitornetiraks Tanzania Chandraleka Wiriyawit Governor Timor-Leste Abdallah Omar Kigoda Governor Alternate Governor Mari Bin Amude Alkatiri Gray S. Mgonja Alternate Governor Adviser Jose Manuel Guterres Enos Steven Bukuku Jerome J. Buretta Adviser Hussein S. Khatib Constancio Pinto John Benti Kimaro * Temporary <> Not a member of IFC # Not a member of IDA 266 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 267 Togo Turkey Alternate Governor Governor Baliki Mewunesso Pini Ibrahim H. Canakci Adviser Alternate Governor Zakari Darou-Salim Memduh Aslan Akcay Ayewanou Agetoho Gbeasor Ayele Veronique Locoh-Donou Adviser Assoulian Kordjina Tchamsi Naci Agbal Kamil Ayanoglu Tonga Ibrahim Aydinli Kazim Caliskan Governor Sabri Davaz Siosiua T.T. `Utoikamanu Halit Ertegrul Melih Nemli Alternate Governor Ozgur Pehlivan Talanaivini `Ofa-Ki-Moana Vea Fazli Toprak Kemal Unakitan Adviser Selim Yesilbas `Aisake V. Eke Turkmenistan # Trinidad and Tobago Governor Governor Bayramgeldi Nurmammedov Conrad Enill Adviser Alternate Governor Parakhat Durdyev Michael Mendez Dovran M. Muratnazarov Mered Bairamovich Orazov Adviser Penelope Forde Uganda Joseph Howard Hayden Vincent Manzano Governor Marina Valere Gerald M. Ssendaula Tunisia Alternate Governor C.M. Kassami Governor Mohamed Nouri Jouini Adviser Moses Bekabye Alternate Governor Louis A. Kasekende Abdelhamid Triki Damoni Nuwaman Kitabire Nimisha Madhavani Adviser Keith Muhakanizi Hatem Atallah David S. Nsubuga Tarek Azouz Kamel Ben Rejeb Ukraine Ayech Bouselmi Samir Chebil Governor Riadh Dridi Mykola Derkatch * Temporary <> Not a member of IFC # Not a member of IDA 267 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 268 Alternate Governor United States Serhiy Hurzhiy Governor Adviser John W. Snow Pavlo Haidutsky Tamara Solyanyk Alternate Governor Alan P. Larson United Arab Emirates Samuel Bodman* Carole Brookins* Governor Roger W. Ferguson* Khalid Ali Al-Bustani Charles Greenwood* Robert B. Holland, III* Alternate Governor Bobby Pittman* Jamal Nasser Lootah Randal Quarles* Robin Ruth Ritterhoff* Adviser Mark Sobel* Sultan Al Zaabi John Taylor* Tony Wayne* United Kingdom Adviser Governor Paul V. Applegarth Hilary Benn Jeffrey Baker Rachel Bayly Alternate Governor David R. Bloomgarden Gordon Brown Mark Bocchetti Suma Chakrabarti* Ken Borghese Jon Cunliffe* Carol Carnes Andrew Hauser* John Ciorciari Stephen John Pickford* Michael Sean Considine Tom Scholar* Brian B. Cox Caroline Sergeant* Abby Demopulos Shriti Vadera* Ann Elizabeth Derse Robert Dohner Adviser Stephen Paul Donovan Masood Ahmed Thomas Engle James Bowler Linda Figura James Droop Megan Flock Shazia Ejaz April Foley Alex Evans Tony Fratto Peter Grant Russell Frisbie Robert Andrew L. Gregory Leo Gallagher Ben Kelmanson Barbara Geiser Dorothea Lee Benjamin Getto Moazzam Malik Stephen Gooch Melinda Simmons Lawrence Goodman Graham Stegmann Michael Grossman Nicholas H. Stern Deborah Grubbs Alison Margaret Stuart Mathew P. Haarsager Beverly Warmington Arnold Havens Lindsey Jennifer Whyte Leslie Hull Paul Williams John Hurley Penelope Williams Mark Jaskowiak * Temporary <> Not a member of IFC # Not a member of IDA 268 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 269 Reuben Jeffery Mary A. Wileden Seneca Johnson Kirsten Wivel Elaine Jones Robert Jones Uruguay # Michael Kaplan Richard Karp Governor Adnan Kifayat Isaac Alfie Chris Kushlis Nancy Lee Alternate Governor Benjamin Leo Horacio Bafico Stuart Levey Daniel G. Cairo* Sarah Lockart David P. Loevinger Adviser Clay Lowery Hugo Fernandez-Faingold Theodore Lyng Renee Gonzales-Silva Charles Mallory, IV Juan E. Notaro Jennifer Mcandrew Carlos Steneri Daniel Patrick McGlinchey David Merkel Uzbekistan Phil Merrill Molly Millerwise Governor Wilbur Monroe Rustam S. Azimov Kathleen Anne Morenski Richard Morford Alternate Governor Elizabeth H. Morris Saidakmad Rakhimov Scott Allen Morris Ulugbek Rozukulov* William C. Murden David Nagoski Adviser Rob Nichols Behrus Abdullaev Jonathan Olsson Bakhtier Ibraguimov Sara Paulson Abdulaziz Kamilov Maurice A. Perkins Mashrab Saidmuradov Cynthia Perry Shukhrat Abdusha Vafaev Paul Reid Nilmini Gunaratne Rubin Vanuatu Muneera Salem-Murdock Gary Sampliner Governor William Schuerch Moana Carcasses Alpita Shah Gordon Shettle Alternate Governor Faryar Shirzad Simeon Athy Gianluca Signorelli Emmy Simmons Venezuela, Republica Bolivariana de # Thomas D. Simpson Chris Smith Alternate Governor James Smith Jose Machillanda* Thomas Smitham Patrick Stuart Adviser Luyen Doan Tran Luis E. Davila Beth Urbanas Alejandro Dopazo Lian von Wantock Odo G. Habeck Mary Bruce Warlick Francisco Illarramendi Olin L. Wethington Per Kurowski * Temporary <> Not a member of IFC # Not a member of IDA 269 3645-p242-270_Accredit1.pdf 8/24/05 9:31 AM Page 270 Natalia Navarro Abdulhakim A. Al Eryani Guillermo Ortega Abdulwahab Al-Hajjri Maria Cecilia Ramirez Adonis Fakhri Jose Alejandro Rojas Ramirez Ahmed Ahmed Ghaleb Jose Sojo Galal Mohamed Moula Nabil Shaiban Vietnam Sami Sofan Governor Zambia Nguyen Quang Huy Governor Alternate Governor N'gandu Peter Magande Dang Anh Mai Alternate Governor Adviser Situmbeko Musokotwane Hoang Khanh Sinh Khuong Duy Pham Adviser Nguyen Pham Van Inone-Mbikusita Lewanika Nguyen Thanh Do Justin Chanda Mubanga To Thanh Hoang Nguyen Thu Ha Zimbabwe Nguyen Ba Toan Pham Van Thiet Governor Vu Lien Phuong Herbert M. Murerwa Pham Xuan Lap Alternate Governor Yemen, Republic of Gideon Gono Edward Mashiringwani* Governor Ahmed Mohammed Sofan Adviser Andrew N. Bvumbe Alternate Governor Zvinechimwe Churu Mohammed Al-Sabbry Judith Kateera Munyaradzi Kereke Adviser Millicent Mombeshora Hesham S.A. Martha Mugwenhi Al-Sayed Abdul Rahman Thankful Musukutwa Fouad Al-kohlany Simon Nyarota Rashad Al-Rassas * Temporary <> Not a member of IFC # Not a member of IDA 270 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 271 ACCREDITED MEMBERS OF DELEGATIONS (MIGA) AT THE 2004 ANNUAL MEETINGS Afghanistan Alternate Governor Thomas Wieser Governor Ashraf Ghani Azerbaijan Albania Governor Avaz Alekperov Alternate Governor Evis Sulka* Bahamas, The Algeria Governor James H. Smith Governor Abdellatif Benachenhou Alternate Governor Ruth R. Millar Angola Bahrain Alternate Governor Governor Job Graca Abdulla Hassan Saif Argentina Bangladesh Governor Governor Martin Redrado M. Saifur Rahman Alternate Governor Barbados Jorge Madcur Gerardo M. Hita* Governor Tyrone Emanuel Barker Armenia Alternate Governor Governor Grantley W. Smith Vahram Nercissiantz Patrick McCaskie* Australia Belarus Governor Governor Martin Lee Parkinson Andrei V. Kobyakov Alternate Governor Alternate Governor Hector James Thompson Anatoly I. Sverzh Austria Belgium Governor Governor Karl-Heinz Grasser Didier Reynders * Temporary 271 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 272 Alternate Governor Alternate Governor Gregoire Brouhns Bojidar Lubenov Kabaktchiev Jean-Pierre Arnoldi* Burkina Faso Belize Governor Governor Hamade Ouedraogo Said W. Musa Alternate Governor Benin Lene Sebgo Governor Burundi Bruno Amoussou Governor Alternate Governor Athanase Gahungu Fatiou Akplogan Alternate Governor Bolivia Leon Nimbona Governor Cambodia Horst Grebe Lopez Governor Alternate Governor Keat Chhon Luis A. Arnal Alternate Governor Bosnia and Herzegovina Aun Porn Moniroth Governor Cameroon Adnan Terzic Alternate Governor Alternate Governor Daniel Njankouo Lamere Dragan Doko Canada Botswana Governor Governor Ralph Goodale Serwalo S.G. Tumelo Alternate Governor Alternate Governor Paul Boothe* Peggy Onkutwile Serame* Aileen Carroll* Andrew Clark* Brazil Ann Collins* Mark de Guzman* Governor Sheila MacDonald* Antonio Palocci Marcel Masse* Lee-Ann McKechnie* Bulgaria Christian Ranger* Bruce Rayfuse* Governor Greg Reade* Milen Veltchev Vinita Watson* * Temporary 272 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 273 Cape Verde Congo, Democratic Republic of the Governor Governor Joao Pinto Serra Andre-Philippe Futa Alternate Governor Alternate Governor Victor A.G. Fidalgo Jean-Claude Masangu Mulongo Congo, Republic of Central African Republic Governor Governor Rigobert Roger Andely M'pokomandji Sonny Costa Rica Alternate Governor Dieudonne Padoundji-Yadjoua Governor Federico Carrillo Zurcher Chad Alternate Governor Governor Francisco de Paula Gutierrez Mahamat Ali Hassan Cote d'Ivoire Chile Governor Governor Boniface Britto Nicolas Eyzaguirre Alternate Governor Oussou Kouassy China Croatia Governor Jin Renqing Alternate Governor Martina Dalic Alternate Governor Li Yong Cyprus Baoan Wang* Wei Wang* Alternate Governor Wu Jinkang* Leslie G. Manison* Fangming Xu* Tong Zhang* Czech Republic Zhao Xiaoyu* Xiaosong Zheng* Alternate Governor Zhu Guangyao* Oldrich Dedek Zou Jiayi* Denmark Colombia Governor Governor Bertel Haarder Alberto Carrasquilla Alternate Governor Alternate Governor Carsten Staur Santiago Montenegro Trujillo Nanna Hvidt* * Temporary 273 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 274 Dominica Alternate Governor Abi Woldemeskel Alternate Governor Abii Tsige* Jennifer Nero* Fiji Dominican Republic Governor Governor Peceli V. Vocea Hector Manuel Valdez Albizu Finland Ecuador Alternate Governor Peter Nyberg Alternate Governor Martti Hetemaki* Ramiro Galarza Hannu Kyrolainen* Pertti Majanen* Egypt, Arab Republic of France Governor Mahmoud Mohieldin Governor Nicolas Sarkozy El Salvador Alternate Governor Alternate Governor Xavier Musca Guillermo Lopez-Suarez Xavier Darcos* Pierre Duquesne* Equatorial Guinea Odile Renaud-Basso* Governor Adviser Jaime Ela Ndong Olivier Basdevant Claude Blanchemaison Eritrea Sebastien Boitreaud Olivier Georges Ma Cuny Governor Nathalie Delapalme Woldai Futur Hubert de Milly Alexandre Draznieks Alternate Governor Laurent Duriez Martha Woldeghiorghis Tedla Ramon Fernandez Patrick Gitton Estonia Alain Le Roy Stephanie Leydier Thierry Mathou Governor Robert Moulie Taavi Veskimagi Emmanuel Moulin Regis Pelissier Alternate Governor Brice Quesnel Renaldo Mandmets Berengere Quincy Anthony Requin Ethiopia Marc Yvon Robert Etienne Rolland-Piegue Governor Elisabeth Sandor Sufian Ahmed David Teillet * Temporary 274 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 275 Jerome Walter Alternate Governor Claire Waysand Plutarchos Sakellaris Petros G. Doukas* Gabon Nicholas Symeonidis* Governor Grenada Casimir Oye-Mba Governor Alternate Governor Anthony Boatswain Christian Bongo Guatemala Gambia, The Alternate Governor Maria Antonieta de Bonilla Governor Mousa G. Bala Gaye Guinea Alternate Governor Governor Karamo K. Bojang Madikaba Camara Georgia Guyana Governor Alternate Governor Zurab Nogaideli Saisnarine Kowlessar Germany Haiti Governor Governor Heidemarie Wieczorek-Zeul Henri Bazin Alternate Governor Honduras Caio K. Koch-Weser Joerg Asmussen* Governor Eckhard Deutscher* William Chong Wong Karsten Hinrichs* Michael Hofmann Alternate Governor Maria Elena Mondragon de Villar Adviser Walter E. Hermann Hungary Alternate Governor Ghana Laszlo Orlos* Governor Iceland Yaw Osafo-Maafo Alternate Governor Alternate Governor Geir Hilmar Haarde Anthony Akoto Osei Hermann Orn Ingolfsson* Greece India Governor Governor George Alogoskoufis P. Chidambaram * Temporary 275 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 276 Alternate Governor Sumio Kusaka* D.C. Gupta Naoyuki Shinohara* Ashok Lahiri* Rintaro Tamaki* Chander Mohan Vasudev* Hiroshi Watanabe* Indonesia Jordan Governor Governor Boediono Bassem I. Awadallah Alternate Governor Alternate Governor Burhanuddin Abdullah Tayseer Radwan Al-Smadi Iran, Islamic Republic of Kazakhstan Governor Governor Safdar Hosseini Grigoriy Aleksandrovich Marchenko Ireland Alternate Governor Alternate Governor Kayrat Nematovich Kelimbetov Elizabeth Beckett* Robert Bradshaw* Kenya Brendan Ryan* Governor Israel Maurice John Pette Kanga Governor Alternate Governor David Klein Donald K. Kibera Alternate Governor Korea, Republic of Yaron Zelekha Governor Italy Dong Soo Chin Governor Alternate Governor Antonio Fazio Joong-Kyung Choi Jamaica Kuwait Governor Omar Lloyd Davies Governor Salem Abdulaziz Al-Sabah Japan Kyrgyz Republic Governor Sadakazu Tanigaki Governor Bolot E. Abildaev Alternate Governor Kiyoto Ido* Alternate Governor Kiyoshi Kodera* Emirlan Toromyrzaev* * Temporary 276 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 277 Lao People's Democratic Republic Macedonia, former Yugoslav Republic of Governor Governor Somdy Douangdy Nikola Popovski Alternate Governor Alternate Governor Sayphet Aphayvanh* Dimko Kokaroski Latvia Madagascar Governor Governor Oskars Spurdzins Zaza Manitranja Ramandimbiarison Alternate Governor Alternate Governor Andris Liepins* Henri Bernard Razakariasa Lebanon Malawi Alternate Governor Governor Fuad A.B. Siniora Goodall E. Gondwe Lesotho Malaysia Governor Governor Timothy T. Thahane Nor Mohamed Yakcop Alternate Governor Alternate Governor Moeketsi Majoro Wan Abdul Aziz Wan Abdullah* Libya Mali Governor Governor Ahmed Betamer Abou-Bakar Traore Alternate Governor Alternate Governor Ali Ramadan Shnebesh Sambou Wague* Lithuania Malta Governor Governor Vitas Vasiliauskas Tonio Fenech Alternate Governor Alternate Governor Arvydas Kregzde Paul Zahra Luxembourg Mauritania Governor Governor Luc Frieden Sidi Ould Didi Alternate Governor Alternate Governor Jean Guill Mohamed Ould El Abed * Temporary 277 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 278 Mauritius Alternate Governor Agnes van Ardenne Governor Khushhal Chand Khushiram Nicaragua Micronesia, Federated States of Governor Luis Eduardo Montiel Governor Henry Asugar Nigeria Alternate Governor Rose Nakanaga Governor Ernest C. Ebi Moldova Alternate Governor Alternate Governor Haruna Usman Sanusi Dumitru Ursu Farouk Bunza* Nasir El-Rufai* Mongolia Ahmed Inuwa Wada* Governor Norway Norov Altankhuyag Governor Morocco Hilde Frafjord Johnson Governor Alternate Governor Fathallah Oualalou Nils Haugstveit* Trond Folke Lindberg* Mozambique Oman Governor Luisa Dias Diogo Governor Ahmed Bin Abdulnabi Macki Alternate Governor Adriano Afonso Maleiane Alternate Governor Tahir Al-Amry Namibia Governor Pakistan Samuel H. Goagoseb Governor Nepal Nawid Ahsan Governor Alternate Governor Bharat Mohan Adhikari Farrakh Qayyum Alternate Governor Palau Bhanu Prasad Acharya Governor Netherlands Casmir E. Remengesau Governor Alternate Governor Gerrit Zalm Lawrence Alan Goddard * Temporary 278 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 279 Panama Qatar Governor Governor Ricaurte Vasquez M. Yousef Hussain Kamal Alternate Governor Romania Rolando Mirones Governor Papua New Guinea Mihai Nicolae Tanasescu Governor Russian Federation Bart Philemon Governor Alternate Governor Aleksei Kudrin Simon Tosali Alternate Governor Paraguay Alexey G. Kvasov* Governor Dionisio Borda Rwanda Alternate Governor Governor Fernando Masi Donald Kaberuka Peru St. Kitts and Nevis Alternate Governor Governor Javier Silva Ruete Denzil Douglas Alternate Governor Philippines Wendell E. Lawrence Governor Juanita D. Amatong St. Lucia Alternate Governor Poland Trevor Brathwaite* Governor Jacek Tomorowicz St. Vincent and the Grenadines Alternate Governor Governor Agnieszka B. Rudniak-Jancewicz Ralph E. Gonsalves Portugal Samoa Governor Governor Luis Miguel Morais Leitao Tiata Pulufana Saunoa Alternate Governor Alternate Governor Mario Lobo Maeva Betham * Temporary 279 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 280 Saudi Arabia Alternate Governor Irena Sodin Governor Ibrahim A. Al-Assaf South Africa Alternate Governor Governor Hamad Al-Bazai Trevor Andrew Manuel Yahya Alyahya* Senegal Spain Governor Governor Abdoulaye Diop Pedro Solbes M. Serbia and Montenegro Alternate Governor David Vegara Figueras Governor Igor Luksic Sri Lanka Seychelles Governor Sarath Leelananda Governor Bandara Amunugama Jeremie Bonnelame Alternate Governor Alternate Governor Sumith Abeysinghe Francis Chang Leng Rajapakse A. Jayatissa* Devinda R. Subasinghe* Sierra Leone Governor Sudan Joseph Bandabla Dauda Governor Alternate Governor El Zubair Ahmed El Hassan Samura Kamara Alternate Governor Singapore Abda Y. El Mahdi Governor Swaziland Lim Hng Kiang Alternate Governor Slovak Republic Ephraim Mandla Hlophe Governor Ivan Miklos Sweden Alternate Governor Governor Elena Kohutikova Gunnar Lund Slovenia Alternate Governor Carin Jamtin Governor Stefan Emblad* Dusan Mramor Ruth Jacoby* * Temporary 280 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 281 Switzerland Turkey Governor Governor Oscar Knapp Ibrahim H. Canakci Alternate Governor Alternate Governor Martin Rohner* Memduh Aslan Akcay Syrian Arab Republic Turkmenistan Governor Governor Ghassan El-Rifai Bayramgeldi Nurmammedov Tajikistan Uganda Governor Governor Negmatdzhon K. Buriyev Gerald M. Ssendaula Tanzania Alternate Governor C.M. Kassami Governor Abdallah Omar Kigoda Ukraine Alternate Governor Alternate Governor Gray S. Mgonja Serhiy Hurzhiy Timor-Leste United Arab Emirates Governor Maria Madalena Brites Boavida Alternate Governor Jamal Nasser Lootah Togo United Kingdom Governor Debaba Bale Governor Hilary Benn Alternate Governor Baliki Mewunesso Pini Alternate Governor Gordon Brown Trinidad and Tobago Suma Chakrabarti* Jon Cunliffe* Governor Andrew Hauser* Conrad Enill Stephen John Pickford* Tom Scholar* Tunisia Caroline Sergeant* Shriti Vadera* Governor Mohamed Nouri Jouini United States Alternate Governor Governor Abdelhamid Triki John W. Snow * Temporary 281 3645-p271-282_Accredit2.pdf 8/24/05 9:31 AM Page 282 Alternate Governor Venezuela, Republica Bolivariana de Alan P. Larson Samuel Bodman* Alternate Governor Carole Brookins* Jose Machillanda* Roger W. Ferguson* Charles Greenwood* Vietnam Robert B. Holland, III* Bobby Pittman* Governor Randal Quarles* Le Duc Thuy Robin Ruth Ritterhoff* Mark Sobel* Yemen, Republic of John Taylor* Tony Wayne* Governor Ahmed Mohammed Sofan Uruguay Alternate Governor Governor Mohammed Al-Sabbry Isaac Alfie Zambia Uzbekistan Governor Governor N'gandu Peter Magande Rustam S. Azimov Alternate Governor Alternate Governor Situmbeko Musokotwane Zainutdin Mirkhodjaev Zimbabwe Vanuatu Governor Governor Herbert M. Murerwa Moana Carcasses Alternate Governor Alternate Governor Willard L. Manungo Simeon Athy Edward Mashiringwani* * Temporary 282 3645-p283-287_Observers.pdf 8/24/05 9:31 AM Page 283 OBSERVERS AT THE 2004 ANNUAL MEETINGS African Development Bank Group Mikio Kashiwagi David Joseph Kruger Omar Kabbaj Bindu N. Lohani Thierry de Longuemar Khempheng Pholsena Henock Kifle Satish Rao Eva L. Relova African Export-Import Bank James Rockett Kunio Senga Christopher Chuka Edordu Robert Young Siy Jean-Louis Ekra Mohammad E. Tusneem Benedict O. Oramah Ganesh Wignaraja African Fund for Guarantee Association of African Development and Economic Cooperation Finance Institutions Habib Soumana Oluremi Omotoso Souleymane Tamboura Daniel Gyimah Vianney J.M. Nyirimihigo Andean Development Corporation Kenneth Edozie Ogegbu Lawrence Okeluc Osa-Afiana Luis Enrique Garcia Rodriguez Felix Bergel Bank for International Settlements Beatriz De Acha De Garcia Carolina Espana Josef Tosovsky Gabriel Felpeto Svein Andresen Hugo Sarmiento Gavin Bingham Luca Errico Arab Authority for Agricultural Mar Gudmundsson Investment and Development Ryozo Himino Andre Icard Siddig Umbadda Rabih Malcolm D. Knight Robert Sleeper Arab Bank for Economic Josef Van't Dack Development in Africa William R. White Medhat Sami Lotfy Bank of Central African States Kamal Mahmoud Abdellatif Ebe Ould Ebe Mustapha Mahamat Barthelemy Kouezo Arab Monetary Fund Black Sea Trade and Development Bank Jassim Abdulla Al-Mannai Mustafa Hamdi Gurtin Asian Development Bank Valery Vladimirovich Aksenov Plamen Vasilev Petrov Tadao Chino Charalampos Tsarouchas Robert M. Bestani Pierre Nicolas van Peteghem Brent Dark Jill Drilon Caribbean Community Philip C. Erquiaga Liqun Jin Maurice Odle Yasushi Kanzaki Evelyn Wayne 283 3645-p283-287_Observers.pdf 8/24/05 9:31 AM Page 284 Caribbean Development Bank Commonwealth Secretariat Compton Bourne Donald Charles McKinnon Patrick Desmond Brunton Amitav Banerji Alan David Slusher Indrajit Coomaraswamy Winston Cox Center for Latin American Joel S. Kibazo Monetary Studies Eliawony J. Kisanga Kenneth G. Coates Cooperation Council for Jose Linaldo Gomes de Aguiar the Arab States of the Gulf Central African Economic and Monetary Nasser Ibrahim Al-Kaud Community Council of Europe Development Bank Jean Nkuete Benoit Ketchekmen Raphael Alomar Andre Guy-Sinclair Tekpa Nunzio Guglielmino Orhan Guvenen Central African States Development Bank Jacques Mirante Pere Krzysztof J. Ners Anicet-Georges Dologuele Thierry Poirel Jacques Kwachil-Ngouvala Apolonio Ruiz Ligero Luca Schio Konstantin Von Klitzing Central American Bank for Economic Integration East African Community Jaime Chavez Marcela Aguiluz de Moya Nuwe Amanya Mushega Chuan Hua Peter N. Kiguta Alfonso Martinez Bordiu Nick Rischbieth East African Development Bank Alfredo Skinner-Klee Eduardo Valle Godfrey B. Tumusiime Mahesh K. Kotecha Central American Monetary Council Peter Opande Miguel A. Chorro Serpas Economic Community Macrino Blanco of West African States Common Fund for Commodities C.O. Gologo David Lansana Bockari Kamara Shunichi Hari Mame Cor Sene Oluremi Aribisala Common Market for Eastern Frank Ofei and Southern Africa Economic Cooperation Organization Erastus J.O. Mwencha Tidenekialesh Asfaw Askhat Orazbay Bernard de Haldevang Alex Gitari Kwimenya European Bank for Michael Gondwe Reconstruction and Development Mahmood Ariff Mansoor Kombo James Moyana Willem Buiter Mark Pearson Noreen Doyle Cyprien Sakubu Lorenz Jorgensen 284 3645-p283-287_Observers.pdf 8/24/05 9:31 AM Page 285 Steven D.F. Kaempfer Food and Agriculture Organization of the Hubert Pandza United Nations Fabrizio Saccomanni Axel Van Nederveen Charles H. Riemenschneider Julie Green Inter-American Development Bank European Central Bank Enrique V. Iglesias Jean-Claude Trichet Oscar Braun Elisabeth Ardaillon-Poirier Eloy B. Garcia J. de Beaufort Wijnholds Agustin Garcia-Lopez Willem F. Duisenberg John R. Hauge Otmar Issing Tito Armando Velasco Tommaso Padoa-Schioppa Raymond Ritter Inter-American Regina Karoline Schuller Investment Corporation Lars Soendergaard Jacques Rogozinski Pedro Gustavo Teixeira Jorge Roldan Christian Thimann Pierre van der Haegen Inter-Arab Investment Michele Kirstetter Guarantee Corporation European Commission Fahad R.H. Al Ibrahim Khogali A. Abubakr Joaquin Almunia Amann Ayman Hussein Nehmeh Peter Bekx Clive Bergel International Fund for Moreno Bertoldi Agricultural Development Herve Carre Daniel A.A. Daco Lennart Bage Servaas Deroose Uday Abhyankar Elena Flores Gual Cheryl Morden Anthony Gooch Vera P. Weill-Halle Guenter Grosche Amy Medearis International Labour Organization Poul Nielson Maeve O'Beirne Juan Somavia Elisabeth Maria Pape Stephen Pursey Bernard Petit Gerald Rodgers Klaus P. Regling Sabine Seeger International Telecommunications Union Cecilia Thorfinn Johannes van der Ploeg Jean-Yves Besnier Vlassia Vassikeri Islamic Development Bank European Investment Bank (EIB Group) Ahmad Mohamed Ali Barbara Bargagli-Petrucci Mohamed Ennifar Jean-Louis Biancarelli Selim Cafer Karatash Terence Brown Zul-Kifl Salami Philippe de Fontaine Vive Chovakaran Payarambath Saleem Torsten Gersfelt Siddig Salih Rene Karsenti Mohameden Mohamed Sidiya Eila Kreivi El Mansour Ould Veten Feten Fiona Turner Zeinhom Antar Zahran 285 3645-p283-287_Observers.pdf 8/24/05 9:31 AM Page 286 Islamic Financial Services Board OECD Development Assistance Committee Rifaat Ahmed Abdelkarim Nor Sadnawaty Saifuddin Richard Manning Kuwait Fund for Arab Organization of American States Economic Development Miguel Angel Rodriguez Emad Th.Y. Al-Majed Guillermo Abaracon Karina Chamba Latin American Economic System Mireya Chamba Patricio Contreras Roberto Guarnieri Agustin Cornejo Paul Fisher Latin American Reserve Fund Mary Johnstone Mikael Larsson Julio Velarde Teisha Mattison Alfonso R. Machado Juan Alfredo Pacheco Cesar Parga League of Arab States Ana Maria Plata Maryse Robert Hussein Hassouna Jose Manuel Salazar-Xirinachs Sherry M. Stephenson Nordic Development Fund Yolanda Strachan Theresa Wetter Jens Lund Sorensen Per Eldar Sovik Organization of the Stella Eckert Petroleum Exporting Countries Nordic Investment Bank Mohammad Alipour-Jeddi Jon Sigurdsson P. L. O. Erkki A.O. Karmila Kari Kukka Salam K. Fayyad Torben Nielsen Abdelaziz M. Abu-Dagga Lars-Ake Gunnar Olsson Amin Haddad Oddvar Ronsen Sahar Haddad Heidi Susanne Syrjanen Mazen Saleem Jadallah Khaled S.K. Kayed OPEC Fund for International Mohammad Shtayyeh Development Southern African Suleiman Jasir Al-Herbish Development Community Said Aissi Ali H.M. Alabdulrazzaq Albert M. Muchanga Jumana A.W. Dejany Mandla M. Madonsela Barbara Hausjell United Nations Organisation for Economic Co-operation and Development Anwarul Karim Chowdhury Jose Antonio Ocampo Donald J. Johnston Suzanne Bishopric Jean-Philippe Cotis Farooq Chowdhury Vincent R. Koen Oscar de Rojas Michael Georg Roeskau Hazem Fahmy 286 3645-p283-287_Observers.pdf 8/24/05 9:31 AM Page 287 Jan Allen Kregel Yao Agbo N'De Hounouvi Eduardo Christian Ossa Dramane Traore UN Children's Fund West African Economic and Monetary Union Sadig Rasheed Soumaila Cisse UN Conference on Trade Alhassane Ag Mohamed and Development Frederic Assomption Korsaga Joachim Ouedraogo Pierre Encontre Heiner Flassbeck West African Monetary Institute UN Development Programme Michael Olufemi Ojo Peter J. Obaseki Michael Marek Siddique A.B. Sesay Denise Dawn De Souza Gianpaolo Galli Santosh Mehrotra World Health Organization Kalman Mizsei Catherine Wachira Xavier Leus UN Economic Commission for Africa World Trade Organization Kingsley Y. Amoako Francisco Thompson-Flores Elene Makonnen Richard Eglin John William Hancock UN Economic Commission for Latin America and the Caribbean Singapore Planning Team 2006 Annual Meetings Ines Bustillo Raquel Artecona David S. Beevers Rex Garcia Benjamin Andrew Breen Chan Kok Leong UN Economic and Social David Chow Commission for Western Asia Chua Loo Lin Michael Chua Fadhil Mahdi Devendran Selvarajoo Goh Chye Boon United Nations Educational, Scientific, Clara Goh and Cultural Organization Aubeck Kam Viviane Launay Lim Siong Tiong Jessica Jeavons Valerie Lim Eliot Minchenberg Kenny Loh Florence Mok Wai Cheng Universal Postal Union Ng Nam Sin Ow Catherine Pek Wan Richard Joseph Strasser, Jr. Quek Cheng Meng Shih-Teo Siew Poh West African Development Bank Jason Tan Tan Maggie Pin Neo Boni Yayi YAP Kok Boon Omar Fall Alice Yeo 287 3645-p288-289_ExecDirectors.pdf 8/24/05 9:30 AM Page 288 EXECUTIVE DIRECTORS AND ALTERNATES IBRD, IFC, IDA OCTOBER 3, 2004 Executive Directors Alternate Executive Directors Tanwir Ali Agha Sid Ahmed Dib (Pakistan) (Algeria) Mahdy Ismail Aljazzaf Mohamed Kamel Amr (Kuwait) (Arab Republic of Egypt) Yahya Alyahya Abdulrahman Mohammed Almofadhi (Saudi Arabia) (Saudi Arabia) Rapee Asumpinpong Hadiyanto (Thailand) (Indonesia) John Austin Terrence K. O'Brien (New Zealand) (Australia) Kurt Bayer Gino Alzetta (Austria) (Belgium) Biagio Bossone Nuno Mota Pinto (Italy) (Portugal) Carole Brookins Robert B. Holland, III (United States) (United States) Otaviano Canuto Gil S. Beltran (Brazil) (Philippines) Eckhard Deutscher Walter E. Hermann (Germany) (Germany) Pierre Duquesne Anthony Requin (France) (France) Paulo F. Gomes Louis Philippe Ong Seng (Guinea-Bissau) (Mauritius) Alieto Guadagni Veronica Querejazu Vidovic (Argentina) (Bolivia) Thorsteinn Ingolfsson Svein Aass (Iceland) (Norway) Louis A. Kasekende J. Mills Jones (Uganda) (Liberia) Per Kurowski Maria Jesus Fernandez (Republica Bolivariana deVenezuela) (Spain) 288 3645-p288-289_ExecDirectors.pdf 8/24/05 9:30 AM Page 289 Executive Directors Alternate Executive Directors Alexey G. Kvasov Eugene Miagkov (Russian Federation) (Russian Federation) Marcel Masse Gobind Nauth Ganga (Canada) (Guyana) Ad Melkert Tamara Solyanyk (Netherlands) (Ukraine) Yoshio Okubo Toshio Oya (Japan) (Japan) Tom Scholar Caroline Sergeant (United Kingdom) (United Kingdom) Chander Mohan Vasudev Akbar Ali Khan (India) (Bangladesh) Pietro Veglio Jakub Karnowski (Switzerland) (Poland) Zhu Guangyao Wu Jinkang (China) (China) 289 3645-p290-291_Directors.pdf 8/24/05 9:30 AM Page 290 DIRECTORS AND ALTERNATES MIGA OCTOBER 3, 2004 Directors Alternate Directors Tanwir Ali Agha Sid Ahmed Dib (Pakistan) (Algeria) Mahdy Ismail Aljazzaf Mohamed Kamel Amr (Kuwait) (Arab Republic of Egypt) Yahya Alyahya Abdulrahman Mohammed Almofadhi (Saudi Arabia) (Saudi Arabia) Gino Alzetta Kurt Bayer (Belgium) (Austria) Rapee Asumpinpong Hadiyanto (Thailand) (Indonesia) John Austin Terrence K. O'Brien (New Zealand) (Australia) Biagio Bossone Nuno Mota Pinto (Italy) (Portugal) Carole Brookins Robert B. Holland, III (United States) (United States) Otaviano Canuto Gil S. Beltran (Brazil) (Philippines) Eckhard Deutscher Walter E. Hermann (Germany) (Germany) Pierre Duquesne Anthony Requin (France) (France) Paulo F. Gomes Louis Philippe Ong Seng (Guinea-Bissau) (Mauritius) Alieto Guadagni Veronica Querejazu Vidovic (Argentina) (Bolivia) Thorsteinn Ingolfsson Svein Aass (Iceland) (Norway) Louis A. Kasekende J. Mills Jones (Uganda) (Liberia) Per Kurowski Maria Jesus Fernandez (Republica Bolivariana de Venezuela) (Spain) 290 3645-p290-291_Directors.pdf 8/24/05 9:30 AM Page 291 Directors Alternate Directors Alexey G. Kvasov Eugene Miagkov (Russian Federation) (Russian Federation) Marcel Masse Gobind Nauth Ganga (Canada) (Guyana) Ad Melkert Tamara Solyanyk (Netherlands) (Ukraine) Yoshio Okubo Masakazu Ichikawa (Japan) (Japan) Tom Scholar Caroline Sergeant (United Kingdom) (United Kingdom) Chander Mohan Vasudev Akbar Ali Khan (India) (Bangladesh) Pietro Veglio Jakub Karnowski (Switzerland) (Poland) Zhu Guangyao Wu Jinkang (China) (China) 291 3645-p292-294_Officers.pdf 8/24/05 11:26 AM Page 292 OFFICERS OF THE BOARDS OF GOVERNORS IBRD, IFC AND IDA AND JOINT PROCEDURES COMMITTEE FOR 2004/2005 Chairman . . . . . . . . . . . . . . . . . . . Democratic Republic of the Congo Vice Chairmen . . . . . . . . . . . . . . . Peru Saudi Arabia Reporting Member. . . . . . . . . . . . . Bulgaria Members . . . . . . . . . . . . . . . . . . . . Australia Bangladesh Bulgaria Democratic Republic of the Congo Dominican Republic France Germany Ghana Hungary Italy Jamaica Japan Libya Malaysia Nicaragua Peru Poland Russia Rwanda Saudi Arabia South Africa United Kingdom United States 292 3645-p292-294_Officers.pdf 8/24/05 11:26 AM Page 293 OFFICERS OF THE MIGA COUNCIL OF GOVERNORS AND PROCEDURES COMMITTEE FOR 2004/2005 Chairman . . . . . . . . . . . . . . . . . . . Democratic Republic of the Congo Vice Chairmen . . . . . . . . . . . . . . . Peru Saudi Arabia Reporting Member. . . . . . . . . . . . Bulgaria Members . . . . . . . . . . . . . . . . . . . . Australia Bangladesh Bulgaria Democratic Republic of the Congo Dominican Republic France Germany Ghana Hungary Italy Jamaica Japan Libya Malaysia Nicaragua Peru Poland Russia Rwanda Saudi Arabia South Africa United Kingdom United States 293 3645-p292-294_Officers.pdf 8/24/05 11:26 AM Page 294 THE WORLD BANK GROUP Headquarters 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. Telephone: (202) 473-1000 Facsimile: (202) 477-6391 Website: www.worldbank.org Cable Address World Bank: INTBAFRAD IFC: CORINTFIN IDA: INDEVAS MIGA: MIGAVEST